I’m wrecking Linda’s marriage. She’s emotional. I wish I could tell her it’s just a casual thing. After all, the woman means almost nothing to me. But apparently it’s gone way beyond that in her mind. This will not end well.

“My husband faithfully reads your blogs and annoyingly refers your ‘rent, don’t buy a house’ articles to me. We own our own home with a small mortgage. I believe there are many other reasons to own a home other than financial, so I prefer to own.

I realize that you are writing from a financial basis only, but if you think it’s such a good idea, where do you RENT your HOME? Do you realize the friction that you are causing in marriages?

Not a fan. Linda”

Well, babe, somebody’s got to do this job. So it might as well be an impervious hunk like me. Can I help it if hubs is Mars and you’re Venus? Fact is, real estate at today’s amped-up values is a massive financial undertaking for any couple, and when we’re all on the verge of a decline it only makes sense to go defensive. So he’s right. But so are you. Emotion turns a house into a home. Actually that means anywhere can be a home – an apartment, a rented semi, a weekend hotel room or two cardboard boxes duct-taped together behind Sobey’s.

Here’s reality, Linda. This market has started to slide, and it won’t stop for months, perhaps years, regardless of how much you hate it. As Mars will tell you, for two years this pathetic blog has been predicting that national house prices will fall by 15% in a correction, then enter a long and ill-defined melt, which will stagnate sales, turn real estate illiquid and further ice values.

The drop will not be homogenous. Vancouver will be hooped, the GTA wounded badly in some hoods, New Brunswick and PEI spared (who cares?), with Calgary, Saskatoon and Winnipeg very surprised. Montreal will crumble if the separatists return. Places like the Okanagan, Parksville and SW Ontario are simply doomed.

Worse, babe, others are starting to agree with me – which is frightening all on its own. Capital Economics says prices will plop 25%. TD economists say 15%. RBC’s geniuses chime in with 10%. And what’s this? A new report from the economics department at Scotiabank forecasting a years-long stagnating market, after the initial drop. Sounds familiar.

“The downside risks to domestic housing activity are increasing,” the new report says. “The full impact of the slowdown may not become fully visible until mid-decade. Affordability will be increasingly strained for existing and potential homeowners when mortgage rates eventually drift up. Historically low interest rates are currently maintaining affordability in the face of record home prices and rising home operating costs.”

What does this mean?

What the bankers infer, but dare not speak, is the spectre of a housing trough that sucks prices lower, then gets a lot worse three or four years out – pretty much what happened in the US. There the market started to wobble in 2005, fell about 15%, leveled off, then plunged again after 2009 by another 17%. Those early vultures who thought they were so smart buying after the initial crash ended up with unsalable houses which declined in value every month after the deals closed.

This is a far more credible scenario than you think, Linda. Every other big housing boom has been followed by a bust of almost a decade in length. People who bought at the peak in 1989 in Toronto had to wait until 2004 to get their money back. And this real estate gasbag is a totally spent force. Never before have seven in ten families owned houses, meaning there’s zero pent-up demand for more stainless. And never have people chalked up such debt to get there.

I told a Financial Post reporter hours ago what I’ve said here repeatedly: this real estate blimp was created out of borrowed money – not economic growth, more jobs or higher incomes. So when the vast majority of people have sated their house lust and now stare at bloated mortgages due to eventually reset at higher rates, that horny feeling fades fast. Meanwhile we’ve not even started to see the impact of those mortgage, cash-back and borrowing changes now clicking in.

Hey, Lindasnugglybunny, I know the Scotiabank wonks said there won’t be a US-style housing crash here. And they’re right. It’ll be a Canadian-style crash. In the end, we’ll all blame the government for our own actions.

Like Peter Simpson, CEO of the homebuilders outfit in Vancouver (whom I know well). F’s mortgage-murdering changes, he says, are nothing but bad news to a collapsing industry. “If it continues to fall, they’re going to have to take a good hard look at what their actions have caused—and be prepared to make some adjustments.”

“For every housing start,” he adds, “there are 2.8 person years of employment that are created.” Yup.  And 30 years of debt.

So, sweets, is it really me that’s causing friction in your mortgage? Or you? Do you crave long-term financial stability, or just a few moments of intoxicating bliss, the cool embrace of granite pushing against hot skin?

Don’t answer that.


#1 T.O. Bubble Boy on 08.08.12 at 10:07 pm

In case you are wondering why you suddenly received a HELOC application in the mail:

(tick… tick… tick…)

#2 ANONYMOUS on 08.08.12 at 10:10 pm

Hey, no problem. All everyone has to do is go out and get themselves jobs that pay $150,000 PLUS per year, SIMPLE !

#3 JennX on 08.08.12 at 10:16 pm

That pic is a photoshop disaster.

#4 Bo Xilai on 08.08.12 at 10:17 pm

Dispatches from the Left Coast…

49 sales today in the Greater Vancouver Area, split between 11,000 real estate agents…

Times, they are a getting lean…

#5 Mithan on 08.08.12 at 10:19 pm

Garth, you didn’t mention Regina. Now everybody will assume regina is safe!!!

#6 macduff on 08.08.12 at 10:19 pm

I think in the general populace there are two common rules of thumb that are both dangerous and simply wrong. One, that property, a safe asset, will always go up and second, what I would describe as an optimism bias, that “everything will work out in the end”. It is easy, especially as a young person, to fall into both of these beliefs and not take heed to what is happening in the world. I also believe that there’s a tendency to deny reality in an effort to justify prior decisions. Lessons perhaps learned by those of us who are getting on in age.

#7 Devore on 08.08.12 at 10:19 pm

What? Hubby thinking for himself and disagreeing with the wife? This cannot stand!

#8 Click Here, its different. on 08.08.12 at 10:21 pm


#9 Renting in Sherwood Park (Sold in Edmonton) on 08.08.12 at 10:26 pm

Congratulations Garth. I see you’re back in the mainstream media. You’re richer than you think.

#10 DM in C on 08.08.12 at 10:28 pm

Why is she blaming you? Is hubby convinced they need to sell and rent? There’s a lot missing from her story.

Why didn’t you explain to Linda it’s the not the black and white of rent or own — it’s the percentage of net worth that the house represents.

#11 thomas on 08.08.12 at 10:30 pm

Gold ain’t dead !

#12 45north on 08.08.12 at 10:31 pm

macduff: there are two common ideas that are dangerous and simply wrong. One, that property, a safe asset, will always go up and second, what I would describe as an optimism bias, that “everything will work out in the end”.

the “everything will work out in the end” leads to complacency, lack of effort, lack of focus.

#13 Seven Stars and Orion on 08.08.12 at 10:33 pm

Gee Linda,
Thanks for tearing Garth a new one, I’m sure he’s huddling under his bedsheets in stark terror! Home wrecker!!!
“For me, it is far better to grasp the Universe as it really is than to persist in delusion, however satisfying and reassuring.” – Carl Sagan

#14 drydock on 08.08.12 at 10:34 pm


#15 City Slicker on 08.08.12 at 10:34 pm

Garth there have been white raven sightings in Vancouver, these rare animals only show up to bring light in times of darkness. The housing crash is definitely under way:

#16 Grim Reaper/Crypt Speculator on 08.08.12 at 10:42 pm

Just so ya know

# 5 Orange is not far from your Hotel Gig in Vancouver August 20…

(No its not a green grocer’s stand)

#17 kim on 08.08.12 at 10:43 pm

In case you are wondering why you suddenly received a HELOC application in the mail:

(tick… tick… tick…)

The economy is going to take a huge hit with HELOC being tapped out by over indebted people who are on the brink of bankruptcy. The fake economy was backed by cheap easy money and now the government can no longer back this reckless gambling by those who should never have been in the housing market. As we all know the bankers wouldn’t have even lent one penny to the majority of those who bought RE with little to nothing down if not backed by taxpayers. Soon you will see a garage sale like never before and if you are an American you understand what I am saying. It is sad to see we have many realtors on this message board who post their never ending lies and misinformation. Love your blog Garth.

#18 Jay Currie on 08.08.12 at 10:46 pm

I am always stunned when women I know and like look at me as odd for preferring to rent; but they look at my wife with something approaching hatred ’cause she subscribes to the happy idea that renting makes sense. Ans she lacks the requisite shame.

The ownership fetish seems odd as women, in my experience, like cash as well. Most of us can own or have a bit of surplus cash. Both is largely unheard of absent an inheritance.

Women remain an eternal mystery.

#19 TurnerNation on 08.08.12 at 10:47 pm

1. Doomer Dent’s ETF is no more.

BETHESDA, Md., May 21, 2012 /PRNewswire/ — AdvisorShares, a leading sponsor of actively managed Exchange Traded Funds (ETFs), announced today that the AdvisorShares Dent Tactical ETF (NYSE: DENT) will be reorganized into the AdvisorShares Meidell Tactical Advantage ETF (NYSE: MATH). The AdvisorShares Trust Board of Trustees approved the plan of reorganization effective May 21, 2012. DENT’s portfolio management team will resign, effective June 2, 2012, and Laif Meidell, President of American Wealth Management, will act as the interim portfolio manager. Pending shareholder approval, it is planned that the reorganization could be effective on or after September 7, 2012, with the Fund retaining the name of the AdvisorShares Meidell Tactical Advantage ETF (NYSE: MATH) and Meidell serving as the portfolio manager.

2. Ma and Pa are fleeing to CDs and the Orange Guy’s Shorts:

$535.5 Billion Pulled From Stock Funds, $5.7B Last Week.

Investors pulled another $5.7 billion out of mutual funds that invest long-term in U.S. stocks, in the week ending August 1. That brings to $535.5 billion the amount of money pulled out of such funds since the start of 2007.

#20 "Things will work themselves out" on 08.08.12 at 10:49 pm

#6 macduff


the “things will work themselves out” attitude is ubiquitous.

it is not just financially irresponsible; it is socially dangerous.

#21 John in Mtl on 08.08.12 at 10:54 pm

“Montreal will crumble if the separatists return.” – Garth

Well, anything is better than Mr Charest at this point. And Quebec will never separate, not now, too many immigrants. If there’s a divorce, it may be Canada that kicks us out.

Everywhere we are now forced to vote for the “lesser evil”, not “the best”. And anyways, whoever gets voted in – in any election anywhere, we all know now that politics is a rigged game and corporations and big banks are the ones that really run the show, not the elected government “for the people, by the people”. History never changes; given time, greed and corruption always seem to win the day. As a species, we need an “extra-terrestrial event” to come to our senses. Fat chance of that happening! Given current planetary conditions and circumstances, I’ll use a beloved phrase on this blog: “this will not end well”.


The mere spectre of a separatist government is enough. — Garth

#22 TurnerNation on 08.08.12 at 10:56 pm

Business idea? GreaterFool home divorce kits.
Only $599. Not available in Quebec.

#23 ags on 08.08.12 at 11:00 pm

Let there be friction between mars’s and venus’s numbers, let them rub against another until a flame is ignited and the numbers burn. And then walk away from the spreadsheets and hit the bedsheets, turn to the friction of skin on skin, heating up, warmer, warmer, hot… igniting the flame that unites… dear mars, dear venus… you ARE a marriage, you HAVE a mortgage. Lose one. Keep the other. Pick your priority. All the best.

#24 Christopher Lackey on 08.08.12 at 11:02 pm

All right I just moved here bring on the separatists and the bargain basement prices!

#25 sid on 08.08.12 at 11:04 pm

I own a multi unit in Hamilton that gives a 7% cap rate at todays values. Are you advising that I sell because prices will drop, or should I hold on to it to continue taking advantage of the cap rates. Btw, looking forward to hearing you speak in Toronto some day.

