Pete and Val moved from Ottawa to civilization last year. “We sold in May at a good price and earned a healthy tax-free gain on the sale,” Val says. “But we’re going back to Ottawa this summer and must decide if we rent or buy.” Like so many others, P&V read this blog because doing so will make house prices come down. Everybody knows that. It’s guaranteed. Just like Regenerist Micro-Sculpting Hydrating Eye Cream and Lash Serum. All scientifically proven.
“In the last year, F killed the mortgage market and the wheels are supposed to be falling off the real estate market,” Pete tells me. “However, when we look at the MLS website, it seems like house prices have not changed since we sold! What’s up? Are you wrong on this real estate correction or does it not apply to Ottawa? What am I missing?”
Now here’s Ryan, growing concerned about the future because “my wife and I are hitting our 30s.” I am so sorry for you, dude. Here, have some lash serum.
“We’ve been renting for almost a decade and are patiently waiting for the market to hit the bottom. While we’ve sat back for years renting (and saving), at the same time, noticing the local housing market balloon to unsustainable numbers, sometimes when I read about your ongoing ‘real estate doom/gloom’ forecast (and albeit a ‘bang on’ forecast), the real question is this: Well, when is it the RIGHT time to BUY?”
In announcing last month’s unhappy sales numbers yesterday, Shelley Mann, boss of the real estate board in Victoria, put it this way: “Many buyers are still waiting for prices to drop, but it’s clear to me that sellers are in a holding pattern regarding the value of their homes.” And that’s about right. Rapacious buyers are battling delusional sellers. And the victims are sales. In Victoria, for example, the number of deals last month was 18.2% below year-ago levels.
In Vancouver house sales plopped a wicked 29%. In the Lower Mainland, the Fraser Valley board says realtors there took a 28% hit, compared with February of 2012. Saskatoon was down 18% last month. Montreal is down 14%. Toronto realtors this morning reported a market-rattling 15% dive.
In fact, falling sales have been a consistent story now for the past eight months, despite cheapo mortgages, rising stock markets and the outbreak of bidding wars, surging house prices and rising sales in the US. With few exceptions, tumbling sales presage lower prices, which we now have in Vancouver and Victoria, for example. So, do hopped-up, aroused wannabe-buyers like Val and Ryan just suck at being patient?
The big ratings agency has been investigating how to calculate the risk on pools of residential mortgages which lie at the core of some massive securities. Fitch is developing a new financial model which can estimate potential losses among Canadian mortgages if the housing market jumps the shark the way it did in the US.
The conclusion: Canadian real estate is overvalued by about 20%. In the last five years prices have risen dramatically, “when underlying fundamentals suggest that growth is unsupportable.” This, you might remember, is consistent with forecasts by outfits like Capital Economics (25% decline) and even the major banks (10-15% drop). It also echoes international opinion, as expressed by tomes like The Economist, now calling our market “the most overvalued in the world.”
So what gives? Where are the beefy cuts?
Well, check this out. Fitch says: “If growth halted and prices began to drop, it would be expected to take several years for home prices to revert to their sustainable values, depending on a number of factors such as government support and credit availability. With this time frame, the actual observed decline in prices could be as low as 10 per cent.”
In other words, no sudden, precipitous Phoenix-inspired crash. More like an erosion in prices stretching over years of flatlining in some areas and a slow melt in others. BC and Quebec are at risk for a 26% drop, the agency figures, while Ontario dips 21% and Alberta just15%. And within those provinces, as I’ve been harping all along, there will be huge difference between markets and hoods. Urban demand areas could get nicked for just 5%, while some McMansions in the burbs are crucified. In fact, this pattern’s already emerging in the GTA and the Lower Mainland.
In short, correction, then melt. An event that could last five or ten years as incomes and rents stagger to catch up with real estate values pushed higher by a tsunami of debt. And where does this leave purchasers and vendors?
Simple. The advice for buyers is ‘wait.’ The advice for sellers is ‘don’t wait.’
It took a decade for this bloat to happen, and it could take as long for prices to revert to the mean. Because most homeowners would rather eat bugs than take even a small loss, sales and market momentum must fall for months on end before asking prices seriously decline.
If you can’t wait, at least don’t whine. Go out like a hero.
188 comments ↓
This year the spring will bring NHL playoffs to Toronto and to Montreal.
My call is 30-40% for Vancouver and I’m willing to wait for 5 more years.
The housing market is already slowing down the economy. As sales fall, profits decline, investment declines and finally GDP also declines. Last month new low rise home sales tumbled by almost 50%. That means that new low rise sales contributed half to GDP of what it did last year. This is a giant snowball in the making which eventually will melt the housing prices.
Not only are all Vancouver sales down 29%, detached homes are down 36%(!).
