Perspective

The tale of a burb. Once, ninety years ago, Oakville was a quaint little place an hour’s slow-train ride from Toronto’s Union Station. Rich people discovered its river-lake charms and built quaint mansions. In the fifties all that changed after Ford bought hundreds of acres of farmland on the edge of town and erected the biggest roofed building in the Commonwealth. Soon Oakville was a blue collar town.

Today three clogged expressways and the nation’s busiest commuter rail line link it to Toronto’s core. Over 183,000 people live there, with Oakville slipping into an urban sprawl of six million people. The car plant is surrounded by miles of suburban houses, malls and humanity. Today the town’s predominantly white collar, middle class, and indebted.

The average income is $89,000. The average house price is $717,937. This ratio of 8.07 puts suburban Oakville in the same nosebleed territory as Vancouver. On Demographia’s scale of affordability it’s off the chart, up there with Melbourne, Australia. Any community with a price/income ratio of more than five is considered a “severely unaffordable” place to live.

Actually, that includes most of the GTA. But, for how long?

Last March I told you the coming months would bring consequential changes to the way houses are financed, and ultimately priced. In the 100 days following, F creamed the 30-year mortgage and raised lending criteria, while CMHC ended coverage for high-end homes and the bank regulator, OSFI, mandated the death of cash-back loans, slashed HELOC credit and toughened up rules for appraisals.

Even those who mocked me (at least the ones still able to breathe on their own) now concede what was forecast is coming to pass. July 9th, the day most changes came into effect (a few are still taking place), marked the end of the boom real estate cycle as we knew it for at least four years. Sales are now tanking in leading markets, with the regional backwaters (Winterpeg, Skatch, Cowtown etc.) certain to follow, in their cute hick way.

No market is immune, although all are different. This restriction of credit will have an impact everywhere. By making it harder for people to afford homes at current valuations, it will force prices lower. The first reaction is a drop in sales as fewer people are able to buy. That’s followed by more sales declines as qualified buyers quickly realize all upward pressure on home values is off. Finally, sellers capitulate and reduce asking prices to meet demand. This can, as in the US, start a downward cycle that lasts for years. After all, who wants to buy a bungalow in Kitsilano for $950,000 this week when it could be $875,000 in March?

Yesterday I told you about Vancouver’s continuing sales plunge. Now it’s Toronto.

Sales in September crashed by 21% from this time last year. In Toronto detached homes (resales) saw a 27% decrease. Last week I told you that sales of new homes (low-rise and condos) plunged by more than 64%. These numbers are not, like most people who read this pathetic blog, mere aberrations. They’re the measurable result of concrete and deliberate actions, combined with a societal madness which, in places like Oakville, has pushed houses over the brink. How can anyone be surprised?

And what about prices?

In its reporting this week the Toronto Star said, “Toronto continues to record strong price gains.” But here are the monthly averages for a single-detached home in 416:

January — $742,993
February — $818,815
March — $816,169
April — $831,214
May — $820,816
June — $803,671
July — $752,431
August — $746,300
September — $781,826

Normally when a market decelerates quickly in terms of sales, you’d expect average prices to rise. Why? Because those people who are price-sensitive, or need lots of financing, stop buying, while those who have more wealth, don’t. So, fewer sales at the low end and relatively more at the top, means a higher average. It’s called math.

But it doesn’t last. And even with this averaging-effect going on, the price of an average SFH in 416 is about $50,000 less than it was in April.

There’s more to come. Much more. As I told you in March to expect markets to be impacted materially as the year unfolded, now I’m telling you valuations will follow suit over the months to come. There is no safe harbour. No place to hide. No community that will be untouched.

Does this mean a crash? Nope. No Phoenix or Miami. Just sleepless nights in Fordville.

181 comments ↓

#1 TurnerNation on 10.03.12 at 8:43 pm

Early post tonite! Seen y’all on the 23rd.

#2 tow mater on 10.03.12 at 8:45 pm

Great post Garth. Interesting how in all the realtors press releases so far they gloss over the amount that sales are down. They just talk about sales being down but prices up. I guess it won’t be long now before the general public’s eyes are opened to the reality of what is happening.

#3 TurnerNation on 10.03.12 at 8:53 pm

Ohoh, from the picture we see Bandit’s gotten into the Scotch supply again!

#4 Realtor #1 on 10.03.12 at 8:54 pm

You heard directly from your leader NO CRASH, no miami or phoenix.

More like Chicago or Boston. — Garth

#5 Canadian Watchdog on 10.03.12 at 8:56 pm

Stay the hell out of my tub. — Garth

Stop trying to hide your past.

Ok enough.

#6 2muchdebt on 10.03.12 at 8:57 pm

All the mainstream media is getting in on the act now.

http://business.financialpost.com/2012/10/03/as-housing-market-slows-industry-scrambles-to-paint-positive-picture/

#7 woper_holic on 10.03.12 at 8:58 pm

I smell a crash. Panic will spread and the market will over-correct…believe it.

#8 Smoking Man on 10.03.12 at 8:59 pm

Speaking of Fordville. Just met Rob Ford at the LCBO on lakeshore. Not 15 min ago.

Hell of a nice guy, Told him he’s doing a great job, He thanked me. Said I had a hell of a car, I said your Escalaid aint bad either, must be a bitch on Gas.

Last year was having problems with over ambitious ticket police I called his office last year and they went away. So I thanked him for that.

……………………………………………………………..
Gartho

Even those who mocked me (at least the ones still able to breathe on their own)now concede what was forecast is coming to pass.

Am I the last hold out.

#9 malik on 10.03.12 at 9:00 pm

useless, nothing can change their behavior

#10 Saskatoon-Living on 10.03.12 at 9:01 pm

What do you make of this Garth:

http://www.thestarphoenix.com/business/Saskatoon+house+prices+still+rise+Royal+LePage+report+says/7338387/story.html

Is it really different here in hickville??

#11 garthturnerdinglehiemersmit on 10.03.12 at 9:11 pm

so basically real estate in toronto is still going up ..your saying?

Read much? — Garth

#12 Esmerelda Fitzmonster on 10.03.12 at 9:14 pm

Sacrilege! Heretic!

“It is probably the case that prices will lag behind the inventory build-up as the abrupt correction in sales is perhaps followed by discounting,” Scotiabank economist Derek Holt said in a note.
http://tinyurl.com/9lhabhg

#13 malik on 10.03.12 at 9:20 pm

My Gift to blog dogs. Portfolio of comfort.

XBB — 30% —– 3.3% yld
CPD — 20% —– 4.7% yld
REM — 30% —– 10.5% yld
VEA — 20% —– 6.8 % yld

#14 Old Man on 10.03.12 at 9:21 pm

I for one loved Oakville with the park near the lake the took my babes to warm them up; and there was the lawn bowling club; not to mention the yacht club, but will tell you a secret, as in TO some of the biggest of the big who were corporate presidents lived there, as they were my clients; not in Toronto, but in Oakville.

#15 EIT on 10.03.12 at 9:24 pm

“The sabotage of the Fordo uranium enrichment facility’s power lines on Aug. 17, gave Israel Prime Minister Binyamin Netanyahu the extra leeway to move his original red line for Iran from late September 2012 – now – to the spring or early summer of 2013”-DEBKAfile

I love you eaton. Thanks dude. The war is postponed, yay!

Crash-Depression-Currency Wars-Trade Wars-World War — People are going to be sleeping a lot less.

#16 Ralph Cramdown on 10.03.12 at 9:25 pm

Something terrible has happened at TREB. They printed a complete press release that didn’t once blame the municipal land transfer tax. Call for help, they must’ve been overwhelmed by toxic gases!

#17 Junius on 10.03.12 at 9:26 pm

#4 Realtor #1

You said, “You heard directly from your leader NO CRASH, no miami or phoenix.”

Remember Miami and Phoenix went off more than 50% from their peaks. Vancouver will be closer to this than Toronto, for sure. However Oakville will still get well below the 2008 numbers you benchmark.

Some Phoenix hoods lost 70 per cent. — Garth

#18 Devore on 10.03.12 at 9:38 pm

Yesterday I told you about Vancouver’s continuing sales plunge. Now it’s Toronto.

I think it is now safe to talk about the Vancouver price declines, rather than merely sales. Or is that counting chickens too early? September is traditionally when sales activity picks up from the sleepy August, but the month has been uniformly disappointing. And it’s downhill for the rest of the year, through to spring (or at least the Chinese New Year in Vancouver, when a new batch of Chinese billionaires descend upon the city to make their feng-shui correct good luck acquisitions with suitcases full of cash).

With the slow speed real estate moves at, it will not be until after next year’s spring market before anyone dares to officially declare a bust.

#19 Don't read his post on 10.03.12 at 9:41 pm

I think some people are expecting bubble armageddon In Canada. A minor correction will be bad enough for many people. It will last for years and really sting but dont expect a pheonix or Miami.

#20 Devore on 10.03.12 at 9:47 pm

But it doesn’t last. And even with this averaging-effect going on, the price of an average SFH in 416 is about $50,000 less than it was in April.

And don’t discount the effect of affordability. A buyer with an $800,000 budget looking for an $800,000 house will continue to look for an $800,000 house, even if the $800,000 house he was looking at 2 months ago is now $750,000. This is how average, median and benchmark(tm) can remain sticky, even as prices fall.

#21 Devore on 10.03.12 at 9:50 pm

#18 Devore

With the slow speed real estate moves at, it will not be until after next year’s spring market before anyone dares to officially declare a bust.

And by “bust” I mean “a cyclically declining market”. A bust indicates there was a bubble, and we’re still a couple years from mainstream admissions of such.

#22 Vincent on 10.03.12 at 9:51 pm

Everyone please email your MP’s to tell them no bailout for the irresponsible home owners who took on more debt they can handle. People should bear responsibilities for their actions.
Thanks

#23 Sparky55 on 10.03.12 at 9:55 pm

2nd hand info, but I heard Halifax has issued a moratorium on new apartment building permits.

#24 };-) aka D.A. on 10.03.12 at 9:55 pm

Seriously, where do y’all think prices will be in ten years’ time compared to where they are today? Do you really believe the savings you anticipate may be had by waiting for prices to fall are going to amount to that much, if anything, against the ultimate lift over the next ten years? Are you not going to need a roof over your head then too? How long are you going to need shelter, 5, 10, 15, 20, 25, 30, 40, 50 years? Are you seriously contemplating renting for all that time? What do you think the price of housing will be when you are just half way through your anticipated need of it; double, triple or more? If you are a 25 year old first time buyer contemplating purchasing your first home what do you think in 40 years at your probable retirement it might be worth – bought and paid for 15 years prior that you put an equal amount as your mortgage payment in savings from then on? What would that do for your retirement?

Nope, you’re probably right and none of my implied insinuations are likely to come to fruition. You should continue renting – in makes cents.

#25 BigDaddy on 10.03.12 at 10:00 pm

Isn’t it fun to catch a falling knife or at the very least
watch other’s experience the mis-fortune.

#26 furst on 10.03.12 at 10:00 pm

Smoking the Good stuff – a poem by Furst

Smoking man is Da man
Because he prophesizes like nobody can
He’s rich and powerful, or so he does claim
He’s larger than life, All of us destitute and lame
He says the housing market will continue to soar
His portfolio will mint, while ours will bore
Drunken nights at the bar, a lovely lady on each arm
Pulled over by cops, no need for alarm
He knows people in very high places
A call to his friends and courts will throw out his cases
We should all aspire to be just like Smoking Man
Haha, hat was hard to write without laughing, Damn!
Ok, seriously now give respect to the Man that Smokes
If you ask nicely, maybe he’ll give you a few tokes

#27 Old Man on 10.03.12 at 10:06 pm

I am really go to blow your minds away, as enough for tonight, as had another client on my page, and it was Colonel Harland Sanders as in KFC. He split the USA in 1965, as lived in Clarkson which is down the street from Oakville. Yep, all that you saw on TV was an illusion, as he gave us his permanent residency to live in Canada, and did a bit of business with him.