Worship positive cash flow. — Garth

#26 Ex-Cowtown on 08.08.12 at 11:08 pm

I think we need a separtist gov’t in quebec. Drive the loonie down to $0.65 and oil exports boom!

Interest rates climb too!!! A double win for us blog dogs with cash and working in the oilpatch.

For everyone else ….meh, not so much.

#27 Once a Banker on 08.08.12 at 11:11 pm

I used to be one of the big banks mortgage lender at branch servicing Vancouver downtown and West Side.
Now I am an investment guy.

Talking about recent amortization reduction from 30Y to 25Y, remember HESLOC is “perpertual” demand loan that you may pay I only as long as you keep the property.
Also of course, you may re-borrow paid down P part as many time as you want.
I am not sure about the actual stats, but pretty sure many HESLOC holders in BC lower mainland – maybe more than traditional mortgage holders.

In fact, banks encourage staffs to sell & convert mtg to HESLOC a big time. Bank staff (= sales person, no better than used car sales, yes, they are the one, your friendly banker at your branch) are encouraged, ranked by mortgage sales, widget, loan insurance penetration, HESLOC-Fixed term convertion points, etc etc you name it.
So, 30Y to 25Y Amor. reduction in my opinion may not affect borrower immediately, but coming (most likely, right?) HESLOC cap to 65% LTC & HESLOC – Term force = no more I only payment, no more re-borrowing from your HESLOC limit, will / must impact BC HESLOC holder a big time.
I have some bank sales strategy stories to share with you, but will get back again.

#28 John in Mtl on 08.08.12 at 11:20 pm

“The mere spectre of a separatist government is enough. ” — Garth

Well that’s true, happened before, won’t be different this time. But we managed.

We need “radically different” than anything on the table at the moment.


#29 Once a Banker on 08.08.12 at 11:23 pm

Just to add: I was doing mortgage / HELOC between 1996 and 2007.
I meant LTV on HESLOC cap to.
Stated income, GDS/TDS pver 300% approved as long as you have 35% D/P, Underwriter overrode if D/P is over 30%, wait, LTV is based on appraisal.
In the year of 2006, 2007, I remember appraised value often exceed purchase price.
So, we bank staff worked around with LTV, too of course!
more HESLOC volume, more sale points.
You are going to be amazed how much big bank’s frontline staffs are pitched.
I am now in the brokearage firm, yes, stock broker.
But we are all regulated, licenced and monitored.
We are taking all risks if not giving anything that is not client’s benefits.

I went too long, may get bak again some time.

#30 Einzatgruppen kanada on 08.08.12 at 11:34 pm

Piss off Linda marriage doesn’t just revolve around a blog. The skinny: You want keeps he doesn’t. If he goes 50% + small mortgage ain’t yours.

#31 Spiltbongwater on 08.08.12 at 11:42 pm

Garth, do you still predict that BoC interest rates will be higher by Christmas?

What do you think? — Garth

#32 Mel on 08.08.12 at 11:44 pm

It is truly sad when Banks who were preaching higher prices not soo…. long time ago, now are telling people that what they told them a year ago, is not going to come true.

Another reason to stop listening to ‘experts’ and learn from history yourself. If you do not, you will pay the ultimate price with your financial future.

You must remember, it is in their ‘best interest’ to keep people optimistic about their purchases. This is how they make their money. It is up to you to decide if what they are selling you is in ‘your’ best financial interest.

Today, we have too many home owners. That will only make things worse in the coming years. Add ageing population, and you could have crisis on your hands.

Thanks to Bank of Canada, Government, and people in general who kept things going until they could no longer do it.

People never learn!

#33 futureexpatriate on 08.08.12 at 11:51 pm

It’s really simple. Tell the wife that she CAN buy all the house she wants. With ONLY her money and credit.

Worked in the ’50’s.

#34 harden on 08.08.12 at 11:55 pm

GT’s feelin’ it.. on a roll.
I predict paparazzi at his Vancouver gig!! And more than a few curious realtors…

#35 tkid on 08.08.12 at 11:56 pm


Garth doesn’t say you shouldn’t own your own home.

Subtract your age from 90. The result is what percentage of your net worth the home should be. So if you are 40, your home should be worth 50% of your net worth, with an equal amount of money in your bank account.

If this describes your financial situation, you have the argument to fling back in your hubby’s face and it is a Garth-Approved argument, which should really shut your significant other up, eh!

#36 a prairie dawg on 08.09.12 at 12:01 am

Linda, just cancel your internet connection.

And spare those of us who aren’t married to you the suffering that he’s going through.

#37 Baron von Munchousen on 08.09.12 at 12:07 am

Linda is probably just pissed about the Canadian women’s soccer game. I wouldn’t know ‘coz I’ve been watching beach volleyball all day :D

#38 Mel on 08.09.12 at 12:07 am

Jay Currie:

I don’t know where you have been meeting these ‘women’, but I can assure you, there are plenty of women left in this world who don’t get horny easily.

So, stop feeling pity for yourself. Start looking somewhere else, you never know what you shall find.

#39 new canadian on 08.09.12 at 12:08 am

Garth, did you really grow up in Canada? I really appreciate fair treatment of both sexes but some people will complain about discrimination. Women are not ready to face reality.
In the end, we are in a country where you can be charged with domestic violence when you just yell at your wife after she burned dinner.

#40 Astute Poverty on 08.09.12 at 12:13 am

You’re richer than you think… cash out now

#41 Carpe Diem on 08.09.12 at 12:16 am

Here is my question.

With this drought in the States and Canada causing +3% food price increases, how will this affect interest rates in the next few years?

#42 David on 08.09.12 at 12:20 am

The sentiments Linda expressed are hardly atypical. The best advice Linda can get is to deal with reality before reality deals with her. The home ownership at any cost mantra has led millions of otherwise sane folks world wide into a financial abyss which ultimately crashed the entire financial system. Linda suffers from heath and home syndrome and thus finds this blog threatening to her most cherished beliefs. The other reasons she mentions to support home ownership are grounded in the realm of intangibles.

#43 MarcFromOttawa on 08.09.12 at 12:23 am

#41 Carpe Diem

Centre Banks will only raise interest rates if there is upward pressure on wages.

There’s a difference between lower prices because of technological advances or higher prices because of droughts or hurricanes and monetary policy.

#44 Freedom First on 08.09.12 at 12:24 am

I am amazed at the # of people/couples who manage their finances by emotion, and not with sound financial principles. The failure to do so continues today, as it has throughout history, causing financial ruin, failed relationships, and countless other problems associated by running financial matters with the emotions. For myself, looking after the well being of myself and family is #1. To behave without prudence, and put oneself, and the people you love, in a vulnerable position, which could have grave consequences is foolhardy. We must look after ourselves, for if we do not, who is going to?

#45 Form Man on 08.09.12 at 12:24 am

#170 Herb ( yesterday )

excellent comment regarding the resident bigots

Garth today……another stellar post

#46 lennydawop on 08.09.12 at 12:27 am

I dont see any prices dropping in the gta ! So keep on ranting but there ain,t no price drops here !

#47 oceanside on 08.09.12 at 12:28 am

Things are going well in Parksville and Qualicum Beach, no slowdown here. 629 residential listings and there has been a total of 57 sales in the last 31 days. It’s different here on the Island.

#48 Lookinin on 08.09.12 at 12:28 am

#8 – no need for language like that. It just makes you look even more stupid. Something’s getting past the censors.

#49 Skip Breakfast on 08.09.12 at 12:29 am

I love how the “You’re Richer Than You Think” meme is finally backfiring on Scotiabank. It was always obscene, and now it’s just pathetic. Are they still using it? I’ve since left the country. But I did start retching and hurling at the words long before today. In fact before 2008. And there was a brief moment following the 2008 debacle that Scotiabank actually pulled the campaign (as far as I could tell anyhow–because it disappeared from sight). And then things “settled down” and the slogan came back! The nerve! They deserve everything they’ve got coming. And, unfortunately, so do the otherwise innocent folks who believed their lie.

#50 Not 1st on 08.09.12 at 12:37 am

Quebec better not try that separatist crap again because the rest of canada is prepared to give it to them this time. The most broke, bitter and bitching province better keep quiet for a while.

#51 Joke Anagan on 08.09.12 at 12:43 am

My wife and I are selling the house and were going to rent. I’m so glad we didn’t already sell because we would have made another bad decision. Tommorow we are meeting with the agent to tell her to drop the price and get it sold ASAP. We will settle all our debts and have a little bit left over to invest. I’ll never see things the same way again. I don’t think we even really care anymore about owning a house. I want to be able to run away with the wind if my job goes extinct. I bought this house were in in 2000 for 126,500. Racked up debt to 200,000. We can sell it for 260,000 if we are lucky. My uncle Ted tried to warn me about debt when I was a kid. I lived debt free for many years untill well after I married my wife. Shortly after buying the house when I was 25 something changed and we got led down the path into debt madness. I’m 37 now same wife same house. We both want out of the house because it’s time to jump. If we can pull this off, I’ll get my but back in line and Never do this again!

#52 Lenar on 08.09.12 at 12:45 am


Garth doesn’t rent, he owns. What hubby is not telling you is what % of your networth a house should consume. In other words you should not have no more than x% of your personal networth in a home. Since you have a mortgage you are below x%. Bluntly You are in debt, Garth isn’t. You can’t compare yourselves.

Garth can tell you the x%, or better yet ask the hubby. If he can’t answer that tell him to go read more Garth and come back to you with all the facts, not just the parts he likes to spout off the top of his head.

Perhaps when you both have the same facts/fiction in front of you, you can make an informed decision together and avoid all friction. One spouse setting the tone for financial matters is the recipe for disaster. I am sure Mrs. Garth is well versed in Mr. Garth’s philosophy. I further bet she agrees with what he is doing, else he wouldn’t be spouting off left, right and center and would be living in the dog house. Perhaps that is what he owns?

#53 Saskatoon-Living on 08.09.12 at 12:46 am

If anyone’s wondering about the woman in the picture, she’s not scared or mad; she’s just experiencing the after effects of a good old fashion freakfest.

#54 canus on 08.09.12 at 12:49 am


There is nothing wrong with wanting to own a house. Or buying one at the top of the market. As long as you are comfortable and can afford the loss in value, similar to how a luxury car depreciates, do what makes you happy. Life is too short to penny pinch when you don’t have to.

Now, if you cannot afford to lose the value, get out and rent. Get liquid. And buy yourself some nice things with the money you saved. Buy a nice car, the worst you can lose is only 10% of what you would lose on the house. You will be richer than your friends, stress free and enjoying your life with your happy husband.

#55 OTR on 08.09.12 at 12:57 am

“New Brunswick and PEI spared (who cares?),”

Lol. I’m from NB, so I care. I wouldn’t mind seeing a correction there though. I’m moving back next year and wouldn’t mind buying some cheap(er) rental properties.

Honestly though, it’s pretty fiar to say that no one cares about NB and PEI, which is why I’d be pretty happy with Quebec seperating and the Maritimes following suit.

#56 Nostradamus Le Mad Vlad on 08.09.12 at 1:07 am

“. . . Lindasnugglybunnywonks . . .” — Hmmm. Bunnywonks. How can a Marquis de Sade novel be created from that word? Thinking . . . thinking . . . oohhh, it’s hard!
“What does this mean? Meanwhile we’ve not even started to see the impact of those mortgage, cash-back and borrowing changes now clicking in. Sounds familiar” — So, from 2013 on and incl. the nine mln. boomers retiring in 2015, this will be a money-free, insane decade (or more) from people who were hoodwinked into taking on large debt loads, without being able to pay it back.

