Diddled

Six months ago in mid-town Toronto, homes selling for well over $1 million, to middle-class families with kids, retrievers and Volvos, were in massive demand. As this pathetic blog chronicled, asking prices were suggested starting points for bidding wars, as rock star realtors egged their clients to ‘give it your best shot.’ Buy now, in other words, or buy never.

Well, never just came.

Whereas selling prices in April and May were routinely 15% above the asking prices, today they’re 10% below. That sure looks like a 22% price reduction to me. Of course, this is a number that will never show up in real estate board stats, for obvious reasons. Kinda like the frankenumber that Vancouver realtors use to ‘prove’ prices can remain turgid even as sales crash 32%. Honest.

The real estate cartel knows how bad things really are, and that diddled stats won’t hide the truth. It’s blaming Ottawa. This goes to yesterday’s post about the role of government in the housing business, free markets, interventionist rules and the manipulation of public opinion. It doesn’t take much. Serious clevage and a low VRM will get you anything these days.

The industry says F’s goring of long-term mortgages, along with more stringent borrowing regs for first-time buyers, was extreme. Overkill. It believes nothing was wrong with the way things were, even though families were taking on unrepayable debt to buy unaffordable houses. So there’s now a major-league lobbying effort in Ottawa to have rules which are not even 90 days old rolled back.

But this won’t happen, at least until it can be coordinated with the Bank of Canada’s first rate hike in 2013. Higher borrowing costs – even a half point more – will have the same net effect as reversing some of the rule changes, and allow the elfin deity finance minister to walk tall among men. So to speak.

Meanwhile some changes are probably forever, like CMHC’s decision to no longer insure financing on homes selling for $1 million or more. This is having a deleterious effect in the BMW-parts of Toronto and, more than anything, is responsible for a double-digit and unreported wallop to prices. Easy to understand. Suddenly to buy that $1.5 million new-build faux baronial anorexic face-stone McMansion in Leaside takes 20% down ($300,000) plus land transfer tax ($55,000) and assorted closing costs ($15,000). That’s $370,000 in cash, as opposed to the $145,000 it took to buy it with 5% down, including closing costs.

In Vancouver, it’s toxic. In the Metro Van area there are just under 5,000 properties currently for sale at over $1 million. That is twice as many as in the entire GTA, which has three times the population. And families there make 30% less money. This is the technical definition of an economic term known as ‘screwed.’

So it’s little wonder what just happened in September.

Sales in the region fell by 8% from August and 32% from last autumn. And while demand dove from this time in 2011 by a third, listings have increased 14%. Sales of detached homes (that’s where the $1 million-plus inventory sits) crashed 38%. Overall, sales are now running 42% below the long-term, 10-year average. At this rate there are enough houses for sale to last almost a year, which means sellers better get used to six or ten months of open houses, and endless vacuuming.

In a flash of brilliance, the local real estate board president said “a clear reduction in buyer demand” is Ottawa’s fault because F’s rule changes, “make homes less affordable.” Wow. Silly us. We thought people stopped buying stuff when it cost too much.

So, prices will fall. In fact they are. It’s a buyer’s market in Vancouver, hunks of the GTA, Montreal, Halifax, Edmonton and, in a few months, most everywhere. The CMHC million-dollar limit is hurting the horsey set, while the death of 30-year money nails the Vespa crowd. Despite worried agents and sweaty sellers, nobody should be buying yet, unless you like surprises. Nor should you believe the ‘official’ market zombie statistics.

Halloween’s coming. Get your stakes ready.

233 comments ↓

#1 Onemorething on 10.02.12 at 9:51 pm

Time2Buy – haha – more like

TIME2FRY!

#2 LJ on 10.02.12 at 9:53 pm

Globe and Mail (top electronic headline), recent:

http://www.theglobeandmail.com/report-on-business/economy/housing/tighter-mortgage-rules-start-to-take-toll-on-high-end-homes/article4583509/

#3 Toronto_CA on 10.02.12 at 9:54 pm

Great post tonight Garth. Really enjoyed.

The folks tracking Vancouver at Red Flag Forums seem to think this was the worst September for sales since records began. Can you confirm? I know August was the worst August ever for “new” home sales in Toronto. I am enjoying these record breaking months on the sales side, prices will follow.

#4 woper_holic on 10.02.12 at 9:54 pm

It will be ugly, no doubt about it.

#5 Smoking Man on 10.02.12 at 9:55 pm

DELETED

#6 kenken on 10.02.12 at 9:55 pm

Where can we get reliable sales and price figures for the different cities, instead of the RE cartel manipulated figures? … a Case Shiller type index

#7 garthturnerdinglehiemersmit on 10.02.12 at 9:56 pm

whos first

#8 T.O. Bubble Boy on 10.02.12 at 10:02 pm

Meanwhile some changes are probably forever, like CMHC’s decision to no longer insure financing on homes selling for $1 million or more. This is having a deleterious effect in the BMW-parts of Toronto and, more than anything, is responsible for a double-digit and unreported wallop to prices.

So, will all of the RE builders tearing down bungalows in North Toronto be left with unsellable cookie-cutter McMansions?

Also – the pace of destroying older homes and replacing them with $1.5M monstrosities seems to have picked up recently — maybe the “investors” are getting nervous?

There may not be any new property being created in Toronto (the lots have been assigned for 50+ years in most cases), but there definitely is an over-supply of renovations/re-builds. Anyone who claims the 416 is safe because ‘they aren’t making any more land’ isn’t looking at the supply and demand for all of the $1M-$2M McMansions.

#9 Smoking Man on 10.02.12 at 10:02 pm

#2 Onemorething on 10.02.12 at 9:51 pm
Time2Buy – haha – more like

TIME2FRY!

………………………………………………….

Good one LMAO

#10 Sebee on 10.02.12 at 10:03 pm

Garth,

Is that really the word? They will go limp and go back to 30 years? I thought you said war? Even with a coordinated rate increase that’s admitting that rolling back to 25 was a mistake. We all know it wasn’t.

#11 Paully on 10.02.12 at 10:03 pm

I would like to know how CMHC ever justified insuring mortgages over $1Million? I thought that CMHC insured mortgages were supposed to be for “starter homes” and first-time buyers! CMHC should not even be insuring the $999k mortgages. Why should tax-payers be on the hook for million dollar mortgages? That is just plain stupid!

#12 Rainman on 10.02.12 at 10:04 pm

Anyone not seeing what’s happening, is either an idiot or in complete denial. The Crash is coming… what I’m wondering is what the lag will be? lack of sales to actual full blown price reductions?

#13 T.O. Bubble Boy on 10.02.12 at 10:08 pm

Examples of the McMansion trend:

“before”: $700k teardowns
http://www.realtor.ca/propertyDetails.aspx?propertyId=12465805&PidKey=153399550
http://www.realtor.ca/propertyDetails.aspx?propertyId=12413439&PidKey=1182042686

“after”: $1.2M to $2.2M McMansions
http://www.realtor.ca/propertyDetails.aspx?propertyId=12388939&PidKey=-594817178
http://www.realtor.ca/propertyDetails.aspx?propertyId=12437132&PidKey=-140250058
http://www.realtor.ca/propertyDetails.aspx?propertyId=12158937&PidKey=-1295088779
http://www.realtor.ca/propertyDetails.aspx?propertyId=12450170&PidKey=388198311

#14 Keeping the Faith on 10.02.12 at 10:10 pm

what does “The CMHC million-dollar limit is hurting the horsey set” mean?

Horsey set?

#15 Smoking Man on 10.02.12 at 10:10 pm

#278 Toronto_CA on 10.02.12 at 9:20 pm
#273 Smoking Man on 10.02.12 at 9:00 pm

I believe Garth has always said that sales crash first. Prices follow later.
…………………………………………………………..

And my guidance teacher said, I would sweep floors for a living, your point being?

Someone says something it happens. How dumb of me.

#16 Ralph Cramdown on 10.02.12 at 10:10 pm

FYI, Audi is the new Volvo in midtown.

#17 DJIM on 10.02.12 at 10:13 pm

The biggest advantage of owning is that once the mortgage is paid off, the pain ends. So why would anyone sign up for a 30 or even 40 year mortgage? Who would want a lifetime of pain?

#18 Smoking Man on 10.02.12 at 10:15 pm

#283 Mr Buyer on 10.02.12 at 9:46 pm
Smoking man is baiting a bull trap. DO NOT BUY A HOUSE FOR THE FORESEEABLE FUTURE no matter how fantastic the persona Smoking man turns out to be.

……………………………………………………………………….
The only way to get up to 10 friends on here is if i’m wrong and eat humble pie.

When the spring market returns with a roar, I will lose 2 of the six I have on here.

I can’t win no matter what I do.

Honestly I just want to be loved…..

#19 Lotusman on 10.02.12 at 10:16 pm

It’s amazing that there were over 1500 Greater Fools in Vancouver last month!

#20 Comrade-Conrad on 10.02.12 at 10:19 pm

Small article in the journal how some
Numbers are down in Edmonton but total numbers are up. Enough with the Kool Aide! It is going to hell in a hand basket. I am not buying until it is cheaper to own a home then rent.

#21 Just Park it on 10.02.12 at 10:21 pm

Saturday morning we drove down the 400 and exited Eglinton to meet up with a few buddies from highschool. At 10:30am we drove by a sales centre which I was astonished was even there – rental apartments lined Eglinton, but backed away from the main road by at least 200 metres – back in the 60’s I guess they believed in some breathing room – anyways – they were selling townhomes on the land between towering rentals and a busy 4 lane road – and the crowds were shocking – police were controlling traffic and the crowd by just a glimpse seemed to reflect the community –

If anyone says the bubble has popped – think again – I saw hundreds lined up – and a number of people just milling around – at historical low interest rates – this party still has some zip to it.

#22 Dorothy on 10.02.12 at 10:23 pm

Knowing how damaging to the economy (and therefore to the majority of the Public) a US housing crash would be, I’m amazed at how much many people appear to salivate at the prospect.
While it is true that Governments contributed to the massive increase in house prices by creating an environment whereby people with no money could buy houses, and that people who were dumb enough to take advantage of the situation deserve what they are about to get, there appears to be no sympathy at all for the millions who will also be adversely affected despite having done absolutely NOTHING to deserve it.

Not everyone bought houses they couldn’t afford. And not everyone is swimming in debt. Yet they could still be caught in the coming deflationery net, particularly if they wind up also losing their job and are unable to find a new one.

And that is a prospect that no-one should be rubbing their hands together with glee over. We should be feeling sorry for such folk and railing at our Government for allowing such a situation to happen. Yet I don’t hear a lot of that; most of what I hear is pure venom borne out of jealousy of those who have been able to find a way to buy that which others can only covet. Most of the bloggers on here are praying those poor folks WILL have to sell at record low prices merely so that they (the bloggers) can swoop in and vultch the houses all up!! Its disgusting!!!!!

#23 Dorothy on 10.02.12 at 10:24 pm

My apologies, I meant to say US style housing crash in the first sentence.

#24 45north on 10.02.12 at 10:24 pm

The industry says Flaherty’s goring of long-term mortgages, along with more stringent borrowing regs for first-time buyers, was extreme. So there’s now a major-league lobbying effort in Ottawa to have the rules rolled back.

well who-da-guessed a major-league lobbying effort, I can see the entire Yankee line-up outside Flaherty’s office. Who’s the starting pitcher?

Pray to God that Flaherty does the right thing which is to stand firm on the rules.

#25 Toronto mine sweeper on 10.02.12 at 10:25 pm

Third!

#26 Not 1st on 10.02.12 at 10:26 pm

But Garth, the media said Calgary was spared and sales rose 17% over last Sept. What gives?

#27 Canadian Watchdog on 10.02.12 at 10:26 pm

Total Canadian MBS issuance has surpassed $1 trillion dollars.

$1,018,521,906,161.44

#28 Jay Currie on 10.02.12 at 10:29 pm

32% drop in sales in Vancouver is simply the canoe heading towards the falls. The hard part lies ahead.

Right now, smart money is dropping asking and settling for less than that. They know they should have made it to shore last spring but they didn’t and they can hear the falls ahead and see the mist. But the dumb money is still “insulted” by low offers.

You’ll know the real correction has begun when the realtors stop telling people their houses are worth 2010 prices in order to get the listing. And we are a long way from there at the moment.

At the moment there is no trigger. Just a sense that safe to shore might be better than discovering how high the falls actually are. The trigger will be the discovery that this is the Niagara River rather than the Humber. The sign is looming out of the mist and when it can be read people are going to be jumping out of their canoes and trying to swim to shore. A few will make it.

#29 Realtors and bankers in an all out panic on 10.02.12 at 10:29 pm

CHMC is the ONLY reason why prices are where they are today. Funny how CHMC no longer insures financing on homes selling for $1 million or more and very little is selling for over $1 million. CHMC shouldn’t be insuring any RE over $400K and then lets see how strong the market is in reality. Realtor scum hate the free and open markets since they know the RE market is nothing but a government backed ponzi scheme.

#30 Smoking Man on 10.02.12 at 10:30 pm

The young crack me up on here, especially bubble heads in Ontario.

You all have problems with home owners, when someone buys a new place, that purchase creates hundreds of Jobs. Those Jobbers spend and a piece of that loot ends up in your pocket, so you can wag your tail, bring home popcorn and a movie. If your dream of housemegedon ever comes to pass, and house prices drop even a bit, you aint buying one, cause you won’t be working. The markets where RE tanked, do you know what the under 30 un-employment rate is?

Insurance Industry:
Has provincial gov’ts by the short hairs, I got pulled over on Saturday night, the aggressive little COP was so proud to tell me if I blew over .05 They take my car, and license gets suspended for 3 days, over .08 Cuffs and jailed. I blew .045 When did the .05 come into effect, what a scam, I called my insurance company and asked would my rate go up, They said huge, suspension would end up on my abstract my rate would triple. (No Trial, No Jury) If I drive never more than 2 beers. But still 2.5 beers would have cost thousand a year. Do governments real care about people. Nope
University:
50 K later for a diploma, debt, and a low paying job. Tuitions have gone up percentage wise double what real estate has.

Your generation is getting raped on insurance rates, and school, gas, food and milk, yet the prison most wanted on your shit list is the wee home owner.