#28 Grim Reaper/Crypt Speculator on 10.03.12 at 10:09 pm

Well…so far …..no-one ahs said..drum roll……Fiirrssszzzztttt!

#29 Form Man on 10.03.12 at 10:09 pm

#23 DA

hmmm. desperation ?

#30 Boombust on 10.03.12 at 10:15 pm

Why no C-R-A-S-H?

I think it’s already baked in.

#31 Devore on 10.03.12 at 10:15 pm

Here’s a timely article for real estate buyers:

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/top-10-ways-to-win-a-real-estate-bidding-war/article4559578/

#32 pathcontrolmonk on 10.03.12 at 10:18 pm

how about this for perspective, says a lot about the Canadian psyche: “Trending articles on Financial Post”

Nortel trial | CNOOC-Nexen deal | RIM | Housing market | Apple iPhone 5 | EU debt crisis | First Leaside | Debt

#33 LJ on 10.03.12 at 10:18 pm

“No Phoenix or Miami.” -Garth

I don’t think that Phoenix ever made it to claim the prize of the 2nd most expensive city on the planet either.

#34 Mister Obvious on 10.03.12 at 10:21 pm

We need a better word than “crash” to describe the future of Canadian residential real-estate.

A crash is what those uncouth Americans had. Similar to what invariably occurs in the final ten minutes of one of their formulaic Hollywood movies. That is so jejune.

In Canada, we prefer less drama. We are more likely to experience “flaccidity”. Perhaps even a severe and humiliating flaccidity. Still preferable to a sudden impact.

#35 AACI homedog on 10.03.12 at 10:25 pm

Plenty of photo reference to canines and felines lately.
Where is the lingerie that was promised ?

#36 GTA Girl on 10.03.12 at 10:25 pm

Disagree with one thing, there will be a crash…in Toronto condos for certain. The pinnacle was reached with the Mirvish/Gehry condos. Put in a weird arty design on the street scape so no one notices the mundane all glass dinosaur behind.

Interesting stuff being dredged up at the Montreal corruption inquiry. The PMO top guy trying to fix the head of Montreal Port, a little while back. Confirmation that the corrupted is at the head of our govt. that and all the beef ecoli scandal…and the Jacobson story done by Michael Harris at IPolitics…plus something else to be released soon.

Garth’s past posts on his interactions with the Prime Minister rightfully place him as the Luke Skywalker of his time.

#37 bsallergy on 10.03.12 at 10:28 pm

Come on Garth is really is different here.

#38 Smoking Man on 10.03.12 at 10:28 pm

Damn it I failed, Oil got killed, The housing market 416 SFH decimated.

I was wrong. Damn. The force, the universe coming for pay back.

Defeat sucks.

After 4 years bubble heads win one.

Furst That’s a Beauty Get a good beat you will be a start on 99.9.

Cheers just going past 2.5

#39 disciple on 10.03.12 at 10:36 pm

Old Man… These are well-known “secrets”. My question is how did Oakville become white collar… every North-South road got its own exit onto the QEW… cause of the traffic…

#40 Canadian Watchdog on 10.03.12 at 10:37 pm

Is TREB Abusing Its Power? Link

The report was released by Gregory Vistness, vice president of the consulting firm Charles River Associates in Washington; and it’s an astonishing 189 pages long. Mr. Vistnes was commissioned by the Competition Bureau to investigate TREB’s practice and in the report he argues many points and makes many accusations against the Toronto Real Estate Board.

“TREB has abused, and continues to abuse, its substantial market power and control of relevant market to reduce competition and protect its member brokers’ interest at the expense of consumers,” he starts off in the report.”

#41 Julia on 10.03.12 at 10:37 pm

High points tonight… Garth’s dog and Furst’s poem.

#42 disciple on 10.03.12 at 10:38 pm

Yup, no crash, no Miami or Phoenix… much worse…?

#43 Suede on 10.03.12 at 10:42 pm

#13 Malik

Interesting mix of ETF’s you mention.

Side note: Was researching many different equities and ETF’s…The names of some interesting ETF’s and equity tickers out there:

MOO – Agriculture
COW – Livestock (currently at 5 year lows)
CORN – Really
DUST – For those that hate gold, buy some gold DUST and 3x your daily movement if you like to gamble
FUN – Cedar Fair Entertainment (Knotts Berry Farm, pays almost 5% dividend)
COOL
GUM – Gold Mountain, not Hubba Bubba or Bubblicious

and the winner:

Copper Mountain Mining Corp on the TSX. Look it up.

#44 JSS on 10.03.12 at 10:44 pm

“The average income is $89,000”

Is this the average of the total family income in Oakville? Or each worker’s income?

#45 mr noodles on 10.03.12 at 10:50 pm

well the melt has reached fort mac according to fort mcmurray today,online edition(dont know how to provide a link).condos down 7.9% and inventory starting to build up in all classes of housing units.

so even with jobs still being created here and the high wage levels looks like nowhere is safe.

#46 WhiteSquall on 10.03.12 at 10:50 pm

Oakville, my childhood stomping ground – in the Trafalgar and Dundas area – I would ride my bike over hills and valleys. The vastness was humbling. Today – its as if you were transplanted to a new world. Conjestion and a thousand stores fill the area. Thousands upon thousands of roof tops cover the once fertile landscape. In 2002, we were looking at buying our first home – but sadly even then prices would have seriously stressed our budget. Our alternative – we moved north, an hour north of Toronto. Our home was 1/3 of the price with alot more “yard” to enjoy.

Though the town has it’s fair share of pompous fools, it’s still a marvelous place with character. If you knock the town – you surely haven’t been there –

Long live Oakville – the greatest town in Canada!!

#47 Mr Buyer on 10.03.12 at 10:58 pm

Yes, it means a crash.

#48 Devore on 10.03.12 at 11:05 pm

#34 Mister Obvious

How about “suck”. Or maybe some clever way to verbify “japan” in reference to their two decades of low interest rates.

#49 Mr Buyer on 10.03.12 at 11:06 pm

#24 };-) aka D.A. on 10.03.12 at 9:55 pm
Seriously, where do y’all think prices will be in ten years’ time compared to where they are today? Do you really believe the savings you anticipate may be had by waiting for prices to fall are going to amount to that much, if anything, against the ultimate lift over the next ten years?
…………………………………………………..
21 straight years of property price decline in Japan after the bubble collapsed.

#50 Ryan on 10.03.12 at 11:10 pm

I am so tired of reading the Demographia study trumpeting restrictive land use and correlating with house prices. Nobody with a straight face can claim tht Toronto has had anything approaching ‘restrictions’ on development. They’ve trashed every nice farm from the west of Milton to Pickering. Vaughan?

Asinine assertion.

A writer that draws a link between a single antecedent variable and house prices loses all credibility in my mind. There’s a lot going on there besides land use policy. The data on affordability is helpful, the rest is toilet paper.

#51 Devore on 10.03.12 at 11:14 pm

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

Aww, I see the VREB has redacted their attempt at starting a new economic theory to spin conditions in Victoria and remind people it’s always a good time to buy. While Google cache did not catch it for posterity, many copy/paste realtors did:

https://www.google.ca/#hl=en&sclient=psy-ab&q=“Victoria+Real+Estate+Market+at+a+Standoff+as+Prices+Remain+Steady”+” interest+rates+will+be+increased+to+stimulate+the+economy”

#52 Victor on 10.03.12 at 11:16 pm

Vancouver real estate sinks

http://ca.finance.yahoo.com/video/real-estate-down-203400848.html

#53 THE CELIAC HUSBAND on 10.03.12 at 11:16 pm

We commute on our laptops.
We ditched one car.
Kid walks to school. A nice walk along the river.

http://theceliachusband.blogspot.fr/2012/10/fall-is-here.html

It’s all about what one wants out of life.

#54 TRT on 10.03.12 at 11:35 pm

Vancouver Stats. Excludes Surrey/Fraser Valley

Oct 3

90 sold
18777 inventory

Correction will happen if sales stay below 100 and inventory slowly rises. Will up date tomorrow.

#55 Grim Reaper/Crypt Speculator on 10.03.12 at 11:36 pm

Who cares ?……..Oakville is attached to a larger land mass that is simply a colony of BC.

FORD should Joint Venture with Monsanto and create a hybrid Shetland Pony.

#56 NKVD Black Raven on 10.03.12 at 11:36 pm

I lived in Oakville in the early nineties. I can only summarize it as a boring, stuffy bedroom community with a mall and terrible traffic.

#57 Concessionman on 10.03.12 at 11:40 pm

“And even with this averaging-effect going on, the price of an average SFH in 416 is about $50,000 less than it was in April.”

Of course with the cartel spin…

“the price of an average SFH in 416 is about $40,000 more than it was in January.”

Easy to see how the public could be misled…

#58 Mr Buyer on 10.03.12 at 11:43 pm

#24 };-) aka D.A. on 10.03.12 at 9:55 pm
Seriously, where do y’all think prices will be in ten years’ time compared to where they are today?
………………………………………………………………
This is another key expectation that is exploited to great effect. it is derived from The Real Estate will always rise expectation. It relies on the expectation that real estate prices are cyclical at worst, so any drop in value will be recovered at some point in the future. First of all that does not apply to bubbles (a bubble is not a cycle unless of course there is a multi-generational time line which thus excludes bubbles from the whole cycle argument anyways). Lets say I buy a house for 500k right now at 3.2% interest with monthly payments over 25 years. That means the house will have cost me around 658k. We have to ask ourselves, is it reasonable to expect the price paid at the top of a real estate bubble to appreciate a further 158k or and additional 31% of the purchase price over the next 25 years. Well under normal circumstances I would have thought that 1.2% a year appreciation is a no brainer and I would be inclined to buy if recovering my money after I used the house was my only concern. The problem is that this is a real estate bubble and Japan is a shining example of what happens to property prices in the aftermath and collapse of a bubble. 21 straight years of property price decline. And contrary to what was stated in the comments a few weeks ago, house prices are not rising in Japan. Any markets that did show gains from the bottom have recovered small fractions of the bubble level prices, that are no where near the price they were 21 years ago. Add into this interest rate fluctuations, taxes, maintenance and a host of other mundane things and it is easy to see that buyers should not be buying now. It is best to rent now for certain. It is a much better idea than it was in 2008 and it will be an even better idea in 2013. Do not get fooled.

#59 Mithan on 10.03.12 at 11:45 pm

Chicago prices dropped 35% from the peak.

Phoenix was crazy. My coworker bought a house last year for $52k. It was built in 2005 for $850k and foreclosed on three times. It also had a pool, 3 garages and would have gone for two million in Regina. Most areas of the city were in the 50-60% range, which I think is too much to expect in Canada, but who knows.

I think Canada will take longer to bottom out and recover than the US do to our mortgage rules keeping things more sticky.

#60 RijndaelConundrum on 10.03.12 at 11:55 pm

Hey Garth,
Are low Canadian interest rates fueling real estate appreciation in the USA? What will become of these guys if the rate goes up over here?

http://www2.macleans.ca/2012/10/03/attack-of-the-snowbirds/

#61 Old Man on 10.04.12 at 12:00 am

Some of you younger people need to get involved with the political machine, as you can make a difference in life. I did this all years ago, and there will be many benefits for you in life, as had the private home phone number of the Mayor in Toronto; a Cabinet Minister asked me to take a summer off with pay to run an election campaign – what a blast -; the head of CSIS asked me to monitor an election count for a certain riding; and was asked to be the frontman for a candidate to knock on doors all night long.

You will meet lots of people, and be invited to great home parties, but once you participate there will be job openings for you, and just ask for a favour and it will not be refused, as that is how the political machine works, so get involved, as it is great fun, as you that are younger can make a difference with nothing to lose.

#62 Nostradamus Le Mad Vlad on 10.04.12 at 12:05 am


Mathematics and High School Prank

Proof that you can’t underestimate the creativity of boys when it comes to mischief.

Considering all the brilliant, devious minds we had in high school, I don’t know how we missed doing this.

At a high school in Saskatchewan, a group of students let three goats loose inside the school.

Before turning them loose, they painted numbers on the sides of the goats: 1, 2, and 4.

