Money for nothing

In the last ten days realtors have moaned loud and long about the death two months ago of the 30-year mortgage. Every major real estate board’s bitched. Homebuilders have had several cows. CREA’s whacked. And I’m hearing of furious lobbying efforts in Ottawa as industry dudes try to corral the federal peckerettes and bring them to their senses.

The rallying cry’s unanimous: you used a sledge to kill a flea. This single change, reducing the maximum amortization period that CMHC will insure to 25 years, will kill housing, construction,  economic activity and jobs, they say. It’s a game changer. F had no idea how widespread the collateral damage would be. So, change it.

Of course, he won’t. Bad enough that he was the guy who brought in 40-year ams and 0% downs, igniting a housing frenzy which became a gaseous Hindenburg, then had to backtrack in disgrace. Reversing policy again would diminish his stature. In which case he might be mistaken for a garden gnome. Nope. Not on.

What the real estate lobby should be asking itself is how such a relatively minor change could so crash sales and idle agents. Are there actually that many people in Canada who have no money? Do most buyers really need the lowest mortgage rates ever, plus thirty years to spread out payments?

You bet. If it weren’t for extreme leverage, houses might cost a third less than they do.

Consider what most people cough up to buy real estate lately. I’ve often told you the average down payment these days is 7%, meaning average buyers have to finance 93%. New numbers from the chief economist of the mortgage broker’s association back me up. According to Wilf Dunning, 61% of all purchasers in the last two years were high-ratio borrowers. In other words, in order to buy they had to mortgage at least 80% of the value of their homes.

Scarier, 41% had less than 10% down (many of those had 0%), with another 21% closing the deal with less than 20%. And this wasn’t a survey of just property virgins – it included every move-up buyer who was cashing out of an existing property and using their equity to help purchase a new one.

This tells us something. Canadians have being buying houses they would not afford if (a) rates were at normal levels, (b) the feds weren’t willing to assume the risk for high-ratio loans and (c) the pay-back period was the traditional 25 years. Change one of those conditions, and the buying stops. Soon after, prices correct.

This is exactly what’s happened. After a massive run-up in values and a galloping public appetite for both risk and debt, any meaningful drop in real estate values will seriously screw up personal finances. And yet this is inevitable. Ottawa’s mortgage tweak just advanced things.

Given how little money most families have saved or invested, we should never have achieved a 70% home ownership rate. And I doubt we will get there again in at least two generations. As house values fade everywhere, the debt overhang will be shocking. After all, if the average down payment in the last two years has been less than 10%, and real estate loses 15% of its value in the next two, then 61% of all buyers since 2010 will be under water – according to the industry’s own numbers.

Now imagine a 30% or 40% drop in parts of Vancouver, Richmond, Victoria, Brampton or Montreal, plus a condo implosion in downtown Toronto.

No, the problem is not that the elfin deity killed long mortgages. It’s that policymakers treated real estate as a special asset, getting Canadians hooked on the crack cocaine of cheap, endless money and convinced houses were riskless. So many will discover otherwise.

Blessed are the liquid.

257 comments ↓

#1 Randy on 10.12.12 at 9:18 pm

Invest in a new house….in after-tax dollars and the interest is non-deductible….Seems like a great opportunity to use leverage to achieve ugly after-tax returns…haha

#2 TurnerNation on 10.12.12 at 9:19 pm

Do I detect a slight maturation of this weblog’s tastes?

From Bikes, Babes, and Balanced Portfolios; to: Harleys, Hotties, and Hedge Funds?

#3 Awesome on 10.12.12 at 9:21 pm

It’s like watching a train wreck…

#4 Chris on 10.12.12 at 9:21 pm

Agents in Vancouver are panicking. Sellers are dropping prices significantly, and the buyers aren’t showing up.

#5 Awesome on 10.12.12 at 9:22 pm

Noticed price drops in the GTA in all my preferred neighborhoods… Waiting for the trend to really take hold.

#6 Smoking Man on 10.12.12 at 9:23 pm

#177 Old Man on 10.12.12 at 8:44 pm
I have booked my room on the Canadian side with Embassy Suites with two young babes, and have my tickets, as one woman is never enough for me, so might see you there with your wife on the American side, and will give you a nod, but thanks for your concern.
……………………………………………………………………
Just Two ?

For you dude……………….Live for Today

http://dyslexicsmokingman.blogspot.ca/

#7 Uki on 10.12.12 at 9:23 pm

Number three.

#8 Awesome on 10.12.12 at 9:24 pm

Based on my calculations in the last few months I would say that in the high end homes people have dropped their list price 5% every couple of months. The longer you wait to buy the more you save… No brainier at this point.

#9 T.O. Bubble Boy on 10.12.12 at 9:26 pm

Funny, I don’t remember the RE Cartels and Mortgage Brokers making this much of a stink when the 40-yr or 35-yr amortization options went away… why is 30-year to 25-year change the pin that popped the bubble? Is this just coincidental timing?

#10 Devore on 10.12.12 at 9:28 pm

What’s amusing is that the industry talks up responsibility all the time, and has guides for buyers telling them to only buy what they can afford and to “stress test” their mortgage at historically normal (6-8%) rates, to make sure they’ll be fine even if rates skyrocket. And now they’re talking out of both sides of their mouths, as an effective 1% rate increase has wiped out their market.

Well, if buyers are really able to comfortably afford rates that are 3-5% higher than today, then 1% should be a non-issue.

Clearly, first time buyers (the sector that’s really cratered) were already spending the maximum monthly they legally can, pushing the envelope with family loans and gifts for the downpayment, now that they monthly has been bumped up, they’re over the edge.

Had they bought 2 months ago before the changes, and the rate really went up 1% on their variable, they would have sucked it up and taken the money from elsewhere, robbing Canada’s economic growth and hurting small businesses to shovel money into banks. This is the government’s way of protecting people (and our society) from themselves.

#11 Just Say No on 10.12.12 at 9:29 pm

unemployable 50 year old’s with interest only line of credit and maxed out credit cards on top of the underwater 2008 mortgage (time to renew)on the house that is not selling. I know a few men in this situation that lived the good life for a few years and they are a bit stressed but are not afraid of walking away from it all. It all looked so good on the way up!

#12 BigDaddy on 10.12.12 at 9:30 pm

Being over-extended is all the fashion.

Daddy please buy me another Beemer.

#13 Bill Gable on 10.12.12 at 9:32 pm

There are more homes priced at a million dollars for sale in Vancouver, than in the entire United States.

* Moneysense

OK. Tell me we don’t have a gas bag here in ‘NoFun” City!

#14 Grim Reaper/Crypt Speculator on 10.12.12 at 9:32 pm

Almost Fiiirrzzzzzttttt !

#15 T.O. Bubble Boy on 10.12.12 at 9:33 pm

Remember when Matt Damon played Will Dunning in that movie where the MIT Janitor is a gifted mathematician?

Oh, wait, that was Good Will Hunting. Good Will Dunning is the biased in-house “economist” for CAAMP.

Interesting that Will Dunning’s Condo Investor Report was canceled… maybe his numbers could no longer be fudged to make condos look like a cash-flow positive investment?
http://www.wdunning.com/condoinvestor.html

#16 dd on 10.12.12 at 9:35 pm

What recovery. Rail traffic tells a different story.

http://pragcap.com/rail-traffic-trends-continue-to-weaken#ixzz294t84PQx

#17 Grim Reaper/Crypt Speculator on 10.12.12 at 9:36 pm

BTW:

My comments should get a diplomatic immunity” bypass” from moderation.

#18 Old Man on 10.12.12 at 9:36 pm

There was never a problem for decades at 5/25 no matter what the interest rate or down payment was to buy a home, so if it works why change the formula? It was REFORM, as Caesar knew better to frick up the system, and where is the beef?

#19 DaleFromCalgary on 10.12.12 at 9:37 pm

The University City condo project in Calgary has been running full-page ads in newspapers offering discounts on their unsold units. It’s a long list with discounts in the $10s of thousands. The young and stupid couples and speculators who lined up to buy the first units must feel sick when they read those ads.

What is even more interesting is that the ads include a legal disclaimer that the units may not be built the way as promised at purchase, ie, different square footage and features. Why would anyone buy thin air 50 metres above a shopping plaza parking lot?

#20 Nostradamus Le Mad Vlad on 10.12.12 at 9:42 pm


“In which case he might be mistaken for a garden gnome.” — Whether a garden gnome or manure pile doesn’t really matter. Either way, there’s no difference, except for the stench (think Chilliwack).

“Change one of those conditions, and the buying stops. Soon after, prices correct.” — Yes, prices will adjust but I agree with Devil’s Advocate — there will usually be a buyer for a home and, depending upon financial terms with a healthy downpayment, there will still be movement, albeit at a much less frantic pace than a few years ago.
*
Friday’s Wise Words from the KDC:

“The trouble with weather forecasting is that it’s right too often for us to ignore it, and wrong too often for us to rely on it.” — Patrick Young

So making predictions about the economy is the same as spitting in the wind. It will blow out, but no one knows where it’s going to end up, which is why I prefer conspiracy theories, as a lot of them are fact-based.

The latest consp. theory concerns Dr. PhlOz, who may be a shape-shifting dweezlebulb from another quadrant of this universe. I’ll keep working on this one!
*
Proof A list of the elite that run the US Fed; Mistake or Not? See gold and silver prices; 12:43 clip 14 mln. vacant homes and growing. Solutions? FBI, CIA and Mossad “Which means by the time the new $100 bills enter circulation, counterfeiters (including the CIA and Mossad) will have already created perfect replicas.” wrh.com. The CIA and Mossad are currently doing the same in Iran; Baffled and so they should be; 4:11 clip EZone or Crash Zone? Lagarde “Translation: ‘The peasants are revolting! We better back off of the looting’.” wrh.com.
*
Washington State Legalizing dope? Jordan “It’s almost a race to see which is going to happen more quickly; the complete collapse of the US economy, or a world war to attempt to prevent that from happening.” wrh.com, and US transporting air assets to Israel in the next couple of weeks. Wonder if this ties in with the Jordan thing? Cyber FF The WH is becoming increasingly annoying with its chatter about FFs, none of which have proven to be partially correct; Fukushima What is being done? Nothing; Russia banned microwaves, now wants to do the same for Wifi; Top 20 Methods Imagine a whole year with no flu shots; Egypt “Alternative theory: Since Morsi is not kowtowing to Washington and Tel Aviv, this is yet another US attempted coup such as we have seen in the Mideast going back to the 1953 CIA overthrow.” wrh.com; Kids in solitary confinement.

#21 prairieperson on 10.12.12 at 9:43 pm

Angry people don’t vote for incumbents. If you are correct about what is coming re housing, and I believe you are, what will, can the current fed govt do to keep from having a lot of furious, wounded voters during the next election? They would seem to be caught between a rock and a hard place. They’ve helped to create the situation–although there are many more than them but the many more have no effect on Canadian elections–where reversing course does not seem possible but moving forward with increasing interest rates seems electorally disasterous. At this point, even doing nothing seems to guarantee a very negative outcome. Since they can’t provide bread, will they provide circuses and, if so, what will those circuses look like?

#22 Mark W on 10.12.12 at 9:48 pm

I use two market indexes that I basically made up to measure real estate in the Greater Vancouver area.

The first I call the Maple Ridge Index, and the second one I call the Tsawwassen Index.

These are two far suburban communities in Greater Vancouver that are well beyond the influence of HAM and overwhelmingly caucasian.

Maple Ridge is located in the Fraser Valley and is largely middle class – working class and has grown about 200% within the last decade or so as a result of urban sprawl and the building of the West Coast Express train to downtown Vancouver.

Most of the people here are heavily leveraged and recent mortgages.

The second index is the Tsawwassen Index … a middle class – upper middle class community south of Vancouver.

The average age in Tsawwassen is 57 and the population of the town has actually gone down by 3000 people since 1979.

The average prices in both these communities have gone up by over 200% in the last decade with many homes in Tsawwassen over, or near the 1 million dollar mark. Two examples below:

http://www.realtor.ca/propertyDetails.aspx?propertyId=12373627&PidKey=1518512414

http://www.realtor.ca/propertyDetails.aspx?propertyId=12396619&PidKey=183179708

These are two communities to watch because HAM has almost zero influence here.

The Tsawwassen Index.
The Maple Ridge Index.

#23 Keith in Calgary on 10.12.12 at 9:52 pm

Interesting comments from one of our best friends today. They had a realtor “evaluate” their house for sale. Looks like my constant bubble talk is “perhaps” getting thru ? You guys may remember that they were featured in my post a while back, about the wine soaked Calgary dinner party I attended at their place a few months ago, where RE was the topic of discussion over cocktails.

My wife said she told her today that she thought her house would come in at $1.2MM +……..and she was really pissed when the realtor told her bluntly that it would not sell at over $999K, as nothing was moving over $1MM, and that at under $1MM it would take 6 months if she was lucky. Now she doesn’t want to list as the market “will come back” and RE only goes up. Well, they owe about $200K……..and in 5 years from now it will be paid for, but probably only worth $500K……………..

They are my dear friends and a hit of that magnitude would not dent their net worth by >10%……..but still……..”a fool and their money”…………

#24 Sherwood Park on 10.12.12 at 9:52 pm

Here’s my question. If the drop from 30 to 25 year amortizations is responsible for the recent crash in sales, why didn’t the same occur when we went from 40’s to 35’s and again when we dropped from 35’s to 30’s? Maybe we just simply hit the peak and we were already on the way down?

#25 Chickenlittle on 10.12.12 at 9:56 pm

Wow! I beat Smoking Man..
I can’t wait for the housing market to correct itself. I had a conversation with my Nono about housing. Back in the 50’s he bought his first house for $4,000. He made $2,000 a year. He asked me why my husband and I hadn’t bought a house. I told him it was because the earnings/housing cost ratio was almost 4 times higher than it was when he first bought. He of course got mad at me and accused me of making his life as an immigrant sound easy, and how us kids don’t know what its like to have to work hard. I beg to differ. I wish I was wrong, but I’m not.
Not to toot my own horn but I am pretty sure that my comment here will be one of the easiest to read. I have no idea what half of the people on here are driving at most of the time. Especially that Smoking Man guy. I like how in his last comment he mentioned that someone asked him for financial advice! Ya right!

#26 happy renter on 10.12.12 at 10:00 pm

The goverment or developers should build new rental apartments that are affordable.Here in Victoria its all old crappy buildings that are not sound proof.Even better we should adopt a european plan where people pay no more than 30 % of your net income for rent.In Canada we pay 1st world taxes for 3rd world services.Its shamefull this country doesn’t provide its people with respect and services as northern european contries do.We all know are tax money is being wasted but no one cares .

#27 MissWoodles on 10.12.12 at 10:02 pm

Is this you that made the news TurnerNation : )
http://o.canada.com/2012/10/11/recipe-for-disaster-man-learns-the-hard-way-how-not-to-cook-a-squirrel/

#28 Bottoms_Up on 10.12.12 at 10:08 pm

I truly feel sorry for all the speculators that thought the “risk-reward” equation was one sided.

Well, it was one-sided for a long time. And now it has flipped.

#29 Smoking Man on 10.12.12 at 10:09 pm

elfin deity -Garth said……………….

On the Floor Laughing my fn guts out.

which induced and un controllable cough spazum

Gartho you trying to kill me?

#30 mark on 10.12.12 at 10:12 pm

Here’s a question: if Emili helped inflate on the way up, can it do the same to reign in money loaned on the way down?

#31 john m on 10.12.12 at 10:15 pm

Imagine how good things would be if “f” and the peckerettes has left things the way they were………so much for “things are different here”…………untold billions turned to dust…………………….you warned them Garth and it will be remembered.

#32 kenken on 10.12.12 at 10:19 pm

the house p0rn still continues in Mississauga!!
Wife just mentioned our friends bought a 2nd house… for investment … despite me telling them of the risks to housing no later than last month!!
And i keep getting the look and her ‘wrath’ for deciding we should keep renting for some more!!

#33 Smoking Man on 10.12.12 at 10:34 pm

#25 Chickenlittle on 10.12.12 at 9:56 pm

If you only knew, If I Could spill the beans. ?

Yoda ? Lie please

so I go with this.

I am a dunken homeless male gay prostitute posting between tricks.

Does that make you feel better

#34 Vangrrl on 10.12.12 at 10:37 pm

That’s a funny pic…

From last week:
‘Canadian investors are buying up so many distressed properties in Phoenix that locals are angry and analysts are warning of a crash”.

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

#35 Molly on 10.12.12 at 10:37 pm

Guess me and my hubby are blessed, I think were the only rational thinking couple in our group of friends. I’m 25 he’s 28 making 6 figures a year (I stay at home with our new bundle) and we currently live in my moms rental house for 600 bucks a month, our friends literally think we’ve lost it, constantly hear things like “but you can afford it” , “you have a baby, she need somewhere stable to grow up”. I just smile……. =) thank you for that Garth.

#36 Realtors are in an all out panic on 10.12.12 at 10:42 pm

RE in Canada is the BIGGEST PONZI in the WORLD and every realtor , mortgage broker and builder knows it. With interest rates only going higher the crash will be here for many years to come. It’s going to be a nasty crash RE industry , a nasty CRASH!

#37 Timbo on 10.12.12 at 10:45 pm

http://www.independent.ie/business/personal-finance/property-mortgages/trapped-homeowners-warned-about-risks-of-tradeup-mortgages-3241345.html

“HOMEOWNERS trapped in properties worth less than they paid for them have been warned that new mortgages introduced to help them move to a larger home are fraught with danger.

The warning came as former building society EBS said it would offer homeowners who owe more than their home is worth the option of trading up to a larger house.”

negative equity trade ups…ah the words escape me!!!

http://www.theglobeandmail.com/report-on-business/top-business-stories/why-toronto-dominion-bank-thinks-canada-is-overbuilt/article4608293/

“So is Canada overbuilt?” Mr. Fong asked.

