Surprisenomics

A few months ago I described a guy with a house for sale who wanted $2.5 million. Teardown building, good lot. And the streets were crawling with airport limos full of HAM. Well, he missed the peak by about two weeks and ended up swallowing his pride while he pocketed $1.95 million after two tortuous months on the market.

“I had to explain to my parents why I dropped the price by half a million,” he told me today, “but in reality I escaped with my life.”

You bet. Not only is the place now worth $500,000 less than 90 days ago, but it’s probably stone cold illiquid. Welcome to deflation.

Remember what I said about this a few days ago? Hope so. You need to get ready.

No, gas, milk or ammo won’t get cheaper, because price inflation will continue apace. Instead, it’s asset deflation you must keep an eye on, because most of us have most of our wealth in a house. And that’s the asset I’m talking about.

Deflation makes money more valuable, which is why the price of an average house in the US fell by 32% when people stopped wanting them. Same house. Fewer dollars. Therefore the dollars became more valuable, even as inflation raised the price of a gallon of fuel. It’s a concept a lot of people don’t get, especially those who think large amounts of government debt or government stimulus programs will make money less potent.

Ironically, the very fact governments have to spend tax dollars buying back their own bonds, give people grants to buy cars, or let you write off the cost of building a deck shows how close deflation is. This is the evil politicians fear the most, since they can’t fix it once it grabs hold. Inflation can always be tamed by throttling back spending with higher interest rates. But deflation is a worse beast, especially when rates are dust and everybody’s swimming in debt.

This brings us to the job numbers. Thirty thousand of them were lost last month in Canada, which is an unmitigated disaster. Yes, I know 21,000 full-time positions were created, but a lot of those were self-generated sorta-jobs launched by people nobody will hire. And over 50,000 other people found their part-time employment wiped out, which tells you something about the state of the retail sector. So now, almost five full years after the economic wheels came off, we have a jobless rate of 7.3%, which is rising. Structural unemployment.

Could there be anything worse for the real estate market than more jobless people?

Yes! Delusion! And this takes to one of the funniest places in the country, Calgary. According to the Cowtown Real Estate Board (CREB), the laws of economics have been suspended, effective immediately.

Forget the deflationary tug which has policy-makers tossing in night sweats. Forget F and the peckerettes’ sacrifice of the property virgins with their murdering of long mortgages, cash-back loans and lending criteria easier than Missy Bunny. Forget the condo over-building downtown and oil which can’t crack ninety bucks. And forget the fact consumers are simply tapped out, with 70% home ownership and record levels of debt. In CREBland, it’s different.

Oh, did I mention Europe? Christy Clark? Fracking?

No mind. “Predictions of a 10 per cent reduction in Canadian house prices won’t happen here, Calgary realtors said in response to the latest warning of an approaching market correction,” blared the Herald this week. Adds CREB boss Bob Jablonski: “We’ve realized the sky’s not falling in, and in spite of what’s happening in Europe and the States, the economy’s good here — it’s a very stable and confident environment.”

But what about the looming impact of Ottawa’s changes, plus new bank regs in October? “Most of the buyers here in Calgary are well-qualified and make good money and they’re very prudent buyers,” Jablonski says. “They know about (the new rules).”

The reality, of course, is that people in Calgary are as twisted as everywhere else. They want it all, and a few thousand realtors are telling them that’s exactly what they can have.

Like Jeremy, who wrote me yesterday. He reads this blog but so far it has not miraculously cured his horniness. “We both work in IT, have no debt, a one-year-old son, early 30’s, make $150k together and have saved $50,000 for a dream we want now.

“A dream house that we want for long term with 4 bedrooms, at least 2000sq feet, 2 car garage with an unfinished basement. Such houses are available in outskirts of Calgary for about $550,000 which obviously is a large amount. We are tired of renting, and just like any other young family want to have a nice single family home with a yard and lawn in a nice neighborhood.

“Do we buy the house now with 10% down, or start smaller with a townhouse and then upgrade in a few years? Our realtor is telling us that Calgary prices are stable and will only rise, and that there’s no reason we need to wait, in case we are priced out forever. Is that so?”

See what I mean? Nothing changes. Anywhere.

Of course $50,000 is not 10% of a $550,000 home, especially when closing costs and mortgage insurance are factored in. Instead, this couple would end up with about $520,000 in mortgage debt, at an interest rate certain to be higher upon renewal. If salaries don’t keep pace (unlikely) and household costs rise (a certainty), then problems loom. And how risky is it taking every dollar you have and throwing it into something that also gives you a half million dollars in debt and generates no income? Worse, if values drop by just 15% (it’s coming, Cowtown), Jeremy just burned through his fifty grand in equity and is now $30,000 below water. So, no savings, no equity and $500,000 in debt.

How is that being a responsible dad or husband?

So a starter home is smarter, but still a gamble. Real estate will correct in Calgary as certainly as it will in Winnipeg or Regina, or everywhere else people think unicorns visit them at night.

In a world teetering on the lip of deflation, rent a nice house, don’t buy. Let the fool who owns it shoulder the risk, and take the hit.

231 comments ↓

#1 TurnerNation on 08.10.12 at 10:16 pm

– Alberta Venture magazine pointed out: Royal LePage’s parent company – Brookfield Real Estate – is traded in the US OTC market as BREUF.US, in Canada as BRE.TO

http://www.brookfieldresinc.com/

Yield is 8.44 %! A method, to recoup your realty fees?

Disclosure: no position.

– For fun: Kijij ontario, 27040 houses under Houses for Sale.

http://ontario.kijiji.ca/f-real-estate-houses-for-sale-W0QQAdTypeZ2QQCatIdZ35QQisProvinceSearchZtrue

Then, search within these results for REDUCED. Result: 545 listings.

And, Search for: “new price”. Result: 1134 listings.

#2 just learninh on 08.10.12 at 10:22 pm

Can you point me to some sites with recent stats about Montreal real estate market?

#3 Josh Diapotissi on 08.10.12 at 10:25 pm

very informative

#4 jack_the_lad on 08.10.12 at 10:27 pm

Garth wrote:

“Yes, I know 21,000 full-time positions were created, but a lot of those were self-generated sorta-jobs launched by people nobody will hire.”

Why such contempt for the self-employed?

Newly-created self-employment positions typically generate little or no income. Therefore the economic impact is negligible. — Garth

#5 PeakOil on 08.10.12 at 10:28 pm

The construction company I work with has recently signed a number of LARGE contracts… Life is good.. (I personally think they either won’t start, or won’t pay)

#6 T.O. Bubble Boy on 08.10.12 at 10:30 pm

Brad J Lamb is working on his speculative anecdotes, obviously trying to keep up with Cam Good and his helicopters full of HAM buyers:

http://business.financialpost.com/2012/08/10/when-one-home-isnt-enough/

He says Toronto, at least partially, has become home to that investor/homeowner.

“There is that element to it,” says Mr. Lamb, estimating it equates to 10% to 15% of the condo market. “The building I live in, one of the sub-penthouses was sold to a wealthy South American family that uses it when they are in Toronto. The rest of the time their daughter [in school in Toronto] uses it.”

Hmmm…. sounds a bit like Vancouver/Richmond circa 2010-2011, doesn’t it? Apparently the Toronto condo market is SUPPOSED to have all of these empty units! These are simply condos bought by wealthy South Americans to use when they happen to be in town (or for their kids).

I guess the Canadian owner/investor narrative was no longer believable with all the new HELOC restrictions and other mortgage limits?

#7 Hurly on 08.10.12 at 10:36 pm

I wished my first house was a ” dream house”. Instead I bought an old 1915 house on a busy street with no driveway. Then rented every bedroom out to students while I lived in the 5′ Basement with a sloping floor. Hitting my head on the ceiling was a regular occurrence. But the point of this story was that I was making double mortgage payments and then sold the house later with lots of equity. Now on my second house I have two suites to help pay off the mortgage faster. Still don’t have my dream house. Jeremy needs to buy what he can afford! And if it was me I would wait a few years. Keep renting Jeremy.

#8 Steven Rowlandson on 08.10.12 at 10:38 pm

A few months ago I described a guy with a house for sale who wanted $2.5 million. Teardown building, good lot. And the streets were crawling with airport limos full of HAM. Well, he missed the peak by about two weeks and ended up swallowing his pride while he pocketed $1.95 million after two tortuous months on the market.

“I had to explain to my parents why I dropped the price by half a million,” he told me today, “but in reality I escaped with my life.”

You bet. Not only is the place now worth $500,000 less than 90 days ago, but it’s probably stone cold illiquid. Welcome to deflation.

I would say this is just the beginning. The bottom of a price crash for real estate is still a long way down from here…. If your house is paid for be gratefull to have a roof over your head.

#9 tran, Calgary on 08.10.12 at 10:38 pm

“It’s different here in Calgary, everyone wants to come here because there are jobs here.”

To rent or buy? A big question I am facing now.

#10 1drs on 08.10.12 at 10:43 pm

Good News Jeremy ! Alberta is a jingle mail province ! Once you are wiped out financially , you can just mail the keys back to the bank and walk away !

#11 Fleabitten Monkey on 08.10.12 at 10:45 pm

Love that realtor spin, “don’t want to be priced out forever, stable prices, will only rise”….creating the urgency. Nice one realtors.

#12 Stinky the Fish on 08.10.12 at 10:45 pm

DELETED

#13 TurnerNation on 08.10.12 at 10:51 pm

For those worried about bond prices dropping, while interest rates rise: the rate change’s effect is somewhat muted – on the way up – by bond Convexity. As I understand it.

#14 eviee1973 on 08.10.12 at 10:54 pm

The Calgary Real Estate Board has a neat free propaganda newspaper, with lots of pro real estate articles in it. Also has property listings .

#15 Mark on 08.10.12 at 10:57 pm

“Good News Jeremy ! Alberta is a jingle mail province ! Once you are wiped out financially , you can just mail the keys back to the bank and walk away !”

Not if the loan is CMHC-insured.

#16 groovin_123 on 08.10.12 at 11:00 pm

I’m in Hickory, North Carolina at this very moment. It’s not the hick-filled, toothlesss, cousin-merrying dustbowl I envisioned it to be. In fact, not at all. It’s very green here, and the humidity is a bit sweaty in the choda-area yes, but it sure isn’t Mexican like.

Anyway. My point. A 3800 square foot brick house with all the latest granite, hardwood, pool in the backyard, 1 acre property on a golf course runs you about $265,000. No I’m not kidding.

I have a shoebox bung-hole in Port Moody, BC, worth around $320K. Paid for. I daytrade for a living do I really need Vancouver??.

I never fully appreciated what a huge, disgusting, lonely and amazon-less bubble Vancouver is in until I arrived here. SOLD SOLD SOLD. Wake up Canada the writing really, really is on the wall.

And Garth, keep your eyes on the goldies (XGD.T) index over the next 6 months and cringe with envy. Kiss-kiss pal.

#17 TorontomarketWatcher on 08.10.12 at 11:01 pm

I have been creepily observing the Toronto market on the sidelines for a number of years. This is the first time that the market is taking a definitive turn for the worse. The minor slow downs before were simply false starts but this is the one that will count. Too much momentum to stop this train.

I present Exhibit A, a renovated detached beauty in a prime Toronto neighborhood known as Davisville Village which has a reputation for its walkability and top tier schools.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12273161&PidKey=1020498132

Price History:

Mid July: 782K
Early Aug: 762K
Current: 729K

MLS still shows the price as 762 but another search shows the reduced price. http://www.realestatetoronto.com/homes/509-Davisville-Ave/24777598/

Now, Exhibit 2: One of the 10 neighborhoods to ‘Buy Now’: http://www.torontolife.com/daily/informer/from-print-edition-informer/2012/01/12/where-to-buy-now-davisville-village/

Hope this paints a picture of the state of the market.

I shall now go back to my eerie and dimly lit rental basement for more real estate voyeurism.

#18 Blasé on 08.10.12 at 11:01 pm

a house in a GOOD non-outskirts area of London, Ontario with 4 bedrooms AND a developed basement with a NICE yard can be had for $300,000. seems like people in Calgary are severely punished for living there.

and, with the measly 10% down, the guy will end up paying close to a million for his dream home in the cold, wind-blown burbs of cowtown.

doesn’t make a bit of sense to me, but different strokes and all that.

#19 Carpe Diem on 08.10.12 at 11:03 pm

Jeremy … I sure hope it is 150K per parent and not for both of you!

I make plenty more than you and the wife stays home with the kids so we don’t have to waste money on daycare and have our kids knowing what family life is.

We live in a castle for much less than buying it or what you will end up with.

Home is where the family is, not debt over your head and no RESPs for your kid.

#20 DUI on Money Road on 08.10.12 at 11:06 pm

If you’re priced out forever, then who the eff is ever going to be able to buy? It’s obfuscation at it’s finest. Think pyramid scheme meets a greasy car salesman.

#21 Van guy on 08.10.12 at 11:06 pm

Where’s BPOE these days?

http://whispersfromtheedgeoftherainforest.blogspot.ca/2012/08/richmond-realtor-warns-price-declines.html?m=1

I say Richmond will lead the way with declines. This article explains the disaster that’s about to happen. And the incredible amount of building continues on. 40% + correction coming soon.

#22 Van Isle Renter on 08.10.12 at 11:09 pm

Unless you have the ability to actually write the cheque for $500K+, you have no real idea of how much $$ it actually is and what it takes to get it.

As some one in the above category, I resent the pimply faced sweaty virgins borrowing hundreds of thousands of dollars without a clue as to how much it really is. It makes it impossible for me to want to write a cheque and compete with a bunch of mis-informed idiots.

It forces me to keep my money in prefs and ETF’s and patiently await the day when I will grind their bones for my bread.

And I’m OK with that.

#23 Hoof-Hearted on 08.10.12 at 11:11 pm

A few months ago I described a guy with a house for sale who wanted $2.5 million. Teardown building, good lot. And the streets were crawling with airport limos full of HAM. Well, he missed the peak by about two weeks and ended up swallowing his pride while he pocketed $1.95 million after two tortuous months on the market.

“I had to explain to my parents why I dropped the price by half a million,” he told me today, “but in reality I escaped with my life.”

You bet. Not only is the place now worth $500,000 less than 90 days ago, but it’s probably stone cold illiquid. Welcome to deflation.
====================================

Funny that..

I’ll bet its that party on West side of Vancouver , with a bungalow they lucked across..

I was actually wondering if they had sold, as they were diddling whether to sell or hold out.

Waaaah poor baby lost Half Million aka $500,000…..greedy vermin ….. (and no I don’t vote NDP)

#24 TimV on 08.10.12 at 11:13 pm

Jeremy, $150 total gross income, less daycare costs. If you get priced out of the market for an average home on the outskirts of town (and the town is not land-locked) – rest assured that it is the market that is messed-up, not you.

#25 Ouroboros on 08.10.12 at 11:14 pm

The only people left that are buying are those who have built up ‘equity’ in their properties.

They use the ‘equity’ to buy bigger houses…or more houses…and prices go up.

Then, they magically have more ‘equity’.

