Why not?

It costs $201,233 and has three bedrooms, two bathrooms and a kitchen with granite countertops. Not bad. Plus there’s parking, two stone terraces and central air. It’s two blocks from the water – the Mediterranean. Cartagena (founded in 227 BC) is down the road. And it’s only a six-hour drive to fabled Gibraltar.

The temp is usually around 20 or better, but it does dip to an average of 12 in January. The sea is aquamarine, the sun shines most of the time and beaches are everywhere. It would be paradise, maybe, if it weren’t Spain where about a third of the population’s out of work. But, if you’re a retired Canadian bailing out of Calgary or North York, don’t need a job and can live forever from the bloated proceeds of your old house, why not?

Playa Flamenca, Alicante, Spain – listing

One negative would be residency requirements. You can’t go to Spain and stay for more than 90 days without a visa, which requires private health insurance, proof of financial independence, police clearance and the usual web of capricious approvals. Until now.

Within weeks, maybe days, the government of Mariano Rajoy is expected to pass a law granting permanent Spanish residency to anyone who buys that snappy white three-bedroom townhouse on Playa Flamenca, or one like it. It’s a dramatic move, matching those already taken by countries like Ireland, Greece and Latvia where a real estate crash has helped gut the local economy.

Spain currently has between 700,000 and a million empty houses for sale plus a banking system that was bailed out a few months ago resulting in a serious credit crunch and too damn few buyers. The housing meltdown has helped forge a 25.8% unemployment rate, which tops even that of Greece.

The country’s real estate crash is now in its fifth year, and prices are falling at the fastest rate since 2008. More than 20% of all mortgages are underwater and almost 400,000 families have been evicted in the last four years. Prices last month were falling at an annual rate of 12.5%, and the cumulative average national drop is now 33.2% since the financial crisis struck. That approximates the collapse in the US (32%), and like in the States, in some areas perfectly appealing houses have lost 65% of their value.

Of course, Spain (like us) had a great housing boom that spawned inflated values and rampant construction. Like Vancouver, prices soared to the point when most locals couldn’t afford to buy. Like Toronto, over-building of multiple-unit projects swelled to be a major part of the local economy. But when the party ended in 2008, the entire country flamed out. Values plunged, jobs vanished,  government budgets imploded and Madrid had to beg this past summer for $130 billion to resuscitate the wheezing banking sector, as rates on government bonds soared to the 7% range – making borrowing impossible.

Just days ago Rajoy was humiliated into a two-year moratorium on more evictions after 53-year-old Amaia Egana jumped to her death from her fourth-floor flat as bailiffs tried to seize the property. The suicide prompted street protests, and allegations it’s the poor who suffer disproportionately when banks need bailouts. Like that’s a surprise.

Anyway, there ya go. Spend at least $200,000 on a bargain in a semi-tropical country beside an azure ocean and laws melt before you. It’s a massive deal compared to the extending of residency with property purchase in Ireland ($500,000) or Greece ($640,000).

Beyond that, another cautionary tale for Canadians. Like the American middle class, once-affluent Spaniards thought nothing of borrowing big and shoveling the bulk of their net worth into homes which nobody imagined could ever stop rising, let alone decline. Unknown to most was the fact real estate had come to represent such a huge portion of the GDP, or that the entire market could deflate so quickly, setting the dominoes toppling. Shock does not begin to describe how people felt.

Spain, by the way, has a mature economy almost the same size as ours, and a population of fifteen million more.

So is a Spanish-style crash possible in Canada? Of course not. We’re special, like snowflakes, with a superior climate and culture. But it does make you wonder. Sell on Lake Ontario. Buy on the Med and veg. Who are the fools?


#1 Randy on 11.25.12 at 7:08 pm

Why not a Spanish style crash…We already got the Wind Turbines…

#2 TurnerNation on 11.25.12 at 7:08 pm

No football? Or just in time.

#3 Bob Copeland on 11.25.12 at 7:16 pm

I always wonder why Americans will stay in America as it declines and Canadians will do the same as their home and the resulting economy decline. There’s sooo much more to gain by going where the deals are. Guess I’m a little man living in a shrinking fish bowl. Makes me mad at me.

#4 Barbarian or Savage? not sure on 11.25.12 at 7:24 pm

Is it true that with Spanish residency I can remove RRSP funds and pay max 25% withdrawal tax? That would really help the vegging process.

#5 a prairie dawg on 11.25.12 at 7:25 pm

That is one happy looking elephant.
He must be cheering for the STAMPS.

#6 Gary M on 11.25.12 at 7:25 pm

You have to be a fool to invest in Spain at the moment. With over 50% youth unemployment, Catalonia (and perhaps Basque Country) on the brink of independence, sovereign debt rated just a bit above junk, and an aging and stubbornly entitled population, Spain has a long way to go before recovery. Besides, Spaniards unlike us, do mobilize and protest, making social unrest a more than likely possibility in the near future.

Hell, even buying a piece of the Trump Hotel seems like a better option at the moment.

#7 Canadian Watchdog on 11.25.12 at 7:31 pm

Breaking News: Separatists winning in Catalonia, Spain – early results

Good timing Garth.

#8 Vince on 11.25.12 at 7:40 pm


#9 Click Here, its different on 11.25.12 at 7:41 pm

I like this post.

I read about the RE in Spain for a few months now. A lot of people will like this idea to buy on sea shore somewhere in a civil war zone for a handfull of pennies.

But the reality is this one : Only a few retirees will actually buy in a foreign country. Germans, English … are already buying in Spain (like us in Florida) but its a negligible fraction of the buyers.

So, ultimately, the prices will have to adjust to the actual financial reality of the local buyers. HAM or HGM or HEM or WTF money wont save the Canadian market. So, to all of you recent owners, just grab to your job and dont lose it. I suppose you borrowed to the extend where 100% of your monthly income is used. Like most of the recent buyers. So, this will be your life for the next 25-30 years because you cannot afford to sell in the coming deflating market.

I used to feel sorry for these guys. But it was in 2009. Now, if you still didnt get it since, its your problem. You had plenty of time to realize you bought an overpriced house and sell it (for just a little or no profit).

#10 Blacksheep on 11.25.12 at 7:43 pm

Just a 200K villa and you get residency. Definitely a sign things are not going well in Spain, but is still pretty tempting for anyone retired. Five years into a RE downturn, could be nearing a bottom, things can only get better?

take care

#11 TRT on 11.25.12 at 7:49 pm

Might as well get a foothold in yet another country..

thanks garth!

#12 Old Man on 11.25.12 at 7:52 pm

Garth has made a point that it will cost big money to retire, and in my garbage mail got this small folder. It was about a small retirement community not far away, so being curious took a look at their website that would put Donald Trump to shame, as it was small with about 130 suites and villas that looked like a 5 star establishment.

My red flag went up immediately, as not a word about the cost, but saw they were offering up to a week free trial with free gourmet meals, and most everything, and the cost was $95.00 a night for a fully furnished luxury suite. I called an old babe that I shoot 8 ball with at a nice poolroom, and said do you need a bit of a vacation.

She said maybe, so email this site, as the cost will come in at $47.50 each for some fun. She freaked out at the gourmet menu; the billiard room; the nightly entertainment on a grand piano beside a three sided fireplace with a pub; the library room with internet; the fitness room with the salt water therapy pool.

The nightly entertainment card is extensive with movies; bingo; wheel of fortune; poker; and trivia. I said what do you want to do? She said this is a free ride for the food alone, so lets hoop them good, and I will pretend to be your loving wife, as the winter snow is coming in, and need some fun.

#13 Blacksheep on 11.25.12 at 7:54 pm

“The government finances its debt with the issuance of bonds, not borrowings from publicly-owned banks. — Garth”
Selling bonds or getting loans? Does both not involve the Government borrowing money from a non Governmental entity, which receives compensation in the form of interest on funds lent?

Do none of the big six, non Gov. banks, ever purchase Can. Gov. issued bonds / securities?


#14 Mean Gene on 11.25.12 at 8:05 pm

¿Habla Español?

#15 periwinkles on 11.25.12 at 8:23 pm

Garth you trying to give Franco some Eisenhower hug-ins..?

For most Canadians Spain’s an ocean & language away.
Florida of Europa? French Riviera would be a better choice but its probably now terribly congested and still expensive. Long way from that seen in Hitch’s idyllic “To Catch a Thief.”

#16 An Importation To Prop The Ponzi Scheme on 11.25.12 at 8:25 pm

If RE fell by a third should I conclude the price before the bust was 300k. It was very affordable by nowadays Canadian standards.

#17 Chickenlittle on 11.25.12 at 8:35 pm

I would move there but what would I do for work? Too bad I’m not retiring!

#18 JO on 11.25.12 at 8:37 pm

If you buy, plan for at least at 30-40 % increase in property taxes because this will happen in most of the developed world including here…problem in Spain is if your foreign, they consider you rich and a very easy target for special surtaxes or violence or both at some point in the next 5-10 yrs…at least in Canada, if you’re Canadian, your taxes will still be going up but you will not be singled out for confiscation of assets.

People of Western Europe, like Canada, got used to a fake economy built on the rapid expansion of junk debt and not healthy productive growth…most entitlements are based on the debt bubble years and now that the contraction in credit has started, the fantasy benefits need to be cut…banks need to be taken over and senior execs put in jail and dramatic cuts in gov’t spending, including pensions for those who retired from gov’t jobs over the last 5-8 yrs need to be reduced to an affordable level…

At the end of the day, the math is not even close…without a miracle of productive economic growth and/or a major writedown of junk debt, you will see politicians trying to explode taxes before the end game of collapse..Spain is probably in the 7th inning…we might not reach the 7th inning here but it is still possible we can see an ugly few yrs.

Spain has a turbulent history of seperatism, violence, and dictatorship…you cannot rule out another Franco coming into power in the next 10 yrs if things continue on like this…the population does not understand that in all scenarios possible, the standard of living will drop a lot because it was based on a fake prosperity…

The dare-I-eat-a-peach blog. — Garth

#19 Vangrrl on 11.25.12 at 8:50 pm

“Of course not. We’re special, like snowflakes, with a superior climate and culture.”
I take it that was sarcasm…
I read about this last week. In Latvia they are offering residency if you spend as little as 80 grand I believe. ha!!
See ya.

#20 mek on 11.25.12 at 8:53 pm

Of course, Spain’s problems are much worse than they should be, because of their membership in the EU. They don’t have control of their currency, and therefore cannot print money. A sovereign currency simply can’t get to 25% unemployment without total incompetents running the show. But 10% unemployment is disaster enough.