“In our view, the answer is yes,” he wrote in his report.

“The current pace of construction is also well north of the average rate of household formation in Canada. According to the 2011 census, only 177,000 new households were created each year since 2006. This would imply that, over time, we have been building more than the demographic need requires.”

Its going to get ugly in a hurry with graphs leading the way down……

#38 EIT on 10.12.12 at 10:45 pm

I think we’ve all been had.

“The Romans had a word for it -obscurantism- which means the purposeful concealment of one’s ultimate purpose.”

You can believe one of two things. Things happen by accident or things happen because someone wants it to happen. I think the later, and so should you!

#39 Victor on 10.12.12 at 10:56 pm

Hard to believe, but over at the Globe, Marcus Gee is actually pumping Toronto’s condo market. Unbelievable.

http://www.theglobeandmail.com/news/toronto/opinion-torontos-condo-boom-is-a-boon-for-the-city/article4611020/

#40 nocte_volens on 10.12.12 at 11:04 pm

#24 Sherwood Park said “Here’s my question. If the drop from 30 to 25 year amortizations is responsible for the recent crash in sales, why didn’t the same occur when we went from 40′s to 35′s and again when we dropped from 35′s to 30′s? Maybe we just simply hit the peak and we were already on the way down?”

————————————————————-

You are confusing the lumpen with the facts…shame on you. ;)

#41 Devore on 10.12.12 at 11:06 pm

#23 Keith in Calgary

They are my dear friends and a hit of that magnitude would not dent their net worth by >10%……..but still……..”a fool and their money”…………

This is “good”, in the sense that they are only losing their own money, and aren’t recklessly leveraged.

Even being underwater on the mortgage should not be a big deal to any homeowner. I mean, it’s not something you do, it’s something that happens to you. You can mitigate that to some extent with a larger downpayment and paying down the principal quicker (hello 25 year mortgage). Banks protect themselves against this risk by insuring your mortgage.

But being underwater should just be business as usual. If this puts you in a financial hardship, you are doing it wrong, probably living off your HELOC because you’re living well beyond your means, and in “normal” times you’d never have access to this kind of ruinous credit.

#42 CalgaryBoy on 10.12.12 at 11:13 pm

Thanks, Garth, for the daily posts and keeping us updated!

I for one am very excited about the long overdue correction! I’ve been waiting patiently and will continue to wait patiently.

A healthy correction in Calgary is much needed! I’m sure that once it’s in full swing in Vancouver and TO, it will start scaring people in other cities.

http://www.cbc.ca/news/business/story/2012/08/23/debt-canada-transunion.html

Average consumer debt, by province

British Columbia $37,879
Alberta $33,564
Saskatchewan $27,699
Manitoba $19,945
Ontario $25,447

#43 Ralph Cramdown on 10.12.12 at 11:14 pm

I’m happy that at least CAAMP, the Canadian Association of Mortgage Professionals, is getting out ahead of our coming problems by hiring the well respected economist Will Dunning.

They’re going to have him write a monthly newsletter, and they’re going to call it “The Dunning Letter.” Look for a copy soon in a mailbox near you.

#44 Devore on 10.12.12 at 11:17 pm

#26 happy renter

Here in Victoria its all old crappy buildings that are not sound proof.

Some are, some aren’t. Have you been in some of the condos built in the last 10 years? And if you’re in a wood frame condo, I don’t know what to tell you, you must have been smoking some good crack when you bought that.

Point is, there are nice apartments, and not so nice apartments. There are condos and houses that should be condemned, but their owners insist on living in them. But when you’re paying big bucks for a service, like a rental, you expect a certain level of product. Owners will put up with way more crap than renters, believe me, at least as long as prices are going up.

#45 Enz on 10.12.12 at 11:17 pm

Garth housing is correcting.. Ripple effect will be construction, higher unemployment, lower tsx, chmc meltdown, basically made in Canada recession. How can we protect our merger weath for us sensible renters. Suggestions on good short opportunities on tsx would be nice??

#46 Old Man on 10.12.12 at 11:48 pm

#35 Molly – you are great news to me, and keep up the great work; hold your head high; and worry not. Your day will come.

#47 fiendish Thingy on 10.12.12 at 11:50 pm

@#22 Mark W.

Thanks for mentioning the “Maple Ridge Index”; I just moved to MR from California a few weeks ago.

While we love our cheap (compared to Santa Cruz, Ca) rental, MR does appear to have some growing pains, with high density suburbs crowding out bears from their habitats, and at least two new condo towers planned for downtown.

MR is considered part of the Greater Vancouver area, and thus is part of the Frankenumber HPI stats. This makes market analysis difficult for us amatuers.

Nevertheless, my sense is that sales in MR are WAY down, listings are WAY up, and prices are still sticky, with sellers still struggling with denial. Every week brings full page color ads for new developments, both SFH and attached/condos. Only a few reductions, mostly for older (20+ yrs) homes in the $300-$400k range.
I’m guessing it will take significant drops in the resale market before developers of new construction will be forced to lower prices of new homes.

So, back to the “Maple Ridge Index”; Any hard, reliable numbers for sales/prices/listings in MR?

#48 NKVD Black Raven on 10.12.12 at 11:53 pm

Mirvish on King…Oxford @ the MTTC propositioning one of the biggest redevelop in NA. 1 Bloor still a hole in the ground.

#49 bruce on 10.12.12 at 11:58 pm

who wants to shell out hundreds of thousands of dollars for a bunch of two x fours, nails and gyproc anyways ?

#50 wes coast on 10.12.12 at 11:59 pm

Garth, glad to hear you defending F to some degree, especially in the face of the powerful realestate lobby. Although you likely disagree with most of F’s policy – we as a ‘greater fool community’ should be in vocal support of at least these new lending rules.

My fear now is that this powerful lobby will brainwash the public – again. First was getting them hooked on the wealth effect of a housing bubble – next may be a political revolt that demands the ‘crack come back’.

Garth you know politics, so if there is any way to get a message to the government in support of these new policies (by way of petition?) – maybe your site is the place to make that happen.

Just a thought.

#51 willworkforpickles on 10.13.12 at 12:01 am

ahh but for the good old days before the yuppies popped out and obliterated row after infernal row of festering rooming house party havens, a veritable teeming vast urban landscape of them…… cockroaches and all.

#52 Cowtown Refugee on 10.13.12 at 12:04 am

#23 Keith in Calgary on 10.12.12 at 9:52 pm
Interesting comments from one of our best friends today. They had a realtor “evaluate” their house for sale. Looks like my constant bubble talk is “perhaps” getting thru ? You guys may remember that they were featured in my post a while back, about the wine soaked Calgary dinner party I attended at their place a few months ago, where RE was the topic of discussion over cocktails.

My wife said she told her today that she thought her house would come in at $1.2MM +……..and she was really pissed when the realtor told her bluntly that it would not sell at over $999K, as nothing was moving over $1MM, and that at under $1MM it would take 6 months if she was lucky. Now she doesn’t want to list as the market “will come back” and RE only goes up. Well, they owe about $200K……..and in 5 years from now it will be paid for, but probably only worth $500K……………..

They are my dear friends and a hit of that magnitude would not dent their net worth by >10%……..but still……..”a fool and their money”…………

++++++++++++++++++++++++++++++++++

Hate to rain on your parade, but I doubt that the house would be less than 10% of their net worth, otherwise she wouldn’t be thinking about selling.

This is Calgary you’re talking about; home of leased Porsches, Ferraris and Maseratis.

Net worth in the patch is ephemeral; one year it’s steak and the next year its beans. And the car payments last longer than the oil in most wells.

Ever has it been so.

#53 fiendish Thingy on 10.13.12 at 12:05 am

@#34 Vangrrl

Loved the McLean’s article about the invasion of the snowbirds; it looks like some Canadians may get hit with a double whammy, first when the Canadian housing market tanks, and second, if the Arizona market overheats or is flooded with foreclosures.

Some folks are just too greedy for their own good…

#54 McLovin on 10.13.12 at 12:06 am

“The Romans had a word for it -obscurantism- which means the purposeful concealment of one’s ultimate purpose.”

Yes and we have the same word – Devils Advocate

#55 Bob on 10.13.12 at 12:36 am

Garth, I love these number posts… but your numbers this time are confusing.

e.g. some points of question/confusion
– how many people (purchasers) have no mortgage?
– are these included in the “average down payment of 7%”
– how do you get 7%? the next statements don’t seem to add up
– 41% less than 10% down
– and another 21% (presumably 10-20% down)
?? WHAT? That’s 62% with 20% or less

so let’s see, as an example
(0.41 * 5 down) + (0.21 * 15down) + (0.38 * 25down)
average = 14.7% down payment

#56 Smartalox on 10.13.12 at 12:36 am

I’ll bet that the reason that emili story came to light this week is because CMHC started running simulations to determine emili ‘s response as property values started to fall. The positive feedback loop works both ways: it goosed prices on the way up, now they’re figuring out that it’s gonna grease prices on the way down.

Imagine accepting an offer on your long-unsold property, the buyer is qualified, even has 20% down. But then the BANKS scuttle the deal because emili says that the buyer’s overpaid, especially since the last sale in the neighborhood sold under duress and was deeply discounted. And tnltb is too lazy to actually go out and appraise the property.

This will accelerate the race to the bottom. The only hope is to do whatever it takes to be the first to sell.

#57 Click Here, its different on 10.13.12 at 12:37 am

I really like the clearance 1$ conceptrol boxes.

Recent buyers will have a good use of those.

#58 Grim Reaper/Crypt Speculator on 10.13.12 at 12:45 am

Obviously, Ontario is desperate to keep Real Estate prices viagra’d

http://www.thestar.com/news/canada/article/1269454–transgendered-ontarians-now-allowed-to-alter-birth-certificates-without-sex-change-surgery

#59 Cowpie on 10.13.12 at 12:59 am

“Based on my calculations in the last few months I would say that in the high end homes people have dropped their list price 5% every couple of months. The longer you wait to buy the more you save… No brainier at this point.” ——————————————————————-
You get an “Amen!” from the choir, brother. Nothing but price reductions on the high end homes in Cowtown for the past two months. The RE’s that are more brainier than the rest of us have started listing their McMansions: http://www.realtor.ca/propertyDetails.aspx?propertyId=11996732&PidKey=1727329447

I think they know it won’t be different here.

#60 Nostradamus Le Mad Vlad on 10.13.12 at 1:00 am


#38 EIT — “I think we’ve all been had. Things happen by accident or things happen because someone wants it to happen.” — Absolutely, but most sheeple won’t know it. They will be grazing on their little plot of land, ignoring all that’s going on around them.
*
Cdn. Frday links, plus (incl. Kevin O’Leary); Global RE Gambling or not? Melting Left Coast Smelly Cheese (or RE); Toyota Bigger troubles than recall; US – China Cyber (and other) trade war? Wholesale Prices rising; Carlos Slim The rich get richer; Graph M2 Money Stock. Apparently, QE3 isn’t working, and More to the point; 10:38 clip IMF has changed their tune on austerity. Perhaps because it doesn’t work? Why Are So Few People Working? Good question; Invade, dammit! via the Pentagon; China in a tizzy.

John McCain manages to shoot himself in the foot again; Kannaduhh says US should avoid fiscal cliff; US deficit WW2 is over, WW3 on the way; Investors Wary; EU changing Basel bank rules. Could be why the IMF is flipping on austerity; Japan crisis? Join the club; Kim Kardashian Biz. whizz-kid? US$41,500 Fridge Kitchen not included; OMREB latest; Energy Bills Sign of things to come? One RE agent Anyone would be happpy with his business.
*
UK Draft Comm. Bill There may be a message here; Syria, Turkey and Israel This touches on an earlier post, where the US will be handing Israel tons of equipment in the next couple of weeks, the UK is building up in Jordan, the west and zionists are running Turkey’s govt. and it could be a prelude to something much larger; Amtrak has joined the police state; 1:31 clip Oz — The Land of Sun, Surf and Snow? 7:19 clip (at end) Michigan hog (and family) farm to be shut down? Two bln. dementia patients? 2:34 clip Bosnian pyramid carbon dated to 25K years old, which places the creationists in a bit of a hole; Lunatic Brit. Only a Brit. would be daft enough to pull this stunt; Filling up? There are some ladies who can be as nutty as man, and this is one; Numerology? Hmmm; Never Fear! Another cult says the end of the world is coming.

#61 Cowpie on 10.13.12 at 1:11 am

ChickenLittle:

A word of advice from the Cow. Read Smokin Man with your eyes squinty, in yoga position, ideally as late at night as possible. Drinking will help if you can manage it.

On many occasions, this will still be of no help. I choose to find it charming, adding a flavourful, yet pungent side to the blog. Like a really bad cheese. But what’s great is that he’s so consistently him. He is “as advertized”.

#62 Whistler long time on 10.13.12 at 1:14 am

This will not end well, stay liquid folks. Whistler is melting.

#63 };-) aka D.A. on 10.13.12 at 1:19 am

LOL!!!

#64 THE CELIAC HUSBAND on 10.13.12 at 1:29 am

“Blessed are the liquid.”

It took me a while to get used to it though. Ho hustle for the next sale. Sleeping much better. A new set of priorities.

Sell if you can. I did.

http://theceliachusband.blogspot.fr/2012/07/moving-overseas.html

#65 Gunboat denier on 10.13.12 at 1:31 am

13 Bill. Wrong.

Here is the quote

“There are currently over 5,000 homes in Vancouver
metro area for sale for over $1 million according to
MLS.ca. In comparison, the NAR reports that in April,
just over 7,000 homes sold in the entire US were sold for
over $1 million”

Here is the article

http://www.theeconomicanalyst.com/content/vancouver-housing-full-correction-mode-implications-canadian-banks

#66 TNT on 10.13.12 at 1:37 am

If you think that the 3+ trillion the EU banks have to deal with in the next few months is going add to the global slowing down pain’s, wait and see what the USA’s fiscal fiasco stirs up.
Periscope down.

#67 Crash Calaway on 10.13.12 at 1:52 am

The MisGnomer.

So F invites everybody to his garden party.
He promises everyone free drinks and when everyone gets wasted and a catering bill is suddenly presented F slithers off leaving the guests on the hook.

Poor Realtor, poor house horny,
Cue violins… Let the whining & wailing begin

#68 live within your means on 10.13.12 at 3:56 am

#18 Old Man on 10.12.12 at 9:36 pm
There was never a problem for decades at 5/25 no matter what the interest rate or down payment was to buy a home, so if it works why change the formula? It was REFORM, as Caesar knew better to frick up the system, and where is the beef?
……………………………..

When Harper was in Opposition be pushed for deregulation of the Banks, etc. After the 2008 crash he travelled the world taking credit for our sound banking & mtg. system. What a hypocrite & liar he is.

How Harper Gov’t Pushed Financial Deregulation Here, Abroad

http://thetyee.ca/Views/2008/10/08/HarperEcon/

#69 JOJO on 10.13.12 at 4:41 am

What 30% or 40% drop in parts of Brampton???
Brampton is the cheapest Area in West GTA, and it has at least 30% to 50% lower prices than Oakville,Burlington or Georgetown.
RE buble is created in Toronto Central, North and West GTA (except Brampton). Prices in Brampton from 2008 avg. RE prices went up 15% to 25%. But in Oakville and Burlington I saw in April, MAy this year were almost 80% to 100% more than 2008. RE Bust will be in Most parts of Canada IF the Banksters start increasing interest rates just for 2% to 3% in next 3-4 years than you’ll see the RE showtime.

#70 TRT on 10.13.12 at 4:49 am

Russian Standard says sales so far in vancity above sept levels. 99 sales today.

Don’t know what you sheep are on…no price drops in my neighborhood.

One thing I’ve learned from this blog is most people are very naive, readily format opinions,and want to follow. Good luck L.

#71 Trt on 10.13.12 at 4:53 am

And Fraser Valley had its highest sales day in several months. You listening Junius or still studying the LSAT?

#72 eagle eyes on 10.13.12 at 5:17 am

#34 Van Girl
In the MacLean’s article re Canadians buying Phoenix with HELOCs in the last 2 years, does this not indicate the Canadians are using their homes as an ATM? If home prices in Canada drop by 15 – 30%, and HELOCs are being restricted, would this not create a disaster? I guess one could argue that prices have already increased in Arizona, but I would shudder at the thought of needing to sell RE in the States to pay off a LOC. Is this a case of high risk/high rewards, or RE gamblers anonymous?

#73 Jay Currie on 10.13.12 at 5:48 am

#21 prairieperson – Best to get it out of the system before the next election.

Politically, losing 100K property virgins in Ontario and BC is sad but not the end of the world. In a couple of years it will feel like a bottom has been reached.

The Conservatives will rompt to victory.

#74 WEX19 on 10.13.12 at 6:01 am

Long time reader, first time poster.

Garth,

Yes or no to RESP for new little bundle?

Got the rundown from the CST rep and his big point is lower MER compared to the banks.

Thanks

#75 Buy? Curious? on 10.13.12 at 6:21 am

Garth, since you have been the only reputable guy to call the end of real estate as an investment to the masses thereby killing the proverbial Golden Goose, my question is, do you have to go on and beat the real estate Cartel’s dead horse too? For 5 years you’ve been predicting this, it’s happening in front of our very own eyes, you get a gazillion hits a month, we all get it. But now that the “smart ones” are liquid, sitting on a little bit of cash, what now? Gold and precious metals are for loonies, REIts, bonds and preferred shares are too complicated, and my Boobie is about to go into a nursing home. She’s been eating porridge for 60years! She’ll probably live another 30! What’s a guy like me going to do?

And Smoking Man, I know you have a limited imagination. For you to come up with this line, “I am a dunken homeless male gay prostitute posting between tricks.” It must mean you been exposed to this scenario in one form or another. You’re a sad sack.