“The living being had no need of eyes because there was nothing outside of him to be seen; nor of ears because there was nothing to be heard; and there was no surrounding atmosphere to be breathed; nor would there have been any use of organs by the help of which he might receive his food or get rid of what he had already digested, since there was nothing which went from him or came into him: for there was nothing beside him. Of design he created thus; his own waste providing his own food, and all that he did or suffered taking place in and by himself. “

#26 Cory on 08.10.12 at 11:16 pm

“in case we are priced out forever”

if people actually sat down and thought about this stupid statement, they would see that it is impossible to be priced out forever.

Anyways, Calgary is different, the realtors and the Herald say it is so. It’s almost as if they will it, deny real economics and forces of supply and demand, that prices will rise and the market will stay hot.

However, there is no sign that lending is slowing down or that the arrogance and debt ridden urbanites is abating. So, I expect this party to continue to infinity. It *is* different in Calgary.

#27 Rich Renter on 08.10.12 at 11:20 pm

Why the sense of entitlement to a 2000 sq ft house with double garage and a lawn.
Stick our money in RESP for the kids, go on vacation somewhere hot in winter and buy a trailer to camp in the summer.
That’s what family is about.
Are you popping over to the east side of the rockies Garth, the Calgary fanbase and groupies are anxious to know?

#28 Scott in Gibsons on 08.10.12 at 11:24 pm

August 10 – Bloomberg (Dalia Fahmy): “Asking prices for German apartments rose in July as buyers sought a safe investment amid the euro zone crisis, with values in Berlin and Hamburg gaining the most. Prices demanded for previously owned apartments jumped 7% in July from a year earlier… Berlin and Hamburg prices rose 16.8% in July from a year earlier… German real estate has been among the biggest beneficiaries of Europe’s sovereign-debt crisis as investors bet that land and buildings will retain value even if inflation spikes.”

As long as banksters are in control of the printing presses and regulators are corrupt, you can’t use reason to predict what will happen. Yes, house prices SHOULD fall but that’s only in a rational market.

#29 Mark W on 08.10.12 at 11:25 pm

$1,950,000.00 is still $1,950,000.00 for a tear down house.

$1,950,000.00 is far more than it was worth a few years ago, and at least double what it was worth ten years ago.

HAM & Champagne any way you slice it.

For about 99.5% of Canadian’s $1,950,000.00 for anything is a total fantasy.

Somebody had the money … and I bet they paid in CASH.

#30 dm in c on 08.10.12 at 11:26 pm

I live in the NW of Calgary in a lovely community named after a beautiful region in Italy. A two story double ‘garage finished basement 2400 square foot place backing on ours is now for sale for $357k.

Jeremy is getting conned. Or will only buy brand new. He deserves what he gets.

#31 Canadian Watchodg on 08.10.12 at 11:32 pm

#17 TorontomarketWatcher

Stated it many times that agents are changing MLS numbers like underwear. Check listings again.

MLS#:C2437303
MLS®: C2432201

#32 Can it be? on 08.10.12 at 11:41 pm

Hey Carpe Diem… Seriously get off your high horse. I’m a woman. I probably out earn you. I have three kids and a high income earning husband and we have a great home. Just because you are better off financially then the guy, doesn’t mean you have to belittle him. Wake up call… There is always someone who is better off then you. Also, saving on baby sitters is typically code for the fact that the person can’t earn enough to make babysitting worthwhile, or they don’t have a career that they would actually want to do. Some of us do… Just because they do it differently… Doesn’t mean it’s wrong. I’m sure Jeremy has a lovely family.

#33 tri state pat on 08.10.12 at 11:41 pm

#2, Just Learninh

Try this,

http://communications.centris.ca/Tableaux/2012/Tableaux_Communiques_CIGM_2012M07.pdf

1)accueil
2)click latest date
3)scroll down to the bottom, click “cliquez ici”

#34 Dan in Victoria on 08.10.12 at 11:44 pm

Yeah Jeremy I’m tired of renting also. Can’t fix my chain saw on the kitchen floor, can’t do burn outs in the garage, not allowed to smoke fish, cause it smells.
Its a real bitch.
But on the other hand I watch prices fall daily here, just sitting and waiting on the side lines.
Priced out forever eh? Are you that stupid.

#35 CoreyMC on 08.10.12 at 11:55 pm

#30 dm in c

I live in the NW of Calgary in a lovely community named after a beautiful region in Italy. A two story double ‘garage finished basement 2400 square foot place backing on ours is now for sale for $357k.

Jeremy is getting conned. Or will only buy brand new. He deserves what he gets.

—————————————————————-

Must be a grow-op and probably not worth buying with all the restrictions. You would be amazed on how many grow-ops there are in every community in Calgary, even in Tuscany!

#36 Dan in Victoria on 08.10.12 at 11:57 pm

Jeremy look at this.
NOT
Saying this will happen here but think about it the market can go down also.
Happy day Jan 2007 $452000
Unhappy day Aug 2012 $142000
Mortgage payment $504
Possible rent $1523
Gee I guess thats why a few of my friends have bought down south.

http://www.zillow.com/homedetails/4456-Brighton-Ct-Hemet-CA-92544/18041811_zpid/

#37 Tiggertoo on 08.11.12 at 12:00 am

Is there an HST impact if speculate and rent vs owning a new house/condo ? ( in Ontario )

#38 Young Boomer on 08.11.12 at 12:05 am

Next week we move to Calgary – into a rental. Married 24 years and 11 houses later we are renting. The process of finding a place wasn’t fun; but this allows us to do more travelling and my husband to semi-retire at 50. We’ve launched the kids and are downsizing. One rental agent told us that many people that are getting transferred bought during the boom in Calgary and if they sell they’ll lose money so they’re renting their places out. Problem is they can’t cover their costs. He thought we were very intuitive to think that prices are going to continue to go down (sorry, we didn’t give you any credit)

So now I go on Calgary MLS to monitor the houses listed in the area we are renting – not to buy – but to watch what happens over the next few years. Since signing the lease a month ago listings have gone up. A few houses at the lowest price points have sold.

Oh, and the people that take possession of our $900,000 beautiful abode next week haven’t sold their current house after a month and a half on the market. (wasn’t a condition of the sale)

#39 Surprisenomics | The Retiring Boomer™ on 08.11.12 at 12:11 am

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

#40 Adeptus on 08.11.12 at 12:11 am

Garth Said: “Ironically, the very fact governments have to spend tax dollars buying back their own bonds, give people grants to buy cars, or let you write off the cost of building a deck shows how close deflation is. This is the evil politicians fear the most, since they can’t fix it once it grabs hold. Inflation can always be tamed by throttling back spending with higher interest rates. But deflation is a worse beast, especially when rates are dust and everybody’s swimming in debt.”

Dear Garth, I love your website and visit it almost daily, mostly for the giggles, but you are showing your limited economics knowledge here. Your analysis is oversimpliefied and partially incorrect.
* The US isn’t using Tax dollars to buy back their own bonds, their Fed is simply printing money out of thin air and buying up the bonds.
* When government gives grants to buy cars, that increases the money supply, not decreases it.
* Go back in history since the Great Depression ended where is the deflation? NOWHERE! At least not for more than 2 quarters. You need to understand that when fiat money is decoupled from sound money (yes that dreaded gold), Central Banks can simply print their way out of a deflation – just like in 2008 which was the worst global shock since the great depression. THIS is precisely why gold has gone up 600% since 2001, or rather why inflation through currency depreciation due to $$ printing has caused gold to be valued in US $$ to be higher. And this will continue, and you will continue to be wrong on gold. Gold has outperformed nearly every asset class in the last 10 years. Including the real estate bubble, and no gold is not in any bubble (yet).
* You said:” Inflation can always be tamed by throttling back spending with higher interest rates”, not anymore my friend. In the 1980’s Volker (Fed chairman) avoided a US dollar collapse via this tactic by driving interest rates to ~20%. This time around it can’t be done. Raise interest rates a mere 5%, and watch US housing valuations dive another 20% (at least). It would be a total meltdown in the USA. We may still get interest rates to spike up massively, well beyond even 5%, but not through voluntary government/fed manipulation, but rather through a US bond crisis in a few short years.

(a) Money printed by government is tax money, deferred of course. (b) Yes, stimulus increases the money supply. Duh. But so what when prices decline regardless? (c) Asset-backed money is never coming back, for obvious reasons. (d) The last sentience of mine which you quoted underscores an irrefutable fact. You can’t read. — Garth

#41 Canadian Watchodg on 08.11.12 at 12:12 am

#36 Dan in Victoria

Wondering why that home is so cheap? http://postimage.org/image/ijinnscqt/

I already see it coming Garth, everyone who jumps back in the market is going to get slaughtered again.

Stop looking at prices you muppets and start looking at household and government balance sheets. That’s what matters.

#42 Peter Goesinya on 08.11.12 at 12:13 am

@ #32 Can it be? on 08.10.12 at 11:41 pm
&
@ #19 Carpe Diem on 08.10.12 at 11:03 pm

http://cache.blippitt.com/wp-content/uploads/2011/03/Popcorn-09-Psych.gif

http://i53.tinypic.com/2yvpcsk.jpg

http://www.latenightwithjimmyfallon.com/assets_c/2010/09/Jimmy_bieber_Popcorn_cu-thumb-350×197-14878.gif

http://cache.blippitt.com/wp-content/uploads/2011/03/Popcorn-15-Scary-Movie.gif

http://forgifs.com/gallery/d/187637-1/Popcorn_decepticon.gif

#43 Tim on 08.11.12 at 12:27 am

Re# 30
And that area couldn’t be any more different that Tuscany, Italy. Italy has character, culture, great food and wine and beautiful women and beautiful architecture…and trees…

#44 disconnnect on 08.11.12 at 12:27 am

#10 1Drs

Please correct me (anyone), but though Alberta is the only non-recourse province, i believe you (must) wave that right in order to get a cmhc mortgage. Blnt (better luck next time).

#45 vatoDETH on 08.11.12 at 12:35 am

Comment 35 CoreyMC: Must be a grow-op and probably not worth buying with all the restrictions. You would be amazed on how many grow-ops there are in every community in Calgary, even in Tuscany!

Reply: they need grow ops to pay their mortgage…?

#46 Nostradamus Le Mad Vlad on 08.11.12 at 12:36 am


“Yes! Delusion! So, no savings, no equity and $500,000 in debt. Miss Bunny’s easy. Surprisenomics. See what I mean? Nothing changes. Anywhere. How is that being a responsible dad or husband?” — ‘Til Debt Do Us Part. More gluttons for punishment. And on it goes, like a traveling soap opera.
*
13:22 audio clip The inflation years; Ten Unhappiest Jobs in the US. Would it be snow shoveling, housework or saleswork here?
Money Lessons from billionaires; RIM cutting jobs next week? Obomba Best president since Ike for stocks, but he has let the country fall; American Workers training Chinese replacements, who will replace them, and Robots replacing humans? Everyday Low Prices Costing American jobs, but NAmerica is becoming more and more service based; Die Broke on Purpose Unconventional, but interesting way of looking at it; GS and Italy Pump ‘n’ Dump; Euro Crisis Generational war; The True Meaning of Money for Nothing. See the headline; Sleeping Well with Garth’s mix or a good income portfolio.

Cdn. Friday links and more links; Keeping One’s Smarts while settling estate; Austerity leads to abandoned children; Gold Confiscation Getting closer; Mirror Image French and US banking systems; Stock Operator’s Page “Looking at the specific stocks being shorted, I do not see indications of a new 9-11. The issues are across the spectrum with companies like Verizon, Herbalife, and Deere. So, it looks like someone is expecting a major across-the-board downturn on the market next week!” wrh.com; Mitt Romney Wouldn’t it be great if he were on Mars? Hollywood portraying America.
*
Iran Doesn’t have any nuclear WMD, and hasn’t invaded anyone for over 200 years. Note the propaganda BS here, and SArabia Just a report right now; 1:49 clip Space truckin’ through 400,000 galaxies; Drones US ones, near China and US global dominance? Hah! All who have tried before have failed; Long Life Secrets Anywhere past where I am now is unexpectedly long; Remember 1970? Grand Funk Live Album came from this; Food Sovereignty It’s new; The Great Wall of China not so great after all; Bubbling Magma Blowout soon? 32:52 clip The dark side of Smart Meters; A Matter of Time before a mega quake hits close to a city.

#47 Not 1st on 08.11.12 at 12:37 am

“Oh, did I mention Europe?”

Yup, Garth, you have. Largely contained was your synopsis. An entire trading bloc is going to blow up within a few years. While adding trillions upon trillions to its balance sheet in the process. Not the definition of largely contained I had in mind. (ps. U.S.A is up next.)

#48 Gord In Vancouver on 08.11.12 at 12:41 am

Excellent post, Garth.

#49 City Slicker on 08.11.12 at 12:49 am

I was at a cocktail party last night and of course the topic turned to real estate. I was speaking with a condo seller who says Calgary is an anomaly of course because of the robust economy, unlike other provinces, due to oil and surprisingly this time even gas was mentioned. Sure we’ve heard all that before so nothing new.
But what else he said was in 2008 when the housing market was going down hard there were 10,000 listings at the time, today there are less than 5,000.
Oh and he also said all the Muslims are moving here, and that will support the market like HAM supports Vancouver

#50 Hagar the Horrible on 08.11.12 at 12:56 am

The advice given in this blog post is nonsense.

This guy wants a nice stable home for his family, not an investment.

When you rent you can get kicked out if the house changes owners, or if the owner wants to move in himself. What kind of stability is that for a young family, never knowing whether they’ll have to move in 2 months?

And even if it goes down in price in the short term and takes years to recover, what’s the problem if you have no intention of moving? As long as you can comfortably afford the mortgage and other expenses, buy!

#51 joe on 08.11.12 at 1:10 am

Calgary is the epicenter of dillusion. Everybody and I mean everybody I know here thinks real estate is bullet proof, I have yet to meet someone with my point of view, which is scary. Calgary will be caught by surprise and I cant wait, at first I kept waiting and waiting, got excited during the financial crisis and then the dillusion took grip again.

After waiting for years I have now come to realize I dont wanna live here, it is one of the most unlivable societies on earth. Horrible climate, too many men no women, super boring. My brother moved to Victoria I visit him a lot there, way nicer less boring place and lots of amazons too. I’ll vultch there when I see huge decreases.

#52 ex bc boy on 08.11.12 at 1:11 am

“with a yard and lawn in a nice neighborhood”…. you can have it!!! I had that less than a year ago. cutting lawn is a drag.The whole notion of a lawn came during the 50’s after WWII. Suburbs were being built and people wanted to mimick the “nice lawn” in front of the White House. I rent now. I have a nice lawn across the street. Its called a park.
Come to think about it maybe I should rent a woman too.

#53 Mr Buyer on 08.11.12 at 1:14 am

#28 Scott in Gibsons on 08.10.12 at 11:24 pm

August 10 – Bloomberg (Dalia Fahmy): “Asking prices for German apartments rose in July as buyers sought a safe investment amid the euro zone crisis, with values in Berlin and Hamburg gaining the most. Prices demanded for previously owned apartments jumped 7% in July from a year earlier… Berlin and Hamburg prices rose 16.8% in July from a year earlier… German real estate has been among the biggest beneficiaries of Europe’s sovereign-debt crisis as investors bet that land and buildings will retain value even if inflation spikes.”

