It took just eight months of shrinking sales for the nation’s realtors to admit it. The market’s in retreat. The prospects for 2013 kinda suck. And it’s all Ottawa’s fault.
Before we rip that apart and feed it to the jackals, let’s flip over to Moscow. “Dear Garth, my name is Viktoria and I am writing from Russia,” she coos, conjuring up images of a snowy babe swaddled in fur with thigh-highs and a wolf hat, “so you can be sure you and your blog are popular and very helpful worldwide!
“I like what you talk about and the way you help people – each time it is like a business case – people give you initial data about themselves and you provide a resolution what to do. I also like your language it is full of funny and useful words and expressions along with being literary.”
Enough foreplay, Vicky. On to real estate!
“But after a while I realized many things are the same worldwide – people want to have a home whatever it takes, they become indebted without thinking how to return and have a problem choosing where to put their money into. Our situation is even more funny from some perspective – the percent for mortgage my friend has is 13! Another “funny” thing is that we still have so called “kommunalka”. This is an apartment where owners own only rooms inside the apartment and places like bathroom and kitchen are in common use. The friend I said has 13% mortgage had not enough money to buy the whole apartment (as we have exorbitant prices for real estate) and bought a room. So now she is living with complete strangers some of whom behave like crazy ones with no hope or possibility to influence them (remember we do not have working police).”
So, there you go, wussy, spoiled Canadians. There are people in civilized countries carrying 13% mortgages on mere rooms, with strangers lurking in the kitchen and ready to surprise you in the bathtub. And no cops. But we have our own cross to bear, of course. It’s called the Canadian Real Estate Association.
So here’s the news. CREA has lopped its forecast for 2013, coming into line with what this pathetic blog told you months ago. Across the country sales in November were 12% lower than a year earlier, hardly a surprise considering the 19% drop in Montreal and declines of 28.6% and 16% in Vancouver and Toronto respectively. After ignoring this trend completely since last April, the evidence of slowdown is now irrefutable.
But give these guys full marks for Soviet-style media control! As recently as August, this was the storyline the real estate cartel was pumping out: “The national housing market remains firmly entrenched in balanced market territory, supported by stable sales activity and fewer new listings. The national sales-to-new listings ratio, a measure of market balance, stood at 53.4 per cent in July 2012, up from 51.6 per cent in June. Based on a sales-to-new listings ratio of between 40 to 60 per cent, two thirds of all local housing markets were in balanced market territory in July.”
So much for CREA stats. Realize these are the same people who now admit house prices across Canada have fallen about 1%, but their Frankenumber – the MLS Home Price Index – is actually ahead by 3.5%. Proof, comrades, there has never been a better time to buy!
That 2013 will start with downward momentum in the housing market should surprise nobody. Both sales and prices will fall compared to 2012. In fact, April of this year will likely go down in the annals of GreaterFooledness as the climactic apex of excess. Remember how I walked you through a bidding war in North Toronto? Every offer had to be for more than the asking price, without conditions, and come with a certified cheque for fifty or a hundred grand.
On April 18th this blog described a bidding war with 15 couples competing for a $1 million home. “Each one was for more than the asking price of just over one million dollars. After reviewing them all, 12 couples were sent home with their certified cheques. Three others were asked to enter a second round of competition, given a few moments to add fifty or eighty thousand dollars. Within minutes the sellers had a firm offer of one used Hyundai less than $1.3 million. And, thus, the value of this home increased 30%. It became a comparable for every other owner on the block.”
Moments like that – auctions carefully orchestrated by real estate agents – brought buyer capitulation, as prices spiraled beyond absurd. Given the jingoism of the industry, it was inevitable any small barrier would send the pendulum of public sentiment careening in the opposite direction. Three months later the feds obliged. Now the realtors have their straw man.
“Interest rates have remained low and the economic backdrop has remained supportive for housing activity, so that should leave little doubt that recent changes to mortgage regulations are responsible for having cooled activity,” says CREA’s chief economist Gregory Klump.
Untrue, of course. A drop in the maximum amortization from 30 years to 25 should have zero bearing on Audi-driving yuppies throwing cash at a property. But they, too, have stopped buying. Bidding wars are gone. Sales slag. Listings languish.
There’s only one valid reason for what CREA now admits. Houses cost too much. Period. 2013 will go some distance in fixing that.
175 comments ↓
Only in Winnipeg,
fiirst baby!! oohh yeeaaaahhh !!! first !!
Realtors: Wussy Galore.
Hey where’s ozy and his kandos? Only in Kanada.
So, let me get this straight:
In Canada, prices are unaffordable because of the Chinese and Iranians buying up every SFH within the urban core of Vancouver and Toronto…
In Russia the average persion can barely afford a room in a communal apartment complex, because of the government and 13% mortgage rates…
And, in Manhattan, the “middle” of the market (two-bedrooms in the $1.4 million to $3 million range) are next to impossible to obtain, probably due to rich Russians (and others) buying up everything bigger than a 1-bdrm:
http://www.nytimes.com/2012/12/16/realestate/trading-up-can-be-hard-to-do.html?hp&_r=0
Seems to me that the uber-rich from around the world are buying up properties around the world as mechanisms to diversify their investments, and the locals are always getting screwed (and blaming every other country for the problem).
Houses cost too much. Period. 2013 will go some distance in fixing that.
Gartho you just don’t realize how the stupid people will make the above statement look silly in the spring.
Logic can’t defeat an army of stupid.
Hey that was good one.
I hope Vik(c)toria did not forget to mention that average condo prices in Moscow increased 6 to 10-fold over the past 12 years depending on the neighborhood, regardless of dysfunctional police, post and worst traffic east of Ural mountains. Oh, and there are at least 10 mln inhabitants and virtually no SFHs in the Russian capital.
Houses will cost too much until they revert to the mean. What is that, 3, 3.5 times average household income? In my area, it means the typical house price would have to drop by a third to a half. If even cheap money can’t hold up the market any longer, there’s nothing left but deflation.
“I like what you talk about and the way you help people…” – ‘Viktoria’ [aka Raisa Skorkina?]…
Are you sure you haven’t been sneaking off to BungaBunga parties, OldPol…
http://youtu.be/l2ahHXu2A2E
Be careful, GT – Berlusconi is now officially engaged to a 27 year old… ergo
RaisaViktoria may already have boarded the next Aeroflot to HogTown…Could be worse.
“In Soviet Kanada, mortgage enters your annals!”
(Wow, that took me a while. Trying to work the word in and not get deleted…)
People must bring whatever money they have to Canada and think this is one amazing country – they give you money to buy a mansion! Truly the streets are paved with gold.
Not sure this is what Canada wants to be known for worldwide. There used to be some different values.
Doug Porter’s first statement as Chief Economist at BMO takes a page from Sherry Cooper:
http://www.globalnews.ca/health/canada/canadian+home+sales+retreat+in+november+slide+to+august+levels+crea/6442773774/story.html
“It increasingly looks like most major markets are indeed undergoing a policy-induced correction,” Porter wrote in a note to clients.
“But, for now, the landing looks to be soft in most cities, with the rather obvious exception of Vancouver.”
(notice the comments from a non-Big 6 economist…)
However, economist David Madani of Capital Economics said the belief that the Canadian market was enjoying a “soft landing” because prices have not fallen sharply was misplaced.
“The continued decline in existing home sales support our view that a potentially severe housing correction is underway,” Madani said.
“Assuming that sales continue to trend lower heading into next year, then sharper demand and supply imbalances will eventually lead to widespread home price declines. We still think that house prices will decline by 25 per cent over the next year or two.”
“A drop in the maximum amortization from 30 years to 25 should have zero bearing on Audi-driving yuppies throwing cash at a property.”
Is it true that yuppie-age families that purchased a home in the last 5 years are < 30 year amortization? Does anyone have a stat for % of home buyers by generation (boomer, Gen X, Y) that took a 30+ year amortization? Just curious.
#6
…WEST of the Urals, of course, sorry for the typo. Sold what we had in Moscow and happily renting for now…
Sold today…
..as usual would have like more… but will clear about seven hundred thous…. and change cash.
… didn’t want to but increasing property tax rates say do so… Oh well…
next door sold today as well… that’s about 1/4 of a city business block in the last week, about $7+ mil in sales… both neighbors… gone…
Well… now we see what happens…
Interesting stuff showing up outside van proper…
Watching for the Levered HELOC sales to show up… and drive down the sales… couple of very interesting court ordered sales already for less than original purchase price and assessment I’m watching…
Safe but sad……………
I guess cash is king now……….
C-Can Gypsy now… where I land… nobody knows…
Silver
Say, is Beach girl running a kommunalka?
Spiltbongwater #8
Garth really, delete that post…just a total and utter miscreant there.
The link at the end of my post is to a credit market summary data table (as of Sept. 30, 2012) on Statistic Canada’s web site. The total debt outstanding in Canada was 5.17 Trillion $ (bottom line of the data table).
From Jan. 1, 2012 to Sept. 30, 2012 (a period of 274 days) the total debt outstanding increased by 194 Billion $. Over that 274 day period it increased at a rate of 708 Million $ per day.