Somewhere, politicos and lobbyists, who chopped and changed the rules, have to be called to account for their part in being associated of this mess.
BoE Economy could stay in reverse for three years; Free Gas for the UK from EU; Stressed Workaholics For those who have jobs; Cutting Costs Firing the lobbyists / politicos? But Griwth forecasts shrink; Cuppa’s uppa 25% rise? A Greek banker, the Shah and Libor; Holy Sheepshit! Financial Algorithmic trading. Never seen a chart like this one; Citigroup Converting homeowners to renters; Facebook Three more resignations in a month; Rio Tinto likes China; The French Recession; German QE; McDonalds sales bite; Retirement Not good planning, and DIY Pensions 2/3 fail; Oil and Gasoline seen increasing; Home prices continue to fall.

Obummer Soft on banks; American Airlines Pilots reject final offer (until the next one); Electricity Prices going up? NKorea Just like Af’stan — “Invade, dammit!”.

The Millionaire Next Door 19 things that won’t be heard; Ghost Cities in China; Maximum Income (Tax Rate); Ten Cheapest Airports Not Cdn., obviously; The Olympics That’s why they are known as The Owelimpix! Baskin Robbins heir rebuilds pension after Madoff; Apartments Rent or buy? Cdn. Pensions Still on?
Steroids Shrunken testicles, etc. ‘Roid rage; Diet change Better than statins; Seaweed on Slime Street; False Wars “No one threatened America since WW II. No one threatens Israel now. Both countries spurn peace.”; Shamans Perceiving Death Life never ends. It’s only these physical bodies which run their course; Blimping Hell over New Jersey; Jo’burg Rare snowfall; Playing with Fire.

#57 mark on 08.09.12 at 1:14 am

Ah this is nothing. Wait until you start getting the hate mail from mother-in-laws.

#58 a prairie dawg on 08.09.12 at 1:21 am

#41 Carpe Diem

With this drought in the States and Canada causing +3% food price increases, how will this affect interest rates in the next few years?

– — –

Since the Feds conveniently removed food and fuel from the inflation calculations, that’s not a problem anymore. At least for them…

Now it’s only about ‘core inflation’. Problem solved.

Frankenumbers are all the rage. Everybody has one.

After all, it’s not like Canadians have to eat or drive.

#59 getreal-tor on 08.09.12 at 1:54 am

#39 new canadian on 08.09.12 at 12:08 am

At least your wife can cook dinner. If it weren’t for take out, many guys would die of hunger. :)

#60 TimV on 08.09.12 at 1:58 am

Sale price of my house in 1989: $X
Sale price in 1997: $X – $100000 (Slightly >30% drop)

Based on actual sales of the same house, both times sold while snow was on the ground (so no seasonal effects).

From people who’ve heard the arguments and lived through those years, I’ve gotten comments such as “Wow – so prices really don’t always go up”.

Try putting real numbers to the argument, eg: 50% probability we could save $Y dollars by taking this course of action (don’t forget any investment returns earned by cash in the bank!).

And, also consider real effects, such as the non-trivial inconvenience of moving. Put a $ price on these inconveniences. Add up the $s.

But it is possible to have a rational discussion.

#61 s on 08.09.12 at 1:58 am

@ 31 Spiltbongwater

I doubt interest rates will rise, carney’s been saying it for years without action.

#62 joe on 08.09.12 at 2:20 am

I see a lot of ppl on here referring negatively to car salesman. I am a car salesman and make a great living doing so, about $85000 a year on average. Some years break a 100 some are 70. At least I dont try and stuff dillusion down ppls throats like realtors and mortgage brokers, I present what I have to offer and the client can make a decision, whats wrong with that? I think lawyers and realtors are much worse. I can do 10 test drives before I sell and get paid.
Thank god for Garth and his website, I always refer to it with my clients that start talking about depreciation etc. (I could buy a house for the price of that car) In reality if you buy a fully depreciated high end, low production car like a 1998 porsche 993 turbo you will not loose a penny in depreciation unless you mile the car out. It might even go up in value like it has for the last 5 years. Will do much better then real estate in any major Canadian city in the next 5 years. And you get to impress the amazons with it too while you own it. Yes if you buy a new one you will loose your shirt, 50% depreciation in first 4 years. Like anything else including real estate do an educated analysis of whats happening in the market and make a decision. Ppl have lost touch with the value of money because banks are whoring it out, a credit contraction is clearly here, the banks say it, the government says it, garth says it.
So Linda, let your man take charge he knows whats going on and 4 years down the road you can buy your house back put a 993 turbo in the garage (paid for) and go on lavish vacations with the family every year and enjoy life. Buying a house today or refusing to sell (if you still can sell) is the equivalent of buying the 993 new.

Granite does not = hapiness.

Financial Freedom does!

Dont worry about what your idiot, dillusional line of credit baller friends think Linda. When those ‘line of credit ballers’ see you and your husband are cruising around in a 993 turbo going on road trips and swimming with dolphins in aruba, just enjoying life then you can ask how ‘owning’ is going for them. You can invite them for the house warming to your new bigger house, with more granite, better view, bigger lot, 4 years down the road bought for less then your average house is worth today.

Happy Selling ;)

#63 Really on 08.09.12 at 2:31 am

Come on Garth!
At least remind her that you are okay with people owning a home if it represents an appropriate percentage of their net worth. Give her some hope.

#64 cynically on 08.09.12 at 2:33 am

I see that 3 of the big 5 banks are adhering to their extremely Canadian conservative character in their estimates of the decline – one at -15% and the other two at -10%. Could this be an average of the entire country because we all feel the plunge in the two hottest markets -T and V – will be much greater or are they playing the RE game where it almost never rains and those few cloudy days disappear quickly. Or maybe their economists never got their high school deplomas.

#65 truth hammer on 08.09.12 at 2:37 am

We already have a Canadian style crash in places like Penticton and Kelowna……it’s like driving though a slaughterhouse where the cows are milling around dumbstuck on their knees and waiting for the knife.

Years of inventory……no buyers…..not for years…….price reductions…no buyers……yet asking prices are ‘firm’……albiet no offers………whole streets vacant……typically Canadian……too stupid to duck…..and now hanging on ‘because it’s different here’… they were told by Global’s pimps….bwhahahahahahahaha !!!

I drove past one new place…..the builder was on the front lawn watering the grass……..he looked pissed… this wasn’t his first weekend wasted…..the landscape was maturing…..a sure sign that the place had been for sale a long time after completion….the tard sign out front said ‘new price’…..I wanted to yell out the window that he should burn the place down for thew insurance……..but knew he’s probably already thought of that…and so had his insurance agent……the premiums on a vacant spec are nasty……so the COC loan payment.

I’ve got to think small and large builders are crapping themselves now that the mad rush by the media to report the blood flowing………….there are too many towers in TO and townhouse projects in places like Richmond are dead dead dead………no wonder as they reached the million mark for 1500 sq ft.

FSBO’ sprouting like mushrooms….realtards are getting creamed……but don’t look for direction from the Real Estate Boards…they are so full of crap they stink…..they represent the salemen remember…..

Those who have bought this year are deep underwater in reality as there are none but forced sales below market….retail is dead……..If one has to complete on a deal at some point in the future best reconsider……the blood is flowing.

#66 Buy? Curious? on 08.09.12 at 2:54 am

Garth, my main man, Turner, let me run down a little story for you. Say this cat, graduates from high school and decides to go to university. Using the money he saved as a teenager plus OSAP (student loans) buys a 5 bedroom house near a university 1991. He lives in one room while 5 others share the other 4 rooms (2 dudes in one room, does he care what 2 guys do in their own privacy? As long as they pay the rent.) He does that for 4 years, gets a job, nothing special, but continues to rent out the house. Pulls some equity out to flash some cash to find a hot wife from a small town (Coburg) and buys another place. Pays both off in 20 and 26 years respectively. Then sells it all June 2008. Do you know how large I’m living, er, I mean, how large he’s living? He came from nothing and is now rubbing shoulders with some older fat cats at the finest charity events. Now, maybe in a few months, will be the perfect time for some young cat or someone flush with cash *ahem* to get into the market. Why? Because someone has to live somewhere. Cash flow negative in real estate isn’t forever and there are ways to cut corners (legally of course). All these people who are waiting out the market or are selling and renting for a while, where do you think they’re going to live? That’s right, Casa de Curious!

So if you’re young, take advantage of the times. People are scared. Everyone knows that you buy during fearful times and sell during euphoric times. Duh. Watch the movie Trading Places starring Eddie Murphy and Dan Akroyd.

#67 Soylent Green is People on 08.09.12 at 2:55 am

Renting the entire upstairs of a house for $1300 per month + 70% of utilities (roughly $200 per month) available immediately. Cable included. There are three bedrooms, a living room, dining room,

****kitchen (large enough for a kitchen table and shared with 1 person in the basement whom is very quiet and respectful),

bathroom with tub and shower. Parking included and TTC bus stop located directly outside the house. Close to grocery store, located in a quiet neighbourhood at Renforth and Eglinton in Etobicoke. It is a 5 minute walk to Tim Horton’s, 24 hour Macs Milk, Walk-in Clinic, Pharmacy and Pizza Pizza.

#68 Mr Buyer on 08.09.12 at 2:57 am

In the end, we are in a country where you can be charged with domestic violence when you just yell at your wife after she burned dinner.
Yes but we men have broad shoulders, we can take it.

#69 Mr Buyer on 08.09.12 at 2:58 am

#41Carpe Diem on 08.09.12 at 12:16 am
Here is my question.

With this drought in the States and Canada causing +3% food price increases, how will this affect interest rates in the next few years?
I heard somewhere that a mere 2 bad growing seasons in a row all bets are off.

#70 Soylent Green is People on 08.09.12 at 3:00 am

Re #39 new canadian on 08.09.12 at 12:08 am

Definition of wife

Where a lower class male still gets to enjoy an unpaid domestic servant.


#71 detalumis on 08.09.12 at 3:07 am

#33 It’s really simple. Tell the wife that she CAN buy all the house she wants. With ONLY her money and credit.

Worked in the ’50′s.
It worked for me in Jan 1990 when I bought my house on my own with my own credit (layabout spouse) and it didn’t take until 2004 to recover more like 1994. I also bought it with almost nothing down (shady mortgage broker), high interest and then paid it off in 11 years all the way accumulating a nice portfolio of dividend bearing stocks on the side.

Next time you get reincarnated I suggest you pick your wife for her character, earning capacity and stock market acumen, not her hotness factor and then you too can enjoy a nice happy financial life. Plenty of men have learned this lesson but not the ones who post on here, they really do seem to live in 1959.

#72 Burnt Norton on 08.09.12 at 3:31 am

All the Lindas out there need to wake up from this bizarre contrived dichotomy they have cooked up in their minds between the so-called “financial” and “emotional” aspects of shelter. As if they are mutually exclusive (?!)

It strikes me as an attempt to rationalize / intellectualize the inclination to act in a manner that is materially costly in order to satisfy an (unconscious) emotional need.

Let’s look at the cost issue first. The costs to a couple will involve labour that takes away from time together and / or with children. This cost can jeopardize marriages and parent-child relationships. The individual under the most pressure to trade labour for shelter will likely grow resentful due to the lack of work-life balance / leisure time available in such an arrangement (especially if it feels imposed or if it is not financially sensible for the family).

Now let’s look at the emotional needs issue. Fear trumps greed. So, could it be that the Lindas out there are fearful that renting shelter could detract from marital stability in that it might make it easier for a mate to walk out on them? Or is it a pure Seinfeldian “nesting vs hunting” issue? (Mars vs Venus, etc…)

My guess is that what most women want is sovereignty. It is an interesting concept to consider. One which allows the financial and emotional considerations of shelter arrangements to complement one another. This concept is where men and women can find common ground on the shelter issue.

The sad irony of situations in which the Lindas out there seek to sacrifice their families’ financial standing in order to satisfy their emotional (fear-based) needs is that instead of enhancing their security they are likely jeopardizing it (both financial security and emotional security). This also tends to happen because they are not enough at peace with themselves and / or their partners.

