Economists

Friday, as I told you, CTV asked me to comment on poor Vancouver’s real estate market. So I sat in the studio and gave all the reasons people should expect declines, from debt/income imbalance, to price/rent ratios, prevailing provincial economic conditions, lending regulatory changes and demographics.

Being TV, they edited out the reasons and went straight to the flash (words are so boring):

“I hope people are listening. This message needs to be heard. Sales in August were pretty awful and they continued to deteriorate through September. It’s going to be a year or two or three before we hit bottom. And I think the market could lose 30 or 40% of its value.”

This was red meat for the humpers. Next up, to suggest I’m an idiot, was Tsur Sommerville, who’s constantly in the BC media as a comfort economist. His title is Associate Professor, Real Estate Foundation Professorship in Real Estate Finance; Director, UBC Centre for Urban Economics and Real Estate. Need I say more?

“He’s being saying this for like four or five years. So if you keep saying this then possibly one time you could be right and then you get to be a genius. This is bunk. In order to get dramatic change, dramatic drops in housing markets, there has to be… the market has to be pushed.”

For good measure, along came another economist who also thinks I love donkeys. He works for the credit union industry, which depends a lot on making mortgages. Unprecedented household debt won’t kill housing, he says. “It could only be the result of a major economic recession, a downturn, or perhaps a financial crisis, a political crisis, typically outside of BC’s borders.”

As you know, sales of houses in all of BC collapsed by 25% last month, and crumbled 31% in Vancouver. There’s an 18-month supply of houses in Richmond and 13-month backlog in the tony Westside. SFH prices have dropped 12% in six months, so it doesn’t seem a stretch to see that double in the next six, or triple some time in 2013. With the economy amping down amid so much debt and in the wake of F’s mortgagicide, how can economists say houses will continue to inflate?

As I’ve told you, what happens in Vancouver and the Lower Mainland is a big deal for the rest of the country, including the godless GTA. In 416, where a detached home costs north of $800,000, the same pressures exist. Wealth is separating, in large part thanks to real estate. Families making over $400,000 (the 1%) can afford $1.5 million houses. Families making less than $100,000 (the 99%) can’t afford $700,000 houses, and yet try.

But when house prices swell and bloat, getting risky and unaffordable, the media paints it as positive news. When sales sag and prices tank, nipping risk and making shelter more accessible, the pathetic bearded guy stating the obvious (that would be me) is talking bunk. No wonder people are so confused and in denial.

Like Amir.

Hi Garth, I read your blog on a regular basis and I always thought I was a lot smarter than an average Joe in making sound financial decisions but maybe I am not as savvy as I think since I am about to make a bad decision and I need your point of view.

I am 27, live outside Vancouver. I am married and own a two bedroom condo which I owe about $235K on it with a 40 year amortization.  I have senior position in a medical firm and making about $150K in total income but my wife is unemployed and going to school but expected to be finished and working by August 2013.

My RRSPs are maxed out with about $100K in them and I have a TFSA of $20K and I have about another $100K in other savings/GIC and etc. – so not a bad position considering the economy!

We found a house that we absolutely love in the neighborhood we really want, the only sad part is that the timing is simply awful considering the upcoming real estate shit show we are all about to see! But this house is a fantastic opportunity as financially it can be a great asset (I know I am using the term asset here, hear me out).

The place is listed for $800K and let’s say after some negotiations, closing costs and our down payment we borrow about $700K from the bank – our monthly payments will be about $3200 on a 25 year amortization and a good interest rate of 2.99% with 5 year term. This house though has a mortgage helper and we can get $1700 a month in rent money – in fact it already has a tenant at $1700 per month for a 3 bedroom basement suit and the house is only 2 years old.

The only problem is that we won’t be able to sell our apartment which we have had for about 5 years and we need to turn that in a rental income property as we don’t want to take a hit and we don’t mind holding on to it if we can – now what do you think? Would it be a good idea to purchase a new house and make ourselves completely buried in real estate? Our plan is to pay the mortgage out of our pocket and use the rent money to pay down the principle so if shit does hit the fan and we renew in 5 years we have little owing……in fact if we can keep the extra payments we can make up to $90K of incremental payment towards our principle without a penalty during our 5 year term!

What are your thoughts?

It’s hard to know where to start, Amir. You’re just so messed up. If you buy the sexy house you’ll have almost no liquid assets and (including your condo) about $1,000,000 in mortgage debt. You can be sure when it all renews, it won’t be at 2.99%. Besides, putting all your wealth into a single asset class accentuates risk, especially when that asset’s going lame fast.

Renting the condo is a bad idea since it will probably be in negative cash flow. And if you can’t sell it now, why are you diving into more real estate, and more illiquidity? Does the house make you that horny? Don’t forget, as well, that any rental income you get for the condo or the things in the basement of your new house is 100% taxable at your marginal rate – which in BC is 43.7% and Ontario 46.4%. And explain this: why would you pay $800,000 for a dream home and then subsidize another person who gets to live in it for peanuts? How can it be perfect when you have you have to share the driveway, the yard and your privacy with another family? Have you thought that through?

Anyway, I think you know all this. You have house lust. Don’t ask me to sanction it. That’s CTV’s job.

179 comments ↓

#1 TurnerNation on 09.23.12 at 8:50 pm

For the Bunker owners:

Beer in bottles and cans
Posted 09/21/2012 06:59 PM ET

Beer in bottles and cans holds up remarkably well to nuclear blasts, absorbing little radiation and even keeping its flavor, a gov’t study revealed in 1955. Civil defense officials put soda and beer in locations near Nevada test blasts to see whether survivors could safely drink the contents scavenged from the rubble after a real nuclear war. Now the curious findings have been republished on the nuclear history blog Restricted Data.

http://news.investors.com/092112-626721-beer-in-bottles-and-cans.aspx

#2 JayBe on 09.23.12 at 9:03 pm

I hope no one makes fun of TurnerNation for being first again… I think it’s rather sweet

#3 Jay Currie on 09.23.12 at 9:06 pm

Amir is at the fork: he can get liquid and be a very happy man with solid assets and lots of room for growth or he can grab the house like a falling knife and wonder why he’s bleeding for the next decade.

Inventory is increasing, prices are sliding, Garth is on the CBC and CTV in one week: I can’t imagine that happening without even the news ninnies noticing the beginning of the slide.

Sell the condo! Rent. Wait. And get twice the house for the same money in 2014. If your lovely wife objects, take her to Hawaii on the money you did not spend on closing costs.

#4 Randy on 09.23.12 at 9:10 pm

Garth….Aren’t you gonna blow it for all of us who want to live in rental properties that are subsidized by over-extended real estate investors ????

#5 Scalgary on 09.23.12 at 9:14 pm

Garth,

Will you consider CTV interview again?

Shame on them…

#6 Willa on 09.23.12 at 9:17 pm

Neil Macdonald at CBC News did a commentary on housing from a within-USA perspective, with an interview with Shiller (http://www.cbc.ca/news/world/story/2012/09/20/f-rfa-macdonald-housing-prices.html) . Shiller is the economist who spotted the US housing correction a long way off and was pooh-poohed till he was proven right. he’s also the author of Irrational Exhuberance, which is a fantastic book about housing bubbles since the 1600s. Anyway, long and short — Shiller says Canadian housing is in for a massive correction, all the signs are there.

#7 Nodebt on 09.23.12 at 9:18 pm

Amir, go read Garth’s last 6 months of posts! And if you still don’t get it, go buy that house and a couple more!!

#8 Chaddywack on 09.23.12 at 9:18 pm

Tsur was a bit different this time though…..anyone who saw the clip would notice that he seemed really hostile in his tone and facial expressions.

It’s almost like when you prove the dumb kid wrong in school and his only reaction is to try and beat you up.

#9 Short Vowels on 09.23.12 at 9:20 pm

Landlord just mentioned the new tenant moving into the $1400/month unit below me is a real estate agent.

In other news, my tap dancing classes starts Tuesday. I don’t intend to get better, no matter how hard he bangs on the ceiling.

#10 COW MAN on 09.23.12 at 9:21 pm

The Region of Peel just put another $18,000 under the bottom of housing prices, by raising their Development Levie Charges 99%.

http://www.thestar.com/news/gta/article/1261086–peel-development-charge-increase-means-homebuyers-pay-extra-18-000

#11 mel in victoria on 09.23.12 at 9:23 pm

Would be nice to see gold and silver take a well deserved rest soon (including possibly some gut-wrenching volatility to scare out the weak hands) as currently quite over-bought as well as other factors….. before marching higher..

Some major banks and their predictions:

http://www.cnbc.com/id/49119240

#12 Gary on 09.23.12 at 9:25 pm

And why have a 40 year mortgage when you have money wasting away in GICs in a non registered account?
at least have a 25 year mortgage on the condo and pay it off ASAP with some of your savings that are being eaten away by inflation along with taxes and terrible GIC interest rates

#13 Boombust on 09.23.12 at 9:26 pm

Tsur and Pastrick and…Hmm, let’s see…oh yeah, there’s Ozzy and then Michael Campbell (who is flapping his gums and furrowing his mini-brows less so lately) Not to mention that other Michael (as in Levy) who also steers his way along by looking into a rearview mirror)

All hacks, every one of ’em. Ugh.

#14 Fortunate Fool on 09.23.12 at 9:26 pm

27 year old. Senior position at $150k/year, $220k in savings… I call BS

Besides, if you buy RE with 40 years amortization, you’re an idiot.

#15 GooderFool on 09.23.12 at 9:27 pm

It seems like almost all of the people who contact Garth make a very good amount of money — either it is a very skewed population or my perception of what people make is skewed. I would think that most 27 year olds do not make $150K and that six figures is still an above average income, but I may well be wrong…

#16 G-unit on 09.23.12 at 9:28 pm

Hey Garth, CTV may be playing the spin game with the facts but the local chinese papers in van and richmond all recently had negative real estate artcles showing the dramatic drop in sales and prices. Its a very be change in tone from what the papers were printing a year ago.

#17 Old Man on 09.23.12 at 9:31 pm

Amir you are a troll sent by the all mightly Casear to stir the pot, as a 40 year amortization only exists in Disneyland.

#18 Maja on 09.23.12 at 9:41 pm

How hot is HAM ?
Today I volunteered during annual picnic organized by local MP.( Conservative )
My job was to welcome people , offered them registration form and give tickets for food,
Hot-dogs and hamburgers.
Several minutes before the official start time we had a line up of HAM waiting for the food tickets. One person told me that the information was spread among the HAM community that there will be free food in the park . They did not care about politics, did not want to talk to the MP or to other people outside HAM.
The rule was to give one food ticket to one person , but HAM managed to cheat in all possible way to get more tickets. They were sending kids in different jackets to get extra tickets. The HAM adults came to me rudely arguing why they got only one tickets while some people got 3 or 4 ( how ? ) . Later I saw them packing the extra hamburgers to the plastic bags and taking them home .
Because we run out of food, the MP decided to send someone to get more hamburgers and just feed the community .