School Administrators spent most of the day looking for No. 3.
*
“No market is immune, although all are different. Sales are now tanking in leading markets, with the regional backwaters (Winterpeg, Skatch, Cowtown etc.) certain to follow, in their cute hick way.” — When China crashes and burns, down follow Oz and Canada.

Magically and possibly then, China, along with several other countries, introduces the world to its new gold-backed currency, dumping the Petro-dollar and getting some stability with it.

‘Tho RE prices will fall, no one knows how much or when, but it’s sure gonna be mighty interesting!

#15 EIT — “Crash-Depression-Currency Wars-Trade Wars-World War — People are going to be sleeping a lot less.”
— and —
#42 disciple — “Yup, no crash, no Miami or Phoenix… much worse…?” — Good summation.

#26 furst — “If you ask nicely, maybe he’ll give you a few tokes” — Good to see you back, Furst!
*
China and the US election; Russian inflation and Chinese RE; Oil and Gas Reasoon why China and Japan are squabbling over the islands; Prepper / Survivor’s Guide Doing alright; ObombaCare Made for TPTB, with Obomba taking the flak? 4:41 clip The US Fed’s addicted to crystal meth (debt); Europe’s fiscal suicide Based on false pretense; Wages Union or non-union, it doesn’t matter; China ends talks with Japanese banks; Guv’mint An excellent reason to not to not let govts. get involved with business decisions; Tidy gains while posting a loss; Double Dip Tuesday, the Daily Mail said the recession was over. Wed., The Sun says it’s still ongoing; 15K queue for 150 jobs Madrid.

QE3? Wall St. wants QE4; Gold and Silver Explosive gains forthcoming? SocGen Global currency debasement may spark civil unrest. No shit; Spain Companies leaving; Futures Surge after debate; Saudi Currency Market Trouble brewing;
Busted What an oil boom town looks like after the oil’s gone; Buying the World Vultures, I would say; US13K debt for each newborn; French economy Mon Dieu! Trojan Horse = IMF.
*
Non Aligned Movement (NAM) makes its case clear about Israel, and 10:42 clip Russia exposes CNN-deceit, The real reason the US fears Iran having nukes, which it won’t plus 3:42 clip Iran already under attack; 4:19 clip It does not make sense for Assad to fire into Turkey, so this is a false-flag by the hired mercenary armies to justify direct military intervention by Turkey. wrh.com, and US and The Toilet So the US and al Quwhatever are friends against Syria, yet they are enemies in Mali. Whut’s goin’ on here? Plus Turkish people So who is the driving force behind Turkey’s govt.? Try the US and Israel; Venezuela US interfering and causing trouble again; Facebook wants a poster to pay for posting; Dumb ’em down while they’re young so they grow up to accept authoritarian figureheads; Pole Shift Happening? Something’s changing; NDAA okayed Americans can be detained indefinitely. Who said justice ws blind? More than Fukushima; Perfect Poison Modern wheat; Who’s A Pretty Boy Then? Not here; Lovely Legs Judge for yourselves; 6:11 clip Electric galaxies bypassed the big bang; Browser Feature that never was; 10:58 clip USSA – The Bigger Picture.

#63 Vangrrl on 10.04.12 at 12:06 am

My friend’s dog has eyes like that- craaaazy!
Someone might have mentioned it already, but Vancouver Sun had a headline “Metro sales slump, prices in decline”.
Wow- they pick up on things fast, the mainstream media.

#64 };-) aka D.A. on 10.04.12 at 12:09 am

#29Form Man on 10.03.12 at 10:09 pm
#23 DA

hmmm. desperation ?

Why would you suggest that? Just food for thought is all it was. Trying to offer a contrarian point of view to that of the contrarians – playing Devil’s Advocate };-)

But really Form Man what do we care whether they choose to buy or sell… we offer services to both. But most who are trying to bail have their heads stuck in 2007 pricing which isn’t going to happen. Such speckers don’t have the serious motivation to compete with the core group of sellers selling for valid motivating reason. This is a “buyer’s market”, no argument about that. Typically though buyers don’t buy in a buyer’s market as they speculate prices may fall yet further. Eventually when it shifts to a seller’s market those buyers are all a twitter with concern that if they don’t buy now they might be priced out of the market.

Oh and by the way did you hear the news? Our local inventory levels are abating at a rapid rate. Mostly what is causing that is those overpriced crap listings, which could hardly be called offerings in the first place, the listings of which are expiring and the sellers conceding their lofty expectations wouldn’t be met so why even try again. More new listings expire in any given month than sell.

#65 patiently waiting on 10.04.12 at 12:09 am

For White Rock Mom: here is my red flag list for today. Each of these listings (except for a few minor exceptions) have all had a minimum of $100,000 price reduction (some as high as $300,000 or more). There are also a few with multiple mortgages on title, pending litigation (meaning they are soon to be foreclosed on). Even the ones where the price history shows the price drop, often have more price drops than are visible on the listing – you can only see the full extent of the price drops when a price history check is done – which I have done for all of these tonight. As far as how far I see the market correcting in White Rock, I think this is only the begining . . . there are a lot of over leveraged owners in this town (I can say this with confidence as I have done mortgage document searches to verify the mortgage amounts on many properties – what I found was really shocking).

Cheers
PW

http://mlslink.mlxchange.com/DotNet/Pub/EmailView.aspx?r=235366579&s=BRC&t=BRC

#66 Joe in van (livin in it) on 10.04.12 at 12:11 am

Would it not make more sense for the BCREA to tell it like it is, drive the prices back down to the $400K (where it really should be) sell lots of houses and make money; no they want to keep up the charade, price high get no offers and make no money. Stupid repossessed BMW people. Sold in Van 2-1/2 years ago and could buy my old hose back for 50K less than I sold. So If I am telling the truth, which I am, then someone is lying.

#67 Bob on 10.04.12 at 12:16 am

So the averages don’t do us justice because of these low sales at the low end and (relatively) more sales at the high end, which skews the numbers when comparing month-to-month.

But yet, you call the HPI a frankenstein number.

So what numbers should we be looking at to tell us the types of corrections we will see?

HPI says minimal correction, averages sales says minimal correction… which numbers are you using?

#68 Bubble Watcher on 10.04.12 at 12:20 am

#40, Canadian watchdog

Is TREB Abusing Its Power?
_________________________

In the report, it says there was $40 billion in commissions last year in Toronto.

Is it real?

Can someone confirm?

#69 Soylent Green is People on 10.04.12 at 12:29 am

For 35 AACI homedog on 10.03.12 at 10:25 pm

http://tinyurl.com/6n95psx

.
.
.

#70 harden on 10.04.12 at 12:32 am

#6 2muchdebt
http://business.financialpost.com/2012/10/03/as-housing-market-slows-industry-scrambles-to-paint-positive-picture/

yes… and also in that column someone in the MSM finally points to the absurdity of the HPI.

#71 dv8 on 10.04.12 at 12:59 am

The madness of a lost society

http://www.youtube.com/watch?v=nFeq02oHgwI

#72 Aaron - Melbourne on 10.04.12 at 1:18 am

Thanks for acknowledging Melbourne is equally as unaffordable as Toronto.

All we need now is an angry mob!

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

#73 Dude from Richmond on 10.04.12 at 2:05 am

Garth, NO CRASH???
Not even in Hongcouver and Richmond?

#74 Mic D'angelo on 10.04.12 at 2:19 am

Garth, I am still waiting for bond yields to rise from summer time. The 30 Year Canada Bond was 2.29% on June-28-2012 and now just over 3 months October-3-2012 it is 2.31% a 0.873% increase. Provincial bonds and strips are actually lower for example Ontario 2043-June-2 3.50% coupon yields 3.30% October-3-2012 vs. 3.38% on June-28-2012.This is a 2.366% decrease in just over 3 months. Bond yields are not going up for at least a decade and if they do it will be short lived and fast to decrease as for the last 15 years.

#75 Humpty Dumpty on 10.04.12 at 2:33 am

McAlvany’s PERSPECTIVE of Singapore, Hong Kong, and mainland China, may
inform you.
surprise you
and possibly alarm you.

This fuse has been lit folks…

http://www.youtube.com/watch?v=lsZhyc06V-I&feature=player_embedded

#76 CyberNick on 10.04.12 at 2:48 am

My friend sais Ottawa is safe because of all the government jobs. He needs/wants to buy soon, my guess within a year. Any thoughts? Garth and/or blog gogs?

#77 Crash Calaway on 10.04.12 at 2:55 am

No Phoenix, no Miami, no crash just a steady gradual increase of heat until we’re cooked. To fried & too crispy to crawl out of the bubbling koolaid.

This Thanksgiving should be extra special for those that didn’t get sucked into buying a shack and actually have some cash to buy that turkey!

#78 VMD on 10.04.12 at 3:01 am

Gentlemen, behold the “Buy one get one free” deal of Vancouver West.
$898000 / 2br – 1460ft² – Buy one get one free (no kidding) (South Cambie)
Buy one Townhouse in Vancouver and get a single family house in US free. ( special offer, no kidding)
Townhouse in Vancouver, BC: $898,000
1460 sqft, 2 big bedrooms + 1 den, built in 2004, south Cambie
Best Schools – just 1 blk from Churchill High, Laurier Elementary and community centre!
Private garage, blt-in central vacuum. Designer paint, custom made window covering, build in security system, all double glaze windows with good acoustics.
This well designed, bright corner townhouse and great community is the best place to raise your kid!

Free single family house in Ohio, USA
Property Description: 6900 sqft land size, built in 1962
This is a 3 bedroom, 1 bath brick ranch with central air, full basement, 1-car garage, all new windows, upgraded electric, new garage door & roof, and newly payed driveway.
Tenant moving in mid-April paying $600 per month for a one-year-contract. Annual property taxes are $1,193.
Agency take care of everything, take rental monthly, good for cash flow.

http://vancouver.en.craigslist.ca/van/reo/3310528801.html

#79 Jay Currie on 10.04.12 at 4:22 am

#43 only by chance on Copper Mountain.

More to the point, burbs get hit hard in crashes. Largely because living in the burbs is less interesting than living in the city. If you have the money and the city is selling at a 25-45% discount you are not going to buy in the burbs.

What a crash or a melt is about is a reboot to reality. We are in the very first months of that reboot.

#80 John on 10.04.12 at 5:41 am

As Canada and Oakville goes, so goes the world. As the world goes, so goes Canada and Oakville.

Now for a little brainstorming suggestion. What would a list of ten factors-variables which demonstrate the above is true look like.

The local analysis and actors would be interesting, but would fall away simply due to priority.

The action? Lots of work on slowly breaking the denial and facing what it means in community. I am not interested in this action at the moment because “I want more time”. I’m not ready. That makes me a lot like just about everyone caught in the ponzi. I mean c’mon…we are the ponzi, aren’t we? We’re not, but accepting that means too much change. Social ( and individual) change must be transitional.

When we look at Australia, would anyone care to go “into the country” to see “what happened in there”? Tye same thing that happened to Australia happened to Canada.

Look at some of the absurd posts about how “smug people should be responsible for their actions and pay their debt obligations”.

Guys. It was a fraud. A scheme. A heist. And the way I see it, there’s a lot of analysis about the air pressure in the tires of the getaway car.

Question: Who is Scotia Bank? It’s as Canadian as The Federal Reserve is Federal.

Step up. Talk about the ponzi. Talk about the fraud. It’s coming out anyway. Is there harm in being contrarian? I don’t see any “contrarianism” going on here.

Apart from that, the context of Oakville in the GTA’s development was amazing. I had never put those dots together.

#81 Form Man on 10.04.12 at 6:38 am

#64 DA

Seems like you must not have checked the stats very carefully ( perhaps your desperation has affected your reading comprehension):

first the good news- inventory for Kelowna has dropped 2.9% from September 2011 ( hardly ‘abating at a rapid rate’) ; the bad news……overall sales are down 13.5% ( residential sales down 18.7%)….ouch !