As long as banksters are in control of the printing presses and regulators are corrupt, you can’t use reason to predict what will happen. Yes, house prices SHOULD fall but that’s only in a rational market.
……………………………………………………………..
prices are falling

#54 Mr Buyer on 08.11.12 at 1:17 am

#32 Can it be? on 08.10.12 at 11:41 pm

Hey Carpe Diem… Seriously get off your high horse. I’m a woman. I probably out earn you. I have three kids and a high income earning husband and we have a great home. Just because you are better off financially then the guy, doesn’t mean you have to belittle him. Wake up call… There is always someone who is better off then you. Also, saving on baby sitters is typically code for the fact that the person can’t earn enough to make babysitting worthwhile, or they don’t have a career that they would actually want to do. Some of us do… Just because they do it differently… Doesn’t mean it’s wrong. I’m sure Jeremy has a lovely family.
………………………………………….
Leaving my kids with people that get paid $10 an hour can also be code for seriously messed up priorities…

#55 KLIP on 08.11.12 at 1:20 am

Appreciate what you’re doing here Garth, edumacating people and all. But to expedite this painful deflation we all see coming, how about we let the idiot realtors keep flapping their gums about “priced out forever”. At this point, if you’re too stupid to believe a used house huckster, you deserve to be pinned.

The Calgary realtor said “price out forever” if you don’t buy. Now that’s FUNNY!

#56 Sea Wave on 08.11.12 at 1:29 am

Here’s a gentle reminder of just how limited the predictive power of the “consensus view” really is:

From the OECD Economic Outlook circa 2007:

“The current economic situation is in many ways better than what we have experienced in years.
Against that background, we have stuck to the rebalancing scenario. Our central forecast
remains indeed quite benign: a soft landing in the United States, a strong and sustained recovery
in Europe, a solid trajectory in Japan and buoyant activity in China and India. In line with recent
trends, sustained growth in OECD economies would be underpinned by strong job creation and
falling unemployment.”

And here’s what the OECD has to say in 2012 (in hindsight):

“Almost five years ago, in the summer of 2007, turbulence in the US subprime market sparked off the
most dramatic financial and economic crisis in several decades. After five years we cannot yet say that the
crisis is behind us. More than once signs of recovery have disappointed. Policy mistakes have been made,
sometimes reflecting inaccurate reading of events, at other times reflecting policy and political failures. Is
it different this time?”

Despite such glaring human failings and limitations, I remain entirely confident that ALL realtors do in fact know … with absolute certainty … that it is ALWAYS a good time for you to buy a house.

#57 TED23 on 08.11.12 at 1:31 am

Stated it many times that agents are changing MLS numbers like underwear. Check listings again.
MLS#:C2437303
MLS®: C2432201

There is nothing extraordinary here. Its simply TWO different Brokers advertising the same house. Therefore there are two MLS numbers.

One is
IHOMES REAL ESTATE BROKERAGE INC., BROKERAGE and the other is Keller Williams.

#58 len on 08.11.12 at 1:34 am

A pretty decent realtor here in Calgary noted that for the first week in August, sales of SFH are the 2nd lowest in ten years

http://calgaryrealestatereview.com/2012/08/08/august-1-7-2012-calgary-real-estate-update/

The spring prices and sales numbers were very much above average trend and now the deceleration in number of sales and average and median prices for Calgary has been incredibly swift.

Mike provides a great service by giving access to stats that tell the story without the usual spin

Alberta is known for turning on a dime – few months of data will tell if this is one of those abrupt turning points.

#59 earlybird on 08.11.12 at 1:36 am

Super post! Once deflation creeps in, if you wait long enough, that $55000 will buy you a hell of a lot more…
Calgary is bust/boom, and will be amplyfied this time around…not everyone works in the patch either…

#60 Bob on 08.11.12 at 2:15 am

Hmm… Garth sounds like a northern Paul Krugman today… (that’s a compliment, btw)

#61 Devore on 08.11.12 at 2:19 am

#4 jack_the_lad

Why such contempt for the self-employed?

Newly-created self-employment positions typically generate little or no income. Therefore the economic impact is negligible. — Garth

Also, many people whose EI runs out become “self employed” under a government program.

#62 Soylent Green is People on 08.11.12 at 2:30 am

Re #32 Can it be? on 08.10.12 at 11:41 pm

So… In other words you stuck your kidsmin stranger care 8/9 hours perday?

Enjoy your big house then.
O
O
O
O

#63 dddd on 08.11.12 at 2:31 am

typically code for the fact that the person can’t earn enough to make babysitting worthwhile – BS!!! – 100% of less well off famlies round here (van) have both parents working…only the lucky/smart/very well paid can do it in vancouver

Doesn’t mean it’s wrong. – unless you ask the kids….who they want raising them mom dad or some stranger? try it!

#64 ANONYMOUS on 08.11.12 at 3:13 am

#36 shut UP this is CANADA

this can’t HAPPEN HERE! JEALOUS PRICK. GOOD NIGHT.

#65 drydock on 08.11.12 at 3:23 am

Be afwaid,be vewee vewee afwaid.

http://theautomaticearth.com/index.php?
option=com_content&view=article&id=338

#66 Tony on 08.11.12 at 3:26 am

Albertans will get to see real estate crash twice. Back in 2007 and 2008 and right now and especially once the U.S. election is over. After November commodity prices including oil will nosedive. Oil should make a new low below U.S. 34 dollars a barrel and may not recover for decades.

#67 drydock on 08.11.12 at 3:29 am

http://theautomaticearth.com/Finance/bubbles-and-the-titanic-betrayal-of-public-trust.html

This is the right link for #37

#68 Rob on 08.11.12 at 3:46 am

Hey Garth,

I couldnt help but notice that Edmonton has largely dropped off your list of cities that will correct…..so I was wondering whether you might have a prediction regarding Edmonton.

#69 ripa on 08.11.12 at 3:53 am

#22 V.I.R. I’m with you.
Blows my mind that people take on a huge debt for somewere to live -or worse, to spec’ on price increases but then spend days researching tyres to save ten bucks on set.

#70 Thinking of buying in Calgary? on 08.11.12 at 3:58 am

I talk with a number of Calgary realtors each month. They talk openly with me.

Right now they are telling their family members and close friends not to buy Calgary real estate.

They openly admit that the doubling of house prices in Calgry over the past decade was only a result of low interest rates and easy qualifiction terms. Since fundamentals were not what pushed house prices higher there will be nothing to support current prices.

They tell me that house prices would have started to correct on their own in the near future even without the new mortgage rules. This is what happened in 2008-2009 when house prices in Calgary crashed 20% in about a year.

The concensus among them is that the new mortgage rules will take about 5 months to start working (only one month old now). They seem more concerned about the OSFI changes that will be enforced in October.

Overall, I would have to say that most of them predict a 30-40% drop in Calgary house prices over the next 1 to 3 years and then a steadily declining market for years after.

#71 Freedom First on 08.11.12 at 4:08 am

A friend of mine who knows my RE history, asked me a while ago when I would buy another house. I said, when I can’t say no. (it’s all in the numbers…..Garth knows this). Also, an important fact, my friend is much better off than me, owns 2 houses paid for, 4 apartments paid for, and 3 apartments 50% paid for, all with excellent vacancy stats. He is much smarter than me, and when I said to him, I will buy another property when I can’t say no……he just smiled and said……..”good answer”…….and then he said I was the richest man he knew, and not to screw it up. Jeremy….the realtor is lying. If you have to work out the math…..and then think about…….forgettaboutit……don’t ever screw yourself………there is enough realtors and bankers already trying to screw you…

#72 mark on 08.11.12 at 4:24 am

I will never understand how people making $150k combined could only have 50k in savings.

#73 Jay Currie on 08.11.12 at 4:35 am

Dan, #34, we should go have a beer at Smuglers or the Penny.

Right now, in Victoria, renting rules. My Dog Walk Index (DWI) is steady. No sales, no listings. However, prices are coming down 100-200k at a time.

As for “dream house”…rent the experience. Your dream house is not actually 2000 square feet. Trust me on this. Go look at the distressed properties on Craigslist. Type in rent $2000 and see what you find. And keep an eye out for your real dream house on MLS and wait 70 days and see if it can be rented.

Yes, Garth, cash is the most valuable thing right now. Cash producing assets, second best.

Now we will see who has the cash and who can service the debt. No fun when interest rates are rising and you don’t have, well, a job.

#74 Click Here, its different. on 08.11.12 at 6:19 am

Hi Garth,

We often read mails you receive going like : “We are a young couple early 30s. We have 50k$ in savings”, “100k$ in saving”, “should we buy a 500 000$ house ?”.

Im stunned by those numbers. I was born and raise in a 35k$ house and the second one, when I was 14 years old, was 58k$. Beautifull middle class 3 br houses in nice neighborhoods. My dad paid the second one cash (he was 46 then) with the little profit on the first one plus savings.

No mortgage whatsoever.

Its absolutely horrifying to see that perspective.

#75 Ken on 08.11.12 at 6:33 am

When income boasting remember the first rule. When an individual tells you their yearly salary, subtract 10k; when they tell you how much they paid for their car, add 3k. Just a helpful hint to allow better assessment of the situation.

#76 jjpetes on 08.11.12 at 7:15 am

Yes Jeremy GO do it! Go! Buy it Jeremy YAAAY JEREMY! You can make it happen Jeremy! You can do it comon Jeremy you can little sheep you can! It only takes a few minutes!

Everyone now chant: “GO JEREMY GO! GO JEREMY GO!”

There does that help Jeremy? Don’t you feel all gooey inside? Now everyone is on your side Jeremy! BUY Jeremy buy!

I think I’ll write a childrens book called Jeremy’s last will and testament. Now go BUY NOW Jeremy and make sure you get your big screen for all that fall football Jeremy and make sure you pay for it on your CC Jeremy. Be sure to put two new cars on lease in the driveway Jeremy.

See Jeremy run on the hamster wheel! Weeee!

See Jeremy pay one CC with another! Weee!

See Jeremy divorce his wife after financial stress! Wee!

See Jeremy lose his job and hit the bottle! We!

See Jeremy blow his brains out in drunken despair! W!

jj

#77 Gypsy Kid on 08.11.12 at 8:07 am

When we bought our first home years ago, our income was close to $200 000, and had one kid. The price of our home? $170 000. That was a starter home…we’ve since moved up significantly, but that’s what people did.
Sadly, that home is now priced at slightly over $500 000.

This current situation is not viable. It’s a life destroying situation, not that owning a home is “life”. But that’s what we strive to have – a home of our own to raise our kids in. I shook my head when people were soooo happy that house prices were rising in T.O. like crazy. Could not they see how destructive it would be for this city? And it has become so….I love my city and I’m sad for the young couples who are starting out.

#78 Johnny D on 08.11.12 at 9:16 am

Garth, I’m calling you out on this statement: “…oil which can’t crack ninety bucks.”

Crude is at $92.87 as I type this. Also, is it possible for the U.S. to see a steady recovery and oil prices nosedive at the same time? And China might be slowing down but they’re not going away.

Please explain your views on oil some more.

#79 salonist on 08.11.12 at 9:20 am

baby garth

http://www.businessinsider.com/19-things-your-suburban-millionaire-neighbor-wont-tell-you-2012-8#he-knows-how-to-manage-his-money-8

#80 John on 08.11.12 at 9:52 am

Van Isle Renter wrote:

“As some one in the above category, I resent the pimply faced sweaty virgins borrowing hundreds of thousands of dollars without a clue as to how much it really is. It makes it impossible for me to want to write a cheque and compete with a bunch of mis-informed idiots.

It forces me to keep my money in prefs and ETF’s and patiently await the day when I will grind their bones for my bread.

And I’m OK with that.”
——

Keep your what…where? Competing against who…when? Bones? Whaaaa? A hyper reality is a hyper reality no matter how you stack it or decide to play it.

The problem is the whole hyper reality thing…at a personal, family, community, national and global level. I’d say there’s immense value in understanding the global ( not Canadian) ponzi scheme you’ve duped yourself into following ( yeah, fortunately it’s you that did it, so all it takes is you to stop doing it).

If you’re going to understand a hyper reality, connected to nothing of value ( where you have little to no value in the fantasy), wouldn’t the purpose of knowing the deal be to improve your life quality? To live?

In other words, what do you think the “real estate” bubble is telling you about how-where you live and why?

Also, all that aside, where are you getting this idea that the situation is about “the housing market” and it’s timing…within a national ( Canadian) economy.

I mean, I realize a lot of people are saying what you say, but is it real? Of course it’s not. Should that fact in itself count for something?

Not in a hyper reality. Facts are a nuisance.

#81 City Slicker on 08.11.12 at 9:57 am

“No, gas, milk or ammo won’t get cheaper, because price inflation will continue apace. Instead, it’s asset deflation you must keep an eye on, because most of us have most of our wealth in a house. And that’s the asset I’m talking about.”

What Garth describes here is stagflation and exactly the same phenomenon as late 70’s and early 80’s resulting in a housing bust. Oh and gold/silver skyrocketing.

No comparison. Inflation was 12%. Now it is 2.5%. — Garth

#82 Steven Rowlandson on 08.11.12 at 10:02 am

Re:#26
Cory I think you are on to something.
The powers that be whether they be financial or political don’t have any real interest in free markets, proper money, proper laws or even right and wrong. In their view what serves their interests is all that is important. Everything and everyone else is expendable.

This is why the precious metals have to be knee capped every step of the way, real estate prices have to go up and stay up and everything that is immoral in the sight of god must be protected by government power.
The powers that be are operating in defiance of natural and divine law and they think they can get away with it for ever.
God and his followers are not amused by all this.

#83 Jesse on 08.11.12 at 10:03 am

I just came across your blog and I found it very informative. I was at the opening at the Arista and Fieldgate phase 3 you mentioned in a past blog entry.. I was in and out in 15 minutes and thought to myself at the time that these prices are insane. Then I realized what was happening.. maybe not in a majority but definitely a few buyers for sure.. were upgrading. They may have bought a house in vaughan between 2000 and 2004 for half the price for what they were going for now.. and were taking advantage of the current market prices to upgrade since they would probably be holding the same amount of mortgage. In any case.. paying $800,000 for a 2000sqft house made no sense and will never make sense. Your blog has actually helped clear my mind. I currently live with my parents, two sisters, wife and 2 children in a 5000 sqft home in brampton that is paid off. I own a condo thats rented, and could probably ‘afford’ a 500,000 home with 10% down. I also like the guy in this entry along with my wife earn about 150K a year. But that 500,000 home in Vaughan would get me a crappy single garage 3 bedroom starter home. I know my wife would like a place of her own, but im not about to risk our financial security now or for the future in an unrealistic and volatile market such as the one we are in right now.