The questions
What really is HAM ? Is this the group that is compromising dignity over $ 1 Hot Dog ?
Is this the ( only ) way to afford RE in Canada ?

BTW – It was a nice event, we had many other people that came to talk to the MP and shake his hand.

BTW 2 . Sorry for the off topic, but I was shocked today

I allow this post only to demonstrate the depths economic racism can take people to. Sad. — Garth

#19 guido on 09.23.12 at 9:42 pm

ya ya try buying a home in gta see how much it still cost aint nobody giving it away cheap GARTHO!

#20 Mel on 09.23.12 at 9:48 pm

Amir, where do we start. Do you not know by now, this blog is about NOT buying a house. At least not yet!

So, why are you talking about buying another one? So far you have issues with your condo., do you not think you will have issues with your future house?

Stop yourself from financial ruin. You are depending too much on rental income. Have you ever heard the word ” vacancy”. Are you so confident that you will month after month always have a tenant? What about taxes, insurance, condo fees, higher interest rates? Keep your condo., or if you have some equity in it , sell it, and in the coming years you will be able to buy it all back for much, much cheaper.

Don’t be fooled! Unless, you insist on it. But then, don’t blame this or that, for your losses. You will have to look to yourself. By that time, you will join the rest of fools.

#21 Paully on 09.23.12 at 9:52 pm

I cannot understand why anyone would choose to live in a formerly SFH that has been subdivided into apartment units. SFH are not built with multiple families in mind. Do you really want to hear EVERYTHING that is going on in the basement suite?

#22 Realtor #1 on 09.23.12 at 9:53 pm

What you are doing is just mean Garth. Giving all these people hope that one day they will be able to afford a home in their dream area. Only less desirable areas like Jane and Finch, Rexdale, Don Mills (which has seen prices soar) or some pocket in Scarborough that throws mid -week block parties with free cognac will see a 30% reduction.

Could you clarify with your readers that prime areas are always prime, that Lawrence Park or the Beaches will not have a 30% off sale.

You give the impression that RE will be some kind of waste land where no one wants to buy a home and sellers will take any insulting offer.

#23 dd on 09.23.12 at 9:55 pm

#2 JayBe I hope no one makes fun of TurnerNation for being first again…

The refresh button probably needs major refit. Scary.

#24 Jed on 09.23.12 at 10:01 pm

CTV, Vancouver Sun, Global–why they are RE humpers is an easy one; guess who pays their salarie via full page spreads on new homes, homes for sale, upcoming condos…

#25 T.O. Bubble Boy on 09.23.12 at 10:03 pm

The 40-yr amortization was only taken away in October 2008, so there could definitely be people on 40-yr / 5-year term mortgages that wouldn’t be renewing until 2013.

Also, I believe that the banks are able to grandfather old mortgages? (i.e. allow someone to renew on the 40-yr if that is what they were on, and no other components of the mortgage are changing)

#26 AprilNewwest on 09.23.12 at 10:10 pm

#13 Boombust. Agree.

#27 John S on 09.23.12 at 10:11 pm

My nephew in his mid thirties plans to buy a house for around 300G. They have a combined income of 150G.

This one is a tough one for me to advice him about, as this is his first house and he is financially well diversified by renting all these years.

What do the blog dogs say?

#28 Duane Silveira on 09.23.12 at 10:14 pm

#15 I would have to agree with you. It seems like most of the stories involve younger people that make way more money than i do. Im 38 and pull about 65-70 a year and i think im not doing bad…till i see a 27 year old pulling 150??? Where did my life go wrong….

#29 T.O. Bubble Boy on 09.23.12 at 10:15 pm

$700k mortgage @ 2.99% w/ 25-yr for the next 5 years (from TD’s online mortgage calculator):

Monthly payment = $3,309.13
Total Principal and Interest Payment for Term = $198,547.80
Total Principal Repayment for Term = $101,793.61
Total Interest Cost for Term = $96,754.19
Balance at End of Term = $598,206.39

So, you’re dishing out $3300/month for 5 years, and you manage to pay off $100k of that $700k mortgage, but then you subtract the property tax ($500/month x 60 months = $30k) and the lost income from the $100k down payment (about $28k if you’re making 5%/year for 5 years), and you’re already trimming that $100k down to $40k. Any renovations or “surprise” fixes to the home and you might be down to zero.

So, to avoid losing money over those 5 years, you’re essentially hoping that house prices keep going up – which definitely is not the case in Vancouver this year.

#30 Toronto_CA on 09.23.12 at 10:16 pm

If this is really a 27 year old who makes $150k a year and has hundreds of thousands saved then he obviously comes from family money or is some genius entrepreneur/gambler/investor so he really doesn’t need your help Garth.

Posts like this are not really in line with the reality that is coming for the average Canadians (and average 27 year old who likely has negative net worth and a $35kish job). But your advice is sound as always.

Days ago I showcased people who consider themselves in poverty. — Garth

#31 Sebee on 09.23.12 at 10:17 pm

I thought you were just about edutainment, but I see you also have a agenda to expand the lexicon. I googled mortgagicide and only results are from your blogs. Get this…Did you mean mortgage guide?

I meant mortgagicide. — Garth

#32 T.O. Bubble Boy on 09.23.12 at 10:29 pm

Apparently even Leaside can have price drops…

C2450379 – 291 BESSBOROUGH DR, Toronto
Aug 30th: $1,048,000
Sept 12th: $998,000
Sept 23th: $953,000

Nearly $100k off asking in less than a month.

#33 What? on 09.23.12 at 10:32 pm

If 99% of people make less than 100,000 and 1% make more than 400,000, that means no Canadian makes between those two amounts.

Come on Garthie

‘The 1%’ and ‘the 99%’ are lexicon. C’mon Whatie. — Garth

#34 coastal on 09.23.12 at 10:33 pm

CTV is just as ho-ish as Global and the rest of them. Tsur is the ultimate hired thug to kill all hope for anyone with a brain who sees this insanity spreading as if crack is given out with every mortgage. Beat them down at every turn there is a glimmer that logical financial equations are showing signs of finally reverting to the norm. Never before seen such a organized hit job on public perception.

One day soon the 3 Stooges of Tsur, Muir, and Pastrick will come home to roost for a very long time and lets see how much air time these scum get.

#35 vatodeth on 09.23.12 at 10:39 pm

People claiming to read this blog and then asking for advice on these types The of questions, is like watching The Dog Whisperer. On The Dog Whisperer, there are so many bad owners that claim to watch the show and have terrible dogs.

#36 Smoking Man on 09.23.12 at 10:45 pm

Ah Grath you just experienced first hand what I have been preaching here for years.

You can lie all you want no one really gets pissed off, but tell the truth (Vancouver) and they are out to skin you alive.

#37 Toronto_CA on 09.23.12 at 10:50 pm

#27 John S on 09.23.12 at 10:11 pm

If your nephew has a decent downpayment (20%) and will still have savings invested after the downpayment, why shouldn’t he buy? $300k on a $150k combined income is very reasonable. As long as they intend to stay in the house for a while after they purchase then it makes perfect sense to me.

Of course if that house was $800k it would be a different answer. I think the rule of thumb is the mortgage should be no more than 3.5-4 times gross income, which is why people who make $120k combined shouldn’t buy $700k houses with 5% down (yet inexplicably do in Vancouver and the GTA).

Garth, any updates on the condo market in Toronto? You haven’t picked that particular scab in a while and I like to see it bleed.

#38 Wofenstein on 09.23.12 at 10:52 pm

Whatever, my Dad saw Garth on CBC or whatever and now I`m no longer a dumbass for not wanting to jump into RE. Years of frustrating conversations suddenly ended. Gracias amigo.

#39 Canadian Watchdog on 09.23.12 at 10:53 pm

Starting to see more brand new condos foreclose.

This was from another self-proclaimed ‘sold out’ condo project.

#40 45north on 09.23.12 at 10:57 pm

Amir: you idiot! You have no idea of your responsibilities as a landlord nor of the rights of the tenant. No idea! (to get an idea of my emotional content look up Jim Cramer going off)

I have a senior position in a medical firm and am making $150K

to put it mildly, conflicts with your tenants can create a lot of stress in your life. If all goes well, it will simply impair your ability to carry out your responsibilities as a senior officer in the medical firm.

Amir, why not play your strong suit – which is your senior position? Why not do a good job where you are?

Garth talking about criticism: Next up, to suggest I’m an idiot, was Tsur Sommerville, you know Garth, I really think it’s going to be worse than you say

Here’s a quote from a link I posted a couple of days ago:

These aren’t the tattooed, face pierced freaks you find in many retail establishments these days. They are my neighbors. They are the beaten down middle class.

http://www.financialsense.com/contributors/james-quinn/are-you-seeing-what-im-seeing

Mark Hanson says that of all Americans with mortgages, 50% are effectively underwater.

#41 Jim on 09.23.12 at 10:58 pm

Surprised Tsur didn’t pull out the ‘a broken clock is right once a day’ schtick.

#42 Dr. WAYNE on 09.23.12 at 10:58 pm

It is blatantly obvious Amir is either a twin or probably one of quintuplets … no ‘one person’ on this earth can be that stupid.

#43 g-unit on 09.23.12 at 10:59 pm

Like Tsur Sommerville said, as soon as soon as the bubble is confirmed you get to be the genius! Although it is likely you and Tsur still won’t be the best of friends.

The reason these bubbles form in the first place is because most people don’t see it coming. Because no one would buy and hold something that they knew was going to crash. That doesn’t mean bubbles are undetectable though; As you will shortly prove.

You will be CTV god incarnate.

#44 AprilNewwest on 09.23.12 at 10:59 pm

#22 — Garth is not saying EVERYONE will be able to buy a home when prices drop a certain amt. Some people may never be able to buy a home but the correction will surely make it alot easier for many to be in a better position financially to afford a home of their own. Neither myself nor any of the people I know who read Garth get the impression that he is saying RE will become a “…wasteland…”

#45 wes coast on 09.23.12 at 11:01 pm

Garth, I don’t know how you put up with MSM uusing your clips as a punching bag for these paid spokepersons (a.k.a economists) to blantantly lie to the public. You should just tell the MSM to piss off next time they come calling. Anyone that trusts what they see on TV deserves what they get.

#46 Tron on 09.23.12 at 11:02 pm

People who report in the media typically rely on a database of ‘experts’ to interview for their stories. Without these ‘experts’ it would take a lot of people and time to research what they are reporting on.
The way the game is played is simple. You market your ‘expert’ opinion by consistently communicating with the editors and reporters in all media. You become front of mind when a story in your field comes up. You build your credibility not by what you have to say but instead having easy availability and the ability to put sentences together that make you sound somewhat credible. The media could care less if they get it right; all that matters is they got an ‘expert’ opinion. No doubt if you advertise with the network you’ll get preferred air but I don’t think it’s exclusive.
Local news is entertainment for the masses. In depth reported news is saved for those individuals who are looking for objective views so that they can come to their own conclusion.
Believing that these realtors should not be allowed to fool the public by going on the news and giving their opinion of where prices will go is futile. It would be interesting to know if CTV and CBC invited Garth because he is in their database or because they felt the story (finally) needed balance; for sure people at the networks read his blog.