Communication and reflection are the keys. Sovereignty is the lock. Live within your means. Be grateful for what you already have.

#73 Click Here, its different. on 08.09.12 at 3:35 am

“2.4 millions for that dump !!! Are you crazy ?”

“Well, it may sound a little expensive but its located on planet earth which is the only inhabitable planet known in the whole universe. Everybody can only want to live here. Its the best (and only) place to live … Think fast now its 2.5 …”

#74 Aussie Roy on 08.09.12 at 4:26 am

Aussie Headlines

Aussie banks are “as safe as houses” – no subprime here.

WESTPAC bank has been accused of bankrupting a 98-year-old woman after lending her more than $400,000 to invest in property.
At a Senate hearing today, Westpac faced claims that a Gold Coast bank manager signed up at least four elderly people for loans worth up to $800,000 promising them a return of 15 per cent

One 98-year old nursing home resident, who is now 101 years old, was lent $440,000 through a 30-year loan investment to invest in a Queensland property developer that collapsed and left her broke.

#75 House Horny Housewife on 08.09.12 at 5:11 am


Linda is right !

A lot of people who come to your blog walk away with the wrong idea. Many think that what you are saying is that renting is better than owning.

Correct me if I’m wrong but I believe what you are actually saying in your blog (over and over again) is that it is fine to own a home as long as this does not represent your main financial security. What you are also saying (over and over) is that speculating on the real estate market to make money is assinine, especially in this current economic climate. AND that if you are in the market for a home in one of the over inflated metropoli (pl?) at the present time, it may be wiser to wait a while until the volatile real estate market has come to rest and the smoke has cleared .. that is, unless you cannot wait and you can afford to lose about 10-20% (depending) of the value of what you pay. All of these are valid points that I don’t think anyone can dispute.

Many, however, do not get this and think that you are saying rent rent rent … forever and ever, no matter what.

Although for most people, renting is probably the best option, especially for those with no savings to speak of, who are actually considering paying three times what a house is worth simply to outbid another idiot for a crappy bungalow in the suburbs, buying is not necessarily evil, if done in the right circumstances.

Perhaps Linda’s husband is one of those people who has misunderstood your message and perhaps Linda and her husband have a financial situation which favours them owning their own home. A small mortgage that they can afford and a retirement savings plan that will see them into their golden years. One needs to look at each situation separately and what is good for one person is definitely not good for another.

I mean, look at all of the replies you received to this entry from people who think buying is for suckers and renting is for winners, in ANY circumstance. To me that alone is proof that many people just don’t get it (due to no fault of yours .. many simply prefer to espouse a black or white way of doing things and to interpret messages to suit their ends .. be it to simplify their lives or to make themselves feel better and justify themselves as renters .. whatever).

Linda, if you can manage your mortgage payments and all of your other home owners’ expenses with ease, meaning that you are able to take vacations, save a comfortable nest egg for your retirement and live your day to day life in the way that you want, then there is absolutely NOTHING wrong with owning your own home.

If, on the other hand, you are thinking of changing homes to something that you know you cannot afford, or you are making unrealistic sacrifices to your present and future in order to be able to own that home, then for heaven’s sake, get rid of it, save your money, invest it and come back to the housing market in 5 years time to see what you can find that suits you.

I am in agreement with you. I hate landlords, noisy next door neighbours, thin walls and cheaply built apartments, not being free to do what I want with my home surroundings, not having my own outdoor space etc.. I am totally with you on this. I also am much more comfortable living on my own property, despite the challenges that this also poses. However, I did rent for many many years until I was comfortable financially owning my own home (so comfortable in fact, that we paid for our first home in 7 years by making double payments and putting down balloon payments .. don’t mind the bank helping but I draw the line at taking advantage). Renting is not horrible, especially when it is the logical thing to do under the circumstances.

Garth, I get all of the financial stuff and yes many will be had by the current financial climate. MANY. But people lose money because of stupid decisions everyday. They also lose spouses for the exact same reason. Linda, sit down and talk to your husband. You will find that most likely it has nothing to do with Garth’s blog but with a financial insecurity that Garth’s blog happens to be satiating. If you can show your husband the numbers that make sense, I am sure he will come around. If you find that the numbers don’t make sense, well then I would suggest you reconsider your position.

All the best.


#76 Piccaso on 08.09.12 at 5:37 am

You’re not as rich as you think… ooops

#77 Danforth on 08.09.12 at 6:29 am

just a few moments
of intoxicating bliss
granite against hot skin

Another brilliant haiku !!


The drop will not be homogenous. …, the GTA wounded badly in some hoods…

Q: Your prediction for East York semi’s, walkable to TTC subway, currently peaking around 500K ?

#78 Taipan on 08.09.12 at 6:29 am

Hi Garth.

This was a table that I used to visually explain the changes in terms and interest rates.

It shows what a person who could afford to pay $2,614 per month and how changes to government rules took a person who could only afford a property of $500,000 all the way to over $1m within 3 years and then back down to $700k.

No changes in income, or anything else, just changes to terms, interest and available finance by government rules.


If you dont want it delete the whole post.

#79 Gypsy Kid on 08.09.12 at 7:26 am

sigh….reading in-between the lines, i’m going to assume that houses in “central” neighborhoods in Toronto wont be falling much, if at all, according to you, Garth.

this is not good at all. not that falling home prices and financial ruin of hundreds are good. but houses will still remain unaffordable for families with kids. T.O. condos are too small to raise kids in. What is the future for families with two or more kids???

#80 Bottoms_Up on 08.09.12 at 7:32 am

#49 Skip Breakfast on 08.09.12 at 12:29 am
They changed the ad around to say something along the lines of:

Sheeple: “I have some obligations, but in a few years I’ll be OK”
Bank voiceover: *you define richness*

#81 Jason on 08.09.12 at 7:38 am

“some hoods in the GTA”? Curious if this means you think the ballooned prices in “hot” Toronto hoods will continue?

Yes, actually. Slower sales, sticky prices in areas where demand always exceeds supply and buyers need not borrow. — Garth

#82 Tony on 08.09.12 at 7:42 am

Re: #25 sid on 08.08.12 at 11:04 pm

Prices will nosedive in Hamilton, a city wrought with steel stench a city you never want to mention to anyone if you actually live there.

#83 svend on 08.09.12 at 8:05 am

“for two years this pathetic blog has been predicting that national house prices will fall by 15% in a correction”

It’s been 5 years Garth, funny how time flies. The are only two thing to learn about real estate here:

1. what goes up has to (partially) come down

2. it is impossible to time the market, to the degree that it is a waste of time trying. buy a house if you want/need one, otherwise don’t

Blog has existed for four years. My 15%-then-melt conclusion was reached two years ago. It stands. — Garth

#84 maxx on 08.09.12 at 8:25 am

#8 Click Here, its different. on 08.08.12 at 10:21 pm

Thanks for sharing. That is the funniest video I’ve seen in ages.
Let’s see how much beneficially aligned vibrational energy comes back to flippers as the global economy continues to flop.

#85 Timbo on 08.09.12 at 8:28 am

“Industrial output shrank 1.8 percent, dragged down by a deep dip in manufacturing, the data released on Thursday showed. The number was lower than a forecast of 1 percent growth in a Reuters poll and sharply lower than 9.5 percent growth a year earlier.”

dips can cool you off in the summer……

“Industrial output, a major measure of how healthy the Chinese manufacturing sector is, grew 9.2 percent from a year earlier, far below the 9.8 percent that analysts polled by Reuters had expected. The figure also marked a slowdown from the 9.5 percent seen in June. ”

Come on world, buy something……….

#86 2centsCdn on 08.09.12 at 8:32 am

I agree with #35 T kid. If Linda and hubby have a small mortgage (as she says) and like where they live. I’m thinking sitting tight might not be the worst thing in the world.

We’d have to see the math scenario’s on their situation and how things would play out (cost’s to sell, move, rent VS where and when to jump back in …. and the money saved). Very disruptive if there’s kids and schools involved. If the whole net gain wasn’t at least $100 grand and took two or three years to play out …. I personally wouldn’t bother.

It’s these knuckleheads who have 4-5-$600K+ mortgages who bought in the last 2 years who should get the hell out and rent ASAP.

#87 bermudab on 08.09.12 at 8:33 am

I care about PEI…. Maybe should move there any thought on that?

#88 hs teach on 08.09.12 at 8:50 am

Teachers need more money! They will strike if they don’t get it. Simple solution: raise taxes. Go McGuinty Go! Go Ontario Go! Yay!

#89 is rim dead? on 08.09.12 at 8:53 am

Rim is dying and tons of houses for sale in kw for $800k+ lol its basically a farm town and ppl are asking for almost $1M for particle board houses haha


#90 tony b. on 08.09.12 at 9:00 am

# 82–sorry–steel is gone in the Hammer–only a few folks still in the biz—its become the next suburb after Burlington–prices are low enough that if you can handle the 50 min train ride to TO it works great as a suburb.
There is more green space and waterfalls locally then any other city. It also gets you a lot closer to the US border so light industry/ manufacturing is booming
Dinosaur thinking like yours went out with Stelco–but believe what you want
house prices habve gone up steadily and averagesd 7% per year for the last 4

#91 TorontoBull on 08.09.12 at 9:15 am

“women are to be loved, not understood”-Oscar Wilde

#92 Toon Town Boomer on 08.09.12 at 9:24 am

When Garth mentions someone finding home to be a cardboard box behind Sobeys. Makes me sad for all the families that have been hurt by all this housing crap. To rent a whole house here in Saskatoon you are looking at about 2,000 a month. So many families had to move because the rents got too high. We don’t talk or think about these people much. I hate what we have become as a society. Too much about “ME” thinking. What about them?

#93 mike on 08.09.12 at 9:28 am

off topic, I know…….
I am looking to invest into some long term RESP for my son. I want to buy REIT. Any suggestions what to choose?

#94 Carruthers on 08.09.12 at 9:29 am

#21 John in Mtl

Since the ’70s every time some bunch of back-woods, xenophobic, yoyo separatists came into power Montreal’s, and therefore Quebec’s, economy got crushed as business and talent left. It may not make as much difference now as there is not much left for them to destroy. Talk about cutting off your own nose to spite your face.

Quebec separatism was the best thing to happen to Toronto and Calgary.

#95 Nemesis on 08.09.12 at 9:36 am

@#56/Nostra – HFT

It looks like this, actually [in RealTime]…

#96 Lilyflor on 08.09.12 at 9:38 am

51 Joke Anagan

Exact same story for us. We we’re fortunate to have sold our house in 2010 as my hubby changed jobs, we had purchased in 2002. We settled all our debt and walked away with a chunk to invest with. After 2 years we are still renting and even if prices come down I’m not convinced I would buy. Home ownership, been there done that!

#97 Lilyflor on 08.09.12 at 9:48 am

You have to feel for the young first time buyers though. We can warn them all we want, but until they experience first hand the difficulties that come with home ownership it is just knowledge we are imparting. They will see the wisdom only after they have gone through the experience.

We were all first time buyers, (those that have owned) and some of us just got lucky! I know I did, but next time I will make sure that it’s not just luck on my side.

The one thing we can do for the next generation is to ensure that we educate at leat ur own children in financial matters at an early age.

#98 BM on 08.09.12 at 9:48 am

F’s mortgage-murdering changes, he says, are nothing but bad news to a collapsing industry. “If it continues to fall, they’re going to have to take a good hard look at what their actions have caused—and be prepared to make some adjustments.”

Garth- do you forsee the govt stepping in to do something here and reversing some of their actions.

