Banana Republic

The feds can murder long-term mortgages. The bank cops can outlaw cash-back mortgages and toughen borrowing rules. F and Carney can warn until they’re hoarse. The media can brim with stories of bubbles. But does any of this actually work? Are people borrowing less, getting cautious and parking their house hormones?

Big question. The answer could dictate exactly how the next few years unfold – melt, correction, or crash.

First, to set the scene, here’s a note Kayla sent me last night. She and her BF work in Ottawa for the government (what else?) and they’re the 4,721st couple to ask me this question. Congratulations.

“We are debating whether NOW is a good time to purchase my first home. My boyfriend and I (early 30s) are currently renting for $1200 a month but are becoming increasingly seduced (and almost peer pressured!) into buying a single home with a backyard in suburbia. We make about $120,000 together, have about $15,000 in savings, and no debt. We are confused!!!! And also maybe too poor to actually afford something now that I am actually looking at those numbers that I just typed on my screen. My parents tell us that we need to buy a house in order to save money. If we keep renting we will have nothing to “to show for it” in 25 years. My real estate agent tells me that this is a great time to buy, as apparently prices will NEVER go down in Ottawa. Help! We don’t know what to do.”

So two young people without enough money to buy a new minivan are actively considering purchasing a SFH (Ottawa average residential price, $373,756). Not only are parents rooting for it, but a realtor’s guaranteeing prices and you can bet there will be lots of banks ready to hand over 95% financing. Why wouldn’t the virgins be confused? Most of the authority figures in their lives are telling them to grow up and get mortgaged.

It’s this societal mania which helped create the situation we now have – where real estate has exploded in value, people in each city say ‘it’s different here’, and first-time buyers lust for a suburban spread nicer than their parents own. How is this sustainable?

It’s not. And here’s a new report from Pacifica Partners which underscores just what this pathetic and nasty little blog has been bleating about: A housing boom built on debt will not last.

“The decade long bull market in Canadian real estate has not been the result of ‘healthy drivers’ such as  income growth, growth of the economy, nor is it the result of housing scarcity.  In fact, housing price growth has outpaced wage growth and  GDP growth Instead, housing price appreciation has been made possible in large part due to rampant debt accumulation, both mortgage and personal credit.”

Below’s a nifty chart to prove it. Ten years ago (when houses were still affordable) household debt equaled 60% of the Canadian economy. Today that number has soared to around 90% – which means it doubled in a decade, after taking 30 years to double previously.

But hark! Is that a plateau on the top of that debt mountain? Does this mean F&C&the-Ps are finally having an impact, with warnings that excessive borrowing causes impotency and Vespa carb sputter? You bet. The evidence of slowing demand for loans and mortgages is mounting fast. Here’s another Pacifica chart to demonstrate:

So, if the real estate escalation we’ve experienced – the one that Kayla’s realtor says will continue – was caused by exploding levels of debt (and not income or job growth), what happens when borrowing flames out? If households aren’t racking up new debt as they were in the past, but earning no more money and shouldering fat payments, what’s going to finance all this real estate activity? How can it be sustained?

“Thus a lack of future debt accumulation by households implies that the key driver of past real estate performance may no longer be available to stimulate real estate going forward,” say the economists. This is not economic theory. It’s financial fact. Fires without fuel extinguish. And this is exactly why Kayla and her stud will end up with more debt than equity, and a mess of heartache, if they listen to the squirrelly people around them.

Ottawa is not different. Nor Regina, Etobicoke or Halifax. The declines and adjustments in every market will be local in timing and scope, but the direction is certain. Residential real estate is in trouble.

How much?

“We have attempted to quantify the necessary price drops to bring specific real estate back to historical average multiples of discounted rental income,” says Pacifica Partners.  (Our) findings indicate a required 30% to 40% correction in home prices in some major Canadian markets to achieve a return to long run averages.”

Remember, the US was creamed by a 32% correction. Thank god it’s different here.

228 comments ↓

#1 The American on 07.27.12 at 7:09 pm

Can someone answer me this, please? In the U.S. it is illegal for a realturd to make any kind of speculative statement surrounding future value of the home, including whether or not a value will go up or down. The realturd may only provide a comparative market analysis (CMA), based on existing comps and prior sales. The prior sales within the CMA are typically within the last six months.

Are you telling me in Canada that realturds can actually make comments like “the real estate value on X property will never go down?” If they are indeed allowed to make this kind of commentary, they should be held accountable for making investment advice as a home, SFH or condo, is typically the largest “investment” a person/couple will make in his/her life.

#2 Meerrrrr on 07.27.12 at 7:12 pm

First…..

#3 Hoof-Hearted on 07.27.12 at 7:13 pm

ffffffffrriiirrsttttttt !

Or…..

#4 TurnerNation on 07.27.12 at 7:20 pm

Canada has the Wet Coast and the Leastcoast.

#5 Stinky the Fish on 07.27.12 at 7:28 pm

This post was rather stinky. Stinky in a good way.

#6 bingo on 07.27.12 at 7:28 pm

This market downturn, just let it roll man, let it roll!
No more government intervention which created the bubble in the first place. Government should not be a player in this (see CHMC which is a team in the game), but rather just a regulator. And a good regulator, not a bad one as it proved.

#7 Stinky the Fish on 07.27.12 at 7:31 pm

Where is that report saying that there would be a reduction of home buyers in 2012? Garth gets all the doofuses thinking it’s a good time to buy— Even with these new rule changes and more coming soon, are these kids insane?

It’s game over time. You, my friend, are invited

#8 Stinky the Fish on 07.27.12 at 7:32 pm

Lastly, why do I have this urge to eat a plantain?

#9 Smoking Man on 07.27.12 at 7:32 pm

Canadian housing growth a direct result of low rates, not wage gains

Now if you where to swallow the cool and think rates are going up anytime soon then the above conclusion is valid.

That’s not going to happen

Now what if rates don’t go up, they go down. fence sitters and savers are doomed. In the 416

lets face those who can’t pay the bills will drop the internet, then the iphone then the car before they take a hit on a house.

Your all canadian you should know this, not drunken clueless American Cattle.

Not going to happen here.

#10 Stinky the Fish on 07.27.12 at 7:32 pm

Oh ya, that’s right… the photo of plantains hugging each other.

#11 Stinky the Fish on 07.27.12 at 7:33 pm

You have some plantain stocks Garth? Subliminal messages. Very clever.

#12 oslec on 07.27.12 at 7:36 pm

first?? but i did read the article, really..

#13 sb on 07.27.12 at 7:41 pm

It took 4 years for the US market to hit the trough and it still really hovering near the bottom.

Harper really exacerbated the situation with his 40 year mortgages. What a great economist he is…

I hope he does not get a pass on this and ends up ruined worse than poor Mulroney. At least Mulroney tried to mitigate the deficit crises. Harper hasn’t done anything tough and he’s just setting himself to be on the corporate boards of big oil when he’s done.

#14 Nostradamus Le Mad Vlad on 07.27.12 at 7:41 pm


“But hark! How can it be sustained? Fires without fuel extinguish. How much?” — Yep, she’s sinking. ‘Twas a wild ride ‘tho!
*
#52 Calgary Resident — “. . . versus CREA’s excellent track record, and they laugh at you.” — “I laugh in the face of danger!” (The Lion King).

“Reality bites Garth. So does your track record.” — Well, let’s see (using round figures).

Assuming I suddenly came into $1 mln. next week, invested it in Garth’s 40-60 plan we would be enjoying a monthly income of $7,250 (+ / -), 80% or more of which would be in the tax avoidance bracket, and the mln. is averaging around 7%.

GICs and CSBs? Good for extra supplies of toilet paper, plus they’re fully taxable.

After making necessary adjustments in our lives to live with this new-found wealth, maxing out TFSAs in ETFs, paying a yearly management fee, it doesn’t look too bad from here, and we certainly wouldn’t have any complaints.

RE? That is the one aspect where I disagree, as my preference would be to rent.

The CPC are a bunch of controlled dronebots, who parrot verbatim what Harper says, accomplishing very little except nothing.
*
Pork and Chicken becoming luxury items? 5:11 clip “Crime pays. At least if you’re a banker.”; 1:49 clip New anti-Obomba sign; Johnny Paycheck Families struggling to get by, but there’s enough for more wars; GS and JPM “I don’t care if you made all the payments; we need that house now to stay solvent!” — Gold in my Sacks” wrh.com; TARP Bad To The Bone; Bubble Economy From NAFTA to collapse; Nationwide All going cuckoo now. The gods must be laughing; Big Banks Just like AT&T, break them up; UK citizens Most of them don’t want to be in the EU
*
Syria NATO backed rebels seen wearing gas masks, and Assad “BWAHAHAH! Unintended circumstances Erdogan! You screwed up and Assad just showed who the better chess player is!” plus Pakistan; Riot Gear Rates a hmmm; Aurora Police Chief Says a lot more about Rudy Giuliani; 4:45 clip Mexicans show how to protest; Mitt Romney A fine endorsement; 30 Days in Jail for collecting rainwater on his own property; Hackers Getting in Android phones; Sounding the Same Little creativity in the music scene nowadays; Fast (junk) food epidemic moving across Asia.

#15 T.O. Bubble Boy on 07.27.12 at 7:43 pm

Remember – corrections often overshoot… 30% to 40% is to revert to the mean, which could mean the bottom goes deeper.

The Canadian belief that house prices go up forever does seem pretty engrained… was the U.S. this drunk on HGTV house porn before their crash?

#16 Onemorething on 07.27.12 at 7:47 pm

Ottawa city and burbs 30% correction. It won’t even take federal job cuts to do that. Timeframe 24-36 months. Go save kiddies.

#17 oslec on 07.27.12 at 7:49 pm

My niece and her husband just sold their house in SE Calgary and guess what, UP graded to a bigger house for double their original mortgage. Why? because their 1800 sq. ft. house is not big enough for the two of them and a new baby.
Her mom believes there is nothing wrong with it even as she tells me first hand stories of her relatives across the border (USA) who have lost their houses and are financially ruined because of it. Whenever i try to mention a possible market correction she just gives the look and changes topics. I guess, ignorance is still bliss, And it is different here.
If i could delete all the info from this blog that is stuck in my pea brain, maybe i will achieve bliss :=)

#18 bruce on 07.27.12 at 7:51 pm

I remember my first mortgage payment in 1991 – $ mortgae was for 100, 000 over 25 years at 12% with a 5 year term – payments were $ 1, 200 per month

Now that bites – but it is reflective of real interest rates in real econmies – how long do we think folks who have saved, spent wisely and have earned nothing on their savings with unusally low rates in the Country for more than 15 years can hold their powder ? I think the Fed. Gov’t may have a real mess on their hands soon – these wise folk have nothing but time on their hands to effect change which is real

#19 Nubbers on 07.27.12 at 7:57 pm

Interesting comment about all the authority figures telling the young couple to get a mortgage. That was exactly my experience many ago when I got creamed in a previous housing bubble.

My mother said ‘here, let me help you’. My best mate said ‘house prices will never go down, just stay level for a while and then go up again’. The real estate agents said exactly what you would expect vested interests to say.

In those pre-internet days, there were no contrary voices to be Googled. No one saying ‘don’t be stupid’, you are going to loose your shirt, pants, socks and everything else’. If I had heard just one opinion that it was a bad time to buy, there would have been a good chance that I would have listened.

Keep hammering out the message on this pathetic, yet strangely alluring blog. I want to hear more stories about young people saved from debt slavery, rather than old gits (thats British for boomers) retiring on a mountain of unearned money.

#20 bruce on 07.27.12 at 7:58 pm

Savings interest rates at banks very low – house prices at unheard of highs. Consumer debt at all time highs.

The CMHC (ypou and me taxpayers) on the hook for hundreds of billions if people start handing their house keys to their bank managers like what has happened before when the market seriously tanks.

We certainly live in interesting times….

#21 Ken on 07.27.12 at 7:58 pm

Ireland was creamed by a 64% correction. Bulldozers have work as a result.

#22 Steve Thompson on 07.27.12 at 7:59 pm

As shown here, the market correction in at least one major U.S. city, Los Angeles, was far worse than the 32 percent average losses across the country:

http://viableopposition.blogspot.ca/2012/04/vancouver-vs-los-angeles-real-estate.html

Most Canadians would find themselves in very, very dire straits if housing prices dropped by anything approaching 45 percent.

#23 bill on 07.27.12 at 8:01 pm

hope itsn’t 40%…

#24 The American on 07.27.12 at 8:05 pm

At #13: SB, actually it has taken between 5 and 6 years for values to hit bottom in the U.S. Florida started falling hard in 2006 as the RE collapse made its way, generally westward across the states, eventually hitting the West coast. On the West coast, prices started dropping between March, 2007 and August, 2007. As I’ve said before, Canada’s correction will take several years to reach bottom, just as it did in the U.S. So, considering Vancouver is the “Miami” of Canada, prices are starting to erode there. I’d say the correction in Canada will not reach bottom until 2018 or later. This is why I cannot stress enough the reasons one should not buy, even if there is a 20% drop. The correction in Canada will be much greater.

#25 East Van on 07.27.12 at 8:07 pm

A prominent economist believes that the housing bubbles in Britain, Australia, and Canada are worse than the one that destroyed his country:

http://www.counterpunch.org/2012/07/26/the-trouble-with-bubbles/

#26 The American on 07.27.12 at 8:13 pm

Read this and learn why it is now too late to cool the market in Canada…
http://www.counterpunch.org/2012/07/26/the-trouble-with-bubbles/

#27 Trader on 07.27.12 at 8:13 pm

We sold our house this past spring, on the coveted Vancouver Island, after it being on the market for 9 months.

Now we rent. Money in the bank. Let me SHOUT out to all the people considering it… (because you are smart enough to see the correction coming)… renting is ideal right now!
Great places available, stupidly cheap compared to owning, and instead of your money tied up in a house. You can keep $$ liquid and safe.

Get the house sold… rent a while, see how things pan out… and appreciate that peaceful feeling.