I can’t see how this can end well.
http://www5.statcan.gc.ca/cansim/pick-choisir?lang=eng&p2=33&id=3780122
It pains my heart that back in the 1970’s that a couple would marry, and just needed a few thousand bucks to buy a home which was a lot of money, so they worked hard to save with this goal in life, and it was always the woman who was in charge of it all. They bought the home with CMHC, and look at them now, as could blow it off for $1 million now.
Noted (unvested, nationally followed) economist Chris Thornberg of USC said it best: “Prices came down because they got too freakin high”
Might want to fix the last paragraph – I think you mean CREA, not CRA! (You’re welcome)
Vlad loved the 911 post. I’m a bonifide ct critical thinker. The facts are you out there, world knows the truth but the price to get it out is to high.
Better just to infiltrate the machine a get what you can from it.
Logic can’t beat an army of stupid.
Canada is so broke. Yep, its so good in this country, That is why the government is asking the Taxpayers to bend over and assume the position as they place their hands into your pocket books and steal more of your hard earn cash.
They should add a luxury tax on foreign ownership and tax the Ultra Rich instead of giving it to the average Canadians
http://www.stcatharinesstandard.ca/2012/12/16/debt-and-cpp-top-finance-ministers-list
Mr Turner
I don’t get it.
After a divorce, 20 years ago, my bank made me come up with a 25% down payment for my very modest, but solid little 60 year old bungalow in Vernon, BC. I still live in it, which may be why I’m single. The few women that sometimes come over all say that the kitchen needs to be renovated. It has functioned perfectly for me since I moved in and I think it did have a reno back in the 50’s judging by the lino.
But it’s paid for now, and it’s comfortable and relatively clean (I am a bachelor).
I don’t get why young people feel they need all this granite/stainless steel stuff in a glass tower. Why take on all on that debt? It doesn’t have to cost that much to have a comfortable place to live.
I like your blog. I read it everyday.
Jim
Funny how suddenly new list:sale ratio is the market balance indicator. I guess using the standard sales:listing ratio would be heart attack inducing.
Smoking Man did you know that Garth kicked me under the bus about telling you about a wild club near where you lived, oh well he deleted me, and will get over it.
Her story left me feeling things will get worse before they get better….
I’m wondering if the disappearance of the HST tax in British Columbia April 01,2013 will stimulate the Vancouver real estate ponzi scheme again ?. http://www.taxtips.ca/gst/bchst.htm.
#7 – Editor –
”Houses will cost too much until they revert to the mean. What is that, 3, 3.5 times average household income? In my area, it means the typical house price would have to drop by a third to a half. If even cheap money can’t hold up the market any longer, there’s nothing left but deflation.”
Let’s turn the clock back to January 1970 when the first of the boomers hit the home markets for the first time.
Back then a single wage earner with an average wage could buy an average priced home in Vancouver for 2.5 times annual income. The cost to service that home was .3 of gross monthly income for that single wage earner. That is when interest rates were at 10%.
Fast forward to now when that same house in Vancouver and that same wage in todays dollars, the cost to purchase that home is 17.6 times that average single earners salary. At the lowest interest rates in history. The cost to service that same home is now is around .45 of that single wage earners gross monthly salary.
If the interest rates were to return to normal at say 6%. It would take 88% of that single earners gross monthly salary. Not enough left over to pay income tax let alone the cost to maintain the household.
We’ve come a long way baby. Those dollars just don’t go very far any more do they? Here we have young couples both working high paying jobs (I know of some), living in houses that I would consider tear-downs, and their strapped to the gills paying on a mortgage worth more than the house and prices declining monthly. Nice job F, C , developers and realtors. But there’s a price to be paid for all this. Just wait til spring.
#26 Old Man
Wild club would be enough for me to know what your talking about. :)
Garth, could you comment on how to read “sales-to-listing ratios” ? Now, I’m not a mathematician, but there’s something funny about those numbers. If ratios express the proportion of ‘x’ to ‘y’ (x:y ; three girls for every two boys, 3:2), then my reading and math skills tell me that a sales-to-listing ratio would mean ‘sales:listings’. For that 53.4% figure to be true (let’s call 54% for ease of math), you would need 27:50 ratio, or 27 sales for every 50 new listings. It sounds like supply would go up really quickly if that were the case. Nor does that explain why a 40-60% ratio is seen as ‘normal’ (also, that’s huge range). Is this just another Frankenumber, or is there some real math behind it that makes sense?
#5 Smoking Man
“Logic can’t defeat an army of stupid.”
——————————————-
So true. For the average person neither logic, nor informed rational thinking, form any part of their decision making process. Instead, fear, greed, lust, envy and shortsightedness is what they base their decisions on.
Smoking Man may just turn out to be right. Despite the obvious blinding stupidity of buying now, in this market, the herd may just continue to do that for quite a while longer. The bleating sheep (“RE always goes up”) may not yet have been fully shorn by the RE Cartel. At least not in Toronto.
CASE Update : Competition Board VS TREB( Toronton Real Estate Board)
http://www.ct-tc.gc.ca/CasesAffaires/CasesDetails-eng.asp?CaseID=347
That’s why the Russians on my floor keeping knocking on my door asking if they can take a shower.
It pains my heart that back in the 1970′s that a couple would marry, and just needed a few thousand bucks to buy a home which was a lot of money, so they worked hard to save with this goal in life, and it was always the woman who was in charge of it all. They bought the home with CMHC, and look at them now, as could blow it off for $1 million now.
There’s always *some* asset class out there that’s an epic bargain. Obviously in the 1970s, it was houses and government bonds. The trick is in identifying such. Hint: its probably not what your peers are investing in at the moment.
Damn…got Insomnia..
When is Dr. A$$hole err..Dr Wanker…. going on Oprah so I can fall a$$leep
Yup, big city prices getting ready to drop, just like in Moscow, New York, and Berlin. The golden 3 times earnings coming to a hood near you! Hold your breath and wait for it!
God loves Renters!
BTW, the rates in Russia are also going down. Now it is possible to get mortgage at 10%. See this http://translate.google.com/translate?sl=auto&tl=en&js=n&prev=_t&hl=en&ie=UTF-8&eotf=1&u=http%3A%2F%2Fwww.metrinfo.ru%2Farticles%2F71999.html
Russian Amazons. Hmmmmm.
Wonder what odds Russian mathematicians give that the HPI number will ever be reported to be below -1.0%? Will it ever happen that CREA report a drop in HPI greater than 1%? Or did CREA build some type of limiting variable to ensure it never will happen.
#2 El Padroni on 12.17.12 at 9:49 pm
fiirst baby!! oohh yeeaaaahhh !!! first !!
=====================================
I’M BAAAACK !!!!!
You’re wrong, EL P, ‘baby’ … but you are an “oohh yeeaaaahhh” inglorious a$$hole undoubtedly expecting
universal acclaim for your brilliant, well thought out,extremely informative, mind-bending post …
The reason why prices will decline EVERYWHERE in Canada is simple: everyone is B-R-O-K-E.
They may still WANT to overpay, but alas, the music has stopped and they do not have a chair.
It is OVER. Everywhere, including weirdo smoking man’s T.O.
Done. Done. Done
For Linda (yesterday’s blog)…
Come to Calgary, or Edmonton, or Red Deer…anywhere in Alberta. The teachers here do not appreciate that they make 20% more than teachers elsewhere in the country … and … I think our education system needs more down to earth, honest, and real teachers like you. Great blog Garth.
Garth, could I request for you to delete post #8 ?
It’s incredibly offensive.
Done. — Garth
#33 FYI Competition Board VS TREB
A ruling in favor of MLS disclosure would be the biggest game changer. Canadians could then recover from Stockholm syndrome and be free from Klumpolini and the realtorcrats.
In my humble opinion, if you really wannma know how much a house should cost in any Canadian market is a 50 % downpayment formula!!!
If you had to put 50% down for any piece of real estate i kanaduh then you would know the true value of it,PERIOD!
Smoking Man on 12.17.12 at 9:54 pm
Logic can’t defeat an army of stupid.
……………………………………………………………………
Yeah it does, every time.
Over 90% of people thought the world was flat.
99% of economists thought there was no bubble – USA.
99% of people thought the earth was the centre of the universe.
My fav, there is no such thing as black swans.
The only fools are those that think, because the majority of people believe something, it must be true.
Aussie Update
PROPERTY players have farewelled a better than expected end to 2012 but anticipate 2013 will bring another year of low supply and flat prices. While low interest rates are expected to fuel buyer confidence, there is some concern that job insecurity is holding others back in some of the cheaper suburbs.
Love Real Estate agent John Gioftsidis, who sold the cheapest house in Melbourne on Saturday, said there had been ”softening levels of inquiry in the past month”.
http://www.theage.com.au/business/property/property-players-worried-and-staying-put-20121216-2bhh8.html
#12T.O. Bubble Boy
… However, economist David Madani of Capital Economics said the belief that the Canadian market was enjoying a “soft landing” because prices have not fallen sharply was misplaced.
“The continued decline in existing home sales support our view that a potentially severe housing correction is underway,” Madani said.
“Assuming that sales continue to trend lower heading into next year, then sharper demand and supply imbalances will eventually lead to widespread home price declines. We still think that house prices will decline by 25 per cent over the next year or two.”