#21 Vangrrl on 11.25.12 at 8:59 pm

Yeah, because Cdns staring at their office computer screens, chugging another coffee to stay awake mid-afternoon, shoving donuts in their mouths and pretending to work while surfing facebook means we aren’t lazy.
My mother grew up in the Mediterranean. Seista in the middle of the day, dip in the ocean at 2pm when it starts to cool down a bit, back to work. Walk along the sea promendade in the evenings, outdoor cafes, sense of community.
Sounds like a healthier, more balanced lifestyle to me.

#22 Nick on 11.25.12 at 9:06 pm

Great post Garth.

And for a chuckle, here’s what Forbes magazine had to say about spanish banks all the way back in the summer of 2009.

Spanish Banks In Top Form


#23 Daisy Mae on 11.25.12 at 9:11 pm

And our government, having witnessed all this, knowing full well, chose to travel the identical path, making all the same stupid mistakes? Unbelievable…

#24 Old Man on 11.25.12 at 9:12 pm

I will tell what all this villa and condo stuff cost during the 1970’s in Spain, as was thinking about buying one, and have a golden rule – never buy something at a distance. You must never buy a dream unless you walk the street, and kick the tires. Now if my memory serves me correctly these properties in the early 1970’s in Spain were selling for about $18,000.

#25 Freedom First on 11.25.12 at 9:16 pm

Why not? If a person is in the market for a place in Spain/retirement property……..”How sweet it is”.

Most unfortunate, but people have a knack for buying at the top of markets, and avoiding the bottoms/near bottoms of the whatever asset class it is. Just like you say on your blog over and over again Garth. Reinforces just how important your blog is. Talked with a woman friend of mine this weekend, mid-forties, and she shared her financial situation with me. Condo and other assets, as well as her debts. She thinks she is doing okay, but she is not. Other peoples advice is costing her big time. She has no idea of my net worth/assets, as I am a private man when it comes to that, but she has a degree in commerce, and can see my knowledge base. I passed her your website address Garth. If she reads it…..maybe I will hear about it:)…….we try to hand out the tools, but it is everyone’s personal decision to seek knowledge…….I am glad you are here Garth, I have passed out your blog site to several people, and 1 even told me he has read it……a bit:)

#26 MB on 11.25.12 at 9:32 pm

I believe at one point in Spain there was one building/unit under construction for every family in Spain. Kind of like Vancouver/Toronto now.

In 2013 the sh*t is going to hit the fan around here. People in Vancouver are going to freaking lose their minds when this bubble shows itself. When the new buyers (5% down crowd) refinances in 2013-2016 prices will crash even further when people learn what “negative equity” means

#27 blase on 11.25.12 at 9:42 pm

100th anniversary of the Grey Cup today Garth. Thought you’d have a shout out today.

#28 The end is nigh on 11.25.12 at 9:45 pm

Apparently, Chinese can now by a Hungarian Passport for
€ 250,000.

#29 AACI Home-dog on 11.25.12 at 9:47 pm

It’s different here…
We have commodities !

#30 T.O. Bubble Boy on 11.25.12 at 9:57 pm

ok, similar sized countries, but the housing bubbles are significantly different… I’m not saying that Canada isn’t in one, but that Spain has been absolutely insane for vacation properties over the past 10-20 years.

You can barely see the Mediterranean anymore in many areas of Spain, thanks to all of the half-built timeshare condos.

Spain was one of the only places on earth WORSE than Florida and Vegas for vacation property speculators. Every Brit with an over-priced home in the UK fancied a second property in southern Spain. Heck – if you buy where Garth is highlighting, you can walk over to Gibraltar and even get your Marks and Spencer shopping in.

#31 shanks on 11.25.12 at 9:57 pm

What happened to Vlad? Did he finally get picked up for information dissemination? Garth, did you ban him again? Please bring him BACK!!

#32 Mr Buyer on 11.25.12 at 9:59 pm

So is a Spanish-style crash possible in Canada? Of course not. We’re special, like snowflakes, with a superior climate and culture. But it does make you wonder. Sell on Lake Ontario. Buy on the Med and veg. Who are the fools?
You jester you :)
Snowflakes, special little snowflakes. I loved it the first time and I am loving it now.
Snowflakes ******************************************************************************************

#33 shanks on 11.25.12 at 10:00 pm

#29 The end is nigh on 11.25.12 at 9:45 pm

Chinese or any rich foreign business person for that matter, have been able to buy express Canadian passports for $400k for a long time now! check it out RCI

False. This does not allow the purchasing of a passport. — Garth

#34 Cory on 11.25.12 at 10:07 pm

Grass is always greener…till it isn’t.

#35 debtors_winners on 11.25.12 at 10:13 pm

Consumer price index in Canada for October constituted 0.2% against expected 0.1% – stat.Canada

#36 Old Man on 11.25.12 at 10:18 pm

#28 blase – forgot all about the Grey Cup, so put it on my tv. I went to one in Toronto during the 1970’s and called my daddy for free tickets, and had them coming in; sold a couple on Bay Street for face value; kept two for myself; and another two came by taxi, but I was gone out the door, so my roommate said enjoy.

My aunt was the executive secretary for the President of Gulf Oil, and set me up with an office girl, so off we went on the Go Train. The one thing about the Grey Cup is everyone is drunk, and we too had our flask, but coming back on the Go Train after the game was a bit of a nightmare, as all wanted to tip the train.

#37 CalgaryRocks on 11.25.12 at 10:18 pm

This program of residence in exchange for buying property was proposed in the US but you know how the Americans are; always afraid that immigrants will go over and take advantage of their awesome food stamps program or their out of reach health care. LOL.

#38 randman on 11.25.12 at 10:27 pm

Dan Norcini makes an interesting point about taxation….

“I have a bit of counsel to the political and monetary authorities. Why not just cease and desist ALL TAXATION OF YOUR CITIZENS COMPLETELY. You obviously can conjure into existence, out of nothing, all the money that you need. Why bother taxing anyone? Just print what you need and end the illusion of possessing any sort of discipline or ethics altogether.

At least that way your middle class will have something of their’s left over before you bastards destroy what is left of their purchasing power.”

Love it!


#39 Victor V on 11.25.12 at 10:37 pm


In their 54-page lawsuit, which also names Donald Trump as a defendant, the four plaintiffs seek to recoup hundreds of thousands of dollars in deposits, along with more than $2.5-million apiece in general damages for “loss of opportunity and consequential damages, negligent misrepresentation and conspiracy.”

The statement of claim says the plaintiffs had limited or no experience investing in real-estate when they opted to purchase hotel units in the Trump tower, which is divided at the 32nd floor between residential and hotel space. They say Talon representatives violated a ruling from the Ontario Securities Commission by distributing detailed financial projections, upon which they relied “heavily” during marketing and sales meetings. Allegedly included in the marketing materials were sets of tables showing possible returns on investment based on room rates of $600 a night and occupancy rates of 55%, 65% and 75%.

#40 Not 1st on 11.25.12 at 10:50 pm

We may be fools and are destined to ride our property bubble down but we won’t be audience to a trading block crack up and currency explosion like Spain will. Lake Ontario looks fine to me.

#41 Risk Analyst on 11.25.12 at 10:56 pm

Need some help guys, the girlfriend and I are going are looking for a rental. We both work in the financial district and getting to work quickly is very important to us. We have viewed almost 100 buildings and they all seem like small dinky crappy shoebox condos. The best building to rent by far that we have found is 15 viking lane. You can get a 690sqf 1 plus den for 1400 and 2 bedroom units go for 2000, which is what we want but there are none left. This building besides being next to go and subway station has the best layouts and amenities either of us have ever seen. Can anyone familiar with the subject please recommend any other buildings with easy access to union station and nice layouts.

Much appreciated,

#42 george on 11.25.12 at 10:57 pm

Latest household credit numbers (to the end of October 2012) from the Bank of Canada:


Latest business credit numbers (to the end of October 2012) from the Bank of Canada:


#43 Suede on 11.25.12 at 10:59 pm


You need to deposit 800k in a zero interest account with the govt. which is not much worse than current govt bond yields.

But this is the min criteria from immigration Canada. Doesn’t mean you’re guaranteed

#44 Citizen on 11.25.12 at 11:03 pm

I understand personal experiences do not prove anything. At its best, they may account as anecdotal evidence.

Many people I usually come across is spending like crazy. Nothing wrong about it except that all of them believe that nothing bad would ever happen in Canada, economy wise. I recently decided to keep to myself the info about the current economy (record, indebtedness, ultra low interest rates, construction share in GDP risks, etc.). This decision was made as most people are already so biased into the “strong Canadian economy mindset” or the “Canada is unique” that even when they try, their confirmation bias just spot information that support their own preconceptions. I simply gave up in economic little chat. However, I do not fully blame them.

It looks like Canadian MSM is doing a pretty good job in making the economy look way nicer that it actually is.

Tonight, I come across this article about the Canadian economy from Wall Street Journal, and I quote some sentences:

“Canada’s hottest markets are leveling off or falling..”
“Years of that easy credit in turn helped give rise to a housing boom..”
“years of extremely low interest rates..”
“Jim Flaherty recently postponed by a year, to 2016-17, government plans to balance the budget, blaming lower commodity prices expected to sap revenue..”
“Canadian consumer confidence was down…”

It might not be evident for everybody, but I notice quite a difference in word choice.
Market falling, CAD version: cooling off, moderation
Easy credit, CAD version: never mention of it, total denial
extremely low interest rates, CAD version: interest rates increase less imminent
Flaherty missing targets and blaming lower commodity prices, CAD version: Flaherty missing targets due to lower commodity prices

Here is the article for you.

Other examples in CAD MSM:
“Flaherty tightening mortgage and setting 25 years…..”, never mention of him being the author of the 40 year, no down payment mortgage.

I wonder, to what extent, if any, MSM is able to manipulate public perceptions?. And, If possible, how that manipulation would shape the likely economic slowdown?

#45 shanks on 11.25.12 at 11:04 pm

False. This does not allow the purchasing of a passport. — Garth

actually Garth, I would say it does. They are immigration lawyers who for $400,000 which is returned after 5 years (no interest), get you and your family fast tracked Canadian passports. Just because they return your capital to you after 5 years doesn’t mean they aren’t in actuality selling you Canadian citizenship.

Its like saying that when you take a big fat mortgage to buy a house that you aren’t actually buying it because you are not coughing up all the money yourself.

It’s a visa program. You are required to deposit $800,000, interest-free. But it does not buy a passport. — Garth

#46 Canadian Watchdog on 11.25.12 at 11:10 pm

#40 Victor V

They say Talon representatives violated a ruling from the Ontario Securities Commission by distributing detailed financial projections

And this deal was overseen by OSC. Now just imagine who unregulated developers were selling condos to.

Remember the US had subprimes, Canada will be preprimes.

#47 FTP - First Time Poster on 11.25.12 at 11:15 pm

So i see the semi-literate “Smoking Man” has now started posting as “Old Man”. Your first moniker was more to the point as you tried hard to blow smoke – too hard in fact. The delusions of grandeur still push through the hollow, soul less facade.