#28 Toronto_CA on 07.27.12 at 8:18 pm

If they make $150k combined and can live in a $1200 a month rental, they’re doing fantastic. With their great DB plans (grr that we as the private sector have to make those plans solvent in the long run but good for them), they don’t even need to put much away for retirement. Just max TFSA’s every year to supplement and invest as Garth says, diversified.

Buying at the top of the RE bubble is not justified for them. We need social intervention to get people to back off bugging renters.

At the very least, prices will flatline for a while until they go back to historical income to price or rents to price levels. If interest rates ever go up or we hit a recession, they’ll go down. Why the rush to buy. At least save up so they can put 20% down on one of those $373k houses.

Thanks for the link Garth, I put that on my FB along with this great clip:

http://www.youtube.com/watch?v=78RO3bjdTXc&feature=player_embedded

Canadian icon Alanis singing “Bubble Trouble”. Fitting, no? Have a good weekend, RE bears.

#29 The American on 07.27.12 at 8:20 pm

At #25: East Van, we must be on the same wavelength! We posted the same thing at the same time.

#30 The American on 07.27.12 at 8:27 pm

When prices correct acos Canada, say an average of 30%+, Canadians will lose in excess of $115,000 of their “net worth” from real estate values alone. This does not even take into account the additional and significant losses of wealth that will also result within one’s portfolio, stemming from economic woes of the real etate collapse. Reports on Canadian wealth are as a result of artificially inflated values on paper from real estate. It has nothing to do with liquidity and portfolio. This will end horribly.

#31 george on 07.27.12 at 8:42 pm

Latest Canadian household credit numbers (to the end of June 2012) from the Bank of Canada:

http://credit.bank-banque-canada.ca/householdcredit

Latest Canadian business credit numbers (to the end of June 2012) from the Bank of Canada:

http://credit.bank-banque-canada.ca/businesscredit

#32 Jon on 07.27.12 at 8:49 pm

Suz Orman, who I think often gives pretty good advice, said that a couple that can’t save the 20% down payment for a home does deserve to own one.

If you are in your early thirties and make $120k a year you should have more saved up then $15k. You clearly aren’t militant enough about your spending.

#33 nocte_volens on 07.27.12 at 8:56 pm

Dear Garth:

I desperately need your advice. I am a (insert your age and gender) who is married to a wonderful (man, woman, alien, other). (He, She) wants to purchase a house, but I am not sure that this is the right time. We both have good (jobs, hygeine, imaginations) and have managed to save (nothing, $1.25, $800,000.00, other). I think we should (invest the money, take a vacation, donate it to scientology). My (significant, insignificant) other says (he, she) needs a house because we have 2 (children, puppies, goldfish) with another on the way. Should we buy the lovely (condo, townhouse, mcmansion, Boeing) for $1.2 (million, billion)? My other says that renting is for (losers, poor people, readers of this pathetic blog) and (he, she) doesn’t want to be a loser. My (mother, father, shrink) says that (he, she) is already a loser, but that’s another story.

Please Garth, we desperately need (your help, your advice, a good smack alongside the head). Please respond because I desperately need (validation, a spanking, a life).

Thank you.

Mr./mrs./miss/ms./dr.

House Horny Real Estate Loser

ps. why do people keep asking you the same %$## question and expect a different answer?

Because they’re all special, like snowflakes. BTW, that letter was very revealing. — Garth

#34 Ryan on 07.27.12 at 9:05 pm

United States Average House Price — $180,000 USD

Canada Average House Price — $370,000 CDN

PPP Currency Value — 1.20 CDN/1.00 USD

Assuming the United States and Canada are equally wealthy countries and US housing is now fairly priced

Approximate Canadian Real Estate Fair Value = $220,000

Projected Approximate Nationwide Decline is Canadian Housing Values — 40%

Is this analysis fair?

#35 Hoof-Hearted on 07.27.12 at 9:06 pm

So yesterday was another intriguing day for real estate sales statistics.

http://whispersfromtheedgeoftherainforest.blogspot.ca/

The entire Lower Mainland only produced 94 sales. In Greater Vancouver that number was a stunningly low 59 sales.

Incredibly 19 of those 59 sales were executed pre-July 9th, part of the glut of activity in the rush to meet the new mortgage rule deadline (and thus caught up in a backlog of CMHC approval).

Only 40 of those sales were post-July 9th. (hat tip zrh2yvr).

The bottom line is that post-July 9th sales have been amazingly weak.

Year to date West Vancouver sales are trending to be down 48.7% from the first 7 months of last year. Richmond is trending to be down 46.2%. And the west side of Vancouver is trending to be down 41.1%

The weak daily numbers lately have us on track to have the worse July in over 11 years, even worse than July 2008.

Can you imagine what those numbers will be if the post-July 9th trend continues for the rest of the year?

Total Vancouver Market Inventory

Jan. 3, 2012: 10,671
Feb. 1, 2012: 13,368 (+2,727)
March 1, 2012: 14,912 (+1,544)
April 2, 2012: 16,o74 (+1,762)
May 1, 2012: 17,122 (+1,048)
June 1, 2012: 18,575 (
+ 1,453)
July 3, 2012: 18,818 (
+ 244)
July 4, 2012: 18,894
July 5, 2012: 18,972
July 6, 2012: no update
July 9, 2012: 19,053
July 10, 2012: 19,140
July 11, 2012: 19,103
July 12, 2012: 19,135
July 13, 2012: 19,208
July 16, 2012: 19,179
July 17, 2012: 19,148
July 18, 2012: 19,180
July 19, 2012: 19,208
July 20, 2012: 19,287
July 23, 2012: 19,279
July 24, 2012: 19,272
July 25, 2012: 19,308

July 26, 2012: 19,357 (+ 539 so far this month)
==================================

Owwww…my eyes……that number is painful to just read.

#36 nocte_volens on 07.27.12 at 9:24 pm

Because they’re all special, like snowflakes. BTW, that letter was very revealing. — Garth

I don’t think it was any more Freudian than that naughty picture you posted.

#37 Dan7 on 07.27.12 at 9:30 pm

S&P cuts outlook on 7 Canadian banks

http://www.theglobeandmail.com/globe-investor/sp-cuts-outlook-on-7-canadian-banks/article4445550/

#38 45north on 07.27.12 at 9:34 pm

Steve Thompson: Most Canadians would find themselves in very, very dire straits if housing prices dropped by anything approaching 45 percent.

as the value of their houses fall, home owners default on their mortgages, Mark Hanson has made a study of this.

Jim Flaherty and I were at the GM plant in Oshawa this afternoon – he told me that prices will drop 10% and he can live with that.

#39 lee on 07.27.12 at 9:47 pm

Your readers are insane if they think they are going to pick up a million doillar home for 500000 to 600000 anywhere in toronto. You’re a dreamer garth.

Where did I say that? — Garth

#40 taylor192 on 07.27.12 at 9:50 pm

Garth,

To be fair Ottawa has not seen a year where prices have fallen more than 3% in 50 years:
http://www.agentinottawa.com/1956_-_2011_Prices/page_491704.html

and rent is almost equivalent to buying thanks to low rates. The mortgage and property taxes on a $300K townhome is $1700 (5% down, 3.5% fixed) vs $1500 to rent (in Kanata). By owning you’re paying down $600 of principal vs putting $200 in the bank.

That said, it is scary to read that prices in Ottawa have outpaced Toronto, if only slightly (24% to 23%), in the past 4 years.
http://www.cbc.ca/news/canada/sudbury/story/2012/07/24/sby-north-leads-home-sales.html

as Ottawa is usually conservative compared to bubbly Toronto. This is especially worrisome as 1 in 3 Ottawa work for some level of government. Government is laying off not hiring, and hiring/salaries have been frozen for a few years. So where did the money come from to increase prices 24%?

We all know the answer, low rates and loose rules, so I sold my house last year and wouldn’t recommend buying… yet if you look at all the numbers for Ottawa you can see why the advice to buy is hard to ignore.

I wish real estate stats were more available for Ottawa, like Vancouver (where I live now, and rent). Word on the street is nothing is moving in Ottawa and inventory is piling up, which is in stark contrast to a usual July in Ottawa that sees sales almost as high as June (June is the best month for Ottawa sales) while listings drop off.

#41 Controller on 07.27.12 at 10:02 pm

#33 nocte_volens — BEST…..COMMENT…..EVER !!
Nicely Done.

#42 mid-Ontario on 07.27.12 at 10:08 pm

#33 nocte_volens
There is a similar pattern that continues to baffle me particularly after they idicate they have been reading Garth’s blog for a while.
As for the revealing, your “handle” says it all.

#43 Grim Reaper/Crypt Speculator on 07.27.12 at 10:13 pm

WTF is a nocte_volens ?

Is that a Vespa for red haired midgets?

#44 Parked | The Retiring Boomer™ on 07.27.12 at 10:13 pm

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

#45 Superman on 07.27.12 at 10:23 pm

Richmond MOI is approaching 30

#46 Devore on 07.27.12 at 10:25 pm

My real estate agent tells me that this is a great time to buy

Would you ask a car salesman whether it’s a good time to buy a car? Or a barber whether you should get a haircut?

#47 DUI on Money Road on 07.27.12 at 10:31 pm

Kayla, your housing costs will almost double if you buy now, and you’ll only build equity at a rate of a few hundred bucks a month. Mortgage – 1600
Property tax – 300
Maintenance – 400
Water hydro gas will be more expensive too.

Ps…fire your agent. Mine in Ottawa just told me the market is dropping.

#48 Canadian Watchdog on 07.27.12 at 10:35 pm

For those who are not aware, 80-90% of distressed mortgages, foreclosures and power of sales end up filing for consumer proposals which do not show up in CBA’s mortgage in arrears stats because they are filed as ‘other’ debts with the credit bureau.

CBA’s mortgage in arrears is what it is, another false statistics to mislead the public from banks bad assets.Hence S&P’s outlook change as a near future downgrade is imminent.

May 2012 Consumer Proposals Statistics http://strategis.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br02873.html

Year-Over-Year

Canada +5.0%
Ontario +9.4%
British Columbia +26.7%
Alberta +24.1%
Manitoba +40.0%
Saskatchewan -11.4%

There’s lies, damn lies, and statistics.

#49 Regan on 07.27.12 at 10:43 pm

#40 taylor192
Even assuming interest rates stay low for the (15-25-30?) year duration of your mortgage, the loan is hardly the only cost of owning a home. I spend $300/month in taxes. $200 utilities, another $200 in heat, insurance. Average $300 in repairs (although that’s usually spent as sporadic, larger chunks of cash). Not to mention sales fees and taxes, amortized as well over your stay in the home. Even when I’m mortgage free, my monthly cost will still run about $1000/month. Without including any capital cost. Without assuming anything about mortgage rates.
The biggest issue with renting seems to be that you can’t find comparable rental units in a lot of markets, but please don’t take the bare cost of a mortgage and compare to rent. Add another grand on top and run the math again. If the units in your example are like my house, a better comparison would be a $2700 home ownership with $600 going into equity, versus $1500 rent with $1200 in the bank.

#50 Spiltbongwater on 07.27.12 at 10:45 pm

http://vzaar.com/videos/924851

Garth, watch the short video and learn history is on your side. In 1991 it took 60% of a families budget to buy a home, now it is 40%. Seems like a savings of 20% to me.

Untrue. — Garth

#51 Paully on 07.27.12 at 10:46 pm

God should be written with a capital G.

#52 Smoking Man on 07.27.12 at 10:56 pm

Bubble heads you have known me for about 3 years I post almost everyday. Have I ever been wrong. Go to the archives find some dirt. You won’t. So I can’t spell who cares. Sitting next to a univercity of TO prof on the train today.The Happy girl mind you he had a beard and a buldge was texting his dauter. Lol lmao all those none words. I asked him what he taught. Engish lit. I rest my case so when texting any thing goes. But all elsE has autority and rules.

Blow me.

Rates will be in the basment for ten years.

Bubble head make your move in Dec go all in and buy

You won’t be disapointed. Only 416

#53 Mic D'angelo on 07.27.12 at 11:05 pm

The B.C. 4.30% maturing 2042 june-18 $120.48 yielding 3.23%, Ontario 3.50% maturing 2043 June-2 $102.68 yielding 3.36%, Quebec 4.25% maturing 2043 December-1 $113.85 yielding 3.55%, Quebec-Hydro $63.78 maturing 2025-August-15 yielding 3.48%, Ontario $40.90 maturing 2037-December-2 yielding 3.59%, Quebec $42.59 yielding 3.57%, Nova Scotia $62.69 maturing 2025 December-1 yielding 3.56%, B.C. $50.76 maturing December-18 yielding 3.55% all yields jumped 8 to 13 basis points since last week July-20-2012. Government bond yields still remain at historic lows Canada 3.50% maturing 2045-December-1 $127.46 yielding 2.31%. Even if you look at one of the highest quality corporate bond like Hydro One 4.39% maturing 4041-September-26 $111.73 yielding 3.73% is still low compared to just 12 to 18 months ago. Now, next week is July’s U.S. non-farm payrolls report and for sure another low growth in jobs for July-2012 less than $80,000 jobs. Canada’s job market is not going to be that good either for July-2012.This will make treasury bond yields and our Canadian, provincial bond yields drop again. This rise in bond yields will not stay higher for long, Garth. GIC rates have not changed much with 1 to 3 year yields rising 3 to 8 basis points 2.35% is the highest 3 year GIC I could find July-27-2012.

#54 Jas on 07.27.12 at 11:06 pm

Garth, I honestly tried to counter all this negativity about the economy and real estate with positive thinking, but reality is reality. Also, you have always been the messiah. Why don’t you teach in a university? I would pay to be in your class.

#55 Sebee on 07.27.12 at 11:07 pm

Communists assigned a place to live to citizens. Housing was designed as a community. I knew all the kids in the blocks and could tell you today where 40-50 kids lived. We all played together in the well designed huge playgrounds where any of our parents could see us, and people were neighbours. Here, it’s I want a bigger house. This is my house, my property. This is my back yard, my fence. Something is broken is broken with our selfish greedy ways. And something is certainly broken with the urban design. It’s all about optimized space not livable space.