Nope. Not unless collapse. — Garth

#99 jess on 08.09.12 at 9:51 am

74 Aussie Roy
“rogue” indeed should be in the plural form. For example in Mr. Dimon’s Diction :
…”It’s because of us. We scapegoat each other. We point fingers,” Jamie Dimon said yesterday.”


Reuters Runs Interference for Elite Corruption, Scrubs Article That Shows How Banks Get Out of Jail Free

FHFA Sends Notice to Federal Register on Use of Eminent Domain to Restructure Performing Loans
Washington, DC – The Federal Housing Finance Agency (FHFA) has sent to the Federal Register a Notice indicating its concern with the proposed use of eminent domain to restructure performing home loans and inviting public input.
As conservator of Fannie Mae and Freddie Mac and regulator of 12 Federal Home Loan Banks, FHFA has significant concerns about the use of eminent domain to revise existing financial contracts and the alteration of the value of the companies’ securities holdings. FHFA has determined that action may be necessary on its part to avoid a risk to safe and sound operations at its regulated entities and to avoid taxpayer expense. Additionally, FHFA has concerns that such programs could negatively affect the extension of credit to borrowers seeking to become homeowners and on investors that support the housing market.


Neil Barofsky on the “Broken Promises” of the Bank Bailouts
August 1, 2012, 10:46 am ET by Jason M. Breslow

“When Secretary Geithner told a group of us in 2009 when he was pressed on how this program [was] ever going to help homeowners, he portrayed what the program was really about. He said that the program was going to “foam the runaway” for the banks. He mentioned that the banks could handle a certain number of millions of foreclosures over certain periods of time and that this would help. In essence what we took that comment [to mean] was this was going to help extend out the foreclosure crisis for the benefit of the banks. They wouldn’t be hit with all of that at the same time.

Unfortunately the way Treasury ran the program, that foam was really supplied by the bodies of wrecked homeowners who may have provided a
S O F T L A N D I N G for the banks, but got absolutely crushed under the weight of this broken program.

#100 Smoking Man on 08.09.12 at 9:55 am

Todays headlines. Carney to rase rates. Bahahahaah. For all you track 6ers. What this means

The new mortgage rules and all the gloom on MSM has failed to derail this re market. So Carney old boy says he’s going to spike rates. As if anyone beilives him anyway.

The pigs will force him to send rates to basment so a pre emptive strike to kill this real esate insanity is warented but a housing sfh 416 crash. Not this decade

#101 Sebee on 08.09.12 at 10:08 am


Did someone just burn up the afternoon watching Pulp Fiction? I’m sure you meant to say Lindahoneybunny but didn’t want to hit on the lady – being a gentleman and all.

No one cares what I think, but since these bytes are free here goes. Anything less than 25% drop means nothing to me – considering the debt fueled run-up since 2000s, and even more so since GFC in both YYZ and YVR.

#102 };-) aka DA on 08.09.12 at 10:11 am

New house prices on the rise
by The Canadian Press – Story: 78898
Aug 9, 2012 / 6:27 am

“Statistics Canada says its price index for new homes rose 0.2 per cent in June, following a 0.3 per cent increase in May.

The largest May-to-June increases came in the southern Ontario region of Kitchener, Cambridge, Waterloo, where prices rose 1.7 per cent, followed by Winnipeg at 0.7 per cent and Victoria at 0.6 per cent.

On a year-over-year basis, the index was up 2.3 per cent in June, after a 2.4 per cent increase in May.

Toronto and Oshawa again were the driving forces behind this increase, rising 5.0 per cent.

Of the 21 metropolitan regions surveyed, three posted 12-month price declines in June, with Victoria recording the largest decrease at 2.6 per cent.”



#103 sid on 08.09.12 at 10:12 am

Tony, I am not worried about Hamilton taking a nosedive, it is a growing community with huge demand for apartments for lower middle class workers. I am worried however about whether I should capitalize on the gains made in the last 2 years (about 20% increase from purchase price; there are surprisingly bidding wars going on right now) and wait a year or two to buy back in.

#104 who cares on 08.09.12 at 10:14 am

who cares if houses crash after silver in soccer …..GO CANADA GO!!!!

#105 Smoking Man on 08.09.12 at 10:18 am

Hope condos tank. Like to pic up a few cheap but listings in a uilding I have my eye on surged last month but the red dots are vanishing fast. Condo owner aint giveing up so I join my good freind LaughingCon. Realtors. Is going to be a nasty condo crash. A nasty crash. Lol

#106 In The Doghouse on 08.09.12 at 10:20 am

Hey Garth , looking forward to your seminar in Van .
I wonder how many of those Realturds will be there trying to mingle with us common folk . Well , it probably wont be hard to spot them . Just look for the Jags , Rolls , Caddies , and Bemers . Jeez, I wonder how they can afford these types of cars…. Oh Ya ….on the backs of us common folks with their outrageous fees , combined with their lies , BS , and outright dishonesty.
Oh well,,, at least I’ll be driving to and from in my trusty Kia bought with Hard and Honest work.

#107 Victor on 08.09.12 at 10:25 am

In a new twist, Carney also said the Bank of Canada could act to help cool the red-hot housing market if needed.

In a separate interview with CTV on Wednesday, he suggested months of dire warnings that Canadians were piling on too much debt was starting to pay off. The pace of growth in household debt is slowing and the housing market is cooling.

“I think an adjustment is beginning in the Canadian housing market,” Carney told CTV.

Still, policy makers are monitoring the situation closely. “If additional steps are required, including by the bank, we will take them,” he added.

#108 Paul on 08.09.12 at 10:43 am

New home prices on the rise.

#109 Harman on 08.09.12 at 10:47 am

Of course government is to blame for propping up the housing market with artifically low interest rates, and dictating to banks what they can and can not do in terms of lending standards. Anyone with reasonable intelligence of economics can see there is huge housing bubble in most of Canada’s major cities, but most people like yourself Garth cannot distinguish between cause and effect. The government is the cause of the misallocation of capital and credit into the housing market. Cause being low interest rates, government backing majority of the mortgages creating a moral hazard, and dictating to what banks and can and cannot do. The government encouraged easy lending and running up debts by policy. It would be very dishonest to say that Canadians are to blame, when in fact the government set them up…

#110 David on 08.09.12 at 10:52 am

Garth has been consistent over the life of this blog about the potential for a nominal 15% price correction.
Individuals like Linda should realise that the housing bubble was not about granting her ilk the intangible benefits of home ownership, which there certainly are many. Linda might get the picture when she tries to sell the house or sees her tax dollars being used to cover former industry excesses.

#111 Nopal on 08.09.12 at 10:57 am


Do you realize the friction that you’re causing to your marriage due to your financial ignorance, and inability to put reason over feelings.

#112 cramar on 08.09.12 at 11:04 am

#75 House Horny Housewife (also #86)

Thank you! Finally the voice of reason.

It would seem that a lot of the dogs that follow Garth are Dalmatians—black and white! Rent is good. Ownership is bad. What seems to be overlooked is Linda’s comments:

“We own our own home with a small mortgage. I believe there are many other reasons to own a home other than financial, so I prefer to own.”

She doesn’t say what their mortgage is, how much they are in debt, nor what their net worth is. So people should give her the benefit of the doubt. She and hubby may be in a fairly good position just a few years away from paying off their mortgage and no other debt. They may live in a SFH in a good area that may only suffer a 10% decline in prices compared to a lot more in currently over-inflated areas.

The greatest financial danger for most families is not a decline in the value of their home, but in DIVORCE. That is one of the greatest destroyers of net worth there is. Many people never financially recover from it. To be avoided at all costs.

#113 The American on 08.09.12 at 11:13 am

Linda, you’re an idiot. You cannot blame someone else for causing friction in your own marriage. If there is friction between you and your husband, perhaps you should examine why. If you and/or your husband are blaming a complete stranger (aka Garth) for your woes, then you probably have significantly larger problems than some blog site. It sounds to me like you simply do not want to consider fact-based material as it may work to your disadvantage, and ultimately you throw a temper tantrum. Get over it, and get over yourself. Seek therapy instead.

#114 tony b. on 08.09.12 at 11:13 am

Sid–Hamilton is about 3 years behind TO as far as trends–much like Mississauga is about 1 year behind–the dog wags the tail–and Hamilton is about as far from the head as people will go to still get to TO–numbers will still continue to go up inspite of Garth raging about the overextended RE in Canada because frankly prices in the Hammer are low because of all the dinosours who still associate it with steel-union-blue collar. I own 2 other properties there that I rent for a positive cash flow. I’m letting other pay my mortgage down, putting $$ in my pocket and watching things appreciate. My thinking is 3-5 years before I liquidate in Ham. This is not the case in TO–wher I would be cashing in today

#115 Tony on 08.09.12 at 11:19 am

Re: #113 tony b. on 08.09.12 at 11:13 am

Here’s some good advice if you like money. Sell while there’s other fools in Hamilton with your same opinion to sell to. Real estate in Hamilton will plunge in price in tandem with Toronto, Misssissauga, Brampton and Ottawa.

#116 cramar on 08.09.12 at 11:39 am

#89 is rim dead? on 08.09.12 at 8:53 am
Rim is dying and tons of houses for sale in kw for $800k+ lol its basically a farm town and ppl are asking for almost $1M for particle board houses haha


A farm town? I wish! Perhaps you meant Wallenstein. K-W is more like TO in microcasm with various and totally different hoods. In my area houses in range of $200k to $300k are selling like hotcakes. Every time I turn around there are lots more on the market, yet they all seem to get snapped up rather quickly. I’ve never seen such activity.

I rode my bike around another Kitchener hood that I visited 6 months ago. Of the hundreds of houses I passed back then there was only one for sale. Now I saw two for sale and one sold sign. These are all nicely kept homes where the pride of ownership is evident. They are in range of $250-350k. The trouble with RIM employees is they bought into the newer ugly $800k hoods, instead of the $300k tree-lined older ones. Now they are getting burned badly.

#117 2centsCdn on 08.09.12 at 11:57 am

#114 tony b.
I disagree …. when TO is done appreciating …. Hamilton will be done appreciating. There’s no reason Hamilton will not keep going up when TO, Oakville and Burlinton are going down. But if your places are in positive cash flow, paying their mortgages down and you’re comfy being a landlord ….. nothing the matter with sitting tight. But more appreciation from todays date? Maybe in 7-10 years.

#118 Joe on 08.09.12 at 11:58 am

Just found this “great” offer from a nearby soon-to-be condo construction project in Montreal:
Looks like things are going _really_ well if they have to put up offers like this, haha. In fact, I haven’t seen a single car on their sales lot in weeks and at least 30 of their 72 units are currently listed on

Ce n’est pas different ici non plus, meme sans les separatistes elu!

#119 2centsCdn on 08.09.12 at 12:00 pm

Ooops! …. shoulda said “no reason why Hamilton will keep going up” NOT “no reason Hamilton will not keep going up” Jeez …. one little word can make such a difference.

#120 Smoking Man on 08.09.12 at 12:01 pm

My new scanner (I built). Picked up two stories one from Reuters and 1 from NASDAQ. All other stories. Gloom and ten point dip. Stories were related to stats can report that non of our canadian MSM is reporting with out the machines directive of talk this market down.

Everyone here has been bashing rbc economist guy. Well his call was dead on with his numbers.

#121 Doug in London on 08.09.12 at 12:15 pm

So the argument of whether or not to sell the house is causing friction in a marriage? If you think it’s bad now, just imagine how much more friction there will be if they don’t sell and values drop significantly. That will be double true for couples who find themselves under water as this correction unfolds.

@Ex Cowtown, post #26:
There could, as you say, be winners if the threat of Quebec separation arises. I live in London and have seen this region lose many industries as they are less competitive with the dollar at par with the U.S. dollar. The latest casualty is E.D. Smith foods will be closing a plant in the town of Seaforth. Separatists and a lower dollar? Bring it on!