#48 hawk on 11.25.12 at 11:36 pm

#3 Bob Copeland on 11.25.12 at 7:16 pm

I always wonder why Americans will stay in America as it declines and Canadians will do the same as their home and the resulting economy decline.


Might have something to do with the differing levels of un(employment) between Spain and Canada………just sayin’

Sell your overpriced shack in Van or 416, invest the proceeds, and retire to your villa. ¿Qué problema? — Garth

#49 Bast on 11.25.12 at 11:38 pm

That is waaaay too pricey for the Alicante property, Garth. Check out http://www.kyero.com – there’s a 3-bedroom in Torrevieja for about $53,000….and so many more.

That does not come with residency, and you get what you pay for. — Garth

#50 Bast on 11.25.12 at 11:39 pm

Oops – that was for a one-bedroom – BUT STILL! It’s Spain! It’s warm, the food is terrific (if you eat the truly Spanish food) and the wine is glorious…

#51 unbalanced on 11.25.12 at 11:40 pm

Why buy the place when you can probably rent it. I rent a 2000 sq. ft. in the Caribbean for $ 60 a day. Cheapie, cheapie!!!!

Why visit a blog if you don’t read it? Property purchase = residency. — Garth

#52 Lucky Sometimes on 11.25.12 at 11:47 pm

No 4 Barbarian or Savage? not sure on 11.25.12 at 7:24 pm
“Is it true that with Spanish residency I can remove RRSP funds and pay max 25% withdrawal tax? That would really help the vegging process.”
That’s true provided you renounce all aspects of Canadian Residency. This is explained in Alex Doulis book “Take Your Money and Run” and “My Blue Haven”
Canada has treaties with countries that allow you to take your retirement money (RRSP. LIRA, etc) subject to withholding tax which varies from country to country. See Revenue Canada Taxation Circular 76-12R4.
Conditions of Non-Residency Status is covered by IT-221R2. Ex. no home ownership, driver’s license, health care etc.

#53 Patient in Richmond on 11.25.12 at 11:52 pm

chinese buying foreign passports is nothing new ,

They have been buying canadian passports for the last 10 years or more . Its fairly simple . You open a business , then after 5 years get citizenship, then sell it to your cousin, uncle sister or whatever .

The cool thing is the business does not even have to make money . I can point out several business in vancouver and richmond that are just a front for chinese immigration . The sad part is and always will be CANADA IS FOR SALE …..

#54 Pauly on 11.25.12 at 11:55 pm

Why don’t you put your money where your mouth is and buy a property in Spain?

Then I wouldn’t be able to irritate you. — Garth

#55 Snowboid on 11.26.12 at 12:00 am

#32 shanks on 11.25.12 at 9:57 pm…

Vlad’s a http://www.youtube.com/watch?v=E9F_DkkIKPs

#56 squidly77 on 11.26.12 at 12:22 am

Black Fridays sales disappointed and I suspect so will Cyber Monday Sales, combine this with the looming U.S. fiscal cliff and its easy to spot.

The Ducks are lining up for a nasty stock market correction in the new year.

As always, no where your monies at.
They’re not making any more land you know.

Our economy is doing so well that everyone wants to live here.

But we have (fill in your commodity of choice)

The immigrants are all moving here, where will they all live ?

And last but not least. Better buy now or be priced out forever ?

I say……Better buy now and be priced in forever.
Its amusing to watch the housing Bulls mentally collapse.
EG. Cameron Muir. http://whispersfromtheedgeoftherainforest.blogspot.ca/

#57 SilverMeridian on 11.26.12 at 12:30 am

SilverMeridian Ottawa Real Estate Market update

Excerpt from the “Housing Trends & Affordability” report by RBC Economics Research

“Ottawa housing market slows

TORONTO, November 22, 2012

The cost of owning a home at market prices is taking a bigger bite out of household budgets in Ottawa than has been the case, on average, since the mid-1980s, indicating that local home buyers experienced greater affordability strain in the third quarter. This may have been among factors weighing on housing activity in recent months,” explained Wright. “Home resales fell 5.4 per cent in the third quarter, constituting the largest quarterly decline in the area since mid-2010. ”

Full report can be found here: http://www.rbc.com/newsroom/pdf/HA-on-1122-2012.pdf

While RBC notices significant slowdown in Ottawa’s RE activity and increased pressure on the current prices, OREB president is trying to assure us that everything is peachy and there is nothing to worry about:

“Compared to the five-year average, Ottawa is right on track, indicating that we are not experiencing a real estate downturn in Ottawa, but a slow, steady incline in units sold and average sale price,” notes Ansel Clarke, President of the Ottawa Real Estate Board. “Ottawa continues to be great place to buy and/or sell a home.”

I guess, when you need to get stale merchandise moving, the best strategy is to hide from the public actual stats, keep talking about minuscule increases in sales and masterfully omit mentioning of all times record high Active Listings and ballooning inventory!

#58 squidly77 on 11.26.12 at 12:36 am

Link here..Link to previous post here

realtor steals for sale signs
More laughs here

#59 MrHulot on 11.26.12 at 12:45 am

i heard that one of the conditions for residency besides buying a property will be that you have to prove that you know how to dance the Flamenco. Any truth to this Garth?

#60 Osama Bin Laden on 11.26.12 at 1:11 am

I’m in !!!

Sick of this frikking cave…..even if the rent is cheap.

PS : I here they have a Helicopter free zone too.

Go Argos Go…..Stamps suck ahahahahaaha

#61 25Alpha on 11.26.12 at 1:22 am

“False. This does not allow the purchasing of a passport. — Garth”

You’re right, but it does in fact ‘give’ the passport in exchange for a few bucks. You’re an ex politician still towing the company line.

No-interest deposit of $800,000, net worth of $1.6 million and five years wait. You are better at gratuitous insults than knowledge. — Garth

#62 Jay Currie on 11.26.12 at 1:40 am

And you can buy warmer, safer, property in Costa Rica according to a guy I met in a bar. Or Thailand – and the massages are free or some such.

I catch the point that the Spanish are willing to toss “residency” in. Do I want Spanish “residency”? And do I want it enough to bung down 200 large for the finest in Spanish bubble construction?

My own suspicion is that we are in for a decade of asset deflation and, at the same time, consumer price inflation. Food and fuel (and taxes) will cost more while many assets – especially housing – will be worth less.

Even though I rent, I am downsizing. Reduce the rent, the hydro, the gardening, the water and so on. This time of year there is not a lot out there. But come the sobering moment of spring there will be a lot of people wondering where the heck their equity has gone. Why their 2 million dollar house has no showings.

I am going for cosy, intimate and charming. And less than half the size of the current manse. The Dog Walk Index will be adjusted accordingly.

#63 TS Eliot on 11.26.12 at 2:16 am

“The dare-I-eat-a-peach blog. — Garth”

(a quick Google search later)

T S Eliot (1888-1965)

The Love Song of J Alfred Prufrock

… Full of high sentence, but a bit obtuse;
At times, indeed, almost ridiculous –
Almost, at times, the Fool.

Shall I part my hair behind? Do I dare eat a peach?
I shall wear white flannel trousers, and walk upon the beach.
I have heard the mermaids singing, each to each…

Personally, I would have referenced the more famous passage:

“I have measured out my life with coffee spoons”

This is a great blog. Always interesting, often helpful and frequently bizarre.


#64 Ulsterman on 11.26.12 at 2:18 am

Bast said: That is waaaay too pricey for the Alicante property, Garth. Check out http://www.kyero.com – there’s a 3-bedroom in Torrevieja for about $53,000….and so many more.

My sister bought a one bed apartment in Torrevieja about 10 years ago for 60k pounds. Never liked it much because it was in a new development near the salt ponds (Torrevieja’s original industry) and so you get plagued my mosquitoes.

Her purchase was made in the golden days of both the Northern Irish and Spanish property booms. Dinner party conversation centred around how many local investment properties you owned with interest-only mortgages, and where your Spanish property was located.

In the boom days here’s how many Brits got lured into the place-in-the-sun Spanish property market. A development company would hold a roadshow at a local hotel and have the artist’s impression and PowerPoint sales pitch going great guns. Interested parties could sign up and be given a heavily discounted 2-3 night trip to Torrevieja – say 100 pounds per person. If you subsequently bought you got the money back. That’s how my sister bought out there and i’m sure she’s lost money in the last 10 years.

Another reason she regretted the purchase was that she felt obliged to take her summer vacation there every year to justify the purchase. She’d have been better off just booking a vacation each year with a travel agent.

#65 daystar on 11.26.12 at 2:30 am

Is that a dryer or front load washer in the kitchen or is just me? Europeans :)

Excellent piece once again, Garth. Going international beyond the special snowbanks of North America where bubbles have gone bust, I like it.

I’ve thought about Spain myself in terms of RE investment (or any other form for that matter) and 3 things come to mind quickly when I look at Spain. Their economy is in a depression:


Unemployment there is now over 25% while 52% of the population under the age of 25 is unemployed. As most blog dogs know, Spain was so reliant on construction and real estate for GDP and jobs that once housing values turned south, where does the revenue come from? Spain, blinded by the greed that comes with a RE bubble wealth effect, became a one hit economic wonder. S

ome say Spain was already there before politicians and banks played the RE card. Their financial sector is a mess from back to earth RE valuations hitting home, hardly the substance that spurs investment from within which has to be a major part of their recovery but it’ll take years and a bottom for their financials to recover I would think at least, on the balance sheet unless changes to immigration laws can stop the bleeding and they’ve got a long way to go in terms of attracting foreign investment. Addressing labour laws and getting bailouts to ride it out is a lesser fraction of what needs to be done here.

A big problem for Spain, Portgual, Greece, Ireland or any Euro nation going through a RE correction is that they are a part of the Euro so what would normally happen with public and private credit issues and government fiscal spirals is a weaker currency that normally gives manufacturing and exports a big lift meaning more jobs. Spain doesn’t have that luxury of a currency adjustment so there is a great deal of excess pressure towards governments to come up with solutions and what can governments do really, besides change laws that tilt favor towards business (weaker labour laws, lower wage standards, I don’t like it but business doesn’t come in to break even), attract new immigrants with what they have going for them (excess real estate capacity mainly), spend money only where needed (exclude everything wanted), provide security (if a nation can’t do that, they are done) and ride it out?

They have to somehow convince multinationals to do business there and invest there without a devalued currency going for them so what can any good government do under this scenario besides what they are doing now?