#47 Fleabitten Monkey on 09.23.12 at 11:05 pm

As and when the real estate correction within Canada and, in particular BC, does hit with its full potential, I am going to listen with great interest to what the 3 wisemen (Smearville, Pastrick and Muir) of real estate economics within the province have to say about what, why and how it happened. This ought to be once for the books.

#48 Bing on 09.23.12 at 11:10 pm

I went to a talk this morning. The famous investor from Hong Kong said,” If you have a house, don’t sell it; if you have money, don’t buy house.” I get confuse. He said housing price in Canada is still rising. I like your website, Garth.

#49 Confused on 09.23.12 at 11:42 pm

Garth, I’m getting the feeling that you don’t trust the news.

I don’t get it? I get all my info from the local news and papers, do you actually think they would mislead us?

The guy on the talk radio says now is a good time to buy.

How else would I know how to think?

#50 Ronaldo on 09.23.12 at 11:50 pm

#14 Fortunate Fool – I second that.

#51 doctorate? on 09.23.12 at 11:53 pm

“Associate Professor, Real Estate Foundation Professorship in Real Estate Finance”

ARE YOU KIDDING ME!!!!

hahahahahahahaahaha~~~~!

#52 Nostradamus Le Mad Vlad on 09.24.12 at 12:01 am


“It could only be the result of a major economic recession, a downturn, or perhaps a financial crisis, a political crisis, typically outside of BC’s borders.” — Toss in WW3 and / or a mega-quake for good measure, and see how far that goes.

“Families making over $400,000 (the 1%) can afford $1.5 million houses. Families making less than $100,000 (the 99%) can’t afford $700,000 houses, and yet try.” — Why do they try? Did these people come into the world without a brain among them? An IQ of around zero would be a good start.

“No wonder people are so confused and in denial. Like Amir.” — We live in complicated times. Let’s not confuse sheeple who, like Amir, hold a false sense of security in bricks and mortar.
*
America’s improving? See the headline and America’s Hidden Unemployed; Apple loses in Germany; 2:04 clip UK freezes welfare as inflation kicks in, but Portugal takes an opposite view; Bernanke Selling derivatives like they’re cinnamon buns with cream cheese; Czech politico says democracy (?) is running outta time, but Tipping the balance of power “Democracy is a Form of Oppression.”; EPA Only the feds. of any country would pull a stunt like this; Income Inequality Worse now than during slavery; Auto Enrollment for pensions; The French Implosion; Fair Trade is unfair? Actually, it’s Free Trade that’s unfair; 0:38 clip Rich throw lower class to the dogs; Global economy to politicos. DgO help us.

China Job cuts rise; Unchartered Waters That’s where great whites congregate; EZone stalemate; Oz and China Hard landings galore; Germany + Inflation; 1:44 clip Offshore tax shelters; 40 mln. retail jobs going soon?
*
Ladies Only Next to nothing on Mr. Gumby’s; 6:42 clip The changes that Communism has made, using sheeple as useful idiots to further their cause, and Long doc. Obomba’s Community ways; False flag Romney needs a favor from Ssshhhhh . . . U-Know-Who to boost his standings; Twist and Shot John Lennon in a 1966 b&w never-seen-before pic; TTC Are the TTC capable of doing this? Mitt Romney and Monsanto Birds of a feather, and GMO – Breast Cancer link; Iran So much for the IAEA being a neutral force; Wikipedia Wikipedialeaks, whatever their names are, just a bunch of two-timing thieves; Vitamin B6 Supplements FDA seeking a way to ban them to help big pharma; 59:42 doc. “There’s no such thing as al-Qaeda – at least not as we’ve come to know it. It’s a fraud perpetrated on the British and American people by the governments to scare us into submission.”; 6:17 clip US and Israel (who else) set off a tinderbox in the MEast, and it will come back to haunt them; SArabia judges Unlike their NAmerican counterparts, they stand up for their principles; Russia Consolidating its strength in central Asia; The Purpose of Buying Ammo is for crowd control.

#53 Devore on 09.24.12 at 12:09 am

The only problem is that we won’t be able to sell our apartment…

Can someone explain this? “Won’t be able to”?

#54 THE CELIAC HUSBAND on 09.24.12 at 12:13 am

3200.00/month mortgage payment. And dealing with people under the stairs. I would not be able to sleep anymore.

With access to that kind of money you can buy a village in Europe.

http://theceliachusband.blogspot.fr/2011/11/le-hameau-du-villenouvelle.html

#55 cj on 09.24.12 at 12:22 am

Amir, you are putting too much of your money in real estate. Stand back and think logically. This house may be over the top but once you buy it, your stress will be over the top. Being a landlord is not easy. The rental money must be declared as income. Not wise investing.

#56 Devore on 09.24.12 at 12:33 am

#27 John S

Sure. Tell them they should be able to tighten the belt a bit and easily pay it off in 10 years. Where the heck do people make $150k and have $300k houses? Doesn’t sound right, what’s the median income in the area?

#57 new canadian on 09.24.12 at 12:40 am

#14 Fortunate Fool

Right on spot! Looks like so many rich people are reading this blog but their decisions are always stupid.
I don’t know who gets 150K in a few years after college in Canada.
Keeping money in investment instead of paying your debt doesn’t make sense. Banks are designed to screw customers, beware of highly profitable banks!

#58 FTP - First Time Poster on 09.24.12 at 12:49 am

I think housing will be affordable when my kids start University…….she’s 4.

#59 FTP - First Time Poster on 09.24.12 at 12:50 am

I think housing will be affordable when my kids start University…….they’re 4 & 1.

#60 EIT on 09.24.12 at 12:53 am

Presstitutes, guilty till proven innocent.

#61 Robert on 09.24.12 at 12:54 am

I have only one comment on Tsur Sommerville and that is he should be fired for making such a fool out of himself on National TV. To think he is teaching our young adults is disturbing to say the least. His sidekick from the Credit Union was not much better. Has this guy looked around the world and counted the number of possible black swan events that could trigger a recession in Canada. Garth these guys are very nervous and whenever an economist resorts to name calling you know they hate to admit you were right. Your timing was off but who would have thought the Goverment was going to add a turbo charger to the Canadian RE market. Well now the turbo charger has blown up it seems the engine has stalled.

#62 Cristian on 09.24.12 at 12:58 am

Not only is Amir not very financially astute, but he doesn’t know the difference between a suit and a suite, or a principle and a principal.

#63 };-) aka D.A. on 09.24.12 at 1:03 am

#22Realtor #1 on 09.23.12 at 9:53 pm

What you are doing is just mean Garth. Giving all these people hope that one day they will be able to afford a home in their dream area. Only less desirable areas like Jane and Finch, Rexdale, Don Mills (which has seen prices soar) or some pocket in Scarborough that throws mid -week block parties with free cognac will see a 30% reduction.

Could you clarify with your readers that prime areas are always prime, that Lawrence Park or the Beaches will not have a 30% off sale.

You give the impression that RE will be some kind of waste land where no one wants to buy a home and sellers will take any insulting offer.

Realtor #1 makes some good points Garth.

#64 Bilbo Bloggins on 09.24.12 at 1:11 am

Don’t get it. Why do idiots always think they’ve found their perfect house.
It’s not your soulmate stupid.
There will be other houses and other listings.
Don’t worry, there will be a flood of them
Enjoy the pickings.

#65 Mnbv on 09.24.12 at 1:20 am

Has Sommerville ever published in any peer review journals?

It’s pretty clear that Robert Shiller believes that Vancouver is in bubble territory; it would be interesting to see if Sommerville is capable of building an academic level argument to support his contrary thesis.

Incidentally, I did a quick search of the “econlit” journal data base and couldn’t come up with any articles published by Sommerville

#66 };-) aka D.A. on 09.24.12 at 1:31 am

Form Man

I’m still not buying it Dude. Something smells fishy in your whole cock and bull story. There’s something that just doesn’t sit quite right in how you use the lingo. You have some knowledge on the subject, I’ll grant you that, but I don’t think so much as you pretend. I suspect you are something less than you portray yourself to be.

Why don’t you tell us more? Talk to us… we’re listening. };-)

#67 Scott (GVRD) on 09.24.12 at 1:38 am

I can name 5 or 6 people off the top of my head that have renters, and yet none of them report that income to the CRA. I’m sure that this is nothing new. How is it that the CRA isn’t targeting these people for tax fraud?

#68 Colin Lanay on 09.24.12 at 2:34 am

#46 Tron
http://www.greaterfool.ca/2012/09/23/economists/#comment-197315

Sounds what’s in this book:

Trust Me, I’m Lying: Confessions of a Media Manipulator

http://www.amazon.com/exec/obidos/ASIN/159184553X/ryanholnet-20

#69 Debt Slave on 09.24.12 at 2:59 am

I bet this 27 year old dude lives in his parents basement and makes $15,000 a year at Starbucks.Go bs on facebook buddy.

#70 Buy? Curious? on 09.24.12 at 3:16 am

Garth, I’m amazed at how easy you are when it come to giving out free advice. You must have a permanent palm print on your forehead considering all the nimrods contacting you for advice. It must encourage these cheap buggers to contact you in the hundreds. Here’s the advice you should give them.

http://www.youtube.com/watch?v=Af1OxkFOK18

#71 new-era on 09.24.12 at 4:01 am

Garth, does it surprise you that the News stations are putting their spin on housing.

Its completely brainwashing. New is not news, its an extension of the advertisers to herd the sheeples

#72 John on 09.24.12 at 5:26 am

Aprilnewwest wrote:

“#22 — Garth is not saying EVERYONE will be able to buy a home when prices drop a certain amt. Some people may never be able to buy a home but the correction will surely make it alot easier for many to be in a better position financially to afford a home of their own. Neither myself nor any of the people I know who read Garth get the impression that he is saying RE will become a “…wasteland…”
——-

Your understanding of the situation seems odd to me. Who cares what “Garth is saying”? What are your conclusions after examining a variety of perspectives? Then you’d be able to add, weigh and integrate the opinions of anyone in a good way.

I assume your opinion is just a clarification of what
“Garth is saying” rather than your own, so let’s stick with that.

Here’s the fatal thinking you’ve picked up:
——-
“the correction will surely make it alot easier for many to be in a better position financially to afford a home of their own. ”
——-

What correction? Have you looked at what’s going on globally and why Canadian real estate all spiked together? Do you understand who the actors are on the global stage and what it means for the “Canadian” economy?

Do you believe that being out of debt, liquid and diversified is an adequate response to the global stage right now? ( especially when “diversification” means
“investing” in banks and commercial real estate).