MOI has jumped from about 14 months to 17.61. Since we are looking for MOI of no more than 7 months before prices stabilize, they have a long way to fall yet.

http://www.omreb.com/news.php?newsID=103

#82 Over in Australia on 10.04.12 at 6:49 am

Melbourne, Australia… My home town and it’s toast. 18 to 24 months behind Canada but the same is going to happen here.

#83 Victor on 10.04.12 at 7:35 am

Why it’s better to rent than buy

http://business.financialpost.com/2012/09/14/why-its-better-to-rent-than-buy/

Does it make more sense to buy or rent a home from an investment perspective? It’s a question I get asked more than any other. The answer, in an era of historically low interest rates and perpetually rising real estate values, appears to be obvious: buy.

Just ask any real estate agent and they’ll tell you, “Don’t pay your landlord’s mortgage for him,” or “Build equity for yourself instead of flushing your money down the toilet,” and our favourite, “There has never been a better time to buy.”

It all sounds pretty convincing, but it’s wrong. Unless you need the security blanket of owning your home, it is nearly always a better financial move from an investing standpoint to rent rather than buy…

#84 Corrado613 on 10.04.12 at 7:48 am

#65 – Patiently Waiting

took a spin thru those links, thanks for the morning laugh. Gotta love stupid people! listing a home for over 1.1mil and slapping on a 10k price reduction…. because THAT’s gonna make it fly off the shelf!!!! Giant facepalm is appropriate!!!!

luckily I own my home but I fear that even buying two years ago, I may have paid too much…(actually, i know i paid too much, stupid minto development “quality” construction!). with luck it’ll be a 15+ year residence for me…. even though that hasn’t worked for me thus far in life. D’OH!

#85 Buy? Curious? on 10.04.12 at 7:55 am

Hey Garth! I was doing a little, um, counting last night with regards to your last post. Not including my 2 posts, you had 230 comments. Out of that 230, Smoking man was mentioned by someone else 22 times. He posted 15 times and funny enough, he was the only one whose comment was deleted. If I, er, counted correctly and did the math properly, you’re devoting 16% of your comment section to him! The numbers don’t lie.

http://www.youtube.com/watch?v=B-Wd-Q3F8KM

#86 TurnerNation on 10.04.12 at 8:24 am

#24};-) aka D.A.

Your realtor-math makes no sense.

– A $500,000 mortgage over 25 years. You’ll end up paying a further *$500,000* in interest costs over its term. If not this much then your maintainence costs will make up the balance easily.

– $500,000 / 25 = $20,000 yr.. Enough to rent a place at $1650/month. Add $350/mo out of pocket for a better place.

The extra $1000/mo (lo-ballfigure) saved away, at say 5% compounded over 25 years = $600,000.

(Total monthly cash outlay is $3000: $2000 paid to a rental, $1000 saved away)

Result: after 25 years you own no house but by saving $1000/mo you have $600,000 in the bank. Using TFSA and RSP room you can avoid/defer some taxes.

(Inflation excluded in all calculations)

#87 Jim Lahey, Sunnyvale Trailer Park Supervisor on 10.04.12 at 8:30 am

#26 Furst

“Ok, seriously now give respect to the Man that Smokes
If you ask nicely, maybe he’ll give you a few tokes.”

You hit this one right out of the park Furst and speaking of parks, everyone in Sunnyvale just loves it! Ricky, in particular, was just giddy over the tokes reference and he promises that at the SASTPGFBDCParty, he will have set aside, copious amounts of weed from this year’s bumper harvest (yes, Rita MacNeil was forced to harvest it once again)for you and Smoking Man! Keep ’em coming Furst. As everyone in Sunnyvale has been saying, “that Furst dude, he da man!”

#88 Toronto_CA on 10.04.12 at 9:14 am

Garth has never predicted a Miami/Phoenix style crash for 416, not sure why anyone is surprised here. Didn’t he say 10-15% in the first plunge followed by a slow glacial melt as incomes/rents catch up to their mean ratio to house prices?

Which will be detrimental enough to the unproductive Canadian economy, a crash would push us over a cliff.

The one area that I do so crashing is GTA Condos. And that, in my opinion, will be a Vegas style crash. Hard and furious, and after it happens everyone will say it was easy to see. We’ll see if I’m right.

#89 The Real Tony on 10.04.12 at 9:24 am

The ratio you provide of 8.07 could be misleading if the average income of 89,000 stat you use is for one earner, and not family or household income. Most family have two incomes coming in Garth.

Not sure if it makes the difference but this meddling with statistics puts you on the level of a real estate agent or a politician fudging the numbers to make a point. Guess you already know…

Sorry for the early morning chirp Garth, but someone has to call you out here and there. Plus I havn’t had my coffee…

Google says: Families median income in 2005: 101,675 CAD. That makes a difference

“The average income is $89,000. The average house price is $717,937. This ratio of 8.07 puts suburban Oakville in the same nosebleed territory as Vancouver.”

That is household income, of course. That is how income is measured. — Garth

#90 Rusty Venture on 10.04.12 at 9:25 am

CyberNick;

Tell your friend to cool his jets, especially if he has a small downpayment. With the federal gov’t cut-backs, Ottawa will see a decline. How much is anyone’s guess…

#91 Sam on 10.04.12 at 9:26 am

Sorry Garth; I strongly disagree.. I think we are headed for a housing crash in Toronto and it’s surrounding areas.. I believe way too many people are in way over their heads when it comes to debt (real estate in particular).. History always repeats itself. The younger generation has no idea of how to manage money or it’s value. They simply cannot save.. The only way I believe a housing crash can be avoided is if mommy and daddy bail their kids out (very possible but not likely as they too are in debt)..
I have been following your blog for at least a few years; please keep up the great work!

Sam

#92 gladiator on 10.04.12 at 9:28 am

@34 Mister O:

DELETED

#93 GM on 10.04.12 at 9:40 am

The average home price in Oakville is probably skewed by
the McMansions. I’ll bet you can probably still get a small townhouse for under $450000. Furthermore, I’ll bet that the median household income (not the average) is well over $80000. It’s doable. Even with a 5% mortgage interest rate, you would be paying $22500/a in interest. Try renting a townhouse in Oakville for less than $2000/month. I realize there are additional costs such as taxes and upkeep and maintenance. But the difference between renting and owning in Oakville is much smaller then a factor of 2. The biggest concern is if there is a major downturn in the economy. Excluding the risk factor it’s a wash.

You bet wrong. Try some research. — Garth

#94 Grantmi on 10.04.12 at 9:43 am

#73 Dude from Richmond on 10.04.12 at 2:05 am

Garth, NO CRASH???
Not even in Hongcouver and Richmond?

Well maybe not a crash… In The Couve… But Dichmond is looking like those pics from Vegas Baby, with row, after row of For Sale signs. Only difference is, the ones in Dichmond have cantonese or manderian on them.

#95 The Real Tony on 10.04.12 at 9:44 am

#89

Fail!

Garth – 1
Tony – 0

#96 Daisy Mae on 10.04.12 at 9:54 am

“In the 100 days following, F creamed the 30-year mortgage and raised lending criteria, while CMHC ended coverage for high-end homes and the bank regulator, OSFI, mandated the death of cash-back loans, slashed HELOC credit and toughened up rules for appraisals.”

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

In other words, the little twerp rolled everything back to where it was before the ‘cons’ disrupted a system that worked just fine prior to the ridiculous changes? And what has been accomplished other than grief for everyone?

#97 };-) aka D.A. on 10.04.12 at 10:13 am

#81Form Man on 10.04.12 at 6:38 am

One month does not a year make, nor a trend. But good points on your part. Fact is the market is shifting for the better Form Man.

You know how you can walk through a home at lock up and “feel” the quality build or not. Well in real estate it is much the same, when entrenched in the market you get an instinctive “feel” for where the market is headed. Back in 2007/08 I “felt” the impending doom and over reacted to it, as I mentioned in a previous post. That was an expensive lesson but taught me much so worth it in the long run. Today I can “feel” the market improving. That does not necessarily mean increasing prices or volumes just an overall better balance.

South of the boarder it seems most everyone I talk to are optimistic and I am seeing a growing sentiment that direction here too. We’ll see, but I am sure you would have to agree that it is consumer confidence which most drives any market. Nobody is going to do anything without confidence in what they are about to do. It’s shifting Form Man I really think it is, people are gaining confidence – slowly but surely… we’ll see.

#86TurnerNation on 10.04.12 at 8:24 am

You are making a lot of assumptions in your calculations there. Granted I am assuming the price of the home appreciates over the, say 25, years you will live in and pay for it, but history has proven that to be the norm and I see no reason why over the course of the next 25 years it will not be repeated.

But you should do what works best for you. We’ll compare notes at a distant future date.

BTW, we are soon embarking upon our plan to sell our paid for family home, invest the money in a revenue generating property and use the income to pay for the rented roof over our head, wherever that may be, in whatever country it might be in. So I am really not so opposed to renting under the right circumstances. But I will always own dirt, always.

God I love real estate.

#98 Mixed Bag on 10.04.12 at 10:23 am

How will “starter” SFH detached homes will fare in Toronto? For example, as a percentage, the loss on the 50’s 1000 sqft’ers, vs. the larger detached two-storey homes the boomers will supposedly want to offload.

I remember a post a while back where Garth stated those won’t be as harshly affected, and wonder that thinking has changed.

#99 Stoopid Idiot on 10.04.12 at 10:27 am

Neil Macdonald: Why a U.S.-style housing nightmare could hit Canada
How Canada resembles a slow-motion replay of the American crash
By Neil Macdonald, CBC News
Posted: Sep 21, 2012 5:25 AM ET

An expatriate always thinks about going home. The longer the time abroad, the stranger the prospect of re-entry feels.
But if you’re a Canadian living abroad these days, the idea of returning home has become downright frightening. Stories are now routinely surfacing in the Canadian media suggestingcollective madness when it comes to affordable living.
Well, I watched America’s nightmare unfold, and it appears pretty evident to me that a sequel of some sort is coming to Canada.Our biggest real estate markets — Toronto and Vancouver — seem to have decided they’re really London and Manhattan. Several of our smaller cities are wildly optim
So I ran that thesis past Robert Shiller, of Yale University, probably the foremost authority on real estate in America. He co-founded the Case-Shiller Home Price Index and predicted the American collapse in 2005, a year before it happened.
“I worry,” he told me, “that what is happening in Canada is kind of a slow-motion version of what happened in the U.S.”
Nosebleed levels of debt
What Shiller was getting at — and what is most alarming to economists and to the Bank of Canada — is the debt Canadians are carrying.
Toronto and Vancouver have led the way, but even cities like Winnipeg have shown a strong housing market this year.(Nathan Denette / Canadian Press)
As was the case in America when I arrived here nine years ago, Canadians have for years been so desperate to avoid being left behind by a surging housing market that they’ve been stretching themselves beyond reasonable financial limits to jump in, thus of course ensuring continued surges.
In the process, household debt has doubled, going from a manageable 75 per cent of household income in the early 1990s to 150 per cent today.
That’s just about exactly the nosebleed level Americans were at when everything imploded here in 2006.
Worse, as the Bank of Canada has been pointing out, Canadian debt is disproportionately concentrated in the most vulnerable households, defined as those devoting 40 per cent or more of household income to paying interest charges.
Manhattan North? Condo cranes dominate the Toronto skyline. (Canadian Press)
That means those households are extremely sensitive to any sort of shock — be it a rise in interest rates, a drop in home prices, or, worst of all, job loss.
The central bank’s analysis suggests that if interest rates rise to 4.25 by mid-2015, fully one fifth of all Canadian debt would be held by those households least able to finance it.
“That is rather scary,” says Don Drummond, a former federal mandarin who also spent many years as the chief economist of the TD Bank.
Drummond says an interest rate of 4.25 by 2015 would not be out of the question, given the levels of economic stimulus in recent years. He also says the bubble in Canada is bursting right now.
TORONTO SKYLINEBefore/after photos: Condo boom changing city’s landscape
“My base case expectation would be that most markets in Canada over the next two years would see a pullback of housing prices of 10 to 15 per cent.”
A similar delusion
Now, both Shiller and Drummond are quick to say Canadians are not likely to experience the near-total meltdown Americans experienced.
For one thing, Canadian banks never joined in the subprime-lending lunacy that inflated the American bubble to such extremes.
For another, Canadian mortgages are insured by the federal government through Canadian Mortgage and Housing Corp.
But Shiller says Canadians do seem to be suffering from the same delusion that afflicted Americans: the notion that housing prices always rise.
He has studied data going back a century, and says that when you factor in inflation, and depreciation of the home’s physical structure, “historically home prices haven’t gone up. Real home prices were essentially unchanged over that interval.”
There are bursts of growth, as in the past 10 years in Canada, but historically they are offset by retreats.
Shiller says real estate bubbles are nothing more than groupthink, and that they “always have their end built into them.”
“People are investing in real estate that is tough for their budgets because they think it will make them rich, and that can continue only as long as [prices] keep increasing.
“When they stop increasing,” he says, people back off, and the bubble then collapses. “So it has its own internal dynamic.”
Exactly when this groupthink changes course, says Shiller, is hard to pinpoint, but one sign is a flurry of media stories. Such as this one, I suppose. Not to mention the attention we are giving this subject on The National.
Even though many of us in the media own homes ourselves — and have a self-interest in the market continuing to rise — there clearly comes a point when the subject begins to dominate public discussion.
Economist Don Drummond: rising interest rates would not be unexpected. (Canadian Press)
Shiller also points out that it was not the financial crisis that burst the American housing bubble. Rather, when the groupthink that caused the bubble turned, the market collapsed, and that in turn triggered the financial meltdown and the crisis among lenders.
“The same sort of thing might well happen in Canada,” Shiller told me.
Canadians seem to think that stricter government regulation in Canada protects them. But they are in some ways more vulnerable than Americans.
Americans at least have the option of lifetime payment stability. The gold standard here is the 25- or 30-year fixed mortgage. The interest rate can be locked in for the life of the loan.
In Canada, most mortgages “renew” every few months, or years, and payments can spike by hundreds of dollars a month if rates rise even slightly.
Americans also deduct interest payments from their taxable income. So many people get a big annual refund, which provides a financial cushion.
If you take that tax refund into consideration, prices in Ottawa are now approaching or equal to prices in Washington, DC., a city steeped in wealth and power.
Seen from this distance, by a longtime expat, that is just unmoored from reality.