#122 Inglorious Investor on 08.09.12 at 12:15 pm

So, in the end we’ll all blame the government for our own actions?

I am all for personal responsibility and due diligence. However, the government and the banksters know full well that most people don’t have a clue about financial matters, and that everyone wants more money.

Hell, they absolutely rely on the public’s ignorance and greed.

For this reason, they knew that changing mortgage regulations to make getting credit easier and to make housing seem more affordable would help drive many people to borrow more and spend more on housing. Then, when the market reached saturation (by historical standards), they changed the rules AGAIN to make credit harder to get.

It’s like giving out free hooch to a bunch of alcoholics. Then, when they are all drunk you snatch away the bottles.

Low rates, which were largely beyond the control of our banks and government, were also a major cause of the problem. However, if the government can change regulations to make credit more “costly”, they could also have introduced more onerous regulations to offset the affect of low rates and perhaps prevent such a large bubble from forming, along with the insane levels of debt that went along with it.

You’re damned right it’s the government’s fault.

#123 Interesting Times on 08.09.12 at 12:16 pm

#75 House Horny Housewife (also #86)

I agree completely. Renting isn’t always the right solution. If their mortgage is small and they are close to paying off their home and if it is in a good area where they plan to stay for the next ten years then there is no point in selling. They should just ride it out. The real estate commissions, legal fees and upheaval etc. involved in moving, along with the uncertainty for the future, isn’t worth it. Besides, prices have already started to drop. If they were going to do this, they should have done it back in March/April.

There is a certain peace that comes with owning your home debt free. They should just stay the course, pay down what is left of the mortgage as quickly as possible and start saving for retirement in earnest.

#124 jesslyn on 08.09.12 at 12:28 pm

There is something very wrong here. What happened to taking responsibility? What happened to doing your research? What happened to not wanting to complicate your marriage unnecessarily? Why don’t we care about the freedom and happiness of our spouses and family anymore?

When we were looking at houses in Vancouver, my husband and I were appalled at the the whole process. From the realtors to the banks to our choices in houses. I felt it was incumbent upon me to understand what was happening in the market before possibly making a very bad decision.

The last call I had with the realtor I explained that buying a house would be putting my husband and kids in a difficult situation and I could not have that on my conscience.

What do I care what other people think about me and my financial decisions? Why would I cave to pressure from others to buy now? They won’t deal with consequences-I will.

If you ever leave your husband, let us know. — Garth

#125 John on 08.09.12 at 12:29 pm

Detalumis wrote:

“Next time you get reincarnated I suggest you pick your wife for her character, earning capacity and stock market acumen, not her hotness factor and then you too can enjoy a nice happy financial life.”

If a man isn’t selecting a female on hotness factor, he’s not a man. The financial stuff is his responsibility. If he wants a “partner” ( Canadian style), gender, chemistry and nature are simply “options”.

In other words, you’re suggesting a bleak de-sexualized world. One where beauty contests, status, natural selection, gender and humanity have been sold off in favor of…what.

What we have in Canada right now. Here’s to the koolaid. Cheers.

Your advice is about frying pans and fires.

#126 Canadian Watchodg on 08.09.12 at 12:32 pm

#95 Nemesis

This is a better animation showing how HFTs have taken over 60% of market volume.

#127 Wudeva on 08.09.12 at 12:35 pm

Garth, Masterful writing!
This entry was positively orgasmic!

#128 zeeman1 on 08.09.12 at 12:37 pm

Garth, I sure hope you told Peter Simpson to take a good hard look at what HIS actions have helped cause.

You can also tell him that when a man lives by the sword he shouldn’t be surprised when he dies by the sword.

#129 Wudeva on 08.09.12 at 12:38 pm

If you’re as good of a speaker as you are a writer, security’s gonna have to remove me from the front row on Aug 20th for my wanton advances…

#130 wisewebwoman on 08.09.12 at 12:39 pm

I guess the only place left in Canada where house prices are on the rise is Newfoundland.
You never mention NL, is it totally under your radar?

Where? — Garth

#131 Gunboat Denier on 08.09.12 at 12:43 pm

51 Joke Anagan – RE wasnt the problem.

#132 pbrasseur on 08.09.12 at 1:00 pm

Montreal will crumble if the separatists return. – Garth

Well that sure won’t be pretty since Montreal, the second largest city in the country, is close to crumbling as it is….

It might crumble no matter who takes power, Montreal (and all of Quebec) economy is kept above water (barely) by rapid growth in public AND household debt, both of which are clearly unsustainable. When the music stops the s.. is going to hit the fan, you can bank on that. On top of that Quebec has the most rapidly ageing population in the world, nasty.

Not that Ontario is in much better shape BTW, it’s only earlier in it’s own decay, but working hard to catch-up…

If you think of what’s about to happen in BC then you get the picture for Canada as a whole… This blog is not about to run out of material, at least that’s for sure.

#133 Ferrari321 on 08.09.12 at 1:02 pm

FWIW – if you have time to listen to the FCR conference call – interesting remarks from the CEO on the Toronto condo market.

#134 Interesting Times on 08.09.12 at 1:09 pm

@ # 125 John

I’m sure you believe that women should never have been granted to right to vote either.

#135 sid on 08.09.12 at 1:12 pm

I would not directly compare Hamilton to Burlington or Oakville. Even at current inflated prices, a house in Hamilton is more than half the price of the exact same house in Burlington. Burlington is driven by emotions, whereas Hamilton is glamour free and strictly business. People live there because they have to, and houses are priced accordingly.

#136 bigrider on 08.09.12 at 1:13 pm

#75 House Horny Housewife.

Boy can you ever tell this was written by a woman.

On and on and on…

#137 bigrider on 08.09.12 at 1:24 pm

#124 Jesslyn-

A voice of reason and responsibility.

You’re probably hot to boot too !

#138 DM in C on 08.09.12 at 1:27 pm

In the end, we are in a country where you can be charged with domestic violence when you just yell at your wife after she burned dinner.


Good thing I can still yell at hubby for ruining the clothes while ironing.

#139 bigrider on 08.09.12 at 1:36 pm

Some simple math for you all.

Woman= Man – reason – accountability.
Woman + Man= house purchase.
Woman +Marriage= Man – freedom +mortgage.
Woman +Man + Divorce= Man – $$$

Just the way it is. Don’t bother attacking the messenger.

#140 Investx on 08.09.12 at 1:39 pm

134 Interesting Times:
@ # 125 John

I’m sure you believe that women should never have been granted to right to vote either.

I don’t think he implied that.

Attraction and sexual chemistry is an important aspect of relationships. Disregarding that is foolish.

Men and women are equal, but different. Politically correct dogma can’t accept that.

#141 Sebee on 08.09.12 at 1:40 pm

#105 Smoking Man

Smoking Man, are you saying you’re going to move some of your investment capital from SFH toward condos after they get run over by the train? Well well well, who would have thunk it! Condos will take buyers away from SFH after all.

#142 Steve on 08.09.12 at 1:49 pm

Garth, do you rent? Can’t seem to find your response to Linda’s question? Do you own any real estate properties anywhere?

#143 Frank le Skank on 08.09.12 at 1:52 pm

Garth it seems like there’s a direct correlation between the high quality of your posts and the amount of idiot comments that follows. Seems like people are getting dumber with every post. There are many exception of course, House Horny Housewife is one, and numerous others. With this pointless post, I am part of the idiots, but felt obligated to share this comment.

#144 John on 08.09.12 at 1:54 pm

Interesting times wrote:

“@ # 125 John

I’m sure you believe that women should never have been granted to right to vote either.”

Do women appear content in your bleak koolaid world? The first spark of reality, chemistry, nature, faith, kindness, boundaries and authenticity returns you to a koolaid stuper.

People are real my friend. Flesh and blood. Bludgeoning yourself and others with failed, neutered beliefs just hammers you deeper into the ground.

Whether these “people”( you don’t see humans…men and women) buy houses or not, enter the market or not, invest or not…or whatever…matters little. They will revert to the mean.

What you’re missing over and over again is the desexualization. Over and over again. Intended or not, the sexualizing of “home” ownership is indeed ironic.

You fall back on tired, predictable and thoroughly tedious arguments.

Have you thought about what life might be like without koolaid? Do you know the real motives of people? Yours? Do you get what this emerging crisis is about? Do you get that it’s about identity.

One blog entry after another touches on this theme of identity and sexuality. Confusion, irony and humor….”in jest much truth is told”.

You just seem to miss it all. And then throw out another tedious predictable and polarized response?

Please. You’re busted.

#145 Jen on 08.09.12 at 1:54 pm

@ # 125 John

Finally, the voice of reason in the sea of genderless propaganda! Kudos to you.

and #134 (Interesting Times), where did he say that women shouldn’t be allowed to vote? Is this your powerful deduction at work?

#146 Spiltbongwater on 08.09.12 at 1:57 pm

Women didn’t need to vote before. It is not like there were polling stations in the kitchen.

#147 getreal-tor on 08.09.12 at 2:05 pm

@House Horny Housewife

I am in agreement with you. I hate landlords, noisy next door neighbours, thin walls and cheaply built apartments, not being free to do what I want with my home surroundings, not having my own outdoor space etc.. I am totally with you on this.

You are describing the build quality of most new developments, whether they are condo’s or town homes and people are buying into it because a perceived “freedom” that home ownership gives you.

People should not compromise on quality just because they are house horny… It’s like compromising on a wife or husband just because you want to get married. Patience can pay dividends.

#148 Canadian Watchodg on 08.09.12 at 2:05 pm

And so it begins…

CIBC Mortgage Fraud Case

In April, 2008 the defendant, Tennille Natasha Lucas was 22 years old and employed at a branch of a Canadian chartered bank in northwest Calgary. She was approached by an acquaintance, Adil Keshvani, who told her she could earn $5000 by allowing a property to be purchased in her name for new immigrants to Canada who could not yet qualify for their own mortgage. Read more.

#149 Bottoms_Up on 08.09.12 at 2:08 pm

#93 mike on 08.09.12 at 9:28 am
Go back through Garth’s blog posts, he mentioned a bunch of reits that might stand to do well in the future. The post was a couple of weeks ago.

#150 Sebee on 08.09.12 at 2:09 pm

Has anyone noticed a storyline in last three pictures? Questionable union, he goes weird, she whacks him to hide the shame.

#151 tkid on 08.09.12 at 2:11 pm

2CentsCDN …

I agree with #35 T kid. If Linda and hubby have a small mortgage (as she says) and like where they live. I’m thinking sitting tight might not be the worst thing in the world.

This is not what I was implying in my post. I believe Linda and hubby have nada put aside for emergencies, retirement, etc, or she would have thumped Garth between the eyeballs with that information when she emailed him. Instead, her only ammunition was her mortgage was small.

Small? How small? $100,000 might be small to one person but large to another. Is the mortgage $400,000 small, or $40,000 small?

Linda strikes me as not wanting to sell her home, no matter what happens, no matter the circumstances. But in case she was being discreet, and she and hubby do have significant amounts saved up for emergencies and retirement, she now has the formula she needs to determine if the house should be sold or not.

#152 Devore on 08.09.12 at 2:12 pm

#55 OTR

Lol. I’m from NB, so I care. I wouldn’t mind seeing a correction there though. I’m moving back next year and wouldn’t mind buying some cheap(er) rental properties.

No one would mind seeing lower prices, except for most of those who already have houses. But the “yes, a correction please so I can buy cheap” is the kind of attitude that gets the jealous bitter renter label flying.

A real estate “correction” will happen where and to the extent that it is locally overpriced and out of line with fundamentals (incomes and rents). It will be further exacerbated or moderated in the short term by affordability (ie monthly payment) and availability and cost of credit, and in the long term by demographics (including immigration/migration) and general economic conditions.