====================================
I use to be in the “Soft Landing” camp as well, that is until I started seeing the mortgage data that was showing the financial underwear of my neighbours … here are a few of the ones I came across today …
MLS F1227373
Asking 2.9 mil
Estimated Selling Price (+/-) $2,200,000 and dropping
Assessed Value 2.493 mil
3 Mortgages on title:
1st Mortgage $3,030,000 at Prime + 3%
2nd Mortgage $300,000 at 15.47%
3rd Mortgage $147,000 (interest rate not shown on documents)
MLS F1225390
List Price $4,500,000
Estimated Selling Price (+/-) $2,600,000
Owner bought for $1,175,00 in Feb./05
Assessed Value $$2,471,000
Mortgage on title: $2,850,000 at Prime Plus 7%
I cannot tell you blog dogs home many mortgages I come across that are similar to the above … that is why I am now convinced that there is no way this will anything but a hard landing … anyone who says any differently has a vested interest in trying to keep people unaware of what is going on, on what is coming, and is likley is benefitting from the housing bubble …
pw
DELETED
#41renters rule on 12.17.12 at 11:39 pm
The reason why prices will decline EVERYWHERE in Canada is simple: everyone is B-R-O-K-E.
==================================
I have a feeling you are right . . . not only does the mortgage data confirm this (see my earlier post), but today my wife mentioned that she went to return a Christmas decoration (a star for the top of the tree because she bought a bigger one elsewhere), only to be refused … the reason given for the policy change was that last year many people purchased large quantities of christmas decorations only to return them after the holidays …
pw
#46 Aussie Roy –
”The only fools are those that think, because the majority of people believe something, it must be true.”
or
”Sometimes the majority only means that all the fools are on the same side
Smith, Michael W”
#35 Mark
“There’s always *some* asset class out there that’s an epic bargain. Obviously in the 1970s, it was houses and government bonds. The trick is in identifying such. Hint: its probably not what your peers are investing in at the moment.”
I’m going to go out on a limb and identify the bargain of today, but I wouldn’t necessarily classify it as an asset: humans. Adjusted for inflation, human labour is the cheapest it’s been since the Second World War. Good news if you’re already rich; bad news for the rest of us. . .
#43 the captain – hi snides on 12.18.12 at 12:06 am
Garth, could I request for you to delete post #8 ?
It’s incredibly offensive.
Done. — Garth
==================================
I think the Nutcracker Ballet has anti- Male overtones….
Comrade Dr. Wayne Kin-ov……
You say “Bolshevik”
I say “No, Its true”
PS are you still trying to give Comrade Lenin CPR ?
–
“Proof, comrades, there has never been a better time to buy!” — In mid-Siberia, there are huge swaths of land available for next-to-nothing, ready to be covered with 50-storey towers of two- and three-bed. condos, lots of delectable SFH — this is where BPOE and Mikey the Realtor ply their trade!
“2013 will go some distance in fixing that. Bidding wars are gone. Sales slag. Listings languish.” — In other words, the party’s over and sheeples are suffering a rough hangover from too much spending.
—
#22 Smoking Man — “Logic can’t beat an army of stupid.” — The two of us are in great shape!
*
China EZone dropped a clanger; Eight Parallels between ancient Rome and today’s US; Multiple Generations New life style? Lumber Prices Good for BC, but a lot of stuff here is headed to China; Bond Issuance hits record US$3.9 tri.; Google vs. Germany; 6:22 clip Automation replacing humanity. Plant running with no one in sight; We’re Screwed Subhead is sufficient; TPsTB Wet Dream Little old but decent.The Ritz Hotel doesn’t pay taxes; Fiscal Cliff Give and take from both sides; Sayonara, Liberty It was so much fun. They were great times.
*
No Delay Interesting that China is calling for gun control in the US; New Award for Obama; Update on the fathers of two mass murders were set to testify (they’ve been conveniently withdrawn); Choo Choo Different from Mongo’s train in Blazing Saddles; 650K pounds Ferrari Supercar (Limited Edition); 2:53 clip Religious nutbar. It’s stuff like this that Monty Python could turn into a nonsensical sketch; Shadow Govt. behind govt.; Bad Santas Actually, they’re riff-raff renegades; Cameron EU exit possible; US$2 mln. Supercar Available oonly in China; 0:28 clip Soccer. How not to take a free kick; Oreos in Antarctica The world is plastered with Oreos; Agenda 21 America’s water supply dwindling, and 8:08 clip and story Humanity vs. The Machine; Short clip Future of the ‘net; The US is the Grim Reaper worldwide.
Nice post Garth…….really got me thinking about CREA, the media, and every other industry.
There is truly many people in every walk of life who have sold themselves for a dollar. They give whores a bad name, as a whore is honest about what she does for her money.
I am sure you are receiving many Christmas cards Garth. And I am sure the cards are only from your fellow good guys. Not the liars, cheats, and thieves.
“..There are people in civilized countries carrying 13% mortgages on mere rooms, with strangers lurking in the kitchen and ready to surprise you in the bathtub. And no cops…”
At least here in Russia they are not making us to eat beaver tails.. So, life is good!
Mon
Garth can you please educate us about “Closed End Funds”. Many thanks.
Here in Victoria ,if you rent people stereotype you as broke,unstable ,low income and or not very wise with your money.There is shame and embarrssement of not owning a house in this beautifull city but house price don’t reflect peoples household yearly income and what they can afford
Its evil that the banks and goverment allowed this rackett to happen so the people become debt slaves and cause so much stress for families.
BOOM! Garth! That was sweet!
Yay! Chaos!
Gen X’ers sacrificed on the altar of debt to appease all the baby boomers.
What’s going to happen when this wave of old people comes crashing down? They’re living longer and have saved less. You can’t put these people on ice flows. They are going to be a bigger drain on society than people on welfare or criminals. Look out for yourselves! Start looking into ways to get around capital gains and inheritance tax. Avoid as much tax as possible. Drain your banking accounts and then rack up debt. Move away to Costa Rica and live large. The worst that will happen is that you may get a nasty letter. There’s nothing immoral about not paying back institutional debt. Companies that make billions of cash a quarter can suck it up a couple of grand in losses.
(A recent graduate from the school of Smoking Man U. Come for the education but stay for the booze and broads).
http://www.youtube.com/watch?v=FCSBoOcGFFE&feature=player_embedded#!
#41 renters rule on 12.17.12 at 11:39 pm
The reason why prices will decline EVERYWHERE in Canada is simple: everyone is B-R-O-K-E.
——————————————————–
I’m not broke but I’m not STUPID either.
Want To Buy An Irish Castle?
If you’re in the market for a new home, why not think big and buy a castle? There are several for sale in Ireland and now that middle income has been defined as up to $250,000, many are within the means of the middle class.
Take Cloghan castle, shown above. It’s in Banagher, County Offaly, and comes with 157 acres of woodland and riverside. The original castle was built in 1336, making it one of the oldest inhabited castles in Ireland. Although it was attacked and burned in 1595, it continued to be used as a home. Its three floors have six bedrooms, four bathrooms, an office, store room, laundry and a big dining hall.
It even counts as a tax shelter. Because it’s a historic building, if you open it to the public on occasion you get certain tax exemptions, and any maintenance and improvement costs count as a tax write-off.
So how much will this put you back? You’ll have to contact Premier Properties Ireland to find out. If the quote is too high, wait for a while. Beagh Castle was originally priced at €695,000 ($906,000) but has been reduced to €299,000 ($390,000). It only comes with 17 acres, but it’s picturesquely located on a promontory above the River Shannon in Ballysteen, County Limerick. Nobody is sure when the first castle was built on this spot, but it was rebuilt by a knight in 1260
http://www.gadling.com/2012/09/19/want-to-buy-an-irish-castle-nows-your-chance/
Here’s a great article about why you shouldn’t be too concerned for paying back banks. HSBC paid fines up to £1 Billions in criminal activity such as laundry drug profits (legalise it!), handled transactions to terrorists in the Middle East and other dodgy customers. If they guys not only avoid prosecution and punishment but even being charged, don’t be too worried about walking away from debt.
http://www.economonitor.com/lrwray/2012/12/12/more-news-from-the-financial-front-were-not-out-of-the-woods-yet/?utm_source=contactology&utm_medium=email&utm_campaign=EconoMonitor%20Highlights%3A%20Risky%20Business
Moscow eh? I liked it better when you compared us to Detroit. On second thought, I’m just glad I live in Canada.
I dont get it, even if the markets were to correct by 50% in big cities like vancouver or toronto, the price of the SFH would still be like 400k or 500k. Thats a lot of money especially when most people in the private sector are working low paying jobs (less than 20$ an hour). The prices are incredibly high when most Canadians are debt slaves. The market is so distorted because of the social engineers in government.
Its best to be risk off these days, just raise cash and use it to get into hard assets before its too late. Rather have 100k worth of gold and silver in my possession, than 100k in cash stored in a bank or worse in an RRSP
All 3 predictions the same as mine for 2013
Gold to drop to $1200 U.S. an ounce
Oil to drop to $50 U.S. an ounce
The German Dax the most overvalued stock exchange in the world to drop 33 percent (i’m predicting at least 50 percent)
http://blogs.marketwatch.com/thetell/2012/12/18/gold-at-1200-crude-at-50-and-other-outrageous-predictions-by-saxo-bank/
Lots of (real estate) doomers here, same people crying that everyone’s broke. We’re not. Many generational homes in TO haven’t had mortgages in decades. I think many are projecting their own inadequacies. Time to turn away from the bong water,move out of your parents home and stop blaming everyone else for your deficiencies.