#76 Francis on 10.13.12 at 6:51 am

The approaching real estate financial tsunami should be peaking just before the next election.

The “citoyens” will have to buy a larger tumbril.

#77 John on 10.13.12 at 8:12 am

“You guys may remember that they were featured in my post a while back, about the wine soaked Calgary dinner party I attended at their place a few months ago, where RE was the topic of discussion over cocktails.

My wife said she told her today that she thought her house would come in at $1.2MM +……..and she was really pissed when the realtor told her bluntly that it would not sell at over $999K, as nothing was moving over $1MM, and that at under $1MM it would take 6 months if she was lucky.”
———

A lot of vibe about “Canadian middle class” jumps out here. It seems older, neutered, entitled, deluded and very exposed to the dynamics of the world financial system.

Imagine the scam of people standing around “conversing” about their “millon dollar” house with “close” friends…soaked in wine. The rest of the pillars of the middle class are built on a borderless derivatives ponzi that appears less stable every day.

Forget the “money” and “real estate”, it’s human dignity, human reality and actual connection that are most undermined.

Give away responsibility, give away power. Without power ( real power), a person is not in a position to lead a valid life, offer value or connect to others.

Nobody is bad or wrong, but it is a serious crisis that is not being talked about. The discussion has now become more and more irrelevant, and has fully stalled out.

#78 MarcFromOttawa on 10.13.12 at 8:17 am

Paper is Poverty. It is only the ghost of money, and not money itself – Thomas Jefferson

I’m looking to buy my first silver maple leaf or eagles (lady liberty) tomorrow at a coin show in Ottawa.

#79 Ralph Cramdown on 10.13.12 at 8:33 am

Yes or no to RESP for new little bundle?

Got the rundown from the CST rep and his big point is lower MER compared to the banks.

Yes to RESP, at least annually up to the the amount that maximizes the government contribution. No to the CST guy: Ask him to show you performance taking into account the enrolment fees and all the other BS (you don’t think his cheap suit paid for itself, do you?) Open a self directed RESP at some no fee place like Questrade and put it into something that will grow nicely, on a DRIP plan.

#80 DR. WAYNE on 10.13.12 at 8:45 am

#14 Grim Reaper/Crypt Speculator on 10.12.12 at 9:32 pm

Almost Fiiirrzzzzzttttt !

You are ‘almost first’, however don’t fret, you are ‘definitely’ an ass hole.

#81 live within your means on 10.13.12 at 8:47 am

#42 CalgaryBoy on 10.12.12 at 11:13 pm
Thanks, Garth, for the daily posts and keeping us updated!

– snip –

http://www.cbc.ca/news/business/story/2012/08/23/debt-canada-transunion.html

Average consumer debt, by province

British Columbia $37,879
Alberta $33,564
Saskatchewan $27,699
Manitoba $19,945
Ontario $25,447
…………………

Didn’t know Canada ended at the Ontario border. Not sure I trust the figures in the article. Suspect they are higher based on what I’ve read & seen on TV.

#82 visorman30 on 10.13.12 at 8:50 am

#55 I think Garth’s statements are consistent with above paragraph. 41% and 21% = 62% (in the post its quoted as 61% but close enough). It seems to just be a breakdown of that overall # of highly leveraged buyers.

I think the problem you’re running into when you try to take that overall stratification of buyers and try to reconcile it to the “average of 7% downpayment” is in your assumptions regarding the distribution of downpayments. Specifically, when you use as an example 41% at 5% that assumes an average distribution of the 41% between 0% – 10% downpayment to 5%. This same assumption plays out in the other elements of your example.

If you’re looking to reconcile the #’s I believe you would need to actual average downpayment % within each grouping. Something like:

41% * (average actual downpayment for 0-10%) + 21% * (average actual downpayment for 11% – 20%) + 38% * (average actual downpayment for >= 20%).

Those averages could very well be 2%, 11% and 30% for all we know just as it could be 5%, 15% and 25%.

Since I don’t have access to the actual data, there is no real way from our perspective to validate the % but there are indications that 7% is not totally off-base. These indicators include:

– Outpacing of housing cost to income would lower capacity to put higher % downpayment.
– High number of first time buyers and, as a group, tends to be highly leveraged.
– Low interest rate removing the cash flow barrier to high debt.

Based on the above, a 7% average downpayment does not seem unreasonable. On a personal note, a 7% downpayment is completely personally unreasonable and I would rent forever if that is all I could muster. Thankfully my girlfriend and both sides of the family agree that renting is the way to go so I don’t have any pressure to buy anytime soon.

#83 Nukester99 on 10.13.12 at 8:55 am

I have always been debt averse and no amount of “stuff” horniness could make me put my proverbial head into a lenders guillotine. The rope withholding the blade slowly burning by the corrosive acid of my own greed. It is an image people should contemplate the next time they want the newest, latest, shiniest trinket. Of course the world has long stopped living within their means and soon we will all suffer to some extent, some far more then others. Should I feel empathy for them?

#84 enaf on 10.13.12 at 9:02 am

chickenlittle, do what i do, see the word smoking man and skip on past to the next comment. he comes here because he is lonely and poor and this gives him the attention he needs.

#85 Steven Rowlandson on 10.13.12 at 9:12 am

Cutting house prices by a third does not make houses affordable Garth. A 90% plus drop might, but a one third drop is merely a slight inconvenience for the real estate cultists. Their suffering must be severe and long lasting enough to convince them that real estate is not an investment and it is to everyones advantage that it be kept cheap enough for everyone with a job to have a home and live at the same time.

#86 Bob Holmes on 10.13.12 at 9:12 am

In case you missed it, HAM comes to Saskatchewan

http://www.theglobeandmail.com/report-on-business/seed-capital-how-immigrants-are-reshaping-saskatchewans-farmland/article4610589/?page=all

#87 TurnerNation on 10.13.12 at 9:21 am

What recession? Try finding a parking spot at Toronto’s malls: Yorkville, Sherway Gdns, Bayview, Vaughan Mills.

Taken over by very expensive US chains, like Coach, Tiffenys, Hermes, Brooks Brothers, and local Holt Renfrew, Harry Rosen. Nortstroms – another US high end chain is set to launch here.
Their prices are nuts! Like: 100 for a scarf. Coats cost at 700-2000. Insane. But the Canucks must be buying. Every kid has an Abercrombie T-shirt.

As mentioned, downtown on Queen St. W from University to Bathurst I counted up to 15 vacant, For Lease stores; In mini-Chinatown at Broadview & Gerrard Sts. and just south of it I counted a dozen vacant, For Lease stores.

Paging all entrapreneurs…the sky’s the limit…for your taxes, rent, hydro, gas, “carbon taxes”.

We’ve been assimilated into the US trade zone.

#88 Daisy Mae on 10.13.12 at 9:31 am

#31 john m: “Imagine how good things would be if “f” and the peckerettes has left things the way they were……”

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

What amazes me is that all the world ‘leaders’ couldn’t think for themselves and make intelligent decisions regarding the economy and where it was leading us. They took the lazy route and followed each other into oblivion. What a bunch of dumb asses. And now they’re all sweating blood and wringing their hands in dismay….but, of course, at the same time silently thinking: “I’m alright, Jack….”

#89 COMFORTABLE IN MY OWN SKIN on 10.13.12 at 9:32 am

I personally wish the interest rates would rise to normal level (about 7 percent) and let the chips fall where they may.

It wont be pretty… in fact, it would be downright ugly ,,, but at least there will be balance in the market.

I am looking to downsize from a townhouxe to a condo…. was I shocked to see the prices they are charging for just the walls and the air inside little boxes in the sky….

#90 Ronaldo on 10.13.12 at 9:41 am

#26 Happy Renter –

”The goverment or developers should build new rental apartments that are affordable.Here in Victoria its all old crappy buildings that are not sound proof.Even better we should adopt a european plan where people pay no more than 30 % of your net income for rent.In Canada we pay 1st world taxes for 3rd world services.Its shamefull this country doesn’t provide its people with respect and services as northern european contries do.We all know are tax money is being wasted but no one cares .”

Have you not heard of:

http://www.bchousing.org/aboutus

Furthermore, with the price of land, how do you propose that developers provide cheap rental housing? And why would they? Since they are in the business of making money, not subsidizing renters. The very reason we have this glut of condos is because developers stopped building rental housing when governments decided to impose ”rent controls” years ago. Why should developers subsidize renters. This is why the BC Housing Development Corporation was created back in the days of the NDP. Taxpayers are already subsidizing renters to the tune of 97,000 units across the province. Maybe you ought to look into this.

#91 TurnerNation on 10.13.12 at 9:46 am

Crazy semi #2 in C01 area, on its 4th price drop! I’d pay $650,000 for it. Tops. It’s overpriced by a cool Mil. Check google streetview – at horrible end of the street.

(BTW, in my small search area, 79 new listings as of yesterday – new condo flippers, mostly. The search maxxxes out – too many listings even for MLS. Must filter by an as-of date.
Realtors must be in a panic. 20-somethings were relying on 30 and 35-year condo mortgages.)

http://www.realtor.ca/propertyDetails.aspx?propertyId=12501951&PidKey=-1090721779

guava.ca»Blog Archive » New Listings Fri Oct 12 14:19:03 2012
guava.ca/?p=3155
23 hours ago – C2485161 – M5V – 137 PORTLAND ST Toronto, Ontario – $1,639,000. *** Modern, Custom Built Home In The Heart Of Toronto s Fashion …
guava.ca»Blog Archive » New Listings Fri Aug 24 14:29:02 2012
guava.ca/?p=3106
24 Aug 2012 – C2424220 – M5V – 137 PORTLAND ST Toronto, Ontario – $1,789,000. Price Change. Aug 24: $1,789,000 Jul 24: $1,849,000 ***Modern …
guava.ca»Blog Archive » New Listings Fri Sep 21 14:19:02 2012
guava.ca/?p=3134
21 Sep 2012 – C2468247 – M5V – 137 PORTLAND ST Toronto, Ontario – $1,689,000. *** Modern, Custom Built Home In The Heart Of Toronto s Fashion …
guava.ca»Blog Archive » New Listings Tue Jul 24 14:29:01 2012
guava.ca/?p=3075
24 Jul 2012 – C2424220 – M5V – 137 PORTLAND ST Toronto, Ontario – $1,849,000. *** Modern, Custom Built Home In The Heart Of Toronto s Fashion …

#92 Angel on 10.13.12 at 10:05 am

Last night on the news there was a story about a family where both the parents had cancer. Didn’t catch the whole thing, why they were on the news exactly. Tragic story, absolutely. I’m not denying that. They were questioning whether they would have to sell their house, their car, if they’d have to move in with family. I wonder things like that often about friends that have maxed out with big mortgages and big debt, they put all their “savings” into paying down the mortgage. What happens when personal tragedy strikes? One gets ill and stops working for a time, or they’re in a car accident and need home care, things like that. I don’t plan on spending our savings and investments there, but I like knowing that our rent and cost of supporting our lifestyle is doable on one income and we have cash should we need it, we wouldn’t have to move on top of dealing with tragedy. It’s comforting to me. More comforting than owning the granite in my kitchen or that no one else used my bathtub before me.

#93 Stickler on 10.13.12 at 10:09 am

Just remember -> When provincial debt is added to the Fed debt burden gross debt jumps to 110% of GDP.

..comparable to the US figures that seem to capture so much media attention.

#94 Keith in Calgary on 10.13.12 at 10:10 am

52 cowtown refugee……

She was only thinking of selling because I have been verbally beating on them to do so. They paid $500K to have it built some 7 years ago. 2 people living in a giant 3,000′ house is kin dof pointless after all.

And, unless you personally know them, you don’t know anything about them.

#95 Ronaldo on 10.13.12 at 10:16 am

#79 Ralph Cramdown –

”Open a self directed RESP at some no fee place like Questrade and put it into something that will grow nicely, on a DRIP plan.”

Good advice Ralph. Right on. Could even check into the various TD Efunds which if purchased through a TD Waterhouse trading account can be purchased and sold at no charge. Slight holding period. Very low MERs.

That is not the reason to choose assets. — Garth

#96 jess on 10.13.12 at 10:17 am

loopholes

10. I’m Irish. No, really.
9. How to lower your taxes by sitting on your ass
8. The Sheryl Crow loophole
7. Getting rich, Facebook style
6. My other home is a yacht interest deduction
5. Big Oil’s Cadillac welfare
4. A break for shipping your job to China
3. The behaving like an asshole deduction
2. Delaware, the Cayman Islands of America
1.The corporate blackmail exemption

http://www.villagevoice.com/2012-10-10/news/the-10-most-corrupt-tax-loopholes/
====
Title Insurance
http://californiawatch.org/money-and-politics/canadian-bank-goes-after-homes-collect-credit-card-debts-18223

Credigy filed a verified complaint for judicial foreclosure in December 2010 in Alameda County Superior Court seeking the sale of a house on Ninth Street in Alameda to satisfy an 8-year-old judgment for $7,381 against Richard Archuleta.

In addition to Archuleta, who lost the house in a 2008 foreclosure by his mortgage lender, the lawsuit named as defendants Bank of America, California’s Franchise Tax Board, the U.S. government and Christina Fong, who bought the house in the 2008 foreclosure sale.

The lawsuit came out of the blue to Fong.

“Both my wife and I were in shock,” said Kai Lam, Fong’s husband. “The first question that came to our minds was, ‘Can they really do that?’ ”

Fong and her husband assumed a house bought from a bank in a foreclosure sale came with a clear title. “Fortunately, we realized that we had title insurance,” Lam said.

Eventually, the title insurer wrote a check for$6,500 to settle Credigy’s claim. Glen Olives, a former attorney for Fidelity National Title Insurance Co., represented Fong in the foreclosure lawsuit.

========

71-year-old Helen Jones, who lives in a modest house in Oakland’s Highland Terrace neighborhood and works as a cashier at a San Francisco hospital.

Jones learned that the bank wanted to sell the house she had lived in for 37 years when, in July 2010, a process server came to her door and handed her a copy of a complaint for judicial foreclosure filed in Alameda County Superior Court.

At issue was a $1,803 judgment issued in 2000, after her ex-husband allegedly didn’t pay $1,636 he owed on a Wells Fargo credit card, according to court filings. Jones said the company asked her to pay $7,000 to settle the old debt.

Jones, who was not named as a defendant in the 2000 lawsuit that resulted in the judgment, said the unpaid debt was incurred after she divorced her ex-husband.

The mere prospect of losing her three-bedroom, two-bathroom, 1,300-square-foot house with an estimated value of $180,000 prompted Jones to pay $3,800 to settle Credigy’s claim.

“I just wanted to get it over with,” she said of Credigy, “because they are awful.”
husband outstanding credit card bill.

#97 Bottoms_Up on 10.13.12 at 10:34 am

#82 visorman30 on 10.13.12 at 8:50 am
——————————————-
In 2010 I did a little survey of my closest work colleagues. 6 families, all 1st time buyers. All late twenties/early thirties. All highly educated, with double incomes.

The average downpayment was 7-8% with 30/35 yr amortization.

Given this is the situation these types of people were/are in, it is no wonder the recent rule changes are demolishing the market.

#98 Bottoms_Up on 10.13.12 at 10:37 am

#79 Ralph Cramdown on 10.13.12 at 8:33 am
———————————————–
A new caveat with Questrade is that you need at least $5000 in the account (or combined across accounts) or they will charge a quarterly service/inactivity fee.

#99 Bottoms_Up on 10.13.12 at 10:42 am

#56 Smartalox on 10.13.12 at 12:36 am
———————————————
This is exactly what has been happening in the USA. Well-qualified buyers couldn’t/can’t get the funds to buy houses. Prices drop further. Banks get more scared. They lend even less. Thus the feedback loop continues.

#100 Bottoms_Up on 10.13.12 at 10:46 am

#32 kenken on 10.12.12 at 10:19 pm
—————————————
Ouch. Good luck to your friends. Hopefully that 2nd house they bought they paid with their own cash, and that it only represents 20% of their net worth.

#101 Bottoms_Up on 10.13.12 at 10:51 am

#187 Herb on 10.12.12 at 11:18 pm
——————————————–
The VAST majority of people that live in the GTA are Canadians first, and GTAians/Torontonians second. They laugh at people that use the phrase ‘centre of the universe’, as it is so off base to be laughable.

It comes across as though you feel inadequate, inferior, or have been slighted in some way, based on your birth locale.

It really is laughable.

#102 Bigrider on 10.13.12 at 11:08 am

Listen up all you house humpers.

There will be a vaccination booth set up at Garth’s Toronto seminar for the RE-101 Gottahumpahoma virus.

Asians ,Italians, Russians and Persians will be taken on a priority basis.

Please have pants down to ankles and posteriors in the air ready for the volunteer nurses, as large numbers are expected.

#103 Dorothy on 10.13.12 at 11:08 am

Throughout my adult life I have watched housing markets fluctuate. It’s a simple fact of life that “what goes up, must always come down”. And it’s also true that throughout the years life has always “gone on” and the world has NOT come to an end, regardless of what is happening in the housing market.
People who have used their heads and adopted fiscal prudence when it comes to making decisions about buying big ticket items such as houses, have always managed to “ride out the storm” when it comes to housing market downturns.
That said, it’s not that long ago that banks were much more tightly regulated when it came to lending money to people in order to buy houses. As recently as the 80’s you could not get a mortgage from one of the big banks without having a minimum of 20% down for a conventional mortgage, and 10% down for a CMHC insured mortgage. Cash back mortgages were outlawed. Amortizations were set at a maximum of 25 years, and as a general rule banks would not allow an amortization that extended past your 65th birthday.
All of these were prudent measures, that should NEVER have been changed. And I am very happy to see such changes revoked.
That said, advising people to sell their homes into a down market, and use the money to invest in a very volatile stock market, is not good advice. Even the IMF is warning that 2008 COULD be repeated at some point, if the world’s politicians don’t get their act together.

http://business.financialpost.com/2012/10/12/lehman-bros-meltdown-could-happen-again-imf-warns/

Everyone’s situation is different. Not ALL homeowners are overleveraged, and not ALL homeowners live in places where the housing market reached the nosebleed highs of places such as Vancouver and Toronto. And even in those markets, not ALL homeowners overpaid for their humble abode. The point is that one size does NOT fit all when it comes to making fiscal decisions about whether or not to sell your home and use the money to invest. So people should be wary about following financial advice on blogs such as this one.