That’s why you will never have more loot than boomers, your priorities are wacked. Your vision of what might be of your life with a nice healthy crash is so delusional. And you all think I’m nuts.

I have some much work to do here.

#31 Max Torque on 10.02.12 at 10:30 pm

“…CMHC’s decision to no longer insure financing on homes selling for $1 million or more.” Wasn’t the CMHC’s original mandate to make home ownership more accessible for first time buyers? Seems to me the housing bubble is largely the fault of government (with shared blame of bankers and greedy envious house lusters). If the CMHC had insured a first time buyer’s home (and only a modest first home…no move up homes, no spec homes, no cottages), this whole fiasco could have been avoided.

#32 Realtors and bankers in an all out panic on 10.02.12 at 10:33 pm

Dorothy #21

You know what is disgusting? CHMC and taxpayers money used to back a ponzi scheme. CHMC is anti-free market and that is disgusting.

#33 Sebee on 10.02.12 at 10:33 pm

OK, time to spin this HPI crap our way. Hey, RE associations, since your little HPI is showing only a low single digit decreases, or usually less than 1% decrease (0.8% anyone?) Stop whining like little sissies. After all, such small decreases, that’s just healthy for a balanced market. HPI decreases so small, why so much fear? Your response RE associations is hardly proportional if that HPI is accurate.

#34 crashwatch on 10.02.12 at 10:36 pm

Meanwhile out in Victoria the VREB keeps cranking up the BS machine. SFH sales in Greater Victoria the last 4 months have tanked almost 50%. Strange how they leave that part out while saying “you better buy now”.

“The median price of a single family home is only 1.5% lower than last year and that number has held steady for the last five months,” Crabb says. “Interest rates are also holding, but should they increase by as little as 1%, that would negate a 10% drop in purchase price. People shouldn’t wait for prices to drop, because we never know when interest rates will be increased to stimulate the economy.”

http://www.vreb.org/mls_statistics/current_statistics.html

#35 Don Bool on 10.02.12 at 10:43 pm

The Halloween Massacre was about whether we, as citizens, are prepared to pay attention, and hold people in power to account when they lie to us.
As proud citizens , we saw , we tried and we lost, but the cream rose to the top…………..I would like to thank the Honorable Garth Turner. The income trust fraud was the biggest single erosion of private savings ever caused by a single government action.

Garth Turner was given the boot for communicating with Canadians. He did his job and stood up for his constituents and the rest of Canadians … Broken promise on taxing income trusts. “He deserves a brand new Harley”

Thanks again Garth

#36 Marco from Van on 10.02.12 at 10:44 pm

And that becomes the end of the real estate folly.

A desperate marketing machine (Realtor TM etc.) will make cosmetics stocks rise by the amount of lipstick they will buy to put on the pig, but ultimately reality will catch up. The more the institution portrays everything as OK, the more the realtors will be at the face of individuals either doubting their capability or the overall message.

MSM will change their tune as soon as advertisement revenue from the RE industry wanes on the back of reduced earnings OR for the fear that their credibility will come in doubt. All it takes is for the first to head down that path that the rest will follow to ensure they don’t miss the “scoop” – look to the US, Britain, Ireland, etc. and you will see exactly how that played out.

It is now a question of an orderly unwind versus and outright crash.

I’m on the “orderly but painful” unwind. The government has a 2-3 year runway for the worse to happen, to then have a 12 month period of “that was bad, but now we’re better” and offer voter sweeteners like $10K TFSA allowances (bring it on!).

The consumer economy will take a non trivial hit and so will the residential construction industry.

The latter has a good proportion of unofficial employment (cash in hand black economy) as is extremely obvious in Vancouver, so I suspect the actual numbers will be somewhat obfusticated.

Car retail has already started implementing a shift towards much longer financing terms, very similar to the US, where you tie yourself up to pay for a depreciating asset for 60+ months to minimize the overall damage. Canadian car prices are still padded since the CDN$:USD$ raise, and so can fall to catch up to the US market prices. Look at how this happened in the UK car/retail scene vs. European continental prices.

There will be a shift down from premium “luxury” (made in china) to more “affordable” (made in china) goods and people will look through the label realizing the underlying good is of the same quality (in the UK that was what became the rise of H&M, Zara, Top Shop, and the indian Sweatshop production front end called Primark).

These adjustments will bring Fakecouver down from the debt fueled superficiality to a more concrete fundamentals based economy.

Foreign money (the little there is) will then have to decide if it was here for unsophisticated speculation or for other reasons and make its mind as to stay or go to the next playground.

All those that took too much debt will either have to re-prioritize their personal economies to de-leverage or cut their losses.

This has happened across the G-20 world, with the exception of Australia and Canada.

And so the Canadian consumer will also graduate from behaving like a teen-ager who only knows good times and no consequences to an adult who understand that every dollar spent that was not earnt, will have to be paid back, and that debt interest can become a prison…

Then we need to worry about our kids having to go through the same thing in about 20 or so years…

On the overall Canada will manage. It started off in a much better place than most other countries, and ensured individual debt was main component of the stimulus package as opposed to national debt unlike many other countries.

I suspect CHMC will have its charter brought under control, and the whole securitization business brought nuder stricter control (already started).

MfV

#37 JohnG on 10.02.12 at 10:46 pm

Garth – at one point you supported dollarization. Can you follow up on that and perhaps paint a picture of what might have happened if Canada had taken the US currency?

Thanks!
J.

#38 Sebee on 10.02.12 at 10:47 pm

Vancouver drops 30%, MSM is all over it.

GTA new home sales drop by 64.5%, silence.

You have no pull with the media Vancouver. Time for you to come down to GTA and get some dirt on Rogers and Bell CEOs so you can do.with the media what GTA can do.

#39 Keith in Calgary on 10.02.12 at 10:48 pm

It’s going to be an interesting 30 days coming up for me.

In two weeks, I get to spend 7 days in Toronto on business.

Then the following week in Montreal.

A week back in the office in Calgary.

And then a week in Cranbrook.

Should make for some interesting economic and RE observations…….not to mention padding my frequent flier account and priority club totals.

#40 Penny on 10.02.12 at 10:50 pm

Do you think prices in Regina and Saskatoon will take longer to tumble than in other cities? Lots of people say it’s different here, and if you try to say otherwise, they get bitchy and snappy.

#41 Smoking Man on 10.02.12 at 10:51 pm

#34 crashwatch on 10.02.12 at 10:36 pm

You have a point BS for sure, but dude, You got to see union station at 12:43 Track 6 vs Track 5

Track 6ers are so easy, you can call out the BS and have nothing, or you can make huge loot on the 6ers

People are dumb, the machine like the sheep dog.

Sit sheep, Run Sheep, Sleep Sheep.

You can’t beat the machine. So learn to profit from its moves, its easy to read.

It’s so easy……………………………………..

#42 Toronto_CA on 10.02.12 at 10:51 pm

“we never know when interest rates will be increased to stimulate the economy.”

Holy hell. That’s the dumbest thing I’ve ever read on the internet. This Crabb person is allowed to talk to the press?

#43 Boomer21 on 10.02.12 at 10:54 pm

#30 Smoking Man, 10:30 and you are still sober and can spell! WTH is going on! Are you ok? Has the recent drop in RE set you on a path of —–Oh Shoot, go have a drink and come back later.

#44 Smoking Man on 10.02.12 at 10:56 pm

Gartho for the Toronto Gartho Show.

Get a DJ as they enter the hall, well not me I will be at the bar my kids have my tickets.

Have the DJ play welcome my son, welcome to the machine, from Floyd as your loyalists and hero worshipers enter the hall.

#45 Inglorious Investor on 10.02.12 at 10:57 pm

#27 Canadian Watchdog on 10.02.12 at 10:26 pm

“Total Canadian MBS issuance has surpassed $1 trillion dollars.”

So THAT’S where all the cheap money for mortgages came from. Notice the huge ramp up starting in around 2002? Correlation and causation, and all that.

#46 Sebee on 10.02.12 at 10:59 pm

Seriously, I hope you’re joking Garth. If 30 down to 25 was equal to 0.9% rate increase can’t be handled by the market this is so out of whack building bunkers would be in order to avoid the fall out. To try and prop up this mess by rolling back is the definition on insanity.

#47 Grim Reaper/Crypt Speculator on 10.02.12 at 11:00 pm

FROM LAST POST (R.I.P)

#265 Smoking Man on 10.02.12 at 8:16 pm

#230 Grim Reaper/Crypt Speculator on 10.02.12 at 4:32 pm

Cutie grim one, cuite

But grim you sack as a Reaper, I have given you so many chance this year, The storm in Lake Ontario was close the lightning, the huge waves, I cranked floyd, and said take me bastard, You failed, I have no respect for you what so ever after that.

It was fun 8 footers over the bow.

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

Actually, me and “the BOSS” figured we’d
keep you around for a while….NETFLIX rates went up,(which pissed us off….!!!!! ) but your posts make us ROTFLMAO…

However..if “Dumb and Dumber 2” gets made….. all bets are off…..

PS : to forgive you a sporting chance we will warn you of Fembot Amazons that may try to tempt you…..

#48 Smoking Man on 10.02.12 at 11:01 pm

#22 Dorothy on 10.02.12 at 10:23 pm

well said,

“There’s no place like home”, “There’s no place like home”, “There’s no place like home”

Ruby slippers? Just asking

#49 Victor on 10.02.12 at 11:04 pm

Vancouver showing ‘clear reduction in buyer demand’, real estate board says

Vancouver’s real estate board says there have probably been “some reductions” in prices in some of its hottest markets, acknowledging the country’s most expensive city to buy a home in is now a buyer’s market.

The Real Estate Board of Greater Vancouver maintains that prices remain stable overall in its market. It says its benchmark price index is $606,100, a 0.8% drop from a year ago and a 2.3% decline over the last three months.

But there is no mistaking the steep decline in sales activity which in September was 41.6% below the 10-year average.

http://business.financialpost.com/2012/10/02/vancouver-showing-clear-reduction-in-buyer-demand-real-estate-board-says/

#50 Stupesing in Cabbagetown on 10.02.12 at 11:11 pm

#14 Keeping the Faith – the horsey set are those well-to-do types that can afford the expensive hobby of keeping horses, or having their spoiled children training and competing in show jumping. They are the jodhpur and velvet helmet people who often speak with fake British accents.

#51 Canadian Watchdog on 10.02.12 at 11:14 pm

#31 Max Torque

“Wasn’t the CMHC’s original mandate to make home ownership more accessible for first time buyers?”

Actually CMHC’s original mandate was to provide affordable homes to veterans after WWII. Fast forward fifty years and they’ve socialized the entire housing market putting the whole country at risk.

That’s what happens people ignore government agendas.

#52 Inglorious Investor on 10.02.12 at 11:18 pm

#22 Dorothy on 10.02.12 at 10:23 pm

“Not everyone bought houses they couldn’t afford.”

True, but just how many people bought homes they actually could afford depends on your definition of ‘afford.’

‘Afford’ used to mean you could pay for something in cash on demand. Then it meant you were able to save enough cash over time to pay for it in full at some specific point in the future. Then it meant you were able to put down a good chunk of money and for the rest take out an affordable loan, the servicing of which did not impair your ability to save for other things like retirement and your kids’ education. Then it meant you were just able to make a token down payment and then scavenge enough nickels to pay the carrying costs. Then it meant the bank would lend you the downpayment, the government would guarantee the bank’s risk, and you could scrape together enough nickels to pay the interest. Then it meant you could borrow the down payment, borrow to pay the interest, and borrow more when you couldn’t even pay the interest. Soon ‘afford’ will simply mean Canadians you never met will pay your mortgage for you.

Is that what you mean by ‘afford’?

#53 Click Here, its different on 10.02.12 at 11:20 pm

Yes, Halloween is coming …

But in a reversed way. Masks will be down. Pricey costumes will be returned to the mall. Role-playing will end. Fairytales will stop. People will knock doors to get out, not in. Adults will ask for treats, not kids.

The costume party last 12 years. Time to sobber up and clean the mess.

I will help to clean much as I can (friends who might get hit) but I wont pay you guys anymore bailout-booze.

Im a good guy. But Garth’s yesterdays post whitened my knuckles. Seriously.

#54 Syd Barret on 10.02.12 at 11:20 pm

Smoking Man, there’s something you can learn from Syd Barrett’s example. You remind me of the crazy diamond himself, and that isn’t a compliment.

#55 Victor on 10.02.12 at 11:21 pm

http://www.theglobeandmail.com/report-on-business/economy/growth/bc-property-prices-a-lesson-for-provinces/article4573288/

In a new provincial economic update, TD forecasts that average prices for existing homes in B.C. will decline 8.9 per cent this year. It is a steeper drop than TD’s previous June prediction for a 4.6-per-cent decrease in 2012, driven by a slowdown in Greater Vancouver’s housing market.

#56 Victor on 10.02.12 at 11:24 pm

Speaking of midtown horsies…couple of price drops on this Leaside McMansion.

http://themashcanada.blogspot.ca/2012/10/price-drop-2-30-sharron-drive-leaside.html

July =$1,589,000
August = $1,549,000
Now = $1,499,000

#57 TurnerNation on 10.02.12 at 11:26 pm

Here’s a bunko listing. 2 mill for an “investment” home just north of Junkieville, in Toronto.
You’ll never get your money out of it alive.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12449624&PidKey=-317229871

#58 Grim Reaper/Crypt Speculator on 10.02.12 at 11:31 pm

Smoking Man,..

I know you are a Shop Steward for this bunch…

http://www.youtube.com/watch?v=SESI19h4wDo

…..I don’t have my bifocals…what were the Union Dues back then?

#59 Teulon on 10.02.12 at 11:32 pm

#39 Keith

Who gives a $hit?

#60 Devore on 10.02.12 at 11:32 pm

Honestly, if a less than 1% increase in interest rates (equivalent to 30-25 year amortization reduction) means you can’t buy a house anymore, you shouldn’t be buying it in the first place. You will thank F in a couple of years.