Mariano Rajoy is expected to pass a law granting permanent Spanish residency to anyone who buys RE. Its a dramatic move for sure especially so because this is a right wing government, but when one considers the extent of housing inventory that is crippling their financial sector, isn’t paying property taxes or generating service jobs of any kind, what else can they do? Suck it up and learn to live with foreign accents at the grocery store like us special Canadians. Its drama, its needed drama, underscores the seriousness of the situation Spain is in and is by far and away the right choice for them to make, I believe. They need fresh consumers with pockets to energize their economy and this should help them bounce back much more quickly but its just a start.

I have a few thoughts on what Spain and all other Euro nations might try outside of changes to immigration laws.

1) Spain could pull a Sweden with education.

Currently, Swedish governments foot the bill for all post university education (much like Quebec does, to our apparent media spun dislike. Apparently secondary education is a privilege, not a right, at least, according to east/west, left/right and corporate ego conflicts). In fact, it wasn’t until 2010 that Sweden stopped footing the entire bill for foreign students (making up 8% of the student body). Can Spain do the same? They have room to take on this kind of expense if these numbers are correct:


… and its probably off the table if these numbers are accurate:


… but this is the ugliness of the internet in terms of validating information. One can look at both links and come up with a logical answer, “I don’t know” until one searches for themselves and who has time for a venture that might not return sucess? The truth isn’t always transparent as most know, for reasons good and bad. Still, Spain can attempt to budget for it upfront through the ECB specifically with spending committments in mind if the ECB was to go for it and put a good chunk of the 52% unemployed youth back in school so they don’t lose an entire generation to systemic unemployment with no evolution. It would help keep unemployed youth protesters off the streets, quiet the noise of the left and give Spain a big emotional lift of hope, something positive to talk about besides depressing depression until things turn around. Its the card as a Spanish politician I would most want to play.

2) Spain could pull a lefty military play with conscription hopefully partially funded by the EU.


Spain ended 9 month conscription in 2001 (with the same government now in power) but it wouldn’t hurt to revisit the concept. Unarmed 1 year consription would be the way to go I would think but it would have to have overwelming general support. I wouldn’t try it without funding or internal democratic support and normally would be dead against such ideas but 52% youth unemployment is devastating to their generation of youth. Thats way too much youth with life on semi-permanent pause. Their government should feel out their people on such an idea especially if security becomes a major issue and free secondary education can’t be done.

3) Infrastructure spending. Spain needs to look precisely at what the economy of the future needs with power, ports, railways, highways, what it will take to meet manufacturing capacity and invest public funds accordingly but most importantly, look at what it will take in terms of laws and incentives to fill factories without taxing human rights and the environment. In short, they need to rebuild without bridges to nowhere and this takes business guarantees which goes right back to changes in labour laws and immigration.

4) Transparency. Spanish governments need to broker deals with unions there with the causal effects of all the choices on the table and make it public, using the media if they have to in order to make their case. Higher wages and employment guarantees mean nothing without jobs and job creation. General strikes are the last thing Spain needs to heal. There needs to be a great deal of transparency now concerning the choices governments and unions have before them so the born communicators there really have to step up and outperform. They have to map out a detailed working plan, scrap the adversarial nature of the beast and take it to the masses.

As an investor, I would be concerned about three major issues:

1) Security. Any nation with unemployment this high can devolve quickly even if its modern so all eyes are on government competance.

2) Economic recovery. Again, all eyes are on government but there’s more to it. Their people have to be ready and hungry for it. High unemployment doesn’t always necessarily make it so.

3) Government competance. There has to be true leadership there. There’s no time for self interests, they need bright people with the right motives in the highest places and if Spain can’t offer this, I would stay away until things tilt geopolitically in favor of Spain and on that note, all eyes should be on this man:


and his party:


and for the most part, their record:

… which should speak for itself but one never knows.

#66 El Cid on 11.26.12 at 2:33 am

To Canadian Watchdog (#47):
The re-election in Catalonia of Mr. Mas, with 50 seats less than in the previous government, is a blow to the separatits, not a victory.

To periwinkles (#15):
You may speak English in Spain almost in any city around the mediterranean. There are already thousands of europeans living permanently in these parts. Ina lighter note, the ocean seems to be quite narrow if you consider that St.John (New Foundland) is about 1000 Km closer to Madrid (Spain) than to Vancouver (BC). Quite a surprise eh!

To Jo (#18)
With all due respect (madam?), your ignorance of the Spanish behaviour (pardon for using the English spelling but it’s out of respect for my many briton friends) in respecto to non-national residents is not even funny. If you are ready to learn the truth please come to the bull’s hide and I will gladly entrhall you while enjoying a delicious paella and drowning in wondrous wine (no the cheap imitations you are allowed to “enjoy” in the Canadian kingdom.

By the way. I’m Canadian. Just in case.

Garth, your “pathetic blog” is one of the best entertainments for Canucks abroad, mostly due to the stark constrast between your witty entries and the ignorance and daringness of most conmments.

If you go to Burgos, ask for my moniker. The wine is on me.

#67 T.C. on 11.26.12 at 2:35 am

Spain is not a “semi-tropical country.” It is a Mediterranean country.

And if you already have a passport from an E.U. country, who needs a residency approval from that country’s government?

#68 Waterloo Resident on 11.26.12 at 2:45 am

WOW, $45,000 PER YEAR for an ACCOUNTANT !
That’s what I call raking it in big time !!!!

Here’s the ad; get it while its hot:


You know; if jobs like this are paying that much, then maybe houses are not that overpriced? Because that’s a good wage, and it can easily buy a $1 Million dollar home if both the husband and wife are both earning the same, so really, what’s all the worry about?

#69 new canadian on 11.26.12 at 2:49 am

#6 Gary M
As G pointed, if you don’t worry about “getting a job”. Life will be cheaper there, too. They usually eat local grown stuff, not imports.

#70 Canuck Abroad on 11.26.12 at 3:14 am

42 Risk Analyst – 15 Viking Lane is way out at Kipling? You should be able to do much better than that. Here is just one that took about 15 seconds.


1000 sq ft 2-bedrooms for $1550 or 1250 sq ft 3-bedrooms for $1850. Much much closer to work. Right in Forest Hill. Not sure why you are having so much trouble, there are tons of places available. In fact I am shocked at the sudden surge in supply. Have you tried http://www.viewit.ca?

If you want more space definitely consider an older building. New builds are too small for anyone to actually live in.

#71 Canuck Abroad on 11.26.12 at 3:57 am

42 Risk Analyst, if you prefer something new with amenities there is a brand new building on Queen West with 1 beds for $1375 up to 3 beds at $2400. Units all have dishwashers. Amenities etc. Quick streetcar to office. Of course, a bit smaller than older buildings.



#72 Tim on 11.26.12 at 4:16 am

You forgot to mention, beautiful architecture, beautiful and friendly women, cheap wine, and fresh food, five hours to Paris by train…

#73 Picasso on 11.26.12 at 5:31 am

#55 Pauly on 11.25.12 at 11:55 pm
Why don’t you put your money where your mouth is and buy a property in Spain?

Then I wouldn’t be able to irritate you. — Garth

I irritate this board from another country

#74 new-era on 11.26.12 at 6:03 am

I too can run the country if I can run up the Debt and print money


But when the music stops.Bammmmm

I can’t believe people are actually buying houses the the past several weeks

#75 Longterm on 11.26.12 at 6:12 am

I’ve been living in London (UK) for the past 10 years after getting out of Vancouver. I’ve been to Spain many times. The country is fantasic. Avoid some of the Med coast, which is filled with condo towers that are empty or owned by north Europeans, and the country is a paradise. Excellent wine that is never exported is 3 euros a bottle, all the olives, tomatoes, chorizo and fresh veg and oranges you could want. An amazing language, passionate people, fantastic architecture and unlimited sun. All you need are some basic language skills that you can improve in-country and either a large enough investment fund to throw off $1500-2000 a month or work you can do over the internet and you have pretty much entered paradise. Those of us with EU passports – and there are many in Canada with British, Irish, Italian, French or German passports or who are eligible but don’t know it – and you don’t need to worry about residency, much healthcare or paperwork. Just step off a plane and start living. If you fancy an large English city and some ale, London is 1.5 hours and £50 away. Alternatively you could live in Edmonton or Saskatoon where everyone in the world wants to live.

#76 Longterm on 11.26.12 at 6:18 am

With no hockey on in Canada to divert the mind, if you are bored and want to indulge your Spanish fantasy, here is a website that aggregates the listings of 1500 Spanish estate agents.


Be careful though, kyero is phonetic for ‘quiero’ en Espanol. You might find yourself calling Remax to list your inflated Winnipeg house the moment the temperature drops to -30C.

#77 Longterm on 11.26.12 at 6:22 am

Now I’m tempted:


25,000 euros asking. Score it for 20k, and you could probably do it up nicely for 30k more. How much would that leave from selling your Burnaby or Cowtown digs to invest?

#78 Buy? Curious? on 11.26.12 at 7:12 am

Garth, can’t say too much right now. I’m doing a little Smoking Man montage using his best lines and clips from Nicolas Cage movies. I should have it done soon.

What I do want to say is that people act in a herd mentality. They’re passive and docile, especially in Canada. What will happen is that with whatever real estate correction occurs, a few will be sacrificed for the greater good of everyone else. Usually, the old, the sick and the stupid will be the ones to go first. They’ll share their stories of misery and we’ll fein sympathy secretly thankful it’s someone else and not us. I already know of two couples that are going through the first phases of financial hardships. I’d love to help them but I can’t lend them money and any advice I give makes them feel stupid.


#79 House Horny Housewife on 11.26.12 at 8:12 am


I hope with this story you are simply displaying how desperate certain countries have become for new investment into their economies. I hope you are not actually suggesting that it would be a good idea to purchase such a property and get into this situation simply because it is cheap to buy.

There are many other luxury properties all over the world that are just as, if not cheaper, than this .. the Philippines, Mexico etc.. Not only that, you can also have very cheap labour working for you full time to take care of the place in these countries (unlike Spain).

Why is residency so important ? Residents pay taxes so of course they want new residents .. If residency is the plus here, just marry a European and get dual citizenship. Then residency will be as easy as moving in and staying there for the required time. Of course if you are a resident there, I doubt you will be a resident here so, as someone has mentioned, you will pay non resident taxes here and resident taxes over there. Not necessarily a plus.

Not to mention the language and culture are not the same as ours so there would be a long acclimatization period which may end with your wanting to come right back here. Believe me I know because my own parents returned to their homeland after 25 years of absence only to discover that the way they do things in the mediterranean is no longer for them (you often have to know someone in a government department or know someone who knows someone etc..).

We have certain controls and conveniences that we take for granted that don’t exist elsewhere.

Not to mention the civil unrest that many have outlined. Having to leave your paradise and throwing away that $200K because the country is in chaos is not how many people want to spend their retirement I should think.