#104 Gunboat denier on 10.13.12 at 11:15 am

81 – LWYM – Really? I’m surprised at how high they are. Remember this is “average consumer debt” (non mortgage) which means you take the total debt and divide by the number of consumers. I would think they count all four members of my household as consumers (all 18+yrs) but my two kidults havent started
consuming that much and another large chunk of the
population have no or very little debt.

So lets say there are 50% with debt, and with two to a
household you can quadruple the figure for those
households that have debt. Perhaps this is more the
situation you are envisioning.

Now I have to be careful here as for the sake of the study I would not show as debt-free. This is because of a personal loan for a vehicle that is actually paid through a business. I wouldnt think this kind of arrangement is common enough to have much of an effect on the
numbers.

#105 maxx on 10.13.12 at 11:44 am

Enduring wealth for a nation is never built upon a single asset, nor debt. It is built upon a citizenry holding a variety of asset classes, including healthy savings, so that there needn’t be excessive draw upon the public purse going forward.

Mass indebtedness, caused chiefly by RE psychosis due to the irresistible lure of cheap money, is setting Canada up for massive backstop spending in medicine and other social programs caused by rampant poverty that could easily have been avoided. Individual fiscal prudence has gone out the window with artificially induced cheap money.

Interest rates must rise carefully and systematically in order to encourage both saving and spending. The boom-box palaver and protests from industry at large and in particular, the RE cartel, are simply self-interested manipulation attempts.

The biggest thing to crash in the inevitable correction are RE industry egos. RE is just one of many investment classes. It won’t feed you, clothe you, buy you medicine, put your children through university, provide for much-needed charity, allow for vacations, nor provide a softer landing in your later years.

It is more than high time to change the course for the short, medium and long-term good of Canada.

#106 Form Man on 10.13.12 at 11:53 am

DA

here is the latest news from OMREB. Note that the trend is down. While year to date numbers for Kelowna have improved over last year, this is due to sales that happened months ago. We are on track to finish 2012 down from 2011…….

http://www.castanet.net/news/Real-Estate/81720/Sept-was-a-tough-month-to-sell-houses

#107 live within your means on 10.13.12 at 11:57 am

#78 MarcFromOttawa on 10.13.12 at 8:17 am
Paper is Poverty. It is only the ghost of money, and not money itself – Thomas Jefferson

I’m looking to buy my first silver maple leaf or eagles (lady liberty) tomorrow at a coin show in Ottawa.

………………

You couldn’t offer me enough. I’ve several beautiful pieces of Sterling Silver (some dated 100+ years) from Norway & Denmark & 22K gold jewelry that my DH’s French grandma & Aunt gave me 26 years ago. Also, several from my Mom. They’re heirloom pieces. Some dated over 100 yrs. Unfortunately, I became allergic to any type of gold earrings. Seldom wear jewelry, other than a lovely old fashioned wedding ring, gold & platinum with tiny diamond chips that I bought at a pond shop for $90. I love it. When DH & I married we really couldn’t afford a wedding ring without going into debt. I asked Mom if I could have the one I had bought her in the late 60’s (when her gold ring deteriorated & she & dad couldn’t afford to replace it). Due to arthritis, Mom could no longer wear the replacement wedding ring I had bought her so she gave it back to me & it wore also wore out.

#108 Doug in London on 10.13.12 at 12:00 pm

At long last F, Mark the Western Fair Carney, and the rest of the gang have shown some sign of coming to their senses. The 25 year mortgage worked JUST FINE. My parents bought a house with on back in 1967, and had no troubles at all. The same goes for millions of other buyers all around the continent. It makes no sense to “fix” something that isn’t broken.

#109 Ronaldo on 10.13.12 at 12:14 pm

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2012/10/13_Art_Cashin.html

Hard to imagine 100 billion for a loaf of bread.

#110 MontrealSFH on 10.13.12 at 12:17 pm

Garth: “…Now imagine a 30% or 40% drop in parts of Vancouver, Richmond, Victoria, Brampton or Montreal…”

——————————

Seriously? Do you really see a 30-40% decline possible in Montreal ? IN MONTREAL ? Please please please Garth, in one of your typical “one-sentence-reply” can you explain this? I agree with some small decline… but 30-40 in Montreal !!! No way.

It would be great if you make a post about Montreal. (like the one you made about Winnipeg a couple of days ago, not a political one about the PQ and separatism speculation)

Thanks for the great job you do. You really deserve those millions of visitors you have in this blog. Imagine just for a second how many more you would have if you broadcast a video of your talks…

#111 T.O. Bubble Boy on 10.13.12 at 12:23 pm

The ultimate HAM listing:
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=12505053&PidKey=1067464802

Price: $1,888,000 (gotta have 888 in there, or HAM won’t even look at it)

Location: Yonge & Sheppard (close to the public transit that you’ll never take)

Photos: show the satellite view, property specs, and an exterior photo only. (you DO NOT want someone accidentally looking at this listing to live in the existing house… That is a waste of the realtor’s time)

Description: focus on building a new dream home among other multi-million dollar homes, and offer to build it for the buyer too. (no HAM buyer would even think of living near non-millionaires… And who wants to bother finding their own builder???)

#112 coastal on 10.13.12 at 12:28 pm

Harper has F’d the country for his own greedy and self centered political reasons yet the arrogant agents claim outrage ? This will go down to be the biggest joke of a political policy in Canadian history in order to juice the economy just to say “Canadians are smarter and not irresponsible borrowers”. Even 6 years later the MSM can rarely zero in on this basic fact of epic proportions.

So suck it up whiny agents and mortgage brokers, you were in diapers during the last serious correction. What’s the next real estate reality show going to be called ? Money Boo Boo ? ;)

#113 maria on 10.13.12 at 12:33 pm

Montreal the next shoe to drop:
Today we received the latest data out of Montreal. It’s ugly. Sales were down to their lowest level in a decade while inventory was at all-time highs for the month. As a result, the months of inventory (which measures the amount of time it would take to sell current inventory given current sales trends) blew out to 12, a level not seen since the financial crisis

…..

There’s no question that builders will be forced to slow their pace of construction if sales trends don’t reverse course in short order. What this means for the job market is up for debate, but consider this: In order for construction jobs to realign with their long-term proportion of all Canadian jobs, it would mean a loss of 200,000 positions. If the “unthinkable” were to happen and Canada were to experience a US-style construction slowdown, it would result in closer to 400,000 jobs lost

#114 Toronto_CA on 10.13.12 at 12:42 pm

I read people above asking why the change from 40 to 35 or 35 to 30 didn’t have the same crashing effect on sales, it’s called math (as Garth says).

Grab a mortgage calculator and see the monthly payment go up from 40 to 35 and compare that to the change in the payments when you reduce from 30 to 25. The jump is much bigger when you take 5 years off 30 year amortization than it is when you take 5 years off a 40 year one.

Good post today Garth!

#115 Snowboid on 10.13.12 at 12:51 pm

#34 Vangrrl on 10.12.12 at 10:37 pm…

Funny how there is no supporting commentary within the story for the claim:

“Canadian investors are buying up so many distressed properties in Phoenix that ‘locals are angry’…”

Unless you mean: “The people there are friendly. There’s beautiful stores and grocery stores and shopping centres. You get up and the sun is shining all the time. How can you not feel good?”

#53 fiendish Thingy on 10.13.12 at 12:05 am…

No greed here, we sold our Victoria home to ‘greater fools’ just as the market began to tank, and paid cash for our Phoenix abode, not as an investment, but as a winter home. This is the same as most of our Canadian neighbours down there.

If we sell it in ten years and only break even we will still be happy.

#72 eagle eyes on 10.13.12 at 5:17 am…

It matters not whether you use your home as an ATM to buy US RE or Canadian toys – either way it’s a gamble.

We spent less on the Phoenix home and improvements than the costs of a mobile home on leased land in West Kelowna – and its’ current estimated value is still less than 1/10 our net worth – no worries here.

#116 price reductions on 10.13.12 at 12:54 pm

#91 TurnerNation

yeah…it does seem lately that guava.ca is full of dramatic price reductions.

will they continue?

#117 lookoutbelow on 10.13.12 at 1:04 pm

Professor Robert Shiller (Yale University professor and renowned US Housing Market’s crash predictor) was right. The Canadian Market is just like the US, only in slow motion.

We are on the same track, just a few miles behind. The US is into Year 6 of their price decline and have recently seen a small spike. Shiller is not convinced it’s real and say there’s no urgency to buy!

Furthermore, easy money and FIXED 30 Year Mortgages at record low interest rates can’t fix housing.

http://www.cnbc.com/id/15840232/?video=3000122199&play=1

#118 DON on 10.13.12 at 1:12 pm

@Ronaldo

The BC Housing Corporation was perfected under the BC Lieberals for the past 12 years. So they have had ample opportunity to get rid of that division. I wonder why they haven’t??hmmm

#119 DON on 10.13.12 at 1:19 pm

@TRT

You know what amazes me…

1) People who quote realtor magazines etc as being gospel.

2) Sheeple who can’t see the forest for the trees. If a giant ball of sh*t was headed in their direction, they would deny it… until it smucked them.

Crashes don’t happen on your timeline as you are only human.

typical vancouver delusional attitude. It took years for the US to realize their crash. We are only in the pre-show time-slot.

#120 Spiltbongwater on 10.13.12 at 1:23 pm

My friend lives in a rental apartment in Surrey. Landlord has been trying to sell the apartment for last year, with no bites. His landlord just returned all the post dated cheques as the landlord cannot refinance. Apartment was bought in 2007, so likely 0/40. Friend pays 1K per month. Condo fees for that building are $350 p/m, and taxes work out to be about $125 p/m. Bank will have to contact them about rent I gather as the porperty is going to get foreclosed. I gather the 0/40 are starting to refinance now and are getting stuck and realizing their “investments” are costing them more then they are making off of it.

#121 IM in C on 10.13.12 at 1:26 pm

Here’s a thought. Right now, 100% of the capital gain a vendor realizes when selling his principal residence, is not taxable. Could that be another factor driving up house prices, albeit indirectly?
I wonder if F is considering slapping on capital gains to the proceeds of a house sale. If he starts with say, your first 1 million is tax free, nobody will complain. and if they do , they’ll be seen as rich [email protected]#$%^ who have it coming to them. After a while, F could lower the limit to say $500k. Now the government will start seeing some new tax income. More importantly, it might halt the endless upward spiral of house prices.

#122 Fleabitten Monkey on 10.13.12 at 1:35 pm

#111 TO Bubble Boy – I’m curious what HAM actually think about when they see those 8’s riddled within a house’s asking price. They must think its a joke. I don’t believe buyers fall for such ridiculous optics.

#123 Pr on 10.13.12 at 1:45 pm

#110 MontrealSFH
… but 30-40 in Montreal !!! No way.

History! In 1999-2000 you can buy triplex 5 MINUTES FROM down town for 100 000$ and very often under 100 000$ Seller had it for sale for 1 year sometimes 2 years. Government intervention, can, and will, do a lot of amazing things! The crowd is always wrong! No time to buy real estate now.

#124 Herb on 10.13.12 at 1:53 pm

#101 Bottoms_Up,

I asked whether your thoughts would have been relevant. And they are not.

The point of my 416 “centre of the universe” comment was to suggest to Smoking Man that it was not, what did or did not happen there might not apply to the whole country, and there was no point harping on SFH there.

BTW, I graduated from St. Michael’s C.S. and U of T. Does that make me 416 enough not to fall prey to geographic envy?

#125 Julia on 10.13.12 at 1:55 pm

#121 IM in C on 10.13.12 at 1:26 pm

Great idea! It could be argued that homes over 1million can’t be considered necessary housing. The rest is an investment like any other so why should the rich get this shelter. No pun intended.

Garth, has this idea ever been put forward?

#126 Hawk on 10.13.12 at 1:57 pm

<<<>>.

Give away responsibility, give away power

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

The most important is giving away FREEDOM by succumbing to a Marxist worldview. When you give away “independence” in favor of “dependence”, you always have a weaker society.

Fortunately we are not so far down the road as Greece, Spain etc but that is where the trajectory is headed.

North America has replaced the “Life, Liberty and pursuit of Happiness” worldview with “Life, Dependency and the Pursuit of Entitlement”.

Need to revert to the former.

#127 jess on 10.13.12 at 2:09 pm

from a to z

http://doj.nh.gov/consumer/security-breaches/index.htm

===
computer tapes were lost in Massachusetts seven months ago huh?
TD Bank is federally chartered, not state chartered, which makes it exempt from New Hampshire law that requires notification of state agencies when “computerized data that includes personal information” is lost or stolen.
Saturday, October 13, 2012

140,000 customers elsewhere affected by TD Bank breach, but NH numbers still unknown

#128 jess on 10.13.12 at 2:28 pm

go big or die?

http://www.huffingtonpost.com/2012/07/16/biggest-house-in-america-david-siegel_n_1677741.html

=========
wouldn’t want to lose that interest deduction
robo central
‘Queen of Versailles’ David Siegel: Mitt Romney crucial to saving employees’ jobs

Newsday‎ – 2 days ago
Florida time-share mogul David Siegel has told his 7000 employees that … which employs about 3,200 people in central Florida and thousands … It follows their effort to build a 90,000-square-foot mansion on Lake Butler, Fla

#129 Denise on 10.13.12 at 2:30 pm

Agree with many posters here. #24 Sherwood Park: “Here’s my question. If the drop from 30 to 25 year amortizations is responsible for the recent crash in sales, why didn’t the same occur when we went from 40′s to 35′s and again when we dropped from 35′s to 30′s? Maybe we just simply hit the peak and we were already on the way down?”
#108 Doug in London: “At long last F, Mark the Western Fair Carney, and the rest of the gang have shown some sign of coming to their senses. The 25 year mortgage worked JUST FINE. My parents bought a house with on back in 1967, and had no troubles at all. The same goes for millions of other buyers all around the continent. It makes no sense to “fix” something that isn’t broken.”
I am so glad our children never bought into the “Buy now or forever be priced out of the RE Market” BS. They also had the pressure from friends to buy “their own home, don’t pay someone else’s rent” BS (again). Yes, Molly @ #35, same as you. You’ve done well, congratulations to you & your husband.
Our eldest child (they’re all adults now by the way), always says “Debt is slavery”. They know a bit of debt is sometimes necessary, i.e. having your own business you have to carry some debt to keep things running smoothly from month to month; to pay suppliers & employees.
Disagree slightly with you Garth, houses need to cost 2/3 less @ least, from what they are now, to bring housing back to realistic, manageable levels. Our system was fine before the hype & meddling & needs to return to what it was before; so our young families can once again live normal lives, not being so incredibly indebted to housing. They’ll then have extra funds to spend in other areas of the economy, as has so often been said on this blog.

#130 jess on 10.13.12 at 2:40 pm

temporary the specifics

In an attempt to break the now ubiquitous narrative that “its all about income tax rates”, and to challenge the ridiculous new support for QEternity; ‘The Bears’ that brought you ‘The Bernank’ are back. In this cartoon, they explain how the bailouts made people like Warren Buffett far wealthier than they should be and exposes who actually benefits from all this QE. The Bears, The Buff-ate, and The Bernank – simply perfect.

http://www.zerohedge.com/news/2012-10-12/bears-explain-how-rich-get-richer

#131 squidly77 on 10.13.12 at 2:55 pm

Average consumer debt, by province

British Columbia $37,879
Alberta $33,564
Saskatchewan $27,699
Manitoba $19,945
Ontario $25,447
…………………

Didn’t know Canada ended at the Ontario border. Not sure I trust the figures in the article. Suspect they are higher based on what I’ve read & seen on TV.
———-

Got kids ? They have the same debt too.

#132 };-) aka D.A. on 10.13.12 at 3:00 pm

#106Form Man on 10.13.12 at 11:53 am
DA

here is the latest news from OMREB. Note that the trend is down. While year to date numbers for Kelowna have improved over last year, this is due to sales that happened months ago. We are on track to finish 2012 down from 2011…….

http://www.castanet.net/news/Real-Estate/81720/Sept-was-a-tough-month-to-sell-houses

Never ceases to amaze me how when real estate board press releases and their statistics support the Blog Dawgs contentions they use them as such but when those press releases refute the Blog Dawgs contentions they cry foul and accuse the subject real estate board of using manipulative SPIN to influence the market.

Form Man, for what it is worth to you, I am quite sure you will find that Septembers losses will be more than well made up for in Octobers gains once the month is through and those statistics published in the next OMREB press release. Seriously, you must know I have access to those stats as they change on a minute by minute basis. Consequently I can tell you unequivocally at this time this Octobers volumes for the Central Division of OMREB month to date are up as follows
This Year
2012 October Month to Date (Oct. 1 – 13)
Single Family Residential Sales Volume 66 units
Strata Unit Sales Volume 38 units

Last Year
2011 October Month to Date (Oct. 1 – 13)
Single Family Residential Sales Volume 54 units
Strata Unit Sales Volume 33 units

This Year
2012 YEAR TO DATE (Ja., 1 – 13)
Single Family Residential Sales Volume 1,726 units
Strata Unit Sales Volume 1,086 units

Last Year
2011 YEAR TO DATE (Ja., 1 – 13)
Single Family Residential Sales Volume 1,583 units
Strata Unit Sales Volume 978 units

#133 Sometime Lucky on 10.13.12 at 3:13 pm

Vancouver Real Estate Anecdote Archive, http://vreaa.wordpress.com/
Bookmark material

#134 bill on 10.13.12 at 3:40 pm

hey dr wayne : are you a proctologist ?