#61 Mr Buyer on 10.02.12 at 11:39 pm

#18 Smoking Man on 10.02.12 at 10:15 pm
Honestly I just want to be loved…..
……………………………………………………..
To the persona that is Smoking man. As an olive branch I wish to tell you in all honesty that I am a very worried newly converted saver that has clearly not saved enough and understands the very limited nature of the financial benefit my current modus operendi presents me. To sum up I am a scared little whiner tapping away on my keyboard from the other side of the world and you can safely disregard my comments in their entirety. Accepting your persona at face value you are able to play in a league I am far away from and you can afford massive losses from time to time while losses of such magnitude will wipe me out many times over. Thus the elevated levels of caution. I am speaking to people much like myself that do not have 500k cash to risk in an increasingly deteriorating environment.

#62 Mithan on 10.02.12 at 11:41 pm

#21:

Joe Canadian doesn’t know about price and sales numbers yet, because most people don’t follow the news. The same trends that lead “normal people” to jump on a bubble late, are also the same ones to get out late or find out about the danger.

When the average person catches on that prices “may” fall, then it’s done.

#63 2centsCdn on 10.02.12 at 11:42 pm

#34 Smoking man.
You can’t beat the machine. So learn to profit from its moves, its easy to read.

I really like this statement. And it might just be my new “phrase of the week” on my fridge : ) I think its the secret to success to living well and doing well (in any situation). We put way too much energy, thought and bitching into trying to figure things out and make things right. Well for dozens of extremely complicated, inter-tangled, global, social and political reasons ….. that just ain’t going to happen. There is no perfect cure. Never will be.

But we stand a much better chance of success if we learn to understand and work with the craziness (not fight to fix it). Thanks Smoking Man.

#64 Canadian Watchdog on 10.02.12 at 11:42 pm

#45 Inglorious Investor

That’s all it is. Offshoring risk. Meet the woman who co-invented it. Link

#65 Mr Buyer on 10.02.12 at 11:42 pm

#52 Inglorious Investor on 10.02.12 at 11:18 pm
Is that what you mean by ‘afford’?
……………………………………………………………
Nice little bit on the dynamic nature of meaning. Well done.

#66 Mr Buyer on 10.02.12 at 11:47 pm

#22 Dorothy on 10.02.12 at 10:23 pm
Knowing how damaging to the economy (and therefore to the majority of the Public) a US housing crash would be, I’m amazed at how much many people appear to salivate at the prospect.
………………………………………………………
I am amazed at the number of people expecting otherwise

#67 Mr Buyer on 10.02.12 at 11:49 pm

#12 Rainman on 10.02.12 at 10:04 pm
Anyone not seeing what’s happening, is either an idiot or in complete denial. The Crash is coming… what I’m wondering is what the lag will be? lack of sales to actual full blown price reductions?
………………………………………………………..
Price reductions are here and now. We are just not hearing about them like we heard about rising prices.

#68 Devore on 10.02.12 at 11:53 pm

#34 crashwatch

People shouldn’t wait for prices to drop, because we never know when interest rates will be increased to stimulate the economy.

Oh, HIGHER interest rates now stimulate the economy? These clowns should pick a story and stick to it, instead of flailing about like clueless economic hacks that they are.

#69 D-dawg on 10.02.12 at 11:53 pm

‘Whereas selling prices in April and May were routinely 15% above the asking prices, today they’re 10% below (asking prices). That sure looks like a 22% price reduction to me’

Is a selling price that is below an asking price truly a reduction in price? It seems more sensible to compare selling prices to selling prices, directly rather than selling prices to selling prices by way of asking prices.

#70 White Rock Mom on 10.02.12 at 11:55 pm

Patiently Waiting – Thank you for the information once again. What percentage drop are you hoping for? I am so frustrated with listings that were purchased last year that are priced 30% higher today. How can BC Assessment get these crazy evaluations? How can local realtors justify their asking prices? If it were possible I’d move to the US. At this rate my kids will be in university by the time we can afford a nice home of our owe. I can’t complain too much because this rental is new and nice. I just worry that our landlady will put it up for sale. Our previous landlady sold our previous rental house. That was not fun and paying 50% more rent for a similar home is not fun either. That’s my rant for today.
Mom

#71 Suede on 10.02.12 at 11:55 pm

MSM only talking about sales drops being massive and record-breaking. No talk about price – not median, not average, but hint of HPI. It’s October, people will just take their homes off the market (like several cousins in the situation, contrary to reducing competitively and selling) in November and try to re-list “in the spring” for a turn around.

Bone for Tuna

I don’t understand the mentality on here that people salivate for home prices to go down either. It will be a tough economy if prices are down: people won’t spend, they’ll feel poorer and just buckle up to be safe. That just goes to show that people are still brainwashed that owning a house is the only true success in life.

Rent a mansion for a month and entertain your friends, then tell them you went broke in a market correction after the month is up. Makes for great stories.

Fake it till you make it

#72 Devore on 10.03.12 at 12:00 am

#22 Dorothy

Not everyone bought houses they couldn’t afford. And not everyone is swimming in debt.

Good, then they’ll be fine!

Every single one of your posts is bleating about the same thing. Something to do with wishing or something inconsequential like that? Seriously, just move on already.

#73 Cory on 10.03.12 at 12:00 am

Garth
It almost sounds as if you have been hearing that the new changes are in question and will be “rolled”back to 30yr etc…? You don’t sound as confident that housing will correct as it should. So if I’m reading correctly, this major lobbying effort to revert back to taxpayer support of this fraudulent real estate business in this country called Canada, could very well have some steam behind it???

Do you really think this government would waffle like that when more and more Canada is under the international microscope for an inflated real estate market..?? And higher household debt levels than the US when it crashed…..

#74 Off-Gridder on 10.03.12 at 12:02 am

#22 Dorothy: perhaps it won’t be too long until your first statement turns out to be correct…

#75 THE CELIAC HUSBAND on 10.03.12 at 12:05 am

Time to buy. If you want to try Europe…..

Guess the correct price on this 2500 sqft town house with a 1000 sqft retail space. Dinner on me if you are right.
80% renovated, needed a kitchen ( done), some modifications to satisfy OH’s north american sanitary requirements.

Located in a town about the size of Cochrane, AB

http://theceliachusband.blogspot.fr/2012/03/la-maison.html

#76 City that smells like it sounds on 10.03.12 at 12:05 am

Penny on 10.02.12 at 10:50 pm

Do you think prices in Regina and Saskatoon will take longer to tumble than in other cities? Lots of people say it’s different here, and if you try to say otherwise, they get bitchy and snappy.
——————————————————

I get the same thing Penny, and yet Garth refuses to comment and give his take on Regina. I’ve been asking for months now.

#77 Fleabitten Monkey on 10.03.12 at 12:07 am

Was Carol Crabb misquoted on her “stimulus” statement or is she such a wooden head she doesn’t understand how monetary policy works? I think she’s probably just a plank.

#78 TRT on 10.03.12 at 12:10 am

In Reality,

Today was the biggest sales day by far for Vancouver. If the last 2 days are a trend, then huge bounce back. This month is critical to see which way she goes..

Also, properties sold on average at 96% of list in Sept.. This from actual sold listings (not anecdotal).

#79 Paully on 10.03.12 at 12:13 am

#16 Ralph Cramdown

“FYI, Audi is the new Volvo in midtown.”

Audi is an acronym for: “A**hole Usually Drives It”

#80 Tim on 10.03.12 at 12:14 am

With these prices you say it’s a buyer’s market in Vancouver?

#81 TRT on 10.03.12 at 12:17 am

#17 DJIM

Bingo!

But only makes sense to buy at a trough if you’re timing it. I’ll probably buy at the next trough for each of my kids so each gets a mostly paid off house when they eventually enter the workforce. Hoping inflation will do wonders over the next 20 years or so..

#82 Crash Calaway on 10.03.12 at 12:18 am

You heartless people!
How can you just stand by and watch a realtor go hungry.
Couldn’t you selfish pigs work 30 more hours a week to buy that house… Come on let’s all pull together and send a realtor to Disneyland.

#83 EIT on 10.03.12 at 12:20 am

BOW DOWN BEFORE YOUR ELFIN GOD!!!!!!!!

#84 new-era on 10.03.12 at 12:21 am

Oh golly gee, F has been warning Tight Ass virgins about debt and possibility of rising interest for over a year and a half.

And all these guys did was laugh and flipped the bird at him. He’s the finance ministry and can make things happen. And so he did. You been warn Real estate agents and property virgins. Now its happening, too bad so sad
Its time for Buffy the slayer to drive a stake into the property zombies and blood sucking vampire agents

#85 Telecon on 10.03.12 at 12:28 am

#30 smoking man

The act of purchasing a home does not create wealth, it is in fact a consumption of wealth..a consumer good. Absent the purchase of the house, the scarce resources used in the building or purchase of said house could have been made available for more productive uses. Given the historic building boom this country has experienced over the last decade, partially a result of government policies that have diverted an inordinate amount of scarce capital towards residential real estate, any further inflating of this bubble will have a much more devastating impact on future job and income generation than horny property virgins getting cold feet.

#86 Vangrrl on 10.03.12 at 12:36 am

#22 Dorothy:
What was that all about? You talk as if the ‘poor folks’ who didn’t buy houses they couldn’t afford and who aren’t in debt, are separate from the bloggers. We ARE those people. Why would we be gleefully awaiting a deflationary period? It would affect all of us.

#87 Nostradamus Le Mad Vlad on 10.03.12 at 12:39 am


“. . . at least until it can be coordinated with the Bank of Canada’s first rate hike in 2013. Higher borrowing costs – even a half point more – will have the same net effect as reversing some of the rule changes, and allow the elfin deity finance minister to walk tall among men.”

Sounds so organized, so ordered. As if it was all pre-planned a few years ago. No, it can’t be. Well it can if a few unknowns are thrown in for good measure! Life is way too unpredictable to organize.
*
Banking on War “On 3-19 (sum of numbers equals 13), 2003 at 9:31 (sum of numbers equals 13) PM EST in the 3rd week of the 3rd month of the 3rd year of the new millennium, the Illuminati oil mafia attacked Iraq under the banner of Operation Iraqi Freedom.”; Staggering Sheeple “There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt.” John Adams, 1826; Oblastit “Obama Didn’t Save the Auto Industry: He Took Away 2,200 Dealerships and 120,000 Jobs”; Iceland’s Economy It pays to jail crooked banxters; Which headline is true? Youth Rage Against The Machine; Selling Your Home? (Cdn.); China’s Pension black hole; Without money, we’d all be rich; Housing Comeback Ummm, not so much, and Rosenberg Another bubble; Iran and Hyperinflation Good time for China to start a new gold-backed currency; Wall St. loves Obomba; 2:18 clip Diesel prices up; Aggressive silver play; Eight Families’ rigged oil game; Rich Pensioners Nothing like having a good family row to clear the air.
*
Comprehensive List of GMO products; Japan Why are their elite rushing to move to Myanmar? Steve Irwin, The Croc Hunter’s son Robert, following in Dad’s footsteps; No heart, no problem; Bolsheviks advocate death panels; Pigs Get Slaughtered? Not necessarily. Depends on whom the pig was; Old Geezers a.k.a. Boomers. We don’t die, we just fade away; Inside Job by bank manager; The Parsnip Tree Don’t humans grow in caskets? Turning Seawater into jet biofuel; Assange – Mossad ties revealed; Stinkfoot or bad breath; Top Five Regrets of the Dying.
*
disciple — 3:17 clip In the lower psychic regions only, the Spiritual Law of Polarity exists, where nothing can exist, except in relation to its opposite. E.G., heaven / hell, good / evil, male / female, war / peace, peaks / valleys etc.. In the higher spiritual regions, there is no polarity, as there is no creation, and this.

#88 Bobby on 10.03.12 at 12:41 am

Here in Victoria there are now over 5000 listings. Last month there were 400 sales leaving over 12 months of inventory. Yeah, I’d say the market is tanking and it would be wise to wait for further price drops.

But no…….the head of VREB says it will be foolish to wait as the government may raise interest rates to stimulate the economy. You can’t make this stuff up.

Using their logic we can only hope for double digit interest rates. Just imagine how the economy would be humming.

#89 Alberta Ed on 10.03.12 at 1:03 am

Hope springs eternal… at least here in pacific Sidney-by-the-Sea (home of the newly wed and nearly dead), where a new five-plex with units about the size of a Texas doghouse is being flogged at $549k per. One already has a SOLD sign in the window, tho’ I suspect that’s bogus. No view, on a busy street, at or below the tsunami line. It will be interesting to see if they sell, or if they’ll go up for rent.

#90 TimV on 10.03.12 at 2:08 am

#30 Smoking Man: double-check what your insurance company told you. My understanding is that a 3 day administrative license suspension should not affect your insurance rates. But don’t do it, anyways. Insurance rates should be the last consideration.

#91 Phil Indablanque on 10.03.12 at 2:12 am

#14 Keeping the Faith,

Here is an example of the horsey set

#92 Blacksheep on 10.03.12 at 2:18 am

Smok’in man,

How abowt thows Sept MSM reel istate #s !

Wow…ate posts alraedy, bee cairfull or yur gonna hav a nervice breack doun.
I understnad whi yor frustriated, aphter al that,
“I now evrything, I’m nevr rong.”
Yor sow upcet, yer speling corektli.

Hear, this weel help yuo relacks,

http://www.youtube.com/watch?v=tbZDjnWtK1A

Y’m hear phor yoo bruther.

PS: the rubi slipers wear orignaly, silver.

take care
Blacksheep

#93 TRT on 10.03.12 at 2:21 am

Fraser valley still going strong.. Highest prices ever for a detached house (whether you look at average, median, HLS index).

Numbers don’t lie.

http://www.fvreb.bc.ca/statistics/Package%20201209.pdf

#94 Walter White on 10.03.12 at 2:42 am

Garth,

I love what you’ve been doing the past few years. I hope you don’t let up as the Ponzi comes tumbling down! The speculators and boomers must realize that there’s no free lunch and everyone pays sooner or later.

Real estate, with it’s huge amount of leverage is the great equalizer once prices head south.

I have a lot of clients that are feeling pretty smug about they’re real estate assets that they’ve owned out of sheer dumb luck, for the past several years but they are now realizing they don’t have enough in they’re investment accounts to cover the overspending.

My predictions are that the boomers are going to be crying at our doorstep in around 5-10 years.

Our lease is coming up at the end of the month and it’s amazing at the number of suites that are for rent here in VAN that were previously listed for sale but couldn’t sell. Just Google the address.