I’m not saying that comunism was better. But neither is the way we live here. Not to mention the debt slavery. Is debt slavery that much worse than freedom-less communism?

#56 Stinky the Fish on 07.27.12 at 11:12 pm

Hey Canadian Watchdog. I like it when you explain your posts like that. Keep up the good work.

#57 Mic D'angelo on 07.27.12 at 11:18 pm

The Hydro One 4.39% $111.73 is maturing 2041 September-26 yielding 3.73% high quality corporate bond. It is not maturing 4041 September-26 it was a typo mistake, Garth. You will see bond yields will not go higher for long over next decade at least.

#58 FTP - First Time Poster on 07.27.12 at 11:24 pm

We could take a 40% haircut and still break about even. If that weren’t the case, we would have sold long ago. The attitude of over entitlement is about to come crashing down around the ears of pretty much everyone I know and I can’t say I feel badly for them. We all wear big boy and big girl pants. Time to pay the piper.

#59 Al on 07.27.12 at 11:34 pm

One of these days, we may see a class action lawsuit against the Bank that keeps saying “you’r richer than you think” when they now that is not the case but want to incite people to borrow and spend.

#60 Hoof-Hearted on 07.27.12 at 11:38 pm

#45 Superman on 07.27.12 at 10:23 pm

Richmond MOI is approaching 30
==============================

Superman..do you have a link to your info?

Thx.

#61 Nostradamus Le Mad Vlad on 07.27.12 at 11:52 pm


Ask The Readers Should I buy a new home? So much for peak oil Try a glut of oil; EZone Recession be damned! A depression is coming, out of which The Fourth Reich will appear; Spain Plenty of jobless, along with Greece and Italy; China + Latin America = Worried America? About what? 2:08 clip US banks haven’t paid bailout money back (yet).

Cdn. Friday links and other stuff; Delta closing Comair in Sept.; College Grads Underemployed or jobless; 15:34 audio clip Japanification; Budget Deficit Strange. He’s been in charge for four years now. Is that a coincidence? Corporate Profit Earnings; Small Clip Origins of Tent City, NJ.
*
‘Net surfing incognito; Yoda exists! Or something like it; Bad Eating The UK, NAmerica and Asia, and Billion dollar junkies.

#62 zeemaan on 07.27.12 at 11:54 pm

hi garth

if cheap rates is what has caused the market to get to these inflated prices, then what makes you think it wont continue.
rates keep dropping, and new entrants are welcomed to canada(and they feel buying a house is mandatory) and prices continue to move up. this is what is needed to for markets to trend upwards….

#63 Smoking Man on 07.27.12 at 11:57 pm

One more. Not a condo. If you buy and need to cut grass in 416. It will be like the highlander swiping his sord but wait till Dec. Hopefully you will nail a track 6er

#64 nocte_volens on 07.28.12 at 12:02 am

nocte volens is latin for ” the cattle are dying” or something else.

#65 Smoking Man on 07.28.12 at 12:04 am

DELETED

#66 My Head Hurts on 07.28.12 at 12:07 am

The Devil will take the hindmost (adjective
1. furtherest behind or nearest the rear; last.)

Fear and greed my friends, that’s it. Start looking at markets from their base. All the other noise is 90% crap.

People move markets, and emotions will move markets further than common cents, this is the base…emotion!

The RE market has been fueled by greed for the last decade…time is up, emotions will soon change from greed to fear, then you know what…they is gonna switch back and forth again and again and again and…

Cyclical, that’s what RE is. Simple, easy peasy, Lemmon squeezy…buy at the bottom, if you’re lucky you will sell at the top.

Oh ya, one more thing…debt sucks. So, buy at the bottom and don’t buy too much stupid house.

Ok, one last thing…only buy if it’s equal or less than renting.

Keep it simple, use your brain…I’m a dumbass and I gots it!

#67 Steph on 07.28.12 at 12:10 am

If you guys want to see a reverse bubble in action, follow TSLA.

The most shorted stock on Nasdaq.

Take a look. Really.

#68 Frank on 07.28.12 at 12:16 am

Actually Paully in the Jewish tradition it should be written G*d

#69 Jay Currie on 07.28.12 at 12:17 am

Once in a while I tote up the Currie fortunes and am delighted to discover that, while the assets are no great shakes but growing, the liabilities remain firmly at zero.

Renting, cash only, UsedVictoria and Craigslist, bikes not cars – what you don’t spend on crap and on monthly payments adds up fast.

I’d love to buy the house we are in but, frankly, it is dropping 10,000 a month in value minimum so I think I’ll wait.

Having “it all” right now at retail is insane. And, pretty certainly, a lot of that stuff is going to arrive on Used Victoria because people are downsizing/desperate/divorcing.

Living well and living frugally are not at all a contradiction. And the pleasure of having a family debt of zero is priceless.

#70 Smoking Man on 07.28.12 at 12:32 am

ThE delema. Do I supporet thE god of knowlage and morality suport the Smoking man that’s me

Or do I back the bubble heads. If I back the bubble heads no fear of retrubution against my fake name on here.

If I go with shit faced smokey some one might chirp me. Ahhhhh can’t have that for my fake name must lose crediibilty

Oh god what to do?

#71 Form Man on 07.28.12 at 12:34 am

#25 East Van

Excellent link

#72 Hurly on 07.28.12 at 12:35 am

#19 Nubbers on 07.27.12 at 7:57 pm
“Keep hammering out the message on this pathetic, yet strangely alluring blog.”

Like a car crash…you can’t look away!

#73 MC on 07.28.12 at 12:52 am

@ #51

I agree…but he does use a capital b to refer to Brother Carney.

#74 Stan on 07.28.12 at 12:53 am

Garth, how come the household debt going from 60% to 90% is called “doubled”? It’s rather oneandhalfed.

#75 Bobby on 07.28.12 at 12:55 am

For #39 Lee,

Come on out here to Victoria. There are lots of condos that once were listed for 1 million and are floundering at under 550k. Bear Mountain, Aquattro to name a few.

Imagine if you were one of the original buyers. Oops, didn’t a realtor say prices never go down.

#76 woper_holic on 07.28.12 at 12:55 am

@#39lee

Your readers are insane if they think they are going to pick up a million doillar home for 500000 to 600000 anywhere in toronto. You’re a dreamer garth.

—————————————————————————–

History has a funny way of repeating itself.

#77 dangeresque2 on 07.28.12 at 12:59 am

Kayla, think of it this way…

Mortgaging is a game, and you play it with billion-dollar companies who have been in business for 150+ years. Do you think that they would be playing the game with new home buyers like you, if they thought they could lose? Even a dime? Of course not.

I bought in Edmonton 4 years ago with the same mindset and peer pressure, so I thought I’d share this story again. I just sold the same condo last week, for less than what I bought it for… 4+ years ago. Real estate always goes up? Bull****.

Went skydiving last week the day after the close… My friends say that I’m crazy, I tell them: skydiving? You should try a mortgage!

All those people “helping” you – they are doing so for selfish reasons, they want to get a commission or brag about you at the next family gathering.

You say no debt – that’s a natural high – these banks are crack dealers, they just want to get you hooked, because you’re hooked for 25 years!

Remember, you are volunteering to get into this, no one is forcing you. You have to come under your own will and honestly believe that the house is worth the money. In Alberta, when you are buying, your lawyer makes you sign something to that effect – again, to cover their ass, not yours. I could go on.

If you want a life lesson, do it! I valued mine, but sure as hell overpaid for it!!! Mortgage shredding day? Nope, I’m burning it!

#78 The American on 07.28.12 at 1:10 am

At #39: Lee, you can call me a “dreamer.” I’ll bank you my left nut you’ll be eating crow within 72 months. I’m happy to make a public wager and exchange information if you’d like.

#79 soho def.n;f';.n.e. on 07.28.12 at 1:11 am

new land lordy making us pay for water,cold water/ass./\/\’; just because it was free to get a meter installed.the city was conning everyone ,’ it will cost you hundreds later.this was over ten years a go.top it all off it’ s boopeep land.we live on a f;’\ flood plain.typu classes soon.done index only.

#80 Canada Disaster Story on 07.28.12 at 1:16 am

I have been following Garth’s blog and agree with many of his commentaries. Just some of my feedback:
– worked for major player in the forest industry for 15 years and the industry got decimated in 2007 pre financial crisis. For instance approximately 40 particle boards mills (OSB) were running 24/7 printing money so to speak and now down to less than 10 mills accross Canada. I view the housing recovery when more of these mills start to fire up production which has not occured over the last 5 years. One mill in northern AB built for 250 million in 2007 remains idle after running for one year. This tells me even the US housing market still remains weak at this time.
– the Canadian Housing across the country is in unknown territory and a comment from this blog it is basically twice the US average. I agree the price should be around 220 K on average.
– had fortunate opportunity to travel across the whole country and it still amazes me there are housing areas i.e. Moncton, Thunder Bay, Windsor, that are substantially less than the major cities in Canada.
– I think this housing correction will be good for the economy going forward. The house prices have created many basement dwellers i.e. 20-40 year olds living in parents basements. Going back in time I don’t think this existed to this extent.
– the major topic going forward is how long this is going to last or bottom which is inevitable 3 yrs, 5 yrs, 8yrs. I do know one thing in stock market corrections the slide is quicker on the way down then up.
Interesting times going forward. I’m pro housing correction as this is healthy economically going forward despite short term issues. These house prices are unreasonable and ridiculous.

#81 Fred on 07.28.12 at 2:13 am

#51paully
god should be written with a capital g.

Whose god? Don’t force you fairy tales upon us.

#82 Confused by your math on 07.28.12 at 2:24 am

“Ten years ago (when houses were still affordable) household debt equaled 60% of the Canadian economy. Today that number has soared to around 90% – which means it doubled in a decade”.

That’s a 50% increase, not 100%.

#83 Humpty Dumpty on 07.28.12 at 2:26 am

The newest member of the Bananna Republic Gang…

From Natural Resources to Currency Wars w/Rick Rule & Jim Rickards

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

#84 B.Anchor on 07.28.12 at 2:32 am

http://www.demographia.com/dhi.pdf

Refer pg 12 for Canada

#85 syd on 07.28.12 at 2:46 am

no cooling down.

http://www.property-abroad.com/canada/news-story/canada-property-market-continues-to-surge-19317422/

#86 TRT on 07.28.12 at 3:18 am

This blog puts out a confusing message.

On one side, it says that Real estate is grossly overvalued in Canada, especially the major cities. On the other hand, it says values will barely budge in area codes like the 416.

Anyone else get that feeling??

#87 Brendon J. Wilson on 07.28.12 at 3:30 am

What I find interesting is that no one has commented on the biggest question that requires answering: how is it that a couple in their early 30s, $120K income, and no debt have only $15K in savings?

$120K less income tax is what, $90K in net after-tax income? Take out $14.4K in rent, you’re left with $75.6K. Take out a generous $2K a month for groceries, utilities, entertainment, etc. still leaves $51.6K a year they could be saving or investing…even if I’m off by 20%, that would still leave ~$40K for savings in the last year alone.

While I’m sure they didn’t have a combined income of $120K in their late 20s, that still doesn’t explain having only $15K in savings.

These guys are not “poor”…where did all their money go?

All I can think is that they had to pay off a lot of student debt?

#88 Piccaso on 07.28.12 at 3:40 am

THE PARTY IS OVER

July 27, 2012, 5:26 p.m. ET
S&P Cuts Outlook to Negative on Seven Canadian Banks

TORONTO–Standard & Poor’s Ratings Services dropped its outlook to negative from stable on seven Canadian banks, including four major ones, because of lofty housing prices and high consumer debt.

S&P lowered its outlooks on credit ratings of Royal Bank of Canada (RY), Toronto-Dominion Bank (TD), Bank of Nova Scotia (BNS), National Bank of Canada (NA.T), Laurentian Bank of Canada (LB.T), Home Capital Group Inc. (HCG.T) and Central 1 Credit Union to negative from stable, the New York debt-rating firm said Friday.

“A prolonged run-up in housing prices and consumer indebtedness in Canada is in our view contributing to growing imbalances and Canada’s vulnerability to the generally weak global economy, applying negative pressure on economic risk for banks,” S&P said.

http://online.wsj.com/article/BT-CO-20120727-716313.html

#89 Piccaso on 07.28.12 at 3:48 am

S&P cuts outlook on 7 Canadian banks

Published Friday, Jul. 27 2012, 5:14 PM EDT

“A prolonged run-up in housing prices and consumer indebtedness in Canada is in our view contributing to growing imbalances and Canada’s vulnerability to the generally weak global economy, applying negative pressure on economic risk for banks,” the rating agency stated in its decision. “Growing pressure on banks’ risk appetites and profitability arising from competition for loan and deposit market share could also lead to a deterioration in our view of industry risk.”

The dimming prospects for the global economy added further impetus for the change, because Canada could see unemployment rise, further constraining income growth. That, in turn, could make it harder for Canadians to pay off their debts and amplify the country’s vulnerability to a housing market correction at some point in the future, the agency said.

The negative outlook recognizes that Canadian banks could see their financial performance and capital levels hurt by these factors, and could also suffer from stiffer competition among one another for loans as consumers try to tackle their debt loads.

House prices have roughly doubled over the past decade while, relative to GDP, consumer debt has risen from about 70 per cent to more than 90 per cent, S&P pointed out. And it suggested that Ottawa’s actions have not done enough to stem what could be a significant problem for the economy. “Successive government efforts since 2008 to counteract the stimulative effect of low interest rates on consumer borrowing and home prices have done less than we expected to counteract the growing level of consumer leverage and housing market risk in Canada,” S&P said. The agency is now watching to see if the most recent moves that the government has made will have better results.

http://www.theglobeandmail.com/globe-investor/sp-downgrades-7-canadian-banks/article4445550/

#90 Ryan Perich on 07.28.12 at 3:58 am

@ spiltbongwater
1. realtor untrue spin.
2. in 1991, it took 60 % of a families income for the year to buy the home outright, where mortgages 15-20 years were common.
3. in 2007-2012, it takes 40 % of a family’s monthly income to pay the mortgage for the next 40 years to buy a home.