#135 Smoking Man on 10.13.12 at 3:48 pm

#127. Julia

Why should the rich get this shelter.

Do hounestly think its easy being rich.

The rich are rich because the make bets, all in at times. The rich Employee people, The Rich invest in people. The poor just complane about the rich.

#136 Blacksheep on 10.13.12 at 3:58 pm

Daisy Mae # 88,

“What amazes me is that all the world ‘leaders’ couldn’t think for themselves and make intelligent decisions regarding the economy and where it was leading us. They took the lazy route and followed each other into oblivion. What a bunch of dumb asses.”
——————————————————
Fair statement.

What would motivate world ‘leaders’ (elected politicians) to make such poor choices?

Climbing the ranks to become a national ‘leader’ requires ‘friends’ in the highest of places. What would motivate said friends, to place their influential support, behind any potential leader? Do you believe these powerful friends to be altruistic with no agenda, beyond, democracy in action? Consumption based western economies, have seen downward pressure on wages and job availability, due to outsourcing. Is it not feasible that said friends, may have ‘influenced’ leaders to stimulate home equity, enabling spending? Most large corporations rely on global sales for profits. A customer with a big L.O.C. feels wealthy and spends as such.

“You’re richer than you think”

take care
Blacksheep

#137 Form Man on 10.13.12 at 4:05 pm

#132 DA

just pointing out some facts…..

#138 WEX19 on 10.13.12 at 4:14 pm

Thanks for the insight #79, 95,98 and Garth.
The MER percentage, and fees are not the only factors that I was looking at. I noticed the 2 for 1 Moore’s suit he was wearing. I’m just trying to get the money the gov’t is giving (which is rare) and match that with something for her for the next 17 years until her rent starts at my house.

I had ambition as a kid but the best move/lesson my Dad ever made was tell me the day I finished High School was ” rent starts today Son”

It didn’t take long (6 months)to see; why pay rent to Dad when I could get my own place with no rules. From there, my buddy and I got an apartment and 1 year later (22years old), I said enough and bought my own place. Everyone thought I was crazy and it was tough but, as an apprentice electrician working at Nortel buildings in Ottawa there was the cash to pay mortgage and then some.

Oh, and little known to me Dad gave me the rent money back when I went to school.

Oh, as per the other days post, luck would have it, 12 years later, I married a top pay hottie teacher and I will tell you she just barely beats me in income as an electrician. First child for the both of us and thanking Dad for the kick in the ass.

#139 AmericanEagle on 10.13.12 at 4:43 pm

Garth Turner was RIGHT –

For years I have been reading Garth Turner’s “GreaterFool” blog and watched as he toughed it out telling Canadians the truth as he was attacked by those who could not (or would not) see what was coming just over the hill in the Canadian housing market.

As an American who continues to rent and has not yet bought his first home (I am 49) because I saw what few Americans wanted to see in the 2000s (a huge real estate bubble causing housing insanity.)

I knew a crash was imminent because there was no common sense – meaning that the math did not work out. I stuck to my guns despite constant pressure to buy. I knew I was right – and that THEY were wrong – very, very wrong.

Now, I have no debt, and continue to rent because I know housing prices here in the U.S. need to fall even more – a lot more, before I will buy a house that is worth its proper value.

And that still is not happening for all you Canadian ‘snow bird’ investors who think prices have bottomed in the U.S. (they haven’t.) You snow-birds are being suckered in California, Arizona and Florida. Better save your money honey and wait.

Garth Turner, for years, has been telling Canadians the truth and he is now being proved correct.

This is something I knew years ago, despite all the BS to the contrary coming from the realty & banking industry in Canada via your subservient mass media hawking over-priced houses & condos and ‘feel good’ bubble news to Canadians.

Now we are seeing articles like this in Canada’s media -> http://m.theglobeandmail.com/globe-investor/personal-finance/mortgages/whats-the-rush-first-time-buyers-nows-the-time-to-rent/article4493774/?service=mobile

And, this -> http://m.theglobeandmail.com/globe-investor/personal-finance/home-cents/why-im-going-to-wait-to-buy-a-house-and-keep-renting/article4542610/?service=mobile

And this -> http://m.theglobeandmail.com/report-on-business/economy/housing/rising-prices-mortgage-rates-make-it-tougher-to-afford-a-home/article4500680/?service=mobile

These are all items that Garth Turner has been writing about for years (and taking lots of heat for) but Garth stuck it out and kept warning and writing about what he saw: the truth.

So, from an American, I say this:

Keep reading & heeding Garth Turner’s very sound advice and watch as housing prices plummet in Canada in 2013, 2014, 2015 and 2016; while those who allowed themselves to be sucked heart & soul into Canada’s own real estate bubble sink ever deeper into a pool of quicksand debt.

It’s going to get ugly out there you Canadians – very ugly – it’s beginning in British Columbia’s Vancouver and will spread eastward. In fact, it has already begun, just as Garth said it would.

You’ve got a star in Garth Turner and you cannot say that he didn’t say, “Told you so.”

Great work Garth. Keep telling the truth, as facts don’t cease to exist just because people choose to ignore them.

– From a free-of-debt American with his eyes wide open.

#140 };-) aka D.A. on 10.13.12 at 4:47 pm

But seriously further to my comment at #132

Never ceases to amaze me how when real estate board press releases and their statistics support the Blog Dawgs contentions they use them as such but when those press releases refute the Blog Dawgs contentions they cry foul and accuse the subject real estate board of using manipulative SPIN to influence the market.

Don’t you all think it hypocritical to accept and tout the information given by an ‘apparent’ authority as a proof source supporting your contention on one hand and when it does not so well support your contention ridicule it as an unreliable self-serving SPIN machine? If you search back in the archives of this blog you will find that even Garth is guilty of such hypocrisy. Must you not agree that such hypocrisy entirely undermines the credibility of this pathetic blog as having an intrinsic lack of integrity?

Seriously. You can’t have your cake and eat it too.

#141 Victor on 10.13.12 at 4:50 pm

http://themashcanada.blogspot.ca/2012/10/for-lease-42-tarlton-avenue-chaplin.html

Remember this 3+1 bedroom, 3 bathroom flip just south of Eglinton that I posted at the end of August?

It had been listed since June for $1,408,000 until they dropped the price at the end of August to $1,359,000. I thought it was still over priced then and might get more interest at $1,279,000.

It sold the third week of September for $1,280,000.

Well, it is now for lease….

For $4,980/month.

Who bought this? A foreign investor? Just someone with extra cash that wanted a one household income property?

It’s a bit strange.

#142 jess on 10.13.12 at 4:52 pm

Would Mitt Romney continue to crackdown on people who evade U.S. taxes on a foreign bank account?
or as he said repeal parts of the Affordable Care Act
===
Medicare Fraud Strike Force Charges 91 Individuals for Approximately $430 Million in False Billing
Medicare Fraud Strike Force operations in seven cities have led to charges against 91 individuals – including doctors, nurses and other licensed medical professionals – for their alleged participation in Medicare fraud schemes involving approximately $429.2 million in false billing, Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius announced today.

According to court documents, the defendants allegedly participated in schemes to submit claims to Medicare for treatments that were medically unnecessary and oftentimes never provided. In many cases, court documents allege that patient recruiters, Medicare beneficiaries and other co-conspirators were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could submit fraudulent billing to Medicare for services that were medically unnecessary or never provided. Collectively, the doctors, nurses, licensed medical professionals, health care company owners and others charged are accused of conspiring to submit a total of approximately $429.2 million in fraudulent billing.

“Today’s coordinated actions represent one of the largest Medicare fraud takedowns in Department of Justice history, as measured by the amount of alleged fraudulent billings,” said Assistant Attorney General Breuer. “We have made it one of the Department’s missions to hold accountable those who abuse the Medicare program for personal profit. And there are Medicare fraudsters in prisons across the country – some who will be there for decades – who can attest to our determination, and our effectiveness.”

“Health care fraud leads to higher health care costs and makes quality care more difficult to obtain,” said FBI Associate Deputy Director Perkins. “Working together to stop fraud, as we did today, will ensure that Americans’ hard-earned dollars are used to care for the sick – not to line the pockets of criminals.”

#143 };-) aka D.A. on 10.13.12 at 4:52 pm

Please excuse the poor syntax of my previous post – although I am sure you must have understood what I was meaning to say.

#144 Julia on 10.13.12 at 4:58 pm

#135 Smoking Man on 10.13.12 at 3:48 pm

Ohhhh. Thanks for the enlightenment. Then how about only tax the poor so they have something to complain about other than the rich or so that they are too hungry to complain at all. And give the hard working rich people free houses so they don’t have to waste their valuable time reading this blog and trying to time the RE market.

#145 Smoking Man on 10.13.12 at 5:01 pm

Further to my point Julia

If you have nothing. There’s nothing to worry about

#146 Mark W on 10.13.12 at 5:02 pm

http://www.theglobeandmail.com/report-on-business/seed-capital-how-immigrants-are-reshaping-saskatchewans-farmland/article4610589/?page=1

Eggs & HAM in Saskatchewan.

#147 prairieperson on 10.13.12 at 5:05 pm

I went for a walk this morning in Maplewood. Didn’t cover the whole area but there were only three for sale signs: one single family, one lot, one condo. Not exactly a rush to escape from a sinking ship. Nothing for sale in my development. Two places for sale on Tattersal. A developer bought a property wth a heritage home, split off a lot, built a new house on it, and now both places are for sale. No price reduced on the signs. On any of the signs. Where are all these Victoria houses with big drops in prices?

That was scientific. Guess you showed me. — Garth

#148 taylor192 on 10.13.12 at 5:11 pm

Garth, you consistently pick on amortizations as the turning point… yet the GDS/TDS ratios are more of an issue. The last round of rule changes reduced GDS/TDS from unlimited/44% to 39/44%. Before 40yr mortgages these were 32/40% and will hopefully return to those values one day. Spending 39-44% of your income on housing is silly… yet according to brokers many clients are close to the limits of those ratios.

#149 jess on 10.13.12 at 5:12 pm

sick society
http://www.justice.gov/opa/pr/2012/October/12-ag-1205.html

#150 Weekly News Links : The Retiring Boomer on 10.13.12 at 5:19 pm

[…] Money for nothing […]

#151 2centsCdn on 10.13.12 at 5:49 pm

#136 Blacksheep
Yes … it’s a very flawed system. Short sighted policies allow world dept to be leveraged out of control, non-Canadian banks collapsing all over the world, Gov’t’s build “feel good patch” mortgage and HELOC rules, then gov’t backed mtg’s …. all artificial economy stimulators …… the masses take the bait hook line and sinker, money is being spent in record levels, we think our leaders are wonderful/genius’s (would vote for them again in a minute), housing industry business love it, banks love it, realtors love it, mortgage lenders love it, real estate lawyers love it … all making buckets of real money. The masses are feeling successful … feeling rich … but most didn’t cash out …. and don’t have real money (actually very much the opposite).

It was all a nasty concoction of the desperate politically and smart financially few, and the not so smart masses …….. creating a fusion reactor of self inflating, self spawning glee. But all built on how much money one could borrow with a fearless lender, an inflated income number, 3% money and 35-40 year amortization monthly payments.

The tiny minority who felt something didn’t feel right and didn’t partake in the madness were looked at as idiots. But when your Gov’t, your bank, your accountant, your wife, your mom and dad, your neighbors … EVERYONE! … says this is ok to do this …. why wouldn’t you jump in with both feet? Well it WAS wrong as it turns out, each player had huge self interests involved. Many will pay for this and suffer for a long long time, some for the rest of their life. The minority who didn’t get sucked in will be fine and sleep well ….. the smart ones will come out and seize opportunities at the right time and put themselves in an even better position in the future. But the Gov’t? .. the banks? … the real estate industry? …. the builders? ….. it’ll be interesting to see how come through this … I only see the banks coming out of this un-dented. A big, smart industry.

#152 VT on 10.13.12 at 6:03 pm

#139 AmericanEagle

I agree with many of your points, except the one about it being a good time to buy in the U.S.

Since you have gone to great pains to commend Garth on his warnings and efforts via this blog, you should also know that Garth has on several postings clearly stated that in certain cases, “buying America” made sense.

So you can continue to wait (and in your location that may be valid), but in some states, we are seeing a bottom and it is indeed a decent time for some to try to make a purchase (caveat being they do their due diligence naturally).

#153 Dan on 10.13.12 at 6:04 pm

Do you have any thoughts on the newly planned condo development by Gehry and Mirvish?

#154 TurnerNation on 10.13.12 at 6:04 pm

Once again DA’s statistics are meaningless, out of context.

Lets say: 1000 units sold this month. 1100, the next. A 10% increase. Great. But how many realtors are there per sale?

If 2000 realtors are active, this means half of those are going hungry each month.

And we’d need to know the total number of listings, price changes, and delists.

Let’s spinnnn the wheel.

#155 Smoking Man on 10.13.12 at 6:06 pm

Julia. Things have changed since I was a kid. My dad sweept floors for a living. Bought a house, car cottage.

Now working is not enough. You have a choice. Get some cardboard make a sign and protest. The machine will crush you. Or give yourself a real education. Listen to me, don’t listen to me.

Ultimatly if you trade time for fixed wages its just going to get worce.

Learn to lie, scam, take. Sell things, not your labour.

Hum last time I checked all the poor pepole on here churp brokers agents. Mortgage dude.

Self employment is your only salvation. You can risk other peoples money, you can hire slaves that are smarter than you.

You only need to be the conductor with your name on the deed.

Its realy easy

#156 TurnerNation on 10.13.12 at 6:17 pm

McGarthyism is rampant on this weblog!

“Are you now or have you ever been a member of the Realty Board?”

#157 Nostradamus Le Mad Vlad on 10.13.12 at 6:57 pm

#49 bruce — “who wants to shell out hundreds of thousands of dollars for a bunch of two x fours, nails and gyproc anyways ?” — I’m switching my diet to nails, gyproc and unleaded paint to ease off the carbohydrogenated 3-in-1 oil for a while. Detox. You understand!

#77 John — “”Forget the “money” and “real estate”, it’s human dignity, human reality and actual connection that are most undermined.” — Agreed. Most of humanity is too focused on the exterior stuff, which doesn’t last and little or no attention is being paid to what really matters, a person’s worth. Good post.

#126 Hawk — “The most important is giving away FREEDOM by succumbing to a Marxist worldview. When you give away “independence” in favor of “dependence”, you always have a weaker society. North America has replaced the “Life, Liberty and pursuit of Happiness” worldview with “Life, Dependency and the Pursuit of Entitlement”. Need to revert to the former.”

Excellent post and bang on the money. It’s one thing to be an NDPer (socialist), but quite different to be a Marxist / Leninist. Because Soros / Obomba are avid followers of the Marxist line of thinking, it seems that is the way we’re headed.

#135 Smoking Man — “The poor just complane about the rich.” — Right, but what else do they have to complain about? The Laughs haven’t bothered to show up in centuries, the Jays last won the WS in ’93 and whatever happened to the Argos? The rich will do just fine!

#139 AmericanEagle — “I knew a crash was imminent because there was no common sense . . .” — Well said!

No common sense is what is so prevalent in today’s society of misfits — people taking on huge obligations, then expecting someone else (the fed. or prov. govts. which are taxpayers) to bail them out when trouble came a’calling. They misused their own freedom of choice to their own detriment. Great post!

#158 TRT on 10.13.12 at 7:18 pm

Saskathewan farmland values up 18%in 1 year. No slowdown.

Invest there Garth?

Friends bro bought 500 acres for $1700 an acre few years ago. Just outside Regina. Now says getting $5400 per acre. Foreign money helping boost prices.

Why they buying? Because too much money in the world (hence low rates),AND they know after it is paid of in 30 years it is part of the next generations wealth!!

#159 Denise on 10.13.12 at 7:20 pm

#147 prairieperson
“Where are all these Victoria houses with big drops in prices?” you asked.
Pick an area & keep track for several months, you’ll see price drops. I’ve now been tracking an area mainly in Saanich West/little chunk of Saanich East for 7 months or so. Every week there’s price reductions. Some have re-listed right after the 3 month original listing expires – as “new” listings, which should be illegal as is fraudulent.
The only house I’ve seen sell within a week was priced accordingly to spark a bidding war & it worked. (This was in Saanich East). The house was priced @ $450K & gather some buyer twits paid $480K, which they’ll regret fairly soon. If I was the sellers I’d be really ticked off @ the crooked realtor. Hope it wasn’t an elderly, infirm, naive couple that she scammed.
Keep watching/tracking prairieperson, after a while you’ll note the downward trend in Victoria’s housing prices. This is a good thing, it’s far too over-priced here, bordering on the ridiculous, but – as I’ve noted over the last 7-8 months – prices ARE coming down. People are finally waking up.

#160 prairieperson on 10.13.12 at 7:20 pm

No, going for a walkabout isn’t scientific. It’s simply a casual observation about a small area. As you said in an earlier post there will differences in neighbourhoods. This area has a large number of older home owners, probably like me, with their house paid for. Refinancing isn’t the same threat as among younger people who have bought in the last few years. However, house prices will go down as older people have to sell because of declining health. That is unpredictable but rather than cause a plunge in prices will, as you say, cause prices to crumble. There is a difference in having to sell and wanting to sell. Forty percent? It’s quite possible. After WWI there was a property price collapse. Forclosures were common. Lots in a cottage area went to around 1200 which was a fortune. They dropped to 50 dollars and stayed there for a long, long time. Five decades and two generations later, I bought some at 300.00 a lot. Lots in that area are now around 80,000.00. Can they go back down? Of course. Run interest rates up high enough, make borrowing difficult enough. We’ve had a tiny change and there are already noticeable effects. Scientific? No. A long memory, yes. I hope you are wrong about the 40%. I’m not in the market to buy. I’m not slavering at the idea of benefiting from someone else’s misfortune. At the same time, I worked hard for the money that paid off my mortage. I’d hate to see 40% of it disappear.