Many of the older retired people in Toronto have pensions from a time when pensions were the norm. They also live frugally because thats what you did. The 60’s jobs are gone. We will live in interesting times but you’re future depends on what you do today. If you think real estate will collapse you better be saving you’re pennies because interest rates will probably account for any savings. Opportunity only comes to those who are prepared. You’re parents money might not save you, they lived healthier lives than we do.
Back to delusional ramblings….
Just a heads up for any REIT investors.
I invest in Mexican stocks, bonds etc. and Fibra Uno (Mexico’s first REIT) returned 70% share and dividends apprec. since it started in 2011. Decent return no?
Also see two new REIT’s just listed that I will be looking at.
90 day cete’s (cash) return 4.56% annually after tax.
Just saying you can look beyond your borders.
More ratecuts in the world. I think I’ve mentioned Australia’s, Turkeys, maybe another’s.
Now: “Hungary’s central bank, roiled by divisions among policy makers, cut the European Union’s highest benchmark rate for a fifth month as policy makers shrugged off the forint’s plunge to a five-month low.
The Magyar Nemzeti Bank lowered the two-week deposit rate to 5.75 percent from 6 percent, the fifth quarter-point cut in as many months, matching the forecast of all 19 economists in a Bloomberg survey. MNB President Andras Simor will explain the decision at a news conference at 3 p.m. in Budapest. “
Asse #68
Poor realtor or flipper Asse who just can not understand the 600B dollar ponzi scheme called CHMC. Why do you think Realtors are crying like babies about CHMC from not backing sub-prime mortgages of over a million dolalrs? If you think the housing market is so strong why don’t you and all your realtors and flipping buddies call the government to take away CHMC and have the bank back the mortgages using interest rates from the free and open market? LOL interest rates on mortgagaes would be 10% overnight and prices in Canada would crash 50-70% OVERNIGHT. You know it , the bankers know it , realtors know it , flippers know it and the rest of the world knows it. Canada is a house of cards that is falling down from it’s own weight. Take away the support and it crashes over night. Canadians are 165% debt ratio that’s MORE the n Americans before their debt/housing bubble came crashing down.
Patiently Waiting #48
There is a reason why Canadian debt to income ratio is 165% and GREATER then maxed out and broke Americans before their credit/housing ponzi came crashing down like a house of cards. Canadiasn are even worse and more maxed out and broke hen Americans. Like I have been saying while mark the talk carney keeps talking. People are stupid and will borrow until they are bankrupt. This is happening in Canada. People are borrowing to the point of being bankrupt. 165% is proof.
#64 Buy? Curious?,
that’s not the way it will work. The little guy is the low-hanging fruit they’ll go after because he is not too big to nail and doesn’t have the battery of lawyers to make prosecution difficult.
Had no idea you can mortgage a room in shared accommodations, and at 13% no less, amazing Russian story.
Anyhow…
Hey, got the Mr. Rogers’s theme song stuck in my head….
“It’s a beautiful day in the neighbourhood, a beautiful day in this neighbourhood, listings are up, sales are down… wont you be my new neighbour….neighbour….. my new neighbour and friend”
I’m pretty sure that’s how the song goes….
Darn! Comment #8 didn’t strike me as remarkable, and now that it’s deleted and interesting, it’s gone.
#52
Called in a heating guy, plumber, electrician. Gone to a dentist, lawyer or any other pro. Depends on the labour thats for sale.
Turner – you may be right. So explain how all these condo builders in the Big Smoke are prepared to, well, build new developments in the face of a down market. What do THEY know that us pathetic plebes don’t? As I noted the other day, within a five-minute walk of my (rental) apartment at Young & Eligible are four – FOUR! – condo developments, one already being excavated and it’ll be huge, as well as three announced structures including a twin-tower fantasy about which I wrote to you last summer. So what do these guys – and their bankers – know that the great unwashed don’t?
For those of us struggling with property prices in Canada, following provides info for other countries. Cannot vouch for accuracy, but 3X income pretty much
isnt the norm anywhere else
http://www.numbeo.com/property-investment/
Not a flipper or realtor. Really don’t care what the housing market does. Lived through the 90’s crash and remember interest rates approached 12%. Am fortunate but fate rewards the prepared.
As for going BANKRUPT (buy/curious) unless you used OPM (like Trump and the Lastmans) or you were able to hide significant assets it is folly. Just set back you’re financial goals/quality of life by years. For middle age men this usually is a byproduct of divorce or just poor choices.
If you really want good advice talk to someone successful. Not the guy wearing the Boss suit but the old fart who vacations at a Paradisus resort. Know quite a few comfortable couples. Characteristics include being humble, gracious, not vindictive, and outgoing. Won’t find them here…well maybe smoking man/old man but then again it’s too easy to hide behind computer personae.
Nothing compares to practical experience.
Merry Christmas and good luck doomers!
#57 Mon: at least here in Russia there not making us eat Beaver Tails, so life is good.
Okay that was funny in a cute sort of way. Brings me back to the 70’s, driving I75 to Florida with the CB radios sitting in the rocking chair while the truckers were watching out for the smokies. There were 2 things they called us gals, one was seatcovers…. Thinking maybe the Russians have lost something in their translation?
This blog cracks me. People make it sound like everyone is broke. I just came back from Orlando and the theme park was full at $100 a ticket! Went to the outlet malls and it took me 30 minutes to find a parking spot. I live in Toronto and i dare anyone to go to Yorkdale Mall and find a parking spot in under 20 minutes. It is not like this because of Christmas. It is always like this. Most of the people on this blog are so bitter because they didn’t buy real estate at lower prices. That has clouded people’s judgement hence the pathetic observations of this blog.
All 3 predictions the same as mine for 2013
Gold to drop to $1200 U.S. an ounce
Oil to drop to $50 U.S. an ounce
———–
the crapiest article ever
Hmmmmmm..pot..kettle…black? Who else exercises Soviet style media control over the truth eh G Man? The lack of truth in Canadian media has spun from an era of entitlment where politicians on the left have seen no reason to introduce disclosure laws for consumer protection. For example look at the gut wrenching response of the leftists when SUN media started broadcasting in Canada….they would have us believe that Armageddon was on the horizon…..why? Is it because politicains …and now entiltled lobbies on the left know that a dumb unresponsive media is a political weapon…particularily effective when there is no opposition? For thirty years we had the leftist Libs pushing their brand of social engineering on Canadians…..lets all make a promise to tell the truth in the New Year……write your politicians and make disclosure and intellectual freedom as important as your right to bend over.
#82 Robert: Its what’s you read between the lines that matters. Yes, Orlando is packed this time of year. I was there last year over the holidays, and who were the majority of visitors? South Americans! Disney was packed with families from Chile, Argentina, Brazilians galore because their economies are booming right now. I saw very few big American families there and not many Cdn ones either. And all around Orlando, the economy is okay but not great. Many houses still for sale. Malls were so-so busy but not packed. As for the malls back here, yes people are spending but they don’t necessarily have cash, they have credit. For example, a buddy of mine bought a brand new Toyota RAV4 last year with a $30K bank loan. Payments were becoming a “hassle”, juggling money between bank accounts every month. So this year, he added the loan to his mortgage when he renewed. He now has $400-$500 back in his pocket every month to spend at the mall, and trips to Mexico. This is how the debt to income ratio gets to 165% in this country.
#32 Babblemaster:
http://ricochet.com/main-feed/Real-Life-Does-Not-Work-Like-School
This article may shed some light on the “stupidity” of this generation.
I am 33 years old, but I did not buy into this mentality. I think having one of my parents die when I was younger made me realize that “life is not linear, it is organic” (Sir Ken Robinson, a very smart man).
Tell that to my generaton. Their parents are telling them to do what they did, and that is buy a starter home, which as we know does not exist anymore, at least not in Toronto or Vancouver.
“Life in school is life in bureaucracy. You follow the rules, do what you are told, and rewards follow.”
“We did everything we were supposed to.”
I realize this article is about school and the “rewards” that come with spending yourself into oblivion before your life has even begun, but I think this speaks to the housing market as well.
It is the blind obedience that my generation has been taught is necessary that is the real culprit.
Parents are always telling us that’s what they did, so what is the hold up? BUY BUY BUY!
I don’t think boomers realize that they were born at the right time. Since when in history has this ever been the norm?
# 82 Robert
Yes Robert they are out spending again. In fact they are spending $708 million a day they are not earning.
http://www5.statcan.gc.ca/cansim/pick-choisir?lang=eng&p2=33&id=3780122
Great economy you have going there.
Funny, talked to a gentleman about the prettiest women around and mentioned Russian. He exclaimed that their manners and characteristics were less than favorable. Then I explained that the problem with Russian women was that they had to deal with Russian men…
Merry Christmas and Good Luck doomers!
People make it sound like everyone is broke because statistics show just that.
Just as not everyone need have exactly 2.2 kids to keep the population stable so long as that’s what the stats show it will be regardless of whether you live in a neighbourhood of single people or on a block where everyone has 12 children.
Even people with no debt and pensions to burn will take a hit if the debt bomb goes off. Keep in mind that pensions may not be as sacred as you think if the people paying it are in risk of default.