You’re referring to “correction” and a “better financial position”. The perspective you’ve transplanted as your belief system has in my opinion a very poor handling and understanding of risk. That perspective ignores and downplays global reality ( and what’s unfolding) in order to take fake “equity” and “invest” it back into a seriously sick ponzi scheme.

So, thinking for yourself, what’s your opinion? Why is what you’ve chosen to believe so inadequate as a risk assessment?

The supposed “overall” vibe of your belief system is to
“be in a better financial position” “after” a “correction”. Good to get out of debt….but “liquidity and diversification”. Talk about that.

When you talk about liquidity and diversifcation I’ll bet your argument goes to hell.

#73 fredtimble on 09.24.12 at 6:19 am

Should we stop encouraging home ownership

http://www.cbc.ca/news/canada/story/2012/09/21/home-ownership.html

“The way I look at it is, I tell people your house is a big fridge,” Milevsky says. “Are you romantically attached to your fridge? Do you plan to sell your fridge in 20 years and retire on it? No, it’s a fridge, you store things in there.

“It’s a place to live. We need it. You enjoy the benefits of it, backyard and so on, but it has to be done in perspective.”

“Without that government support that’s allowing people with very little down to jump into the ownership pool, you just would not see the ownership rate expanding the way that it is,” he argues. He also believes the CMHC mandate is inherently self-defeating.

“They don’t provide affordable housing, they provide affordable financing. And when all you do is provide affordable financing, you inflate house prices.”

#74 Ronaldo on 09.24.12 at 6:50 am

This latest post is too bizarre to be believed. Methinks some realtor dude is playing with you Garth after your CBC interview. You must be getting lots like these right now. As one poster stated, no “one person” can be that stupid.

Don’t get out much, do you? — Garth

#75 Form Man on 09.24.12 at 7:10 am

#66 DA

I have already told you. You clearly do not have a grasp of how larger developments are financed ( does Canadian Western Bank ring a bell for you ? ) Go back and get your facts together before making a fool of yourself again.

#76 Regan on 09.24.12 at 7:30 am

#32 T.O. Bubble Boy – Cabbagetown has some discounts too. C2439819 is now down to $799,000. It was originally on guava at $899,000 a few months back. So not only was there no bidding war, that’s an 11% haircut. Problem is, with both of these anecdotes, they listed over the summer when the market is weakest. And perhaps they weren’t priced right to start with. Nonetheless, it’s news for anyone selling in a ‘demand’ area of Toronto – your bidding war frenzy and 5 days on market sale is not guaranteed.

#77 eaglebay - Parksville on 09.24.12 at 7:31 am

#67 Scott (GVRD) on 09.24.12 at 1:38 am
“I can name 5 or 6 people off the top of my head that have renters, and yet none of them report that income to the CRA. I’m sure that this is nothing new. How is it that the CRA isn’t targeting these people for tax fraud?”
________________

The Canadian tax system is like a funnel.
It doesn’t matter who declares the income, somebody down the line will pay taxes on the cash flow.
It has to go somewhere.
Some people pay more and some people pay less.
It all ends up in the funnel.

#78 Smoking Man on 09.24.12 at 7:50 am

#72 John

Nice post. Good number of people here are just cleberty worshipers. Void of any thinking and evaluating.

#79 Ronaldo on 09.24.12 at 7:56 am

http://www.theglobeandmail.com/life/home-and-garden/real-estate/buyers-trim-price-of-coal-harbour-condo/article4559416/?cmpid=rss1

From the above link, it seems we have a long way to go to get the condo prices in Vancouver back to reasonable levels. Hardly what you could call a trimming of price by the buyers. Media reporting . Sheesh.

#80 TurnerNation on 09.24.12 at 8:08 am

Wealth management branch closures. I though we were richer than we think?

(By the way, last evening I sat down at PC to check things before winding down for early bedtime before the week. I prepped my post, his refresh ,deciding on which link to post it. Hit refresh one more time and there was a new post! No kidding. Timing again…)

>Canaccord Financial Inc. is accelerating its strategy to improve the performance of its Canadian wealth management division. As a result, Canaccord is closing 16 underperforming branches and refocusing its operations in major centres across Canada. The consolidation of branches will allow Canaccord to better service its private clients by concentrating its support resources and capital investments in client service activities in its key markets. This initiative will improve the operating results of this business and will ensure our capital investments in the business will be targeted to regions we see the most opportunity to grow our market share. Sixteen Canaccord Wealth Management branches will continue to serve our valued clients in fourteen cities across Canada.

#81 bill C on 09.24.12 at 8:15 am

Garth First of all you are not the only one that knows what is going on. Almost every economist in Canada knows we are in deep doo do now.
A professor at York U just showed us charts in California from 2005.

((Evidence of a Southern California Housing Bubble
Submitted by Rich Toscano on November 27, 2005 – 5:45pm
Contrary to popular perception, the fundamentals underpinning Southern California’s explosive real estate boom are actually quite poor. So why have home prices risen so high? Because the local housing market is in the midst of a textbook speculative bubble.

Why Is Southern California Housing So Expensive?”
see link and its eery that this is no different here.))

http://piggington.com/bubble

Pay attention. That was not my statement. — Garth

#82 TurnerNation on 09.24.12 at 8:23 am

Rennie is the keynote speaker at a BC economic forum!

http://www.investnewwest.ca/speakers.html

They swim in a small puddle. — Garth

#83 2centsCdn on 09.24.12 at 8:24 am

One thing is for sure …. a Canadian real estate “correction” will be very very bad for MSM’s business. The real estate and banking industries must be in the top five advertising industries in Canada. The proof of a correction will have to be so strong and obvious before MSM will want to report it (because it’s just plain bad for business). If only the poor average Joe knew what’s really behind the skewed numbers, information and “expert advice” that we see and hear on MSM.

#84 NYCer on 09.24.12 at 8:32 am

#39 Canadian Watchdog on 09.23.12 at 10:53 pm

How do you that is a Foreclosure? I live in that building (renting)…

That unit in itself is severely overpriced in asking. $390k is way too high, you can get the same unit for $360k or less now; no price increase since over a year ago.

#85 NYCer on 09.24.12 at 8:41 am

Oh and to add to my previous comment: Here is a unit in my building I am renting, floor is literally 1-2 floors away from me priced at $351k for 1+1; same unit I am renting. My landlord bought it for just under $360k in Feb 2011. Sucks to be her since the maintenance fees have climbed about $50/month since then and my rent has not increased 1 penny.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12438359&PidKey=912880320

And here is another unit in my building. 2+2 which when I was looking into renting this area, the same unit on a lower floor was sold for $420k+ and now this unit is being listed for $399k. Fun times ahead in my building and it’s only about 4 years old.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12438265&PidKey=646623808

#86 AACI Okanagan on 09.24.12 at 9:02 am

Speaking of 40 year amortization, there is a small 4+ acre hobby vineyard for sale at $1.8 million + that offers a carriage house, an excellent upper end home, and great vistas. The owners purchased it for just less than a million in the early 2000’s, refinanced to the max during the boom to where it needs 1.6 to clear title, (it is worth less than 1.4) and the sad part is that they have a 40 year amortized mortgage, and the guy is 62 years old. Who gives a 62 year old man a 40 year old amort mortgage? No wonder the system is broken and we will pay for it…

#87 John S on 09.24.12 at 9:05 am

#37Toronto_CA on 09.23.12 at 10:50 pm… Thank you for your response.

#56Devore on 09.24.12 at 12:33 am .. They both work in IT in Kanata (Ottawa) and plan to live across the river in Aylmer, QC. Sure they would pay few extra dollars in taxes, but other benefits in QC (childcare, etc..)will offset most of it.

#88 fancy_pants on 09.24.12 at 9:14 am

now that the feds have tightened mortgage terms etc, me thinks we Canucks may see lower short term BoC rates again, if helicopter Ben pulls a trigger for round3 of QE.

Only tool to keep our trade balance reasonable to our parents to the south. and in the global economy that is a large part of the equation that makes up the GDP

lets be honest, we were doing this dance 3 years ago and the music hasn’t stopped. since then prices have risen at least 25%. Economics has gotten very complicated with the global web of finance.

watch out for Ben. he swings a monetary axe that perhaps isn’t effective to the degree it once may have been but it is still dangerous – just b/c it is dull doesn’t mean it won’t do damage. it will do messy damage. damn, is it a Keynesian axe he bears?

cheers

#89 fancy_pants on 09.24.12 at 9:20 am

ok. not the only tool… but the only reasonable one. hence why they fixed up the mortgage side before they go and drop rates again.

sure, could do some QE of our own. but really lets leave that game between the yuan and US dollar. we don’t want the inflation.

there. like most posts here, add a dime to this and you have 12cents

#90 Toronto_CA on 09.24.12 at 9:22 am

Record debt loads? Who cares! Nothing to see here. I’m just dandy thanks. – Typical Canadian Sheep

http://www.theglobeandmail.com/globe-investor/personal-finance/majority-of-canadians-remain-blas-about-debt-loads-survey/article4562982/

#91 Gypsy Kid on 09.24.12 at 9:37 am

Lol, Maja, you are sooooo funny and ignorgant! Was your post a joke??
This was funnier then the “Italian” jokes and disses (equally ignorant).

Amir, our income was triple yours when we bought our house for $700 000 (years ago, of course). Our mortgage was only $300 000 then. Paid it off pretty quickly, but a close to million dollar mortgage at your age? What if wife gets pregnant and wont be working??
What if you have two babies in the next few years?? Babies are expensive and they get more and more expensive as they get older. Trust me. Been there, done that, with a lot more money then you’re making now….think twice. If indeed you are an authentic poster and not a troll.

#92 Daisy Mae on 09.24.12 at 9:38 am

CBC, September 24th: “I don’t know that home ownership should be a right and that it should be backed by taxpayer dollars and kind of be the prime mandate of a Crown corporation,” says Ben Rabidoux, creator of the Economic Analyst blog, which looks into housing and mortgage trends…..”

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

You’re right again, Garth!

#93 Gypsy Kid on 09.24.12 at 9:44 am

Turner Nation, you dont have to explain yourself for being “first” so many times. I have to admit, when I “retire” for the night, the first thing I do is check for Garth’s new post. I know, I know….a sick addiction!

#94 Economists — Greater Fool – Authored by Garth Turner – The … | | Vancouver Realty News BlogVancouver Realty News Blog on 09.24.12 at 9:47 am

[…] Economists — Greater Fool – Authored by Garth Turner – The …Friday, as I told you, CTV asked me to comment on poor Vancouver's real estate market. So I sat in the studio and gave all the reasons people should expect …www.greaterfool.ca/2012/09/23/economists/ […]

#95 Grantmi on 09.24.12 at 9:55 am

#67 Scott (GVRD) on 09.24.12 at 1:38 am

I can name 5 or 6 people off the top of my head that have renters, and yet none of them report that income to the CRA. I’m sure that this is nothing new. How is it that the CRA isn’t targeting these people for tax fraud?

do what i do.. if the landlord is a dick… i always send a note to the CRA AFTER i move out with the fact i’ve been renting from the POS landlord..with cancelled checks and/or receipts. If the landlord is half decent, and doesn’t hassle me.. I do nothing.