Yeah the fact that this place is being offered to foreigners for a fraction of its cost is pertinent to Spain’s situation and yeah the fact that the government is also sweetening the pot by offering residency to anyone who buys in is also pertinent. But for heaven’s sake this is a bait situation if I ever saw one and anyone who is a big enough sucker to buy in will become embroiled in a situation that may not be easy to get out of without losing some serious cash.

That saying that if it looks too good to be true then it probably is is what comes to mind here.

On the other hand, if you want to take a two week vacation there and would consider renting a luxurious villa, I am sure it would be dirt cheap.


#80 Canuck Abroad on 11.26.12 at 8:16 am

76 Lonterm, I agree Spain is fantastic. It is a great base from which you can see the rest of Europe too, either by train (super network all over Europe) or cheap flights. Morocco is a quick ferry ride away. The weather is great and its easy to pick up enough spanish to get by.

Re the unemployment and political uncertainty, these things will work themselves out. Might be tough for a couple of years but this is probably an ideal time to buy, when everyone else is freaking out about the sky falling.

#81 Canuck Abroad on 11.26.12 at 8:20 am

Daystar, front load washer. Every place I have lived over here has had a clothes washer in the kitchen. No need for a tumble dryer in Spanish heat, just hang it up and save the planet.

#82 GTA Girl on 11.26.12 at 8:37 am

The EU passport/citizenship is worth the cost.

Keeping options open for the future would be wise. If you are set up well financially for the future, yet not a rich person, a warm sunny place is of interest.

The health benefits of active lifestyle in a warm climate. Access to health facilities in parts of Europe, which are better than Canada.

Being aged in Canada in February can be a death sentence.

#83 jerry on 11.26.12 at 8:38 am

Feds increasing TFSA contribution room to $5500 next year.

The official announcement will come today. — Garth

#84 GTA Girl on 11.26.12 at 8:39 am

Spain is semi tropical. Barcelona and the north are friggin cold in the winter.

#85 Victor V on 11.26.12 at 8:40 am


Purchasers of hotel-condos in Toronto’s Trump International Hotel & Tower are asking the Ontario Securities Commission for “immediate action” and a formal investigation into the ill-fated downtown project.

The OSC is seen as the final hope for panicked buyers who failed in their bid Friday to convince the courts to intervene and appoint an inspector to review financial dealings at the deluxe project.

Buyers of 256 hotel-condo units have until Nov. 29 to hand over final payments of a half-million dollars or more to developer Talon International Inc., or risk being in violation of deals penned up to seven years ago.

Talon has already launched lawsuits in Newmarket Superior Court against seven investors who’ve sought to get out of deals based on what they claim is a “material change” under Ontario’s Condominium Act — maintenance fees and taxes that have turned out to be some 30 to 50 per cent higher than Talon estimated when the units were sold.

Four buyers lost their bid Friday to have the courts intervene, as an investor revolt mounts that could undermine the glitzy project.

Some buyers of the unique hotel-condo units have found themselves in dire straits. They have been racking up losses of about $175 a day on hotel-condo suites where maintenance fees and taxes are by far outstripping hotel revenues. Meanwhile, they have been unable to get mortgages to close their deals from banks that consider the units more commercial than residential.


There will be more tears on Nov. 29.

#86 Sir Finance on 11.26.12 at 9:25 am

With the lack of savings and inflated housing prices, could you ever see the Gov’t making changes to or getting rid of the Home Buyers Plan?

Unlikely. The additional blow to home sales would be fatal. — Garth

#87 pbrasseur on 11.26.12 at 9:42 am

Big difference between Canada and Spain is they don’t have their own currency, they can’t print, can’t devaluate (same problem in other PIIGS nations)

That is what transformed a severe recession into an all out depression, which is getting worse and might even breakup that country…

In other words, we’ll suffer and become poorer, there are now ways around that, but nothing like Spain.

#88 live within your means on 11.26.12 at 9:43 am

In 1976 a sis, friend & I went to Portugal & Spain. Just outside of Seville during rush hour (slow traffic) two young guys on a small motorcycle drove on the shoulder beside us. Friend was in the front passenger seat with the window down – 1st time on our trip. Guy on the back of the cycle reached in and grabbed my purse which was between us. Knowing there must be more purses, a few minutes later he threw a rock through the back passenger window, just missing my sis. I tried to pursue them but they sped away quickly & turned off onto a side road.

Car in front of us pulled over & motioned for us to stop. They saw what happened. Luckily they also spoke French. He was a lawyer & asked us to follow them so we could report it to the police. We had to stay outside for about an hour until the cops had time to take our report. He took the car to a garage & had the window replaced. We went back to their gated house. They doubted anything would be done as there were so many similar incidents. Warned us not to leave anything visible in the car.

We had to return to Madrid the following day to get my passport replaced, etc., etc. While at the Canadian Embassy we spoke to a Spanish businessman who told us many horror stories of tourists getting ripped off. Also advised us not to wear any jewelry, not even a ring.

With the high unemployment rate in Spain I wouldn’t be surprised if the crime rate hasn’t markedly increased. No desire to ever return to Spain.

#89 Herb on 11.26.12 at 9:54 am

#64 TS Eliot,

and here are my favourite lines in all of of your poetry:

When lovely woman stoops to folly and
Paces about her room again, alone,
She smooths her hair with automatic hand,
And puts a record on the gramaphone.

Now why does that remind me of Beach Girl?

#90 Herb on 11.26.12 at 9:57 am

“… in all of of your poetry:”

#91 Stickler on 11.26.12 at 10:18 am

Nice, but residency is not citizenship…residency does not get you a passport.

Duh. — Garth

#92 The real Kip on 11.26.12 at 10:28 am

“The temp is usually around 20 or better, but it does dip to an average of 12 in January”

Sounds like bad snowmobile weather to me not to mention ice fishing, skiing and hockey. No wonder they can’t give it away.

#93 Beach Girl on 11.26.12 at 10:29 am

Well, I have a Euro passport. The only country I would consider is India. I am Anglo. I heard Goa was wonderful and the beach fantastic, as I am in for beaches. I love Indian cuisine. A friend said I could live large there. Been to Spain, it’s okay, not great. Live sex shows. Been all over Europe. I would never buy, just rent. Possessions own you. Though I own a few in GTA.

No health issues now, but will Canada dump me. I heard Mike Jagger and the likes go there. Anyone with info. Thanks.

#94 :) :( Ying Yank on 11.26.12 at 10:33 am

The Best Exotic Marigold Hotel!
The sounds awfully familiar? Thousands of Despot Britons looking for the perfect climate and retirement within their means purchased properties in Eastern bloc countries on the Med over the last 15 years. Who wants to retire in Croatia, Serbia or Albania.

#95 Beach Girl on 11.26.12 at 10:41 am

#90 Herb

What a gentleman. The Beach Girl.

#96 Gunboat denier on 11.26.12 at 11:06 am

69 Waterloo – the work tasks required in that ad are no different than my nice lady at the front desk with only high school and a couple of courses. She just nips at the bottom end of the listed wage. It is not for an accountant.

#97 C on 11.26.12 at 11:11 am

Garth, do you see Canadian Residential REITs holding value through a real estate correction?

Yes. REITs don’t buy houses. — Garth

#98 CalgaryRocks on 11.26.12 at 11:22 am

#57 squidly77 on 11.26.12 at 12:22 am
Black Fridays sales disappointed and I suspect so will Cyber Monday Sales, combine this with the looming U.S. fiscal cliff and its easy to spot.

Record sales this year actually.

#99 Canadian Watchdog on 11.26.12 at 11:34 am


Here is the story. — Garth

#100 Toronto_CA on 11.26.12 at 11:43 am

Did not “C” that announcement about Carney.

Garth, thoughts!?

We are colonizing. — Garth

#101 armpit on 11.26.12 at 11:47 am

Mark Carney will be leaving to be the next Bank of England Governor…..what are you doing next year, Garth?

#102 IM in C on 11.26.12 at 11:48 am

Gaarth: What will be the effect on prefered shares with the potential rise in interest rates next quarter

Unlikely that soon. A quarter point jump will have virtually no effect on capital values and zero effect on yield. Worry about mortgages instead. — Garth

#103 Franke le Skank on 11.26.12 at 11:48 am

#66 daystar on 11.26.12 at 2:30 am
I haven’t done in dept research on Spain’s situation other than reading news articles but it sounds like you’re analysis is accurate. Spain reminds me a lot of Canada in certain ways. A large portion of our GDP is due to the housing boom we are experiencing. A lot of condo’s and houses are being built, and this creates a lot of jobs with a trickle down effect to other industries like such as financial, lumber and so on.

I’m not certain what the employment numbers in Canada are for specific age demographics but most of the youth I know are either unemployed, working a shity part time job or can’t find anything. I currently work for the biggest telco in Canada and I can tell you that new employees in the future will be making 40% less than current employees after the new contract is negotiated. New employees will probably be doing twice as much work for half the pay, should be good turn over once they realize McPukes pays the same. Read the paper and every second article is about another corporation cutting pay and/or jobs.

I believe that this housing correction will take a lot of people by surprise and it will be comparable to the US housing crash, but with a different flavour.

#104 Gord In Vancouver on 11.26.12 at 11:51 am

Carney picked to lead Bank of England; first foreign head

Translation – he didn’t want to be here WHEN interest rates have to be raised.


F’s announcement. — Garth

#105 Canadian Watchdog on 11.26.12 at 11:55 am


#106 Djb on 11.26.12 at 11:58 am

If Carney does a good job across the pond I wonder if he will become Sir Carney in 5 years?

#107 Click Here, its different on 11.26.12 at 12:11 pm

Mark Carney is gone.

Hey Garth, thats a great opportunity for you. Ever concider to apply on the job ?

#108 IM in C on 11.26.12 at 12:12 pm


Remember, Spain is Spain. Government services and efficiencies we take for granted here, aren’t going to be found there. Do your research. The article is one of a plethora of horror stories by expats.

That’s what happen when you buy property – anywhere – without proper legal representation. BTW, the story is three years old. — Garth

#109 Buy? Curious? on 11.26.12 at 12:19 pm

Garth, I just watched the press conference with Mark Carney and you weren’t even mentioned once! Does that mean you won’t be sending him a congratulations card?

On a side note, I’m just finishing my Smoking Man tribute video. I’m trying to chose the right song for the soundtrack. Does anyone have any suggestions?

#110 Canadian Watchdog on 11.26.12 at 12:22 pm

Official statement: Link

Bank of Canada Governor Mark Carney Appointed Governor of the Bank of England

Ottawa – The Bank of Canada announced that Her Majesty the Queen has approved the appointment of Mark Carney as Governor of the Bank of England effective 1 July 2013. He will serve a five-year term.

Governor Carney will continue to serve in his current position until 1 June to ensure a smooth transition to the next Governor of the Bank of Canada. The Governor will remain Chair of the Financial Stability Board.