#45 jan on 12.18.12 at 12:11 am wrote:
In my humble opinion, if you really wannma know how much a house should cost in any Canadian market is a 50 % downpayment formula!!!
If you had to put 50% down for any piece of real estate i kanaduh then you would know the true value of it,PERIOD!
But how can you know how much 50% is unless you already know the true value?
There is a better method of estimating the price of real estate. Take a look at what people are prepared to pay to rent it. The monthly rent gives a far better picture of the true value of a house than the price. And if you have the monthly rent you can then use it to calculate a sensible price for the house.
#20 JR
And it’s just that simple. Prices go down, because they got too high. The corollary is that the solution to high prices is lower prices. But people will look for exotic explanations, because their sense of self is tied strongly to their house, and their net worth totally dominated by it. A simple explanation makes them look foolish.
A few of us remember whe PM Gordon Brown sold off all of Englands gold reserves to spend on social dodging…..he dragged our ignorant politicains in Canada down with him and Canada also sold off all its reserves. Well…it seems like the BOE has seen the error of it’s ways and bought many hundreds of tons of gold to put back in the Queens treasury…..does anyone see Marc Carney selling off Englands gold again…to make the Cnadian model an example to the world?
http://www.huffingtonpost.co.uk/2012/12/13/queen-visit-bank-of-england_n_2294771.html
At least Britain has survived the Brown era….Canada still suffers from TrudeaU era economics in the massive debt the Libs created.
In truth, the deficit was eliminated under the Liberals, while Mr. Harper has added $200 billion to the national debt, which now stands at an historic high. Accuracy counts on this pathetic blog. — Garth
#82 ROBERT
Be careful, LaughingCon will be coming for you.
#82 Robert
You have made some observations and comments that deserve a reasoned comeback.
1) “People make it sound like everyone is broke.”
Actually, people on this blog are not saying that. The general consensus seems to be that many people are in hock to the max. In fact, Statistics Canada says that Canadians are in debt at more than 160% of income. That’s a lot of debt.
2) “I just came back from Orlando and the theme park was full at $100 a ticket! Went to the outlet malls and it took me 30 minutes to find a parking spot.”
That’s exactly the point. Carney has been telling the populace for many months that we are too indebted and spending too much. The fact that people are spending doesn’t actually mean that people have the money to spend. It just means that they have access to credit.
3) “Most of the people on this blog are so bitter because they didn’t buy real estate at lower prices.”
Perhaps some are, but I can’t really speak to the percentage. However, many people are upset that houses have been artificially stimulated by foolish government fiscal and high-house price policies. This has resulted in a situation that could potentially blow up in our faces. Such as it has elsewhere.
So, Robert, I’m not really sure what your rant is about, but it sounds as if you believe that there will be no housing correction and that people on this blog are silly for believing so. Well, I’m not sure either (especially regarding Toronto), but time will tell. One thing we do know for sure, is that many people expressed the same sentiment in the USA before the bottom of that market fell out from underneath them.
The following is especially for Viktoria, enjoy.
http://www.youtube.com/embed/KgoapkOo4vg?rel=0
gold loosing ground today
should see some buying now
#78 Gotthardbahn
Builders build. That’s what they do. In 2008, Onni was able to cut prices by 40%, and still exists today to build more concrete boxes.
#68 Asse
That’s good, because prices aren’t set by paid off houses that are not selling. Although those have the most downside potential, as they can drop prices well below mortgaged up competition (also see: US).
And the people retired today are not the problem, it is the boomers who will be retiring in the next 10 years.
I have to wonder why you insist on spending your time being vexed by postings on a doomer blog, then spend even more time and effort to post yourself? Don’t you have better things to do with your time, like rolling around in all your equity?
“The lady doth protest too much, methinks.”
Sounds like someone is worried.
#78 Gotthardbahn
You seem to be missing info regarding the long process developers must take before excavation can begin.
But Mr. Tuner… the liberals didn’t have to go through a recessionary period of biblical portions like the CONS have. (Trust me.. I’m no defender of any party! But having Harper and Co. battle this world wide GFC of 2007 – 2012.. to me is quit impressive!)
Move along! Nothing to see here!!
Sorry! Mr. Turner. (Not Tuner)
#59… Yep…That is the basic sentiment in Victoria… but… The tides will be changing and the renter will look like the saavy one. Cocktail parties are going to be interesting over the next 5 years.
#64 Buy Curious
In fact the fine amounts to little more than 5 weeks of profit for HSBC
Check out Rolling Stones article by Matt Tiabbi
Absolute proof of the division between rich and poor
#78 Gotthardbahn
To understand why developers would start condo developments now, one needs to realize how developer financing works:
typically it will take at least 2 years from acquisition of land to start of construction. During this time, the developer will presell units to a certain threshold in order to trigger his financing. In addition, the developer will have spent a considerable amount on permit fees and engineering and architects. Obviously there is no cash flow, so all of these expenditures are with borrowed funds ( the buyer deposits are held in trust ). Stopping the process at this point usually means certain bankruptcy. Proceeding, and hoping the market has recovered in a couple of years when the building is complete, is the developers only option. In short, the start of construction today actually indicates where the market sentiment was 2 or 3 years ago.
Smoking Man:
Next time you board an airplane, cross a large highway bridge, or ride an elevator in a hi-rise, reflect on how much better off we would all be if pilots, engineers, scientists, etc, avoided school and were self-taught instead………
your arguments are utterly foolish.
In addition, your belief that building single family homes at a greater rate than household formation can go on forever, shows your attempt at teaching yourself math has been less than successful.
@#22 Smoking Man on 12.17.12 at 10:31 pm Vlad loved the 911 post. I’m a bonifide ct critical thinker. The facts are you out there, world knows the truth but the price to get it out is to high.
Better just to infiltrate the machine a get what you can from it.
Logic can’t beat an army of stupid.
*********************************
Sooner or later even the army of stupid beats itself…Everything has a tipping point.
#85 boomer hater?
I have heard this many times. Boomers had it made; best time to go to school, get jobs, buy stuff cheap. What a load. Do some research and you learn that boomer times were about the same as these times. Student debt equal to a mid-priced car. House prices were the statistical norm, about 3X’s income. Difference today is easy credit and the attendant madness that ensued. Don’t blame boomers for 20-30 something greed and stupidity. Also, jobs were few and far between in the 70’s. Post Nam recession. Our depression era parents didn’t have the time or inclination to coddle us until everything was just perfect for us.
#80 Asse on 12.18.12 at 11:02 am
#82 Robert on 12.18.12 at 11:09 am
Most people on this site are not gloom and doom, the small percentage of people that post are outspoken and sometimes radical. The RE and investment information on this blog is excellent in my opinion. When I research a specific topic, I like to hear arguments from both sides and then decide which one aligns with common sense, reality and truth. In the case of real estate I prefer to align with Garths view because of the factual information he uses. I have yet to see opposing arguments (or facts) that challenge his logic. I’d ask you to provide some factual data to prove your point but you’re probably just passing through and decided to label this as a doomer site because of the inconvenience a RE downturn will cause you and your deep seeded denial when it comes to losing your equity/retirement savings.
Spring 2013 will be interesting for RE.
Logic can’t defeat an army of stupid….
That’s because we’ll drag you down to our level and beat you to death with experience…. I’ve been stupider longer than you’ve been smart…
Stupid can be fixed, Stoopid is … “dumb on purpose” Kinda like First and Dr…. ah forget it
#24 Jim
Stay Pat buddy… stay pat
Bubble never return to the historic mean as much as due to over surplus they dip below that mean, then correct. Smoking Man’s sisters are featured in this video
http://www.peakprosperity.com/video/232/playlist/153/chapter-15-bubbles
“There is no means of avoiding the final collapse of a boom brought about by credit expansion.
The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment
of further credit expansion, or later as a final and total catastrophe of the currency system involved.
Ludwig Von Mises
DonDWeast
human labour is the cheapest it’s been since the Second World War….. isn’t that the truth
Robert…. It’s called Credit
Crea reminds me of the Iraqi defence minister who went on television as the allied forces were invading and demolishing any Iraqi resistance.
He claimed that the Iraqi army was defeating the Allied forces and driving them back.
I wonder if he works for CREA now.
Many people think like CREA and that is why there will be a buying fenzy in the spring for Single family homes in Vancouver.
snicker, snicker.
“Accuracy counts on this pathetic blog. — Garth”
Only for those who are not Canadian Conservative Neandercons.
How BAD is it Vancouver?
There were only 30 sales in all of Greater Vancouver on Friday. 100 used to be considered a slow day.
5200 houses in Greater Vancouver with 1M+ price tags (and not eligible for CMHC insurance). (Holy Cow!)
As Tiger Williams said so eloquently “ Done like Dinner”.
My Boomer coterie are huddled in a blanket of OMG proportions, as they realize that they won’t be simply able to dump their bung for a million and retire on the proceeds.
I also note that ‘Flaherty the Foolish’ has floated the idea of privatizing CHMC.
It’s bad – not as bad as what is happening to the NHL (* study published today said the NHL Brand has suffered worse damage with this lockout – than BP did, during the Gulf Oil spill).
Yikes.
#65 The real Kip on 12.18.12 at 8:02 am
——————————————
Here, here! This blog could use a little more positive national sentiment.