#91 daystar on 07.28.12 at 4:43 am

#46 Devore on 07.27.12 at 10:25 pm

Good point.

#92 Freedom First on 07.28.12 at 4:55 am

Thank you Garth and all of the dogs supplying links to videos and written articles, especially you, Nostradamus…..really enjoy your ongoing links…..great!

I have to say that after today, reading Garth, watching the videos, and reading the links, and having followed Garth’s blog for a long time, today I have the worst feeling of empathy, and compassion, truly sad and disheartening knowing what is going to happen in Canada over the next few years in our RE market. All of the warnings to Canadians, from so many valuable sources, and still, to late, as so many have swallowed the kool-aid. Terrible tragedy is, the herd infecting the herd, and even some by their relatives……people they used to trust. There will be many divorces, resentments, and ruined relationships, even with family members. I sincerely feel bad about it. Hard not to unless someone truly hates people.

#93 yorel on 07.28.12 at 7:02 am

The term “first house” says it all.

#94 betamax on 07.28.12 at 7:30 am

#33 nocte_volens — best comment ever. Brilliant.

#95 House on 07.28.12 at 7:32 am

The real question Kayla should answer is what is she doing with $120,000 per year if she has no savings to show. And does she want to stop those expenditures to buy a home.

#96 Mr Buyer on 07.28.12 at 7:35 am

#84 TRT on 07.28.12 at 3:18 am
This blog puts out a confusing message.

On one side, it says that Real estate is grossly overvalued in Canada, especially the major cities. On the other hand, it says values will barely budge in area codes like the 416.

Anyone else get that feeling??
…………………………………………………………….
not really. prices will crash everywhere

#97 bigrider on 07.28.12 at 8:19 am

#9 smoking man-

Your comment about Canadians dropping everything that has a bill attached to it before they drop the house is valid.

I am quite sure that Canadians, especially new ones, would sell there cloths and go nude on the street before they gave up the GOD centric house they own.

The sickening obsession with home ownership in Canada so deeply ingrained in the psyche that it has become instinct.

#98 bigrider on 07.28.12 at 8:26 am

#39 -lee

What part of China you from?

Have you bought in Rich man Hill yet?

#99 Keeping the Faith on 07.28.12 at 8:34 am

#39 lee

we actually think it will be $1M home for 500K and sellers “must cross that field, present himself before this army, put his head between his legs, and kiss his own arse”

#100 Bottoms_Up on 07.28.12 at 8:42 am

#85 Brendon J. Wilson on 07.28.12 at 3:30 am
———————————————–
The real question, as you point out, is how long have they had those jobs? If they are recent acquistions, such as within a year or two, that would definitely explain the lack of savings.

Also — car expenses can be very high (payment, gas, maintenance, insurance etc.), and also pension contribution takes a significant chunk out of monthly wages. Same with public transit and animals if they have any.

#101 Uki on 07.28.12 at 9:02 am

#51 Paully on 07.27.12 at 10:46 pm
God should be written with a capital G.

I agree, otherwise it is a disrespect.

To #79 Fred :
Go somewhere play with your primordial soup.

#102 Herb on 07.28.12 at 9:20 am

#90 Freedom First,

and it will be all the victims’s fault. Oh yeaaa …

#103 This is Wonderland on 07.28.12 at 9:24 am

Unbelievable! I would have never dreamed of asking my parents to buy me a house and I think if I did my dad would have laughed me out of their house.

My House, Your Money reveals what really goes on behind closed doors as prospective homebuyers turn to their extended family members for financial help in order to land their dream home.

http://www.cineflixproductions.com/shows/98-My-House-Your-Money

#104 TurnerNation on 07.28.12 at 9:24 am

I’ve always thought of this guy as the most lightweight Dragon. Is he pumping his dying Whistler holdings?
Lame value propsition.

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/dragons-den-star-reveals-why-hes-still-bullish-on-real-estate/article4440139/

“I’ve been in and out of three properties in Whistler since 2001 and that market has been very good to me, because I’m very bullish, in real estate in general, and more specifically on the resort real estate market,” he says.

Croxon is an avid skier and while living in Whistler for about two years he decided to educate himself about the real estate market there. “I learned the market well enough so I thought I could be safe in terms of buying a place to stay and so I added a couple of more places just as pure investment. It turned out to be right for a period of time.”

#105 Daisy Mae on 07.28.12 at 9:58 am

“Remember, the US was creamed by a 32% correction. Thank god it’s different here.”

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

F&C&the-Ps aren’t patting themselves on the back, are they? That would be a huge mistake after all their previous dumb-ass decisions they’ve made that got us into this mess….

#106 OttawaRenter on 07.28.12 at 10:03 am

#80 Confused by your math on 07.28.12 at 2:24 am
“Ten years ago (when houses were still affordable) household debt equaled 60% of the Canadian economy. Today that number has soared to around 90% – which means it doubled in a decade”.

That’s a 50% increase, not 100%.

I presume he’s referring to the total amount of household debt–the economy has grown over the last 10 years so its 90% of a larger number.

#107 X on 07.28.12 at 10:10 am

Most people are morons. They will borrow as much as they can, finance for as long as they can. They brag about their low rate. Who cares, if you are 70 and still paying it off, does it really matter.

They shoudl consider raising the minimum down payment required as well as eliminating the cash back mortgages.

The US had rates too low, for too long. I am doubtful C will fall into this trap.

#108 OttawaRenter on 07.28.12 at 10:20 am

#86 Brendon J. Wilson on 07.28.12 at 3:30 am

I don’t know the specifics of Kayla and her hubby’s situation, but when I read her story I laughed at how similar it was to that of my wife and I. We’re also in Ottawa, early 30s, renting, with combined income around $120k and we have around $20k saved.

However two years ago we had nearly $40k in combined student debt which is now all paid. Including pension contributions at work we’ll be saving about $40k this year.

No chance we’ll be buying a house any time soon.

#109 ts harpoon on 07.28.12 at 10:25 am

Garth,

Message for Kayla & Co.:

$60,000 +/- per year to own, maintain and “exist” in a suburban Ottawa neighbourhood. Two adults, one child, one dog. Two cars, 30 year old home at 2400 sq.ft., 2 gov’t jobs. Costs do not include travel vacations, gifts and charitable contributions, prescriptions, subscriptions,
RSP/REP contributions, savings, hobbies and cash for the canvassers, etc. etc.

Jump on board and hope for the best, like we did.

#110 Ogopogo on 07.28.12 at 10:28 am

The rise of the American “super renter”:

http://www.nytimes.com/2012/07/29/realestate/big-deal-sky-high-as-in-the-rent-check.html?hp

Americans have figure out the joys of renting, even at the highest income levels. Why haven’t we?

#111 Dan in Victoria on 07.28.12 at 10:45 am

Bobby @75
We sold in Victoria a little over a year ago, figured it was the top so we sold.
Just went to visit one of our old neighbours last week, drove by an exact same house as ours 3 blocks over from our old one. Was for sale, asking $110,000 less than what we sold for.

#112 Daisy Mae on 07.28.12 at 11:04 am

18 bruce
“I remember my first mortgage payment in 1991 – $ mortgae was for 100, 000 over 25 years at 12% with a 5 year term – payments were $ 1, 200 per month…”

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

I remember my first mortgage in ’68 — $108 per month, PIT. Total cost: $12,500 for a 25-year-old small 2-bdrm. Our expectations were reasonable for newlyweds.

#113 paul on 07.28.12 at 11:40 am

Whats wrong with you people, whats the rush to get into a life time long debt.
You dont buy on a small pull back unless you know prices will continue to rise long term. Housing in Canada have only one direction to do, DOWN hill. Look at America, they are debating every year if it really has bottomed yet.
We have a long way down, the question is not the distance down but the time frame its going to take.
You can not trust media on a small pullback ( “buyers market now” ) In the future when the worst is behind us, they will mislead us about “it has bottomed” ( America ).
Housing needs to become affordable for the average Joe first, but AFTER the beating, people will be afraid of debt even if the bottom has been achieved. On top of that, we do not know at that time, what the unemployment rate will be, what economic cyle we will be in, etc.
I live in Surrey B.C where prices are extremly expensive and been waiting for about 5 years for the buuble to burst.
So relax and wait a few years or you can be a greater fool and a victim of vultures. Either way no love lost here.

#114 T.O. Bubble Boy on 07.28.12 at 11:54 am

$1.2M for a “great lot” (down 40% from $2M just 4 days ago?), and the realtor even adds “The Current House Is Completely Livable” – almost sarcastically:
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=12238919&PidKey=676782940

#115 Once Upon a time... there were someone called REALTORS on 07.28.12 at 12:04 pm

#33 nocte_volens

Thats an awesome job…!

Garth,

Thanks for giving me peace everyday!

Keep up the great work..!

#116 T.O. Bubble Boy on 07.28.12 at 12:11 pm

Here’s another great bubble property – flipper runs out of money, then offers “Will Complete Work, To Buyers Speifications From Owners Samples”…

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=12254755&PidKey=-1066396360

#117 coastal on 07.28.12 at 12:27 pm

We sold in Victoria a little over a year ago, figured it was the top so we sold.
Just went to visit one of our old neighbours last week, drove by an exact same house as ours 3 blocks over from our old one. Was for sale, asking $110,000 less than what we sold for.

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

Dan in Victoria,

What you saw is the reality in Victoria, not the fantasy the agents and the VREB want you to believe. I read one agent say “I’ve been waiting 5 years for the correction”, as if there have been zero price decreases. When you show examples like yours, you are accused of cherry picking or the house was “over valued” and they “got lucky”.

The slimy crap these agents are spewing out is at record levels. They are in full denial that the market is the Titanic that has hit the berg and taking on water. Young and dumb, plus old and greedy make for the exact ingredients of a market crash. Distribution has been going on for over a year, classic market top action before the big drop.

#118 Tony on 07.28.12 at 12:32 pm

Re: #39 lee on 07.27.12 at 9:47 pm

No one said overnight but facts are facts that one million dollar house will drop to 600 grand. It’s just a question of how long or how fast.

#119 Snowboid on 07.28.12 at 12:37 pm

#111 Dan in Victoria on 07.28.12 at 10:45 am…

Our experience too, only our former neighbour has now taken their home off the market.

“It will improve in the spring of 2013” – they said, as we quietly snickered under our breath!

#120 Hoof-Hearted on 07.28.12 at 12:52 pm

The house that tapped out a billionaire

http://www.theglobeandmail.com/life/home-and-garden/the-house-that-tapped-out-a-billionaire/article4446443/

But as things unravel, it’s hard not to see the Siegels as an extreme version of any family that spends too much and saves too little. Mr. Siegel admits, on camera, that he had never taken a penny out of the company, not even to set aside education funds for his many children, and had personally signed for all his business loans, meaning that if he loses his business, his family could be out on the street, too.

This surprised Ms. Greenfield: “I always thought people at the billionaire level would never be personally exposed on this kind of scale, that they would always have insulation to the vicissitudes of the stock market.”

The Siegels manage to be both the villains and the victims of the financial crisis, accusing the banks of being “pushers” who got them addicted to “cheap money” even as they themselves push time-share agreements on low-income families.

As Mr. Siegel tries to hang on to the PH Towers, a Las Vegas development that has become a financial albatross for his company, his wife attempts to reel in her spending, forsaking Versace for Wal-Mart and laying off some of the household staff. He, meanwhile, expresses his money worries like every dad in the world – by yelling at Jackie and the kids for leaving the lights on.

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

TRAILER

http://www.youtube.com/watch?feature=player_embedded&v=AdJYzgJ4CwI

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

The trailer is a bit campy…I think they are trying to evoke sympathy and help pay off the mortgage.

However no sympathy…the irony is they got caught up as both victims and perpetrators of predatory lending .

I see in 5 years either he croaks or she ditches him

#121 TimV on 07.28.12 at 12:59 pm

Ottawa – this buy a house and save is so questionable. Nothing induced my wife and I to save as effectively as knowing that every purchase was money we would not be able to spend on a home. Initial indications are we won’t save nearly as much now that we own, since there’s no longer any incentive. Unfortunately, our peak savings occurred at the same time as the peak bubble (such is life!). You may have better luck.

(Yes, we do now save the imputed rent on our home, but the imputed rent exceeds our actual rent from before we bought, so it’s not really a savings).

#122 Grim Reaper/Crypt Speculator on 07.28.12 at 1:05 pm

Just remember..some of the biggest fortunes were made in the Depression taking advantage of opportunities..even the Civil War.

I remember this young buck Cosmo Doppleganger

Quite bright…but wouldn’t shut up…kinda a know it all.

He interrupted Abe Lincoln’s Gettysburg Address with his own version….partied wit Karl Marx…..advised JD Rockefeller….but his BUY on Horse and Buggies created the Depression

Anyway…the deal was if he would STFU…I would leave him alone….but the the bugger also went into hiding..some basement suite….. and I have to get him ASAP..he is getting over -ripe.

I heard he is on this blog….Initials are S.M. …….sorta like the Lori Douglas judges off duty perks….

#123 eagle eyes on 07.28.12 at 1:23 pm

#85 Brendon J. Wilson on 07.28.12 at 3:30 am

$120K less income tax is what, $90K in net after-tax income? Take out $14.4K in rent, you’re left with $75.6K. Take out a generous $2K a month for groceries, utilities, entertainment, etc. still leaves $51.6K a year they could be saving or investing…even if I’m off by 20%, that would still leave ~$40K for savings in the last year alone.
_____________________________________

$1200/ month for rent?
$2000/ month for all expenses and pocket money for 2 adults?
I don’t know where you’re living, but in the real world you’re really off.
Real world expenses:
$1600/month rent
$ 300/month insurance on 2 vehicles
$ 300/month on gas
$ 500/ car payments or lease on 2 vehicles
$ 300/month cable, telephone, hydro, gas
$ 800/month groceries
$1500/month 2 adults spending
$ 50/ health insurance
$ 200/union dues, pension contributions, etc

$66,600 per year not including any annual vacations. $120,000 does not go a long way these days. That’s why Garth is right when it comes to high consumer debt. if one spouse loses their job, most people cannot pay their monthly expenses and you’ll see a fast downward spiral.