Governor Carney said:

“I am honoured to accept this important and demanding role, and to succeed Sir Mervyn King with whom I have worked closely over these past five years and from whom I learned so much.

This is a critical time for the British, European and global economies; a decisive period for reform of the global financial system including its leading financial centre, the City of London; and a crucial point in the Bank of England’s history as it accepts vital new responsibilities.”

“It has been a privilege to serve as the eighth Governor of the Bank of Canada. I am proud of the Bank’s contribution to the resilience of the Canadian economy throughout an unprecedented period of global turmoil. The Bank is helping to lead the reform of the global financial system. It is introducing the most sophisticated currency in the world. And as the Government of Canada’s fiscal agent, it is providing funds management and banking services with the highest reliability and resiliency.”

“Canadians can be confident that such leadership will continue. The depth and quality of its human resources, the dedication of its employees and the clarity of its strategic vision will ensure that the Bank will continue to promote the economic and financial welfare of all Canadians.”

“I would like to thank the Board of Directors of the Bank of Canada, Minister Flaherty and Prime Minister Harper for having given me this opportunity to serve Canada. I have done so to the best of my abilities and am humbled by the support I have received from both my colleagues at the Bank and from Canadians across this great country.”

The Board of Directors will shortly form a Special Committee comprised of independent directors whose mandate will be to undertake a recruitment process for the selection of the next Governor. Governors of the Bank of Canada are appointed by the independent directors, subject to the approval of the Minister of Finance and the federal Cabinet.


Ed Clark next? Could be.

#111 Uwinsome on 11.26.12 at 12:30 pm

Now Gary Soper from Royal Lepage says that tougher mortgage rules were necessary and are not responsible for the real estate slow down:


#112 MJG on 11.26.12 at 12:31 pm

Ok, sell here and move to Spain (or maybe Latvia) and do what? Veg on a beach? Do this after 60 and you are dead in less than five years sucker. Better to stay here near family and other roots, work hard, live long and prosper (to steal a Vulcan quote).

#113 Grim Reaper/Crypt Speculator on 11.26.12 at 12:33 pm

We are colonizing. — Garth

Oh no….. don’t get Dr Wanker going

#114 Uwinsome on 11.26.12 at 12:34 pm

Gary Soper (Royal Lepage) also thinks that chances of tougher mortgage regulations being reversed are ZERO.

#115 IM in C on 11.26.12 at 12:37 pm

What is your take /opinion on Alex Doulis book “Take Your Money and Run”?

Not much. — Garth

#116 TRT on 11.26.12 at 12:45 pm

Shouldn’t C be immediately removed from office? It’s a conflict of interest now. He will position Canada so it can be taken advantage of by England. Watch our currency pairs going forward.

#117 Ralph Cramdown on 11.26.12 at 12:48 pm

Breaking: Rob Ford appointed to replace Mark Carney.

#118 OkanaganInvestor on 11.26.12 at 12:57 pm

What will Moody’s downgrade do to bank preferred shares?

“Moody’s has threatened to downgrade six of Canada’s major banks. The credit rating agency has expressed concern with ballooning consumer debt in Canada as well as the spike in house prices in recent years.

Critics observe that if Canada nationalized its abundant resources, it’s wealth could be redistributed to working class Canadians. This, they say, would reduce the amount of debt accrued by Canadians and would increase the number of people who own their homes outright.

The Harper government claims it is creating a strong economy in Canada. However critics suggest that they are overly concerned with helping the well-heeled in Canadian society to the detriment of ordinary Canadians.

Analysts note that the Harper government, for ideological reasons, is opposed to working class Canadians unionizing to fight for a fair wage. This, such analyst note, has prevented many wages from rising with inflation, which in turn, has led many Canadians to have to turn to loans in order to survive in Canada’s increasingly rapacious capitalist economy.”


Nothing, of course. — Garth

#119 Patiently Waiting on 11.26.12 at 1:05 pm

#105Gord In Vancouver on 11.26.12 at 11:51 am
Carney picked to lead Bank of England; first foreign head

Translation – he didn’t want to be here WHEN interest rates have to be raised.


F’s announcement. — Garth

If this isn’t the clearest signal yet that the housing market is about to go down I don’t what is. Carney is obviously jumping ship before the sh_t hits the fan. Leaving someone else to clean up the mess that was created because there is no way out at this point . . .


#120 Uwinsome on 11.26.12 at 1:06 pm

Garth, does the $500 TFSA increase just impact the contribution for 2013, or can you retroactively boost the prior 4 years by $500 each?

Probably a stupid question.

You know the answer. — Garth

#121 The end is nigh on 11.26.12 at 1:25 pm

Re Purchasing Passport.
In the investors category, you and your family become Canadians after 3 years, the deposit will be returned after 5 years.
I personally know two of these cases here in Richmond.

Do you disagree with immigrants? Or just wealthy ones?– Garth

#122 T.O. Bubble Boy on 11.26.12 at 1:34 pm

How can we nominate Garth to be BOC Governor? I’m sure his buddies F and H would love to see him back in town!

#123 T.O. Bubble Boy on 11.26.12 at 1:36 pm

@ #118 Ralph Cramdown on 11.26.12 at 12:48 pm

Breaking: Rob Ford appointed to replace Mark Carney.

You just made me spit coffee… nicely done.

#124 Canadian Watchdog on 11.26.12 at 1:36 pm

A few reasons why TD's Ed Clark could be heading the BoC next.

Past Governors:

Gordon Thiessen (1994 – 2001)
Thiessen studied economics at the University of Saskatchewan[1] and received an Honours BA in 1960 and a MA in 1961. He taught economics for a year and then joined the Bank of Canada in 1963. From 1965 to 1967 he attended the London School of Economics, from which he received his Ph.D in Economics in 1972.

David A. Dodge (2001 – 2008)
He attended Ridley College, a private boarding school in St. Catharines (and second alumnus to become Bank Governor), and graduated from Queen's University with an honours degree in economics. He received his Ph.D in economics in 1972 from Princeton University.

Mark Carney (2008 – present)
Carney completed a bachelor's degree in economics from Harvard in 1988. He later attended Nuffield College, Oxford, where he received a master's in economics in 1993 and a doctorate in economics in 1995.[5]


W. Edmund Clark
"Ed graduated from the University of Toronto in 1969 with a Bachelor of Arts degree. He earned his Master’s degree and Doctorate in economics from Harvard University in 1971 and 1974 respectively. Ed has also received honorary degrees from Mount Allison University and Queen’s University."

And lastly, you have to be on this list every year.

#125 tkid on 11.26.12 at 1:46 pm

Ford is out. And Toronto will be the next Detroit. Too much infrastructure needs fixing/replacing with a budget stretched too tight as it is.

Look for the TCC to shut the subway down as being too expensive to maintain in the next decade.

I won’t buy in the GTA. I like Spain a great deal better, and as a British (and Canadian) citizen, I don’t need to purchase $200,000 villas. Give me a nice 2 bed place in the sun with a nearby orange tree and I’ll be content!

#126 Old Man on 11.26.12 at 1:50 pm

I would not be surprised in the least if F was appointed to the Bank of Canada, as Caesar needs to quickly get him off the books, so he can bring in a new puppet.

#127 Humpty Dumpty on 11.26.12 at 2:11 pm

Will Carney become Luke Skywalker or Dark Vader….

Max Keiser and Stacy Herbert ask, “who knows what evil lurks in the heart of the global financial system?” And find the answer is that “the Shadow banking system knows!” The shadow banking system has grown to $67 trillion


#128 Lucky 3 on 11.26.12 at 2:13 pm

Oh, Spain
Just returned from a 2 weeks vacation (Madrid)
Fabulous, good food,good vine friendly people,oh and quite a selection of prosciutto.
Gluten free products as far as you can see, and the best, endless variety of gluten free ice cream. Here in Canada only one Chapmans variety.
Any way we were impressed.
RE. One cousin of mine bought a 2 bed unit in Madrid back in 2005, he paid 250.000 , guess how much is worth now? max 120.000. He managed to close up the business (construction) and he lost 3 vehicles and one villa under construction in the last 3 years.He struggles to survive with no end in site.
Personally I am playing with the idea to retire and move to Spain but I still have two decades to go until retirement. Work,work work this is the best we can do, for now.

#129 Victor V on 11.26.12 at 2:19 pm

UPDATE: Trump investors get a 2 week extension on their closing date.


#130 Seriously? on 11.26.12 at 2:23 pm


The countdown is now official.

Canada craters in August 2013.

Abandon ship. This is not a drill.


#131 Herb on 11.26.12 at 2:26 pm

Captain Carney, “Go on board! Coordinate the rescue from aboard the ship!”


#132 TRT on 11.26.12 at 2:27 pm

Just don’t buy in Egypt!

Can these people make up their mind?? or Just camp out in Tahrir Square every few months for the downfall of the gov in power.

IMO, unfortunately, I think this area of the world is best served by dictatorships as democracies just do not seem to be able to hold..too much corruption inherent in that society.

#133 TRT on 11.26.12 at 2:31 pm

Carney’s moves are very telling.

He looks out for himself first, Canada second. He says he only had a year and a half left here so he decided to make a move. I say so what? Resign. Lets have a Canadian Citizen run Canada, NOT a British Citizen!

#134 squidly77 on 11.26.12 at 2:41 pm

Black Friday traffic up, but sales down.

#135 Davey Boy on 11.26.12 at 2:43 pm

Buy? Curious?

“Smoking in the Boy’s Room” might be appropriate seeing how he wasn’t much for school or rules. ;)

#136 Old Man on 11.26.12 at 2:47 pm

Now if one goes back in time, it is so clear the fix was in many months ago for his appointment in England; not to mention all the other appointments to the highest world financial institutions. Lest we never forget he denied all, so did he lie on the record to all the citizens in Canada? I will let you to be the judge.

#137 Derek R on 11.26.12 at 2:54 pm

#134 TRT on 11.26.12 at 2:31 pm wrote:
Lets have a Canadian Citizen run Canada, NOT a British Citizen!

Eh?? Carney was born in the Northwest Territories and brought up in Edmonton. How much more Canadian can someone get? You want the Doug McKenzie running the BoC?

#138 smartalox on 11.26.12 at 2:59 pm

So what’s the consensus on Carney? Did he jump, or was he pushed? My $0.02 is that he got tired of trying to reconcile the gap between what he saw in Canada’s economic future, and what F was telling him to see. I hear the No. 2 at the BoC, Tiff Macklem’s view of Canada’s prospects is MUCH more in line with F’s version of reality.