#161 live within your means on 10.13.12 at 7:40 pm

#92 Angel on 10.13.12 at 10:05 am

Happened to me, but thankfully after we had paid our house off. When we bought our home we based it on one income, doubled up payments and paid it off in 7 years. Yeah, we ate lots of KD, but it was worth it,

#162 TNT on 10.13.12 at 8:23 pm

@ 158 TRT

Acerage is being bought in Canada by parties that are aware of the importance of growing food.
And the profit in selling it.

#163 rain8 on 10.13.12 at 9:06 pm

Garth first of all how do you think of interesting things to write about everyday. Secondly, can you comment on what is happening with US real estate. The market there appears to be improving but do we need to be concerned (especially in places like Pheonix), that Canadian buyers purchasing in the US have been using lines of credit on their existing homes in Canada to purchase in the US. If there is in fact a major correction in housing in Canada will this not affect US properties in areas where Candadians purchase?

#164 Smoking Man on 10.13.12 at 9:11 pm

Vlad. You rock. Come to vegas next week end man. Your the Neil young.

The hero to roger waters. And Bob Dylen.

You’re my neil young

#165 Bottoms_Up on 10.13.12 at 9:18 pm

#140 };-) aka D.A. on 10.13.12 at 4:47 pm
——————————————–
Your take it valid, but when the data is from an unbiased source, is transparent, and shows something worthwhile, doesn’t it make sense to accept it?

#166 rob c on 10.13.12 at 9:19 pm

im watching brampton and bolton. a home in brampton reduced its price by 50k. still to high. a home in bolton hasnt sold for 3 months, just relisted.

end of march next year i think will be the real indicator.

im counting down the days to joy.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12483793&PidKey=-853274476

this home used to be worth 450k in 2003. he listed at 800k. reduced to 749k. everything is headed for KABOOM.

Time to party!

#167 Bottoms_Up on 10.13.12 at 9:22 pm

#139 AmericanEagle on 10.13.12 at 4:43 pm
—————————————–
What city do you live in? Just curious as to what your local real estate situation is. Are you looking to buy in the burbs, country, city? What pricing changes have you seen for your own city for these areas over the years?

#168 Old Man on 10.13.12 at 9:27 pm

Smoking Man – check out CFMJ – AM 640 at 1:00 AM for a great show; do not miss it or you will be sorry.

#169 Bottoms_Up on 10.13.12 at 9:27 pm

#129 Denise on 10.13.12 at 2:30 pm
—————————————
It’s due to the combination of factors:

Ultimately going from 40 to 25 yr ratio.

Changes in OFSI oversight of banks.

CMHC running out of room (i.e. banks will now have to shoulder the risk of lending instead of the taxpayer).

Changes in HELOC ratios (reduces speculation).

Changes in rules for mortgages for 2nd homes.

Changes in debt servicing ratios.

All this happened in the past year or two….KABLAM!! A severe attack on the Canadian housing market.

#170 Picasso on 10.13.12 at 9:29 pm

#158 TRT on 10.13.12 at 7:18 pm

Wow…. who would have thought you could make a killing buying farmland in Saskatchewan.

#171 Bottoms_Up on 10.13.12 at 9:31 pm

#124 Herb on 10.13.12 at 1:53 pm
—————————————–
Well you obviously missed SM’s post where he explicitly said that he has no clue about markets outside 416. So yes obviously he will post on what he knows.

#172 Picasso on 10.13.12 at 10:01 pm

#158 TRT on 10.13.12 at 7:18 pm

Wow…. who would have thought you could make a killing buying farmland in Saskatchewan.

——————————————————

Now just think about this… if your doubling your money flipping dirt in Sakatchewan you know this Canadian ponzi scheme is about to implode.

#173 Ogopogo on 10.13.12 at 10:10 pm

#156 TurnerNation on 10.13.12 at 6:17 pm
McGarthyism is rampant on this weblog!

“Are you now or have you ever been a member of the Realty Board?”

LMAO!

#174 Liquid on 10.13.12 at 10:44 pm

Heh, I will admit I was one of those people who bought my condo with 6% downpayment. But that was back in 2009. Luckily my property value has gone up since then. The over leveraging mentality I have grown to assume and accept is scary because when interest rates starts to climb I will have a harder time to pay off my mortgage. But the temptation to borrow beyond my means is just too great.

#175 Canadian Watchdog on 10.13.12 at 10:44 pm

Canadian government debt now growing at an annual average of 5.8%. That’s 3x faster then the rate of GDP. Chart

Canada is broke. Period. Rates can never go up, ever.

#176 Timbo on 10.13.12 at 10:48 pm

#126 Hawk,

Studying late at night with fox on the tube? ;)

“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
Thomas Jefferson (1743 – 1826)

“Reason why the Roman Empire fell – Failing Economy
The Government was constantly threatened by bankruptcy. The cost of defending the Empire, the failing economics, heavy taxation and high inflation was another reason why the Roman Empire fell. The majority of the inhabitants of the Roman Empire failed to share in the incredible prosperity of Rome. The flow of gold to the orient to pay for luxury goods led to a shortage of gold to put in Roman coins. Roman currency was devalued to such an extent that a system of bartering returned to one of the greatest civilizations the world had ever known.”

How many bankers have gone to jail in you Marxist delusion? How about repealing of the estate tax so that within one generation feudalism would result from concentrated wealth passed to the next generation to grow ever stronger? Has a new Glass steagall act been introduced?

With elections being bought by a wealthy few I think you might want to start reading up on fascism. It is starting to simmer.

politics be damned. I have faith that history will not repeat ……

#177 45north on 10.13.12 at 11:22 pm

James Elliot Coyne died at age 102

Bank of Canada governor fought high-profile battle with Diefenbaker

For his part, Coyne believed the government’s expansionary monetary policies were unsound. He attempted to curb the Keynesian enthusiasms with various public speeches that warned about the inherent inflationary dangers of those policies.

Read more: http://www.ottawacitizen.com/business/Bank+Canada+governor+fought+high+profile+battle+with+Diefenbaker/7386808/story.html#ixzz29EvNYcgx

James Elliot Coyne a man of integrity

#178 blase on 10.13.12 at 11:25 pm

the celiac husband has got to be the worst name for a travel blog that I’ve ever come across. What, was the herpes husband and the Type-A diabetes husband taken?

#179 blase on 10.13.12 at 11:27 pm

“Canadian government debt now growing at an annual average of 5.8%. That’s 3x faster then the rate of GDP. Chart

Canada is broke. Period. Rates can never go up, ever.”

—————–

Won’t Canada’s future debt problems result in downgrades from rating’s agencies, resulting in rates going up?

#180 vic_guy on 10.13.12 at 11:28 pm

@ prairieperson # 160, 147, etc

In an area I watch, Broadmead in Victoria, there are some substantial drops already. Note these are not sold, I’m using a VREBMatrix search which returns assessed values. This is also a bit anecdotal as my search criteria is limited by bedrooms, neighborhood, etc because that is the way the Realtors have the system set up (only they can search all details for all areas). That said, these are real numbers, which I think in addition to the lack of sold signs indicate some interesting things.

–$78,000 below 2012 assessed–
MLS : XYZ

–$96,000 below 2012 assessed–
MLS : ABC

These are nice, not distressed properties, and have been on the market for a while.

The MLS legalese allows this data only for personal use (no publication). However, I’m sure any Realtor will be happy to set up an account/saved search for you so you can pull back the curtain of the For Sale signs and get a peak at the Wizard behind. I think you’ll be surprised, I was :-)

You’ll also be able to see the large amount of expired listings, the relisted properties, etc. I like data and even this small slice is very interesting to me.

#181 KG on 10.13.12 at 11:50 pm

@ #67:
With CMHC in place, it is not the guests on the hook, but the sober people who did chose not to join this ugly party.

Can somebody explain to me that banks get all the upside but none of the downside, and we claim to be civilized ?

#182 Timbo on 10.13.12 at 11:52 pm

http://www.youtube.com/watch?feature=player_embedded&v=cz4tOp1MHPc#!

Italian students just blowing off steam….

http://www.zerohedge.com/news/2012-10-13/after-starting-riots-greece-merkel-booed-germany-next

“What does an iron chancellor have to do to be loved these days? After scrambling 7,000 members of the Greek police force out of an early prepaid retirement for her brief, still inexplicable 6 hour visit to Athens last Tuesday, which caused the now usual Syntagma square rioting, Merkel next took the stage in a rainy Stuttgart, in a show of support for the local mayor candidate Sebastian Turner, which promptly devolved into 14 minutes of continuous booing.”

Just another relaxing week in europe…..

#183 KG on 10.14.12 at 12:06 am

And Garth you advise us to invest in bank preferred s, sorry I have a moral issue with that.

#184 Nostradamus Le Mad Vlad on 10.14.12 at 12:13 am


#162 TNT — “Acerage is being bought in Canada by parties that are aware of the importance of growing food. And the profit in selling it.” — Bingo! With the costs of food exploding (the drought may have something to do with it) and the waste of corn being used for ethanol, your post is right on the mark. See this link.

#164 Smoking Man — “You’re my neil young” — Dankeshun!

#176 Timbo — “politics be damned. I have faith that history will not repeat ……”

Good post. History may not repeat, but it will rhyme. Guess WW3 supersedes politics in this respect, but we’ll wait a little longer.
*
Derivatives and War John, you may find this interesting, and Art Cashin says parallels exist between US and Wiemar Germany; Bull – Bear What’s the diff? Morgan Stanley A slowing world and a fiscal cliff; China Acceleration month; Smart Money is buying PMS, ‘tho I kike mining companies better.

China If China is slowing down, why does the govt. want spending increased for pensions? Homeowner and Squatter Entitlement gone nuts? Catastrphic Implosion? Not until it happens; Who is Smarter? The Nobel Peace disaster called the EZone, or Russia and China, strengthening their economic and defense ties? Warped Priorities A country is supposed to assist their own, not someone else’s.
*
0:50 clip 50-ft. wave in Hawaii. Surf’s up! 0:56 audio clip 1987 — Comedian outs Jimmy Savile as pedophile. After this, the comedian never worked on TV again. Coarse language; Switzerland arming in case of EZone implosion / war? In case you didn’t know, please don’t panic; GW / GC This chart shows GW stopped 16 years ago, and 5:45 clip Typhoon Tip (1979), the most massive storm in earth’s history; Russia – Syria – US “When the facts are against you argue the law. When the law is against yo argue the facts. When both the facts and the law are against you, call the other guy names!” wrh.com; m$m not our friend, so ignore it; 2:10 clip Mitt Romney shows his softer, gentler side by being rambunctiously stupid; Kick The Bucket There’s more than one way to go, but this is a little strange; Egypt There may be a further reason other than water for this; Survival of the Fittest Seeing the pic, one has to be tough to do this; The earth can sustain us. An article to the contrary.

#185 DON on 10.14.12 at 12:29 am

Took a drive in Victoria along the water from through James Bay, Oak Bay, Gordon Head, all the way to Sidney and back the other side. Started to count the for sale signs, (consistent through all neighbors – notable mention: 3 houses on the water in a row).

I started to wonder if someone gave the call to vacate the island and I missed the emergency radio warning.

I guess stage 2 has started.

The sunniest September – early October breaking records and low sales. Well the rains are back been cloudy for the last 5 days and now it is pouring.

Lots of BMW’s and Land Rovers in this city, I take it the HELOCs are delicious.

#186 Hawk on 10.14.12 at 1:01 am

#176 Timbo on 10.13.12 at 10:48 pm

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

1. The bankers should have gone to prison and the banks should not have been bailed out. By bailing them out the government interfered with the marketplace. And 99% of the time when the government interferes with the marketplace it’s for the worse.

2. The wealthy buying and selling corrupt politicians, is simply corruption, not capitalism. Corruption should be crushed with harsh penalties.

However that said, corruption exists in any economic system, not just capitalist societies. Socialist basket cases, suffer far greater degrees of corruption. Do you think Hongkong and Singapore have more corruption or Belarus and Greece?

3. I don’t get Faux News, nor do I care for it.

#187 AACI Home-Dog on 10.14.12 at 2:02 am

Re: #155 Smoking Man ….
This post, amongst others, is why so many bloggers love you, man !

#188 AACI Home-Dog on 10.14.12 at 2:23 am

#159 Denise

“The only house I’ve seen sell within a week was priced accordingly to spark a bidding war & it worked. (This was in Saanich East). The house was priced @ $450K & gather some buyer twits paid $480K, which they’ll regret fairly soon. If I was the sellers I’d be really ticked off @ the crooked realtor. Hope it wasn’t an elderly, infirm, naive couple that she scammed.”

hey..it sold…in a tough market….probably ‘arms length’. How can you say the buyer will regret, yet the vendor was “screwed ? makes no sense…

#189 TRT on 10.14.12 at 3:40 am

#175 Canadian Watchdog

Rates will rise very little, Bank of Canada will let the currency suffer…leading to made in Canada inflation.

RE prices will be maintained by foreign investment. They can buy here but we can not buy there. As a Canadian, try buying in India or China..

The gap between upper class and working class will widen. There will also be a beggar class. The working class will be conditioned to never expect more in life than having a job…the notion of financial freedom won’t even cross their mind. In India, the working class never expects to own any RE of significance…the income to price ratio is astronomical!

But sheep here in Canada have no clue to what awaits..Now tell a child born in East Van to poor renting parents that he/she will have an equal chance of prosperity in life. Not gonna happen…and its getting worse!

#190 TRT on 10.14.12 at 3:49 am

#172 Picasso

I don’t think this Ponzi scheme is coming to an end anytime soon. Just too much money in India and China.

My cousins land in India is worth somewhere in the $20-25 million dollar range (no such thing as mortgages exist)…yet the family spends like they are earning $100 a day (hate it when I go there)…AND he wants to inquire about immigrating here. Not anywhere else because he has relatives here.

Now tell me, is he going to care whether a house is $900,000 or $600,000?? and believe it or not, most immigrants from India are very land rich…They don’t sell in anticipation of higher and higher prices that have been rising for 30 years now.

#191 Herb on 10.14.12 at 7:35 am

#171 Bottoms_Up,

Smoked Man is quite capable of defending himself if I have missed or misinterpreted his meaning. Two blog dogs arguing about what he might have said or might have meant would have him ROFLH[is]AO and give im the greatest satisfaction. Forget it!

#192 Weedeater on 10.14.12 at 7:46 am

“Are there actually that many people in Canada who have no money? Do most buyers really need the lowest mortgage rates ever, plus thirty years to spread out payments?”

That really says it all.

#193 T.O. Bubble Boy on 10.14.12 at 8:12 am

Garth – you’re going mainstream (again)… fee-based financial advisors are now offered as a bundled service with a BMO discount brokerage account:

http://www.moneysense.ca/2012/10/12/automate-your-adviser/

I’m a little skeptical about this type of offering – you’d probably be getting a new college grad with 4 weeks of training or some “advisor” sitting in a call centre in India or the Philippines.

However, based on the fact that they are charging ‘full service’ rates, and giving pretty basic services (i.e. Not managing anything, just answering questions on the phone once in a while), I’m sure that this would be very profitable if they get people to sign up.

#194 Darryl on 10.14.12 at 8:43 am

#145Smoking Man on 10.13.12 at 5:01 pm
Further to my point Julia

If you have nothing. There’s nothing to worry about
—————————————————————–
Then you have no worries about losing your mind SM.

#195 Picasso on 10.14.12 at 9:09 am

Jamie Dimon says U.S. housing has turned a corner. How are things where you live?

POLL

Agree, the “boom” is back (4116)
–5%

Things are improving modestly (35474)
———————————-47%

It’s still a mess (36363)
————————————48%

Conclusion: the masses are almost always wrong. — Garth

#196 detalumis on 10.14.12 at 9:11 am

#92 Angel you are rationalizing, if you are living in an apartment and both parents get cancer and have no disability insurance you are sunk even lower than a home-owner, you will get evicted even faster. I paid off my house in 11 years even at uber high interest rates, by buying a fixer upper, doing no renos and buying absolutely nothing for the entire time, I’m talking no vacations, no clothing, no restaurants, just working and sleeping. People today are not prepared to live like that but they are very good at vilifying older people who did, calling us spoiled and entitled boomers.

#197 Victor on 10.14.12 at 9:28 am

Done Deals: Should this Toronto townhouse have sold for under asking?

http://www.theglobeandmail.com/life/home-and-garden/real-estate/video-should-this-queensway-townhouse-have-sold-for-under-asking/article4603234/

#198 johnny thomas on 10.14.12 at 9:56 am

Not sure why you are picking on Winnipeg of all places. Real estate for years was dirt cheap there..now its gotten a bit frothy but nothing like in most other cities. You mention the average income is 75k and the average house is 250..sound like a pretty healthy ratio to me..about 3 to 1. How many cities in Canada have a ratio that low?
Yes real estate may drop in winnipeg but it wont drop nearly as much as in most other cities. The economy is also very well diversified.

#199 Mr Buyer on 10.14.12 at 10:07 am

My wife asked me if Canadian banks go after the children and other family members if the parents die before a mortgage or a loan is paid off. She is a full on piano teacher and has little tolerance for math or finances other than to save every single yen (penny) that is not nailed down and give me the hairy eyeball when I am burning through money a little too fast any given Sunday. When I explained that the bank takes everything that parents leave behind and tracks down any hidden money but other than that if there is money still left owing the bank is out of luck and I told her that it is most likely like that in Japan provided the children did not co-sign the loan. When this sunk in my wife said why not just join the debt party. If everyone is borrowing like crazy and driving prices sky high with no repercussion to later generations of our family lets just borrow like crazy and give our kids the best we can right now. Fortunately she was more than half joking but she sized up the situation quite well and rather quickly. There is something to this Mozart stuff.