#153 tkid on 08.09.12 at 2:17 pm

P.S. Linda, if hubby won’t shut up about selling the house and it is driving you insane, start buying bags and bags, and then cans and cans of dried lentils. Why would you do such a thing? Because some stranger on the internet (have real names to reference at your fingertips) warned about the drought and how everyone could wind up starving to death and keeping on droning on and on about the coming drought and how you won’t share with his family because of how people behaved in cities during the Bosnian War (Google it to find out what I ‘m talking about) and drone and drone and drone … he might just start talking about baseball again.

#154 Interesting Times on 08.09.12 at 2:24 pm

@ # 125 John

Could you please expound on why ‘the financial stuff is his responsibility’. I would really love to hear it.

Thanks in advance.

#155 Daniel on 08.09.12 at 2:39 pm


In English – what was the judgement?

Funny thing, I lived in Calgary at the time and was approaching in 2006 for the same thing. Probably would have worked out better for me as prices were still going up.

#156 jesslyn on 08.09.12 at 2:47 pm

Financial matters belong to the person who has the financial accumen. If you have proven to your spouse (either way) that your financial decisions are responsible and sound then you should have an equal say in all financial matters. If not then you should take it upon yourself to go and learn so that you have something valueable to bring to the table. This should be your goal or you are being irresponsible and perhaps destructive.

#157 drydock on 08.09.12 at 2:59 pm

I was born in Montreal and live here again.
I have seen the FLQ bombings(domestic terrorism)the kidnappings murder and various separatist governments elected.
All of which has turned Montreal into a parody of itself.
In 1980 i was in Detroit,2012 Montreal reminds me of Detroit at that time.

#158 PoorgEoisie on 08.09.12 at 3:05 pm

I know a few people who bought in Hamilton for one reason: cheaper than Toronto, Burlington, oakville. If prices go down in those places, people will be less inclined to move to the hammer. Unless of course, hamilton sellers reduce their prices to maintain that 100-200k discount.

#159 Canadian Watchodg on 08.09.12 at 3:08 pm

Chart: GTA housing inventory soars to near record high.

FSBOs and developer’s shadow inventory not included.

#160 morry on 08.09.12 at 3:11 pm

You are one horny sexy Economist.

How do you hold off the house-lustful babes?

Why would I? — Garth

#161 morry on 08.09.12 at 3:21 pm

Mark Carney: Invest in ‘productive capital,’ not houses or condos

ps you may not be able to handle ALL the lusty babes… send Linda my way.

#162 betamax on 08.09.12 at 3:54 pm

Linda, you should…ah, who cares.

#163 John on 08.09.12 at 4:08 pm

Interesting times wrote:

@ # 125 John

“Could you please expound on why ‘the financial stuff is his responsibility’. I would really love to hear it.

Thanks in advance.”
All responsibilty belongs to the individual. For everything. This is the core of freedom. A man shouldn’t be turning to anyone for his compass….unless it’s from a proven, trusted source.

Quit cherry-picking to reaffirm the koolaid stupor. What you already know isn’t part of a discussion. Respond to the ideas with your own ideas…and back them up.

This would be interesting. What you’re saying is obvious and just shows you want the koolaid training to be unchallenged. You’ll have no difficulty in finding people who agree with you.

If it eases the pain a bit, I would say women can be men too. It has a huge cost. Men can be women…that also has a huge cost ( bigger). You see that all around you.

Things are what they are. That’s likely the best takeaway.

#164 Vancouver Realtors near the grassy knoll on 08.09.12 at 4:11 pm

Ok Boys…..lure that blogger and his Amazon entourage towards the Convention center..its just North.

Use 1/2 price bunker repair coupons and squirrel recipes as bait….works every time.

Sorry gotta be the patsy.

#165 Jan on 08.09.12 at 4:24 pm

An article in the Rpyal Pacific Realty website has an article hoe Stephen Harper staged a war on Vancouver real estate with new mortgage rule,,read below

Stephen Harper is playing a dangerous game by declaring war on the Vancouver housing sector

Does Canada’s economic action plan include attacking the Vancouver housing market?

The latest numbers from the Real Estate Board of Greater Vancouver could have far-reaching political implications.

The REGVB has reported that July sales were the lowest in this month since 2000.

May and June sales volumes were also at decade lows. And if this continues, it will create a great deal of pain for real-estate agents and developers, who make their living by closing deals.

Lenders also expect to be repaid for financing projects, but it’s hard to collect if the borrowers aren’t generating sufficient revenue.

And that’s where the politics comes into play.

The Conservative government has repeatedly reduced the mortgage-amortization period, dropping it from 40 years to 35 years to 30 years, and finally, to 25 years.

Many potential first-time buyers, in particular, have trouble affording a home in Greater Vancouver when they have to repay their loans within 25 years.

Senior bankers have been cheering on Finance Minister Jim Flaherty, supposedly because they are worried about a housing bubble.

The reality is that because banks also own investment dealers, their CEOs would prefer to see more Canadian money flowing into the equity markets rather than into real estate.

That’s because the investment side of the financial-services business generates fatter profits—most of the time—than boring retail banking and those unglamourous mortgages.

In addition, chartered banks are not competing with credit unions to nearly the same degree on the investment side in comparison to the mortgage market.

So by shortening the amortization period to 25 years, Flaherty is, in effect, shifting financial resources away from real estate and into paper assets.

If the housing slowdown continues, don’t be surprised if we start hearing about financial troubles in the credit-union sector.

That’s not Flaherty’s concern because credit unions are regulated by the provinces.

So any bailouts would come from provincial taxpayers and provincial credit union deposit insurance corporations.

Is a Zambian-born economist the cause?

I wouldn’t be surprised if Prime Minister Stephen Harper, a trained economist, has been influenced by a Zambian-born economist in crafting mortgage-amortization policies that may kill the Vancouver housing market and create significant hardship.

In 2011, former Goldman Sachs investment banker Dambisa Moyo wrote a book called How the West Was Lost: Fifty Years of Economic Folly—and the Stark Choices Ahead.

In this book, Moyo zeroed in on how too much investment capital in the western industrialized world has been allocated to real estate, undermining economic competitiveness and enabling China to race forward.

“If you’re going to have a bubble, the ‘best’ type of bubble is a productive asset bubble financed by capital markets,” she wrote. “The technology boom of 1995 to 2000 is an example of that.”

She claimed that the worst kind of bubble are in unproductive assets that are financed by banks.

“Japan’s real estate bubble between 1986 and 1990 is one such example,” Moyo noted.

Her previous book, Dead Aid, called for an end to foreign aid in Africa. Since it was published, the Harper government has sharply reduced assistance to the continent.

Similarly, Moyo’s analysis of housing markets in the west could easily have influenced Harper to put the brakes on mortgage lending in Canada.

There’s a disproportionately negative effect in Vancouver because this city has had the highest housing prices in the country.

Moyo has received a fair amount of attention in Canada, appearing on CBC and speaking in different venues. She was even invited to the Bon Mot Book Club in Vancouver, which was created by Leah Costello, a former director of events at the Fraser Institute.

Fans of the Fraser Institute tend to love Moyo’s free-market view of the world. She has even claimed that the U.S. is on the verge of socialism.

The political implications of Harper embracing her ideas are pretty clear. People who work in the real-estate sector are some of the Conservative party’s strongest supporters.

At the same time, the Conservatives appear to be implementing the ideas of an economist who opposes investments in the housing market.

If the federal Liberals are paying attention, they’ll wake up to this and try to peel away some of the Conservative base. What that will mean to Harper’s political future is anyone’s guess—but it’s probably not good if the next election comes after housing markets have crashed in cities across the country.

#166 jess on 08.09.12 at 4:34 pm

watchdog said:HFTs have taken over 60% of market volume.??? thought it was 40%

” There is currently no consensus definition of HFT that exists among market participants, academics and regulators.”
The Investment Industry Regulatory Organization of Canada is the national self-regulatory organization which oversees all investment dealers and trading …

IIROC reports that industry estimates put HFT activity at between 25% and 40% of trades on Canadian marketplaces. And, it notes that it is currently working on a study of HFT activity in the Canadian market that will provide an impact analysis of the effects of HFT on market quality and integrity.

It also says that it is enhancing its monitoring capabilities through automated regulatory alerts “to detect highly-automated manipulative activity that may otherwise be challenging to identify”. IIROC adds that its HFT study may also generate further insights into novel forms of manipulative and deceptive activity requiring additional alerts.

#167 Just Checking on 08.09.12 at 4:36 pm

Comment #8 includes the f-word (spelled in full in the last sentence).

Not any more. Thanks. — Garth

#168 Stickler on 08.09.12 at 4:41 pm

The whole view that renting = bad -> is immature and simple. In Silicon Valley during the tech boom…and long after, many many people rented …executives and highly paid engineers.

Needless to say they were smart enough to understand that renting was the obvious choice. You can’t fight math.

My tip:If people mock you for understanding math and you are upset by this…well you are an idiot too.

#169 Canadian Watchodg on 08.09.12 at 4:50 pm

#166 jess

Follow Nanex and Joe Saluzzi for the real numbers. It’s so bad at this point that the SEC is scared to ban or limit HFT trading since it provides so much liquidity. Basically, the market would drop without it.

Great audio interview with Eric Hunsader of Nanex here.

#170 Interesting Times on 08.09.12 at 4:52 pm

@ # 163 John

Thank you sooo much for clearing that up.

You really are one in a million. (I hope).

#171 earlymidlifecrisis on 08.09.12 at 5:06 pm

I’m so sad that I cant see Garth. Please come to Kelowna. I’ll even pick you up at the airport with a welcome fruit basket! Seriously. I will check in every day now to see if you find xtra space. I can drive if needed, but would rather pick you up.

#172 Stickler on 08.09.12 at 5:11 pm

…and more market NONSENSE:
– HFT scandals a plenty
and this gem:
“Labor Department Admits Data Leak, Says [Job] Claims Data Was Released 15 Hours Early Due To “Glitch” …nice.

Peak Complacency is a good way to describe things today. Watch out below.

#173 jess on 08.09.12 at 5:16 pm

.#169 Canadian Watchdog
HRT : no consensus definition of HFT and self regulatory reminded me of this arguement

There is no consensus on the definition of a “tax haven

#174 Milk Man on 08.09.12 at 5:45 pm

Hey, How come its booming in Edmonton. Starts are through the roof…What gives ?

#175 Alex N Calgary on 08.09.12 at 5:47 pm

Tony, I am not worried about Hamilton taking a nosedive, it is a growing community with huge demand for apartments for lower middle class workers. I am worried however about whether I should capitalize on the gains made in the last 2 years (about 20% increase from purchase price; there are surprisingly bidding wars going on right now) and wait a year or two to buy back in.

Do you even read this blog? you think Hamilton, which is totally dependent on commodity based manufacturing is going to keep growing regardlessly? Its different here right? Hamilton will be different then Calgary which will always have demand from oil and gas.

Its funny how people have a vague idea of what their local cities economy does and needs, when really the big long term picture of how the canadian economy and currency value will crush and local demand for special coffee beans, or Beenie Babies which will always be in demand….

#176 Anti-Just Checking on 08.09.12 at 5:53 pm

Comment #167 contains a crybaby who shouldn’t be posting on this site because he or she obviously isn’t old enough to read ‘dos nasty sweawr wewds.’ Grab a bottle baby and stay off of grown up websites.

#177 Canadian Watchodg on 08.09.12 at 5:55 pm

#173 jess

Regarding IIROC link: HFT activity on Canadian exchanges only make up one-fifth of total volume, so there is some time to enact regulations before it’s too late.

We shall see what integrity is left in Canada’s regulatory system.