Definitely not pushed. — Garth

#139 daystar on 11.26.12 at 3:02 pm

#82 Canuck Abroad on 11.26.12 at 8:20 am

Sweet! In the kitchen though, lol. When I think about it more, its a space saver to put it there. I just knocked a laundry room wall down in a house to make a bigger kitchen. It bought me an extra 70 sq ft or so aside from the 13 sq ft a washer and dryer take up and changed the look (and value) of the digs. Its all in apps and needs I guess.


#140 Canadian Watchdog on 11.26.12 at 3:13 pm

#139 smartalox

So what’s the consensus on Carney? Did he jump, or was he pushed?

When one is offered a position to be the Queen’s financial bitch, they accept it with prestige.

#141 Skiffy on 11.26.12 at 3:33 pm

Yay its official!

On another note, if housing prices do go down over the coming months years, how long do you think until rent follows?

#142 Old Man on 11.26.12 at 3:35 pm

#139 smartalox – let me take you through a walk in time when F told all we will not touch Investment Trusts. There was this man called Mark Carney that worked in the Department of Finance, and changed the formula to rip off all Canadians for about $34 billion in losses to exempt Goldman Sachs; the banks; and a few other institutions. So who was the real boss man giving F the orders? F turned around weeks later, and changed his mind – why?

#143 Ralph Cramdown on 11.26.12 at 3:41 pm

Did he jump, or was he pushed?

Good lord, man, he’s moving to be the head of the Bank of England (you know, the 5th largest independent currency in the world?) not of the Bank of Pikangikum.

He was offered a ladder, and he climbed up it.

#144 Canadian Watchdog on 11.26.12 at 3:41 pm

Looks like Mark Carney’s wife didn’t want to stay in Canada.

Could Australia’s ‘Asian Century’ be Canada’s too?

By Diana Carney

“I am British by birth and Canadian by choice. While I have a healthy respect for the Commonwealth, I have never aspired to go beyond my two nationalities — until this week. Now I want to be Australian.”

#145 Shea on 11.26.12 at 3:52 pm

Who will benefit…?

Is this how most Canadians really feels about the TFSA? I have never felt rich in my life, but apparently we must be a 1 percenters because we max out our TFSA.

#146 Deb on 11.26.12 at 3:57 pm

Regarding the news on the TFSA – an increase to $5,500 as the contribution limit on January 1, 2013 – I am pleased to see that the indexation promise has been kept. I recall that when I raised the possibility of the TFSA increase two months ago, the most memorable response was “Don’t count on it.”

#147 ronthecivil on 11.26.12 at 4:14 pm

“On a side note, I’m just finishing my Smoking Man tribute video. I’m trying to chose the right song for the soundtrack. Does anyone have any suggestions?”

Isn’t there some song by the odds or someone of that ilk about lying?

Something with a lieing theme….

#148 Shane on 11.26.12 at 4:17 pm

Garth, your buddy is leaving what next?

#149 Old Man on 11.26.12 at 4:37 pm

#145 Canadian Watchdog – Diana is a real beauty, as is every man’s dream of a wife, but for me will take a pass, as is no trophy wife. I prefer a good looking woman that wants to camp and go fishing, and if she has a love for dogs she is all mine.

#150 Mike on 11.26.12 at 4:40 pm

Nice post Mr Turner.

RE: Carney

just another Goldman appointee inside the shadow banking world

now they have all of Europe

it has got to be pointed out the lengths the MSM is going to to make sure you know he is CANADIAN, that he is not tarnished by the bailout nonsense etc etc

no mention of his previous work at Goldman

#151 new canadian on 11.26.12 at 5:04 pm

Looks Spain idea bothered some delusional Canadians. Well it is “insecure”, “social unrest” and “unlike Canadians, they are mobilized people”.
So I see that Spain or probably any warm country is dangerous and not safe but Canada is! Like Mexico is too dangerous, people shoot each other like they do at Eaton Mall and Scarborough.
I recommend you don’t mobilize and stay at home all winter and read some books about defence mechanisms.

#152 Johnny Boy on 11.26.12 at 5:28 pm

Now that Smoking man and Buy? Curious? are not workin the pages we can talk about our Glorious Ex Mayor Mr Ford.

#153 Canadian Watchdog on 11.26.12 at 5:45 pm

#150 Old Man

She’s an interesting woman indeed.

New Bank of England Governor Mark Carney’s wife: an eco-warrior who says banks are rotten Link

The British wife of the new Bank of England Governor is a strident environmental activist who urges people to spend less money on possessions, and once declared: “Having more stuff does not make us happy.

Mrs Carney also urges readers of her website to live frugally. Describing herself as a “farmer’s daughter” she wears recycled vegan shoes, describes environmentally-friendly ways to tackle head lice and recommends “gardening with cow poo”. “Reducing consumption, or returning it to levels that are sustainable, is critical overall,” she wrote online.

What a dynamic couple.

#154 Bill Gable on 11.26.12 at 6:01 pm

Mr. Turner for Bank of Canada head – stat!

Oh, well, I can dream, can’t I?

#155 Herb on 11.26.12 at 6:19 pm

#150 Old Man,

s’alright. Mark is beautiful enough for both of them.

#156 Linda Pearson on 11.26.12 at 6:21 pm

#148ronthecivil on 11.26.12 at 4:14 pm

How about “Your Cheatin’ Heart”? That one would just about cover most of Smoking Man’s lies and chicanery, not to mention all the hookers, real or imagined.

#157 TRT on 11.26.12 at 6:40 pm

Clowns at ICBC running their own identity scheme with the Enhanced Drivers Licence…to get in an out of the country.

Citizen and Immigration Canada (CIC) running their own Canadian Passport/Canadian Citizenship Cert. identitiy documents.

Now they realize the potential for double dip fraud of multiple entries under one person…

Immediate holds placed as per their website! Lets see if anyone is fired at ICBC. Not likey.


#158 Smoking Man on 11.26.12 at 7:09 pm

So tempting to weigh in………………………

#159 Old Man on 11.26.12 at 7:11 pm

#154 Canadian Watchdog – in life do not be fooled into an illusion, as this woman is more than meets the eye, as she fools me not, and with me life is simple, as need not a beauty, but a woman with common interests for a coffee nightly to discuss world events who smiles and says now what? I will say lets go to some small town auction sale to hoop some bargains, and after the great event we will go to the nearest local restaurant for a late night bite to eat to mingle with some good folks, as we may have money in life, but forget this all, as we are all the same.

#160 daystar on 11.26.12 at 7:16 pm

#104 Franke le Skank on 11.26.12 at 11:48 am

Agreed. When you participate with as much volume as I have, you are bound to have some stinkers (I have regrets :) but I’ve been historically strong with Spain. Its like the product of any other scribe, the more you research and familiarize, the stronger your material becomes and there are two ways of going about it that stand out to me. One is to have a hypothesis or better yet, a theory and research with a bias to prove it with whatever searches and intel you can. In other words, take an educated guess and try to prove yourself right through research if you can. The other is far more scientific, causal effectual, observational, experimental, i.e. take the results as they come without bias interpretation or let the facts do the talking and connect the dots from there. One path is the quick route but can lead you astray while the other is the long route, exhausting, but is most likely to lead you to the unbiased truth.

Too often in this site (mind you, its better than it ever used to be) I’ve seen people challenge Garth’s knowledge with what they think they know instead of what they truly know… y’know? There’s a difference between thinking and knowing is what I’m trying to say and the all to often pattern I see is from those who think they know what they are talking about and challenge Garth with their guesses and assumptions often lacking the manners and experience to do so. Such novice challengers don’t provide links or some sort of path that allows the reader to know where they get their conclusions precisely because they haven’t researched their assumptions and most of all, they ignore a critical sequence or procedure that must be followed before you can even get to a position of challenging authority, something I’ve learned along the way through researching religious texts and that simply is this:

We can question authority all we want, its how we learn, its how we evolve from thinking to knowing (good luck getting rapid fire answers back, but we can question all we like). There are silly questions but for the most part, there is no such thing as a foolish question because the process reminds us of one of our ultimate goals of enlightenment which is to learn and from infancy to elder respect the process and time is finite so.. rethink it, ask the right questions and do the research before you even get to that point because thats the only way we’ll ever find the right answers is to ask the right questions and if one wishes to be treated in kind in this world, it goes a long, long way to be polite.

Another universal goal for the enlightened is peace through harmony and if we aren’t about that, we’ll find conflict without question and where does going blind with assumptions into picking a fight, asking all the wrong questions and disrepecting all the natural born leaders get you? Its a question that answers itself but for those who lack the imaginations of a best selling scribe, it gets you the status of “the greater fool”.

Challenging authority is another matter. One should never challenge authority unless the challenger “knows” the authority is not only wrong, but will never get it right due to the enlightenment traps I speak of and then some and again, thats what I see far too often from so called “challengers” on this site. They don’t know what they are talking about, they only think they know, motivated by individualistic egotistical ideals that breed conflict over holistic ideals that breed harmony and as such, are blinded to how “stunted” their life’s journey has become until an alpha comes along… a wolf playing among domestics, teaching them the ways of nature and social graces through putting them in their place by using their own words and goals against them, warning them occasionally bluntly, “fire isn’t for pups, its for adults, go play with water for a while and learn to piss with the pups lest you get burned”.

The scraps are good here, the meat is “fresh” :) and the social graces entertaining ;) . We have a good master but nature is nature and we do need to learn how to hunt as a pack. We learn this much… and a visionaries dreams become fulfilled.

But I digress.

Your assessment:

– A large portion of our GDP is due to the housing boom we are experiencing.

CMHC bragged on their website a year ago that its a shade over 20% in Canada. When one compares and contrasts this number with the rest of the world, its extreme. Not as extreme as Spain was, but extreme none the less and the adjustment back to the norm will not be painless.

– Read the paper and every second article is about another corporation cutting pay and/or jobs.

From what I can tell, its short term gain for long term pain. Corps can’t collectively flatline and/or roll back incomes on the middle class allowing inflation to outpace and expect it to fly over the long term and yet, because their naked self interests for profit blind them from the macro economic effects of their actions, they do expect it to fly and if governments are bought by the same self interested corporate collective will and weaken the regs, the most effective weapon a nation has against diluting debt through income growth is taken away. Btw, when I come up with dated links like this one and our Harper government lays off people at Stats Can left and right, I can only conclude its because our Harper government doesn’t want us to know the truth. 08′ is the best statscan can do? So clouded, its transparent:


Even so, a claim like this from the above link:

“Canadian women earned an average total income of $30,100 in 2008, up 13% from $26,300 in 2000. That 13% growth surpassed the 7% growth for men over this period, but men continued to have higher average incomes. In 2008, the average total income for men was $47,000.”