#124 Aussie Roy on 07.28.12 at 1:23 pm

Aussie Headlines

Developers say “where did the HAM go?”.

or

If we discount prices then the banks will revalue our unsold holdings demanding more equity from us, much better to give away, “stuff” and write it off as marketing.

DEVELOPERS are slashing apartment prices and handing out tens of thousands of dollars in incentives – including rebates, cars, furniture and holidays – to lure buyers into Melbourne’s new-unit market.

While many industry players say the offers are good news for buyers, others worry that the discounting could fuel a ”race to the bottom” that could harm property prices.

Bottom, what bottom, No bubble here?…..

http://www.theage.com.au/business/property/gifts-galore-boost-flagging-unit-sales-20120728-233eo.html

Deleveraging consumers with rising living costs, want, “cheap, really cheap”

THRIFTY shoppers are no longer chasing value for money – they just want the lowest possible price.
This is the theory driving the latest campaign in the war for the discount dollar.

It comes from research by budget retailer Big W, which is making an aggressive bid to increase sales – slashing prices by up to 50 per cent.

Tonight it will launch a new television commercial to convince shoppers it is the best buy in the country, featuring the slogan

“Everyone’s a winner with Australia’s lowest prices. Cha-ching.”

http://www.news.com.au/money/cost-of-living/cheap-beats-quality-for-australian-shoppers/story-fnagkbpv-1226437468597

#125 mousey on 07.28.12 at 1:56 pm

Heard an ad on CKNW yesterday from one of the mortgage brokers that regularly flog their business on this station. Her words were, “It’s a buyer’s market and prices are low.” Are they low? Really? Is this person on drugs? Where are they low missy!

#126 gtaguy on 07.28.12 at 2:16 pm

#9 Smoking Man

Interest rate cuts are gonna do nothing to save Canada from a falling market just as it hadn’t saved any housing market in the world from a crisis. All that did was make the bubble bigger and make it worse once it does pop because at that point rates have no more they can drop.

#127 John on 07.28.12 at 2:38 pm

32% correction in the US while soaked in money printing and debt and derivatives.

What correction?

#128 Don on 07.28.12 at 3:06 pm

Up till June 2012 -“It won’t happen here it’s different”

Now things will improve by Spring 2013???? The problem is and always will be a lack of people who can afford or who are willing to be in debt for a house that simply is not worth the value.

How simply stupid some folks are. When the pendulum swings it’s the momentum that you have to watch out for.

This is a done deal, low interest rates will not save anything, that’s how we got here.

It’s gone awfully quiet on Vancouver Island and noticeable price declines in Victoria in the richy neighborhoods and retirement communities. Remember there are even limited numbers of retirees and most are moving back to be close to their grand children.

Can’t reason with educated stupid people. All those who brought condos in Victoria are quiet about their investments now.

Higher divorce rates coming – repeat of the 80’s and all for greed.

#129 dd on 07.28.12 at 4:21 pm

…Ten years ago household debt equaled 60% of the Canadian economy. Today that number has soared to around 90% – which means it doubled in a decade..

Your math wording = 50% increase, not a double.

The dollar value more than doubled. Obviously. — Garth

#130 Hoof-Hearted on 07.28.12 at 4:47 pm

One anomaly I can already foresee is estates with R.E. where Non Primary Residences will be deemed SOLD upon death , and the heirs will be forced to sell into a collapsing market.

To GARTH (or anyone):

QUESTION How does that work ?

If the property was worth say $1 MILLION at time of death and the best they could get ends up say $600,000 how does that shake down re: Gov’t cut?

Real estate is normally deemed disposed of upon death, triggering capital gains over the adjusted cost base. — Garth

#131 salonist on 07.28.12 at 4:52 pm

“Wealth Transfer? Boomers Banking on a Mirage”

http://moneyland.time.com/2012/06/12/wealth-transfer-boomers-banking-on-a-mirage/

#132 Patient in Richmond on 07.28.12 at 5:06 pm

Don’t miss this opportunity to buy a great home for a great price!!

http://www.realtor.ca/propertyDetails.aspx?propertyId=12248038&PidKey=2106722841

Will people actually look at this in a serious way ?

#133 truth hammer on 07.28.12 at 5:20 pm

How stupid are you if you don’t understand the difference between grossing $100,000 p/a and the actual net you will recieve after taxes…both direct and indirect.

You might gross 100K….but you’re a long way from ‘making 100K’. People are being stupified by the idea that they are richer than they think.

This stupidity is why so many young people are shocked when the final ‘net’ numbers are laid down…in the seconds before they sign the mortgage. The banksters know that rare few of these horny house slaves get the bottom line before they walk through the door to sign up .

It isn’t until after they leave that they realize they have been screwed into poverty.

Direct and Indirect taxes take 82% of the ‘average’ Canadians income……OK the Fraser Institutes says 70% but I ‘m thinking of all the extra HST etc that we pay for parking….fishing…..driving…..movies etc etc etc.

My question is ” How DO VANCOUVERITES PAY 75% OF PRETAX INCOME ON SHELTER AND STILL EAT?

#134 Denise on 07.28.12 at 5:25 pm

Victoria house prices have been steadily dropping since I started watching the prices approximatley 4 months ago. My main focus has been just regular houses in family neighbourhoods, mostly in my area. A few “solds” a couple of months ago (how much of a price drop for the buyer – who knows), but nothing has been sold since, despite multiple price drops by the sellers. Buyers are plain fed up with over-priced houses trying to be sold by uninformed, greedy sellers. Sellers need to wake up to the reality of today’s market, buyers certainly have; here in Victoria anyways.

Victoria is in for a rough ride. — Garth

#135 Old Man on 07.28.12 at 5:29 pm

I sit back and see all these young couples who want to own a home, as such is good in a moment of passion, and they say we have incomes for a mortgage and we want our dream in paradise. I say take it easy, as if you buy at the top all you will ever own is debt and go under water. So rent for a few years, and and kick back with cash and watch the Real Estate scenerio collapse, and perhaps move in for a buy at 50% off.

#136 Canadian Watchdog on 07.28.12 at 5:43 pm

#133 truth hammer

“My question is ” How DO VANCOUVERITES PAY 75% OF PRETAX INCOME ON SHELTER AND STILL EAT?”

They borrow more.

#137 DonDWest on 07.28.12 at 5:46 pm

#133 truth hammer

Get a grip! I haven’t paid taxes in 10 years! If you’re paying 70-85% in taxes, obviously you don’t know how to fill in a tax form and take advantage of all the little gimmicks available to get your money back. Get educated!

#138 Hoof-Hearted on 07.28.12 at 5:48 pm

#124 Aussie Roy on 07.28.12 at 1:23 pm

Here in HAM ville Canada….Richmond BC….somebody posted above we have 30 MOI.

Richmond as we speak is still building Hi Rise condos.

(We already have a 20% Commercial vacancy rate and it is increasing.)

However try to tell people that every NEW residential project built dilutes their own equity…it will accelerate the race to the bottom and/or deepen the bottom point.

The only positive I see is that people may bail from these projects, (ie can foresee then not even 1/3 filled…the rest foreclosed) they become a separate class….and the other RE becomes far more desirable.

#139 ANONYMOUS on 07.28.12 at 5:55 pm

Anyone have an idea when T.O. prices will start to drop?

#140 NFN_NLN on 07.28.12 at 6:11 pm

#123 eagle eyes on 07.28.12 at 1:23 pm


$1500/month 2 adults spending

I think you need a sub-breakdown of that line item. I’m not saying it is wrong… but my monthly expenses for EVERYTHING (including rent) is only $1800. What is $1500 miscellaneous a month.

#141 Betamax on 07.28.12 at 6:33 pm

#133 TH: “How DO VANCOUVERITES PAY 75% OF PRETAX INCOME ON SHELTER AND STILL EAT?”

As #136 CW said, they borrow. An even the ones making more than the median wage are funneling more of their wages into housing.

I was walking through my company’s parking lot the other day and noted that most of the cars were average sedans, despite the fact that most people parking in that lot make multiples of the median wage. Why was’t there more Audis and Beemers? Are they merely frugal? No. It’s because most have a mortgage in Vancouver. And they’ve already tapped a HELOC to pay for renos to the old bung, trips to Europe, and to pay down their crdit cards. They’re tapped out and having nothing left. Retirement’s going to be a bitch, even for people who make more than most. Instead of making them rich, high housing prices are going to leave them paupers.

#142 Blue Monster Lover of Meats and Vegetables on 07.28.12 at 6:37 pm

woops, I posted this on the wrong article. How’d that happen?

“Thus a lack of future debt accumulation by households implies that the key driver of past real estate performance may no longer be available to stimulate real estate going forward,” say the economists. This is not economic theory. It’s financial fact.

Yep, it’s economic theory that happens to be correct. Unlike many of today’s ‘theories’ which are wrong. Like deflation is dangerous is probably the most ridiculous that people believe because economist say it. Idiots.

Anyway, nice post as usual Garth, really enjoying the humor these days, it’s always fun. KUTGW

#143 arctodus on 07.28.12 at 7:00 pm

Garth, why do you insist on continuing to insinuate that the USA market has bottomed?

32% is just the start…..we are in the greatest depression of all time…….but those of us that still have net access just do not know it.

Shedlock has it correct except he still believes in unicorns and fairy dust (he buys the BS of the “free market” solving the energy decline wall we have hit)….

The global markets are in decline and will never stop declining now until we hit an ecological steady state….I think that is sometime after the mushroom clouds and before Des Moines Iowa goes under water from the 10 C temp spike we have started in the global climate system

But have heart all….as we collpase there are good points….I heard that the british government told 100,000 slime ball gold digging so called mothers that they were on their own collecting child support from their reluctant former boy toys…..even the queens own has to cut costs…what with the olympics and all ;)

We are MONKEYS that think we understand what we have wrought…so funny…..

#144 Nostradamus Le Mad Vlad on 07.28.12 at 7:25 pm


#85 syd — “no cooling down.” — It will soon enough. Then it will be flat as a pancake for XX years.
—–
#124 Aussie Roy — “Everyone’s a winner with Australia’s lowest prices. Cha-ching.”
— and —
#125 mousey — “It’s a buyer’s market and prices are low.”
— and —
#92 Freedom First — “There will be many divorces, resentments, and ruined relationships, even with family members.”
— and —
#127 John — “What correction?”
— plus —
#128 Don — “Can’t reason with educated stupid people. Higher divorce rates coming – repeat of the 80′s and all for greed.”

Very good, esp. the first sentence. How educated does one have to be to not get in a debt-for-life situation, thus becoming a slave for the money masters?

People often overlook the fallout from losing a job, home etc., due to circumstances that, for the most part, were caused by themselves in the first place ‘tho, I guess one should exercise compassion, take the high road.

But y’all are correct — as well as the economic impact, there is the inevitable rollercoaster of emotional baggage to be taken into account as well.
*
Voodoo Child Feelings of nostalgia for Jimi, but it’s Kenny Wayne Shepherd (pretty good).
*
GM Get bailed out by two govts., outsource the trades to cheaper places then have risky subprime loans in NAmerica — can’t lose situation, ‘coz bailouts will happen again! Hidden History; Hedging Bets “I wouldn’t bet against the possibility that there are many in Congress, considering the state of the US Federal deficit, who are not doing precisely the same thing.” wrh.com; ECB War among banks?
*
Space burp Summat’s happening out there, ‘coz it’s smelly down here; Cover Up? It appears so, as the FBI had put out warnings two months ago on the ‘net; Iran Stockpiling three months’ supply of food; Massacre “In the US lexicon, Syria kicking the stuffing out of an invading army of foreign paid mercenaries with smuggled US weapons is a ‘massacre’, but a starvation blockade of Gaza by Israel capped off with a solid week of bombing in 2008 is a ‘measured response’.” wrh.com, as per Harper, and Turkey In conjunction with NATO, the US, Israel; How convenient for the west, as they are in Africa now; Japan vs. China Militarily? Japan’s got other things to take care of; North Dakota A govt. which uses intimidation on its citizens isn’t a govt. at all, it’s a dictatorship; Coffee As good as red wine and beer; DHS Nothing like a little social unrest to keep us busy; The Chemputer prints any label you like, and Whooping Cough Vaccine doesn’t work that well; Monsanto Top Ten GM foods to avoid; BP In the news again for all the wrong reasons.

#145 DonDWest on 07.28.12 at 7:28 pm

The results for June are in. Surprising to many that Halifax leads the bears with an outstanding 6% decline in home prices for just a given month. Surprising to everyone but me, the peninsula bubble hasn’t been widely covered by the media. Go to the south end of Halifax, we have our million dollar townhouses here too. Of course not too far behind in the bear charts are Victoria, Vancouver, and Kelowna.

I’m laughing, Regina had a 13% gain in home prices in just the month of June alone. Regina is by far leading the bull charge. This is a result of nothing more than manipulated markets being corrected at some cities before others. Regina was one of the last to get on the train; they’ll be the last to get off.

Reminds me of the USA, first the bubble goes pop on the southern coasts and then makes it’s way to the desert, and then finally the heartland.

-Victoria and Vancouver are Los Angeles and San Diago
-Halifax is Miami
-Kelowna is Pheonix
-Calgary and Edmonton are Dallas and Houston
-Windsor is Detroit
-Regina, Saskatoon, and Winnipeg are the “leftovers,” heartland USA, that somehow think they’re immune by virtue of being leftovers. They’ll end up subject to the same treatment.
-Montreal will discover that French people don’t have a cultural immunity to real estate bubbles. Sorry, can’t truly compare you to American city, but your uniqueness won’t save you.
-The rest of Ontario outside of GTA and Ottawa has already crashed.