Real estate will come crashing down, but you may still not be able to afford what it is you want. Now more than ever there is an air of entitlement. What we want has become what we need. You don’t remember how frugally our parents lived. Home cooked meals, Tv’s that were kept for 25 years, and if you wanted your basement finished you bought a hammer and a circular saw. Nothing was perfect but we had homes and families spent time together.
I wonder how many people actually ‘bought’ gold? ETF’s are a great investment when the market trends up but when it corrects they seem to take a bigger hit..had a bunch in 2008 and sold last year. Now I’m just waiting. Nothing seems secure or at least valued at a price I’m ready to pay..including bank stocks.
Opportunity doesn’t knock often but be ready when it does..cash is always king.
Merry Christmas and Good Luck doomers!
Wow, this sad blog really does reach a big audience, with at least one reader in Russia now! It goes far beyond spoiled rotten Canadians, as well as a few Americans and the odd Australian with their similar stories about a real estate market coming back to being within sight of reality.
As you, my fellow Canadians, are well aware the genie is now out of the bottle. It’s become mainstream knowledge now that our overpriced real estate markets are correcting. Hardly a day goes by where you don’t read about it in The Globe and Mail, and it’s making it’s way to smaller circulation papers like the London Free Press. I haven’t looked, but it’s probably also found its way to smaller city papers like the Sarnia Observer or Timmins Daily Press. Now let me see, weren’t we warned this correction was coming?
Black Gold said
“I dont get it, even if the markets were to correct by 50% in big cities like vancouver or toronto, the price of the SFH would still be like 400k or 500k. Thats a lot of money especially when most people in the private sector are working low paying jobs (less than 20$ an hour).”
Welcome to the rest of the world. Population pressure/Land use restrictions results in this. RE prices have nothing to do with incomes when these pressures are present.
Wow, finally!
We get to the heart of the matter. Political subversion.
Even the Commies have been subverted by profits.
We have the country and the government that we deserve because we are too stupid to go another way.
Before we spend 100 billion dollars on ships, aircraft and tanks, we should build low-cost housing for pur laine Kanadianskis.
I know. Build a new political movement. We’ll call it the “Democratic House Party”.
A house for every Kanadianski, a chicken in every pot, an Escalade in every garage.
Seriously. Komrade.
In truth, the deficit was eliminated under the Liberals, while Mr. Harper has added $200 billion to the national debt, which now stands at an historic high. Accuracy counts on this pathetic blog. — Garth
Guess Mr. Harper should have allowed the NDP/Liberal/Bloc coalition to go through. They would have been the epitome of frugel spending.
Cerberus bought Bushmaster in 2006, and more gunmakers since, merging them into Freedom Group, which it will now sell. bbc
Freedom Group
http://www.cerberuscapital.com/news/cerberus_capital_management_statement_regarding_freedom_group_inc
Hey Garth, who’s gonna be our next resident central bankster. Remember, Goldman experience required.
Some more fodder for the inflation/deflation debate…
In the days of ancient Rome when the republic was still a republic, Lucius Cassius, one of the city’s most venerated consuls, famously coined the phrase cui bono.
It means As a benefit to whom?, and Lucius Cassius, inquisitive and analytical by nature, was always asking the question… whether he was investigating a crime or unraveling political corruption. Even as far back as the ancient Romans, someone always benefitted.
This simple dictum still applies today, especially when governments pass stupid laws and policies.
For example, the Department of Homeland Security decided that air passengers need to be bathed in radiation, so they went on a shopping spree buying $100,000 body scanners. Who benefits? Why, avid body scanner promoter and former Secretary of Homeland Security Michael Chertoff, reported as having had questionable ties to Rapiscan Systems. Three guesses as to what they make.
Sometimes the corruption is so obvious it’s just painful.
Cui bono also settles the argument of inflation vs. deflation, which seems to be one of the most divisive economic debates of our time.
There are some who believe that systemic overleveraging will eventually cause the money supply, and prices, to collapse. There are also some who believe that perpetual printing and easy money will lead to substantially higher prices.
Cui bono?
In a deflationary scenario where price levels fall, it is the savers… people who have been responsible with their money… who benefit. In an inflationary scenario, it is the debtors… people who have been irresponsible with their money… who benefit.
Which of these two groups is calling the shots? Why, the latter, of course.
Governments, and particularly those in the West, need inflation. It’s the only way they can keep the party going and pay down their debts.
In one extreme example, the Weimar Republic hyperinflation episode in the 1920s wiped out the country’s pre-inflation federal debt. To paint this picture even more clearly, the aggregate balance of all mortgages across Germany in 1913 totaled about 40 billion marks (about $221 billion in today’s dollars).
At the time, this amount constituted roughly 16% of all German wealth. Ten years later, in 1923, this amount was worth less than one American cent.
An economist at Yale University from the 1920s named Peter Reinhold estimated that the Weimar central bank had printed so much money that if you stacked all of it denominated in 1,000 mark notes, the pile would be 25 BILLION times taller than Mount Everest.
In printing such a vast sum, the Weimar government benefitted tremendously by getting rid of its debt… at the expense of everyone else who ended up using the currency as wall paper.
Governments also benefit from inflation in surreptitious ways. In inflationary environments, wages tend to increase rapidly… far more rapidly than tax laws can be updated. As a result, workers in progressive tax systems end up being pushed into higher tax brackets, even though their inflation-adjusted wages have actually decreased.
Suppose you make $50,000, and that your current tax bracket is 25%. At $75,000, a new tax bracket kicks in at 35%. Let’s assume that in three years, wages and prices double. Now you’re making $100,000 per year, but you’ve been bumped up to the 35% tax bracket. On an inflation-adjusted basis, you’re actually worse off.
This constitutes yet another form of theft, and it primarily affects skilled, middle class workers, as well as those living on fixed pensions… all for the benefit of a fiscally irresponsible political class.
And as we know, it is the political class that makes the rules, not us. They will do what is to their benefit, not ours. And it is to their benefit to inflate away their debt. The writing is on the wall, and the history is right there in front of us.
http://www.sovereignman.com/finance/inflation-vs-deflation-cui-bono-10236/
Air Canada’s starts discount brand ‘Rouge’ for flights to Sun destinations.
Real Reason not reported by MSM: To put other airlines that fly to Sun destinations, such as Air Transat, out of business. How? Air Canada/Wesjet have a duopoly within Canada flights due to legislation. They earn lots of $$$$ here and will subsidize the new airline…and hide that fact with fancy accounting.
Sound familiar? With all the Telecoms opening discount brands when new mobile operators arrived in Canada??
Get rid of this Aviation monopoly. Allow USA based airlines to fly point to point within Canada! Follow the $$$
#82 Robert
You know you’ve some peoples’ attention when 5 of the following 12 comments are about your comment. Nice work. I just have one quick thing to say:
I rent a home for $1800 a month. If I were to buy, after an $80000 dollar down payment and property taxes (no maintenance accounted for) I would be paying about $2600-$2700 (depending on the mortgage terms I chose)
What do I have to be bitter about?
#66 black gold
You said that it’s best to be risk off, and then said you would want a heavy position in precious metals.
Could you explain that a little more?
I thought being long precious metals was a risk ON position. N’est-ce pas?
Hey guys! Good news: A Soft Landing For Housing!
Yup, soft landing here for sure.
Sorry, Garth. This just has to be spread around and I hope you let this get through:
http://www.examiner.com/article/media-blackout-oregon-mall-shooter-was-stopped-by-an-armed-citizen
Bad guys will always find a way to get weapons – even if it’s illegal to own them.
I meant to continue: “so we might as well let the good guys acquire and carry them – just in case.”
thanks.
#105 don’t blame Boomers for 20-30 something greed? Excellent! It is good to know you won’t need any
handoutsfinancial assistance from the younger generations when you go to retire. After all the younger generations will be too busy paying for our own mistakes.And remember, no cauterwalling about the pittance that is CPP or that company pension that you had no idea was so underfunded. And no squawking about the obscenely high property taxes. Or whining about a mortgage you never paid off.
It really is a relief to know your generation is all set. It is a weight off our minds.
Just released TREB data for the first two weeks of December:
Toronto desirable SFH – sales down 10.1%, prices down 3.1% YOY
Toronto condos – sales down 24.2%, prices down 4.3% YOY
Smoking Man/Whazzup – it is going to be a nasty crash realtors, a nasty crash.
97 Devore
Home babysitting today and bored. Glad it got a rise;)
And no I’m not rich, just a shmuck whose trying.
I would like to believe this is a blog of truly, critical thinkers.
I would like to believe the Dogs could discuss, recent MSM deceptions.
I would like to believe, when a police spokesmen publicly threatens prosecution for posting information online, posters everywhere, but especially here, would
take notice.
I would like to believe people here would rise above, their personal fears.
I would like to believe we are more here, than the pursuit of ROI and personal net worth.
I would like to believe, In this special circumstance,
I would not get told, this is not the correct forum for this universal issue.
I would like to believe something this atrocious and obvious, perpetrated on the most vulnerable in our society, would not be ignored.
I would like to believe all these things.
Our collective silence, brings us shame.
take care
Blacksheep
Mentioned Salmon Arm the other night and in the last two days three court ordered sales hit the market. This so reminds me of the early eighties. Back then it started the same way with a rash of foreclosures. I expect before this bust gets in gear Vancouver and Toronto will be the foreclosure capitals of Canada. The greatest ever redistribution of wealth continues to phase two. In 2000 it was the stock market bust and now in phase two it is the real estate transfer. Middle class is doomed unless of course you open your eyes and learn more about this big picture.