… hailed as “success” when Canadian indebtedness has grown like this, check out chart on #4:


Household debt has grown by 50% since 2000, lions share coming since Harper.

and this:


… is for me disturbing and everyone is happy with their new debt purchases until rates go up:


… and incomes remain flat or roll back when business takes a beating from slow consumer spending and defaults. So what we are witnessing under this government and our business leader stewardship are business behaviors that tend toward income stagnancy or “shrinkage” for the sake of the shareholder while enouraging staggering levels of debt growth that can’t be maintained with higher interest rate scenarios. The consequence is forced income shrinkage that further exasterbates the struggle to service debt. This is the way its played out in other real estate bubbles collapsing across the world like Spain as today’s example and it will play out the same way here, its just a question of time and to what extremes.

But seriously, why should Canadians be surprised at this outcome? We have a federal government who’s masters are banks and CEO’s who’s self interests are for the shareholder, not the consumer, middle class, worker, the sovereigntist or for that matter, the health of the system.

– I believe that this housing correction will take a lot of people by surprise and it will be comparable to the US housing crash, but with a different flavour.

Agreed. Are our banks more resilient?


TD is investing heavily in the U.S. marketplace. Considering the choices they have, I think its the right choice but I woudn’t have said this if Mitt Romney would have won the election, thats how much difference governments make there for me and, apparently, management at TD seems to think the same should one consider the timing of the announcement. They need to invest in a nation thats on its way up whether its housing, currency, economy as a whole, you name it and I believe its the right choice for them. Why? Canada isn’t that nation on its way up precisely because of the causal effects of what the higher ups have chosen (RE/debt bubble, stagnant incomes) so investing outside of Canada lessens the negative impacts Canadian housing will have on Canadian banks who have less domestic exposure.

RBC is after greater domestic margins as of late:


… while Scotia Bank, Canada’s largest holder of international assets just keeps on getting bigger:


Not to dismiss what Goldman Sachs is all about, but the Bank of Nova Scotia has a larger market cap than GS for those who pretend GS is the biggest whale. A clip from the link:

Scotiabank is one of North America’s premier financial institutions and Canada’s most international bank. With more than 81,000 employees, Scotiabank and its affiliates serve some 19 million customers in more than 55 countries around the world. Scotiabank offers a broad range of products and services including personal, commercial, corporate and investment banking. With assets of $670 billion (as at July 31, 2012), Scotiabank trades on the Toronto (BNS) and New York Exchanges (BNS)

… my point? Canadians banks overall are more resilient to a housing correction (and following melt led by higher interest rates) than people think (but you have to go bank by bank, not the sector as a whole. I believe there is weakness out there among the big six and one, maybe 2 banks won’t make it through high single digit rates).

When interest rates inevidably rise RE values here will get slaughtered as the informed well know. If readers don’t know this, pick up a mortgage calculator and work the math. The mere fear of higher rates along with tighter regs and the masses catching onto bubble hype are causing the correction we’ve just entered into but the true test to housing is higher interest rates and what’s shaping up the longer the loonie is at par and rates remain historically low is that once rates do move upward everyone (roughly 60% of all mortgage holders) will renewing 5 year terms or floating (28%) into higher rates and and that will effect the bottom line for us all.

Will it be enough to cause prolonged recession? Yes. Will Canadian banks suffer? Yes, but not as much as readers think. The Canadian banks that have grown their international portfolios outside of Canada in particular will weather this storm much better than people think. Hence, our blog host’s assertion that bank preferreds is a safe play in that context, as well as Garth’s insistence that Canadian banking is more resilient to a housing downturn in Canada than we believe or that a Canadian housing crash won’t be identical to U.S. housing bubble gone bust, is correct.


Wups, wrong link. That’s the link for the growing “foreign investment” of Harper and friends. I guess that means its enough for today. :)

#161 daystar on 11.26.12 at 7:55 pm

#125 Canadian Watchdog on 11.26.12 at 1:36 pm

It won’t be Ed. I would think that the BoC will try to promote from within:


… but ultimately the final decision rests with the federal cabinet. Readers should keep in mind that our big six bank CE0’s make 12 to 30 times the income of a BoC’s governor salary. Even directors from the big six have conflict of interest issues to deal with and likely make more than $550,000 a year so… I’m leaning towards the BoC’s wishes of drafting from within being upheld but one never knows.

What I will say about Mark Carney is the only time I ever found myself criticizing him, (a post on derivatives a few months back specifically relating to currencies, I didn’t do the research but since then my worries haven’t abated) I ended up regretting it but I’ve never regretted defending him and people can slag Mark all they want but England has been well aware of his talents for some time. (he’s one of the best high profile communicators I’ve ever seen) Mark is an Oxford man after all and it would be pretty hard for anyone else in his shoes to turn down an offer like that.

We are talking about becoming a central banker of a nation that has 10 times the history, nearly double the populaton and 1.5x the economy. 500 trillion worth of foreign exchanges occur there. Can Mark have a greater influence on the banking industry as a whole in England? Yes he can and I wish him all the best.

#162 Old Man on 11.26.12 at 7:57 pm

Do not mention the TD bank today as needed a cash transfer and nobody is on the phone, as had no money and went to a variety store to make a purchase and they were down, so a credit card would not work, so said give me a credit slip for a purchase, and all was done. Some of you knock these people from Asia, as shame on you; yes my money will clear at midnight, and they will be paid in full tomorrow.

#163 Dodged-a-Bullit-in- Alberta on 11.26.12 at 7:57 pm

Greetings: Re: #110 Buy? Curious. Theme song for you to consider for Smoking Man video–” The Bottle Let Me Down” M. Haggard.

#164 Canned Goods and Buckshot on 11.26.12 at 8:18 pm

Beaches are nice but if rural tranquility is what you are after check out


Compare to anything in southern Ontario at similar price. It screams bargain. Any posters with a synopsis of French residency or visa requirements?

#165 TRT on 11.26.12 at 8:21 pm

#161 daystar,

I don’t think anyone reads posts more than a paragraph or two long…just saying.

#166 Patiently Waiting on 11.26.12 at 8:24 pm

161 Daystar – I believe that this housing correction will take a lot of people by surprise and it will be comparable to the US housing crash, but with a different flavour.
—————————————————————–Thanks for your insightful comments Daystar. The more I see the debt levels that Canadians have been piling on, the more I agree that the housing correction will be more severe (at least in major urban centres) than many realize. I came across another example of debtagedon this afternoon. MLS F1220796. Purchased 2 years ago for $2.1 mil, it has just reduced the asking price by $300,000 (new price $2,395,000), Mortgage is a wopping $1,425,000 at Prime Plus 5% (so 8% at today’s prime). Interest only payments would be $9,500 per month. Add to that property taxes $11,162 per annum (2011). What the heck are they using to buy food?


#167 claudius emperor on 11.26.12 at 9:20 pm

Great day for Canada – losing both Rob Ford and M.Carney.

Talent in M.C?
What did the guy do was actualy nothing… I guess doing nothing (besides the hawkish tone..) makes you big shot.

What hapenned to the interest rates M.C.?

#168 shanks on 11.26.12 at 9:20 pm

#56 Snowboid on 11.26.12 at 12:00 am
Thanks SB, nice to hear he got the keyboard gig with skynard and is off on tour for a while!

#169 neo on 11.26.12 at 9:21 pm

Has a Bank of Canada governor ever left his position abruptly before the end of his term without a successor before?

When was the last time that happened to any G8 country?

#170 Grim Reaper/Crypt Speculator on 11.26.12 at 9:34 pm

#159 Smoking Man on 11.26.12 at 7:09 pm

So tempting to weigh in………………………

#160 Old Man on 11.26.12 at 7:11 pm

#154 Canadian Watchdog – in life do not be fooled into an illusion, as this woman is more than meets the eye, as she fools me not, and with me life is simple, as need not a beauty, but a woman with common interests for a coffee nightly to discuss world events who smiles and says now what? I will say lets go to some small town auction sale to hoop some bargains, and after the great event we will go to the nearest local restaurant for a late night bite to eat to mingle with some good folks, as we may have money in life, but forget this all, as we are all the same.


You just did…2 minutes later

#171 daystar on 11.26.12 at 9:41 pm

#166 TRT on 11.26.12 at 8:21 pm

Lol. Sure, no one comes here to read, its all about the sexy pictures!

#172 Gunboat denier on 11.26.12 at 9:41 pm

I will miss “Blog Dog Carney”….sniff…sniff….

#173 Smoking Man on 11.26.12 at 9:42 pm

As the pressure builds for Buy? Curious ? To deliver.

#174 daystar on 11.26.12 at 9:46 pm

#167 Patiently Waiting on 11.26.12 at 8:24 pm

Thanks, yeah, what are some folks thinking?

#175 Hugh Jasz on 11.26.12 at 9:49 pm

…….I’m just finishing my Smoking Man tribute video. I’m trying to chose the right song for the soundtrack. Does anyone have any suggestions?….

I don’t know or care if he actually had the visions where the secrets of the universe were revealed, and I don’t even care.

He’s an artist of a sort, he rarely fails to entertain, and a couple of his theories have inspired me and made me better.

So, Shine On You Crazy Diamond .

#176 Strataman on 11.26.12 at 9:52 pm

“But I digress”. Yes you do Daystar I have to say if you have a point or points get to it in the first paragraph, I agree with TRT you are pushing it to go past two paragraphs and that would be your fault as if you donot make a helluva an argument (which you didn’t) in paragraph 1 why the hell would anyone read further? This is your introductory paragraph which I read the firat sentence
“Agreed. When you participate with as much volume as I have, you are bound to have some stinkers (I have regrets :) but I’ve been historically strong with Spain. Its like the product of any other scribe, the more you research and familiarize, the stronger your material becomes and there are two ways of going about it that stand out to me. One is to have a hypothesis or better yet, a theory and research with a bias to prove it with whatever searches and intel you can. In other words, take an educated guess and try to prove yourself right through research if you can. The other is far more scientific, causal effectual, observational, experimental, i.e. take the results as they come without bias interpretation or let the facts do the talking and connect the dots from there. One path is the quick route but can lead you astray while the other is the long route, exhausting, but is most likely to lead you to the unbiased truth.”

I think you said blah blah but if your typical you will never get to this line! :-)

#177 Chickenlittle on 11.26.12 at 10:09 pm

What happened to Smoking Man? Was he Rob Ford all along?

#178 meslippery on 11.26.12 at 10:14 pm

That gate and wall and maybe dogs.
To me that says it all.

#179 eddy on 11.26.12 at 10:28 pm

Ezra Pound called it ‘The Stank of England’. He was not being facetious.

#180 TurnerNation on 11.26.12 at 10:37 pm


Clearly an imposter. Post is too short, in its length.

#181 Been There Done That on 11.27.12 at 12:13 am

How about a track from Steely Dan’s “The Royal Scam”.
The Royal Scam is littered with cryptic allusions to people and events both real and fictional.

#182 Why not? | The Retiring Boomer on 11.27.12 at 12:56 am

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