-Now what’s left is Toronto and Ottawa, which many broadcasting realtors on this site seem to think have a special immunity. Toronto is often compared to New York and Ottawa to Washington D.C. The realtors claim those two American cities didn’t get burnt; therefore Ottawa and Toronto won’t either. Of course this overlooks that real estate in New York did take a dip everywhere but the most sought after neighbourhoods. This also overlooks that New York didn’t “go Dubai” with condos the way Toronto has done. The condo supply in Toronto is beyond insanity.

As for the people who compare D.C to Ottawa, get real, unlike the USA they’re cutting government jobs. . .

#146 a prairie dawg on 07.28.12 at 9:15 pm

It’s different here.

http://news.nationalpost.com/2012/07/27/former-wall-street-banker-committed-suicide-in-court-by-taking-cyanide-pill-after-arson-conviction-autopsy/

#147 John on 07.28.12 at 9:45 pm

Bingo wrote:

“No more government intervention which created the bubble in the first place. ”
——-

You think “government” intervention caused the bubble? Please defend your idea. Government intervention most certainly did not create the bubble, and if you believe that, you literally have no idea what’s going on..and are burping up grape koolaid. There’s just no nice way to say it.

Government intervention means “interfering” with the “free market”. Dude. Government and the market are ONE. Mark Carney is from GOLDMAN SACHS. He is a head of the Goldman Sachs based FINANCIAL STABILITY BOARD…and earmarked as head of THE BANK OF ENGLAND. The rest of Canadian politics are just hacks plugged into a beaurocratic trough or corporate interests.

Really.

Are you aware of what the Canadian Central Bank does in reality and who it serves? Who is behind it? Do you know what the big Canadian banks are up to right now? Did you know it was a cartel? Do you know about LIBOR in deep detail? And on and on.

It’s understandable to be misinformed, but c’mon man….this is getting tedious. Land the plane. Somebody. I just don’t get it.

Nonetheless, this blog provides great links, articles, discussion, humor, controversy and technical analysis. It’s just that there’s something fundamentally wrong when a comment like the above is left unchallenged.

Which is it? Are people with all the information within
their reach “uninformed” or do they simply not want to look at the facts?

#148 T.O. Bubble Boy on 07.28.12 at 10:01 pm

Garth – your most recent Post City article isn’t online for some reason (just in print I guess?):
http://www.postcity.com/North-Toronto-Post/August-2012/

Sticking with the Leaside theme, here’s a Leaside special for you… $938k for what exactly?
http://www.realtor.ca/propertyDetails.aspx?propertyId=12112743&PidKey=-1894117058
(answer: a 30ft lot, and the chance to apply to the city to tear down the bungalow and build a McMansion)

#149 Don on 07.28.12 at 10:02 pm

#145 Nostradamus Le Mad Vlad
“tho, I guess one should exercise compassion, take the high road.”

Agreed, but…Compassion is expensive and the my interest in given out compassion is low. LOL

#150 Gunboat Denier on 07.28.12 at 10:16 pm

117 Coastal – I havent seen a significant correction in upper VI. The height was 2008 with $350k average. It dipped in 09 to $330 but has been steady since around $340k. Perhaps the agent meant it should have corrected more.

I dont recall the % correction in the early 80s (I did not own then) but the correction in the mid to late 90s was a bit over 20% in that 4-5 year period. Nowhere near that since 2008. A larger correction could have been seen as better in the long term as inventory would decrease by
being both bought at cheaper prices and postponing
further development.

#151 Pat on 07.28.12 at 10:27 pm

@ #146 DonDWest,
Where did you get these numbers from? Thanks.

#152 Tony on 07.28.12 at 10:30 pm

Saturday night, 10:29. I’m on greaterfool.ca. I need a life. Pathetic.

#153 Dave on 07.28.12 at 10:37 pm

How a couple earning 120K a year only have 15,000 in savings aside… I know several people in Ottawa that would disagree with their Realtor. Both have had their houses on the market for months (one for close to a year) and despite price reductions, neither have sold.

Remember that in the end, your house is only worth what someone is willing to pay for it.

#154 Sebee on 07.28.12 at 10:39 pm

Read in S&P outlook downgrade that the HELOCs will get called in of values decrease. Not sure we touched on that. Banks won’t have to call equity between morgages, but they will have to maintain 80% which means HELOCs called in if values drop.

#155 Hoof-Hearted on 07.28.12 at 10:47 pm

#92 Freedom First — “There will be many divorces, resentments, and ruined relationships, even with family members.”
===================================

I agree…..
Anecdote:
Extended family members….the Mom(now deceased ) owned land on Vancouver Island WATERFRONT..her dad bought it in the 1940’s.

Lots were created…. one given to each of the (3) kids PLUS an extra one….and the Mom had Primary Residence.(thus no capital gains)

So…the eldest son decided that they should pay the TAX hit on the EXTRA lot,(aka it was infinitely valuable) using the Primary Residence as collateral for a “Line of Credit”..which cost each of them about $100,000 (aka toal of $300,000). This was about 3 years ago when IF they sold the extra lot, at PEAK MARKET….they could have paid off ALL the estate taxes owed and be debt free.

Now, the market has collapsed , especially on the Isaland..and their LOC costs will likely go UP.

Now I can see the SHTF and internal family feud build when this “know it all guy”(who BTW works as a Civil Servant) will be shown to be a greedy idiot who dragged them all down financially.

MORAL: cut family ties when estate is being settled…..CASH OUT…….morseo now.

#156 Smoking Man on 07.28.12 at 10:49 pm

#153 Tony

I’m at fallsview casino. And I’m on here two. Think we have problems.

Just got my ass handed to me in the poker room happens every time I play sober. At the bar warming up for round 2

#157 thinker on 07.28.12 at 11:46 pm

Hmm, I think Garth you fit your comments for those graphs. In fact what it is telling you is that people are paying down faster then before in the last 12 years. The opposite, credit expansion while debt/price expansion would be a concern. In fact, people are parting with large debt faster then horn dogs are expanding into mini boxes in the sky. While credit is still available for housing, people are paying it down fast. That seems good for society, but bad idea for the borrow. If you can borrow at nothing for long periods of time, you should get as much credit as possible and leverage up. Canadians don’t care what the cost of debt is, they are all paying it down quick. Think about it.

#158 Mr Buyer on 07.28.12 at 11:52 pm

#148 John on 07.28.12 at 9:45 pm

Bingo wrote:

“No more government intervention which created the bubble in the first place. ”
——-

You think “government” intervention caused the bubble? Please defend your idea. Government intervention most certainly did not create the bubble, and if you believe that, you literally have no idea what’s going on..and are burping up grape koolaid. There’s just no nice way to say it.
…………………………………………….
You sir are clearly a conservative propagandist as government intervention clearly did create the real estate bubble and I would be happy to keep repeating that fact Ad nauseam if you persist with your propaganda (ask anyone, I love repeating things in clear and concise sound bites)

#159 Mr Buyer on 07.28.12 at 11:57 pm

The prime minister is a trained economist and his government and agencies of his government enacted legislation and applied influence that clearly initiated the bubble. Plainly and simply.

#160 Mr Buyer on 07.28.12 at 11:59 pm

#139 ANONYMOUS on 07.28.12 at 5:55 pm

Anyone have an idea when T.O. prices will start to drop?
………………………………….
I think I may have mentioned before that is is 29 days, 17 hours, 36 seconds from July 29th 7pm eastern standard time OR the moment they stop dropping. Please feel free to ask at any point in the future.

#161 Nostradamus Le Mad Vlad on 07.29.12 at 12:02 am


Bananas Speaking of the EZone . . .; Transport is more important than food. The west is warped; Disability Claims UK and US are the same; Shakedown or Sheikdown?
Dividend Paying Shares I know this is the UK, but it’s still a fairly nice return; Osborne keeps his job for another week or so; Water Meters Better than estimating; Consumer Spending People are a little more careful these days; Pensioners How much do Cdn. pensioners pay? UK Bad GDP.

Spain Too expensive, and Germany Saving or ditching the Euro? Safe Haven Hmmm. Not sure about the location; Decentralized Currencies living a good life in Greece. Think they want to go back to the Euro? Not a chance; The RIM Disaster; Stockton, CA No money in the kitty; Corporations pay 10% for Olympics; Off The Hook Parents not responsible for adult child’s debts.
*
m$m BS Holmes kills 12, Obomba kills thousands. Where’s the outrage? Tiger or Great White The winner is . . .; New Jaguar Nice; TPP and Agenda 21 What a revolting combination; disciple’s theories may have something to them (Aurora shooter), and James Holmes This is more to the point; Monsanto suing DuPont with both of them ending up broke? That would be good; 0:13 clip The Fourth Reich is alive and well at the Olympics.

#162 45north on 07.29.12 at 12:05 am

DonDWest: Toronto is often compared to New York and Ottawa to Washington D.C. The realtors claim those two American cities didn’t get burnt; therefore Ottawa and Toronto won’t either.

New York dropped 26%, DC dropped 30%
http://www.nytimes.com/interactive/2011/05/31/business/economy/case-shiller-index.html?ref=business#city/WDC

Let’s say that half of the drop in NY City will apply to Toronto and half the drop in DC will apply to Ottawa. Now I don’t know any reason for saying it will be half but just to illustrate a point – which is a 15% drop in real estate would hit very very hard.

#163 Grim Reaper/Crypt Speculator on 07.29.12 at 12:06 am

#157 Smoking Man on 07.28.12 at 10:49 pm

#153 Tony

I’m at fallsview casino. And I’m on here two. Think we have problems.

Just got my ass handed to me in the poker room happens every time I play sober. At the bar warming up for round 2

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

nah nah nah

I was the dealer….I thought that was you in the Michael Jackson outfit

Your ass is MINE…you can’t lose it at a lowly casino

#164 Dan in Victoria on 07.29.12 at 12:08 am

Coastal @ 117
Snowboid @ 119
We’re just along for the ride now. Put on your goggles.
Have you checked out Sooke City and Mill Bay Cobble Hill ?
Ouch.

#165 Timbo on 07.29.12 at 12:39 am

http://www.huffingtonpost.com/2012/07/27/stockton-bankruptcy-retiree-health-care_n_1712260.html?utm_hp_ref=business

“A federal bankruptcy judge on Friday cleared the way for Stockton, California to cut health care benefits for retirees while it is in bankruptcy proceedings.”

A slow decent into the rabbit hole. Wanna bet there will be more of this as ‘the job creators’ take another tax cut and starve the cities……………

http://maxedoutmama.blogspot.ca/2012/07/t.html

“Personal current taxes are 1.474 trillion. Our net deficit is running close to a trillion before we consider the 2014 bust of the Medicaid/individual insurance subsidy impact. So we would have to raise tax rates by about 67% (2/3rds) to come nearly back into balance. The impact would throw us into a massive recession, so we can’t do that. ”

It will work until it doesn’t.
Kick the can till you hit the wall………

#166 coastal on 07.29.12 at 1:02 am

#151 Gunboat Denier,

The percentage drop in the early 80’s in Victoria was 30% by the VREB numbers but in reality places could be had for 50% in some places. I bought a place that dropped from $110K at the peak to $65K two years later in a nice core neighborhood of Victoria.

People who say it can’t or won’t happen are out to lunch or pathological liars, it happened and can happen again. World economies are so much more screwed now than back then.

#167 new canadian on 07.29.12 at 1:24 am

The Great Canadian Ignorance! I feel it when I talk to someone about serious topics. Americans think that they are the greatest nation, but I think pretty much same for Canadians. And when faced with reality in Canada, like poverty, income distribution, 10 hour hospital emergency room waits, well you will be ignored! They will look at me as if I am lying but then truth hurts, you can’t miss the GREAT CANADIAN IGNORANCE.
So look at this people asking same thing over and over. Don’t blame interest rates for this, the great one is to blame.
I think average wood box covered with glue and bricks should really worth around 100K, now it’s around 400K, so I expect a minimum 50% correction.
Keep up ignoring, pump up the great Canada!

#168 Vancouver_Bear on 07.29.12 at 4:32 am

#9Smoking Man on 07.27.12 at 7:32 pm

By following your advice, mortgage owners will lose their houses faster than they think.

As soon as they stop spending on “stuff and services” Canadian economy will be in the toilet, since it’s 70% consumer spending driven. When economy is in the toilet mortgage owners lose jobs.
Quality of jobs already severely deteriorated after GFC, those “regained” jobs are mostly McJobs and seasonal/part-time minimum wage jobs….Which is a very bad news for Canadian RE future. No growth in wages always equals no growth in other things, RE included.

Was in Ditchmond (aka Richmond) today…..saw a forest of “for sale” signs…..no signs had “SOLD” sticker on them. Fun is just starting.

#169 eagle eyes on 07.29.12 at 5:02 am

#140 NFN_NLN on 07.28.12 at 6:11 pm

$1500/month 2 adults spending

I think you need a sub-breakdown of that line item. I’m not saying it is wrong… but my monthly expenses for EVERYTHING (including rent) is only $1800. What is $1500 miscellaneous a month.
_________________

You must be VERY frugal…but for the average youthful adult:

2 adults = $750 each

lunch and coffee/day pp $5 X 20 days per month = $100
weekend entertainment pp $50 X 4 = $200 (no fancy dinners – movie, bowling, pub, sporting event, concert, or dinner)
gym membership, fishing, mani/pedi, round of golf, hockey, etc (pick a hobby) = $100
clothing allowance pp = $100 – $200
gifts (birthdays, Christmas, anniversaries) $50 – $100
grooming (haircuts, and ladies spend more on coloring, perms, etc.) $50 – $100

That type of spending isn’t really outrageous. This doesn’t factor in designer handbags, fancy cars, upscale dining, etc. The average person spend $750 alone on Christmas presents. Don’t underestimate the miscellaneous. How do you think credit card balances balloon out of control.

#170 Richmond BC on 07.29.12 at 5:49 am

What many of you don’t understand is that this bull market has caused many families a lot of grief. Cannot afford to buy or rent in such a high market. The basics of life include shelter. This has been unattainable for many. Forgive me for not having compassion for sellers who can’t double their re investment. I think it’s time for a big crash so that we can press the reset button this country so needs.