#200 };-) aka D.A. on 10.14.12 at 10:17 am

#154TurnerNation on 10.13.12 at 6:04 pm
Once again DA’s statistics are meaningless, out of context.

Lets say: 1000 units sold this month. 1100, the next. A 10% increase. Great. But how many realtors are there per sale?

If 2000 realtors are active, this means half of those are going hungry each month.

And we’d need to know the total number of listings, price changes, and delists?

Let’s spinnnn the wheel.

Well, you asked and I shall comply. But while the answers to those questions I can provide, I fail to see how they have any significance, if any at all, to the point I was supporting – that unit sales volumes are increasing or holding steady.

There are about 800 REALTORS servicing that area (The Central Okanagan Division of the Okanagan Mainline Real Estate Board). So yes it is a most competitive marketplace, – probably the most competitive in Canada. And, yes, I am quite sure there are a great many REALTORS who, so to speak, going hungry each month. Just like any vocation/profession a lot of REALTORS too move to this wonderful place (Kelowna) to enjoy the lifestyle while plying their trade.

As for the rest of the statistics you asked for;

There are 2,071 Active Single Family Residential listings in the Central Okanagan at the time of this writing.

While I can’t figure out how to extract the number of price changes from the system I can tell you that 1,451 of those 2,071 Active Single Family Residential listings have been on the market for 51 or more days and as such most certainly should have had at least one price reduction.

The listing of 56 Single Family Residential Properties have expired so far this month and 1,306 so far this year without having attained a sale

There have been 57 Single Family Residential Properties “withdrawn” (delisted) so far this month and 1294 withdrawn throughout the course of this year to date.

There are 1,332 Active Strata Property listings in the Central Okanagan at the time of this writing.

While I can’t figure out how to extract the number of price changes from the system I can tell you that 959 of those 1,332 Active Strata Property listings have been on the market for 51 or more days and as such most certainly should have had at least one price reduction.

The listing of 50 Strata Properties have expired so far this month and 947 so far this year without having attained a sale.

There have been 32 Strata Properties “withdrawn” (delisted) so far this month and 788 withdrawn throughout the course of this year to date.

Now, really, what’s your friggin’ point? How does that make the statistics I provided in my post #132 which prove that our unit sales volumes in Kelowna are actually increasing, albeit moderately, a meaningless piece of information to a blog of which most participants seem to believe otherwise.

Would you rather I lied and provided FALSE statistics which supported your contention? Are you that short on integrity? Are you that much a hypocrite? Take it for face value. It is what it is and as I have said before I really don’t care if you believe me or not. The only reason I participate in this blog is my inexplicable compulsion to do my best to moderate that which is too one sided.

Volumes in Kelowna have held consistent for the more than four years now since the unwarranted peak of 2007/08 and are, in fact, increasing at a moderate and reasonable rate supporting the contention that we are amid a healthy soft landing. Will it continue so? Who knows? But for now the actual serious end of the business, not that of those with held over unrealistic lofty expectations, but the core real market, is doing just fine, neither too robust nor too sequestered thank you very much.

#201 Realtors are in an all out panic on 10.14.12 at 10:42 am

TRT on 10.14.12 at 3:49 am #172 Picasso

I don’t think this Ponzi scheme is coming to an end anytime soon. Just too much money in India and China.

My cousins land in India is worth somewhere in the $20-25 million dollar range (no such thing as mortgages exist)…yet the family spends like they are earning $100 a day (hate it when I go there)…AND he wants to inquire about immigrating here. Not anywhere else because he has relatives here.

Now tell me, is he going to care whether a house is $900,000 or $600,000?? and believe it or not, most immigrants from India are very land rich…They don’t sell in anticipation of higher and higher prices that have been rising for 30 years now.
———————————————————

LOL the delusions from you realtors are to funny and proof the housing crash is here and hitting hard. Brampton sales much like the GTA have stalled but in Brampton you have FORCLOSURSES as people have gone BANKRUPT and went back home. MILLIONS of wealthy people want to pay top dollar and save Canada’s housing bubble from crashing?….lol You realtors much be in a total all out PANIC. It’s going to be a nasty crash TNT , a NASTY crash!

#202 jess on 10.14.12 at 10:44 am

Credit Suisse mapped global wealth last year

http://www.taxjustice.net/cms/upload/pdf/Inequality_120722_You_dont_know_the_half_of_it.pdf
professor Thomas piketty, unrecorded offshore money is generally not included in the world top incomes database study he co- authors

Inequality – You Don’t Know the Half of It, accompanying our estimates of global offshore wealth, which garnered headlines around the globe

October 12, 2012, 9:00 AM IST.Why Indians Are Getting Poorer
http://blogs.wsj.com/indiarealtime/2012/10/12/why-indians-are-getting-poorer/

2012 Global Wealth Report
http://taxjustice.blogspot.co.uk/2012/10/new-global-wealth-report.html
“Now here is a fact that may surprise some people. The United States of America comes in at only $38,786 – just ahead of Greece, at $35,714.”

Stop telling us it’s all good economically
Date October 12, 2012
“Is an overvalued currency responsible for the gains ?”
http://www.smh.com.au/business/stop-telling-us-its-all-good-economically-20121012-27gqa.html#ixzz29HgDQbPz

#203 Realtors are in an all out panic on 10.14.12 at 10:50 am

blase on 10.13.12 at 11:27 pm “Canadian government debt now growing at an annual average of 5.8%. That’s 3x faster then the rate of GDP. Chart

Canada is broke. Period. Rates can never go up, ever.”

—————–

Won’t Canada’s future debt problems result in downgrades from rating’s agencies, resulting in rates going up?
———————————————————-

Yup that’s 100% right and why rates will go higher. Canada living off borrowed money coming to an end and the years of pain have just begone.

#204 TurnerNation on 10.14.12 at 10:58 am

#178 blase

I wondered if the resident analyst John would tell us the name smacks of “Canadian neutered victimhood” – a celiac, and a ‘professional’ husband, all-in-one as an identity.

#205 };-) aka D.A. on 10.14.12 at 11:02 am

#154 TurnerNation on 10.13.12 at 6:04 pm

It is interesting to note however that of the 3,403 currently active single family residential and strata properties on the market you can expect that the listing of 30% will expire without ever attaining a sale, another 30% of the sellers will give up their lofty expectations and cancel their listing pulling the property from the market and just 40% will actually sell. Of the 40% which actually sell 64% will have taken more than 51 days to do so and typically sell for something closer to 95% of their list price after, in most cases, at least one price reduction while the other 36% sell within 50 days and sell for something closer to 98% of their list price.

The moral of that story? Those serious sellers who price their property in accordance with the market of the day and not the pipe dreams held over from the past sell faster and for more money – on average in Kelowna $12,000 more (average cobined Kelowna Single Family and Strata property sale price this year to date = $418,551 x (98%-95%) = $12,556.53). Thus a good, competent REALTOR® who will guide you to setting the right price will put more money in your pocket quicker and with less inconvenience to your daily routine. A good REALTOR® does not cost you money they save you money.

Helping you set the right price is a big part of what we do. I could not possibly do so on my own home as I, like every other home owner, am too close to my property to be objective in that regard.

#206 Smoking Man on 10.14.12 at 11:16 am

Grim nice try again.

Slip in the shower crack my back right under the ribs. Direct hit in the wall of tub. 2 inch gash on the back of coconut.

As I’m lying on the ground no one can open the door cuase the pole that holds the shower curtain is Jamed between the door and something.

Just 2 glasses of wine. Getting old I’m thinking.

Damn it hurts.

Till next time grim

#207 Old Man on 10.14.12 at 11:29 am

Smoking Man hope you made the big party last night and had a dance with the Mississippi Queen, if you know what I mean.

#208 Form Man on 10.14.12 at 12:19 pm

DA

Great spin job. What cannot be denied is that as long as the Kelowna MOI is above 8 months ( currently it is 17 months ), prices will continue to decline. The notion that there is ‘upward pressure’ on prices in the current market is absurd. Likely one of the reasons prices in Kelowna have not dropped faster is the high number of ‘underwater homeowners ‘ who cannot lower their price as they have no cash to bring to the sale. For these people, buying a house ( instead of renting ) has been a disastrous mistake.

#209 Daisy Mae on 10.14.12 at 12:43 pm

Fleabitten Monkey

#111 TO Bubble Boy – I’m curious what HAM actually think about when they see those 8′s riddled within a house’s asking price. They must think its a joke. I don’t believe buyers fall for such ridiculous optics.

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

HAM is interested if the house address contains ‘8’s’. Pricing the house with multiple ‘8’s’ is a joke.

#210 Denise on 10.14.12 at 12:44 pm

#169 Bottoms_Up: “All this happened in the past year or two….KABLAM!! A severe attack on the Canadian housing market.”
I don’t consider it an attack on the Cdn housing market. I think it’s a much needed correction that should have taken place several years back, but the government interferred so the market wasn’t able to correct itself/take it’s natural course. As a result, we’re in the mess we are in. We’ll have to go through some pain for things to eventually right themselves again, get back to normal market conditions; the government has to stay out of the RE marketplace from now on.
#187 AACI-Home Dog: I think the buyer will regret it because they over-paid, they should’ve waited a few years, during which prices will fall/market will correct. You’re right in that the sellers are probably happy if they just wanted to sell asap, realtor facilitated that well with setting up the bidding war. Feel sorry for the potential buyers tho, would be nasty/stressful to be involved in one of those, being “played” & knowing you are.

#211 Ogopogo on 10.14.12 at 12:45 pm

#204 };-) aka D.A. on 10.14.12 at 11:02 am
A good REALTOR® does not cost you money they save you money.

Such philanthropists, realtors are. So misunderstood, so unjustly treated as scum by society. CREA should surely be nominated for a Peace Nobel for its invaluable contributions to the betterment of civilization.

Oh, when, when, pray tell, will we recognize the tragic sublimity of being a REALTOR®, taking on the sufferings of home-selling humanity without so much as a passing thought for self?

#212 Richie Rich on 10.14.12 at 12:46 pm

Boomer doomers are a plentiful breed, dime a dozen, forever waging wars on drugs, arabs, hippies, etc et all. Now they wage wars on common sense and morality. While money is what you need in the case you do not die tomorrow, remember you can’t take it with you, not even a few feet into the other side. Live for today, in case you do die tomorrow.

#213 Daisy Mae on 10.14.12 at 12:55 pm

#136 BlackSheep: “Is it not feasible that said friends, may have ‘influenced’ leaders to stimulate home equity, enabling spending? Most large corporations rely on global sales for profits….”

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

Sure, it is. Boils down, as usual, to corruption in high places. Along with greed and mismanagement, of course….

#214 Canadian Watchdog on 10.14.12 at 12:57 pm

#188 TRT

“Rates will rise very little, Bank of Canada will let the currency suffer…leading to made in Canada inflation.”

1) If the BoC lifted rates, they would decrease par value on current bonds held by banks and pension funds, who now hold 80-90% of all Canadian bonds. Chart Not a good idea when most Canadian pension funds are already underfunded.

2) Even if inflation rises, the BoC would tolerate high core inflation to help make up for Canada’s output gap (GDP lost). This fallacious idea is called Price Level Targeting or NGDP targeting, whereas a central bank abandons inflation targeting and keeps printing until a nominal GDP target is met.

Rates will never go up unless the Canadian dollar is devalued a la 1949, where Canadians woke up one morning to find that the value of their currency was devalued by 10%. Only today, it would have to be in the range of 15-25%.

I’ll post it again for those who missed it: Growth in the Age of Deleveraging by Mark Carney

“As a result of deleveraging, the global economy risks entering a prolonged period of deficient demand. If mishandled, it could lead to debt deflation and disorderly defaults, potentially triggering large transfers of wealth and social unrest.”

That means at best, we end up like Japan. Chart 1 Chart 2

Think in decades, not years folks.

You will see, likely before 2013 is done, that you are wrong. — Garth

#215 Mister Obvious on 10.14.12 at 1:03 pm

#195 detalumis

You response to #92 Angel leaves out one key piece of information, namely, when?

I’m a boomer like you and have a similar story. While I didn’t self-sacrifice quite as much as you claim, I also paid off a low quality bungalow (with great potential land value) in a period of 11 years from 1985 to 1996.

I did this mostly by forgoing the toys so many young people deem necessary these days. I focused only on the task at hand which was to pay off my 25 year mortgage in the fastest time possible.

But that occurred in a very different world from the one we see today. The Hong Kong exodus to Vancouver had not even begun when I got started. When I sold my place after 25 years and became a renter I calculated that the resale value of the property increased by an average of 8% per year over my entire period of ownership.

Of course I didn’t actually net the full 8% per annum since I had a mortgage, taxes and upkeep to pay but let’s face it, I did all right in the long haul. I imagine you did too. But I now admit, there isn’t a hope in hell of a repeat of that for quite a while yet. We’ll both be gone by then.

And you’re right. It’s not our fault. We did the work, we played the game and we need not feel sorry.

To say: “it’s different here” in the realm of real estate is pure BS, but to say: “it’s different now” is spot on.

That’s why this blog (written by a boomer) exists. To help those who have profited from a financial anomaly to hold on to their gains and also to teach a new generation how to succeed in a world where residential housing no longer reigns supreme.

#216 VT on 10.14.12 at 1:38 pm

#204 DA

Don’t disagree that there are some good realtors out there that would help both sellers/buyers in their transactions.

Trouble is, the past decade has brought all kinds of incompetents into the field, so the % of good realtors is likely fairly low…

#217 Canadian Watchdog on 10.14.12 at 1:44 pm

“You will see, likely before 2013 is done, that you are wrong. — Garth”

Nope. In fact, Carney will be forced to lower rates as the velocity of money decelerates. It’s that 2007 all over again Garth. Don’t fight it.

#218 };-) aka D.A. on 10.14.12 at 2:24 pm

#214 Mister Obvious on 10.14.12 at 1:03 pm

I understand where you are coming from and how you could arrive at the conclusions you do but you too leave out one key piece of information when you say “To say: “it’s different here” in the realm of real estate is pure BS, but to say: “it’s different now” is spot on” and that is that it wasn’t so different then. I clearly remember many of us then saying that same thing of then compared to the then days gone by.

#219 Old Man on 10.14.12 at 2:37 pm

There is one item that you all need to focus upon, and to ponder before a potential hoop or score when all comes down. The obvious is clear with this and that for a correction, but what will happen with all those suckers who bought with cheap money on long amortizations with little down stroke, as they all wanted to become rich?

The mortgage renewals will roll over into a different formula to a 25 year amortization, and like a lumber jack will be calling, ” down she comes. ” This bottom will take years to mature like a deck of cards folding with waves of woes. Now can you imagine the horror of being under water, with a mortgage renewal in the near future?

#220 };-) aka D.A. on 10.14.12 at 2:38 pm

#207 Form Man on 10.14.12 at 12:19 pm
DA

Great spin job. What cannot be denied is that as long as the Kelowna MOI is above 8 months ( currently it is 17 months ), prices will continue to decline. The notion that there is ‘upward pressure’ on prices in the current market is absurd. Likely one of the reasons prices in Kelowna have not dropped faster is the high number of ‘underwater homeowners ‘ who cannot lower their price as they have no cash to bring to the sale. For these people, buying a house ( instead of renting ) has been a disastrous mistake.

If that is so Form Man would you care to take a moment to explain to me why prices have NOT declined in a manner in keeping with your argument and provide some form of proofsource to back up your claims?

And of those homeowners who are currenty ‘under water’; before they bought the house ought to have contemplated the risks more than they did. “Home ownership” is not a speculative venture it is a long term commitment. Try turn it into a short term speculative venture you are more likely to lose far more often than win.

I have provided unfettered, honest, simple raw statistics that show sales volumes are increasing albeit moderately but would we want anything but moderation after coming out of such a fiasco as we did some four years ago. As you must know price follows volume up or down. These increasing volumes are holding our markets well with moderation that we can depend on. Yes there are some weaknesses in our local real estate market but from where I stand and what I see I can tell you they are being worked out in a calm and reliable fashion by the natural checks and balances in a free market.

I am personally VERY comfortable with the current state of the local Kelowna real estate market which I believe is presenting a reasonably sound and predictable (as predictable as any can be) market in which buyers and sellers can make reasonable decisions without too much fear. It baffles me that you, as one so close to the industry as you allude yourself to be, cannot see this. Things are getting better not worse. But if you really, truly want it you can make them worse for yourself.

Don’t accuse me of SPIN Form Man, there was no SPIN. That was simple raw data. The only SPIN was your petulant misunderstanding and rejection of that data as that which clearly refuted your mistaken opinions on the market. Another hint; of all the inventory on the market 30% will expire without a sale, another 30% of the sellers will give up their lofty expectations and of the remaining 40% that will sell 65% will need to reduce their price in order to achieve such a result. Simple extrapolation would suggest then that just 14% of those homes on the market today are actually ON and IN the market. So your claim that we have 17 months of inventory, while at first glance may appear true, in reality we have scantly more than 2 months of real ON and IN the market inventory. Call that SPIN if you like but it is far more truth than the ignorant claims you make.

#210Ogopogo on 10.14.12 at 12:45 pm

#204 };-) aka D.A. on 10.14.12 at 11:02 am
A good REALTOR® does not cost you money they save you money.

Such philanthropists, realtors are. So misunderstood, so unjustly treated as scum by society. CREA should surely be nominated for a Peace Nobel for its invaluable contributions to the betterment of civilization.

Oh, when, when, pray tell, will we recognize the tragic sublimity of being a REALTOR®, taking on the sufferings of home-selling humanity without so much as a passing thought for self?