Seriously, there is a huge wave of accidental landlords coming to market that have no clue what they are doing which suggests a a big wave of rentals beginning to show up on Craigslist.

The play is unfolding as predicted! Good job!

Walter

#95 Nubbers on 10.03.12 at 2:58 am

Dorothy @22,

I have to disagree. Its great that house prices are going to crash, especially for all those who would like to settle down with a places of their own, but have watched their tax dollars push house prices into dangerous territory.

The shame is that house prices were allowed to rise so far in the first place, and that many of young and naive will have been tricked into destroying that part of their young lives where they should have been building careers and producing the next generation.

There is already enough of a demographic time bomb without the effects of the current house price bubble. Lets hope that house prices crash fast so that everyone can get on with their lives and not live with a Japanese style lost 2 decades. Obviously that excludes the beguiled, but they’re doomed anyway, regardless of how long it takes.

#96 dan on 10.03.12 at 3:00 am

Garth ,
what do you think JT’s chances are of moving back into 24 sussex dr?

#97 JOJO on 10.03.12 at 3:57 am

Of course that finaly is comming correction on RE market, just REMINDER I was very bullish in Jan/2009 when avg. price was $310k in GTA and all of you blogers had very scarry predictions. Now look at the prices in Toronto, Oakville etc! Avg. price over $ 510 k?

#98 Dividend Yield Investor on 10.03.12 at 4:34 am

#17 DJIM on 10.02.12 at 10:13 pm
The biggest advantage of owning is that once the mortgage is paid off, the pain ends. So why would anyone sign up for a 30 or even 40 year mortgage? Who would want a lifetime of pain?

Bingo! Dead center hit! Right on the money!

It has been of my opinion that if you cannot afford to purchase a house with a 15 year mortgage then continue renting.

Don’t become a debt slave!

Dividend Man!
Atlanta GA

#99 Picasso on 10.03.12 at 4:52 am

Cost of Living Comparison Between United States and Canada

http://www.numbeo.com/cost-of-living/compare_countries_result.jsp?country1=United+States&country2=Canada

#100 Teresa on 10.03.12 at 5:06 am

From: http://www.theglobeandmail.com/report-on-business/economy/housing/tighter-mortgage-rules-start-to-take-toll-on-high-end-homes/article4583509/

“It’s a short-term lull in the market,” Mr. Muir said.

It’s only a flesh wound! LMAO!

Yes, it is only a flesh wound before the real assault begins.

#101 John on 10.03.12 at 5:14 am

“The real estate cartel knows how bad things really are, and that diddled stats won’t hide the truth. It’s blaming Ottawa. This goes to yesterday’s post about the role of government in the housing business, free markets, interventionist rules and the manipulation of public opinion.”

The retail cartel and the government? Then you went on to talk about “The Bank of Canada”?

You’re busted.

Would you dare to pull out the “doomer” or “conspiracy” card now?

You write well…your technical analysis is instructive and detailed, you’re a good guy obviously…and funny. Clever.

But the “correction” is on. And amidst the confusion, there will be poor information and ( unbelievably) masses of people who don’t know what is going on.

Your post today inspired a “glance” feel as the relevance is dropping fast. The situation seems to be unfolding and you’re still talking about the “real estate cartel”, Ottawa and The Bank of Canada.

No way.

#102 Buy? Curious? on 10.03.12 at 6:20 am

Holy Cow! Smoking Man has posted 7 times already and it’s only 6am. Dude, you diluting your pragerised brand. How many times can you call people stupid, yap on and on about interest rate, and make obscure references to the travel of those living out by Pickering? Ok, we get that you have lots of cash, you drink, gamble and masturbate but it’s time to take a break. Can you limit the posting to one? Then spend the rest of your time making Mrs Smoking Woman feel loved.

Now on to something related to today’s topic, when we hear about the “30%” drops in home prices, does that mean from compareables from the peak? If someone bought in 2003, and sold now but still made over a 75% return, minus closing costs, did they still make more money then those ReIT’s returns during that same period? All the people in my age group haven’t sold their homes or lost anything. When they hit retirement will they not have weathered this cycle downturn and sell for a huge profit?

Smoking Man, please don’t comment on my post.

#103 KG on 10.03.12 at 6:35 am

“Whereas selling prices in April and May were routinely 15% above the asking prices, today they’re 10% below. That sure looks like a 22% price reduction to me.”

I hope you are right, but it is not currently 22% reduction if the asking price today are based of 15% higher to begin with. I am talking about GTA. But I can see the 22% reduction coming.

A house with a $1.5 million asking that traded for $1.72 million in April and now trades for $1.3 million is worth 22% less. — Garth

#104 COW MAN on 10.03.12 at 6:37 am

Amigos:

So when Harper and his Elfin Finance Minister killed Income Trusts, do you think there was a big lobby trying to change their minds on breaking their pre-election promise, not to touch Income Trusts? If they didn’t back down against that pressure then, why would they back down on keeping a promise to curb debt accumulation?

#105 dd on 10.03.12 at 7:06 am

#93 TRT on 10.03.12 at 2:21 am
Fraser valley still going strong..

No there not. Did u just read the statement and ignore the numbers?

#106 mark on 10.03.12 at 7:25 am

Maybe Global will ask you on this time, Garth!

#107 T.O. Bubble Boy on 10.03.12 at 7:34 am

@ #79 Paully on 10.03.12 at 12:13 am
#16 Ralph Cramdown

“FYI, Audi is the new Volvo in midtown.”

Audi is an acronym for: “A**hole Usually Drives It”
———-

You need to update the references… D-bags in Audis is more of an 80’s thing. Audi and Mercedes are now the HAM chariots of North Toronto. Look for a whole bunch of Audis on kijiji when the HAM gets out of speculating on Toronto SFHs and the $ heads back to the mainland.

#108 Victor on 10.03.12 at 8:00 am

Home sales in Vancouver fell 32.5% last month. Royal LePage predicts softening prices across Canada. Do you think there will be a correction in the housing market?

https://www.facebook.com/BNNTV/posts/10151444377868206

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

Those of you with facebook accounts could help answer BNN’s question.

#109 Bigrider on 10.03.12 at 8:07 am

Garth today- ” nobody should be buying yet”

You shouldn’t have said that. To say that
implys that the time is near and the house horny freaks on this blog will get the message that they need to get ready to pounce.

Don’t even think of looking at RE in the GTA until at least 2016- 2018 when prices will be troughing 30-40% off current prices.

#110 Pr on 10.03.12 at 8:13 am

The industry says F’s goring… borrowing regs.. was extreme. Overkill.

Where where they (The industry ), in the first place , in 2007, when F introduces: 0 cash down and 40 years amortization! They saw a new GIANT pool of buyers. So, ZIP, not a word, not a sound, they saw the opportunity to make….Money! HYPOCRITES.

#111 TurnerNation on 10.03.12 at 8:20 am

land transfer tax ($55,000)!

That will pay over 4 years of rent for me.
See, buying a house now is throwing your money away!
Added to the mortgage, over 25 years, the 55k will turn into 100k.

#112 Grantmi on 10.03.12 at 8:23 am

More like – TIME2CRY

#113 TurnerNation on 10.03.12 at 8:25 am

Still no hikes elsewhere…

Poland Unexpectedly Holds Rates Even as Expansion
Poland’s central bank unexpectedly left borrowing costs unchanged, rejecting calls to undo the European Union’s only interest-rate increase this year even after the economy expanded at the slowest pace since 2009.

#114 █ ♣ █ My House Pofit is MINE - My House Loss is OURS on 10.03.12 at 8:31 am

So what you Garth is prepping us to accept is:

– Interest goes up .25 or .50 early next 2013
– Rock-Star Ultra brutal lobbyists in full assault
– 30 or even 50 Yr mortgage is back again
– CMHS Cartel starts to insure everything
– 3-5 Million Depend boomers are retiring in next 4 years
-selling mega $$ houses for profit
-and current 1 Trillion in Mortgages swells to 2 Trillion

and that is OK with all of us here?

You have to explain Ottawa that there is always more poor people than rich, and collapse of society is easier than building one..

#115 Julia on 10.03.12 at 8:38 am

#52 Inglorious Investor on 10.02.12 at 11:18 pm
Is that what you mean by ‘afford’?
……………………………………………………………
Well said!

#116 Smoking Man on 10.03.12 at 8:38 am

#102 Buy? Curious?

You count my posts?

That’s creepy

#117 2centsCdn on 10.03.12 at 8:41 am

#78 TRT
That’s the spirit! You’re kidding right? A 2 day trend in real estate??? Too funny. OK folks the crash is over …. we had 2 ok sales days (in a row!!!) time to come out and buy again ….. paleeze! And sold for 96% or what? ….. a 20% reduction from 6 months ago prices. And why is this a critical month? Please don’t try to trick some poor house virgins into buying something now with that sack of crap reasoning.

#118 Toronto_CA on 10.03.12 at 8:59 am

Garth, any predictions on when the CMHC and Genworth lending caps will be reached and what affect that will have on the RE market? Think it was around 580bil at Q2?

#119 housedoc on 10.03.12 at 9:03 am

I will offer my seat to Smoking Man in Toronto if someone will promise to punch him in the mouth.

#120 Editor on 10.03.12 at 9:06 am

#52 Soon ‘afford’ will simply mean Canadians you never met will pay your mortgage for you.

You nailed it. And if this means Canadians that maxed-out buyers never met have to pay through higher taxes, those other Canadians are going to be most resentful. There are social costs as well as financial costs in cleaning up this mess.

#121 Smoking Man on 10.03.12 at 9:28 am

#119 housedoc

The wit-less always resort to violence.
Come and debate me like a man.

Wos

#122 so it begins... on 10.03.12 at 9:35 am

GTA numbers out sales down about 20% y/y
Active Listings up 15%

What i found interesting was Detached Homes that sold for a million dollars or more was only down by 12 sales (homes), however, homes under a million was down by 800 sales. I thought the new rules would have more of an effect for homes over a million $.

#123 Subversive on 10.03.12 at 9:38 am

@22 Dorothy

I’m not sure about blaming bloggers in general, but the amount of vindictive glee at other peoples’ potential misery in the comments section of this blog certainly is disconcerting.

#124 Francis on 10.03.12 at 9:39 am

2000 years ago there was a person who spoke the truth to the crowds. Most did not believe Him.

#125 Editor on 10.03.12 at 9:45 am

#99 Cost of Living Comparison Between United States and Canada

Housing, food, clothes, eating out – yes, it’s more expensive in Canada (relative to Canadian and US location). But this chart does not include the cost of health care, both insurance premiums and out of pocket. This remains a major difference between living in the 2 countries. Canadians may pay somewhat (not excessively) higher taxes but access to health care is guaranteed. A lot of Americans would – regardless of the loud minority of Tea Party folks – pay somewhat higher taxes as well in order to have guaranteed access to health care and reduce the terrible insecurity and ever-present risk that comes with life in a private medical system. SO yes, burgers and rentals are cheaper there. Good place to be a grad student or starting out in life. But it costs a whole lot more to do anything from have a baby to have cancer, and only some of that’s predictable. It’s not an apples-to-apples comparison.

#126 Just(not)AnotherSheeple on 10.03.12 at 9:52 am

Re: #78 TRT
====================================
In Reality,
Today was the biggest sales day by far for Vancouver. If the last 2 days are a trend, then huge bounce back. This month is critical to see which way she goes..
Also, properties sold on average at 96% of list in Sept.. This from actual sold listings (not anecdotal).
====================================

The inquiring minds should ask why.

Perhaps the reason why is that the speckers / flippers (many of them RE agents ) saw the dismal numbers for Sep. and have decided to front-run the sheeple and SELL NOW when there are still un/misinformed greater fools around.

SELL NOW (without profit or for a small loss) will be preferable than waiting until Spring 2013 when the whole herd will be looking for the exit – and there will be bloodbath and I am willing to bet it will stay in the history RE books as the “Spring of 2013”.

===
BTW thanks for the FVREB report – just question – did you read it – very interesting stats on page 6 where they provide the long term trend – hardly any appreciation anywhere since 2007 for the towns and the apartments and the detached houses will follow soon (especially when the only driver for the higher averages drops below $1M)

===
BTW – buy soon for your kids or there wont be any houses left for sale if the trend continues…

#127 Editor on 10.03.12 at 9:52 am

#102 I think. All the people in my age group haven’t sold their homes or lost anything. When they hit retirement will they not have weathered this cycle downturn and sell for a huge profit?

— Maybe yes, and maybe no. It depends on whether they paid down their mortgages and used the savings to invest in liquid assets to build up a nest egg apart from home equity. If they spent the rest and borrowed against equity to spend some more, they are ‘banking’ on cashing out their home to pay for … what? The debt they’ve carried into retirement? Home equity works as sort of a rollover for the next home, whether a condo, a retirement home, etc., staying in the same market. Otherwise, profits can still diminish over time as all markets, housing and equities, tend to return to the mean (average). This is why one’s house needs to be only a certain percentage of one’s assets, maybe a third or less. In the US, independent housing experts already analyzed the long-term effect of demographics on the housing market. Bottom line: It ain’t going back up for a long, long time.

#128 Buy? Curious? on 10.03.12 at 9:53 am

Smoking Man is at 9 posts today and it’s not yet 10am!

Go Smokey, Go Smokey, go!

Bestow us with more wisdom. Tell us again how the world works. Or better yet, tell us how you manage to get a seat on the GO train on your way home to Oshawa before anyone else. Make sure you misspell every other word too. That cracks me up. “Befoe I git on trak 5, I stop at the Baskin Robbins. Oh, I dont by a cone like other suckers. No, I git the looser who’s working their way threw university to give me all 31 samples! Smoking Man, Winning again.”

#129 Just(not)AnotherSheeple on 10.03.12 at 9:56 am

re #78 TRT

The other reason is perhaps the expiration/near expiration of the many 30-years pre-approved mortgages.

#130 so it begins... on 10.03.12 at 10:01 am

also the sales figure of 5879 is equal to 2002

#131 Daisy Mae on 10.03.12 at 10:05 am

#22 Dorothy: “We should be feeling sorry for such folk and railing at our Government for allowing such a situation to happen…”

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

…and big business for their greed, curruption and mismanagement. Investors around the world have lost TRILLIONS in this downturn. Through no fault of their own. No one is being bailed out. Everyone has been affected — not just the ‘newbies’. We ALL suffer. Every single one of us.