#82Robert
How many of those people at Yorkdale do you think are paying cash and better still will have the cash to pay of the credit card on time. I saw the same full mall parking lots in the U.S. in Dec. 2007. How did that turn out?
#91 Hangfire –
”Well…it seems like the BOE has seen the error of it’s ways and bought many hundreds of tons of gold to put back in the Queens treasury…..does anyone see Marc Carney selling off Englands gold again…to make the Cnadian model an example to the world?”
Actually Hangfire, the 4600 tonnes of gold stored by the BOE is owned by many other countries. The UK at last count only held 310 tonnes of that stash. Brown sold off 400 tonnes between 1999 and 2002. Wasn’t aware that they were busy buying up any more. I know that India and China are gobbling up as much as they can get. Canada has all of 3.4 tonnes. Close to what to what Slovenia, Aruba and Hungary each have. That amount would fit on my coffee table with lots of room to spare. Even UK’s gold would only represents an 8’cube which would bit in my pantry. So, not so much really.
Bad guys will always find a way to get weapons – even if it’s illegal to own them.
The two issues in regards to the recent elementary school shooting are:
1. The mother stored guns in the same home that her violent, disturbed son resided in. She then insisted he take lessons on how to properly fire them. Why were the weapons not stored at a local firing range, out of temptations way of her son?
2. A number of witnesses state they heard the gunshots coming from the direction of the elementary school but did nothing because they always hear gunshots and believed the cause to be just another reckless hunter.
If a number of gunshots were heard coming from the direction of an elementary school up here, the local residents would not pass it off as ‘another reckless hunter’ because we are not used to hearing gunshots and especially not from the direction of the elementary school. Rapid gunfire would alarm everyone.
We can and do own guns in Canada, but you can expect the RCMP to sooner or later inspect your premises to ensure the firearms are properly stored. I know this because of all the news articles where Canadian Hunter X Y or Z complain because the RCMP confiscated his weapons or tromped on his carpet. Does the local sherrif south of the border do the same? Does the local sherrif south of the border dare do the same?
#111 Bill Gable
You plagiarizing the Globe message board. Or are you Peter on there? Busted (-;
I would like to believe, when a police spokesmen publicly threatens prosecution for posting information online, posters everywhere, but especially here, would
take notice.
They have promised to prosecute those who have impersonated police officials online and posted deliberate falsehoods. That Youtube video has been edited.
This is a blog about ROI and only about ROI, in particular Canadian real estate. I have found it to be a refuge in the past 48 hours from some horrible news.
#128LaughingCon
A bit of cherry picking. All the averages are up except for the two you mentioned. Spring is all that matters going forward in this debate.
@134, You are misinformed about police inspecting how firearms are stored. Of course anything is fair game if someone is dumb enough to give consent to an officer to enter your home. (Never consent to anything.) Also, an officer can forcibly enter your home in hot pursuit or with a warrant, but as I understand it both of those cases require some actual evidence of a crime.
Only a provincial firearms officer (not a regular cop) can inspect your firearm storage, only with prior notice and agreement on a time, and only if you own 10 or more guns. The law states the gun owner is supposed to help the officer in his/her inspection, which in fact means the law is in violation of the charter right against self-incrimination. In soviet canada, gun owners are dangerous subversives.
Your question about what the local sheriff would dare to do south of the border is a good one. You prefer a lopsided power dynamic with the state where you are not safe and in possession of privacy in your own home?
#127
The boomer demographic runs the show. Our demographic will continue to get it’s fair share. Why shouldn’t we? We paid for it and We vote. On an individual level, people of any age group are ultimately responsible for there own financial state.
#103 for man
We don’t need testing till university, if a kid hates allgebra don’t force it on them, let learn what they like, we will get better pilots and engineers in the long run.
That way kids will gravitate to subject matter they will be pationate about. No supper vision required, so the kid that hates algebra won’t be designing buildings.
What is wrong with that.
“In truth, the deficit was eliminated under the Liberals, while Mr. Harper has added $200 billion to the national debt, which now stands at an historic high. Accuracy counts on this pathetic blog. — Garth”
Well, maybe the Liberals got it wrong! Because according to the Modern Monetary Maniacs, without government debt the public would have no money. In order to accumulate debt, the gov needs to run a deficit. Therefore, deficits are a necessary part of the fiscal plan. Since we all need/want money, the bigger the deficit is the better!
Don’t you just love “free lunch” economics?
#139 rosie on 12.18.12 at 6:11 pm
“The boomer demographic runs the show. Our demographic will continue to get it’s fair share. Why shouldn’t we? We paid for it […]”
No you didn’t.
TREB Reports footnotes:
First two weeks of Dec.2011 – “Serving over 31,000 Members in the Greater Toronto Area, the Toronto Real Estate Board is Canada’s largest real estate board.”
First two weeks of Dec.2012 – “Over 35,000 TREB Members serve consumers in the Greater Toronto Area.”
Meanwhile sales 416:
SFH – 364 / 304 now – down 16.5%
Semis – 126 / 81 now – down 35.7%
Towns – 110 / 91 now – down 17.3%
Condos – 526 / 392 now – down 25.5%
==========================
Realtors TM – Up 12.9%
==========================
Smoking Man/Whazzup – it is going to be a nasty crash realtors, a nasty crash.
#142
I like to believe we did. If it is not there then we’re all in doo doo. Think positive. Turn that frown upside down.
It has been said that you fortunate in life if you have one good teacher. One who lights a spark. I think most of us had at least one in our lives. Maybe not a school teacher but a teacher none the less. Come on Smoking Man who was your rabbi.
The Second Great Betrayal: Obama and Cameron Decide that Banks are above the Law
Posted on December 17, 2012 by Devin Smith | 9 Comments
By William K. Black
http://neweconomicperspectives.org/2012/12/the-second-great-betrayal-obama-and-cameron-decide-that-banks-are-above-the-law.html#comments
=======
too big to prosecute?
UK memo to US media: our financial bad guys are badder than yours
http://treasureislands.org/uk-memo-to-us-media-our-financial-bad-guys-are-badder-than-yours/
And to all of those who called me wrong a few months ago on this blog about the CPP being grossly underfunded, a little lump of coal for your stocking!
http://opinion.financialpost.com/2012/12/17/pension-shakeup-needed/
May they also get a copy of Bill Tuft’s book on the sorry state of Canadian pensions under their tree.
RE: #105 Rosie
Baby boomers are the cakewalk generation.
You could raise a family on one income.I personally know of a family where the Father worked selling hair care supplies to beauty salons. The Mom stayed at home and raised 3 kids. They now have a paid for home, paid for cottage on the ocean & retirement income.
Do you honestly think that could be accomplished in today’s world?
The minimum wage in BC in 1972 was $2.50/hr – a brand new beautiful home in Richmond was $40,000.
The minimum wage is just over $10.00/hr so a brand new beautiful home in Langley should be $160,000 – you know, so we could “suffer” like the boomers.
Employers attended highschools competing to hire the soon to be grads.
University acceptance was a matter of filling out the application.
Show me where this happens now.
Boomers could pay off a brand new car with 2 months salary.
Boomers have experienced the greatest generational increase in wealth in the history of mankind.
You might want to look up “Baby Boomer” on wikipedia.
Baby boomers are the priviliged generation.
My mother (god rest her soul) was honest . She would say “I don’t know how you kids do it- it is much more difficult to make it these days”.
Overheard at a party about someone getting into the market in the last while because they didn’t want to throw away money on rent. They didn’t realize that they were getting into a 35 year mortgage.
I’m not sure how you can be so unaware of how long your mortgage will be. Especially when it will be one of your biggest purchases ever. Maybe the monthly looked okay?
Old Man and Daisy Mae
the noose begins to tighten on the Harper cons…..
http://www.theglobeandmail.com/news/news-video/video-struggling-real-estate-market-can-have-huge-impact-on-conservative-economic-narrative/article6531797/
#150 Form Man
Would that not be funny, Gartho influences the elfin diati, then fast forward to next election, fat bastetd goes down cause real estate crushed.
Revenge is sweet.
#141 Inglorious Investor on 12.18.12 at 6:33 pm wrote:
Well, maybe the Liberals got it wrong! Because according to the Modern Monetary Maniacs, without government debt the public would have no money. In order to accumulate debt, the gov needs to run a deficit.
Not quite. The “Modern Monetary Maniacs” say that the public has to get money from the government or from exporting. The reason that the Liberals were able to reduce public debt without causing anguish in the private sector was that Canada was earning lots from exports. Try that when Canada is importing more than it’s exporting (i.e. now) and you’ll see lots of private sector losses, a big loss of savings and an overall rise in poverty.
#148
I don’t think your talking about boomers. Sounds more like their parents.
Gta mouths of inventory starting to rise .
Click on guava link to see chart . http://guava.ca/indicators.html
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#120 randman — Exc. post and link. Nice work!
#130 Blacksheep — Also a first-class post.