#84 John on 08.11.12 at 10:19 am

Young Boomer wrote:

“Oh, and the people that take possession of our $900,000 beautiful abode next week haven’t sold their current house after a month and a half on the market. (wasn’t a condition of the sale)”
———

Isn’t this just another version of the “Greater Fool”. This is an example of “low value” participation in society, following a formula ( including mating, working, citizenship and psuedo-community)…and then accidentally “making” “money” on the house ladder due to being used as fodder by global speculators ( banks and central bankers etc.)

Let’s not forget that the Greater Fool could not be drawn into the game unless the scam that there “is no casino” existed. There does exist a mechanism that will register the sellers of the 900.000 dollar house…as having 900.000. All players are led to believe that the casino is allowing the demographic lottery ponzi players to KEEP the “money”.

Thus the entrance of the Greater Fool.

Casinos never ever let their clients keep the money..and if money is “given”, it’s with a show and the dopamine of getting something for nothing.

Read the post. The people are going to semi-retire using “money for nothing”. Casino chips. So you retire
( remove yourself from the value for value working life, but don’t offer value ….instead belieiving distant ponzi operators are “giving” you money?)

Casinos simply do not operate this way. Return to the mean isn’t just a real estate term.

Ponzi scheme operators create wild imbalances among the supposedly “equal” Canadians. But they don’t fight the resulting class wars.

The classes do.

#85 In The Doghouse on 08.11.12 at 11:05 am

10 new listings per day in the Abbotsford area. 15 old listings per day reducing their price by $10,000 – $40,000. The 10 new listings are listed at crazy , unrealistic prices . Whats the matter with these people ????? Do they not realize whats going on ???? I’ll give you one guess !!! They were manipulated by the RE agents into believing that all was wonderful in the world , the ecomony was booming , and they would have hoards of horney virgins knocking down their doors . Iv’e learned first hand what these bloodsuckers will do to get your listing , only to knock you down in price because there
is no showings , no calls , no horney virgins waiting to pounce !!! This is just one of the tricks that the Realturds use against you . For all of the Honest people out there who are putting their house on the market , Do your homework , look at whats happening around you . DO NOT LISTEN TO THE LYING , MANIPULATING,GREEDY, BULLSHITTING REALTURDS, Their only concern is their wallet

#86 Inglorious Investor on 08.11.12 at 11:08 am

I’ve said before we would have deflation and inflation at the same time. Asset price deflation. Commodity inflation. An extreme case was 2008 in the US.

The banking system cannot handle deflation because of the massive debts in the system which have the banks levered up by many multiples of their capital. It’s why the [email protected] inflated the Fed’s balance sheet to something like 3 trillion George Washingtons in the wake of the housing crash and Lehman disaster, so the banks could have the reserves to pretend they are solvent.

As Steve Keene and others have shown, asset prices (particularly houses) depend on rising levels of debt. Indeed, not just rising debt, but accelerating debt. That means debt can actually be growing, but if it grows at a decelerating rate, prices can drop. This is how sick our economy has become.

The real economy is deleveraging massively (and this is not a short-term phenomenon, but a generational one). But the monetary and fiscal masters are trying to counteract the deflation with massive money printing to save the banks. Therefore, we are getting the asset deflation, which is the natural result of a generation-long build-up of too much debt. But thanks the the central hackers, we are also getting commodity price inflation at the same time. And risk-free yields are less than nothing.

Some call it financial repression. Some say the Feds can manage the “stock” but not the “flow.”

In the end, it will cost you more to live in a house that’s dropping in value.

Now, with Canadians in the aggregate in debt up to their eyeballs. With the housing market at historic levels of participation. With boomers starting to retire. With the global economy slowing. What is going to drive an on-going acceleration of debt in Canada to keep house prices rising? Or even stable when real incomes are stagnant and employment drops?

Again, as I’ve said, we need need more real wealth, not more currency. What is confusing many so-called “Keynesians” (most of whom are not real followers of Keynes) is that more “money” has not resulted in more wealth. You mean the solution to too much debt is not more debt? Yes, Krugman et al, debt is not wealth.

#87 dd on 08.11.12 at 11:11 am

Ironically, the very fact governments have to spend tax dollars buying back their own bonds.

LOL! I mentioned this very idea on this blog back in 2010-11 and you called me a lier!

Inflation = By the way, It is the “independ” central banks that are buying the goverment bonds. This is the definition of inflation. Price inflation is the result of all this printed money.

Deflation = decreasing or default on loans

Try again. — Garth

#88 In The Doghouse on 08.11.12 at 11:17 am

28 Forecloseures in Abbotsford . Virtually unheard of.

#89 dd on 08.11.12 at 11:26 am

Deflation makes money more valuable.

I would beleive you but the central banks are preventing this from happening. Yes good o’ Carney is helping out too.

So if this is true, IN GENERAL, money collecting 0.01% in the bank or the mass of goverment bonds on the market will be worth more next year.

Again, generally speaking.

#90 dd on 08.11.12 at 11:34 am

“Monthly QE to infinity.”

MARKET PULSE Archives
Aug. 10, 2012, 1:56 p.m. EDT
Fed’s Williams now favors QE3

By Greg Robb
WASHINGTON (MarketWatch) – San Francisco Federal Reserve Bank President John Williams said Friday he now supports another round of asset purchases. “It seems like if we have the tools to move us faster toward our goals, we should use them,” Williams said in an interview with the San Francisco Chronicle. Williams is a voting member of the interest-rate setting Federal Open Market Committee this year. Earlier this week, Boston Fed President Eric Rosengren also came out in support of QE3. Both Williams and Rosengren said they favor an “open-ended” program of monthly purchases. The first two rounds of quantitative easing ended on a specific calendar date. Top economists are split fairly evenly on whether the central bank would launch another round of stimulus, according to Blue Chip Economic Indicators.

#91 TurnerNation on 08.11.12 at 11:46 am

1.85 million for a skinny Toronto infill semi. They claim 3000sq foot of space.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12238645&PidKey=-1313150040

#92 dd on 08.11.12 at 11:56 am

It doesn’t get any more comical than this:

Increasingly, euro-zone leaders are pushing the dirty work on the ECB. In the end, though, they will likely have no choice but to pay Greece the next tranche of its bailout package.

Take Greece, for example, where liquidity is becoming scarce. The government in Athens needs to repay a maturing bond worth €3 billion ($3.7 billion) to the ECB by Aug. 20. The solution to that problem seems paradoxical: The ECB itself is pumping money into Greece, so that the country can in turn repay the ECB.

http://www.spiegel.de/international/europe/ecb-prints-money-for-greece-to-buy-time-for-athens-a-848989.html

#93 T.O. Bubble Boy on 08.11.12 at 12:02 pm

@ #17 TorontomarketWatcher

That place showed up on mls.ca/realtor.ca today at $729k… could have been a delay in posting the new listing.

#94 dd on 08.11.12 at 12:12 pm

Nigel … always good

http://www.youtube.com/watch?v=TN_1mF-3JTI

#95 IPityTheFoo on 08.11.12 at 12:29 pm

A Seller over prices his property by $500k and this is news?

#96 Old Man on 08.11.12 at 12:30 pm

Garth is 100% correct as we are in a deflation crisis, and forget the inflation nonsense, as they go hand in hand like a magic show. In fact I believe we are in a worldwide deflation depression, and in the next few years all hell will come down on Canada which will shock all. Cash is king and renting is prudent, so buy no Real Estate until the bottom comes in, and even then do not expect a correction, but a modest capital appreciation for at least a decade or more.

#97 TurnerNation on 08.11.12 at 12:31 pm

Adding: if you know the area or look at Google streetview you’ll see the 1.85million semi faces a bleak industrial parking lot. Bet it will be condos, soon.

#98 TurnerNation on 08.11.12 at 12:32 pm

Calgary’s house rentals. Balanced market?

Offering (1129)
Wanted (1133)

http://calgary.kijiji.ca/f-real-estate-house-rental-W0QQCatIdZ43

#99 John on 08.11.12 at 12:53 pm

Steven Rowlandson wrote:

“The powers that be are operating in defiance of natural and divine law and they think they can get away with it for ever.
God and his followers are not amused by all this.”
——-

The thing is, anyone looking at your previous strong argument will use this to conclude you’re working backwards to perceive the world….from a subjective and personal opinion.

I happen to agree with the spirit of what you’re saying…this faith idea. But once you work in “God and his followers”, it’s over. People rightly discount your reasoning as contaminated and seperatist. “Understanding” and gaining knowledge from today’s drama doesn’t obligate the person to also include the “God and his followers” hammer.

And it is a hammer. Better left in the tool box.

#100 Heinz Skitzvelvett on 08.11.12 at 1:07 pm

Ozzie Jurock was just on CKNW talking about inflation coming back to the real estate market as central banks print more money.

Mr. Jurock, meet Japan. Japan, Mr. Jurock,

#101 Old Man on 08.11.12 at 1:10 pm

There is this myth supported by the current reform government in power that Canada is a model for all nations to envy, and all is well. So lets take a look at the balance sheet, as wealth is assets compared to liabilities. I took a look at the federal debt clock, and it is running so fast, so say $600 million which is a start, as add in the total provincial debt; the municipal debt; the mortgage debt; and personal debt, and we are talking about $trillions in debt.

Canada has a population of about 34 million, so what is the per capita debt? Can you spell trouble with this equation? Debt is the killer for any nation or an individual, so with a Real Estate crash what is about to happen? Think about it!

#102 Canadian Watchodg on 08.11.12 at 1:14 pm

“No comparison. Inflation was 12%. Now it is 2.5%. — Garth”

Real inflation has been much higher since the US and Canada adopted CPI formulas set forth by the Boskin Commission in 1996. And of recent news, Stats Canada is preparing a new CPI formula that will rig the inflation rate even further.

If only people were smart enough to realize that the value of what their buying is shrinking, while prices are going up. Here’s reality on some retail food prices:

Toothpaste
Deodorant,
Soft Drinks
Peanut Butter
Baby Food
Coffee
Macaroni
Bread
Eggs
Chicken
Ground Beef

Don’t get too comfortable with inflation rates Garth. It’s just one big government lie to keep everyone calm. Sooner or later, people will realize what’s being reported and what is happening in the real world has totally diverged.

#103 Gunboat Denier on 08.11.12 at 1:20 pm

83 Doghouse – I will take the opposing arguement – it’s usually the homeowner that sets the price too high. On a $500K house at 6/3%, the listing realtor will make about $4500 commish after paying brokerage and sales split.
They would make $3750 on a $400k price. The difference being no sale at 500 and a sale at 400. If a seller talks with 3 realtors, they will most often go with the one that
recommends the highest price, or who simply accepts
the owners suggested figure.

Didnt DA used to say this? He makes money in a high or low market.

#104 cowtown cowboy on 08.11.12 at 1:50 pm

#30 dm in c

$357 for 2400 sf in Tuscany…..give your head a shake…..maybe 1000sf. I live across the bow valley and someone in the hood is asking 690k for 2300sf w/finished basement. I have 2100sf and could get about $600k give or take 50k. Bought in ’06 for 390k after selling our side-side for 50% more than we paid in ’02. For me to upgrade to 2600+ sf would take over 800-900k+ in my neck of the woods. IT in Calgary is pretty good, all the majors are trying to get projects done, start your own co. and consult, make about 150-200k/year pretty easily, pay yourself a good salary, keep the rest in the corp. Looking to move out to Springbank with the other mucky mucks! Need to finish the MBA this fall and then the world is my oyster….and then load up on options, cash out a few mil in a couple of years, rinse and repeat!

#105 daystar on 08.11.12 at 1:53 pm

#76 Johnny D on 08.11.12 at 9:16 am

I’d say crude is headed over $100 regardless of what happens with the world economy. Its preliminary to say now, but the corn harvest will yield approx. 10 to 11 billion bushels this year (I’m leaning towards a hair under 10 billion) with the U.S. government calling for 10.8 billion bushels as of yesterday. This compares to 2011 production of 11.5 billion bushels of corn (314 million tonnes) from the year before.

http://www.bloomberg.com/news/2011-11-08/drought-damaged-u-s-corn-crop-pressuring-global-food-supply-commodities.html

In 2011, the U.S. consumed 5.1 billion bushels for ethanol production, more than was consumed by livestock, roughly 40%of all corn produced.

http://nationalhogfarmer.com/nutrition/ethanol-lead-corn-consumption-0821

So lets digest it. The U.S. is doing what it can to keep this unsustainable fossil fuel system going regardless of environmental consequences. New pipelines, ethanol production, anything the U.S. can do to keep the old energy economy going is being tried including ethanol production. Corn prices were strong last year due to a production shortfall caused by drought in some U.S. states in the cornbelt. The kneejerk reaction was more acreage going into corn. The problem is, global warming. June of 2011 was the hottest month on record in the U.S. . July of 2012 was now officially the hottest month on record in the U.S. . June 2011 to June 2012 was also the hottest year on record globally and these numbers run back since 1895 on U.S. soil and 250 years globally.

http://www.thedickinsonpress.com/event/article/id/60441/group/Opinion/

http://www.lansingstatejournal.com/article/20120811/NEWS08/308110029/USDA-predicts-lowest-corn-crop-yield-17-years?odyssey=tab%7Ctopnews%7Ctext%7CFRONTPAGE&nclick_check=1

Corn inventories are also significantly down so this will definitely bite into corn production earmarked for ethanol production by as much as 2 billion bushels or more? The above link suggested 400 million bushels but its a rosy production estimate that was off last year by a billion and will be this year by roughly the same. End result is less ethanol and more crude imports pushing demand by as much as 4% yoy. And then there’s this headline:

http://www.theglobeandmail.com/news/world/israel-wants-to-attack-iran-before-us-vote-israeli-report/article4473446/

#106 dd on 08.11.12 at 1:54 pm

#94Old Man

Garth is 100% correct …

Wow. I personally never knew someone that was 100% correct all the time. This is a first for mankind.

#107 dd on 08.11.12 at 2:03 pm

#94Old Man

“In fact I believe we are in a worldwide deflation depression”

This this statement is correct the money in my bank account will buy more goods of all types next year than this year.

Therefore the CPI (consumer price index) will actually go into negative mode. CPI includes housing costs (renting or buying).

Think about that. My money WILL buy more next year and the year after than.

#108 Canadian Watchodg on 08.11.12 at 2:14 pm

#94 Old Man

“Cash is king”

Cash is not king, trading assets is king.

#109 Mark on 08.11.12 at 2:19 pm

No comparison. Inflation was 12%. Now it is 2.5%. — Garth

Hands up all who believe the government’s inflation stats – 2.5%, no way.

#110 Grim Reaper/Crypt Speculator on 08.11.12 at 2:52 pm

Yep….success at last.

With the help Of Dog the Bounty Hunter..finally got Smoking Man.

We should have figured it out sooner…how he had access to a computer and type with a “straight” jacket on is beyond us.

To celebrate the victory..this homage to a slippery adversary…(who loves the word “SUBMIT” so much it is tattooed in his $#%^&*)

http://www.youtube.com/watch?v=fnhZt73_d-I

#111 young & foolish on 08.11.12 at 3:26 pm

I don’t understand the “tired of renting” crowd, yet I wonder ….

Rents … will they ever go down?