#132 Daisy Mae on 10.03.12 at 10:08 am

Yes, I know…..’corruption’.

#133 Daisy Mae on 10.03.12 at 10:17 am

#40 Penny: “Lots of people say it’s different here, and if you try to say otherwise, they get bitchy and snappy.”

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

I guess ’cause they know you’re right…..

#134 crashing yuppy on 10.03.12 at 10:24 am

Garth,

Why do you let that buffooon Smoking Man post on your site? He adds absolutely nothing and is an annoyance.

I pity a person who has nothing better to do than that.

#135 Mixed Bag on 10.03.12 at 10:29 am

“Meanwhile some changes are probably forever, like CMHC’s decision to no longer insure financing on homes selling for $1 million or more.”

Of all the mortgage-related changes that were made, this one is the most logical, obvious even. Even in a boom market, this one needed to be made. The government did something right, who’d have thought? (Although one can argue that the ceiling could have been lowered).

#136 Daisy Mae on 10.03.12 at 10:32 am

#60 Devore: “You will thank F in a couple of years.”

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

Thank him for what, exactly — undoing the damage he’s caused?

#137 Red on 10.03.12 at 10:33 am

#22 Dororthy

No one, owner or renter, will escape a deflationary period so I don’t see what you’re cowing about. People with a lot of debt will feel it more than people who have planned for potential changes in their financial futures – simple as that.

Schadenfreude is fun and all but I DO worry about friends who have recently purchased homes and cars and started families and find money tight right now. However I won’t appologize for not feeling sorry for those who pigged out on cheap debt like a bulimic on a binge while I saved and didn’t take on debt I couldn’t hope to repay, nor do I feel a responsability to bail them out (or to have ever even aided them to accumulate so much debt in the first place, especially via a government backed institution).

As for your assertion that “most of what I hear is pure venom borne out of jealousy of those who have been able to find a way to buy that which others can only covet.” That’s a lovely myth and I hope you tell yourself that story every night. A number of people here don’t covet your or anyone else’s home and we’re certainly not jealous. What we want is to stop hearing about how we’re “so jealous because you’re so successful because you “bought” a home”. We want our government to stop guaranteeing crap mortgages and to not be on the hook so our idiot friends & family can purchase something they think they’re entitled to, think that everyone is jealous of them for having, and can’t afford without a great deal of “intervention”.
Also I find your choice of language interesting in that “been able to find a way to buy” suggests it’s not that they could afford it but rather they figured out they could get a cash back mortgage or other creative financing (be it bank financing or deciding to stop contributing to retirement/savings funds) to complete a purchase. Anyone with pulse could get a mortgage in Canada over the past few years, it’s not like current owners are some financial gurus who figured out the magical secret. If someone (like myself) doesn’t own a home right now, it’s more than likely they don’t want to and not that they can’t. I have actual real money saved, but why throw it out the door competing for a home that some other person is going to use “funny money” (ie a massive mortgage) to buy. I won’t indebt myself in the same manner that others are so eager to, so I’m taking my toys and going home… maybe I’ll come out and play again in a few years.

#138 TRT on 10.03.12 at 10:41 am

Garth, you’ve inadvertently given false hope to many people on this blog. — people are expecting 50-70 % drops in Vancouver.

Where did I say that? — Garth

#139 Realtors and bankers in an all out panic on 10.03.12 at 10:42 am

Alot of worried out of work realtors on garths blog like TNT and smokingman who are seeing the housing crash first hand. Realtors posting on this blog is proof the market is crashing since they wouldn’t be here if times were good but the fact is sales have CRASH and CRASHED HARD!!! and now prices are following. It’s going to be a nasty crash realtors a nasty crash.

#140 refinow on 10.03.12 at 10:53 am

With the massive # of condo’s yet to close, but already have sold contracts CMHC has likely issued commitments to insure that exceeds their allowable cap.

This is likely the catalyst that will tear the roof off of the cdn housing market.

Our government is in a lose-lose situation with CMHC… Raise the ceiling and they know they are blowing more air into this housing bubble, don’t raise the ceiling…then they are stomping on the bubble with football cleats.

Either way is not a viable solution….

My next prediction is CMHC will limit 5% Down to only First Time homebuyers…. Existing homeowners will need 10% minimum down to buy their next home.

Watch…

#141 };-) aka D.A. on 10.03.12 at 11:12 am

#19Lotusman on 10.02.12 at 10:16 pm
It’s amazing that there were over 1500 Greater Fools in Vancouver last month!

Sarcasm… LOL I get it… yes sarcasm. Right?

#22Dorothy on 10.02.12 at 10:23 pm
…most of what I hear is pure venom borne out of jealousy of those who have been able to find a way to buy that which others can only covet. Most of the bloggers on here are praying those poor folks WILL have to sell at record low prices merely so that they (the bloggers) can swoop in and vultch the houses all up!! Its disgusting!!!!!

We’re not in Kansas anymore Dorothy.

#29Realtors and bankers in an all out panic on 10.02.12 at 10:29 pm
CHMC is the ONLY reason why prices are where they are today. Funny how CHMC no longer insures financing on homes selling for $1 million or more and very little is selling for over $1 million. CHMC shouldn’t be insuring any RE over $400K and then lets see how strong the market is in reality. Realtor scum hate the free and open markets since they know the RE market is nothing but a government backed ponzi scheme.

First, in Kelowna where the statistics are not likely to be so much different than anywhere else in Canada, 30.9% of homes are bought with “all cash” and 52.5% with a conventional mortgage where the buyer has put down 20% or more in cash. That’s 83.4% of the market who needed no CMHC backed financing.

Second, almost 70% of all sales, in Kelowna where prices have a reputation for being on the high side, were for homes under $400,000.

So… if you extrapolate the above statistics I believe you will understand your proposal would have no significant impact on the market as only a very, very few such buyers exist who would be seeking such CMHC backed mortgage financing on a home over $400,000in the first place. There are not nearly so many high ratio mortgages on properties of $1,000,000 or more as you seem to think, not even so many as you think over the $500,000 price range. The need for high ratio mortgage financing decreases at an exponential rate beyond $400,000.

Those your proposal would hurt most are but a very, very a small part of the market but those most in need – those in that $400 – $500 K market which puts them squarely in that middle class that seems to get repetitively screwed over and over again. “Diddled” as Garth says.

#32 Realtors and bankers in an all out panic on 10.02.12 at 10:33 pm
Dorothy #21

You know what is disgusting? CHMC and taxpayers money used to back a ponzi scheme. CHMC is anti-free market and that is disgusting.

Man it`s getting dark in here again. Need I shed some more light on the topic? Of course not. Best leave the ignorant to their own devices… or lack there-of. People hear what they want to hear and believe what they want to believe. Oh and on that note, I find Garths statistical manipulation not at all less contrived than that which he accuses others of so doing.

#274Form Man on 10.02.12 at 9:01 pm
#259 western infant

the NDP have never formed a Federal government in Canada, and the Liberals have been out of power for 6 years now. Harper has presided over the fastest rise in deficit, debt, and growth of the civil service ever. Does this make him the greatest socialist of all ?

#142 tkid on 10.03.12 at 11:15 am

Dorothy,

I’m looking forward to the real estate market regaining some sanity. Greed is the current watchword of that bunch, and no, I don’t feel sympathetic towards them. 95% of Canadians should have kept themselves up to date on the news and trends going on outside the country, and got themselves out of debt with some savings on the side.

Instead, Canadians have used the last 5 years to gorge themselves on debt, forget about the savings. I remember your comments about you and your husband relying on CPP and OAS when you hit retirement. Many disregard all arguments for saving an extra $10 a week for 10 years so they can replace OAS if OAS is discontinued.

Emergency funds are for suckers. We never had any money left over to save for our retirement. We are entitled to have the government pay us to retire. We want a house no matter what. These are the mantras of the fiscal nimrods.

And I don’t feel much sympathy for any of them, especially not when I can see what is coming after the next election, and not when I worked hard for my money and did without so I would have savings set aside for my times of need.

#143 Smoking Man on 10.03.12 at 11:19 am

#134 crashing yuppy

And your post added what?

I will translate for all the proud home owners on this blog.

Wa wa wa. All my freinds bought houses, wa wa,
They made money, I was to afraid. I’m smarter than them. Wa wa wa . They make me feel worthless. Wa wa.

Now its my time to shine a crash is coming. Who is the losser SM.he can’t spell wrecking the bubble head happy dance. Go away SM you losser. Some one should punch you in the mouth.

Ah a typical bubble head

#144 bill on 10.03.12 at 11:22 am

#50 Stupesing in Cabbagetown on 10.02.12 at 11:11 pm
that was a fair description,I thought.there is a variation on the theme out here in the west, where certain affluent types pretend they are cowboys.
adds colour to the scene I suppose.

#145 };-) aka D.A. on 10.03.12 at 11:28 am

#286tonysilverdick on 10.02.12 at 10:49 pm
Nothing is tanking. — Garth

now come on there Garth housing is

So you think “housing is tanking”? While I have no crystal ball which unequivocally tells me otherwise what I can tell you is; it has been my experience that, and can provide local examples (Kelowna) supporting it, the cost of housing has roughly doubled over the course of each successive 10 year period since 1971. The cost of housing since 1971 certainly did not follow a straight line upward trend but on average it, despite the peaks and valleys on the way, has been my experience that it has roughly doubled every ten years.

What we are experiencing right now is a valley in the undulations of that upward trajectory just as five years ago was a peak in that roughly ten year cycle – both admittedly more significant than those prior but mere moderating peaks and valleys in an overall upward trajectory none-the-less.

So what does that mean? Does it mean that five years from now, based on those historical trends, we can expect another peak followed by yet another valley 5 years thereafter? I really don’t know the answer to that, as I mentioned I have no crystal ball, but based on that fairly consistent historical track record I’d be willing to bet more on the presumption that buoyant times are closer at hand than worse.

The U.S. is already showing significant signs of recovery. No, they are not out of the woods quite yet nor are they beating their chests in a display of such victory but they are smiling a lot more and talking more optimistically about the future – both of which do an economy good.

Canada tends to follow our neighbours to the south with a one to two year lag. I can’t say for sure but my money is on better times closer at hand than worse. If the U.S. economy continues to strengthen we will ride their coat tails to prosperity without ever mimicking their failures. My broker has brought a U.S. Housing Recovery Fund to my attention which I suspect might prove to be a lucrative investment. So yes, I intend to put my money where my mouth is – although I did not any more than suggest what I think MAY be most probable but not inevitable. Your mileage, of course, may differ.

#146 DM in C on 10.03.12 at 11:35 am

Calgary Herald reports that prices have increased 6.5% here. Because ‘it’s different’. :-)

” “Despite recent changes to mortgage lending rules, we saw a variety of buyers, including first-time home buyers, enter the market.”

http://www.calgaryherald.com/homes/Calgary+house+prices+rise/7336665/story.html#ixzz28FbRe665

#147 robert on 10.03.12 at 11:41 am

Credit scoring a loan application has changed significantly as it is obvious that the Banks have noted the risk in the RE market (65% LTVR). What was once viewed as an asset will now be viewed as a liability. Questions like when did you buy your home,how much was your downpayment on the purchase, was it a cashback mortgage will become the norm and a clear indication that your home is now being viewed as a liabilty not an asset. IMO the zero to ten percenters down will find the process of opening new credit much more difficult today and nearly impossible in 2013. Its all about the DEBT side of the ledger.
Static numbers donot lie. Buy a home at 500k with 5% down. With CMHC fees and Property Transfer Taxes you are left holding a $496,000 mortgage. You wake up three years later to a 15% correction and suddenly your home is worth $425,000. Simple math says that you are $71,000 underwater that is until you try to unwind the house. A sale at 425k will have some obvious costs attached to it like 15k realtor fees and 20k penalty to the bank for prepayment. Hmmm not so simple still owe a total of 15k consumer debt which was used to landscape and fence the new home. oh yes and still owe 6k for the hottub on the back deck. This reality is just now starting to touch many Canadian households. All this pain for a 15% correction? Try 30% or 40%!!!!

#148 joe on 10.03.12 at 11:48 am

#33 Seebe- OK, time to spin this HPI crap our way. Hey, RE associations, since your little HPI is showing only a low single digit decreases, or usually less than 1% decrease (0.8% anyone?) Stop whining like little sissies. After all, such small decreases, that’s just healthy for a balanced market. HPI decreases so small, why so much fear? Your response RE associations is hardly proportional if that HPI is accurate.

Wow you put my thoughts into words haha, so true.

#149 KommyKim on 10.03.12 at 11:55 am

Re: #22 Dorothy on 10.02.12 at 10:23 pm

I agree. If prices crash more than a 3rd, the suckers who put 30% down could get hurt a lot more than those that went in with 5%. The 5%rs will declare bankruptcy and walk away from the house and all their other debts. The responsible 30%rs will have lost a ton of cash.

Re: #32 Realtors and bankers in an all out panic on 10.02.12 at 10:33 pm

You forgot to add, “It’s going to a nasty crash realtors, a nasty crash!” LOL

#150 JD on 10.03.12 at 11:56 am

Reading the book “Quiet: The Power of Introverts in a World That Can’t Stop Talking”–about how the financial crisis in 2008-9 was created by a decade of traders, bankers, and advisors with out of control emotions–they thought things could only keep going up and made riskier and riskier bets to keep the bucks rolling in. Then, the whole house of cards fell. Sounds a lot like Canadian Real Estate, except the shaking has just begun.

#151 Editor on 10.03.12 at 12:08 pm

#122 Detached Homes that sold for a million dollars or more was only down by 12 sales (homes), however, homes under a million was down by 800 sales

> Could be the changes more strongly affected first-time buyers ? Time will tell.

#152 Babblemaster on 10.03.12 at 12:17 pm

#52 Soon ‘afford’ will simply mean Canadians you never met will pay your mortgage for you.

Excellent post!