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Fiscal Cliff – SS “That is not the government’s money. That is YOUR money the government borrowed to balance their budget, and now they can’t pay it back. The US Government just defaulted on the American people.” wrh.com, and Foreign Holdings “There will come a tipping point at which the US economy is going to crash, and and drag the US government down along with it. At that point, the US Treasury notes will become worthless.” wrh.com. Esp. if derivatives and the like also unfold; Subsidies for mansions; Geithner panicking Has he discovered that he’s replacing Bernanke? Carbon Tax Just another money grab; 4:53 clip EU built on sand, and the tide’s washing ashore; 110% hike in a year UK supermarkets, plus energy costs.
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Disinfo. This is one method of doing it, and is done very well; The west is doing a fine job in Af’stan “Connecticut! Shooter! Sandy Hook! Dark Knight! Ban Guns!” — ABCNNBBCBSFOX” wrh.com, War with Iran This is what is being taught to young children in schools. Any connection between last Friday’s events and this? Quite clearly there is; Plus this — Guns in Schools? 1:17 clip Young lady explains why she is buying her first gun; Murder – Suicide “Check the medicine chest.” wrh.com; US expands military in the Philippines, and 3:26 clip Now it’s Bulgaria’s turn; 1:42 clip ObombaCare explained in one sentence.
#151 Smoking Man
and one could say the irony is delicious……….
One recent survey discovered that 40 percent of all Americans have $500 or less in savings.
How does that stack up against Canadians pathetic savings rate?
I have friends that are cutting cable, dumping cellphones, trying to sell toys like boats and jet skis – and if you really want to get an eyeful – take a look at the lineup in your local grocery store!
The Malls here in Vancouver have foot traffic – but few people are carrying packages.
In the US they are trying to say unemployment is 7.7% = yet there are 86 million without full time work.
Oy vey.
Hey Garth,
Can you give us a snaphot before the end of the year of the “most deleted”
My moneys on Smokin Man
#93 Babblemaster:
Good post!
#135 – NEO
Wrong. I got info from the web.
I only post on one board.
This one.
Get a life.
#111 Bill Gable: “…also note that ‘Flaherty the Foolish’ has floated the idea of privatizing CHMC.”
*****************
‘Flaherty, the Foolish’? Love it! LOL
Re: #83 martin9999 on 12.18.12 at 11:30 am
They also predict the German DAX will lose 33 percent next year. The DAX has been the most overvalued stock index in the entire world for quite some time. Gold looks certain to drop to $1,200 U.S. Oil could be a different story because it’s always manipulated upwards because the big oil companies pay huge corporate taxes. Technically oil has to break down in price at some point in time.
#67 Tony on 12.18.12 at 8:58 am
“All 3 predictions the same as mine for 2013
Gold to drop to $1200 U.S. an ounce
Oil to drop to $50 U.S. an ounce
The German Dax the most overvalued stock exchange in the world to drop 33 percent (i’m predicting at least 50 percent)”
Yes, good old Saxo Bank. Dart thrower extraordinaire. You are in great company.
#85 ChickenLittle
Good point about blind obedience. Especially to authority figures. By my observation, there is too much of that. And you’re also correct that, to a large extent, we were taught it in school. But, in the end, I think it still comes down to a lack of critical thinking.
Yeah
Smoking Old/ Man attended one of my seminars.
He was a star pupil…..
#144 rosie
“I like to believe we did. . .”
You can believe what you want, but the facts state otherwise.
Greetings: I have asked this before, and am doing again. Please delete the arseholes who post “first, furst, etc”.
“Nothing creates a Republican like a Mortgage”
Can’t remember where I read that, probably in a VP book years ago. Happiest people I know are the ones who don’t worry about money…some because they have more than enuff; some because they feel they have enuff.
(I don’t fit into either of those categories, btw)
I can’t think of a single multi-millionaire I know that’s content…the treadmill is very large in their world, & quite well appointed, but it must always be trod daily, & at a very fast clip…all the time, always. Never stop!
They are, without a doubt, the most depressing company I tolerate…for short periods of time. Always concerned with details but never wanting to hear any.
Quality of life is a funny thing, & on this housing-obsessed blog a well-appointed shelter is central to it. Owned, preferably; but renting is a viable option if one has a healthy bank balance. Or not…the “prejudices” against renters have been previously noted by others.
(Geez, I kinda miss the old days when a bank would only loan you money if you could prove you didn’t really need it!)
I prefer renting because it partially removes me from having to deal with the machinations of financial institutions (which I’m certain are all inherently evil in intent & purpose) & because I’m lazy…well, perhaps financially, anyway. Enuff energy goes into business & work, & all artists know that financial motivation destroys the creative spirit.
I can remember taking a formula for compound interest & applying it to various numbers deposited at steady rates over many years & decades & being surprised at the end result…did this when I was 17. I also remember thinking “So what? Anybody could do this!” As this blog demonstrates, few people actually do; myself included. Required way too much concentration twice a month & interfered with my drawing.
Fast-forwarding almost 40 yrs, it’s interesting to note peoples’ reactions to their respective situations versus their original expectations. (I don’t worry about money too much, ‘cept when I don’t have any…LMAO)
As a couple posters have noted, there is an underlying cult of sulkers around…because-they-missed-the-housing-market types; but that is a generational thing that goes up & down. And it doesn’t just happen with housing…
I too am PO’d that I didn’t buy in 2002…I’m also PO’d that I put all those Bobby Orr rookie cards into my bicycle spokes, that I haven’t won LottoMax, (yet!) that I sold my HemiCuda 15 yrs before the market peaked, bought Bre-X but didn’t buy Apple @ $23; & I’m really PO’d that I didn’t win the DNA lottery & have parents that were filthy rich…
Stoopid Friggin’ Planet. There’s just no justice here…whaaaah!
Sometimes I think short-term goals are the best-pursued…never can tell when an errant Soviet Satellite will tumble to earth & land on your roof. Too many things are outside of our control, from my way of thinking. Hopefully, enuff short-term goals get strung together in some sort of karmic order to generate some long term stability within your life.
In closing, & in keeping with the “doomer” theme underlying this comment thread, my immediate short-term goal is to get paid for this flame job before the world ends on friday nite…& I think I’ll hold off buying Christmas presents till saturday morning once I’m reasonably certain it will actually arrive.
And like those old Mayans interviewed by Mexico City TV said last nite, if the sun rises saturday morning they’ll be back out in the fields (just like the rest of us) irrespective of what their forefathers foretold…whatever it was…
#162Bill Gable
#135 – NEO
Wrong. I got info from the web.
I only post on one board.
This one.
Get a life.
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“Peter Pan
10:50 AM on December 17, 2012
There were only 30 sales in all of Greater Vancouver on Friday. 100 used to be considered a slow day.
5200 houses in Greater Vancouver with 1M+ price tags (and not eligible for CMHC insurance).
I saw the Grim Reaper outside the local Re/MAX office yesterday.”
Ummmm no. You get a life. lol. The “web” you got it from was the Globe and Mail comments section “Realtors blame Flaherty as slump deepens” article. Nice try.
Yet another example of RE duplicity here in hogtown.
This place was on market for over 180 days, not 35, and sold for only 80% of list, not “99%”
From TREB:
102 Branstone Rd Sold: $680,000
Toronto, Ontario M6E4E5 Toronto W03 Caledonia-Fairbank List: $689,900
Orig Price: $689,900 Taxes: $4,426.68/2012 99 % List
SPIS: N Caledonia-Fairbank 114-15-L DOM: 35 Contract: 11/12/2012 Sold: 12/17/2012
From Guava:
W2333457 – M6E – 102 BRANSTONE RD Toronto, Ontario – $799,900
Price Change. Sep 1: $799,900 Apr 12: $849,900
MSM coverage of the real estate slippage tonight on CBCnational tv and local radio is front and centre. What a difference a few months makes.
The SFH will be affected in Toronto; no area will be immune. People’s underlying financial weakness has only begun to get exposed.
One other probably difference between the “boomer times” and the current generation–they started off small..like my parents.fresh of the boat and renting an apartment on top of a store…then my mother pressured my father into buying their first home, a major fixer upper for 15-20k+(probably that female status-seeking hindbrain that worries about what will others and family “back home” think)…and moving “up” about every decade. Before they actually moved to the GTA, the GTA SFMcM to them looked like unattainable dream houses.
The current generation now want that McMansion as their *starter* house.
Western Observer you are so wrong as a Boomer you have no idea of how many hours i worked each week to raise my family and trust me not alot came easy. Luckily for me i was a saver and retired at 56 years old. For thirty five years i worked six days a week my friend and it is my childrens generation that has put lifestyle ahead of work. I am not saying they are wrong but i am just stating a fact. My only advice to you is to develop a work ethic my friend and maybe you too can retire early with no debt.
Why not just say, ” If you sold at 2:05am on a Sat morning, sales are down 100% and prices are down 100%. I told you so…” …cause no sales at that time.
Man Garth, you are attracting the sheeple and IQ<100 crowd indeed. this post not meant to be posted. only for you.
I'm sure you can make $$$ other ways. Not trying to insult you or anything but when it comes to thinking, we are on opposite ends of the spectrum. Weird eh? Unless ur doing it intentionally. lol
http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/canadas-housing-market-a-victim-of-demographics/article6185296/
A very old friend sent me this today. I had seen it before, but it confirmed again how very fortunate we are.
> http://www.youtube.com/embed/W86jlvrG54o?rel=0