#96 };-) aka D.A. on 09.24.12 at 9:57 am

#75Form Man on 09.24.12 at 7:10 am

I know well of CWB. Canadian Western Bank is a more regional ‘chartered’ bank which the annual revenues equating to just 1.5% (one and a half percent) of that which The Royal Bank of Canada generates.

Canadian Western Bank does not deal exclusively in construction lending and, given it’s relatively diminutive size, that which it does doesn’t make it a major player as you portray it to be in the whole grand scheme of things. I’d suggest that on a local scale Valley First Credit Union is as much a player in construction financing as CWB.

I think it is you who should get your facts together before making a fool of yourself Form Man. I repeat; something still smells fishy in how you use the lingo. I am not convinced you are as you portray yourself.

You are star-struck by your “bankers” attention.

Interesting statistic I heard the other day; of all those most reckless with their own personal finances bankers are among the worst. Don’t know the source but don’t doubt it. Bankers are people just like anyone else. Venture capitalists, angel investors, typical equity partners and Guido the loan shark down the street… now there’s a financially savvy lot.

#97 grantmi on 09.24.12 at 10:10 am

oh,,, i forgot to mention! Imagine Landlords.. that you’ve been a dick for 3 – 4 years to a tenant… and then you get a ream job from the CRA going back that long digging into ALL your tax filings!

Makes you want to be a better person.. doesn’t it?

#98 Helmut sells mortgages on 09.24.12 at 10:13 am

Helmuts “expert” assessment is useless. In a BC Business article post 2008 financial crisis he was asked the following: 

How did you rate? Give yourself a letter grade on your record in forecasting the past 18 months. 


Helmut Pastrick: F for the financial crisis.


With all his experience, he didn’t predict what was going to happen then and he sure doesn’t have the motivation or skills to do it now either.  

Asking bank economists to comment on real estate is like asking a crack dealer if the crack is good.  Of course it’s good, they want to make a sale. 

#99 Dr. WAYNE on 09.24.12 at 10:16 am

SHOULD WE STOP ENCOURAGING HOME OWNERSHIP:

http://www.cbc.ca/news/canada/story/2012/09/21/home-ownership.html

#100 };-) aka D.A. on 09.24.12 at 10:16 am

#86AACI Okanagan on 09.24.12 at 9:02 am

I know the property you speak of (closer to Penticton than Kelowna won’t disclose more than that respecting the owners privacy). Nice spot and IMHO worth more than many others similarly priced. Given the current owner I suspect their personal covenant gives the bank all the security they need.

#101 Daisy Mae on 09.24.12 at 10:17 am

“Unprecedented household debt won’t kill housing, he says. “It could only be the result of a major economic recession, a downturn, or perhaps a financial crisis…”

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

Is this guy LISTENING to himself?

#102 Dean on 09.24.12 at 10:20 am

Looks like the tide is finally turning Garth. Public opinion is like a large oceanliner, it takes a long time to adjust. When I bought my home in 2000 my parents were clearly disappointed in me for spending $130,000 on a house — “way too much”. Of course this was a group of people that lived through the 1980’s interest rates and 1990’s recession.

Cut to today and the same parents cheering my siblings on as they get “great deals” of $400,000+ for homes not much different. Meanwhile they’re fixing up dumps, that they got for “ultra cheap” $200,000+ and renting them out.

I think it’s still going to be a while before sentiment changes. There are a few very large industries dependent on the status quo and they’re not going to go down without a FUD fight.

I think the biggest factor is this: As long as you’re not selling your home, it can have any value that you want it to have, in your mind.

#103 T.O. Bubble Boy on 09.24.12 at 10:25 am

@ #80 TurnerNation:
Wealth management branch closures. I though we were richer than we think?

I saw that too — maybe Garth can comment on whether this is just CanAccord struggling, or if all wealth management firms are taking a hit. (I’d think the latter, since everyone’s money is tied up in home mortgages and HELOCs)

#104 benchwarmer on 09.24.12 at 10:43 am

http://attainablehomescalgary.ca/about
The city of Calgary is behind this one. Like it says, “What a great opportunity… everyone wins!” Well at least the home builders and banks do, they’re all that really matter anyways.

#105 jess on 09.24.12 at 10:45 am

why ?

Federal censors deleted numerous records released to The Record related to the $818-million rail transit plan it is helping to fund. Pages titled Key Issues or Considerations are entirely blacked out.
Road Ahead: Feds hide rail transit reviews
By Jeff Outhit, Road Ahead (the record )

#106 kreditanstalt on 09.24.12 at 10:52 am

There must be something wrong when absolutely everyone is counting on everyone else to buy (or rent, or lease) whatever it is they’re planning to sell…

Sort of smacks of “money chasing money chasing money” doesn’t it?

But where’s the PRODUCTION?

#107 kreditanstalt on 09.24.12 at 10:56 am

A professorship in REAL ESTATE???

What’s next? Degrees in “movie appreciation”?

Disregard this guy. If the present economic morass has taught us ANYTHING at all, it’s that “experts” are of little use, be they mutual fund salesmen, doctors, lawyers, dentists, city planners, “registered investment advisors” or whatever…

#108 Herb on 09.24.12 at 10:57 am

#87 John S,

your nephew obviously can afford a $300 K house, but I would seriously question what he is proposing on other grounds.

Houses in Aylmer may cost less than in Ottawa, but he is facing a daily commute of an hour each way (half an hour to get to and across Champlain Bridge, then another half hour to get to Kanata), and commuting costs will not go down. Capital appreciation and resale value are dead parrots for the medium term (at least), especially if QC politics get noisy or the Feds keep downsizing.

I’d tell him to save his money and rent for a few more years, then buy in Kanata or anywhere else close to work.

#109 Alex N Calgary on 09.24.12 at 11:03 am

Families making over $400,000 (the 1%) can afford $1.5 million houses. Families making less than $100,000 (the 99%) can’t afford $700,000 houses, and yet try.

Yet another letter from someone in Vancouver that doesn’t make sense, I’m 27 and make 150k in a SENIOR position in a medical company, hMMmMmm is this the 1% you’re talking about? another weed growing income supplimenter? 200k in the bank, AGE TWENTY SEVEN? does this seem a little hard to believe? or another letter from someone who lived at home their whole life saving every penny and going nowhere and buying nothing, cmon more letters from the 99% who don’t have a maxed out 100k TFSA at age 23.

Another good post though! keep up the good work!

#110 };-) aka D.A. on 09.24.12 at 11:05 am

I would love to share a link which takes you to a virtual tour of that property I suspect AAIC Okanagan @ comment #86 spoke that you could make up your own minds on it’s probable value. But given that personal personal information AAIC Okanagan shared with you it would be inappropriate to attach an identity to it even if it was merely the address and photos of that person’s residence.

Nice spot though, spectacular really – with a revenue stream that I suspect would significantly offset the annual cost of living there – even after mortgage payments on 1.6 mil.

#111 Just Park It on 09.24.12 at 11:09 am

I think what really blows my mind – it’s not what Amir holds or plans on doing – but a 27 year old – just out of diapers making $150K and in a “senior” position within a medical field – okay – when I was 27 I was pulling in 28K, clawing my way up the corporate ladder and 1 year away from moving out of the nest as I was not financially ready to do so at that wage.

Good on yeah Amir – I spent like a drunken sailor but have some wicket memories of places travelled and countless experiences .. not sure what he has gained if he’s tight fisted about his finances.

I have never reached $150K per year – I must be one of the few in here that makes the average – maybe the housing market is actually justified in prices today as a $150K easily supports a $600K-$800K house…

27…….geezzz

#112 Canadian Watchdog on 09.24.12 at 11:09 am

#84 NYCer

“That unit in itself is severely overpriced in asking. $390k is way too high, you can get the same unit for $360k or less now; no price increase since over a year ago.”

Foreclosure listing is from an agent and no price increase over the past year is pretty good compared to others.


The Seller Bought The Unit From The Builder In 2008 And Now Asking Only $399,900 (Original Price From The Builder in 2008 + Cost) For A Quick Sale.

5 years, 0% return and still not sold.

#113 TRT on 09.24.12 at 11:30 am

Blame “Cry Wolf Carney” when everything gets destabilized. His saying one thing and doing another is criminal for a public figure. He needs to raise rates now. But the wolf won’t.

Friends say that they’ll just declare bankruptcy if a storm hits and rightly blame it on Carney and others. Cant argue there.

#114 Molly on 09.24.12 at 11:34 am

# 73 fedtemble

Did you look at the comments on that article? Lots of “paying someone else’s mortgage” and “war on he middle class”. How is a housing correction a “war on the middle class”? Oh ya it’s a war on you because your shelter is going back to it’s actual value, scary times ahead people if the majority is this stupid.

#115 };-) aka D.A. on 09.24.12 at 11:48 am

#97grantmi on 09.24.12 at 10:10 am
oh,,, i forgot to mention! Imagine Landlords.. that you’ve been a dick for 3 – 4 years to a tenant… and then you get a ream job from the CRA going back that long digging into ALL your tax filings!

Makes you want to be a better person.. doesn’t it?

What makes you think most landlords don’t pay their fair share of taxes on all sources of income?
Personally I always leave a little on the table just in case C.R.A. does comes a knocking . Then I would greet them at the door saying, “GREAT! Glad to see you as I forgot to add in these expenses and wouldn’t mind that money YOU owe ME”. Certainly worth every penny you leave in their care in the off chance you might have opportunity to use such a greeting. };-) Honesty is the best policy and being so cheap that you feel you can cheat CRA is a fools game.

But if you know of a landlord who is cheating CRA I encourage you, no I emphatically implore you to report them. Such scoundrels cost honest people like us millions every year.

#116 jess on 09.24.12 at 12:00 pm

http://www.chinalaborwatch.org/pro/proshow-177.html

CLW investigators entered these 8 supplier or directly-operated factories either posing as workers or interviewing workers outside of the factories.

Media Center
Foxconn’s Factory, Producing iPhone 5’s, Erupts in a Riot(Sep.24,2012)

6,000 Flextronics Workers Strike in Shanghai Samsung Lied About Hiring Discrimination in China(Sep.10,2012) An Investigation of Eight Samsung Factories in China:(Sep.4,2012)

http://www.chinalaborwatch.org/media.html

#117 Babblemaster on 09.24.12 at 12:03 pm

It’s all about “repression:”

http://www.theglobeandmail.com/globe-investor/financial-repression-and-the-making-of-bubbles/article4562377/

“Faced with a private and public domestic debt overhang of historic proportions, policy makers will be preoccupied with debt reduction, debt management and, in general, efforts to keep debt-servicing costs manageable,” acclaimed U.S. economist Carmen Reinhart wrote in a Bloomberg commentary in March. “In this setting, financial repression in its many guises (with its dual aims of keeping interest rates low and creating or maintaining captive domestic audiences) will probably find renewed favour and will likely be with us for a long time.”