Unfortunately, it will surely come to pass that, one way or another, responsible Canadians will indeed be paying for those irresponsible Canadians that swallowed the RE kool aid. We will be told by our glorious leaders that doing so is in the best interests of everyone. That’s exactly what happened in the US. Sure, there will be discussions in the MSM and people will talk about the slippery slope, etc., but it’ll all be irrelevant noise and have no impact on the bailout. Why, because it’ll be in the best best interests of Smoking Man’s “machine” that it be so.

#153 Herb on 10.03.12 at 12:23 pm

#110 Pr,

Where where they (The industry ), in the first place , in 2007, when F introduces: 0 cash down and 40 years amortization!

In Ottawa, lobbying like mad, to make it happen. How were they to know there’d be unintended consequence? The idea was to increase FIRE industry revenue by making it possible for anyone to buy a house. No one could have forseen that such a benign and democratic gesture could crash the housing market, right Garth?

Pity poor F for trying to close the barn door and getting trampled.

#154 housedoc on 10.03.12 at 12:25 pm

How long is a sold sign allowed to stay up before it becomes a bylaw infraction?

And to #121 SM
I’ve heard you’re quite the master-debater.

#155 Old Man on 10.03.12 at 12:26 pm

Caesar takes down the Real Estate industry to reform the mortgage market; now its the meat market, so where is the beef? I am going to a kosher butcher to get me something to eat, as canned beans will not do it for me.

#156 John Prine on 10.03.12 at 12:35 pm

#105 dd on 10.03.12 at 7:06 am
#93 TRT on 10.03.12 at 2:21 am
Fraser valley still going strong..

No there not. Did u just read the statement and ignore the numbers?
——————————————————————–

Completed sales in Abbotsford for September 2011, 176. For September 2012, 116. That is a 34% drop in sales volume…Dying market.

#157 Old Man on 10.03.12 at 12:51 pm

My nextdoor neighbour buys and sells Real Estate like there is no tomorrow, as he flips them like a fish in a frying pan. The other day bought a new Benz which was a repo, and got a great deal, so said who was the victim? He said someone called Smoking Man. :)

#158 Canadian Watchdog on 10.03.12 at 12:52 pm

All you need to know about today’s TREB report.

Y/Y GTA Condo Sales by Price Range:

0-$500,000 (-31.5%)
$500,000-$1,000,000 (-6.5%)
$1,000,000+ Over (+60%)

#159 PERPLEXED on 10.03.12 at 1:01 pm

PRICES IN EDMONTON WENT UP. HOW ON EARTH WOULD THAT MAKE IT A BUYERS MARKET.

– PLEASE EXPLAIN

It’s the water. — Garth

#160 Smoking Man on 10.03.12 at 1:08 pm

Was checking out the Globe and Mail chats bulls out numbering the bears. Hum

Did all the bears come here.

In the 90’s was the last time we had an re correction. Back then. 11 precent unempoyment. 18 precent interest rates. And a huge spike in prices in a short span of time.

In ontario we have 8prec unemployment 3 prec rates.
Since 2008 from the dip in fall to today prices only up 18 precent

Yet LaughingCon and his band of brothers are calling for a 50 present drop. They are dancing the happy dance. Yet prices are up. Demand and inventory falling. Its fall, happens.
Big disapointment in store for you as GTA red dots to the MSM

Vanishing act

#161 Westernman on 10.03.12 at 1:18 pm

Vangrrl @ # 86,
Why would anyone be gleefully awaiting a deflationary period? Simple – so the prudent, insightful, productive people who have accumulated CASH can go forth in the marketplace and pick up assets for pennies on the dollar… and I don’t mean phony assets in the fraudulant financial sector but real assets – tangible, durable assets – that real people need on a daily basis.
This is the marketplace’s version of “justice”…

#162 Old Man on 10.03.12 at 1:24 pm

There is one concern I have about the condo market in Toronto, and perhaps elsewhere; and the corruption in Montreal involves local government, but say this indeed extends into the domestic housing market too; whereby, construction costs have been bumped up as high as 30% for any project.

Is this a smoking gun that has yet to be uncovered? It is just a theory, but what if? I cannot rationalize any condo having a construction cost as high as $1,000 per sq.ft., in the GTA unless a corruption cost became a built in factor to be passed on to the buyer. This could become a huge mess in the end.

#163 Herb on 10.03.12 at 1:39 pm

#158 Canadian Watchdog,

thank you, as always.

#164 For Sale on 10.03.12 at 1:39 pm

Here, just outside Halifax, it’s as tho new subdivisions are popping up all over the place. However, a lot of these brand new homes have “For Sale” signs on them. Where does the money come from to be able to do that? Who finances all these vacant properties?

#165 Canadian Watchdog on 10.03.12 at 2:02 pm

Harvard Law School: Posted Hugh C. Beck, a member of the Securities and Exchange Commission: Identifying and Deflating Asset Bubbles

“A bubble inflates as public information about an asset class diverges from private information possessed by the public information’s sources. Accordingly, the key to deflating a bubble is to gather relevant private information, compare it to the corresponding public data, and then publish the comparison for all market participants to see.”

Ok. Let’s do that…

Guava vs TREB Detached Home Price (Inventory vs Sold) Link

As the above chart shows, there is now a divergence between inventory prices and sold prices: average prices are up due to a lower sample size (sales) and higher end properties being sold; while the inventory price shows sellers have started to reduce prices.

The inventory price is a much better indicator for where prices are heading.

#166 crashing yuppy on 10.03.12 at 2:04 pm

Smoking Man

FYI

I own several properties and you are a desparate realtor and everybody on this blog knows it.

You have become tiresome and irrevelant.

#167 John on 10.03.12 at 2:05 pm

Kenken wrote:

“Where can we get reliable sales and price figures for the different cities, instead of the RE cartel manipulated figures? … a Case Shiller type index”
——

Your tracking irrelvant stats, fixed or not. Track the sale of the cheap money…and it’s exit. Are you clear on which cartel to look at. It’s definitely not the “real estate cartel. That’s evident.

You’d have to be misinformed to follow “real estate cartel” numbers. How are those numbers relevant to “Canadian” real estate.

State your case.

#168 Old Man on 10.03.12 at 2:06 pm

#164 For Sale – I will never forget that day when the Province of Ontario brought in speculation tax for about 20% to stop the madness of it all. Al called me in Richmond Hill who was a mortgage broker, and said an entire subdivision of homes were all sold, and nobody moved in back in the 1970’s. I had a lawyer call me who had bought 50 homes on speculation with this Italian Bank in Yorkville doing the financing which went south into bankruptcy. Yep, have seen it all, but this time might be worse.

#169 John on 10.03.12 at 2:07 pm

For sale wrote:

“However, a lot of these brand new homes have “For Sale” signs on them. Where does the money come from to be able to do that? Who finances all these vacant properties?”
——

Great question.

#170 };-) aka D.A. on 10.03.12 at 2:13 pm

#161Westernman on 10.03.12 at 1:18 pm
Vangrrl @ # 86,
Why would anyone be gleefully awaiting a deflationary period? Simple – so the prudent, insightful, productive people who have accumulated CASH can go forth in the marketplace and pick up assets for pennies on the dollar… and I don’t mean phony assets in the fraudulant financial sector but real assets – tangible, durable assets – that real people need on a daily basis.
This is the marketplace’s version of “justice”…

Ya, I did that – well sort of but with a less fortunate twist. I sold revenue properties we owned in August of 2008 foreseeing the economic calamity that lay in wait ahead. I wanted to clear off any and all debt and hold cash expecting that we would soon enough be in able to buy back that which we sold and more for significantly less cost than what we sold it for at the peak of the market.

Well the financial crisis materialized pretty much exactly as I anticipated it would and I and those around me, for a brief time, thought I was a financial genius. Today… not so much. After having incurred the selling costs, paid Harper and his clan some capital gains taxes and then waiting for the market to drop, and then waiting some more and then waiting yet some more I have finally come to realize four long years later that real estate is not going to go down nearly so much as people thought then nor now. Those properties we sold are still worth most all of that which they were then but after the selling costs and taxes we can’t replace them with the cash we have left. Sure I’m holding cash and have no debt but I would gladly trade where I am now for where I was then.

Education is a bargain at any price. Experience is the best teacher. Learn from mine.

#171 robert on 10.03.12 at 2:14 pm

Oil just broke below $90 and is currently trading at $88 a barrel. If indeed we are heading into a deflationary cycle and oil continues to pullback keep a very close eye on Edmonton and Calgary. Things have a habit of unwinding very quickly there.

#172 Herb on 10.03.12 at 2:26 pm

Al right, I cant beet Smoking Man, so I’ll join her. I’ve never taken the GO Train and live to far from TO to ever do so, so I can’t becom a Track5er. Heck, I can t even be a Track 6er!

But I have a keybored and acces to you, Garth’s Greater Fools, so here I cume, SM, to be just like yoo. I will entertain you’al with my habits, family, succesess, failures (there must be a few I can dig up), philosofy of life, general and financial accumen, likes, Dislikes, round condamnations and general disdain, not to forget my awful mastery of English and a couple of langages I’ve forgot en.

But I’m a reesonable man as well as beeing a financial genious. For small considerations (to be sliped to me thru Garth) I will refrain from emoolating SM and refert to my normal persona, nice bleeding heart Commie socialist Herb.

#173 truth hammer on 10.03.12 at 2:28 pm

Garth….thr real estate pimps in Vancouver are standing in adamant opposition to the stats you’ve proposed and to the consequence you suggest. Instead…King Tsur of UBC real estate sponsored forum is shouting that sales have only fallen ‘5%’ and that the chorus of ‘It’s a buyers’ market’ coming from the entire pantheon of pimps and pimpettes is in fact what is more on the leading edge of truth in Vancouver……Garth…once again….you’re in opposition…..and therefore wrong….by fact of right, might and the numbers that the Real Estae Board insist that prices are in fact still INCREASING!!!!!!!!

Afford-bully-ty means nothing to these people….as I’ve said it is the mind set of all those who exist to leach off the public purse in one way or another to deny that there is ever anything wrong with wringing out the saps for their last pennies.

#174 Inglorious Investor on 10.03.12 at 2:29 pm

Maybe Garth will write further about this later:

Jim Murphy, president and CEO of the Canadian Association of Accredited Mortgage Professionals (“Professionals?” Really?) was just on BNN bleating about how the G’s changes to mortgage rules are affecting housing sales.

Of course, he implied that a slowdown in housing sales will affect the economy. Namely, he talks about jobs.

Of course, Mr. Murphy is not really concerned with HOME sales. What he really cares about is MORTGAGE sales. If everyone in Canada bought their homes with cash, he wouldn’t care if home sales were a million units per year, or zero.

He wants more mortgages, mortgages, mortgages!! After all, I’m sure the number of mortgage brokers has exploded over the last ten years. That’s a lot of debt mongers to feed.

Maybe CAAMP should diversify out of homes and sell mortgages for sheds. Because that’s where many Canadians may end up living if the market price trends of the last ten years keeps up.

#175 Country Girl on 10.03.12 at 2:33 pm

#119 housedoc

Smoking Man, you can sit beside me. I’ll protect you. Pepper Spray.

#176 jess on 10.03.12 at 2:38 pm

rationalized “added value”

The USDA said transglutaminase must appear on the ingredient label in addition to terms like “formed” or “reformed meat.” But that’s the second problem. If you’re eating glued meat at a banquet or restaurant, you’re not likely to see “reformed” meat on the menu. You would never know.
banquest or restaurant not on restaurant saying meat is “formed”
meat glue watch how it is done 4-a-pound stew meat now looks like a $25-a-pound prime filet. watch how this glued meat at the center cannot reach the right temperature

The USDA said transglutaminase must appear on the ingredient label in addition to terms like “formed” or “reformed meat.” But that’s the second problem. If you’re eating glued meat at a banquet or restaurant, you’re not likely to see “reformed” meat on the menu. You would never know.
http://abclocal.go.com/kabc/story?section=news/consumer&id=8642900

#177 Frank le Skank on 10.03.12 at 2:40 pm

Some clarifications from Reators regarding low sales.

“The number of transactions was down by 21 per cent in comparison to September 2011. However, it is important to note that there were two fewer working days in September 2012 compared to September 2011. The majority of transactions are entered on working days. On a per working day basis, sales were down by 12.5 per cent year-over-year.”

http://dcnonl.com/nw/32201/cb

#178 Westernman on 10.03.12 at 2:44 pm

aka D.A @ #
I didn’t mean R.E. ( although I understand R.E. is the conversational currency at this blog ) I was talking more about equipment – tractors, trailers, backhoes etc. You know, money making equipment… assets… real assets…

#179 Old Man on 10.03.12 at 2:47 pm

Now this story will blow your mind away, as a new airport was to be built NE of Toronto near Markham, and my mind might be a bit in a fog, but believe it was the Ontario Government who used the expropriation act to seize all the farmland for such to be done. Well that deal went south in time.

Now, they were stuck with all these properties, and had to blow them off, and bought two farms myself, as they were selling them off at about 52k to 55K with a nice home on well and septic. There was just one lender at the time who would give a mortgage, and that was V&G, and needed a well testing, so lots of javex was poured down those old wells.

I financed so many of those farms for young couples that were looking for a bargain with V&G. The point of this rant is thanks to Caesar there will be thousands of properties coming into inventory, and they will deal to get this mess off the books; so be patient for you that want a home in a few years – do not overlook CMHC to buy a home, or condo when the time looks right, as they will be giving them away.

#180 Smoking Man on 10.03.12 at 2:52 pm

#172 Herb
Tell the truth your last post was it not fun. Lol

#176 Country Girl
Sure

#181 Old Man on 10.03.12 at 3:07 pm

#175 Country Girl – be careful as the Weather Witch has a claim on him, and if Smoking Man don’t show up she will be attracted to a higher order of manhood, as Garth will be her new target, and if he thinks those Amazon women can protect him; she just laughs about it all.

#182 DON on 10.03.12 at 3:38 pm

@ #66 Mr Buyer on 10.02.12 at 11:47 pm #22 Dorothy on 10.02.12 at 10:23 pm
Knowing how damaging to the economy (and therefore to the majority of the Public) a US housing crash would be, I’m amazed at how much many people appear to salivate at the prospect.
………………………………………………………
I am amazed at the number of people expecting otherwise

AND

@137 Red in reply to Dorothy

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

Well put both of you in your replies to Dorothy.