#100 Realtors are in an all out panic on 10.04.12 at 10:34 am

Organized real estate is unable, it seems, to admit the glory days may be behind it.

Sales plummet in major markets and the industry comes up with a new explanation for the decline, draping its comments with a sense that everything is just fine. The excuses are piling up.

This month’s gem comes from the Toronto Real Estate Board: It complained September didn’t have enough working days — too many weekends.

I always thought people bought homes on weekends, but it seems the transactions are registered during the week.
The number of transactions was down 21% in comparison to September 2011,” said TREB in a release. “However, it is important to note that there were two fewer working days in September 2012.”
This logic has produced a new measure from TREB: Sales were down only 12.5% — not the actual 21% — from a year ago on a “working-day basis

http://business.financialpost.com/2012/10/03/as-housing-market-slows-industry-scrambles-to-paint-positive-picture/

Read the whole article. I can’t believe someone in the media reported the truth.

#101 SKRenter on 10.04.12 at 10:39 am

Regina sales for september down 32% from 2011 (214 sales down from (315), prices up 13%.

“A slight cool off which began in August continued in earnest right into September, with the lowest number of sales occurring since the beginning of the year. Although there is no evidence to support this, there is a possibility that the federal government’s mortgage financing rule changes, which came into effect earlier in the year, caused some buying decisions to be pulled forward to avoid the new restrictions. This would have a diluting impact on demand in later months,” said Gord Archibald, Executive Officer of the Association of Regina REALTORS® Inc.

“It’s far too early to say this is a trend, as economic fundamentals such as job, population and household growth all point to continued strong levels of demand for housing,” concluded Archibald.

Sounds like every realestate article. But hey, we have hay, so we are different.

Link: http://www.reginarealtors.com/index.php?option=com_content&view=category&layout=blog&id=11&Itemid=11

#102 T.O. Bubble Boy on 10.04.12 at 10:47 am

Realtor shenanigans?

272 MELROSE AVE, Toronto, Ontario
July 11th: C2414751 — $649,000
October 4th: C2479600 — $779,000
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=12477207&PidKey=2138086409

Did this property really increase $130k in value in 3 months?

Did they underprice and try for a bidding war in the summer, only to fail?

Did someone buy this in July, then had second thoughts and is trying to re-coup all of the realtors fees, land transfer taxes, etc. etc.?

The listing does mention newly finished floors and new appliances, but I’m pretty sure that adds up to a few grand, not $130k.

#103 in the doghouse on 10.04.12 at 10:52 am

5 months on the market – $500 price reduction … I wonder what planet this guys on ?

http://www.livefraservalley.ca/homes/31691-Amberpoint-Place/Abbotsford/BC/V2T%206T2/22338670/?index=1#price-history

#104 I am disappoint on 10.04.12 at 10:52 am

#49 Mr Buyer – good point about Japan real estate.

#24 };-) aka D.A. on 10.03.12 at 9:55 pm
A question for you D.A., if you envision a world where real estate values will climb unceasingly over the long term to the point where the average family can no longer afford to own shelter, then shouldn’t we have hit that point already during the course of human history?

If it were true that real estate prices would increase without end, effectively pricing out the majority, then I would hardly call that progress of any kind.

#105 bill on 10.04.12 at 10:53 am

#27 Old Man on 10.03.12 at 10:06 pm
hey did you know nat and ernie?

#106 Mr Buyer on 10.04.12 at 10:54 am

#86 TurnerNation on 10.04.12 at 8:24 am
#24};-) aka D.A.

Your realtor-math makes no sense.
……………………………………………………………
I think that was my post in answer to #24};-) aka D.A.
and you have to excuse me as I misread the output from the mortgage calculator. The 145k I mistakenly cited was the total payments for the 5 year term, not the 25 year amortization. I must be on crack as well as the entire mortgage business. This is absolutely stunning. I ran the mortgage calculator again and it tells me it is $225,282.03 in interest payments over the amortization period. Hopefully I am reading it right this time and not being a crack head again. I said I liked math I didn’t say I wasn’t stupid. That is an appreciation of about 45% of the original price or around 2% a year of that beginning price which again is not a totally unreasonable if it wasn’t a bubble price to start with. Here is the math…
number of months = 12 * 25 = 300
monthly interest = 3.2% / 12 = 0.267% or 0.00267
the required base is derived from the monthly interest like so…1+monthly interest = 1.00267
The exponent is the negative number of months which gives 1.00267^(-300) = 0.4494 which has to be subtracted from 1 like so 1 – 0.4494 = 0.5506 and the monthly interest rate has to be divided by this like so
0.00267 / 0.5506 = 0.00458 which I multiply by the mortgage amount to get the monthly payment like so…
0.00458 * 500000 = $2425 in monthly payments which I multiply by 300 months like so… 300*2425=$727500 in total payments so the total interest paid is 500000 – 727500 = $227500 This is not the actual amount because it is in effect a fixed rate at 3.2% for a 25 year term which is not available. As I said before with the crack head total interest paid. Renting now is a good idea and it is a much better idea than it was in 2008 and it will be an even better idea in 2013. Once again that was my crack head math previously not DA’s

#107 Picasso on 10.04.12 at 10:57 am

U.S. Rate on 30-Year Mortgage Hits Record 3.36%

#108 Tony on 10.04.12 at 11:09 am

Re: #80 John on 10.04.12 at 5:41 am

Oakville is a hellhole! One thing abounds there and that’s poverty. No where else in Canada is the average age of a car older than in Oakville. With the traffic it’s like living in a secluded prison. Name one person who actually likes living there?

#109 Mr Buyer on 10.04.12 at 11:12 am

just wanted to let you know that in my crack head world
500000 – 727500 = $227500 is a perfectly valid mathematical statement but it translates to
727500 – 500000 = $227500 in the real world

#110 Tony on 10.04.12 at 11:16 am

Re: #76 CyberNick on 10.04.12 at 2:48 am

Your friend has a rare dislike for money. It would make more sense for him to give all his money to charity rather than buying a house and losing it to the bank holding the mortgage.

#111 Coraline on 10.04.12 at 11:47 am

367 Bob: The most respected house price index is Case Shiller. It uses sales pairs, i.e., comparing the price of the same house when it sold at time A to when it sold at time B. If the price difference of a pair exceeds the average price difference for a region, it assumes that there were some renovations, etc., and weights the pair differently.

The MLS HPI used in Vancouver and other places is much less straightforward. It is actually quite difficult to determine what it incorporates. It claims to assess the “typical price” for a region, leaving a lot of power in the hands of the individuals compiling the stats.

The Teranet index attempts to replicate the Case Shiller by using the repeat sales methodology. While their methodology discusses various weighting strategies, for the life of me I can’t figure out what weighting scheme they actually use. Perhaps someone else here can help. Regardless, the Teranet is probably the best house price index we have in Canada.

#112 PoorgEoisie on 10.04.12 at 12:10 pm

As old man was saying, I think politics may be the place for me as have always wanted to be prime minister.

#113 Ottawa RE observer on 10.04.12 at 12:11 pm

#76 CyberNick

I’ve scrutinized the Ottawa Elmvale Acres area (next to Alta Vista) detached house prices very carefully over the last year. It’s a leafy suburb, 50×100 lots are typical with small 1950’s and 60’s brick bungalows on them, a few cape cods sprinkled here and there. Fairly desirable hood, due to quick commute to downtown, and proximity to Ottawa General hospital.

Sales here have been squeezed to a near stop. Price reductions on many houses, even multiple reductions.
Many houses on sale for 5 months plus.

Before moving here this spring, (We downsized from a much bigger house, so no mortgage.) we made an offer on one house, but pulled it after inspecting the house showed it to be overpriced, at least for us.
It’s still for sale after two significant price reductions.
I noticed several houses (including a recent purchase) now for rent. (Waiting for the market to “rebound”?)
BTW, you won’t see “Price reduced” on lawn signs, or on the MLS listing.

Yes, Ottawa is a bureaucrat town, with somethng like 65% of the working force directly or indirectly employed by the feds. But with noises about layoffs always present, all of my government employed friends are worried, even if they have not been targeted THIS time.

Ottawa housing IS very expensive compared to historical levels, it has just not appreciated at gold-rush-fever rates like Vancouver or Toronto. (“Thars gold in them thar condos!”) But Ottawa prices have gone up a little too much every year, for many years. Now prices no longer reflect solid fundamentals and they most certainly can and will go down.
How far down? One pretty good rule of thumb: Check house prices vs wages over the years. They should stay roughly at the same ratio. Not a definitive metric, but if you check graphs plotted over the last few years, you’ll see that house prices have left wages in the dust.
And the psyche has changed here in Ottawa. First we’re realizing that government jobs are not forever, and not garanteed. Secondly, if the USA can have a housing crash, if Spain can have a crash for different reasons, If Japan RE still hasn’t recovered after 20 plus years (for again different reasons) well, what if house values don’t always go up?

Buying now could be a disaster.
So ask your buying friend this: Could he sleep nights if the house prices were to fall 10-25%, and stay there for 5-10 years? So if he wanted to sell (Or was forced to sell), with a high ratio mortgage he would owe the bank more than the sale price. (Will he have, say $50,000 laying around, just in case?)
Could he survive a 2-3% increase in mortgage rates?
(A rate increase means his house value will fall even further.)
Is he going to borrow near the max for which he’s eligible? A 2% hike is hell on the beer, nights out, any kind of activity except walking budget. Much more than a 2% hike, and he better get used to the taste of cat food.

Both house price reductions and interest rate increases, are very likely within the next few years.
Ottawa house prices increasing over the next few years? Very unlikely.

Tell your friend to wait at least a year , and see how the wind is blowing then.