#171 Timbo on 07.29.12 at 8:39 am

http://news.investors.com/article/620090/201207271807/gm-risky-subprime-auto-loans-fuel-sales.htm

“GM Financial auto loans to customers with FICO scores below 660 rose from 87% of total loans in Q4 2010 to 93% in Q1 2012.

The worse the FICO score, the bigger the increase. From Q4 2010 to Q1 2012, GM Financial loans to customers with the worst FICO scores — below 540 — shot up 79% to more than $2.3 billion. The second worst category, 540-599, rose 28% from about $3.4 billion to $4.3 billion.”

Let’s lend out to anyone with a pulse. Go Volt!……..

http://www.arabianmoney.net/us-dollar/2012/07/29/why-central-bankers-cant-really-fix-the-mess-they-created/

“The US is also in trouble. Economic reports showed the US economy expanded more slowly in the second quarter and a softening job market prompted Americans to curb spending. Consumer confidence in July dropped to the lowest this year, new home sales unexpectedly fell from a two-year high while orders for equipment slumped. And the stock market went up! ”

Stock market saw Uncle Ben’s shiny new helicopter. It’s pretty…………

#172 Herethere on 07.29.12 at 9:58 am

Oh, what a confusion. Somebody sold me one of them 4% bonds, maturing February 31, 2045. Forgot to ask if will mature on the morning or evening. Forgot to ask if the 4 dollars yearly for my 100 cookies, need to pay some commission. Wonder now if that 4 dollars, in 2045, will allow me to buy, two of them bananas, one to eat. Oh boy, better should keep buying 300 ft. condos to be built around 2018, no money down, $600 bi-weekly, $200 taxes, $200 common sense expenses. I think in some places they call them sopressata expenses. Yeah, may be is different here.

#173 maxx on 07.29.12 at 10:04 am

#1 The American on 07.27.12 at 7:09 pm

They get away with it all the time. We get that from almost every realturd we speak with.
All investment firms pay extra advertizing money to add a disclaimer to the effect that “past performance is no guarantee of future performance”.
Realturds don’t. They blather away without a care in the world, focused only on that fat commission cheque at the close of the “deal”.
No other business would get away with this. They need to have a huge, legal dog collar attached to them, monitoring their every move, with a serious, litigious hard snap to their wallets and demerit points every single time they’re out of line:
They feign ignorance of and /or don’t disclose facts that seriously affect the quality of life at a new property;
They bully;
They consistently overstate properties’ values in order to solidify forced price floors;
They intimidate;
They conspire.

Furthermore, they should be obliged, by law, to have an amount of money set aside, in trust, which they can never touch, until they officially leave the business, based on their annual income (amount to re-set and increase if their take-home goes up) so that any client with a problem, pre- or post-purchase can make a fiscal claim and get paid quickly upon investigation. Enough of this insanity.
Any client with a complaint should feel completely confident to immediately contact the realturd’s provincial authority. They should insist that their complaint goes on record and then follow up with legal action.

#174 Jim on 07.29.12 at 10:39 am

#173

No one has minded the bloviating and puffery from realtors of late, largely because the market has risen. When people are making money, they don’t care if realtors are making nonsense claims.

The tide will turn when the market is falling. For instance, my sister (a lawyer in Vancouver) is considering actions against a fellow who marketed time share condos in Williams Lake. (Yes, you read that right. Luxury time share condos in Williams Lake).

Whether her claim is meritous or not, you’ll see increasing numbers of people turning to such mechanisms as they lose money. This is where popular calls for regulation come from.

#175 John on 07.29.12 at 10:49 am

Mr Buyer wrote:

“You sir are clearly a conservative propagandist as government intervention clearly did create the real estate bubble and I would be happy to keep repeating that fact Ad nauseam if you persist with your propaganda (ask anyone, I love repeating things in clear and concise sound bites)”
——————-

Funny how your reasoning has been disabled by “propaganda”, yet you claim to know what it is ( I’m assuming your points are just ironic, since you develop almost no argument). Maybe you’re having fun.

From today’s little missive it sounds like you think “trained economists” create bubbles. Do guys pushing buttons for dropping bombs create wars?

You’d be fun for a “one round debtate”, but it’s clear you’re not going to debate. Stick to clear concise sound bites. Say what you hear. Don’t think critically, and never back up your arguments with independent thought. Label other people, cut interactions short when your flimsy belief system gets challenged. Move on.

If you are actually serious that the Canadian government is causally involved in creating the housing bubble…go for it. I want to hear how you arrived at that conculsion. Tell us about “F, C and the Bank of Canada”.

I’m also a lover of chilled grape koolaid, but as an adult I don’t drink it. I used to love it on hot summer days. You may be misusing the beverage. It seriously soubds like you don’t know what’s going on, but have some irny skills. Do you understand the real estate bubble in Canada? It sounds like you’re lost.

#176 realtors in a panic on 07.29.12 at 11:20 am

Realtor smokingman is in a panic as sales are down in 416 and prices dropped almost 15% in just two months. Realtors all over Canada are seeing price drops and sales. Banker buddy tells me credit is getting tighter as people are going bankrupt. Now We are getting reports of a huge jump in consumer proposals as many are on the brink of losing it all. It’s going to be a nasty crash realtors a nasty crash.

#177 The American on 07.29.12 at 11:21 am

At #147: Prairie Dog, that “news” is crazy old. I see in your National Post that was dated on July 27th. Are you freaking kidding me? That incident happened like 5 weeks ago.

#178 fires in the GTA on 07.29.12 at 11:25 am

This time a house in Milton. The fires are picking up as this downturn gets worse and people try and burn their money problems away.

#179 Painted Toenails on 07.29.12 at 11:37 am

Our little enclave here in Victoria has a special vibe. I won’t name it as it wouldn’t be fair to the other residents. (cough, inner harbour). Nowadays, I rent.

HALF of the homes here are for sale, either on mls or by word of mouth. One has sold.

It’s astounding to me how little is actually known about Victoria’s REAL real estate market. Some other Victorians have commented on it. They are bang on. Anybody. ANYBODY buying in Vic right now is indeed a greater fool.

For the first time in decades I can pick up and take off for several months this winter WITHOUT worry and without paying for a mortgage or maintenance when I leave. I don’t have a lot of stuff around anymore – gave the kid the couches and the big TV. G’bye, G’riddance. He’s happy. He’s just starting out and wants stuff. I remember that feeling. To everything there is a season.

Kinda like going “back in the day” when the world was shiny and I was free.

How much is that feeling worth to me now? A. Lot.

I’m not rich. I live off what I make (very nicely) and Garth has invested some of the proceeds from my house sale for me.

Some of our blog dogs have purchased in the States. If anyone wants to share details, I’d be listening and grateful.

#180 Keith in Calgary on 07.29.12 at 12:07 pm

The Conservative government created the conditions for the housing bubble to form. To deny such is to label oneself a moron.

Tell us who strecthed out amortization periods for mortgages from 25 -30-35-40 years and then reduced them back to 25 ?

Tell us who insturcted the BOC to lower interest rates and who utilized ZIRP to keep prices from deflating as bad as they would have without it ?

Tell us who instructed CMHC to forgo traditional lending standards (sound credit granting principals) and finance everyone who had a pulse and could “fog a mirror” ?

Tell us who increased the funding limit of CMHC to $600 billion ?

Etc….ad naseum…..

#181 eagle eyes on 07.29.12 at 12:16 pm

Yesterday in Richmond BC, I drove past one corner with 6 open house signs. Of course out of curiosity I drove in, and lo and behold they were within 1 block. 6 open houses of single family homes on one block for sale!!!! What happened to the bidding wars? Where’s the HAM? Come out hammy, ham, ham wherever you are. Can’t hide forever. Wait…these are McMansions owned by HAM. THEY are the sellers. What’s happening?!!

#182 Gunboat Denier on 07.29.12 at 12:17 pm

178 American – the “news” was that the autopsy
confirmed the original theory.

But why would Canadians think some scammer in the US
committing suicide is news anyways?

#183 Herb on 07.29.12 at 12:17 pm

#176 John,

ask yourself a number of questions:

1. Is there a housing/RE bubble?
2. If there is one, when did it start?
3. If …, when, over what period of time, did it get bloated?
4. If …, how did it get bloated?

Then consider certain moves ascribed to the Harper Government, such as:

1. When were mortgage periods extended to 40 years? Why?
2. When were down payment requirements reduced? Why?
3. When were mortgage periods reduced to 35 years? Why?
4. When were mortgage periods reduced to 30 years? Why?
5. When were down payment requirements tightened up again? Why?

Now, if you compare your answers to the first series of questions with the answers in the second group, you may find a certain correlation between the timelines. Now ask yourself further if this correlation is mere coincidence, or causality.

Unless you only are a Conservative shill, you should be able to answer these questions realistically and produce the facts and logic that would convince many of us that there was no “intervention” by the Harper Government that would have caused or bloated the housing/RE bubble.

#184 Canadian Watchdog on 07.29.12 at 12:23 pm

Top 10 CPI basket categories with the highest price increases since spring 2008. (High demand)

1. Jewellery +51.6%
2. Fuel oil and other fuels +41.9%
3. Water +41.4%
4. Services related to household furnishings and equipment +32.2%
5. Bakery and cereal products (excluding infant food) +27.4%
6. Child care and housekeeping services +25.2%
7. Dry cleaning services +24.5%
8. Other cultural and recreational services +24.0%
9. Other household goods and services +20.6%
10. Education +19.2%

Top 10 CPI basket categories with the highest price declines since spring 2008. (Low demand)

1. Natural gas -29.4%
2. Home entertainment equipment, parts and services -24.7%
3. Recreational equipment and services -21.4%
4. Women’s clothing -14.4%
5. Purchase, leasing and rental of passenger vehicles -7.7%
6. Other clothing accessories -7.6%
7. Furniture and household textiles -7.1%
8. Children’s clothing (including infants) -7.1%
9. Leather clothing accessories -6.9%
10. Women’s footwear (excluding athletic) -6.2%

#185 T.O. Bubble Boy on 07.29.12 at 12:30 pm

Another great Toronto property:
C2419962 – 47 OAKWOOD AVE
Price Change. Jul 18: $1,000,000 Jul 28: $799,900

20% drop in 10 days?!?!?

But, it gets better if you read the description:

General Description
Opportunity Knocks. Licensed Rooming House. Finished Basement. Being Sold ‘As Is’ Due To Fire And Smoke Damage. Grand 3000 Sq Ft Home That Can Be Restored. Great Location. Generous Lot Size 42 X 102 Feet. A Few Rooms Will Require Major Renovations, However The Rest Of The House Requires A Good Cleaning And/Or Renovations. Bathroom On Each Floor. Windows On Main Floor Boarded Up But Not Broken. Great Location.

Interesting that most Toronto realtors assume livable bungalows will all be torn down, but that this place will be fixed up?

#186 JB on 07.29.12 at 12:52 pm

@American

RE agents in Canada are using any weapons they can to sell you the house. One part of their dirty strategy lies also in claiming (Cash for Keys) that tenants are generally willing to cheat you as a landlord and occupy your property without any desire to pay for a long time. This is really insane.

#187 EW on 07.29.12 at 12:57 pm

For those of you wondering why $120,000/year may not be much, have a look at these BC living wage calculations. These numbers represent the lowest a person needs to just get buy. In a family of two parents and two kids, each parent must make the following per hour(so double the number shown):

Vancouver – $18.81
Victoria – $18.03
Esquimalt – $17.31
Kamloops – $17.27
Regional District of Central Okanagan – $16.98
New Westminster – $16.74
Abbotsford – $16.42
Williams Lake – $15.77
Cranbrook – $14.16

http://www.regionaldistrict.com/docs/admin/socdev/coklivingwage_jul11.pdf

http://www.regionaldistrict.com/docs/admin/socdev/coklivingwagetable.pdf

#188 Grantmi on 07.29.12 at 1:13 pm

#85 syd on 07.28.12 at 2:46 am
no cooling down.

http://www.property-abroad.com/canada/news-story/canada-property-market-continues-to-surge-19317422/

Oh yea. That’s a real authoritative site!!!!

#189 TurnerNation on 07.29.12 at 1:27 pm

I wonder how many Van or TO bidding wars are driven by school catchment districts.

Because, you know, it’s very important Jaydon, Braydon, Haydon, Graydon, Hailey, Caleb, Finn get into the “right” school. After all, they’re so special.

#190 eagle eyes on 07.29.12 at 1:33 pm

#187 EW

So you are saying that it takes $80,000 per annum just to “get by” living in Vancouver. That is for the basics. Why does that not surprise me? I think that $120,000 for a average family is an average income and it is hard to save.

#191 Anthony on 07.29.12 at 1:42 pm

http://www.youtube.com/watch?v=aLBhY_-s5L8&feature=plcp

For more commentary on a very similar idea, see the video: A slowdown in debt is by definition a recession

In this video I detail how a slowdown in debt is literally exactly what a recession is. In the Great Depression a falling off of a cliff of aggregate demand was caused by exactly that: people having to pay off debt (aka deleveraging). In our model of a capitalistic society, when people take on debt (boosting aggregate demand) the times are good and we experience a booming economy, and when we pay off debt (depleting aggregate demand) we live through a depression. Currently, we are about to embark on a large scale, decade and a half paying down of debt (depression).

Thanks all, happy sailing!

#192 JM on 07.29.12 at 1:49 pm

Just go back from a weekend at a friend’s cottage. All along Airport Rd. from Mayfield all the way up to Mosley Ave. a sea of for sale signs. Went for a drive in Collingwood same thing, for sale signs everywhere including back to back neighbours. If this isn’t a sign of things to come then I am not sure what is.

#193 Suede on 07.29.12 at 2:30 pm

#185 Cdn Watchdog

Where did you find the breakdown of those items on the StatsCan website?

#194 Snowboid on 07.29.12 at 2:42 pm

Many years ago, when our minds were still sharp, we would attend any time-share presentation that offered ‘rewards’ we felt made up for our time.