#112 Old Man on 08.11.12 at 3:27 pm

I have no problem with a point counter point, and trash me, as have seen it all, as know from experience what is coming down the track, whereby the train sees a problem and hits the breaking system, but takes a mile to come to a stop – too late!

#113 TurnerNation on 08.11.12 at 3:28 pm

A general Calgary rule-of-thumb: Short sell the current Saddledome sponsor’s stock.

As per wiki: For 10 years it was Canadian Airlines (then Air Canada) after the takeover/rescue. Air Canada promptly went bankrupt.
(And today it’s current round of stock issue fell from $20 down to $1).

Then, for 10 years, the sponsor was Pengrowth Energy. Pengrowth’s stock price fell from $30 down to current $6 levels.

Now Soctiabank’s signed on…the Scotiabank Saddledome. Will history repeat itself?

#114 In The Doghouse on 08.11.12 at 3:37 pm

Most homeowners don’t have a good idea what their house is worth, or what the market is at , up or down . therefore they listen to what the realtor is telling them . If a market is spirualing down, as it is now , Its still quite obvious that the realtors are still pumping the homeowners , as witnessed by the houses being listed . And as far as commissions go , ( since you brought it up ) Realturds are one of the most grossly overpaid , nonprofessions going . 99 % of the population have to put in 2-3 Wks of work to reap the benifits that RE agents get in a few hrs of work . And , PLEASE , don’t try to use that old , worn out arguement that RE agents earn their money , Iv’e bought and sold a few houses in my life to know what is involved in a RE transaction . Anyways….. It’s always great to take another stab at the Realturds …. See you at the Kia carlot .

#115 Canadian Watchodg on 08.11.12 at 3:46 pm

#107 Mark

Next time you eat at Subway, check out the new size sandwiches, slimmer sized soft drinks and the whole 12 chips that fall out of Ms Vickie’s potato chips bag.

Or Tim Horton’s new sized coffee cups. Classic marketing tactic to hide new price per oz.

It’s the small content reductions and price changes across all food and consumer staples that pillage savings every month. Nobody notices until they look at their bank balance and wonder where their money is going.

#116 Old Man on 08.11.12 at 3:56 pm

Canadian Watch Dog give me an education about trading assets, as would love to hear about it, as need to make some money.

#117 Hoof-Hearted on 08.11.12 at 3:58 pm

Housing sales plummet

SFU professor believes price of some suburban condos could drop by half

http://www.thenownews.com/business/Housing+sales+plummet/7069153/story.html

QUOTE:
But one financial expert believes Lower Mainland real estate has reached a turning point.

Andrey Pavlov, a professor of finance with Simon Fraser University, noted prices in Vancouver have rocketed past those in places like New York and San Francisco, and in the case of the Tri-Cities, are comparable to suburbs of those major cities.

He suggested the pace will not continue and predicts prices will likely drop in the Vancouver area.

Pavlov argued home prices rose dramatically in the Lower Mainland, not out of income or general economic growth, but rather debt accumulation.

With low interest rates and easy qualification terms, people have been taking on more and more debt.

“I think this engine of real estate price growth is now done,” Pavlov told The NOW in an e-mail.

“So I don’t see where the future support for real estate can come from.”

And he’s especially concerned for the condo market.

He explained that singlefamily properties would always hold their value to some extent because usable land in the Lower Mainland is limited.

But he contends condos have absolutely nothing that can support them.

And in cases where the quality of a new development might be in question, he can see prices of condos in the suburbs dropping by half or more.

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

One has to wonder how many builders are panicking and just band-aiding the work to try and get it on the market ASAP.

PS if you seriously think that just because it has been “deemed inspected ” = actually inspected…I have a pre-sale line-up spot you can have.

#118 AprilNewwest on 08.11.12 at 4:15 pm

#98 – Doesn’t Auzzie Jurock make money of RE. Why would anyone believe him.

#119 IM in C on 08.11.12 at 4:17 pm

@109 Y9oung and Foolish

My rent went down!

#120 AprilNewwest on 08.11.12 at 4:18 pm

#94 Old man. Deflation of assets only. Inflation of things we need to survive,eg, food heat etc. Garth has pointed this out many times.

#121 a prairie dawg on 08.11.12 at 4:28 pm

Possible bank slogans in 5 years:

-Apparently you weren’t as rich as you thought.

-Banking can’t be this easy after all.

-Making money make cents.

#122 rent is going down on 08.11.12 at 4:30 pm

of course rent will go down as the deflation crisis unfolds.

at the moment, rent is only high because of gross speculation.

#123 Yel on 08.11.12 at 4:38 pm

Please inform yourself before you write about Calgary – prices here are up 10 percent when compared to January

Greetings

Actually it’s 7.92%, but what does that prove other than more risk? — Garth

#124 a prairie dawg on 08.11.12 at 4:40 pm

#100 Canadian Watchodg
#106 Canadian Watchodg
#113 Canadian Watchodg

– — –

You’ve misspelled your own name 3 times in a row. Any chance you’ve been drinking today… lol

#125 Bottoms_Up on 08.11.12 at 4:56 pm

#113 Canadian Watchodg on 08.11.12 at 3:46 pm
—————————————————-
Your Tim Horton example doesn’t make sense. They didn’t change cup sizes at all; they renamed the sizes of their cups. You can still get the same sized coffee for the same price. You just have to know what to ask for.

#126 TNT on 08.11.12 at 5:11 pm

Sandra Wyant says “now is a fabulous time to jump into the market”.
Don’t tread carefully people it might give you time to think and do your homework, jump in be impulsive its only money.

Sandra you are a Spin Dr, buy now it may not go lower or buy now you may get priced out. Instill panic amongst potential buyers perhaps.

Do they teach you that in RE school?

Sandra do your homework study what historically happens in these market conditions.
There is lots of examples.
Uneducated, untruthful or puppet, what do you think Garth?

#127 Canadian Watchdog on 08.11.12 at 5:25 pm

#114 Old Man

First learn how to keep your wealth protected before taxes, pension and investing rules change. There’s no benefit to making returns in sheltered funds when the taxman comes to reap your wealth in order to pay for the government’s debt obligations.

Policy matters more then ever. They will change the rules when the time comes.

#128 Westernman on 08.11.12 at 5:33 pm

Response to City Slicker @ # 79,
“Inflation is at 2.5 % …”
Suuuuuuuuurrrrrrrrrrrrrrrrreeeeeee it is…
If we can’t believe our tax masters in Ottawa who can we believe…

#129 In GARTH Almighty not God we Trust on 08.11.12 at 5:46 pm

#104 dd

“Wow. I personally never knew someone that was 100% correct all the time. This is a first for mankind.”

Well now you do dd. The bearded mystic oracle, all knowing, all wise, financial tea leaf reader without equal, denouncer of parliamentarian peckerheads and peckerettes, former minister of national revenues, lone voice of reason crying out in the HELOC infested wasteland of Canada, public speaker extraordinaire, New York Times bestselling author, Harley riding rebel and adored object of sexy Amazons, is indeed right 100% of the time! Get with the program. Sheeeesh!

#130 a prairie dawg on 08.11.12 at 5:54 pm

Inflation numbers are much easier to manipulate since they removed food and fuel from the equation.

ie: the new ‘core inflation’ frankenumber

It’s not like anyone in Canada has to eat or drive.

And the cheque is in the mail.

And I have a bridge for sale, cheap.

#131 In GARTH Almighty not God we Trust on 08.11.12 at 5:54 pm

80 Steve Rowlandson

“The powers that be are operating in defiance of natural and divine law and they think they can get away with it for ever. God and his followers are not amused by all this.“

Please enlighten us Steven on who God`s followers are.

#132 Casual Observer on 08.11.12 at 6:01 pm

#107 Mark

Hands up all who believe the government’s inflation stats – 2.5%, no way.

This may explain why the CPI numbers don’t make sense. If the calculation was done the same way as it was done in the 1970’s – it would be higher. It’s for the US, but my understanding is that Canadian CPI is calculated much the same.

The author has some predictions about hyperinflation that I might not buy into, but as far as I can tell, his calculations about the CPI seem sound.

I’m not saying it’s a conspiracy or anything. The information about all the calculation changes may not be advertised, but it’s not hidden. Just understand that the price index of a fixed basket of goods is not what’s being calculated.

http://www.shadowstats.com/article/no-438-public-comment-on-inflation-measurement

#133 Gunboat Denier on 08.11.12 at 6:04 pm

112 Doghouse (presuming you’re replying to me) –
where did I say realtors are worth the money? And why
if “their only concern is their wallet” would they
overprice a listing so it wouldnt sell?

A client of mine had an unusual property to sell. He spoke with 3 realtors. One a high-producer, another a low-key veteran, and the third a newbie (at least compared to the other two). He got 3 considerably different valuations. I
told him right away who gave which value. Figure it out.

#134 Devore on 08.11.12 at 6:14 pm

#93 IPityTheFoo

A Seller over prices his property by $500k and this is news?

It’s news when they underprice it by $500,000, so why not?

#135 kevsta on 08.11.12 at 7:08 pm

No comparison. Inflation was 12%. Now it is 2.5%. — Garth

#107 MarkHands up all who believe the government’s inflation stats – 2.5%, no way.

if you really want to get into the statistics manipulation rabbithole I would suggest checking out Gordon t Long & Ty Andros video series – False Economic Growth

the extent and depth of the lies and distortions is so much worse than you can imagine.

did you know for example that they can and do just make up what they think is, or *probably should* be happening in a process called “imputation”, which accounted for approximately FIFTEEN PERCENT of US GDP between 2005 and 2010?

seriously, believing official figures is very bad for your investment health.

#136 Canadian Watchdog on 08.11.12 at 7:13 pm

#130 Casual Observer

There’s a reason why two chief statistician have left Stats Canada under Harper’s regime. Harper doesn’t like the current CPI. Needs more manipulation.

#122 a prairie dawg’

Yeh I noticed after. Who cares? Thanks anyway.

#123 Bottoms_Up

Look at the cup sizesagain and what do you see? The new small is the old medium size; the new medium is the old large size, etc. As for price, they had increased the price per ounce (profit margin) last year, however, by increasing sizes according to what consumers are used to ordering (10oz DD to 14oz DD is a 40% hike), they increase prices again, in return, added profit is made on last years margin increase. It’s the good ol’ double switcheroo trick.

#137 In The Doghouse on 08.11.12 at 7:24 pm

131 Gundoat Denier.
You know the answer to the first question . Thats the first thing they teach you in that school , whats it called , you know , the one on the back of the match book cover that you can get in 3 easy steps, certification guranteed ….The #1 thing they teach you is “GET THAT LISTING” !!! No listing, no money. Then you can knock the listing price down to a fair, market price.
Responding to your second querry :
I’ll bet all three of them were way over fair market price. Refer to the above statement

#138 cynically on 08.11.12 at 7:37 pm

#99 says “There is this myth ……….. that Canada is a model for all nations to envy, and all is well” This reminds me of an article a Sun columnist wrote about Canada’s judicial system about five years ago where he interviewed a noted(his word) woman defence lawyer who brazenly said that “Canadians should be proud to have a judiciary that sets the bar for the rest of the world.” Canada doesn’t set the bar for the financial system, the judiciary system or any other system employed in this world. In fact we are borrowers or copiers, not initiators or originators by our nature.

#139 Mr Buyer on 08.11.12 at 7:52 pm

#94 Old Man on 08.11.12 at 12:30 pm
Garth is 100% correct as we are in a deflation crisis, and forget the inflation nonsense, as they go hand in hand like a magic show. In fact I believe we are in a worldwide deflation depression, and in the next few years all hell will come down on Canada which will shock all. Cash is king and renting is prudent, so buy no Real Estate until the bottom comes in, and even then do not expect a correction, but a modest capital appreciation for at least a decade or more.
……………………………………………..
Sage appraisal of likely eventuality. Strait out of the Japanese playbook but you need to add another decade and the present situation is minimal depreciation over an extended period. Bubbles are simple life forms, they inflate, collapse and the targeted asset crashes in value.

#140 inflation and deflation on 08.11.12 at 7:53 pm

“#75 Gypsy Kid on 08.11.12 at 8:07 am
When we bought our first home years ago, our income was close to $200 000, and had one kid. The price of our home? $170 000.”

>>> I remember buying in the late 90’s in Toronto, big detached fixer-upper in the west end for $220K. Our hhi was $80K at the time, and boy was I nervous. The 25yr mortgage with the RRSP down payment and CMHC penalty was just about the same as renting the same house, ie $1,550 per month. Three young kids and no other assets or savings.

Flash forward to 2012, that same job that paid $80K would now pay about $110-$120K, so let’s say a 50% increase in gross and take home pay. So logically the house should go for about $330K, right? Uh, no, it sold recently for $850K. (house got sold due to marriage breakdown for $475 in 2005 so in the end it worked out okay even after reno costs etc) But $850K makes no sense at all, and these prices must be incredibly frustrating for young adults and young families who are debt averse. And Vancouver being worse than GTA is incredible.

on an inflationary note, I just noticed that Kashi Go Lean Crunch cereal which I’ve bought for years and years is still the same price, but the box is skinnier and smaller and now holds only 390 grams instead of 425 since it launched.

hmm.

#141 Cory on 08.11.12 at 8:14 pm

#102cowtown cowboy on 08.11.12 at 1:50 pm

Yes and I am 6’7″ 520pounds of pure muscle, and have a harem of women in my palace in Jordan. Why, I made 2.7 billion just yesterday in the markets and bought 7 more Lambo’s for my garage that’s bigger than the entire city of Calgary.

Ahhhh, yes, the internet is grand.

#142 dd on 08.11.12 at 8:42 pm

#130Casual Observer

If the calculation was done the same way as it was done in the 1970′s – it would be higher.
—————————————————————–
Funny, anything out of real estate boards are highy suspect. But any goverment stats are taken as gospel. Gov would never lie. Never.

#143 Gunboat Denier on 08.11.12 at 9:00 pm

CPP buys more US RE

http://www.cbc.ca/news/business/story/2012/08/10/cpp-fund-up.html

#144 dd on 08.11.12 at 9:02 pm

Will CDN dollar buy more copper over the next 10 years? Call up any graph and look at long term charts. Flation is more than 2%. Those that do, believe in tooth fairies.

http://emetalprices.com/base-metals-2012-forecast-aluminium-to-hit-2200-copper-8200-nickel-19800-zinc-2000/

http://www.tradingeconomics.com/commodity/copper

Yeah, I’m almost out of raw copper, myself. Damn. — Garth

#145 bill on 08.11.12 at 9:33 pm

hey rowlandson
when were you appointed god’s mouthpiece?

#146 Van grrl on 08.11.12 at 10:01 pm

#52 Mr Buyer in response to #32 Can it be-

Yeah, if you’re a cheap jerk who only pays the babysitter minimum wage! So um, what exactly are you saying about how much you value the work your stay at home wife might do?? Interesting!