#114 IM in C on 10.04.12 at 12:16 pm

Having followed the RE market in Calgary for the last 4 years, I can tell you that things in cowtown cooled in ’09, and have remained flat since. All the real estate agents I spoke to said thata the one sector of the Calgary RE market still going strong was the + 1million dollar SF. Now that the CMHC insurance has been removed from that market.. we shall see.
Which leads me to my next point. Every realter I spoke to out here was scared taht teh CMHC was going to ‘release 500 homes in the NE ‘ onto the market. The expresseion – shadow inventory – is used a lot in discussions concerning the US real estate market. I wonder what the shadow inventory here is?

#115 john on 10.04.12 at 12:22 pm

Garth,

Obviously house prices are overvalued across the board, but your analysis is way off. First, averages are irrelevant for obvious reasons. Way back in 2006, median household income in Oakville was $105,563. Median house price in Oakville in Sept 2012 was $559,000. That puts the ratio at 5.3x. Grow that income at 2% through to 2012 and your median income is $119,000, or 4.7x. High yes, but comparing it to Sydney or Vancouver is ridiculous.

Oavkille-Milton Real Estate Board, average price (all properties) August 2012: $717,937. Median household income: $83,982. — Garth

#116 Victoria on 10.04.12 at 12:25 pm

I wonder why we wouldn’t see a big crash in a city like Victoria. It seems like house after house $900,000 and up is coming on the market.

I wonder what is in the future for Victoria which has no real industry/economy.

#117 john on 10.04.12 at 12:25 pm

I should note that puts Oakville in the ballpark of Salinas, California or Lancaster, Pennsylvania, not Melbourne, Australia.

#118 Bobby on 10.04.12 at 12:28 pm

Oh oh………it looks like the VREB (Victoria) has rescinded it’s message on the September sales numbers. The official reason is it was supposedly due to a published error. Yeah right!

It seems the statement that buyers had better get in soon as the government may raise interest rates to stimulate the economy, just didn’t fly. You couldn’t put enough lipstick on that pig of a statement. The logic of such a statement escapes me, and many others it appears.

Rather than some asinine spin, why not just say the market is softening and prices and sales are expected to decline. But I get it, if people don’t buy, realtors don’t get paid.

#119 Form Man on 10.04.12 at 12:39 pm

#95 DA

You seem to forget that Canada’s housing market extends beyond Kelowna. Housing appears to have bottomed in the U.S. ( MOI below 7 months ), about 6 years after the peak there. Toronto and Vancouver both peaked only in the last few months, so likely have a few years yet before they bottom out. Kelowna peaked a couple of years after the U.S.( 2008), but with 17 months current inventory, the bottom is not even close. It is good that the U.S. economy is healing, but thanks to the idiocy of H and F, Canada’s housing market has only just begun its descent……

#120 Herb on 10.04.12 at 12:42 pm

#111 Ottawa RE Observer,

ditto for the area in the West end we’ve been watching for a year. The market under $500 K is sluggish, and over $500K is dead.

CyberNick’s friend better look before he leaps. You’ve described the probable consequences very well.

#121 randman on 10.04.12 at 12:52 pm

Excerpt from an email received….

“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 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.

And I don’t know if it’s fair that the banks, government, mortgage brokers and real estate cartels get to profit from their blatant misleading of the horny ones.

If you look at the stream of information that these groups have been spewing over the last 7 years…it’s pretty clear that they are a big part of the cause.

As usual…the unwary are swept away whilst the perpetrators profit. With all the bunk ,Chinese are coming in forever best place to live so on so forth and the best we are different then all the others . Vancouver City tax revenue large part is by developers selling more condos ,sooner then later something has to give.”

#122 };-) aka D.A. on 10.04.12 at 12:53 pm

#102 I am disappoint on 10.04.12 at 10:52 am

The cost of maintaining a roof over your head, be it rented, borrowed or owned maintain parity with the ever increasing cost of everything else. Do you think that the price of food is going to decrease over the course of the next 25 years against the cost of any other such necessity?

I will grant you that the cost of housing has become unaffordable given the price of the house but people buy payments not that asking price and interest rates are what has caused it to push beyond reasonable. Interest rates will increase and the price of housing will drop somewhat but not nearly so much as you might think. What so many miss is it is the monthly cost of maintaining a roof over your head which continues and will continue, all things being equal, to rise. If you own eventually you will own free and clear and that monthly cost will diminish substantially compared to others. If you rent you will be at the ever increasing along with everything else cost of life’s necessities.

The day that all changes is a day you really do not want to arrive as it will be that turning point as in every great civilization where a great undoing takes place. That day will come for North America just as it did Egypt, Greece, Germany, the United Kingdom and so many more. Are you thinking we are so close to hitting that reset button? If so you will waste your life away worrying about it. Life is what happens when you are making plans for the future.

#104 Mr Buyer on 10.04.12 at 10:54 am

You are over analyzing Mr. Buyer. Go with your gut. If you don’t want to buy don’t. It’s your call. You don’t need to justify it. It is more important to enjoy life as you might not be here tomorrow so enjoy the day. That’s not to say be an irresponsible fool but to over analyze your life away can be equally as costly. If you aren’t taking chances and occasionally losing you are not trying hard enough. We are animals, a little more sophisticated than most although at times it couldn’t appear further from the truth, and like animals we need to take risks and venture out into the wild to hunt, forage and compete. Others are coming back with the kill while you fear leaving your den. Like I said we’ll compare notes sometime in the future.

#123 John on 10.04.12 at 12:54 pm

Daisy Mae wrote:
_______
(Garth)
“In the 100 days following, F creamed the 30-year mortgage and raised lending criteria, while CMHC ended coverage for high-end homes and the bank regulator, OSFI, mandated the death of cash-back loans, slashed HELOC credit and toughened up rules for appraisals.”

****************************
__________

In other words, the little twerp rolled everything back to where it was before the ‘cons’ disrupted a system that worked just fine prior to the ridiculous changes? And what has been accomplished other than grief for everyone?”
———-

I know what a parrot is, but why do you agree with the original statement in this way?

The money was offered to Canada via international banking cartels. The tuning any non-sovereign government does is this context is barely relevant ( at least in comparison).

I understand that someone handing out “Watchtower magazine” doesn’t gain much “discussion” with this activity. It’s a one sided discussion. If you repeat the same nonsense over and over again, soon you have a uni-belief system. Eventually alternate points of view are choked off through lack of oxygen.

Your assertion is utter nonsense. It’s as simple as that. What you are saying is not true. You’re parroting and helping to stifle legitimate debate.

Keep it up…I mean it’s sort of “working”. But it helps nobody.

#124 Suede on 10.04.12 at 1:11 pm

A lot of people on here are bright and loud.

Why not have your say in the budget? Lobby the government to decrease amortizations to 15yrs so property prices drop dramatically and you can scoop up a deal with the cash in your GIC.

It’s a free country, but will your argument cause someone to listen?

https://www.leg.bc.ca/budgetconsultations/survey.asp

#125 randman on 10.04.12 at 1:15 pm

Speaking of Unions…..

This is an example of the BS they try to put over on us….

“Forget zero tolerance. Bay City Public School teachers for years could be caught repeatedly under the influence of illegal drugs or alcohol without being fired. Teachers in possession or under the influence of illegal drugs could be caught three times before they lost their job, and they got five strikes if they were drunk on school grounds before being fired. A school district official said the language in the union contract that protects teachers for those instances “was incorporated into the teacher Master Agreement in 1997.”

http://www.michigancapitolconfidential.com/17596

#126 broadway skytrain on 10.04.12 at 1:20 pm

and one more thing….

OLD MAN , you are wise and have seen much in this life , but, I CANT TAKE IT ANYMORE!!!

your annoying habit of starting sentences with AS, then leaving out the subject of the sentence has finally gone too far(for me , at least) – you now are banned from my eyes! i had big hopes with #14 today, as was elated to make it halfway in the clear, but you just couldnt resist, could you. i will miss your stories but until some other poster confirms you have changed you ways i just cant look. all the best to you and dont take it personally;)

#127 Daisy Mae on 10.04.12 at 1:25 pm

Quote:

“Politics is the art of looking for trouble, finding it whether it exists or not, diagnosing it incorrectly, and applying the wrong remedy.”

#128 Toronto_CA on 10.04.12 at 1:34 pm

Toronto housing heads for buyers’ market, first time since slump: BMO

MSM is on a tear now.

http://www.theglobeandmail.com/report-on-business/top-business-stories/toronto-housing-heads-for-buyers-market-first-time-since-slump-bmo/article4588591/

Let’s see if it keeps up.

#129 Canadian Watchdog on 10.04.12 at 1:38 pm

Another increasing condo fee: Downtown Toronto Condo management charging to book elevator??

“My new condo building management office in downtown Toronto is charging me $100 to book an elevator for 3 hrs + $500 in deposit.

What on earth do they need $100 to book an elevator – is this normal? wow”

#130 spaceman on 10.04.12 at 1:40 pm

Average prices are one of the worst ways to gauge a local market. Better to get a PCS account and watch the selling prices compared to assessments. In Victoria absurd assessments dropped for many properties, 1-2 % last year, and if i look at sold prices, I am seeing sales 40-60G below assessed value. We are at 2007 pricing now, and about 10% off the peak in 2010. Sales are way down for this time of year, I can’t see any improvment soon, and now BOC is talking interest rate hike, maybe soon or 2013.

#131 broadway skytrain on 10.04.12 at 1:41 pm

#49 Mr Buyer on 10.03.12 at 11:06 pm
#24 };-) aka D.A. …..
…………………………………………………..
21 straight years of property price decline in Japan after the bubble collapsed.
—————————-
Japan has a two-tier property ladder with Tokyo miles ahead of the rest. Tokyo has seen annual rises of 30-40 per cent in land prices, which are in great demand for new property builds. While there are genuine concerns that property prices in general are moving too high too quickly, they are still only at 50% of the levels reached in the 1980s (an example of how far the market had risen!)
http://www.expatforum.com/articles/property/buying-property-in-japan.html————-

granted this is old , but japan IS different from NA. i lived in tokyo and there were ZERO ppl buying with yuan,rupees,dollars or euros. only the nihon-jin driving the market. immigration is very real in north america – virtually non existent in japan.

#132 Form Man on 10.04.12 at 1:42 pm

#119 John

you are obviously a Conservative troll, and you seem to misunderstand what Daisy Mae is correctly stating.

Go back and try again.

#133 45north on 10.04.12 at 1:51 pm

D.A. (Devil’s Advocate): Today I can “feel” the market improving. That does not necessarily mean increasing prices or volumes just an overall better balance.

yeah well volumes and prices are about to fall off a cliff, in the States the banks put up with delinquent mortgages and held onto “real estate owned”. I’m guessing that Canadian banks cannot and will not.

the best time to sell was six months ago

#134 Stew on 10.04.12 at 1:51 pm

Does this mean a crash? Nope. No Phoenix or Miami. Just sleepless nights in Fordville.

If you only understood “bubbles”..allow me to show you..
http://www.sharelynx.com/chartstemp/BubbleComparisonsRankings.php

#135 Doom on 10.04.12 at 1:54 pm

@4 Realtor#1
You heard directly from your leader NO CRASH, no miami or phoenix.
=====
That’s Glorious Leader to you!

#136 broadway skytrain on 10.04.12 at 2:00 pm

68 Bubble Watcher on 10.04.12 at 12:20 am
#40, Canadian watchdog

Is TREB Abusing Its Power?
_________________________

In the report, it says there was $40 billion in commissions last year in Toronto.

Is it real?

Can someone confirm?
—————————————-

do the math 40B for gta would extrapolate to maybe 200B for canada. canada gdp is something like 1.4T or 1400B

re commisions are not 15% of gdp, id guess closer to 0.15%

#137 Frank le Skank on 10.04.12 at 2:05 pm

#94 Daisy Mae on 10.04.12 at 9:54 am
Housing prices can’t go up forever. Not to mention the decrease in sales starting to happend before the rules were implemented.

#112 john on 10.04.12 at 12:22 pm
Still a douche

#122 randman on 10.04.12 at 1:15 pm
Alcoholism and drug addiciton are viewed as a disease. Some companies will send you to rehab a few times and pay for the treatment. You get a few chances before they fire you and I think that’s fair. I agree that unions go overboard with most things, but companies would rape us if they wern’t there to couterbalance them.