To Dorothy: Buyer beware ever heard of that statement. Greed fueled this and if a person puts 5% down or 30% down in a bubble market without checking into the fundamentals then yes the one who put 30% down will loose the most. AND that is too bad, they should have put 5% down on the ponzi scheme. People have to start taking responsibility and not blindly believing what other people are stating as fact. History has given us so many examples of bubbles. DO YOUR RESEARCH. If people had listened to this blog years ago, instead of calling Garth and his blog dogs CRAZY they would not be in this position now.

The nerve of you to come on here and tell us that we should not pat ourselves on the back for not leaping into the abyss. The sooner we get this correction over with the healthier our economy will be.

When I can wait and save to buy a lot and slowly build a suitable house and have it paid off faster than 35 – 40 years the fundamentals are truly wrong.

HOW DARE THOSE who pushed this bubble higher and higher affect my way of life when the market crashes. I don’t want their inflated card board houses, I want a sound economy from which I can make my decisions. I will wait till the bottom and vulch. Survival of the fittest right SMOKING MAN.

Is there no sense of responsibility, what the hell are you people teaching your children. Maybe it is time to take away the safety nets to correct the way of thinking that has manifest in the last 3 decades.

Dorothy maybe you should go buy another house. My realtor just told me PRICES NEVER GO DOWN>

#183 Elchavo on 10.03.12 at 3:50 pm

@#123 Subversive

“but the amount of vindictive glee at other peoples’ potential misery in the comments section of this blog certainly is disconcerting.”

human beings being human beings. Just human emotions man. It’s not that disconcerting at all.

And I can’t wait for this bubble to fully go pop. Yes we’re all gonna be affected one way or another, but I’m liquid, debt free, mobile, and will certainly enjoy the Schadenfreude as I see the people who mocked my RE abstinence go underwater. Cause I do know that 90% of them are 5%/35’s , overstretched, oblivious, financially ignorant, proud homeowners.

just being one emotional human being. nothing more.

moving on….

#184 Kim on 10.03.12 at 4:02 pm

driving around in the GTA and it becomes painfully clear the market is in a stand still as very little is selling. The RE industry is worried as sales have sharply dropped 30% or greater since the RE industry always compares last years REVISED numbers .They overstate september 2012 sales and then compare it to the revised numbers of sept 2011. This is very criminal and the government needs to break up the criminal RE board. It’s no wonder people hate realtors.

#185 Alex N Calgary on 10.03.12 at 4:13 pm

When the hell did housing become a right? These comments that say we should be happy housing is roaring, it keeps us all in work. That is total crap, people don’t have houses as rights, they are greedy, full of pride, and think they are smarter and better then everyone else. They care little for others rights, respect for other people is at an all time low. Anyone could read online that housing is a huge risk, its outrageously priced, they ignored it all.

I don’t want to scoop up a crashed market house, I don’t even want a house anymore, I just wanted all these smug, superior, smarter then everyone, care about no-one, people to learn a lesson. There is no easy money in this life, unless you are privledged, or very lucky.

#186 BBstudios on 10.03.12 at 4:13 pm

“This is having a deleterious effect in the BMW-parts of Toronto”
Bahahaha, another doozy! Beemers are cool though – – but you are definitely great with your words Garth. Keep up the great writing!

#187 Victoria Tea Party on 10.03.12 at 4:25 pm

THE MIGHTY BANKS ARE FALLING ON WALL STREET?

With friends like them…as the saying goes…

Bloomberg news reports that the US central bank’s money-printing sprees are gradually destroying the bottom lines of America’s six largest banks!

As a result, the report says, investors are running the other way and a repeat of 2008 looks definitely possible.

Here’s what Bloomberg notes:

“…The lowest leverage in a decade, return on equity at a third of 2006 levels, higher capital requirements, shares trading below book value, declining bonuses, job cuts (40,000!),…Europe…and a backlash against bankers have damped the joys of profit.

“…Dick Kovacevich,the retired…chairman of Wells Fargo & Co…said he was told by someone at his country club: ‘Wall Street was bailed out, and Main Street wasn’t…’

“…Ralph Schlosstein…(an independent New York banker): ‘The challenge they face is how to adjust to this new capital regime, and the new regulatory regime, and to earn an adequate return on equity. None of them have yet broken the code.’

“…When the banks say, ‘We’re doing very well but not getting a return on our capital,’ it’s completely incomprehensible, and it’s angering to the average American,” said a Michael Greenberger, a university professor…’They’re making billions of dollars in profits. That’s the bottom line.’

” ‘…The reason their current and prospective investors are concerned is that there’s every likelihood that what happened in 2008 will repeat itself,’ he said, calling the rigging of global interest rates and JPMorgan’s trading loss evidence of systemic instability.’ ”

So the succulent poison that gave renewed life to Wall Streets addled banks in 2008-09 is coming full circle and is reinfecting corporate capitalism!

If those guys can’t cope with the situation what about the rest of us?!

Most intriguing, and not very settling.

#188 kenken on 10.03.12 at 4:37 pm

#177 – I was reading that justification of less working days from the Realtors. it is amazing how they use and report these in their favour.. Why did they not say that Sep11 had more working days and was skewing the sales number!!!!

#189 };-) aka D.A. on 10.03.12 at 4:39 pm

#177Frank le Skank on 10.03.12 at 2:40 pm
Some clarifications from Reators regarding low sales.

“The number of transactions was down by 21 per cent in comparison to September 2011. However, it is important to note that there were two fewer working days in September 2012 compared to September 2011. The majority of transactions are entered on working days. On a per working day basis, sales were down by 12.5 per cent year-over-year.”

http://dcnonl.com/nw/32201/cb

Every September has 30 days in it and REALTORS® work 7 days a week . Those “non-working” days your refer to would have been as equally productive as any other in that month and those sales would have been posted, accounted and attributed to the month of September as late as the in the wee early days of October. In other words September is September is September and can rightfully be compared against any other September other than a month does not a year make nor is it any indication of a trend unto itself. That article is exactly the kind of SPIN that gives our profession a bad name. The market is what it is. We don’t make the market we deal with the realities of it. Shame on them. We need informed buyers and sellers not misled buyers and sellers.

#190 Spiltbongwater on 10.03.12 at 4:40 pm

But this won’t happen, at least until it can be coordinated with the Bank of Canada’s first rate hike in 2013. -Garth

There’s now a 100% chance interest rates will be going up. You read it here first. Actually you read it here when nobody believed it. So get ready.

No, it’s not going to happen June 5th, when the Bank of Canada again determines the cost of money. But between then and the day when the Amazons always dress up as naughty reindeer (little floppy tails and the whole deal) and cavort in the white stuff, it’ll happen.-Garth

2013 is before or after the Amazons dress up as naughty reindeer?

The longer rates stay unchanged, the worse the prognosis. — Garth

#191 truth hammer on 10.03.12 at 4:52 pm

On a rate increase note…don’t hold your breath….. the deflation of the debt bubble will have to policy driven…..and we are hardly in extremis now……the FED in the US will not raise rates until well after 2015……they need inflation…not deflation…..they have dealt with the property bubble….do you think the US Congress cares about Canadians?

The Fed Chair has introduced a QE ad perpetuum…..not likely they’re thinking of raising rates. A rate hike on this side of the border would drive the resource rich Canadian dollar to new highs as it did the Aussie ( reached $1.05) perhaps to the oil dollar range of $1.15 or higher.

Rest assured …ther will be no devolution in policy…expect more restrictions…higher taxes…..and less affordability as we have not yet seen the brunt of unemployment hitting when all the construction workers being laid off en masse show up at the EI office and drive unemployment past 9% in Q4.

Prices will be sticky…they always are…..at first…..but that doesn’t start to balance the evolution of pricing when divorce, transfer, Ham flight, job loss, builders loans and bankruptcy sailing to market with a court order for a quick sale……those are the stats I’m waiting to see. It won’t matter what you’re asking for your property when the last 3 sales have cut 30% of the actual market value. That’s when we’ll see prices come down in a big clump.

HAM is afraid of public humiliation…they are completly out of the market for now…and no help from the Dim Sum Queens who read the local news flow on falling prices…..they are perception driven……like chirping chickens these days all talking about the ‘guys who are getting screwed’.

Builders and speculators with bills to pay will dump and take a tax loss by year end.

I will speculate that Flaherty and the boyz will introduce further restrictions on consumer credit borrowing before mid term…….good political move ‘to clamp down on the banks’ and head off the NDP to the moral highground.

#192 Dooom on 10.03.12 at 4:52 pm

Diddled is a euphemism for something…..what could it be?

#193 Questioning Calgary stats on 10.03.12 at 4:59 pm

Clearly the industry is watching prices crash (hidden from the public by their manipulated stats).

If mortgage lending standards were loosened again, that would only push CMHC’s total (already $600 B) much higher in a short period of time and risk Canada’s AAA credit rating, with dire consequences.

#194 Herb on 10.03.12 at 5:12 pm

#180 Smoking Man,

well, the hard part was beating down the spell checker who/which/that objected at every turn.

The real question is “Was it as good for you as it was for me?”

#195 Herb on 10.03.12 at 5:13 pm

#181 Old Man,

let me solve this ongoing crisis: I’ll look after Weather Witch, and you and smoking Man get a room.

#196 house burden on 10.03.12 at 5:14 pm

People interest rates will rise. So when you buy a house you should be doing your calculation based on the average/ normal mortgage rates.

Right now rate are low because the government has gotten themselves in a bad situation (too much debt). But like the 90’s when no one bought the canadian bonds, the yields rose to record high in a very short period of time.

Look a greece they were OK OK OK, Oop 7/15% in a matter of a week.

Look a the US, printing printing printing open ended printing , bond yields are climbing, america dollar vs Euro spread gapping better yet the cost of gas oil is now at a record high. They (the government can hide the numbers in there special needs accounting ponzi scheme) but the price of GAS, food and everything else is starting to rise soon the greenback will fall out of favor and inflation will kill america, but they will be cheap to Canadians which will do some serious spending in the states to add onto our existing debt problem.

If interest rates stay low, we will keep on spending, the debt will grow, just like a herion addict, they can’t stop when its too easy

#197 Smoking Man on 10.03.12 at 5:15 pm

I sorry to report this happy dancers.

In today edition of tonight. That’s the evening newspaper that all the track 6ers read on the way home from cube life.

The headline reads

AVERAGE HOME PRICE HIGHER

Now once a track 6er gets this into the hard drive on shoulders.

The Stuborn 6er will never drop his price to acme faced bubble heads.

Reality don’t matter here, prestige and an image of seccess is what they buy.

#198 hawk on 10.03.12 at 5:16 pm

#171 robert

Yes oil prices keep going lower worldwide but this government keeps raising them at the pump. We need to get rid of them and have consumer protection law requiring gas stations to reduce prices.

The government does not set gas prices. OMG. — Garth

#199 Old Man on 10.03.12 at 5:23 pm

#171 Robert agree, as spot oil price is a joke, as the oil sands must discount that by about $20.00 to be refined, so what is the illusion? Could it be that the Province of Alberta has a cost problem? Could it be that the Real Estate values in Alberta are going to take a big hit? I went today to buy $10.00 worth of gas as do a cost average scenerio, and it was $1.31 a liter, so asked the woman for my seniors discount, and she could not stop laughing, as she said get with the agenda as all are being screwed over at the punp with taxation, so you too must pay.

#200 jess on 10.03.12 at 5:32 pm

…drugs, hookers ,crime ,unsafe conditions .How come this owner could even rent this property?

“For years the police, bylaw-enforcement staff, the fire department and the electrical safety authority tried to shut down the buildings. ”

http://www.therecord.com/news/local/article/810842–developer-plans-prestigious-condo-on-site-of-former-crack-house

#201 Mark on 10.03.12 at 5:36 pm

“There’s now a 100% chance interest rates will be going up”

Don’t you mean 0%? We’re staring into a deflationary abyss, housing is crashing, and demand is collapsing. This would point to interest rate cuts in the pipeline, and likely a program of US style quantitative easing will be necessary at some point.

The Bank of Canada rate will not fall, unless we are about to go over the brink. Pray that doesn’t happen. — Garth

#202 Old Man on 10.03.12 at 5:39 pm

The government does not set oil prices, but at the pump the spot price goes down, and the cost per litre climbs through the roof, and it is all a matter of taxation of grabbing taxation money from the citizens, and no more special investigative committees about the citizens being screwed over. This stuff took place years ago, but all was kicked under the bus.

#203 Mark on 10.03.12 at 5:47 pm

“The Bank of Canada rate will not fall, unless we are about to go over the brink. Pray that doesn’t happen. — Garth”

So if we get a few quarters of 0% inflation or even mild deflation (ie: -1% annualized), you’re insisting that the BoC would leave the policy rate at 1%?

Of course, for homeowners with deteriorating collateral, this won’t matter, as the lenders will be increasingly demanding higher risk premia. But the rest of the economy could definitely use cheaper money at this point.

The bank will not move downwards. — Garth

#204 Old Man on 10.03.12 at 5:54 pm

There are three levels of oil pricing and just checked the latest stats, as the latest is $88.03 as it is crashing, so will see how this works out for Alberta, and their Real Estate values going forward.

#205 house burden on 10.03.12 at 5:54 pm

In a flash of brilliance, the local real estate board president said “a clear reduction in buyer demand” is Ottawa’s fault because F’s rule changes, “make homes less affordable.” Wow. Silly us. We thought people stopped buying stuff when it cost too much.
=============================

But haven’t the real estate agents been saying it the HAM investor who has been buying everything in site.

See what happens when you ditto with the system. Now we know its been Cheap money, CMHC and cash back to canadian investors, whom were buying all along.

HAM probably never existed, if so they only bought small percentage of the properties.

One thing you should know about Asian, most are afraid of Ghost, they don’t like old houses. That why they usually buy new.

What a drag foreign investors lack your sophistication. — Garth

#206 Blacksheep on 10.03.12 at 6:35 pm

Smok’in man,

Oh…buddy, You’ve had a rough day.