#147 Can it be? on 08.11.12 at 10:01 pm

I’ll make sure I cash in my daughters resps now and tell them not to bother getting an education, when I should just be concerned with them marrying well according o some of the people on this blog. God forbid life doesn’t work out for them, and they are not as lucky as those women who married the high income earners on this blog. Or god forbid they don’t get married. Or illness strikes. Millions of people around the world have managed to work and raise children… I’m not anti stay at home parents, but I certainly wouldn’t want to have judgmental friends like some of the commenters. In my world working mamas and stay at home mamas coexist. Seriously.. None of you knows for sure what the future holds for your children so I hope you are a little more open minded.

#148 Bumbaclout on 08.11.12 at 10:05 pm

Teachers need more money, they need their raises ok? Canada is all about public sector bs, fake wealth, and HOUSES.

GO KANADA GO!!!

#149 Can it be? on 08.11.12 at 10:05 pm

@peter… Thanks for the popcorn! I knew the comment would get some people’s panties in a twist. I just can’t stand people judging other peoples income earning or parenting. Seriously annoying. Being a person that actually has options in life really does give you a whole new perspective on life.

#150 Can it be? on 08.11.12 at 10:08 pm

On to the main topic. Word on the street… My Toronto speculator friends in hot neighborhoods,(ie davisville etc) are bailing. Selling for less just to get out. Everyone wants to speculate in Miami now.

#151 Gunboat Denier on 08.11.12 at 10:33 pm

135 Doghouse – we agree on getting the listing, but we still disagree on who is setting that initial price. I’ll give you another local (for me) example. Acquaintance down the road listed his place for 1.5M. I did quick mental calc and came up with something under 1M. My business associate is chums with listing realtor and had already queried him on it. “Not my price” was the answer he got.

I am surprised you couldn’t pinpoint the second question better. The relative newbie looked at the lot area and priced it like some new lots down the road. Problem was, my clients lot was heavily encumbered with restrictions.
The high-producer looked at it for what it was – basically a building lot – with a trade-off between privacy and a somewhat isolated location. He had the most realistic price. He knows how to move product and consistently sells for 95%+ of list.

Eventually the realtor from my first example brought in a buyer. Not sure of the price.

#152 M G on 08.11.12 at 10:52 pm

If deflation is coming our way, well then Garth, what will Mr Carney’s next move be? A year or so ago he had no right to raise rates. This is Japan my friends. Low rates for a very very long time. Cash is always king, but having cash producing assets even better. All my condos are rented out and producing CASH.

All those people flocking into Toronto, where are they going to live? Ok dont buy real estate, just rent from me thanks very much.

#153 Grim Reaper/Crypt Speculator on 08.11.12 at 11:00 pm

Personally…don’t really care about “cup size”..as long as Amazons maintain their own high standards.

#154 Nostradamus Le Mad Vlad on 08.11.12 at 11:23 pm


#111 TurnerNation — “. . . the Scotiabank Saddledome. Will history repeat itself?” — Always has and always will, taking up new forms each time. It’s just that most don’t recognize the forms.

Goes with #110 Old Man — “. . . whereby the train sees a problem and hits the breaking system, but takes a mile to come to a stop – too late!”
— and —
#115 Hoof-Hearted — “Housing sales plummet” — One aspect is consistent — condos have become water closets in the sky, SFHs aren’t much of an escape (unless homeowners are debt free and have sufficient income to pay exorbitant bills), and we’re no more than chicken shit for TPTB. Good posts!
*
Rather than investigating the simple truths of life, such as spontaneous combustion, it would be more beneficial if we took a gander at why individuals spontaneously explode, such as here. Also — this. What else should ladies expect from us simpletons?

There is no logical rationale for this. Then again, there is no logic anywhere here. It’s all immediate spontaneity!
*
A computer virus targeting the banks may cause fiscal collapse; Return of the 1930s Dust Bowl History . . .; Blink! US debt just became grossly obese; 2:47 clip Monsanto and Walmart — Brothers in Arms; China Very interesting if this happens; Oil Barons plus the feds. here gouging NAmericans; Klamath Dam removal “We all know about the dams being removed across the USA…this will be the largest dam removal in history and it will decimate a Northern California farming community.”; CarboNazis Rolling blackouts in California; US austerity What will Cdn. austerity bring us? Bankster Fraud has left 100 ml. + in poverty; Europe’s Ten most stupidly dangerous politicians. There’s a few here, on this side of the pond as well; Spain Supermarket looting. People are getting desperate.

Forecasters Economics or weather, they’re all the same; More Taxes; China not pulling its weight, and Japan increases sales tax; Chinese Ponzi Play; EZone Plan L instead; Investing US$100 mln.; The Weekender.
*
Einstein Correct again; Syria is not isolated, and could turn nasty very quickly; Devil Dog These critters do exist; Open Wide I see gut rot; SArabia says no go to Israel using its air space; Two Pyramids in the Lost and Found in Egypt; Romney’s Death Squad After dubya and Obomba, it is only fitting that another mass murderer is running for head honcho, and Romney and Ryan Guaranteed austerity; FEMA Truth or urban legend? Venezuela A thorn in the bowels of Washington, plus it has the largest oil reserves in the world; Fukushima Five ‘quakes in six days; PC dying? I still like the last version of XP; Aleppo, Syria The rebels (supported by the US and NATO) couldn’t hold on, so Europe and the US want intervention; GMO Tomatoes Good looking poison; Krokodil A Russian-made heroin substitute is lethal; 1:26 clip Scotty’s here to beam us up! We’re outta here! Dark Matter In terms of banxters, yes, dark matter does exist; Eco-Cities or prisons under the guise of eco-cities? Louisana sinkhole keeps citizens at bay; Twinned in different parts of the Pacific; The Sun Could be it’s pissed off with us as well.

#155 Mr Buyer on 08.11.12 at 11:47 pm

#145 Van grrl on 08.11.12 at 10:01 pm
#52 Mr Buyer in response to #32 Can it be-

Yeah, if you’re a cheap jerk who only pays the babysitter minimum wage! So um, what exactly are you saying about how much you value the work your stay at home wife might do?? Interesting!
……………………………………………….
Nice. Did I touch a nerve?

#156 thousands of empty toronto condos on 08.12.12 at 12:05 am

Toronto condo owners are in deep trouble. They can’t sell them for more then they paid and can not rent them for cash flow positive. Many condo “owners” are losing money hand over fist every month. Many will lose their condo investment in bankruptcy . Going to be a nice long crash until prices fall over 50%. Look out below suckers.

#157 house burden on 08.12.12 at 1:22 am

Did my regular drive today and counted 32 houses for sale in vancouver/burnaby and not a single sold sign.

Two weeks ago there were 28 for sale and 3 sold.

Even my house horny friends which were searching for a second or third house are now holding back and thinking it definately not a good time to buy

#158 Suede on 08.12.12 at 1:23 am

#101 Canadian Watchdog

You forgot the number 1 indicator of inflation:

REESE Peanut Butter Cups. Used to be $1.00 in vending machines in 2001, now up to $1.50. In gas stations it was $0.99, now it’s $1.69

Anything someone spends disposable income on should be included – end of story. Nevermind Boskin and co.

HPI, CPI, all the PI’s – it’s all fixed by whoever is assembling the inputs. Except Magnum PI. He’s not fixed, that’s for sure.

Heck, when i plot the price of Vancouver home prices over 10 years vs the amount of chest hairs i’ve been getting, there is almost a direct linear correlation. As one increased, so did the other. No Joke.

There was a valley in 2008 because that’s the first time i waxed it to look sleek (The evolution of man, some say, to a less hairy type) for a vacation in Europe. They grew back a while later, very slowly. And contrary to Kramer’s old wives tale, they don’t grow back thicker Jerry.

Then in 2010 prices (and chest hair) took off again because i started getting into Jack Daniels Single Barrel (it’s not as good as the regular sour mash) and my friend’s XO. He likes to show it off in the front cabinet, so he’ll oblige me every time i come over and point it out – i’m not shy, and he likes to play big shot.

Wow,

Saturday night on Garth’s Blog. Long day. Still pathetic though.

#159 Hoof - Hearted on 08.12.12 at 1:34 am

#153 Nostradamus Le Mad Vlad

SFH are a far better goal than condos….when the SHTF..that is where I’d aim my sites.

#160 oceanside on 08.12.12 at 1:41 am

Nice house in good neighbourhood of Qualicum Beach just listed yesterday for $285,000…..Breaking the $300K barrier!

#161 Casual Observer on 08.12.12 at 2:25 am

#141 dd

Funny, anything out of real estate boards are highy suspect. But any goverment stats are taken as gospel. Gov would never lie. Never.

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

The Government isn’t lying. The numbers that they report are exactly what is being calculated. It’s just the method of calculation that has changed. In fact, the Bureau of Labor Statistics (BLS) even estimates the impact of some of their changes on CPI reporting.

From the Shadowstats report link:

“The substitution-related alterations to inflation methodologies were made beginning in the mid-1990s. The introduction of major hedonic concepts began in the 1980s. The aggregate impact of the reporting changes since 1980 has been to reduce the reported level of annual CPI inflation by roughly seven percentage points, where 5.1 percentage points come from the BLS’s published estimates of the effects of the individual methodological changes on inflation… The balance comes from my estimates of the changes not formally estimated by the BLS.”

Nothing was hidden. Everything was publicized, but people weren’t paying attention.

Also from the report:

“In the early-1990s, political Washington moved to change the nature of the CPI. The contention was that the CPI overstated inflation (it did not allow substitution of less-expensive hamburger for more-expensive steak). Both sides of the aisle and the financial media touted the benefits of a “more-accurate” CPI, one that would allow the substitution of goods and services.

The plan was to reduce cost of living adjustments for government payments to Social Security recipients, etc. The cuts in reported inflation were an effort to reduce the federal deficit without anyone in Congress having to do the politically impossible: to vote against Social Security. The changes afoot were publicized, albeit under the cover of academic theories. Few in the public paid any attention.”

Anyway, it’s all very interesting, but a little off topic for a RE blog.

#162 zoronqueen on 08.12.12 at 3:36 am

I am considering a floating home in Richmond or Vancouver. Any comments?
I am willing to spend 500K including the moorage…

#163 Can it be? on 08.12.12 at 7:20 am

Surprisingly lots of sold signs in south east oakville with the bigger agents, although lots of lower selling prices. In the high end spectrum houses are selling for half a million less. The way I see it, there are those that will enter the market each time when prices drop as no one knows for sure how low things will go. The speculators are truly pessimistic however… Word on the street… Markets tanking.
@mrbuyer… I recall many of your self help posts not too long ago. The Internet has a long trail of information. As I’ve said before, find happiness in your own life. Good luck with your house hunting, your wife and your kids. Oh and I agree with Vangrrl… Babysitters should be paid well. No question about it.

#164 Bottoms_Up on 08.12.12 at 8:32 am

#157 Suede on 08.12.12 at 1:23 am
————————————
I pay $1 for 8 Reese cups at walmart. Does that mean we’re in deflation?

Only you. — Garth

#165 Bottoms_Up on 08.12.12 at 8:39 am

#135 Canadian Watchdog on 08.11.12 at 7:13 pm
————————————————-
Yes I agree with that take on it. The way it was initially brought up made it sound like it was inflation hidden within a reduction of cup size.

#166 In The Doghouse on 08.12.12 at 9:03 am

150 Gunboat Denier
Talked to a few of my associates about houses they’ve sold , and all of them said the same thing . they had a price in mind , but were upped by the agent . Of course there are people out there that think their cottage is worth a mansion . If that agent had any scrupples , he would have walked away , but as we all know that word is not in RE agents vocubulary as well as honest , truthfull ,fair , hard working , etc , etc , etc AS for the property finally selling , it probably went for a lot less than what you had priced it at . I think I’ll move up from the Kia car lot , to the Mercedes used section . I imagine the lots will be full of ex-RE agents lease returns . Maybe I’ll see you there .
Cheers.

#167 Herb on 08.12.12 at 9:18 am

The deception lies in continuing to call it the “Consumer Price Index.” It should be called the “Official Price Index” because its use is to government as an economic and political factor.

It is a tool to limit wage demands and “indexed” payments. It does not reflect the actual “basket of goods” bought by consumers, and limits alarm among the populace to individual perception. If a hard, official number told them they were paying 10% more for the stuff they need than a year ago, they might reduce their purchasing or demand government action.

And that is the total conspiracy: just another spin in a pseudo-democracy based on the mis-, dis-, or uninformed consent of the governed.

#168 Herb on 08.12.12 at 9:19 am

#161 zoronqueen,

well, that floating home certainly would be a depreciating asset.

#169 Mr Buyer on 08.12.12 at 9:38 am

I took the bait and I know better. Anyways, the top has passed and now on to the crash. The simple life of bubbles.

#170 Hoof - Hearted on 08.12.12 at 10:35 am

#161 zoronqueen on 08.12.12 at 3:36 am

I am considering a floating home in Richmond or Vancouver. Any comments?
I am willing to spend 500K including the moorage…
==================================

Wait till the Big One hits..they’ll be lots of floating homes..err homes trying to float.

Make offers from your dingy.

#171 Jas on 08.12.12 at 11:13 am

Garth:
you have been calling wolf for the last 3+ years.
And God knows how many investors missed the opportunity of making good profit from real estate investing. (I know all about REITs but here I’m talking about an investor who wants to play his/her local RE investment)
Even now, when things are cooling …there are hot spots…. and perhaps they won’t be impacted by the factors you’ve been mentioning on this blog. For example allow me to say about some parts of my town (Surrey, BC) where we have fresh supply of immigrants and mainly from India (I’m from India as well) if you take the cultural factor into account, the first thing these people want is their own home. And where they want to buy, I don’t see any significant drop or stall in house prices for an extened period.
By the way, the mortgage rate and down payment rules don’t impact these people because they sell one/two acres of their land in India and buy a $600k house without any loan.

Agian, can you let us know where are you picking individual RE investment properties? is it still Windor? any other cities?
thanks

Surrey? Seriously? Let us know how this works out for you. — Garth

#172 Gunboat Denier on 08.12.12 at 11:31 am

165 Doghouse – I had to sleep on it some but came up with more experiences of “my realtor wanted me to give
it away” situations. But it is possible my smaller market
with a few well-established realtors (and dozens of
wannabes) simply hasnt gone that route , as word would
quickly get around (ie they would flame each other) of
the practice. There are also many established business
and family connections too, so in some cases no
competition for the listing. As for my buddy down the street, I am quite sure the realtor has told him he is way too high.

It has been “good blog” and would be interesting to hear from other parts of the country on this, even DA from K-town – if he promises to behave.

#173 dd on 08.12.12 at 11:42 am

Vancouver Island housing numbers

http://www.coastrealty.com/new/public/market_stats_all.php

#174 Mister Obvious on 08.12.12 at 11:50 am

#165 In The Doghouse

“but as we all know that word is not in RE agents vocubulary as well as honest , truthfull ,fair , hard working , etc , etc , etc”
————————

I am not a RE agent or even a fan that ‘industry’ but you step over the line by painting all agents with the same brush.

I have known some who had all the qualities you list above and more.

We tend to blame RE agents for woes that are largely attributable to basic human greed.

Agents are usually just facilitators of our own inherent ruthlessness. If an agent fetches us a unexpectedly large price for our home he’s a ‘good businessman’.