If hiring a REALTOR did not somehow make economic sense, through even the most terse of cost benefit/analysis, the 95% of they who employ such services to sell their property would never even contemplate doing so. Clearly you must be of the 5% who do not see that value.

Experience is the best of all teachers, an education is a bargain at any price, and if you think such an education is expensive try ignorance. You don’t think the experience of someone who has helped hundreds of clients with hundreds of real estate transactions hasn’t learned something that might save you from making a costly mistake or two? No problem – please feel free to embark upon learning through your own experience. Ignorance is bliss.

#221 Timbo on 10.14.12 at 2:40 pm

http://mhanson.com/archives/1057

The US

a) First-Timer demand went flat in May and have remained there for months. Shows house prices already out of whack with flat incomes of first timers

b) Investor demand DOWN YoY in August. This cohort won’t come back until Foreclosures start churning back up. Remember, if Foreclosures triple I will be bullish housing.

c) Repeat Buyers carrying this market…a temporary phenomenon. Low rates and ample supply at mid-to-high end has drawn out years of pent-up supply. But this cohort is thin and weak relative to any time before in history, as over 50% do not have the equity in their present house to sell and rebuy or the credit to get a loan.

d) Repeat buyers driving the market bodes ill for the off-season when they go away. That’s because last year’s off-season was strong on Twist, lack of rain and snowfall, and inventory. These all become headwinds in Q4.

What no mission accomplished??

http://www.latimes.com/news/nationworld/nation/la-fi-drought-restaurants-20121014,0,3803482.story

“Analysts expect overall food costs to rise 5% to 20% by the end of the year — a painful squeeze for businesses that, even in the most prosperous times, operate on tight margins with little room to maneuver.

“If the cost of the food goes up that much, it can pretty much wipe out their profit,” said John Davie, chief executive of food service partnership Dining Alliance. “Restaurants will be forced to look at everything from the phone bill to payroll to food costs to how they negotiate with vendors.”

Ouch! No soup for u…….

#222 };-) aka D.A. on 10.14.12 at 2:48 pm

For those sellers ON and IN this market it is working very well as this market makes their listing look like a bargain. Their price is less than it would have been four years ago and there is a plethora of overpriced unmotivated sellers whose asking price is so absurdly high it makes that of those seriously ON and IN the market look like a good deal.

It’s always a good time to sell if you know what you are doing.

#223 Picasso on 10.14.12 at 2:54 pm

What I see consistently on this board is that your pro bubblehead is totally reliant on below historical norm interest rates.
Makes sense when you have to take on a historical amount of debt to buy a particle board box in Canada.

#224 PoorgEoisie on 10.14.12 at 3:02 pm

Co worker of mine bought in mississauga just before the end of the 30 year mortgage. “still paying that ridiculous rent?” he said to me with a bit of smugness. He was very happy to join someone’s “winner’s circle”. That someone encouraged him to go in with his best bid with no conditions and no inspection. He thought he could convert the basement into 2 apts. and rent them 1300/1600 and someone convinced him that was a possibility. He hasn’t even been with our company for a year and is making a reduced salary while on training and someone loaned him the money.

While renovating his basement he came to discover a massive tree root growing through his foundation and now all the “somebodys” are gone. I do not relish his misfortune and I do recognize that ultimately he himself is responsible for his actions. But a banker, broker and a realtor all took advantage of this guy, he was conned pure and simple.
With the basement ruined it will be a while before he gets the renters he needs and they will most likely be undesirables paying 400-800 and eventually he will lose the place and be out of the market for many years. The people that fostered the RE uptick could not see past the end of their nose and blindly took buyer’s from tomorrow to make today a little sweeter. Well tomorrow is coming fast and there aren’t many buyer’s left. And the RE cartel will stupidly lobby too keep the old standards even though they are only robbing themselves of clients down the road.

#225 Form Man on 10.14.12 at 3:03 pm

#219 DA

prices in the Okanagan will continue to decline until the MOI is below 7 months. That is the reality. It is not different here.

#226 Old Man on 10.14.12 at 3:08 pm

I have to tell you a secret from the old days when I helped young married couples to buy their dream to make a home purchase for $52,000. They had jobs, but no downpayment, and who was I to not make it happen for them. It was all a matter of showing a downpayment, so had this deal with the manager of Beneficial on Bay Street.

He said bring it all to me, as can make a credit check and all the other stuff that will not show up, and will lend them the downpayment in secret. I was always the type of person to see a young couple make it in life with no money, and most made it which makes me smile about it all.

#227 TurnerNation on 10.14.12 at 3:10 pm

I’m sure, desperate realtors are telling people to “wait for the hot Spring market, and re-list”.

Sure, right after the flood of Xmas bills arrive, the new property tax and hydro rate hikes take effect; after you learn of no year end bonus, no COLA salary increase due to”the economy”. With another round of CONservative govt austerity jobs cuts and perhaps Blog Dog Carney’s rate hike on the way. Yeah THAT hot spring market. Still no 30 or 35 yr amort will be available to most people.

It’ll be a gas.

#228 Old Man on 10.14.12 at 3:36 pm

#223 PoorgEoisie – In Toronto there are thousands of properties called non-conforming, as there are many homes renting out the basement or elsewhere, so when one buys a property be sure it is legal or non-conforming with rental income. I laugh about this all as there are too many to crack down upon this illegal stuff, as it has become a tradition.

#229 Ronaldo on 10.14.12 at 3:37 pm

#214 Mister Obvious –

”That’s why this blog (written by a boomer) exists. To help those who have profited from a financial anomaly to hold on to their gains and also to teach a new generation how to succeed in a world where residential housing no longer reigns supreme.”

But unfortunately, in order for those who have profited from this anomally and to hang on to those gains, they have to pass on the problem to some greater fool who will likely be one of that ”new generation”. Tough way for them to learn how to succeed.

#230 };-) aka D.A. on 10.14.12 at 3:57 pm

#224Form Man on 10.14.12 at 3:03 pm
#219 DA

prices in the Okanagan will continue to decline until the MOI is below 7 months. That is the reality. It is not different here.

You can keep saying that until the cows come home Form Man but does nothing to change the reality of the current Kelowna market in which prices ARE holding steady as unit sales volumes grow moderately. I have explained to you time and time again that the current inventory levels are not a valid measure of the supply end of the equation as the bulk of them are the offerings of sellers who would only sell if a greater fool than themselves were to come along willing to pay some absurd amount the seller would be an idiot to refuse. Less that 20% of the active listings in Kelowna are actually ON and IN the market.

There is that part of the market visible to the public and then there is the real market which can only be seen by a trained eye. It’s kind of like someone saying “my home is worth X dollars because my neighbour is asking Y dollars for his and mine is better.” Neither have sold so neither is a valid measure of anything of consequence. All the for sale signs you see or the red dots you see on maps of listings mean nothing. It is SOLD signs which count, and there are more of those this year than last and more so far this month than the same month last year enough so they well make up for this Septembers drop this year from last year.

#231 AACI Okanagan on 10.14.12 at 4:02 pm

The Okanagan real estate market has been on a slow decline since our crash in 2008 where values dropped 15% to 25% depending what sub-market you are in. There is no upward pressure on values period. Unlike TO and Van markets, we never recovered from our hit in 2008 so I don’t see a big drop in values , I think a 5-10 % decline per year in the next few years.

#232 Richard on 10.14.12 at 4:32 pm

#226 “With another round of CONservative govt austerity jobs cuts and perhaps Blog Dog Carney’s rate hike on the way.”

Lets see……BIG FAT LAZY UNPRODUCTIVE govt that just sucks the life and cash out of the over taxed population like parasites…….YUP…..Govt firing of taxpayer funded employees who push endless piles of paper up on the private sectors dime sounds freaking awesome to me Jack !!!

#233 An Importation in Quebec on 10.14.12 at 4:50 pm

Montreal will not go down by even 10%. This is the most controlled, manipulated and corrupted place in North America

#234 NO Work In BPOE Toy SALE on 10.14.12 at 4:57 pm

Sign of the coming times

http://vancouver.en.craigslist.ca/rds/mcy/3333259992.html

Just tragic. — Garth

#235 DON on 10.14.12 at 5:02 pm

@ 103 Dorothy.

You are correct not ALL are in the same financial position. But as usual ALL will suffer as a result of the few. House prices will come down across the board.

Now I hope you understand that prices cannot increase forever in such a short period of time. The gains both you and the rest of us saw, were not sustainable and are about to be taken away. They were never really in the first place unless you sold early.

So be happy you were one that can afford your house, but know that the yoy price increases were not sustainable.

OH I wish the Older crowd, would take note and realize even they have more to learn. Most of them told their children this boom was fail safe. I am glad for the parent’s I have/had.

#236 Form Man on 10.14.12 at 5:16 pm

#230 AACI

I agree

#237 Old Man on 10.14.12 at 5:22 pm

I am so worried about Smoking Man, as may have come to the big party last night, as was there until after 4:00 AM. What a blast from the past as it was a first in history, and loved it all. Perhaps Smoking Man could not take it all, as am sure he had a dance with the Mississippi Queen, and it was too much for him.

#238 Ralph Cramdown on 10.14.12 at 5:33 pm

If hiring a REALTOR did not somehow make economic sense, through even the most terse of cost benefit/analysis, the 95% of they who employ such services to sell their property would never even contemplate doing so.

Well then, here’s some other things that must make economic sense:
– Lottery tickets
– Putting high octane gas in a car that only requires regular
– Buying bank mortgage insurance instead of life insurance
– Buying high commission RESPs from fast talking salesmen
– Buying high MER low performance funds from [email protected]
– Going to your bank, asking what mortgage rate they’ll give you, and taking it
– credit card balance insurance (i.e. voluntarily higher compounding interest)
I’ve got lots more, but I’m sure you can fill in some of the blanks with your favourites.

Fact is, lots of people are getting rich convincing others to make economically stupid decisions.

#239 Herb on 10.14.12 at 5:41 pm

#225 Old Man,

“Beneficial”? Surely you meant the “Predatorial Finance Company”.

#240 Ralph Cramdown on 10.14.12 at 5:48 pm

For those sellers ON and IN this market it is working very well as this market makes their listing look like a bargain. […] there is a plethora of overpriced unmotivated sellers […]

Standard sales BS. Sellers who won’t cut their prices enough to make a deal aren’t serious. Buyers who won’t bid enough to make a deal aren’t serious. Agents can get more than unrepresented sellers, even factoring in commission. When a FSBO sells at full price and over appraisal, it’s because the property sold itself. It sounds like the criterion for ‘serious market participant’ is someone who lets you ring the bell in your broker’s office.

I understand why top salespeople need to tell themselves this, and to believe it. But you have to understand that outside of a roomful of other agents, it sounds just as daft as talking about little green men.

#241 Ralph Cramdown on 10.14.12 at 5:54 pm

#227 Old Man In Toronto there are thousands of properties called non-conforming, as there are many homes renting out the basement or elsewhere, so when one buys a property be sure it is legal or non-conforming with rental income.

I don’t think so. In Toronto, all second units are legal if inspected and found to be conforming (mainly type X drywall between units and in utility rooms, linked smoke alarms and two big-enough exits), illegal otherwise. “Legal non-conforming” refers to other aspects such as lot setbacks and coverage ratios — if you tore down the property you wouldn’t legally be able to build the same thing again. Correct me if I’m wrong.

#242 Old Man on 10.14.12 at 5:56 pm

#232 – An Importation in Quebec – my old lover from Montreal became an appointed Federal Judge who is now retired, and years ago her brother who was an MD pooled some funds to buy Real Estate, and the market crashed. This will all happen again, as Montreal is in for a huge crash once again.

#243 Old Man on 10.14.12 at 6:38 pm

#238 Herb you got that right, so will give you a cigar.

#244 Gunboat denier on 10.14.12 at 6:51 pm

228 Ronaldo

“in order for those who have profited from this anomally
and to hang on to those gains, they have to pass on the
problem to some greater fool”

Not neccessarily. A whole bunch of people made good
money because of the RE boom without ever selling their
house.

#245 };-) aka D.A. on 10.14.12 at 6:59 pm

#230 AACI Okanagan on 10.14.12 at 4:02 pm
and
#235 Form Man on 10.14.12 at 5:16 pm

You want to believe a 5 to 10% decline per year in Kelowna real estate values over the next few years is eminent… fill yer boots fellas. I’m not saying it’s impossible, improbable yes, impossible no. You see unlike you boys I don’t have a crystal ball. But what I can tell you unequivocally is, here, now, today the market absolutely is not what you purport it to be nor has it been for the past four years.

Good luck to you both… and you ridicule me for my reliance on my ‘gut instincts’? No voodoo in your prognostic crystal ball gazing is there … nope, none at all. How’s that workin’ for you by the way? How are your businesses doing in this depressed, dismal, market? Apparently not so good for if you were doing ok you would have an entirely different take on the state of the market. Might your attitudes have something to do with your failure to see the opportunities?

#246 Mister Obvious on 10.14.12 at 7:35 pm

#228 Ronaldo

You make a good point. A fool remains so until he finds a greater fool. At that point he ceases to be a fool and becomes just another person who profited from investment. But a real fool is the one unable to judge the likelihood of becoming the final holder of a rising asset and, even worse, chooses to make that his one and only asset. That is what this blog tries to warn against.

#217};-) aka D.A.

It was different then. I was able to buy a house that cost approximately 3.5 times my annual income. If I tried to do the same today in the same location I’d need to be prepared to spend at least ten times my annual income.

#247 Nostradamus Le Mad Vlad on 10.14.12 at 7:54 pm


#211 Richie Rich — “Live for today, in case you do die tomorrow.”
+
#236 Old Man — “Perhaps Smoking Man could not take it all, as am sure he had a dance with the Mississippi Queen, and it was too much for him.”
=
#205 Smoking Man — “Getting old I’m thinking. Damn it hurts.” — Tell us The Fat Lady hasn’t sung for you SM, ‘coz we’re just having way too much fun here! We need you! Don’t listen to her!
*
Sweden tells Greece to quit EZone; Derivatives This would be the icing on top of the cake, then add this into the mix for good measure; Obankaccounts See headline; Rotting Apple Core The EZone; US$45 Trillion Wasting money on an imaginary threat.
*
4:31 clip Sheeple are expendable. As long as the guns work, the military’s okay; 1:43 clip “Can you imagine the reaction if Romney launched ‘White People for Mitt’?” wrh.com; Foxman to US Christian Leaders Not very Christ-like; Brezezinski and Carter “Al-CIA-duh”; US and allies Under the auspices of the west’s ‘freedom’; 1:48 clip New Jersey. WW2 all over again; Canada – EU Trade Agreement Incl. same rules as ACTA’s; Headline is correct So don’t be afraid and don’t let yourself be bullied; Obomba Being a gentleman (!), lets Billary take the rap.

#248 Grim Reaper/Crypt Speculator on 10.14.12 at 8:00 pm

DELETED

#249 Old Man on 10.14.12 at 8:30 pm

#240 Ralph Cramdown – I appreciate your posting, but know better, so take care.

#250 Form Man on 10.14.12 at 8:38 pm

#244 DA

Actually business is good. This year has been one of my best ever. Working for the construction banks, cleaning up messes left behind by broke, deluded local Kelowna developers………

#251 AACI Okanagan on 10.14.12 at 9:29 pm

#244 };-) aka D.A. on 10.14.12 at 6:59 pm

My business is fine, busy with refinancing, foreclosures, divorces, estates, the usual stuff..

#252 };-) aka D.A. on 10.14.12 at 9:39 pm

#249Form Man on 10.14.12 at 8:38 pm
#244 DA

Actually business is good. This year has been one of my best ever. Working for the construction banks, cleaning up messes left behind by broke, deluded local Kelowna developers………

#250AACI Okanagan on 10.14.12 at 9:29 pm
#244 };-) aka D.A. on 10.14.12 at 6:59 pm

My business is fine, busy with refinancing, foreclosures, divorces, estates, the usual stuff..

And they tell me I have a vested interest in pumping things up.

#253 AACI Okanagan on 10.14.12 at 10:26 pm

#251 };-) aka D.A. on 10.14.12 at 9:39 pm

That makes no sense at all. 80% of my business is refinancing, it doesn’t matter if the market is up, down or stable. People are always refinancing.

#254 Snowboid on 10.14.12 at 10:57 pm

#230 AACI Okanagan on 10.14.12 at 4:02 pm…

I agree as well, and it’s proven by OMREBs’ own stats.

Anyone that says prices are ‘flat’ over the last 4-5 years is likely past the denial stage into desperation.

#255 Form Man on 10.15.12 at 6:50 am

BMO says Kelowna sales dropped 25% in September. They must not have got the memo from DA……..

http://www.theglobeandmail.com/report-on-business/economy/housing/canadian-housing-market-peers-over-the-edge/article4611795/

#256 Dupcheck on 10.15.12 at 11:30 am

If everyone is in debt isn’t that slavery? This is new era slavery. Only the ones that have no debt and money flows in for them without them working are the masters. I am thinking 1% are the ones who pull the strings, the rest are followers and slaves at different degrees and positions. Why are we so stupid, rules have changed but the game is the same.

#257 Mick on 10.16.12 at 1:16 am

Gents,

All the housing implosion is for the best.
Normal people drink, bang and have fun …Normal people do not stress out over signing up their life for a collection of walls. The “fun” part is inversely proportional with the “stress-over-mortgage” one.
I bet that Canadian libido went substantially down in direct correlation with the appreciation of housing.
The final result will be a 50-60% down prices in housing, mortgage rates 10-15 % and the much despised metal hitting the roof (not because it’s any good but because with the massive print , the dough will worth exactly crap). And let’s be serious now.. a good blow job (ensured these days by buying the dream house) will remain as desirable (when greeted with the despised metal).
Diamonds are forever they say :). Exactly my point.

Garth baby, keep those pics coming. The ones that you once posted.