Best one was in Cancun, a company out of Florida that was run by Canadians. Free lunch, tour, bottle of tequila, two ‘Mexican’ blankets, and a bus tour for two to Chichen Itza.

After two hours the final ‘closer’ was almost crying, he had a perfect sales record, and would lose his job if we didn’t buy. The original price had gone down from $ 27,000 to $ 9,000.

We said no, and after another 1/2 hr to round up the ‘prizes’, we left feeling we got a good deal for 2.5 hrs of our time.

So, open house in Kelowna yesterday near our condo…

SFH, not a bad price – open house also last weekend. Agent was very excited – we were first to attend in 3 open house events.

As the ‘tour’ progressed the agent was showing more desperation, offered some prizes if we left our name (we didn’t). Then he said he would entertain any offer, anything.

At this point he began to remind me of the ‘closer’ from Cancun, the only difference is this agents’ fear was real.

From our building… unit sold in 2008 for $ 509,000…just sold again for $ 399,000.

Stocked up on popcorn, patient as ever!

#195 John on 07.29.12 at 3:33 pm

Keith in Calgary wrote:

“The Conservative government created the conditions for the housing bubble to form. To deny such is to label oneself a moron.”
——

Ok, anyone informed knows this guy is wrong. Anyone going to debate this?

#196 Patient in Richmond on 07.29.12 at 4:06 pm

got re-listed by new realtor , 200.000 price drop , and so it begins, the slow steady downward spiral .

http://www.realtor.ca/propertyDetails.aspx?propertyId=12235777&PidKey=-1367128569

#197 Realtors and Bankers in an all out PANIC! on 07.29.12 at 4:08 pm

We all know RBC said no bubble but why would Canada’s LARGEST mortgage lender say no housing bubble? The article below clearly explains the ponzi scheme CHMC and HELOC allowed people with NO MONEY to spend money they don’t have , will never have and can never pay back . It’s going to be a nasty housing crash realtors a nasty housing crash.

TD Bank, Royal Bank, Bank of Nova Scotia get dimmer outlook from S&P

“If housing prices drop enough, banks could start calling all those home equity lines of credit. They base people’s loans on the assessed value of the house,” said Werner.”

http://www.thestar.com/business/article/1233343–td-bank-royal-bank-bank-of-nova-scotia-get-dimmer-outlook-from-s-p

#198 So sad on 07.29.12 at 4:20 pm

The doorbell just rang. A realtor asking if we knew of anyone interested to buy. Said that the open house two streets away will be open until 5:00pm. Must be quiet out there.

#199 TnT on 07.29.12 at 4:38 pm

The conservative gov had a 5 year crystal ball showing our future back in 2008 watching the US crash. It’s either a coincident that we now have a RE problem or absolute neglect.

#200 NAM not HAM on 07.29.12 at 4:54 pm

#196 Patient in Richmond on 07.29.12 at 4:06 pm
got re-listed by new realtor , 200.000 price drop , and so it begins, the slow steady downward spiral .

http://www.realtor.ca/propertyDetails.aspx?propertyId=12235777&PidKey=-1367128569

————————-//—-
Actually it’s a 120,000 off the original asking price. They paid 545k in 06.

#201 TurnerNation on 07.29.12 at 5:03 pm

Snowboid, what that agent DA??

Sellers on strike – Realtors in a panic.

Going back to school catchment areas idea, ask anybody their fondest childhood memories. Schools, houses, will not be a factor. Kids just dont’ care about it.

$450,000-500,000 for a Milton SFH? Empty farmland in B.F. Ontario? Manufactured communities? Bleh.

#202 NAM not HAM on 07.29.12 at 5:11 pm

Attention BPOE!!!!!

Richmond active listings this month,
Sfh
1181 Active listings
Sold 28

Attach
1537 active listings
Sold 68

#203 a prairie dawg on 07.29.12 at 5:16 pm

#178 The American

At #147: Prairie Dog, that “news” is crazy old.

– — –

It wasn’t posted for it’s current date. The theme of the story was:

ex-banker/over-indebted/arson/fraud/jail/suicide, and it involved real estate.

Now go have a watered down beer. ;)

#204 Judgment ability on 07.29.12 at 5:29 pm

I think people who deny the real estate bubble have a judgment ability similar to these folks:

http://knucklesunited.com/2010/04/10-embarrassing-car-accessories/

#205 DM in C on 07.29.12 at 5:43 pm

195-John:

You’re barking up the wrong tree in this blog. More would agree with Keith than you think. So if you’re just trolling, go find a political site somewhere and sod off.

#206 Devore on 07.29.12 at 5:45 pm

#189 TurnerNation

Because, you know, it’s very important Jaydon, Braydon, Haydon, Graydon, Hailey, Caleb, Finn get into the “right” school. After all, they’re so special.

Still cheaper to send the little rugrats to private school than pay the catchment premium.

#207 Grim Reaper/Crypt Speculator on 07.29.12 at 5:52 pm

Yeah…time share…..that’s what I’m thinking too.

But how to word it….”Part Time Eternity” doesn’t have enough swagger

#208 Fiendish thingy on 07.29.12 at 5:58 pm

Urgent request from fellow blog dogs!
I’m in BC looking at rentals, and one landlord inCoquitlam wants 12 post dated cheques upon occupancy.

Is this legal?

#209 Casual Observer on 07.29.12 at 6:31 pm

I’m no fan of realtors, but I do think that they are being given too much of the credit/blame for the RE bubble. Nobody held a gun to people’s heads and forced them to buy.

Imagine if a couple wanted to buy a house and the realtor turned around and said it’s not a good time to buy. They would just move on to another realtor. If they did listen to the advice and delay their purchase, and prices continued to rise (like they did after 2009), then the couple would be angry for being talked out of buying.

Either way, they lose business. The best thing for the realtor to say is that they don’t know whether prices will go up, stay flat, or go down, then let the couple to make up their own mind.

Whatever happened to people thinking for themselves? Anybody that can do basic math and read a chart would have been able to figure out that the rapid rise in RE prices was predicated on an equally rapid rise in mortgage debt – not rising income. This fact alone told me that prices were not sustainable. The only question was how long it could go on.

When the financial crisis hit in 2008, I thought that would be the end of the Canadian housing bubble. My timing may have been early, but nothing else has changed – except that prices have become even more over-extended than before.

I don’t think that realtors should be misleading prospective buyers, but people need to take some responsibility for their own choices and stop blaming everybody else when things don’t work out.

#210 Nostradamus Le Mad Vlad on 07.29.12 at 6:40 pm


Lettuce Prey and Terminated Terminator.
*
30 Days Hath September During which time the US, UN, NATO and Israel will be embroiled in a war Iran didn’t start, derivatives / CDS will become like GICs but Cdn. RE is the only problem of the day! Plus Seriously Joking and here; GS Running scared. First para. is interesting; Gold, China and Fort Knox “So now we know where all the gold being dumped onto the market to rig gold prices down (to keep small investors in the banks and stock market) has been coming from! ” wrh.com; America’s Debt / Deficits Scrap Easy solution? Hang the crooked banxters, and Lloyds, plus Ireland; Empty Seats The flatlining economy may have something to do with it.
*
10:43 clip A lady from Iran explains their position; Syrian Rebels Without A Clue “Wouldn’t it be simpler to have the “rebels” stop massacring people?” wrh.com, and Syria Enter the Dragon; CNN (m$m) No one likes a liar; 8:39 clip Supermarkets not doing great job, and Live Long and Prosper but not with junk food; Cancer The Forbidden Cures, as they are not money makers; Russia The EU can shove their inspections.

#211 Canadian Watchdog on 07.29.12 at 6:46 pm

After many tedious weekend hours of research, here is the best chart I’ve plotted so far for 2012. http://postimage.org/image/r3y8rdgl7/

Keep it. Study it. Verify it. Then you’ll know what must come next.

#212 Daisy Mae on 07.29.12 at 6:54 pm

#159 Mr. Buyer: “….government intervention clearly did create the real estate bubble and I would be happy to keep repeating that fact Ad nauseam if you persist…”

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

I would agree. When the government tinkered with the length of amortizations and all else, what would you call it, if not ‘interference’?

#213 Spiltbongwater on 07.29.12 at 7:02 pm

#198 So sad on 07.29.12 at 4:20 pm
I had a realtor ring the doorbell a few weeks ago asking if I wanted to sell. Realtors are the new Jahovahs Witness.

#214 Dred on 07.29.12 at 7:05 pm

If it keeps on rainin’, levee’s goin’ to break, [X2]
When The Levee Breaks I’ll have no place to stay.

Mean old levee taught me to weep and moan, [X2]
Got what it takes to make a mountain man leave his home…

Drip, drip, drip… The reckoning is a coming.

#215 Grim Reaper/Crypt Speculator on 07.29.12 at 7:15 pm

Time Share:

Real Estate Polygamy ?

#216 John on 07.29.12 at 7:25 pm

Daisy Mae wrote:

#159 Mr. Buyer: “….government intervention clearly did create the real estate bubble and I would be happy to keep repeating that fact Ad nauseam if you persist…”

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

“I would agree. When the government tinkered with the length of amortizations and all else, what would you call it, if not ‘interference’?”
——

You’re wrong on this. Did you notice that the same “intervention” occurred in Australia?

Governments are hardly interfering. They just got out of the way of the derivatives fraud and did their part in the credit bubble plan.

Do you think Canada ( de facto) is a soverign nation with representative government? Technically it is, but the real estate bubble showed the truth: State and corporation are one.

How could you maintain your intervention argument with the presence of derivatives and massive money printing? The last thing the government did here was intervene. They are low level two bit players that serve banking interests. They are able to do what they do because of what you believe.

You’re not informed.

#217 Daisy Mae on 07.29.12 at 7:29 pm

TnT on 07.29.12 at 4:38 pm
“The conservative gov had a 5 year crystal ball showing our future back in 2008 watching the US crash. It’s either a coincident that we now have a RE problem or absolute neglect.”

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

I would venture to say you’re right. It was ‘absolute neglect’ and a whole lot of stupidity and mis-management.

#218 fiendish thingy's question on 07.29.12 at 7:58 pm

as far as I know it’s both legal and the norm. Every place I’ve ever leased required 12 post-dated cheques and sometimes an extra month for a deposit as well when you move in. (ie “first and last”)

good luck

#208 Fiendish thingy on 07.29.12 at 5:58 pm
Urgent request from fellow blog dogs!
I’m in BC looking at rentals, and one landlord inCoquitlam wants 12 post dated cheques upon occupancy.

Is this legal?

#219 Canadian Watchdog on 07.29.12 at 8:00 pm

#159 Mr. Buyer #218 Daisy Mae #217 John

Q for any of you: What should the government have done to stabilize the economy or what other option was there?

Footnote: Canada’s economy is 89% smaller the the U.S.

#220 ANONYMOUS on 07.29.12 at 8:00 pm

Sorry folks; COTTAGE COUNTRY is BOOMING once again:

http://www.theglobeandmail.com/life/home-and-garden/real-estate/cottage-market-heats-up/article4428138/

We discussed that article when it was still news. Two weeks ago. How was the coma? — Garth

#221 TurnerNation on 07.29.12 at 8:01 pm

#198 So sad on 07.29.12 at 4:20 pm

Time for new signs:

“No Peddlers, Junk Mail, or Realtors(r)”!

Shoo them off the porch.

#222 Fiendish Thingy on 07.29.12 at 8:14 pm

@#219-
Thanks for the feedback; asking for post-dated cheques is illegal in California, or at least our county, where we are currently renting, so we were shocked after several other landlords who spoke with didn’t mention it.

#223 Snowboid on 07.29.12 at 11:08 pm

#180 Painted Toenails on 07.29.12 at 11:37 am…

If you are thinking of Arizona I will answer any questions you have.

I can tell you with the research done first, the process is far easier than buying in BC!

#224 Snowboid on 07.29.12 at 11:12 pm

#201 TurnerNation on 07.29.12 at 5:03 pm…

To the best of my recollections, it wasn’t the gold standard of Okanagan RE agents!

#225 Mr Buyer on 07.30.12 at 9:29 am

#221Canadian Watchdog on 07.29.12 at 8:00 pm
#159 Mr. Buyer #218 Daisy Mae #217 John

Q for any of you: What should the government have done to stabilize the economy or what other option was there?

Footnote: Canada’s economy is 89% smaller the the U.S.
…………………………………………………………..
Lets see, a massive real estate bubble was the best and only course of action. Encourage the entire nation to assume massive amounts of personal debt for shelter. Is that your assertion, there was nothing else to be done. Unaffordable housing destine to crash. Nice try.

#226 Mr Buyer on 07.30.12 at 9:31 am

#218John on 07.29.12 at 7:25 pm
………………………………………………………….
I should have taken a closer look at your posts before I took you so seriously

#227 Mr Buyer on 07.30.12 at 9:45 am

#211Casual Observer on 07.29.12 at 6:31 pm
I’m no fan of realtors, but I do think that they are being given too much of the credit/blame for the RE bubble. Nobody held a gun to people’s heads and forced them to buy.
………………………………………………………
Lets substitute crack dealer for realtor. How everybody can ignore the white elephant in the room is beyond me. THE CHANCE TO STRIKE IT RICH, FREE MONEY, LAP OF LUXURY and all that stuff of many a pipe dream. Hey man didn’t your hear they are giving away money for houses down at the bank, everybody is just dreaming up numbers for prices on their houses and buyers are so scared they will not be able to buy later that they are turning around and asking the bank for the cash and the bank is giving it to them. More and more people are trying to get in on it beacause they can sell later for more. How is this dynamic not completely predictable with a 99.99008645% chance of transpiring given human nature and evidence of such activity from our neighbors to the south. On top of that how is this the fault of the buyers? They could have chosen not to buy say you. Okay then given that rational then why isn’t cocaine widely available as it once was. They are very different say you, one invokes a physical reaction followed by a psychological and physical dependency. What a momment, is that cocaine or money?

#228 Mr Buyer on 07.30.12 at 9:55 am

#176John on 07.29.12 at 10:49 am
You are not serious. Clearly.