If we are helpless pawns in a bidding war the agent becomes the scum of the earth.

The truth is somewhere in the middle. We all need to take some responsibily since we all created this risky RE mess together.

#175 Don on 08.12.12 at 11:57 am

If you want deflation make your own coffee,wash your own car,cut your own grass,take care of your own kids!!

#176 Hoof - Hearted on 08.12.12 at 12:24 pm

# 170 Jas

Don’t take offence..is not meant to be.

I know a lot of South Asian people and many are heavily invested in construction.

What I often see is a family will build a monster home…live in it for a year or (2)…do the capital gains thing SELL and build another. Often the buyer will be Asian(ie Oriental).

The work sites are almost exclusively South Asian…including seniors..definitely keeps the South Asian community employed. This food chain worked for several years.

However, and I have said this before, that I think that once HAM is knocked out, there will be a huge backwash in the South Asian Community, having tied their economic future to this. Houses are not selling, and new construction is drying up.

#177 In The Doghouse on 08.12.12 at 1:05 pm

173 Mister Obvious
I call as I see em . A spade is always a spade , no matter what color it is .

#178 TurnerNation on 08.12.12 at 1:35 pm

Nostradamus Le Mad Vlad ok about the Scotiabank Saddledome. I will note today’s BNS stock price at $52. Will check back in 6 months, then 1yr, see if BNS is above or below.
They need to name it Scotiablank Saddled-with-debt Dome.

Calgary is so predictable, boring. Economic and social cycles. HOM (hot oil money) comes and goes.

#179 Investx on 08.12.12 at 1:44 pm

#101 Canadian Watchodg

“No comparison. Inflation was 12%. Now it is 2.5%. — Garth”

Real inflation has been much higher since the US and Canada adopted CPI formulas set forth by the Boskin Commission in 1996. And of recent news, Stats Canada is preparing a new CPI formula that will rig the inflation rate even further.
………………………………..

Come on Garth, you should know this.

No comparison. Except there are more conspiracist nutbars today who believe the government purposefully lies to them. — Garth

#180 cowtown cowboy on 08.12.12 at 1:52 pm

#140 Cory on 08.11.12 at 8:14 pm

Is anything I said false? No. People in this town cash out options all the time, just ask anyone who is at Nexen. Most options are underwater at the moment, which explains why Invermere is a little quiet these days.

People who have been in the patch for the last 10 years or so have done extremely well, including a friend who just bought his 2acres in Springbank and place in Invermere for cash.

Yes, the internet is a wonderful thing, try using it for doing some DD before shooting your mouth off.

#181 jess on 08.12.12 at 1:52 pm

Chartered banks: Total claims and liabilities booked worldwide vis-à-vis non-residents
page 38 of 176
http://www.bankofcanada.ca/wp-content/uploads/2012/07/bfs_july12.pdf

#182 TurnerNation on 08.12.12 at 2:11 pm

Canadian watchdawg this one will skew your MLS rental stats.

For Rent: $35,000/Monthly

http://www.realtor.ca/propertyDetails.aspx?propertyId=12101760&PidKey=743928853

.

#183 Westernman on 08.12.12 at 2:12 pm

Investex @ # 178,
Concerning the reply …
No, of course governments never lie… I don’t think anyone can find even one single instance of governments or organizations of any type even once lying to anyone about anything…
Sweet Jesus how can anyone make a more naive or disingenuous statement than that …

Because you have not been there. — Garth

#184 gtaguy on 08.12.12 at 2:29 pm

No comparison. Except there are more conspiracist nutbars today who believe the government purposefully lies to them. — Garth

…………….

Seriously, you believe governments do not purposefully lie to us and we are nutbars to think they do or is it that this just applies to economic data?

Sure Iraq had WMD’s all along and Iran is planning on nuking Isreal. Must be true the government nutbars said it’s true.

Yes, I do. And this is not America. — Garth

#185 truth hammer on 08.12.12 at 2:44 pm

Lets not forget that the ‘jobs numbers’ are always ‘projections’ and seldom based on fact of any kind. The ‘birth death’ model keeps many civil servants employed but few others. “farm labour’ is another ‘boost’ in the stats because traditional jobs should have been filled….despite the biggest drought in centuries…..bwhahahahahaha….mainstreet tells the true story…..retail space is opening up like black holes along every high street.

#186 45north on 08.12.12 at 2:45 pm

Hoof – hearted: I think that once HAM is knocked out, there will be a huge backwash in the South Asian Community, having tied their economic future to this.

this being construction and the housing market in general

compare and contrast the South Asian Community (Indian ?) to the Italians coming to Toronto in the 60’s. My Italian brother-in-law and his brother did very well, building houses and selling them. 40 years ago I remember using high-school French to communicate with the Italians on a construction site.

#187 ANONYMOUS on 08.12.12 at 2:57 pm

Garth, let me explain in simple terms why guys will ignore your advice and buy a house anyways: WOMEN !

Women give sex and men want sex.

Women want a house (nest) and if the guys don’t buy them a house (nest) then they go and find some OTHER GUY to give their sex to. It really is just that simple !

Now if the guy is smart and he listens to you (which he SHOULD do), his girl leaves him for some other dude, and then he is a single guy living in a bachelor apartment, with no woman by his side.

#188 JOhn S on 08.12.12 at 3:01 pm

Investex @ # 178,
Concerning the reply …
Because you have not been there. — Garth

Agree that we have not been there. But been long enough in the government to realize that not all truth is released. Selective numbers makes it to the press.

Hard to believe that you say HPI is a farce, but CPI is the absolute truth.

Both are overseen/monitored either directly or indirectly by the same authority.

Where did I say ‘absolute truth’? I said there is no conspiracy to mislead. And there is not. — Garth

#189 Signpost in the bushes on 08.12.12 at 3:35 pm

Investex @ # 178,
Concerning the reply …
No, of course governments never lie… I don’t think anyone can find even one single instance of governments or organizations of any type even once lying to anyone about anything…
Sweet Jesus how can anyone make a more naive or disingenuous statement than that …

Because you have not been there. — Garth

Absolute monarchies are those in which all power is given to or, as is more often the case, taken by, the monarch. Examples of absolute power corrupting are Roman emperors (who declared themselves gods) and Napoleon Bonaparte (who declared himself an emperor).

“Absolute power corrupts absolutely” arose as part of a quotation by the expansively named and impressively hirsute John Emerich Edward Dalberg Acton, first Baron Acton (1834–1902). The historian and moralist, who was otherwise known simply as Lord Acton, expressed this opinion in a letter to Bishop Mandell Creighton in 1887:

“Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men.”

The text is a favourite of collectors of quotations and is always included in anthologies. If you are looking for the exact “power tends to corrupt, and absolute power corrupts absolutely” wording, then Acton is your man. He didn’t invent the idea though; quotations very like it had been uttered by several authors well before 1887. Primary amongst them was another English politician with no shortage of names – William Pitt the Elder, Earl of Chatham and British Prime Minister from 1766 to 1778, who said something similar in a speech to the UK House of Lords in 1770:

“Unlimited power is apt to corrupt the minds of those who possess it”

Acton is likely to have taken his lead from the writings of the French republican poet and politician, again a generously titled individual – Alphonse Marie Louis de Prat de Lamartine. An English translation of Lamartine’s essay France and England: a Vision of the Future was published in London in 1848 and included this text:

It is not only the slave or serf who is ameliorated in becoming free… the master himself did not gain less in every point of view,… for absolute power corrupts the best natures.

Whether it is Lamartine or his anonymous English translator that can claim to have coined ‘absolute power corrupts’ we can’t be sure, but we can be sure that it wasn’t Lord Acton.

#190 JULNICAN on 08.12.12 at 3:50 pm

“#65 Tony on 08.11.12 at 3:26 am
Albertans will get to see real estate crash twice. Back in 2007 and 2008 and right now and especially once the U.S. election is over. After November commodity prices including oil will nosedive. Oil should make a new low below U.S. 34 dollars a barrel and may not recover for decades.”
——————–

Is this you, squidly77?????

#191 TurnerNation on 08.12.12 at 4:22 pm

Realtors in a PANIC!! Desperate for Harleys.

“Realtor looking to assist you in buying process and buy your Harley !!! Interested?? Let me know what you have,,, looking for a road king,,, thanks.

This ad was posted with the Kijiji mobile app”

http://ontario.kijiji.ca/c-cars-vehicles-motorcycles-street-cruisers-choppers-HAVE-A-HARLEY-YOU-NEED-TO-SEE-TO-BUY-A-HOUSE-W0QQAdIdZ400256271

#192 Canadian Watchdog on 08.12.12 at 4:30 pm

“Because you have not been there. — Garth”

And what would parliamentarians know when even they themselves are being denied access to federal agency information?

Regarding OSFI’s CMHC oversight:

OSFI Committee Meeting: Thursday, May 17, 2012

Senator Moore: Thank you, witnesses, for being here.

My first question was covered by Senator Tkachuk as I, too, thought that reports dealing with the activities of agencies handling public funds would be made public. I do not know why it was put under OSFI. I hope that was not done to avoid public scrutiny. I do not know that you have answered the senator’s question about what you will include in your report in terms of what OSFI found. You may be limited in what you can say; I do not know. We will have to wait and see how that unfolds. Do you know how that will work? Have you had discussions with OSFI as to how much you will be able to say in your report with respect to their findings?

[Karen Kinsley, CEO of CMHC]

Ms. Kinsley: Not at this point, senator. Again, I would suggest that OSFI can give a more fulsome answer on this. I would expect that they will treat us similarly to how they would treat others they review, and the recommendations, to the best of my knowledge, are not particularly attributed to OSFI in annual reports and so on. That is not to say that the findings or the recommendations that they make will not be taken on board and will not in fact find their way into the annual report, corporate plans or other public documents. As to whether it would say that OSFI recommended this and CMHC did that, I do not believe it will be that specific.

As another Senator asked a similar question…

Senator Hervieux-Payette: My colleague asked this question of the previous organization. Reporting will be done by whom, to whom and how will we be informed? You will do the assessment and supervision of the CMHC, and of course this will fall under the Ministry of Finance. What will parliamentarians get at the end of the day? It is important that we know what type of reporting we will get. Will it be like an annual report of a corporation, like a Genworth report, or a different report?

[Patty Evanoff, OSFI Senior Director]

Ms. Evanoff: The legislation provides that we report to the two responsible ministers and to the board of directors. The ministers and the board then become responsible for acting on any recommendations that we have. I believe the legislation also provides that CMHC has to develop a plan to respond to any such recommendations through its corporate planning process.

As we noted this morning, we would not have our supervisory findings made public because of the importance of confidentiality with respect to our mandate and the mandate of any similar global regulator. However, Ms. Kinsley said this morning that CMHC does provide financial disclosure as well as other commentary through its annual report.

Senator Hervieux-Payette: The figures that we will get from her will be the same figures, except we will not have the recommendation.

Ms. Evanoff: Not the specific recommendations, no.

————

You’re right Garth, government agencies don’t lie, instead, they just refuse to disclose information to publicly voted officials and direct them to same source that everyone on this blog has access to. No conspiracy here.

That’s right. There is not. — Garth

#193 John on 08.12.12 at 4:33 pm

Above thread on inflation “rigging” and “conspiracy” etc.
______________________
#101 Canadian Watchodg

“No comparison. Inflation was 12%. Now it is 2.5%. — Garth”

Real inflation has been much higher since the US and Canada adopted CPI formulas set forth by the Boskin Commission in 1996. And of recent news, Stats Canada is preparing a new CPI formula that will rig the inflation rate even further.
………………………………..

Come on Garth, you should know this.

No comparison. Except there are more conspiracist nutbars today who believe the government purposefully lies to them. — Garth”
________________

Reading the above, I’d say it’s important to keep it between the ditches. There are a lot of assumptions here. Garth brings a few out. “Government purposefully lying” to citizens.

“Government” does not represent Canadians in any meaningful way ( such as responding with leadership to crisis times). This is far beyond “debate” …in fact now so far beyond argument that it would be like talking about putting toothpaste back in a tube.

Government in Canada is simply not a relevant power structure. The “democracy” is not representative. You’d need to argue that it was…and in doing so all credibility would be lost. Plus, people don’t need the argument They know. They don’t know what to do about it. The world is now run by the ponzi…people feel it. There’s certainly no gut feel of “yes we can” nowadays. It’s a collective, warranted uncertainty that’s going on.

Government lying or not is meaningless. As far as “purposefully”…proceed with the argument.

The Canadian government simply reacts to the necessary next steps and machinations of world banking cartels. How this could be “purposeful” I don’t know. Is a weather vane purposeful? ( thanks Inglorious Investor).

As far as framing people who are aware of the above as
“conspiracy nutbars”, it’s highly unlikely that would fly with anyone unless they were nothing more than a”Greater Fool 2.0″. Ignorant. Uninformed. Victimized.

You don’t need to take over a global ponzi asset chip and put yourself into debtors prison to be a Greater Fool. There are many ways. Believing the “Conspiracy Nutbar” label is one of them.

Conspiracy nutbars do exist…but I doubt they pose any real threat to your argument.

#194 In The Doghouse on 08.12.12 at 4:54 pm

190 Turner Nation
Flogging Harleys!!!! Whats next . Hawking cars????

#195 Signpost in the bushes on 08.12.12 at 5:05 pm

Where did I say ‘absolute truth’? I said there is no conspiracy to mislead. And there is not. — Garth

It’s sad to see, hear or read anyone, who has worked so very long and hard to build their credibility, endanger it so needlessly.

Brave words from someone who have never spend a minute in government. Grow up. — Garth

#196 Old Man on 08.12.12 at 5:14 pm

I beg to differ about women wanting a so-called nest, as guys get over this all, as have met women that had the smarts about money that could floor you all, as some women with big money are not stupid at all, so never put down a female, as some of them know all.

#197 -=jwk=- on 08.12.12 at 5:22 pm

#1 @bre.to

Run, run from this one. Went to the last shareholder meeting (At hockey hall of fame, which was kind of cool). 1st time in BRE history they lost realtors, also first time revenues were down. Asked the CEO what he thought about that – got a stock ‘working hard to provide value’ line. Once the realtors start folding, and they will, this stock is screwed.

BRE provides the services to run a realtor office – and they own a ton of them too. So if you want to open an office, they will give you software, contacts, everything down to your own letterhead. For a pre realtor fee, per year.

“The Company’s revenue is primarily fixed in nature, based on the number of REALTORS® in the network, which decreased 1%, period over period. This structure provides revenue protection from the impact of revenue declines when the market cools, but also reduces the degree to which the Company participates in periods of rapid market expansion. ”

And when realtors drop by 5, 10, or 15%?

disclosure: took the q1 dividend and sold at 13.25.

#198 jess on 08.12.12 at 5:25 pm

Blot on the permanent record

The department and investigative agencies ultimately concluded that the burden of proof to bring a criminal case could not be met based on the law and facts as they exist at this time,” the department said.
But the department added that if additional or new evidence were to emerge, it could reach a different conclusion about prosecuting Goldman.
============================

Levin, the Senate panel’s chairman, said in an interview last year, it “is not for Congress to determine whether or not a crime was committed.” Rather, “that is for the Justice Department and that is for the SEC to make those determinations.”