#178 jess on 08.09.12 at 6:07 pm

this will give one a headache

How Apple and Amazon Security Flaws Led to My Epic Hacking

…”In the space of one hour, my entire digital life was destroyed. First my Google account was taken over, then deleted. Next my Twitter account was compromised, and used as a platform to broadcast racist and homophobic messages. And worst of all, my AppleID account was broken into, and my hackers used it to remotely erase all of the data on my iPhone, iPad, and MacBook….

By Mat HonanEmail AuthorAugust 6, 2012 | 8:01 pm | Categories: Miscellaneous

#179 Form Man on 08.09.12 at 6:12 pm

I see DA is desperately trying to worm his way back onto the blog. Perhaps the poor wretch will finally garner some pity from Garth……..

#180 Milk Man on 08.09.12 at 6:14 pm

Garth, I asked, How come Edmonton is booming with record housing starts ???

#181 jess on 08.09.12 at 6:17 pm

165 Jan

Moyo’s free-market ? Dead aid ? Aid in exchange for tax free zones seems to be exploitation by Designer tax laws- ” representation without taxation ”

Here’s the counter argument the report’s author, James Henry, a lawyer and former chief economist at McKinsey and Company.
Exhaustive Study Finds Global Elite Hiding Up to $32 Trillion in Offshore Accounts – A new report reveals how wealthy individuals and their families have between $21 and $32 trillion of hidden financial assets around the world in what are known as offshore accounts or tax havens. The actual sums could be higher because the study only deals with financial wealth deposited in bank and investment accounts, and not other assets such as property and yachts. The inquiry was commissioned by the Tax Justice Network and is being touted as the most comprehensive report ever on the “offshore economy.” It also finds that private banks are deeply involved in running offshore havens, with UBS, Credit Suisse and Goldman Sachs handling the most assets. We’re joined by the report’s author, James Henry, a lawyer and former chief economist at McKinsey and Company.

To see more Democracy Now! reports about tax havens, visit


#182 Nopal on 08.09.12 at 6:33 pm

#162 Betamax


#183 TurnerNation on 08.09.12 at 6:41 pm

Yes, Toronto condo Realtors are in a panic!

On the other hand, the condo market has been flat to down since the start of the year. June just put an explanation point to that trend: overall condo sales in June vs. June of last year were down 18%, 416 condo sales were also down 18%, and Downtown condos took the biggest hit – down 30%. That brings Downtown condo sales on a year-to-date basis 9% lower than for 2011.

#184 specops on 08.09.12 at 6:44 pm

@JennX – this is a pic from the tv show Covert Affairs, not a photoshop image per say. The guy on the bed is “dead” and the agent is hiding out of sight of the hitman…

Garth – might be a copyright pic…

Can’t wait to attend the Vancouver session!

#185 Smoking Man on 08.09.12 at 6:52 pm

#141 Sebee on 08.09.12 at 1:40 pm
#105 Smoking Man

Smoking Man, are you saying you’re going to move some of your investment capital from SFH toward condos after they get run over by the train? Well well well, who would have thunk it! Condos will take buyers away from SFH after all.


Funny got a bit of loot under the mattris, In London they had a correction, then a bouce back prices are high. Just want to do it to f with the bubble heads heads. Mind you last time I did that I bought YLO should re think this

#186 jess on 08.09.12 at 6:53 pm

WATERLOO – An investigator with the Ontario Fire Marshal’s office is probing the cause of a fire that caused about $700,000 in damage at a home construction site on Thornhill Place Thursday morning.

The cause of the blaze, which damaged three homes at 311, 313 and 315 Thornhill Place, remains under investigation but police say they are treating the fire as suspicious at this time.

#187 Daisy Mae on 08.09.12 at 7:09 pm

#102};-) aka DA on 08.09.12 at 10:11 am
New house prices on the rise – by The Canadian Press


Prices can rise all they like. What is being accomplished if there are no buyers/speculators?

#188 Daisy Mae on 08.09.12 at 7:16 pm

“In the end, we’ll all blame the government for our own actions.”


You bet we will. Granted, no one held a gun to anyones’ head…but the feds made it easy. And we took advantage. Thousands upon thousands made poor decisions…but that’s what people do. We’re only human. The feds knew exactly what they were doing…or did they?

#189 smartalox on 08.09.12 at 7:16 pm

@155 Daniel:

The documents referred to an application by CIBC to have itself severed from the larger fraud case, because (they argued) that although the guy who appears to have enabled the fraud (and it would appear, potentially several others) worked for CIBC as a mortgage specialist, they can’t be held responsible, because he hid his intentions from CIBC, they were unaware of what he was doing, and that CIBC was burned by the fraud, too.

The application was denied, because the evidence CIBC gave in the deposition failed to convince the judge that CIBC didn’t know what was going on with the fraud, that CIBC could not be liable for the actions of its employee, and that at no point CIBC could have prevented the fraud from happening.

At least that’s how I read it. So now the whole mess is going to trial.

It’ll be interesting to see how the whole mess plays out; I’m sure that the big banks encouraged their “mortgage specialists” to be as independent as possible, in order improve the plausibility of their denials in such situations. It’s probably also not for nothing CIBC tried (and failed) to sell it’s mortgage business.

Hopefully this will go better for Canadian victims of these types of fraud than it did in the US, but this remains to be seen. What will be the same though, will be the tactiics that see banks tie these judgements up for years, with scads of high-priced lawyers, while the poor dupes in these schemes see ever mounting legal bills soar.

All because the banks turned a blind eye to management of actual risk, secure in their belief that CMHC would bail them out if the loan went bad.

Next we get to see how CMHC balks at paying out the policy on the loan, probably citing CIBC’s insufficent risk management and vetting practices.

#190 Canadian Watchodg on 08.09.12 at 7:17 pm

“This may be a hard message for some brokers to accept, especially after the recent loss of FirstLine. Many are also concerned that a member of the country’s Big Five might purchase ING just for its book and pull the bank out of the channel. ING’s Dutch-based parent company, which is under financial difficulty, recently announced it considering the possible sale of its UK and Canadian operations.”

The disinvestment in Canadian mortgage broker channels is echoing (exactly) what played out in the US during mid-late 2007, when lending channels were cutoff to brokerage firms around the country, in turn, less loans were being given that fueled sales down even harder.

This is the negative feedback loop that unfolds when credit contracts in a highly leveraged market. There is no such thing as a bubble that deflates slowly.

CMHC’s next MBS securitization report should confirm this is happening.

#191 Babblemaster on 08.09.12 at 7:26 pm

#124 Jesslyn

Wow girl, you really make sense. Your husband and children are lucky to have you. Your first sentence, “There is something really wrong here,” is so relevant to this society. There is something really wrong. In fact, really, very wrong.
People are manipulated by greed, fear, avarice and the herd mentality. That’s our nature. The forces at work take full advantage of this fact. People just don’t think logically, and they never have. They’ve never studied logic and have no idea what a syllogism is. You know, come to think of it, horses have never studied logic either and they shoot horses, don’t they? Perhaps they should do the same with illogical people. However, there are too many of them to do that, so the best thing to do is to keep a straight head and ignore their bleating exhortations to do as the herd does. And, don’t bother explaining yourself to them because illogical people are totally immune to logical arguments.

#192 Form Man on 08.09.12 at 7:38 pm

#180 milkman

at the end of the article you linked to, they mention that, although starts are up, new home sales are slow. The article supposes this indicates pent-up demand is building up………maybe not……..maybe over-optimistic developers are the only thing building up…… reason……..

#193 DonDWest on 08.09.12 at 7:41 pm


#194 Form Man on 08.09.12 at 7:47 pm

I have no idea where the word ‘reason’ came from at the end of my previous comment. ignore it.

#195 Gunboat Denier on 08.09.12 at 8:09 pm

190 watchdog – No! No! No! Have we learned nothing?? That’s a POSITIVE feedback loop!

#196 Form Man on 08.09.12 at 8:10 pm

#188 Daisy Mae

Good point. Harper is a trained economist, and Flaherty was Ontario finance minister under Harris. Presumably they knew what they were doing when they juiced the market via CMHC. Either they knew what would happen, and cynically proceeded in order to win a majority, or they are utterly clueless. I’m not sure which is worse……….

#197 Nostradamus Le Mad Vlad on 08.09.12 at 8:15 pm

#95 Nemesis — Thanks for the link.
Huge Food Conglomerates “But remember; you are not allowed to grow food on your own land! You WILL be dependent on massa for your next meal, you loyal little slave you!”, and 30 Days In The Hole “Even Hitler didn’t claim to own the rain that fell on people’s roofs!”; BRIXIT One has to start; US$11 trillion Fiscal gap; Sanctions against the US Seems fair; The United States of Welfare More than 100 mln. recipients. Add in foot stamps and people who have stopped looking for work altogether; Money Junkies exploit carbon credit scheme (surprised?); GS and GE Cutting ties with Obummer; Reno, Nev. Sobering reality of what life is like; George Osborne Boosting banks, not the economy; 7:27 clip The Trouble with TARP;
NATO’s fleet comes to Syria; The TPP Pay a fine for clicking on a wrong link? The Fourth Reich has arrived; Flame and Stuxnet targeting Lebanese bank customers; 24:55 clip SArabia revolution will mess with NATO’s invasion of Syria (excellent); How convenient that a person who witnessed a Cdn. sexual abuse scandal, dies at the wrong time; CCTV footage Gun or rolling pin, they’re both good forms of defense; 4:43 clip The Toilet (al quaeda) is a creation of the CIA and Mossad; Divide and Conquer Exactly what Harper does here, now in the US; Monsanto Double standard; 2:33 clip ‘Quake time in LA. It’s also known as negative karma.

#198 toronto guy on 08.09.12 at 8:17 pm

hey Big Rider, I’m kind of surprised that no-one’s called you on your ignorant comment at #139

funny that you say “don’t shoot the messenger”

buddy, you’re not a messenger, just boring

#199 toronto guy on 08.09.12 at 8:28 pm

I can’t call Big Rider a

No. — Garth

#200 Calgary Car Guy on 08.09.12 at 8:44 pm

#112 cramar said
The greatest financial danger for most families is not a decline in the value of their home, but in DIVORCE. That is one of the greatest destroyers of net worth there is. Many people never financially recover from it. To be avoided at all costs.
I agree except for the last sentence. Happiness, contentment and freedom are valued above net worth in my book. Life is not a dress rehearsal.

#201 Bigrider on 08.09.12 at 8:57 pm

# 198 toronto guy.

Torontoguy= neverlaid.

#202 Smoking Man on 08.09.12 at 9:16 pm

Vlad. What will happen to Harpo in the next election if this centrel planned housing softening over shoots its target. Will the dwarf take the fall. Will C go back to goldmen or will harpos money men get MSM on board to pump the market back up?

Or are they that cofident in their survays that the owner herd will not capitulate.

Tomorrows Job numbers should be interesting. Cause C said interest rate hike not of the table. I took that as he had a peek at the job numbers and its going to be very strong

#203 John on 08.10.12 at 9:54 am


I guess the only place left in Canada where house prices are on the rise is Newfoundland.
You never mention NL, is it totally under your radar?

Where? — Garth

Newfies have borrowed their brains out, just like the Irish.

#204 smoking man sux on 08.10.12 at 11:25 am

what a crappy photoshop. it’s all out of perspective.

#205 Feeni on 08.10.12 at 3:49 pm

Denial, Winnipeg style:

#206 Chris Laurin on 08.10.12 at 6:31 pm

Garth thank you….you just saved my daughter from buying a condo in KW with a big down, could afford it… thanks Garth! at least she will listen to you…huge favour your doing the Canadian public, thank you.
I sent her the post of this week …. Shes in banking in the same situation as the girl in T.O. you told to bail, that did it. I have some eves that need cleaning as well :)