In short, it doesn’t appear that there’s any danger of interest rates rising significantly for quite a while. Governments have set dealing and managing with this giant quagmire of debt as a priority. They will do this by confiscating the wealth of savers. The converse is that they will be rewarding the irresponsible spenders.

#118 Form Man on 09.24.12 at 12:05 pm

#96 DA

Looks like you have been doing some homework DA. Good for you !

Back to the issue that started all this,let’s examine how developments are typically financed :

A developer raises some ‘seed capital’ from venture capitalists to secure the land and pay for consultants drawings and preliminary marketing. Once these hurdles are cleared, he needs someone to finance the construction, so goes hat in hand to a construction bank ( note the use of the word bank, and indeed, these guys refer to themselves as bankers, imagine that ! )

Whoever is supplying the largest amount of financing will usually at this point be #1 on the title, (and it likely is not the venture capitalists). If our developer now gets himself into some financial difficulty, his venture capitalists will certainly encourage him to ‘get his act together’, because if he doesn’t, the #1 will foreclose, and the venturists will probably end up with nothing.

This is not me being ‘star-struck’, this is a fact ( facts are things with which you seem to have a very poor grasp of )

Being in the industry, my intention is to provide that perspective to the blog. Concealing my identity is vital to my ability to contribute this info. Looks to me like you are beside yourself with desperation to ‘shut me down’, as you view my facts as threats.

Providing facts does not make me a ‘Kelowna hater’, I quite enjoy living here. I think it is one of the finest places to live anywhere, but that doesn’t mean there are not serious problems in the local and national housing markets that should be examined and discussed……..

#119 Kilby on 09.24.12 at 12:06 pm

Just watching Tsur Sommerville, Helmut Pastrick and other “experts” make me feel embarrassed for them and their employers. They seem to be trying to stretch the “denial” of our financial debt and house pricing problems even as they are unfolding in front of everybody.

#120 DM in C on 09.24.12 at 12:11 pm

Molly;

I just read that too — I think that the comment section is a great example of why/how Canada is going to get smacked quite rudely. I was getting sick to my stomach at the bad math, justifications and blame-throwing.

People won’t believe it, even as it’s happening. Cognitive dissonance.

#121 Alex N Calgary on 09.24.12 at 12:22 pm

http://www.cbc.ca/news/canada/story/2012/09/21/home-ownership.html

The comments are amazing, people still associate real estate as a long term stable, appreciating commodity, of course if you belive that a house will always have a certain value and will always increase, why would you rent? The mere concept of a bubble or that the house could fluctuate in value is no even on their radar, oh wow are we in trouble.

#122 Wudeva on 09.24.12 at 12:40 pm

Someone should gather up and publish a compendium of landlord-tenant horror stories to provide a reality check for Amirs out there thinking they can just become landlords to pay off the mortgage and everything will be peachy – or you can just google: “tenants from hell”

@TurnerNation –
Here’s a little auto-refresh browser plug-in just in case your F5 key breaks:
https://addons.mozilla.org/en-US/firefox/addon/reloadevery/

#123 Steven Rowlandson on 09.24.12 at 12:42 pm

Garth wrote:As I’ve told you, what happens in Vancouver and the Lower Mainland is a big deal for the rest of the country, including the godless GTA. In 416, where a detached home costs north of $800,000, the same pressures exist. Wealth is separating, in large part thanks to real estate. Families making over $400,000 (the 1%) can afford $1.5 million houses. Families making less than $100,000 (the 99%) can’t afford $700,000 houses, and yet try.

Don’t worry Garth most of the 99% barring a miracle will find out the hard way that they overstepped the mark and are in deep trouble.

#124 Robert Dudek on 09.24.12 at 12:48 pm

Families making over $400,000 (the 1%) can afford $1.5 million houses. Families making less than $100,000 (the 99%) can’t afford $700,000 houses, and yet try.

Wait a second – there are 0% families making between 100,000 and 400,000?

#125 RobRoy on 09.24.12 at 12:52 pm

Maja, I have the same observation here in Ottawa.
I was organizing many community events and I observed the following:
1. HAM community usually do not attend events where no free food is served
2. When free food is served HAM makes several turnarounds and grabs full hands with no care that there may be not enough left for everyone. They do not care about what event is about and only come for free food.

Since housing bubble is going to pop soon it makes me wonder if all those HAM just do not have any $$ left after paying mortgages, hellocs and credit cards ?

Garth, what kind of “economic racism” you talk about, it is an observation, and covering it up with some political correctness does not make any sense.

HAM = ‘Hot Asian Money,’ as in “offshore funds from Chinese citizens.” It does not mean Canadians of Asian heritage. This is racism. — Garth

#126 truth hammer on 09.24.12 at 1:14 pm

I think Amir and those just like him suffer from the propaganda malaise of the ‘you’re richer than you think’ campaign. I am always amazed when people quote their gross income and forget that it’s not what you make ..it’s what you take home that matters. I know professionals that earn a good buck…..but their outflow is greater than their intake…..they are always gauging their expenses against the gross and not the net……..it’s financially infantile.

Amir has to consider the taxman before anything….the CRA takes 1/2…right off the top…..don’t forget CPP and EI……..worse if you’re self employed. The Fraser Institute says that we pay over 80% of our gross incomes back in direct and indirect taxation. I’ll bet Amirs wife knows how much she has to pay for rice and chicken curry much better than he does.

People like this are rich enough not to own their automobiles and usually have two new leased vehicles in the driveway….and they typically commute. Gas prices are never going down again. Typical insurance and warranty costs on a new vehicle are another several hundred dollars a month.

Large houses are money pits when it comes to property taxes and maintainence expenses.

Kids are expensive as hell….don’t get me started…..my annual tuition for a top notch private school was $18,000 p/a plus plus….they play and travel a good deal at those schools so the costs are higher than the tuition generally.

I’m going to do a back of the napkin calc and suggest to Amir that his feeling of wealth is an illusion…..apparently economics or accounting were not offered as electives when training for his technical position.

Lets look at health care long term….currently at 20% of GNP and rising…..there has to be a point of inflection when massive change has to take place because along with education and government we citizen taxpayers will have a choice to make in 10+ years….which services do we have to cut to the bone……education, health or government…the demographic macro against the backstop of fiscal reality should make every young person squirm when they think of taking on a long term financial committment in an enviornment of limited projected growth.

It’s not that these people aren’t richer than they thought…but they are certainly less able at math than they should be.

#127 jess on 09.24.12 at 1:33 pm

Is unemployment caused by laziness or lack of training? This economist explains Westernman’s construction as a ” fallacy of composition.”
=====================

http://www.cfeps.org/pubs/pn/pn0601.htm

The argument they often use is that “I can get a job, therefore all the unemployed could get jobs if only they tried harder, or got better education and training”.

The way I go about demonstrating that fallacy is a dogs and bones example. Say we have 10 dogs and we bury 9 bones in the backyard. We send the dogs out to find bones. At least one dog will come back without a bone.

We decide that the problem is lack of training. We put that dog through rigorous training in the latest bone finding techniques. We bury 9 bones and send the 10 dogs out again. The trained dog ends up with a bone, but some other dog comes back without a bone (empty-mouthed, so to speak).

The problem, of course, is that there are not enough bones and jobs to go around. It is certainly true that a well-trained and highly motivated jobseeker can usually find a job. But that is no evidence that aggregate unemployment is caused by laziness or lack of training…”

Teaching the Fallacy of Composition:

The Federal Budget Deficit

by L. Randall Wray[1]

SUMMARY:

#128 Ronaldo on 09.24.12 at 1:38 pm

#86 AACI Okanagan – was speaking to a realtor that I know from Kelowna last month and she too mentioned that she was trying to sell a 5 acre orchard to some older fellow for 1 million. He was trying to sell a vacation property (but couldn’t) and was hoping he could trade it as part payment for the acreage. I asked her what the revenue would be on this property which also had a small older home. She said about 10 thousand. I replied, “not a good return on investment is it?” She says, ”Well, it would be a lifestyle”. Seems some people go from one bad investment to another.

#129 };-) aka D.A. on 09.24.12 at 1:40 pm

#118 Form Man on 09.24.12 at 12:05 pm

I certainly respect the tone of this most recent of your posts than they before and you are correct on most of that which you explained as being a common evolution in the financing of a development project.

Like you I too wish, professionally, to maintain my anonymity, not so much against the buyers and sellers of real estate but my colleagues in the business. From time to time I try to dispel those myths the players in my industry tend to perpetuate. The organized real estate industry is not at all what the typical layperson, and apparently the bulk of the readers here, are led to believe. While I do believe we provide a most valuable service (we must or 95% of buyers and sellers wouldn’t be using us) we are in many ways our own worst enemies propagating and perpetuating the myths we think advantage us in the oh so competitive arena in which we ply our trade but really undermine a true understanding of it. If the Blog Dawgs would not be so quick to take issue with me because I am a REALTOR® and prejudicially preconceive me as such a “REALTYWHORE” they might find I have time to offer some valuable insight they could use rather than wasting our time locking horns with one another.

On your comment

Providing facts does not make me a ‘Kelowna hater’, I quite enjoy living here. I think it is one of the finest places to live anywhere, but that doesn’t mean there are not serious problems in the local and national housing markets that should be examined and discussed……..

While I am a true believer that the market will adjust accordingly, just as Kelowna City Council has come to realize that their “Affordable Housing Strategy” was and is useless as the vacancy rate has adjusted accordingly to alleviate that contentious issue, you are correct – there are issues that still need addressing. Although I will not disclose specifically in what as I may give hint of my identity, I am actively involved in participating and doing what I can to address those issues toward the betterment of this fine city. As they say ‘If you are not a part of the solution you are a part of the problem’.

And you are absolutely correct, as I too think, this is one of the finest places to live anywhere, bar none, worldwide.

#130 Canadian Watchdog on 09.24.12 at 1:45 pm

New GTA home sales “slip” 64.5% in August

http://www.newswire.ca/en/story/1041107/new-home-sales-slip-in-august

#131 spaceman on 09.24.12 at 1:48 pm

A while back a poster was asking “should I buy this house” and I was surprised by the answer, but have used this in my own decision making. The answer Garth gave was something like this…

If you absolutley love it, have money to burn, can make the payments without hardship, and can live with a depreciation of that asset of @15, then go for it. But it better be your dream home, because you will be in it for 10 years or better.

I was in a horrible living situation, with people below me that were extremely inconsiderate. Raising 2 teenagers and feeling throddled. We found our dream home, in the exact location we wanted, equal distance between their schools, at a price we could afford, we low balled and seller met our offer. This is Victoria, we have been in a decline for 2 years. Final price 13% below assessment. We moved in June, and have been happy ever since. This decision suited my situation, but I did it in an informed manner.