Levin released on Saturday:

Our investigation of the origins of the financial crisis revealed wrongdoing and failures among mortgage lenders, banking regulators, credit rating agencies and investment banks. One of those investment banks, Goldman Sachs, created complex securities that included ‘junk’ from its own inventory that it wanted to get rid of. It misled investors by claiming its interests in those securities were ‘aligned’ with theirs while at the same time it was betting heavily against those same securities, and therefore against its own clients, to its own substantial profit. Its actions did immense harm to its clients, and helped create the financial crisis that nearly plunged us into a second Great Depression.
========================
Financial Crisis: Anatomy of a Financial Collapse. The 635-page Levin-Coburn Report.[4] It represents an in-depth investigation as well as a permanent record of the financial crisis of 2008 and took over two years of research and investigations to compile. It found “that the crisis was not a natural disaster, but the result of high risk, complex financial products; undisclosed conflicts of interest; and the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street.” [5]

http://www.hsgac.senate.gov/subcommittees/investigations

http://en.wikipedia.org/wiki/United_States_Senate_Homeland_Security_Permanent_Subcommittee_on_Investigations

#199 John on 08.12.12 at 5:30 pm

Cowtown Cowboy wrote: ( assuming this is not a troll or a joke)

“$357 for 2400 sf in Tuscany…..give your head a shake…..maybe 1000sf. I live across the bow valley and someone in the hood is asking 690k for 2300sf w/finished basement. I have 2100sf and could get about $600k give or take 50k. Bought in ’06 for 390k after selling our side-side for 50% more than we paid in ’02. For me to upgrade to 2600+ sf would take over 800-900k+ in my neck of the woods. IT in Calgary is pretty good, all the majors are trying to get projects done, start your own co. and consult, make about 150-200k/year pretty easily, pay yourself a good salary, keep the rest in the corp. Looking to move out to Springbank with the other mucky mucks! Need to finish the MBA this fall and then the world is my oyster….and then load up on options, cash out a few mil in a couple of years, rinse and repeat!”
————–

It should be clear that this muppet representation
( above) is just as necessary to the global ponzi as the first time buyer was (in the run up of cartel cheap money).

The muppet that “made money” by offering nothing and thinks the commodities “supercycle” will continue begins to believe his own BS. Starts with 100 grand, rides up Goldman Sachs et al mountain, and starts to feel entitled.

Then it’s over.

But…without him, none of the ponzi could exist. You simply must have believers. This puts the “worth” into the ponzi chip. Plus ( if he’s serious) he’s going to do an MBA, specializing in black jack.

There’s about an 80% chance that the post is real. Consider what that means.

#200 Linda on 08.12.12 at 5:42 pm

Hi Garth,

In 2009 you came to the Island (Victoria, Nanaimo). Are you planning to come again after Vancouver? Linda

Has it been that long? How have you managed to cope? I shall return. — Garth

#201 deja view? on 08.12.12 at 5:46 pm

Men who refer to ‘the wife’ bother me. (eg. CD)
Are wives chattel? It’s derogatory!
and why do people like to talk about how much $ they make, or even less important, how big their house is..
But I digress.
When I bought my first piece of property just before the market collapsed in the ’80s I though, ok, my taxes will go down.
Wrong! The assessed value kept falling while taxes kept rising.

#202 InvestX on 08.12.12 at 5:46 pm

Where did I say ‘absolute truth’? I said there is no conspiracy to mislead. And there is not. — Garth

—————————————–

Changing how the inflation rate is determined and then stil comparing it to old figures is not misleading?

And it’s different here, our banks our solid and didn’t receive a bailout or assistance during the recession.

#203 Form Man on 08.12.12 at 5:52 pm

#184

I agree with truthhammer on this. retail seems to be hurting everywhere. cannot be a good sign

#204 Van guy on 08.12.12 at 6:08 pm

#170 Jas on 08.12.12 at 11:13 am

Surrey? Seriously dude. Are you one of those guys hanging around surrey central skytrain station? Surrey is a shit hole.

#205 Herb on 08.12.12 at 6:18 pm

Of course governments don’t lie. Neither do advertisers. They merely bombard you with what they want you to know, and practice the utmost economy with any facts that might hurt sales.

#206 Nostradamus Le Mad Vlad on 08.12.12 at 6:25 pm


The Hillbilly Vasectomy

After their 11th child, an Alabama couple decided that was enough, as they could not afford a larger bed.

So the husband went to his veterinarian and told him that he and his cousin didn’t want to have any more children.

The doctor told him that there was a procedure called a vasectomy that could fix the problem but that it was expensive.

‘A less costly alternative’, said the doctor ‘is to go home, get a cherry bomb (fireworks are legal in Alabama), light it, put it in a beer can, then hold the can up to your ear and count to 10.’

The Alabamian said to the doctor, ‘I may not be the smartest tool in the shed, but I don’t see how putting a cherry bomb in a beer can next to my ear is going to help me.’

‘Trust me,’ said the doctor.

So the man went home, lit a cherry bomb and put it in a beer can. He held the can up to his ear and began to count!

1, 2, 3, 4, 5 at which point he paused, placed the beer can between his legs and continued counting on his other hand.

This procedure also works in Tennessee , Kentucky , Louisiana , Arkansas, Mississippi , parts of Georgia, Missouri , West Virginia, and all of Washington DC.
*
truth hammer does have a valid point, esp. with these outlandish costs; Gold Price fixing? Owelimpix Security = Failure One arrest, over half a billion pounds spent; Abandoning Fields Food prices to skyrocket; Oohhh to be a meter maid; New York homeless Sweep ‘en under the rug.
*
NWO Conspiracy Quotes “His [Obomba’s] task will be to develop an overall strategy for America in this period when, really, a new world order can be created. It’s a great opportunity, it isn’t just a crisis.” — Henry Kissinger at the New York Stock Exchange, January 2009, Military vehicles in neighborhoods. Summat’s up and NDAA “However, if Judge Forrest’s injunction is struck down, between the Homeland Security Act, the Patriot Act, and this lousy piece of legislation, the United States of America will have become a post-constitutional republic. This is why you have seen such a massive militarization of the police across this country, to reinforce the very bleak reality that we are no longer a nation of laws.” wrh.com; Secession Constant change (evolution) dictates that, not humanity; Fourth Amendment Gone; Oops The Strait of Hormuz isn’t big enough for the both of us; Malware goes pro; Life under Antarctica Yes, it exists; Commercial Flying No sleep pilots, use auto switch.

#207 Grim Reaper/Crypt Speculator on 08.12.12 at 6:37 pm

If you want to piss – off people on Vancouver Island..tell them you DO have a bridge to sell them.

#208 Smoking Man on 08.12.12 at 6:39 pm

Where did I say ‘absolute truth’? I said there is no conspiracy to mislead. And there is not. — Garth
…………………………………………………….
Grass Hopper

#209 Gunboat Denier on 08.12.12 at 6:49 pm

199 Linda

“Has it been that long? How have you managed to cope?
I shall return. — Garth”

See, everyone wants to come here!

#210 Spiltbongwater on 08.12.12 at 7:27 pm

#200 deja view? on 08.12.12 at 5:46 pm

When I was married I nver referred to my wife as “the wife”. I always referred to her as “the dragon”.

#211 WaterlooResident on 08.12.12 at 7:32 pm

So Garth, you say that we will have BOTH inflationary AND deflationary events at the same time; food and other necessities will experience inflation but assets such as real estate will experience price deflation.

Interesting.

Well then, please tell us where does investments in bonds, preferred shares, ETFs, and other similar financial investments stand, will they experience price inflation (prices rising) or price deflation (falling prices).

What is YOUR opinion on this matter?

Financial assets have a healthier future than real ones. — Garth

#212 jess on 08.12.12 at 7:46 pm

are there shame blogs in canada?

http://shameproject.com/profile/adam-davidson/

#213 cowtown cowboy on 08.12.12 at 8:12 pm

#198 John on 08.12.12 at 5:30 pm

Well John,

I have no idea what half your post was about….but I still have one class left before I am done my MBA (in Energy Management) so maybe they will teach what it means in that one…..as for the rest, I assure you what I said is true, someone who thinks they can get 2300sf in Tuscany, I assume that is the neighborhood the guy was talking about, is dreaming, look for yourself, not too hard.
As for the ‘world is my oyster’ bit, that is just a bit of tongue in cheek. I never said I planned on upgrading to 2600+ sf, although I would like to, I can not justify the prices they want, I went and looked at a showhome in Aspen(yeah you can look that up to if you’d like), I think it was about 2400sf, all the upgrades, but on a shitty lot, Price tag just under a million. No I think I will stay put, finish my basement, have about 3000sf and pleasant views of the bow valley. If I ever do wiggle my way into a nice gig with an O&G and get a boatload of options, well we’ll leave that conversation for another time.
Remember to Breathe!

#214 CoreyMc on 08.12.12 at 8:15 pm

#170 Jas on 08.12.12 at 11:13 am

Surrey? Seriously dude. Are you one of those guys hanging around surrey central skytrain station? Surrey is a shit hole.

———————————————————————–

I agree! But the Surrey amazons are accommodating.

#215 Canadian Watchdog on 08.12.12 at 8:24 pm

#210 WaterlooResident

The market is a speed-trading game which is why biggest firms are investing in HFT systems and hiring Quants to develop algorithms, strictly programmed to pillage every penny from the little retail investor to big hedge funds.

Unless you want to give them your money with a buy and hold strategy, go right ahead.

#216 Westernman on 08.12.12 at 8:26 pm

Herb @ # 204,
Don’t be such a child Herbie… ever heard of the Gulf of Tonkin, Iran-Contra etc. etc. etc.
These deliberate conspiracys were admitted by the principals that prosecuted them … this kind of shit goes on ALL the time – even in Canada The Good…
Grow up kid…

#217 dm in c on 08.12.12 at 8:35 pm

Sorry to burst your bubble there cowtown cowboy but it is absolutely true. With another on my street for $365k. Been living in tuscany for four years now. I don’t care about proving it to some anonymous Internet braggart. Believe it ir not.

Calgary has always had more money then brains. Or class. Except during those bust times. Cant forget those.

#218 Dan from Richmond Hill on 08.12.12 at 9:06 pm

Financial assets have a healthier future than real ones. — Garth

How is this possible?

It’s true now. Wake up. — Garth

#219 ANONYMOUS on 08.12.12 at 9:09 pm

Yes, it is true that there are very smart women, but most women have a uterus, and that means they naturally want a ‘NEST’ for their offspring. Any sane man knows this by now.

#220 InvestX on 08.12.12 at 9:21 pm

191 Canadian Watchdog

“Because you have not been there. — Garth”

And what would parliamentarians know when even they themselves are being denied access to federal agency information?

Regarding OSFI’s CMHC oversight:

OSFI Committee Meeting: Thursday, May 17, 2012
———————————————————–

Well, well, well….
Lack of disclosure and transparency. I’m shocked.

Not!

#221 cowtown cowboy on 08.12.12 at 9:34 pm

#216 dm in c on 08.12.12 at 8:35 pm

This is what 375K buys you in Tuscany:

http://www.realtor.ca/propertyDetails.aspx?propertyId=12296191&PidKey=-139941060

1400 sf is far cry from 2400sf, at least when I do the math.

As for being an anonymous braggart, what exactly am I bragging about? And as for anonymous I can be in the NW in about 15 minutes if you would like to meet in person.

As for class and money, sounds like you have neither, maybe you should crawl back to whatever province you slunk out of…we’ll be just fine without you.

#222 Smoking Man on 08.12.12 at 9:37 pm

Herb. Everybody lies. In fact the better you get at it the better you can spot it.

#223 Canadian Watchdog on 08.12.12 at 9:45 pm

#217 Dan from Richmond Hill

“It’s true now. Wake up. — Garth”

Yes it’s true. You will wake up one morning to find your tradable financial assets have erased all their gains, because the little guy will never understand market making and keep giving his money by the one model used again and again for decades to transfer wealth to the 1%.

Stocks are going up!! Only nobody other then computers are trading.

#224 just learning on 08.12.12 at 10:09 pm

#33 tri state pat

Thanks. Very good site.

#225 Van grrl on 08.12.12 at 10:17 pm

#154 Mr Buyer:

If by “Did I hit a nerve?” you mean it surprises me how low child care jobs are valued, yes. Indeed! Some people won’t think twice to spend money on frivolous material possessions but as you yourself stated, jobs related to child care often (though not always) pay minimum wage.
If you meant it hit a nerve because I work in childcare, no I don’t :)

#226 Van grrl on 08.12.12 at 10:22 pm

#209:
When I was married I nver referred to my wife as “the wife”. I always referred to her as “the dragon”.

And she left you?? How odd!! haha

#227 cynically on 08.13.12 at 2:21 am

Glad to see that a few people on this blog realize that we have a quasi-democracy not a true one, if it is ever possible in this world to have a true one. However we could democratize our country to the point where ALL pols are elected, not just MPs and we could cut back on the numbers we put on the gravytrain as the proportion we now have to our population is far too high and costly. In fact if we keep cutting up electoral districts and adding more representatives we’ll end up with more MPs than electors. Think about it!

#228 bigrider on 08.13.12 at 7:27 am

There are a lot of Tonys aka Antonio with speck lots and houses in the GTA.

They will be crying in their tomato sauce soon enough

#229 DM in C on 08.13.12 at 10:35 am

Cowtown;

That’s in Arbour Lake. Thanks for reinforcing my assertion. Guess map reading isn’t a skill they teach you up in the ‘patch’.

Let’s see 1600 sq ft above grade + finished basement of 800 = 2400 sq ft < 380k. In Tuscany. See if you can find it yourself.

Math IS hard. For some.

#230 cowtown cowboy on 08.13.12 at 11:51 am

dm in c

sincerest apologies on the map snafu, here is another tuscan example of 370k: http://www.realtor.ca/propertyDetails.aspx?propertyId=12257391&PidKey=-723436209

a whopping 1200 sf, as this is a real estate blog, I wouldn’t think i would have to tell you that you never include the basement, finished or otherwise in the sf. So it has another 20×20 drywalled room in the basement. Could be ok if you live alone, which I assume you do, for obvious reasons.

Might as well buy a condo and walk to work, unless you really look forward to that commute on crowchild everyday.

#231 YGuy on 08.14.12 at 6:57 pm

If EVER there were a pair of Realtors who cared only about their commission and had their heads in the clouds, it is these two. I quote:

Prices “are NOT going to drop. We can play the same “what-if” game with an aster­oid strike – (it’s) not going to hap­pen tomor­row either.”

“It is folly to dis­cuss things like this that have 0% chance of hap­pen­ing. Prices are more likely to be UP 15% by the end of the year.”

“The old eco­nomic and real estate “cycles” we were taught back in grade 9 busi­ness class no longer exist.”

http://www.jeffreyteam.com/blog/toronto-real-estate-market/buying-a-home-with-just-5-down-make-sure-you-love-it/#comment-17036