#138 eagle eyes on 10.04.12 at 2:14 pm

Does this mean a crash? Nope. No Phoenix or Miami.
_________________________________

In Vancouver Westside and Richmond where values went up nearly 100% in four years, even if prices adjust by 40% (which you have referenced more than once) it will look like a crash.

#139 Stew on 10.04.12 at 2:31 pm

The next HOUSING bubble CANADA:
http://www.businessinsider.com/canadian-housing-bubble-2012-10

#140 broadway skytrain on 10.04.12 at 2:31 pm

correction……….
-central SF fell 16% at the worst- sorry . i believe it is 16% currently from the peak, as has recovered somewhat

#141 Steve on 10.04.12 at 2:40 pm

I thought ‘warnings’ took the form of a horse head in your sheets…

Maybe the dog head in the hallway is a pre-warning???

Better watch yourself Garth!

#142 John on 10.04.12 at 3:17 pm

Form Man wrote:

#119 John

“you are obviously a Conservative troll, and you seem to misunderstand what Daisy Mae is correctly stating.

Go back and try again.”
———-

Ok, let’s get you right out in the open. I’m saying that the Canadian real estate is international and part of a huge global credit situation. This “situation” deserves massive attention, and is getting it to a small degree on this blog ( quite a few links). Parroting the “blog ideology” of domestic forces as drivers, real estate associations, the finance minister who happens to be in charge, the central bank of Canada, “cyclical” corrections and the like is absurd.

A lot of value has popped out from the diversity of opinion, and claiming “domestic” has slowly devolved into what it is: Developing a philosophy that isn’t living up to the actual problem.

Perhaps discussing the real issue ( which is right in your face) is a more adequate response.

What are your thoughts on this content? I think it’s legitimate. Do you? Why? Why not?

#143 robert on 10.04.12 at 3:19 pm

The big question is has the train left the station and is it full of would be buyers who have decided that renting a depreciating asset makes more sense. Based on the numbers we are seeing i would suggest these trains have been leaving the station for sometime now and are indeed packed full with standing room only. As the story is told in Print, Radio and TV this correction will pickup steam and “fear” will become the catalyst for a full blown panic. With 70% home ownership the first 10% will be most vulnerable with their 0 down 40 year mortgages. Trustees phones will ring off the hook as this group looks for a solution hoping that personal bankruptcy will take off the pressure. Listings will spike even higher and homes will be offerred for the amount of the mortgage. Personal and Mortgage Debt will become the focus as owners learn about the devastating downside risk to leverage. The day has finally arrived and the new mantra will be ” a wealthy man in the year 2012 will be a man with no debt”.

#144 Pr on 10.04.12 at 3:24 pm

The industry who now crying to the government to back off the new rules, i have a question for you : Are you worry worried about household debt, which has ballooned from 75% of household income in 1990, to 150% today.

#145 Harlee on 10.04.12 at 3:40 pm

#27 Old Man
Harland Sanders was actually the manager of a Safeway store at Manitou Beach,a small resort village in the middle of Saskatchewan. This was before he became a “Colonel”. He quit Safeway, fried chicken at his restaurant in the US and the rest is history. Quite an entrepreneur but a bit of a racist. He used to do interviews on Saskatoon tv and once gloated how them “darkies” down South sure loved that fried chicken,mmmm-boy. I can still see the host of the noon hour show cringe.

#146 Sam on 10.04.12 at 4:21 pm

> I am so tired of reading the Demographia
> study trumpeting restrictive land use

Spot on.

In the lead up to the US melt down I read a bunch of “research papers”, “position papers”, “debunkings” from

1. libertarians (think tanks/blogs/independent economists)
2. real estate shills

that there was no bubble in the US and all US problems were caused by the legal situation.

The RE shills (and associated – the mortgage brokers groups too for example) of course wanted loosened restrictions all around.

#147 };-) aka D.A. on 10.04.12 at 4:31 pm

#119 Form Man on 10.04.12 at 12:39 pm

Personally I think a US recovery of any extent has a lot more positive impact on Canada than you seem to believe. It has been my experience that Canada tends to lag behind the US which gives us opportunity to learn from their mistakes and I do believe we have done so through this most recent international economic crisis that we have kept our economy relatively buoyant. I may well be that with an improved economic situation south of the boarder we may never falter as we could have as we ride their coat tails into calmer economic waters.

My hat’s off to Carney and Flaherty who I think have done a pretty darn good job. But as we all know it is really Bernanke who is at the helm of this ship and compared to that Canada is but a dingy in tow.

As you know I gauge where we are headed more by looking at the past than crystal ball gazing.

Time will tell Form Man. Hopefully someday we’ll have the opportunity to compare notes and you can tell me you told me so. Actually I think we both hope you aren’t right. But chances are what YOU think is what will unfold for you. A house is first planned before it is built and before it is planned it is conceived in your mind. Everything is that way – everything. That I am seeing more confidence out there is the thought process which leads to plans which lead to results. That’s encouraging.

#148 Canadian Watchdog on 10.04.12 at 4:48 pm

RealNet New Home Price Index: High rise condos down 4.8% y/y, low rise up 12.7%. Link

#149 Linda Pearson on 10.04.12 at 5:14 pm

#141Steve on 10.04.12 at 2:40 pm
I thought ‘warnings’ took the form of a horse head in your sheets…

Maybe the dog head in the hallway is a pre-warning???

Better watch yourself Garth!
———————————————————-

Nah! I can read dog. He’s saying, “I’m cute, I’m here, I’m staying right here. Is it supper yet? And by the way, did I mention I’m starving?”

Look at the pic again; it’s clear as a bell.

#150 truth hammer on 10.04.12 at 5:22 pm

‘Free Car with purchase’….so that madness begins again in Richmond. Builders are getting creamed….ethnic builders especially who have borrowed from non traditional sources where the idea of a ‘demand loan’ takes on a character of it’s own…more akin to the lawless brutality of anouther time and country than the dream of getting rich in Canada offers the unwary.

The Indian mob is alive and doing very well in Canada thank you very much. here’s how the scam works. A family pledges it’s ancestral land in the Punjab to the money lender ( local mob ) …an immigration file is set up and paid for through the process of application in India ( which is as crooked as the Delhi sun is hot) …the family member applicant is suddenly a successful ( on paper ) engineer or whatever the quota of the month dictates ( even though the paperwork…certificates…degrees etc are all bogus) and the file is approved……for a price….in comes the family of twenty to Canada under the reunification dodge.

Once in Canada the family agrees to borrow money from a certain local credit union that fronts for the Khalistan Liberation Front ( as we found out during the Air India joke-inquiry) ….to create employment as per the immigration requirement….the penniless ( but land holding family) are loaned the $800,000 for a cab license …….presto…..the money from the local dope growing buisness is laundered through a seemingly legitamate. But we all know that you can’t pay the vig on an $800,000 ‘loan’ driving a cab….so tha fun starts.

In the Punjab people are sleeping on the roof in shifts with shotguns because the mob guys come around and remind the family that there is an outstanding debt in Canada……the family gets roughed up in the markets and the fields….reminded that they have to come up with something fast….after all they’ve borrowed more than a million bucks. Grandma and Grandpa of the desperate family are now carrying kilo’s of heroin for the mob because they know that there is a political outcry every time anyone checks an ethnic for crime activity.

The family falls for the oldest trick in the book…the Temple Bank offers them more money to buy real estate…….now the mob can launder millions more through the dummy corporation into local real estate.

We have hundreds of individual family built projects in Metro Vancouver…..all with money borrowed from the infamous Temple Bank…aka ‘Credit Union’……and all on the hook to the Indian mob….all in big trouble.

How did this madness start….well…it all goes back to the Pierre Trudeau days when after his success cutting Greater Toronto into a hundred new constituencies to influence the vote count in parliament by air-dropping hundreds of thousands of new immigrants into Liberal dependancy…he tried it in Vancouver to establish a beach head…..he did..one seat…….by importing 500,000 Punjabis tribesmen…whose only goal was to further the cause of a separate Khalistan in India.

Why did we see so many mobsters surrounding Justin Trudeau while he was in Vancouver yesterday……you really have to ask…..they know an easy mark when they see one.

The mob will call the loans on the family builds…they have no laws to follow…there will be murders in the Punjab and property will change hands…….wasn’t it smart to make so many people dependant on the tribal leaders instead of allowing free men and women to immigrate to canada.

#151 $$$BPOE#1 on 10.04.12 at 5:33 pm

PURE GENIUS
CAMERON McNEILL: “I always say Vancouver is the Swiss bank account of international real estate. It’s a — it’s a funny little quote that I say because sophisticated people, whether they live in Vancouver or they’re international, they — they recognize Vancouver as a safe, long-term place to park some money when it comes to real estate.”

#152 Hawk on 10.04.12 at 5:34 pm

#83 Victor on 10.04.12 at 7:35 am

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

I have found that many people who make rent vs. buy comparisons don’t compare apples to apples.

I’ve often heard people make a statement such as “I pay $1,200 for my condo, while a mortgage with 20% down would cost me $2,200” without even realizing that renting an equivalent house as the one they would choose to purchase, will actually cost a great deal more in rent, then that $1,200 per month condo.

And of-course that’s not to say that people shouldn’t rent according to their needs, in fact they definitely should do so.

Just that one should realize that renting a $500 – $600K house in Toronto isn’t likely to cost anything close to $1,200 nowadays.

#153 disciple on 10.04.12 at 5:49 pm

Breaking… I just discovered that Lino Zambito of the Quebec Construction Corruption scandal is Jay Leno. Get it? Lino / Leno? They are laughing at us… These criminals seem to have Quebec in the bag…

#154 Herb on 10.04.12 at 6:09 pm

C’mon, Garth, give Smoking Man another drink. He’s drooling on your carpet!

#155 Blacksheep on 10.04.12 at 6:23 pm

Daisy Mae # 96, John & Form Man,

“In other words, the little twerp rolled everything back to where it was before the ‘cons’ disrupted a system that worked just fine prior to the ridiculous changes? And what has been accomplished other than grief for everyone?”
———————————————————-
I believe labels like conservative or liberals, just muddy the waters. If the Liberal or the NDP held power, would the same housing bubble, not have taken place? Just as it did in most western countries? If you can accept that reasoning, the ‘party’ and it’s left right / right distraction gets taken out of the equation. As to your valid question, “what has been accomplished”, I suggest the answer might be found in, What would have taken place had no additional stimulus been applied in spring of 2009. I suggest our housing correction would be well under way
(a necessary event) and possibly approaching a bottom, as it started correcting hard in the fall of 2008. This of course would also mean, just like the states, the ‘party’ in power during the bubble expansion, would be tossed out and replaced by a different, yet equally corrupt ‘party’. Is this why ‘Fs’ changes took place?

Of course this whole premise sidesteps the point John, has repeatedly tried to make here. I think he’s trying share his view that our (most western) Central Banks (at a minimum) sovereignty, has been compromised, to some degree. “The Creature From Jekyll Island” is a great read and starting point if one is like minded. John’s challenge is trying to open a discussion on this topic, but some (me) lack the knowledge, while others won’t to discuss it on a public forum (wise?). John, I see your getting closer to just ‘getting it all out in the open’ Your comments from the periphery are being misinterpreted as slag’s and not helping the discussion advance. Your going to have to take a risk and share what ever knowledge you have, if you want to move the conversation forward. Hopefully others will join in.

take care
Blacksheep

#156 jess on 10.04.12 at 6:46 pm

Since the beginning of 2010, the SEC has filed more than 100 cases involving hedge fund malfeasance such as misusing investor assets, lying about investment strategy or performance, charging excessive fees, or hiding conflicts of interest. The SEC today issued an investor bulletin detailing some of those cases as examples of why investors must rigorously evaluate a hedge fund investment before making one.