Thank You Garth for this, I know what to expect in the coming years, and i am ok with it.

Call me a fool if you like, I don’t care.

Did I pay too much? yes… do I regret it ? Not the least. I know it will decline in value the next 5 years, I don’t care. I didn’t buy it as an investment. Its a place to LIVE.

#132 Roial1 on 09.24.12 at 1:54 pm

from yesterday

#151Ayn Rand Army on 09.22.12 at 1:43 pm

Nothing free is free. It’s the MOST expensive system with little value you can get. Same with education.
——————————————————–
Oh, absolutly expensive to live here.

HOWEVER. Your way of thinking is so “Greed is good” That you do not see the truth. Only what is seen as good for you.

As for the expensive part, Have you EVER looked up the cost per dollar of medicare vis-a-vis the US system? No, I’d bet not.
So much of their “User pay” model is syphened off, as in, “Profit” that many people are left to die, just so that the well off can get Very expencive health care and NOT worry about their society as a whole. So what if people have to live in the streets, “it is their fault anyway.” “I’m all right Jack”, “so screw the rest of you.”

I guess that that is the type of nation that you wish to live in, but not me.

As for education, would you choose to live here in an educated country or say a country where education is only for the religeous fanatics and rich????

Oh, and before you go labeling me as a “commy sympathiser” I am a well off retiree who pays taxes and does not shirk my responsebilities. (Taxes)

I just do NOT agree with Gordon Gecko as you do.

Conclusion: emigrate to the States. You want to live in a dog eat dog country. Do so!

#133 Old Man on 09.24.12 at 2:10 pm

Amir is 27 years old, and buys a condo with a 40 year amortization that was first available on June 20, 2006. He enters university at age 18, and acquires enough education to become a member with a medical establishment to earn $150,000 a year that would take about 6 or 7 years to accomplish. Now he has 100K in RRSP; 20K in TFSA; and $100K in savings without even looking at the taxation on $150,000 per year. How did he do it all?

#134 Reality Bytes on 09.24.12 at 2:13 pm

Who cares about Amir.
A 27 year old doctor with a crap load of money, who’s going to continue making an even bigger crap load of money for the rest of his life, can afford to make whatever decision he wants, to live where he wants.

#135 Coraline on 09.24.12 at 2:20 pm

Brutal sales decline on new homes reported in the GTA, lowest August on record:
http://www.bildgta.ca/media_releases_2012_detail.asp?id=888

#136 Bill Gable on 09.24.12 at 2:29 pm

Tsur didn’t look like a happy Camper. If that is the case now – wait until about oh, 18 months from now, when moronic ‘investors’, will be looking for his scalp.

The guys on CKNW have an agenda.

(* The Campbell’s and the Ozzie Stonehenge).

It’s called Sales.

#137 Jon in Cowtown on 09.24.12 at 2:32 pm

Garth; don’t spend a lot of time responding to the real estate establishment. What else would you expect. Don’t lower yourself by giving these poor guys any credence whatsoever.

Can you really blame the poor sods. To quote Upton Sinclair: “It’s difficult to get a man to understand something if his salary depends on him not understanding it”

#138 Old Man on 09.24.12 at 2:38 pm

Final comment – nobody that needs an education to hit $150,000 in the medical field could have $100K at age 27 in an RRSP, and the other red flag is that he said his wife was unemployed, and going to school – need I say more! I might be old, but am not stupid; just saying!

#139 Foggy on 09.24.12 at 2:50 pm

Good article from Diane Francis regarding demographics in various countries around the world – including our own. Makes the argument that there is a strict correlation in a country’s success based on the population balance of old versus young people.

http://opinion.financialpost.com/2012/09/21/is-canada-headed-for-demographic-disaster/

#140 Jimbo on 09.24.12 at 3:00 pm

Acquiring debt like house horny Amir is done very easily with banks and realtors being the facilitators. Even after reading this blog on a regular basis, Amir is ready to take the plunge. Good luck buddy!

Banks love to accommodate the Amirs of the world with realtors on the front lines sending droves of people to the mortgage abyss. Remember folks, realtors are not consultants they are salesmen. Banks and realtors would never tell you to rent if it was in your best interest.

That’s why we have Gartho.

Financial responsibility vs the ease of acquiring debt. The latter always wins; it’s seems to be human nature.

#141 blobby on 09.24.12 at 3:09 pm

You only need to read the comments under this article to realise why we’re screwed:

http://www.cbc.ca/news/canada/story/2012/09/21/home-ownership.html

Canadians seem to strongly believe that home ownership is a right – and they all seem to be pumping the idea that renting is throwing away money.

Do people not get taught math at school any more?

#142 Metro Van Observer on 09.24.12 at 3:20 pm

In Vancouver the usual ‘experts’ the local media quotes are Tsur S., Helmut from the credit unions and gold old Cam at the real estate institute. Each represents a group that benefits greatly from unsustainable and perpetual price increases. They distort or outright hide the truth for fear of negatively impacting the special interest groups they represent.

Were it not for blogs like this, people would never get a contrarian (actually truthful) viewpoint.

Kudos Garth for keeping it real and standing up as a lone voice of reason in a delusional place to help people preserve and build real wealth.

You called this market years ago and were only delayed due to the financial engineering of the feds to crash rates. Despite rates, the market is still imploding as you predicted back then.

Can we call you Dr. Doom North?

#143 blobby on 09.24.12 at 3:33 pm

Adding to my above post, it seems that CBC will censor anyone who tries to post something explaining the math behind how renting can work out better than renting money off the bank for a mortgage.

PS: Todays letter – did i read that right? $150k a year and he STILL took a 40 year mortgage?!?

#144 Form Man on 09.24.12 at 3:56 pm

#129 DA

thank you.

I agree that almost all attempts by levels of government to alleviate ‘ housing issues’ are a waste of taxpayers money, and can distort the market.

#145 888realtor on 09.24.12 at 4:12 pm

House Price Index in Canada, most cited internationally, is showing growth !
http://www.housepriceindex.ca/

#146 patiently waiting on 09.24.12 at 4:16 pm

Fraser Valley Real Estate Board – Here are the latest stats – as of September 24, 2012 – 14 of 19 Working Days. Sales are down 23% year over year
————————————————————–
SEPTEMBER 2012 Listings 1952 Sales 625
AUGUST 2012 Listings 1629 Sales 695
SEPTEMBER 2011 Listings 1867 Sales 812

#147 John on 09.24.12 at 4:17 pm

TRT wrote:

“Blame “Cry Wolf Carney” when everything gets destabilized. His saying one thing and doing another is criminal for a public figure. He needs to raise rates now. But the wolf won’t.
——-

Carney doesn’t consider, raise, lower or do anything at all with interest rates. He’s not even involved. Sounds like you’re unclear with how we got here.

Friends say that they’ll just declare bankruptcy if a storm hits and rightly blame it on Carney and others. Cant argue there.”

#148 AACI Okanagan on 09.24.12 at 4:24 pm

#86AACI Okanagan on 09.24.12 at 9:02 am

it is not listed mls anymore and it is closer to kelowna than Penticton.. not the same property we speak of..

#149 Old Man on 09.24.12 at 4:34 pm

Anyone that got sucked into a 40 year amortization were fools, as what was the term? These fools became slaves to the bankers, as those that were horny to buy their home got hooped. They were not paying off the mortgage loan at all, but were paying interest on the principal, but all is well in Disneyland. Now what will happen with a crash, and the renewal of the term?

This will not be pretty, as so many will go underwater, and what are they going to do when the term renewal comes up? The banker will say things have changed, as your home in paradise has a different market value, so come up with some cash to make it all right. What if they can’t do it?

#150 Tony on 09.24.12 at 4:35 pm

This guy is worst than the stork with his head in the head. This guy must be the absolute epitome of total stupidity. He might consider just leaving the keys in the door for the bank who holds the mortgage if he buys it.

#151 Canadian Watchdog on 09.24.12 at 4:41 pm

#141 blobby

“Canadians seem to strongly believe that home ownership is a right – and they all seem to be pumping the idea that renting is throwing away money. Do people not get taught math at school any more?”

No, but they will learn and realize that renting is not throwing away money when someone close to them loses everything they own.

#152 popados on 09.24.12 at 4:49 pm

now a renter,still in dog house.i have had landlords ask for cash,what a pain in the arse.they are going out there way to help you.AND AMIR MEANS RICH BASTARD IN THE MIDDLE EAST!

#153 Spiltbongwater on 09.24.12 at 4:50 pm

I think Amir is pimping out his unemployed wife (albeit that would make her employed). How else would someone get that kind of coin in a few years of working? Either he is selling his wife, or selling drugs. He may have got a dowry, but that is doubtful.

#154 squidly77 on 09.24.12 at 4:56 pm

New GTA home sales “slip” 64.5% in August

This is gonna be a very bad if not extremely horrific real estate crash. Even worse than I had originally thought.

It’s gonna be such a shame watching my friends, family and other hard working Canadians lose it all. The divorces and family break up will be tragic.

I ran my blog for years, I tried, but few listened.

#155 2centsCdn on 09.24.12 at 5:05 pm

Amir’s going to do what Amir’s going to do. He WANT’S to buy that house.

Smart people look at the money they have, look at their job security, look at the market conditions (prices, mtg rates, economy), look at a few possible future scenario’s, build in a little cushion (things do go wrong, things do change), and look at the best way to provide food, shelter, an enjoyable life and bit of security.

Most people just buy what they want to buy, then try to reverse justify it somehow. Usually even an idiot can see holes in their reasons. People do what they want to do … usually for quick gratification …. then try to blame everyone else when it blows up. Go for it Amir …. the fact that taking on a million dollars in debt with a $150k (before tax) salary doesn’t make you flinch tells me either there’s another “new math” or I must be getting old.

#156 Old Man on 09.24.12 at 5:10 pm

Here is how it will happen, as have see it all, as there will be several lenders in trouble with 416. CMHC will take a hit; the banks will take a hit on interim bridge loans when the developers go bankrupt; the banks and insurance companies are holding stuff that will go sour; the so-called mortgage corporations that lend will have big trouble; and the private mortgage money will be taken down – bigtime – as they are sharks.

The party will come to a sad ending, as this is just all a repeat of history, but this time it will be big; not like before, but a huge bust that has never happened before in Canada, so sit back and watch this show over the next few years, and buy nothing, as renting will be a cool place to sit it out.

#157 Nubbers on 09.24.12 at 5:31 pm

Truth Hammer @126
‘It’s not that these people aren’t richer than they thought…but they are certainly less able at math than they should be’.

Well said. My other half has a degree in accountancy, but in 2007, when UK prices crashed and we sold to rent, she would have had me buy back in again at a much higher level. I took her through the maths with spreadsheets, historical charts etc. Nothing worked. In the end, I just had to dig in and do without a love life for a few years (again).