Remember, you’re stinking rich and should care less about RE prices. Pour your self a big glass of Cabernet (bring the bottle) and take a load off.
Here’s a little ditty from the original Smok’in man to help you wind down.

http://www.youtube.com/watch?v=coh7n6dYj5Y

Come on back, if after a glass or five, you feel like talking. I’m here for you.

take care
Blacksheep

#207 Nostradamus Le Mad Vlad on 10.03.12 at 6:42 pm

#63 2centsCdn — “#34 Smoking man. You can’t beat the machine. So learn to profit from its moves, its easy to read. I really like this statement.” — That’s right — Play the machine. Sometimes you hit paydirt, sometimes strike out, but more often than not, one will do better than average.

#104 COW MAN — “If they didn’t back down against that pressure then, why would they back down on keeping a promise to curb debt accumulation?” — Now that the CPC has a majority, the chances are they couldn’t care less about debt / deficit reduction, as they know it can be passed on to the next fed. govt.

If no one is charismatic enough to meet them head on, they will be re-elected for a few times. Only then will we know how much damage H and F have done to the country.

#131 Daisy Mae — “…and big business for their greed, curruption and mismanagement.” — More of that coming, and there’s nothing that anyone can do about it.

There is no difference who is running the show, whether it is the Mafia, the Triad or the ones you referred to.

#185 Alex N Calgary — “When the hell did housing become a right?” — Housing never has, nor ever will be a right, it’s a privilege. If people want to take a gamble with a low down payment and a huge mtge., good luck to them.

I’m not standing in their way, and neither will I bail them out.

#187 Victoria Tea Party — “If those guys can’t cope with the situation what about the rest of us?!” — Take two aspirin and call me in the morning? Sounds about right!

#200 jess — “…drugs, hookers ,crime ,unsafe conditions .” — Sounds like this site!

#208 Grim Reaper/Crypt Speculator on 10.03.12 at 6:47 pm

#192 Dooom on 10.03.12 at 4:52 pm

Diddled is a euphemism for something…..what could it be?

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

Garth has a soft porn license…he has to prove it every so often or else we are cursed with SmoKinky Mans blog as back up

#209 Old Man on 10.03.12 at 6:49 pm

Smoking Man was it you or someone else who bought call contracts on the price of oil? I am sure it was not you, but someone else. :)

#210 Grim Reaper/Crypt Speculator on 10.03.12 at 6:51 pm

#181 Old Man on 10.03.12 at 3:07 pm

#175 Country Girl – be careful as the Weather Witch has a claim on him, and if Smoking Man don’t show up she will be attracted to a higher order of manhood, as Garth will be her new target, and if he thinks those Amazon women can protect him; she just laughs about it all.

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

Somekinky Man is a silicon – based Life form,….thus is still not weaned off the Amazons

#211 Herb on 10.03.12 at 7:26 pm

#202 Old Man,

don’t quite follow you on taxation driving up gas prices. Taxes are a “per cent” add-on, so they move in sync with the prices set by the oil companies. Taxes do not force those higher, the oil industry does, thus raising the taxes and end-price we pay at the pump.

#212 Mr Buyer on 10.03.12 at 7:28 pm

#160 Smoking Man on 10.03.12 at 1:08 pm

Vanishing act
………………………………………………………….
I am guessing that it will always be a buy on RE. Am I wrong? Nice shining of the the light on only a part of the statistical picture that supports your assertion. I am guessing you are hoping to exert your god like self to create reality. Not to worry, this is the collapse of a real estate bubble and we are in the opening acts. The stats will soon shine their own lights. This is not bull or bear, this is a new paradigm, bubble or collapse. Careful you do not fall into the common trap for most demi gods with amazing powers of observation, that being the belief in every word you yourself utter. I think you really know the collapse is here. Even the drop in sales is enough to give your much maligned sheep pause. Prices will take care of themselves. Do you see the MACHINE opening the bank vaults again to the critical first time buyer set at these horrific prices? If so then our bubble can indeed get another infusion of hot air but it will still end in collapse.

#213 randman on 10.03.12 at 7:30 pm

“#40 Penny: “Lots of people say it’s different here, and if you try to say otherwise, they get bitchy and snappy.”

Happened again today …everyone is convinced the whole
world wants to live in the lower mainland …..

Question is…Do you say to them …I told you so?

#214 Smoking Man on 10.03.12 at 7:47 pm

#209. Oldman

Yes I did my oil fut. And I bought some mar today too.

If say oil drop to 80. I take a small beating. Now if something happens after us election. The up side is huge.

Its a good bet.

#215 ballingsford on 10.03.12 at 7:48 pm

I read the other day that ETF’s are on their way out. Questionable about some REITs also. For REITs, should one think about purchasing Commercial or Residential or both?

You read wrong. — Garth

#216 patiently waiting on 10.03.12 at 7:54 pm

Patiently Waiting – Thank you for the information once again. What percentage drop are you hoping for? I am so frustrated with listings that were purchased last year that are priced 30% higher today. How can BC Assessment get these crazy evaluations? How can local realtors justify their asking prices? If it were possible I’d move to the US. At this rate my kids will be in university by the time we can afford a nice home of our owe. I can’t complain too much because this rental is new and nice. I just worry that our landlady will put it up for sale. Our previous landlady sold our previous rental house. That was not fun and paying 50% more rent for a similar home is not fun either. That’s my rant for today.
—————————————————————–
Difficult to say how far White Rock will fall. Bottom line is it has started to fall, and the sellers that are resisting the slowing market will only have to reduce more next year after the coming spring market fails to materialize. Sellers are also the last ones to get the memo about a changing real estate market, as they tend to put their trust in Realtors who tend to drink their own Kool Aid – as Upton Sinclaire once said “It is difficult to get a man to understand something, when his salary depends on his not understanding it. …

Here is my White Rock Red Flag List for today. Each one has been red flagged for one or more of the following reasons: (Note these are all price ranges):
– every one has either overtly reduced the price substantially, or has reduced the price by renewing the listing at a significant price reduction, some are forclosures, others are flagged because they are carrying 2 or more mortgages, but every one listed has been flagged because I would categorize them as a problem listing that is headed for trouble. Enjoy, and don’t give up . . . just be patient . . .

http://mlslink.mlxchange.com/DotNet/Pub/EmailView.aspx?r=1365428161&s=BRC&t=BRC

pw

#217 Canadian Watchdog on 10.03.12 at 7:56 pm

Anybody notice something new from VREB’s latest press release?

*The original news release issued on October 1, 2012 contained an error. We apologize for any inconvenience this may have caused.

They removed:

“Interest rates are also holding, but should they increase by as little as 1%, that would negate a 10% drop in purchase price. People shouldn’t wait for prices to drop, because we never know when interest rates will be increased to stimulate the economy.”

Booked like Garth.

Stay the hell out of my tub. — Garth

#218 45north on 10.03.12 at 8:02 pm

So there’s now a major-league lobbying effort in Ottawa to have rules rolled back.

But this won’t happen

It won’t happen because the bubble is pricked and you cannot un-prick it.

Ben Rabidoux presents Vancouver and Toronto sales:

http://mcaf.ee/pgxv0

Vancouver’s bubble was pricked in April and Toronto’s in August.

#219 Mr Buyer on 10.03.12 at 8:09 pm

#170 };-) aka D.A. on 10.03.12 at 2:13 pm
I have finally come to realize four long years later that real estate is not going to go down nearly so much as people thought then nor now.
…………………………………………………………………
This mythic characteristic of real estate must be perpetuated at all costs. The ever inflating asset even in the face of collapse in RE values in more than a few countries including our cousins to the south. This expectation is the lynch pin upon which buyers base decisions to to jump into monstrous amounts of debt.
This little case study is a nice example of psy ops with the messenger explaining he or she is a member of the group and has come to the conclusion that the group is wrong. It costs nothing to disseminate on this somewhat widely read blog. Co-ordination of commenting on blogs can be a real potent force to advance a mindset at little or no cost and slight risk of blow back. Hearts and minds. Blog engineering may well be a nice little business in and of itself. Advancing views and opinions in the comments section of a host of related blogs, as well as initiating a blog, surveying the rhetoric and developing counter rhetoric (civilian psy ops). Every public relations entity likely has an element in their organisation doing so or contract it out to a professional entity specializing in it.

#220 Mr Buyer on 10.03.12 at 8:17 pm

#78 TRT
Also, properties sold on average at 96% of list in Sept.. This from actual sold listings (not anecdotal).
……………………………………………………………..
This is a huge change in the situation that buyers faced scant months ago. Lets just re-frame this information moving the emphasis just a tad. Houses have begun routinely selling for less than asking. Anyone on this blog that says prices are not falling must take another look. Even these greatly engineered stats indicate a huge change in the lay of the land.

#221 TurnerNation on 10.03.12 at 8:19 pm

And the beat goes on in Toronto.

Junky semis 1/2 mill. SFHs 1 mill.

http://www.torontomls.net/PublicWeb/CL_CF.asp?link_no=45594040.175000&t=l&fm=F

#222 Old Man on 10.03.12 at 8:20 pm

#214 Smoking Man – am rolling my dice on a call for orange juice contracts, as the weather witch has never been wrong with a freeze in Florida; you need to pay attention about this all.

#223 ballingsford on 10.03.12 at 8:24 pm

#215 ballingsford on 10.03.12 at 7:48 pm

I read the other day that ETF’s are on their way out. Questionable about some REITs also. For REITs, should one think about purchasing Commercial or Residential or both?

You read wrong. — Garth
^^^^^^^^^^^^

You’re probably right Garth. I was in a hurry when I read it, but I’ve been known to get the drift when I read things quickly.

Maybe I should have slowed down a bit.

Or probably, I should have researched who the author was affiliated with.

#224 DON on 10.03.12 at 8:37 pm

Article below is in regards to Vancouver Island.

The bubble started developing here in the late 90″ fueled by freedom 55ers and retirement from all over Canada. Soon to be in Toronto newspapers.

By Staff Writer – Parksville Qualicum Beach News
Published: January 03, 2012 7:00 PM

NANAIMO — House sale prices were, in general, down nine per cent in the Parksville and Qualicum Beach areas in the last month of 2011, according to data released today by the Vancouver Island Real Estate Board.

Based in Nanaimo, VIREB stated in a media release that looking at home sales prices in Dec. 2010 and Dec. 2011, the average price of a single family home dropped to an average of $343,292 — down nine per cent.

While most real estate zones were down on the Island (outside of Victoria), Comox Valley saw a 13 per cent jump in Dec. 2011 over the same month in 2010.

Overall, VIREB reports 2011 was a stable year, meaning sales prices were on par with 2010. On average, house prices were down slightly (about $1,000) in 2011.

#225 agent.smith on 10.03.12 at 8:51 pm

#125 Editor – Our health care system in Canada is a fossil… Very few countries still have soviet style health care… We share this honor with Cuba. Canadians have been duped into believing castrocare is something to be proud of. If you want to see a good health care system take a look to Switzerland or some of the other European countries. Anyway, that’s another story.

Back to your point…. The U.S. government spends more per capita on health care than Canada… So your point about the cost of living here is bunk.

http://www.nationalreview.com/critical-condition/47302/third-highest-world-i-i-obamacare/avik-s-roy

Also, the U.S. has much higher military expenditures, and we aren’t even contributing our fair share to continental defense.

Yes we pay somewhat higher taxes here, for a variety of reasons. But that doesn’t come close to accounting for the absolute scam that is canadian pricing on consumer goods, food, etc.

#226 Old Man on 10.03.12 at 8:55 pm

I need to get serious about all the Real Estate stuff , as for young people do not buy anything, and just sit back and rent for a few years, as the risk is too great to get horny about owning a home. The capital cost is a risk in hell, as the bubble is near the top, and there is a huge downside to lose all, so why do it? Oh I know that owning a home makes you feel good to be special in life, and all is well out of pride.

But where does this feeling of pride go when things turn sour; it goes into a state of utter depression, and stay way from it all, as this stuff can break up a marriage in a NY minute, and is it worth the risk? I say no – just my take upon what is coming down, and for you that bought years ago with capital appreciation you might consider selling before it is too late to save some capital to move into safety.

#227 Daisy Mae on 10.03.12 at 8:57 pm

Booked like Garth.

“Stay the hell out of my tub. — Garth”

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

You must drive Dorothy crazy…. LOL

#228 };-) aka D.A. on 10.03.12 at 9:04 pm

#218Mr Buyer on 10.03.12 at 8:09 pm

What I wrote is a consequence of my listening too much to others. You needn’t listen to me. Take from my story what you will, or won’t as the case may be. I suspect your prejudice reveals your age. The best lessons are those we learn by our own experience and an education is a bargain at any price. Still the earlier you learn the more time you have to benefit by your learning. Mine was a $500,000 lesson which I am willing to share with those who have such an open mind as to listen. Unfortunately youth is impatient and rushes in or out as the case may be.

I am quite sure there are plenty other readers of this blog who sold their property and now regret having done so and probably and equal number more who have more recently sold and have yet to but will come to regret having done so. Real estate is a long term hold anything less is speculation and renting.

A wise man does not wait to buy. A wise man buys and waits.

#229 Gunboat denier on 10.03.12 at 9:48 pm

137 Red

You have real money saved? But you lecture about
creative financing? Ever wonder where your money came
from?

#230 TurnerNation on 10.03.12 at 10:31 pm

#192Dooom

He said Fuddle Diddle.

#231 Mr Buyer on 10.03.12 at 10:45 pm

#228 };-) aka D.A. on 10.03.12 at 9:04 pm
A wise man does not wait to buy. A wise man buys and waits.
……………………………………………………………….
21 straight years of property price decline in Japan. That is the collapse of a real estate bubble. They will likely never attain the lofty prices at the peak of the bubble ever again and certainly not within the serviceable life of the houses that were bought. Your little maxim does not apply at the top of a bubble.

#232 Steven Rowlandson on 10.04.12 at 6:40 am

The reason I don’t buy real estate apart from not having a decent income is that I don’t want to be financially diddled. Unfortunately most markets are all about the financial abuse of investors, working people and customers. Some call it capitalism, I call it financial gross indecency and gangsterism.

#233 TurnerNation on 10.04.12 at 7:49 am

#222Old Man – there’s no OJ ETFs. Futures only. If you can stomach the leverage. The risk of extreme margin calls, limit up/down exists. I suppose you can hedge using options on futures but they tend to be terribly illiquid, with huge spreads.
Futures are a Pro’s game only…