“These hedge fund frauds have lured even the most sophisticated investors using the siren song of outsized returns or secured and guaranteed investments,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “As fraudsters increasingly capitalize on the cachet of hedge funds, we will maintain our strong presence in policing this industry.”

http://www.sec.gov/news/press/2012/2012-206.htm

#157 TNT on 10.04.12 at 7:03 pm

Wait and see what happens when the Chinese and Canadian Government start to look into the means or modes of financing.

The Chinese kid that lives down the streets father bought the house, for a million dollars.
The father is a tradesman.
Thats a lot of dough in a communist country.
Maybe they also have a laundromat.
Much suspect banking being uncovered and its just a matter of time.

#158 Daisy Mae on 10.04.12 at 7:30 pm

#129 Canadian Watchdog: “My new condo building management office in downtown Toronto is charging me $100 to book an elevator for 3 hrs + $500 in deposit….”

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

Just another reason not to buy one. Anyone contemplating such a purchase should check this out beforehand. We consumers have the ‘power’. We just need to use it.

#159 Devore on 10.04.12 at 7:39 pm

#157 TNT

Just because someone is an investor class immigrant does not mean they are wealthy. The only real requirement is to post $800,000 to the federal government for 5 years. Everything else is either immaterial, or easily forged. $800,000 is not a lot of money. A Chinese lender would easily give that, at a good rate, knowing the principle is guaranteed by the Canadian government. Interest on that is less than $2000/month, an amount well within reach of a family that can afford to buy and maintain a sedan in China.

That’s a pretty cheap price for Canada to sell permanent residency for.

#160 JL on 10.04.12 at 7:42 pm

OH please come speak in Kelowna again or an summary would be awesome !!

#161 Smoking Man on 10.04.12 at 7:44 pm

Reading all the posts reminds me of a bunch of drunks celebrating a lotto win.

Problem the draw ain’t till tomorrow.

#162 Nostradamus Le Mad Vlad on 10.04.12 at 7:46 pm


#107 Picasso — “U.S. Rate on 30-Year Mortgage Hits Record 3.36%” — Inflation by a thousand cuts?

#142 John — “I’m saying that the Canadian real estate is international and part of a huge global credit situation.” — Absolutely bang on, ‘tho the Cdn. RE market is such a tiny fragment, it doesn’t matter.

China and Europe are two main players here, with TPTB favoring a Chinese / Russian NWO, which is where the current cycle is headed to anyway. Good post.
*
Iran arrests 16 currency manipulators; Who Controls The Wealth In US? “The Federal Reserve has been instrumental in ensuring success for this group but at the expense of many Americans.”; Unemployment If you believe this, then you know where Sadaam’s nuke WMD are, ‘coz no one else does; 3:43 clip See headline; Before the Euro Some countries still recognize old currencies; 10:05 clip 1929 – 2012. History rhymes and repeats; The War Machine It would survive, but not in the form we used to know it; Retired world bank demographer Vaccines are part of depop.; Venezuela and Dan Rather. Venezuela has one of, if not the biggest oil deposits in the world.
*
National Virtual ID Card Yeeehhaawww! We’re all micro-chipped criminal sheeples now! Nukes and DC “It’s all about the money, folks; people are completely expendable to the money-junkies!” wrh.com; Turkey – Syria Neither side wants war, so a FF would probably be used to start one, by the US and / or Israel; 5:27 clip Af’stan — epic fail; Arsenic In food and good ’til the last drop; 8:09 clip War on terror a costly failre, war on drugs a costly failure; 25:45 clip “Poisoning with radioactive materials is not only death, it is an intentionally cruel death, lingering and painful.” wrh.com.

#163 Mr Buyer on 10.04.12 at 7:51 pm

#104 Mr Buyer on 10.04.12 at 10:54 am

You are over analyzing Mr. Buyer. Go with your gut. If you don’t want to buy don’t. It’s your call. You don’t need to justify it
……………………………………………………………….
So do not bother with the math when buying something. Well that notion troubles me on many levels.

#164 Mr Buyer on 10.04.12 at 7:58 pm

#131 broadway skytrain on 10.04.12 at 1:41 pm
………………………………………………………………….
I say again, Japan has lived through 21 straight years of property price decline with markets that have bottomed not coming anywhere near bubble prices. I think that your 50% attainment of bubble prices, if true (I can track down reliable data through a friend of a friend eventually if it is important enough), is an absolutely best case scenario.

#165 Smoking Man on 10.04.12 at 8:00 pm

I was preparing some stats, the same list that was up top except showing the last five years showing the difference in prices between spring and fall prices.

I was going to post bax futures showing that bay street is pricing a 1/4 point drop in interest rates for the spring.

But decided I don’t want to be punched in the mouth at the Gartho show. I want to shake his hand and thank him for being such a sport. This pathetic blog is the closest thing you will ever get to democracy .

So going forward I won’t crap on the bubble head dance floor anymore. Enjoy the happy dance bubble heads

#166 Grim Reaper/Crypt Speculator on 10.04.12 at 8:02 pm

SmoKingKong Man….

Time to sign another lease – on- life extension…plus strata fees

Hurry up !…… I gotta pee !

#167 Daisy Mae on 10.04.12 at 8:04 pm

137Frank le Skank

#94 Daisy Mae on 10.04.12 at 9:54 am
Housing prices can’t go up forever. Not to mention the decrease in sales starting to happend before the rules were implemented.

#112 john on 10.04.12 at 12:22 pm
Still a douche

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

I don’t believe I said this. #94?
But I agree with you re ‘John’. LOL

#168 Daisy Mae on 10.04.12 at 8:16 pm

#149 Linda: Nah! I can read dog. He’s saying, “I’m cute, I’m here, I’m staying right here. Is it supper yet? And by the way, did I mention I’m starving?”

Look at the pic again; it’s clear as a bell.

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

Nah, dog is freaking.

#169 Snowboid on 10.04.12 at 8:16 pm

#59 Mithan on 10.03.12 at 11:45 pm…

Yes, there were some great deals in Phoenix – but an $850K home for $52K?

I can’t see that was possible – maybe $ 250K if it was really in bad condition.

Our experience was about 60% off peak values – but nearly 94% off peak just didn’t happen.

Maybe they are the same folks from Saskatchewan that told us last year they didn’t have to buy extra health insurance for their six months in Phoenix because “Sask Health pays all the costs…”

#170 Toon Town Boomer on 10.04.12 at 8:17 pm

Did you know the Hicks around here are still paying over asking price. Me and the pelicans are still waiting for you to visit us cause we need HELP in a big way here in Skatch.

#171 Mr Buyer on 10.04.12 at 8:18 pm

#131 broadway skytrain on 10.04.12 at 1:41 pm
……………………………………………………….
As for foreign money in Japan everyone that lives here knows that China and Korea buy up a good deal of real estate and land here. Did you really live in Japan because the foreign money thing left me wondering…

#172 Canadian Watchdog on 10.04.12 at 8:19 pm

#158 Daisy Mae

“We consumers have the ‘power’. We just need to use it.”

Consumers have a long way to go before they learn how to mobilize and demand change. Until then, the elite will continue to pillage their wealth and stuff them in 400sq.ft. condos.

Where is Accountability?

“The current Ontario Liberal government has put into a place a review process that is not only lacking on information but also lacking on proper feedback outlets.” — “People in Ontario need to wake up to what is going on.”

Yes they do. Because what’s really going on is unelected officials coming to your town telling the mayor how to plan urban developments , because ‘they say’ land is running out so people must live in smaller more affordable communities built around the banks and mega corporations.

There’s a lot more going on then you think.

#173 Snowboid on 10.04.12 at 8:20 pm

#81 Form Man on 10.04.12 at 6:38 am…

Correct – matches what we have been seeing in the areas we follow. Sadly a few RE agents are past the denial stage and into desperation – the posts truly reflect that – as well as the amount of manure shoveled our way.

It will be interesting to see how things are when we return in late April.

#174 TNT on 10.04.12 at 8:27 pm

@Devore

I agree that much of the Chinese money is legit investor grade.

I know that a tradesman in China does not make a large amount of money in a country that the average salary is 2000$ a year.

Even if its 20k a year

The math doesn’t work.

#175 Form Man on 10.04.12 at 9:02 pm

#142 John

I agree that there is a worldwide ‘ credit problem’. What also needs to be agreed is the Harper government in 2006 juiced an already hot housing market for either ideological or political reasons. By 2008 it was obvious the same policies were backfiring spectacularly in the U.S. In spite of this evidence, H and F decided not to learn from the U.S. experience. This was the result of either complete incompetence or calculated cynicism. Which is worse ?
Daisy Mae pointed out correctly that the ‘tightening’ put in place by F has almost, but not quite returned us to the same rules as 2006………

#147 DA

An improving American economy is helpful for Canada for sure, but is of little help for an over supplied Canadian housing market. Only time, and a reduction in home production can rectify the situation.
While Carney has been a capable central bank governor, Flaherty has been a disaster. If you want an example of a good finance minister google ‘Martin, Paul’

#155 Blacksheep

It is possible that a housing bubble may have formed in Canada without Flaherty’s 2006 rule changes, but it is interesting to note that in an effort to ‘deflate’ the bubble, Flaherty has now walked back almost all of those same changes…….

#176 Mr Buyer on 10.04.12 at 10:22 pm

#147 DA
America will save Canadian Housing…that little expectation sort of sent me off balance for a while but after a tiny bit of reflection I surmised there were real differences between the expectation and the probable effects. I am wondering how a strengthening America in regards to the real estate bubble is going to do much more than draw more manufacturing jobs away from Canada this time around and there is always the problem of clearly establishing that America is coming anywhere near approximating its pre-crash self. America is far from finished, in fact I shudder to think of the absence of America as a superpower on the world stage but America will not be maintaining Canadian real estate bubble prices at any point inthe future. I also liked the re-assertion of the whole foreign money maintaining the bubble prices thing again. The myth of foreign money is alive and well even in Japan and even with that expectation (an expectation with little real substance, as in Canada) there has now been 21 STRAIGHT YEARS OF FALLING PROPERTY VALUES in Japan.

#177 Mr Buyer on 10.04.12 at 10:29 pm

Is it just me or does that dog look like Scooby Do’s brother or cousin or something?

#178 Rosebery on 10.04.12 at 11:25 pm

Nostro missed one. We’re mainstream now:

http://www.businessinsider.com/canadian-housing-bubble-2012-10

#179 FERNANDO on 10.05.12 at 8:53 am

realtors continue to put their spin on what is really happening, as Mark Twain remarked, “figures don’t lie but liars can figure”

#180 new-era on 10.05.12 at 2:12 pm

http://business.financialpost.com/2012/10/04/everything-you-need-to-know-about-canadas-housing-bubble/

Canada’s sub-prime mortgage industry is growing and there are $500-billion in high-risk mortgages in the Canadian housing market. That is nearly 50% of the market.

Moreover, the Canada Mortgage and Housing Corporation (CMHC) which insures all mortgages approved by banks, has a legal limit of $600-billion for mortgage insurance, and this limit has already been raised twice since the end of 2007.

#181 randman on 10.05.12 at 6:55 pm

Garth…what say ye?

“Of course QE stands for quantitative easing. Even as a lifelong student of the financial markets, I don’t recall hearing this term before late 2008’s epic stock panic. Central banks are notorious for trying to cloak their actions. So although “quantitative easing” was universally derided historically, it was known by a different name. Quantitative easing is simply a pleasant-sounding euphemism for debt monetization.

All throughout world history, debt monetization ended in ruin for the countries that foolishly played this dangerous game. And it is exactly what it sounds like. Central banks create new paper money out of thin air to buy bonds, thus monetizing them. The big problem is this grows, or inflates, the money supply. Whoever sold the bonds to the central bank spends this new money, injecting it directly into the economy.

The result is inflation. When the money supply grows faster than the underlying pool of goods and services on which to spend it, their prices are bid up. The more new money the central bank creates to monetize debt, the worse the resulting inflation. Even though its impact on price levels isn’t apparent immediately, it is inevitable. Once unleashed, history has proven inflation will fully run its course.”

http://www.321gold.com/editorials/hamilton/hamilton100512.html

(1) Worry more about deflation. (2) Stop reading self-idolizing gold sites. — Garth