#158 Toronto_CA on 09.24.12 at 5:43 pm

Holy Hell at those new home numbers. 64.5% decline? Wowsa.

#159 mid-Ontario on 09.24.12 at 5:47 pm

52 Nostradamus Le Mad Vlad
Thanks.
I enjoy your post and links.
Time well spent!

#160 Mr Buyer on 09.24.12 at 6:09 pm

#101 Daisy Mae on 09.24.12 at 10:17 am
“Unprecedented household debt won’t kill housing, he says. “It could only be the result of a major economic recession, a downturn, or perhaps a financial crisis…”

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

Is this guy LISTENING to himself?
………………………………………………………………..
This is the Black-Swan mythology that manifests itself in various forms in the comment section of the blog and a great deal in the mainstream media. Bubbles are themselves a black-swan event. They are simple lifeforms that expand (consuming all available resources) and ultimately collapse. It is the extended period of time that this simple life cycle plays out that masks the black-swan nature of bubbles. Remember, 21 straight years of property price decline in Japan post bubble. 21 years straight, uninterrupted years of falling property values that continues to this day. I can attest to this in my experience with our parking lot losing $120 per 3.3 sq meters over the past 5 years and people must provide proof of a parking spot in order to buy a car here in Japan (there is little or no parking). Property values are a small fraction of what they were in the bubble and rents are much cheaper then they were. That is the landscape of a bubble collapse.

#161 Old Man on 09.24.12 at 6:52 pm

I will never for that day at this highend Law firm called McMillan in Toronto, whereby, I had to sort out my assets, and was asked the BIG QUESTION. It was all about the Family Reform Act, which can be hell on earth, for some of you who are shacking up, and living in sin, as this can become a nightmare for a couple that is buying Real Estate. This can become a huge surprise, and must be looked at with prudence, and was not all that clean, but all not too bad with me.

#162 jess on 09.24.12 at 6:53 pm

..”foreign based multinational corporations from reducing canadian tax by transferring or “dumping” into canada shares of foreign corporations to create deductions from canadian source income or to create paid up capital that could be returned without triggering witholding tax. These transaction have been characterised as eroding the canadian tax base without providing any signifcant economic benefit to canadians.

#163 Realtors in an all out PANIC! on 09.24.12 at 7:15 pm

Realtors seem just as bad as terrorists who hate freedom and democracy. Bloggers and Garth we need to take down these freedom and democracy hating realtors who are in a PANIC as they try to hang on to their anti freedom and democracy position.

MLS house information seen as so private, Toronto Real Estate Board seeks to have public barred from Competition Tribunal hearing
http://www.thestar.com/business/article/1261655–mls-house-information-seen-as-so-private-toronto-real-estate-board-seeks-to-have-public-barred-from-competition-tribunal-hearing

#164 Old Man on 09.24.12 at 7:21 pm

Now for you women who are divorced, a new law came into effect in Canada which few know about, as was there in 1981/82, in Ottawa in a high position, as you can fill out a form to claim 50% of CPP, against the ex hubby in secret with a claim against his CPP. I kid you not, about this all – knowledge is power, and my babe at Stats Canada did it, and gave me the knowledge of this all, as had no clue.

#165 rosie on 09.24.12 at 7:25 pm

NUFFSAID http://www.huffingtonpost.ca/2012/09/24/toronto-condo-house-sales-collapse_n_1910576.html

#166 Mr Buyer on 09.24.12 at 7:26 pm

The idea that a bubble needs a black swan event for it to collapse is akin to saying that disaster A is not a disaster unless some other disaster occurs and then disaster A will be a disaster. Bubbles do not require any external forces to pass from one phase of their life-cycle to the next. All bubbles require to pass from expansion to collapse is the consumption of every available molecule of resource in whatever form, real wealth or debt.

#167 Canadian Watchdog on 09.24.12 at 7:41 pm

It’s becoming clearly evident that nobody, nobody knows just what the hell is going on with GTA’s shadow property assignment market, so much so, that Urbanation has partnered up with CMHC in an attempt to quantify how many unaccounted for pieces of paper have obligations to fulfill a mortgage on over 68,000 properties planned for the GTA.

Document

Nobody knows anything!

#168 Nostradamus Le Mad Vlad on 09.24.12 at 7:44 pm


#71 new-era — “. . . its an extension of the advertisers to herd the sheeples”

True. The m$m is tightly controlled which almost certainly means advertising shows how the sun is shining out of one’s arse, when the opposite is true.

Sheeple, for the most part, are fundamentalists, believing every hook, line and sinker they’re told, no critical thinking or figuring out for themselves required.

#113 TRT — “Blame “Cry Wolf Carney” when everything gets destabilized.”

Column by David Crane (The Business of Canada, e-mail [email protected]) in today’s KDC entitled “Carney not telling the whole truth”.

Not surprising, as Carney used to work with Hank Paulson and others at GS, and GS may or may not have any semblance of credibility left.

Crane writes about Alberta’s oilsands / tarsands. Mulcair is against exporting the oil, as it also exports jobs, whereas Carney holds the opposing view, saying it bring lots of money in, but ignoring Mulcair’s point about job losses.

#159 mid-Ontario — Noted and appreciated!
*
JPM, Libor and the old boys network; Painful Recovery “You’ll be delighted to know Lagarde is exempt from the pain.”; Ground Zero Wasn’t sure where to put this, under finance or crooks; Natwest More accounts closed without warning; Spain, France, Italy etc. are flatlining one by one; Pass the bubbles, please Deleveraging through austerity.
*
Subs with nukes “Interesting that the Jerusalem Post now admits Israel has nuclear weapons.” wrh.com, 10:31 clip Lies about Iraq are repeated here, and 3:59 clip IAEA — No evidence; Curious, to say the least; 6:39 clip Total surveillance; Resveratrol ype 2 diabetes, etc.; Clueless Stupid is as stupid does, but this borders on the lunatic fringe and Ditto to previous link. Garth, you may have to take us to an alternate universe! German Catholics Don’t ask me; 97% Yes, it’s true; Small Guns “As I mentioned before, a New World Order brought into existence through fraud and deception can never allow freedom of speech, freedom of thought, or freedom of inquiry, or its own crimes become exposed. In order to conceal the circumstances of is own birth from its own citizens, the New World Order has to be history’s greatest tyranny.” wrh.com; China – Af’stan A partnership in the making? Iran 90% or more is required for nuke WMD.

#169 TurnerNation on 09.24.12 at 7:46 pm

#18 Maja – a sad commentary on today’s Conservative supporters, as I read it :)

#170 Mister Obvious on 09.24.12 at 8:04 pm

#141 blobby

Do people not get taught math at school any more?
————————-
In a word, no. But I think Barbie said it best:

http://www.youtube.com/watch?v=NO0cvqT1tAE

#171 truth hammer on 09.24.12 at 8:10 pm

#157…Nubs…..it never surprises me how money of any amount can make some people develop visions of grandeur………professionals are the worst money managers…..in my experiance the very king of crdeit clowndom have been dentists ( besides our greedy coddled civil servants of course who like making jam are the scum that rises to the top under the deluded entitlement system in Canada which guarantee’s a payday for life and allows them to spend without thought of ever saving a penny and thereby backstops the delusion that fiscal prudence doesn’t exist) .

When many persons begin to make more money in the later years of their professional life it is easy ( and funny) to watch their expenses suddenly take off into the stratosphere ……the newly affluent spend money like drunken sailors….and Seattle pimps who park their Cadillacs on the front lawn……..civil servants do the same with boats and motor homes as some kind of idiot code that they are on top of the world…..

The usual modus operandi is that they spend it all on the credit card and home equity loans…..because the gross numbers on their paycheques are counter -realistic to the amount they think they are raking in.

Ask any debt counsellour and they’ll tell you that it’s always the doctor who makes a million dollars a year who has a consumer credit debt of 1.5 million…….money is like a psychosis…..a chimera….a cocaine high…where you become two persons while on the drug…but then the other half wants some too and the addiction cycle becomes to resemble a parade of fools all marching through the mall with their pants down waiting for the big horned rhino of reality to run them down.

#172 Realtor #1 on 09.24.12 at 8:38 pm

# 29 T.O Bubble Boy

You forgot to discount taxes

lost income from the $100k down payment (about $28k if you’re making 5%/year for 5 years)

Since everyone is getting a kick highlighting price reductions allow me to highlight homes that sold
over asking price (from friday GTA)
MLS#: C2461204
MLS#: C2461366
MLS#: E2461969
MLS#: E2468383
MLS#: E2461214
shall I go on?

#173 TurnerNation on 09.24.12 at 8:44 pm

#122 Wudeva – I use IE (Internet Exploder) :).

#174 Smoking Man on 09.24.12 at 8:46 pm

#163 Realtors in an all out PANIC! on 09.24.12 at 7:15 pm

You know what I love about you LaughingCon

In all the years I have known you, Globe and Mail days.

You haven’t deviated from message, you’re consistent, focused, and determined.

All the Characteristics of a successful entrepreneur. But you lack something.

For those of us who take risks, sometimes we don’t live that long, but if you don’t take risks, you don’t live.

I put you in the later, If you’re at the double tree on 23rd, I’m buying your beers.

#175 Mr Buyer on 09.24.12 at 9:03 pm

#172 Realtor #1 on 09.24.12 at 8:38 pm
# 29 T.O Bubble Boy

You forgot to discount taxes

lost income from the $100k down payment (about $28k if you’re making 5%/year for 5 years)

Since everyone is getting a kick highlighting price reductions allow me to highlight homes that sold
over asking price (from friday GTA)
MLS#: C2461204
MLS#: C2461366
MLS#: E2461969
MLS#: E2468383
MLS#: E2461214
shall I go on?
…………………………………………………………..
Please do. Why not contrast reductions and purchases over asking and track changes in the relationships over time and publish the results on the front page of newspapers across the country. I would be very happy if you were to go on in such a manner.

#176 nocte_volens on 09.24.12 at 9:22 pm

Economists are merely apologists for their employers point of view. I have listened to the ramblings of the credit union guy (I won’t mention Murray’s name) for a couple of decades as he is one of the most reliable contrarian indicators that I have found.

#177 Canadian Watchdog on 09.24.12 at 9:22 pm

#172 Realtor #1

62B Earlsdale Ave
MLS#: C2461204
Sold: $546,600
List: $449,000
122 % List

Now look across the street.

For Sale: $699,900

#178 futureexpatriate on 09.25.12 at 12:53 am

Great photo you got there of the Romney Campaign, Garth, and riding the Fox “News” van to boot…

#179 Herb on 09.25.12 at 12:21 pm

Please say it isn’t so, Truth Hammerer, Westernmoron et al –

that neo-conservatism is “the search for a superior moral justification for selfishness”

http://www.thestar.com/opinion/editorialopinion/article/1261675–mitt-romney-blurts-out-the-truth-about-neo-conservatism