For all those who pulled their listing instead of cutting their prices, you’re never going to catch that market by chasing it down. It’s better to be the first on the block to undercut your neighbors than be the last one holding property when everyone else is holding cash.
Cut 15% now, or lose 30% later, it’s up to you!
I would love to have the MLS realtor text for today’s house photo.
Ravine? Check.
Trees? Check.
Easy access to canoe? Check
White water rafting in back yard? Check.
$2.2m it is then. Unconditional offers 9th @ 6PM.
Government support and credit availability are already about as high as they can be (unless the 0%/40-yr party starts up again).
Rates have been so low for so long that they simply cannot provide a new stimulus at this point… if someone wanted to get a mortgage, then they already have one (or two, or three).
Slow melt?
http://youtu.be/B0RWLxOFGLY
TeeHee!
The plot thickens as more members from the chamber of second, sober thought get caught in the cross wires. The snouts dig deep and when they finally come up for air, they grunt to us feeble taxpayers, “WE, your SENATORS come FFUUURRRRSSSTTTTT”
But seriously…
If prices are 10x income vs. 4 to 5x historic, and hugely over valued to rents, how can it be slow like Fitch says? Seems like 10% annualy is what this calls for, for 3 years straight. Then slower drops. Wasn’t that how it played out is US? 30-odd % over 3 years?
Also, correction needed in last section. BC listed twice 26% and 21%. Editor doesn’t get his pint today.
Wasn’t Fitch same agency that had Lemon Bros at AAA.
Just saying,
The same mathematical modules that are taught in every house of obedience training……
Viod of herd dynamics…..
Canadian sheep are a stubborn lot… Who don’t care about income vs cost, they look at rent to ownerships, and will accept a premium for the pride of cutting grass and shoveling snow, and serving wine on granet…
It’s obvious to me…
Tomorrow D day..
This may be my last post for while, prey that it’s not….
If you can’t wait make serious stink bids. Start your offers 50% of asking. If they tell you to go blank yourself move on to the next one. There are so many houses sitting empty that sooner later someone will take a substantially lower price.
Patiently Waiting, I liked your HAS comment. There are truly are so many HAM selling.
If prices fall 10 percent in Vancouver it won’t move the needle. They have risen by more than than since you have been waring about the big correction.
Interest rates not going anywhere fast.
FP toay reported Banks started spring market mortgage sale/competion. 5 year 2.89 without asking borkers can get you 2.5% for a 5 year mortgage. 10 year mortgage can be had @ 3.6% or so.
Boomers or bangers shifting Economist underatsnding of retirment medelling – will keep working and shifting models by approximatey 10 years. Also have boomers have decided thay would rather stay put and brong back their kids and grand kids then sell at a loss.
Condos will correct but SFM including those multi million ones will retain values.
Bottom line too many that come to this blog suffer from paralysis by analysis and negative thinking.
I now read for Garth’s great updates but also to remind myself how lucky or blessed I have been with life to date.
http://toronto.ctvnews.ca/video?playlistId=1.1181421
Here’s a story about an elderly couple who cannot afford to live in their older condo anymore. The maintenance fees are too high!! They admitted that they would be better off renting….I feel bad for them.
In a nutshell……………
S_O_F_T L_A_N_D_I_N_G
“Lemon Bros”
Smoking Man, you crack me up almost every time!
It’s true though. It’s a better name for them.
Inside is a cat thinking “I should buy a boat”
I knew that Fitch article would make it to today’s post!
Anyway, while I agree with Fitch about the slow melt, if the economy hits a contraction in Canada as the yield curve suggests may happen; all bets are off. A soft landing can happen if the economy otherwise is strong while people deleverage; if construction and other FIRE activity comes to a halt with sales dropping as much as they have we could see a real recession. That would be a downward spiral for prices, and a hard landing.
“….. depending on a number of factors such as government support and credit availability……”
=========================
….and polling numbers in 2015 elections.
One can only assume that the same F & BOC, who together succumbed to lobbying efforts of Realturds, Clone Builders, and Banksters a decade ago, would not hesitate to artificially prop up their self-incubated housing pyramid scheme further with syringes of easy credit to debt-addicted voters covered by taxpayer-funded CMHC bandages.
Anyone see 60 Minutes on Sunday? Miles and miles of new empty condo’s, houses and shopping centres. Won’t end well.
Meant to say in China.
#12 – Poor Tim always so hopeful that RE will continue to increase. Vancouver will drop alot more than 10% and it won’t take yrs either.
Oh noes, even O’Leary says wait (amongst usual BS nonsense)
http://www.cbc.ca/player/News/Business/ID/2340343413/
if Flaherty wants to tame the market, he can introduce a higher qualifying rate for fixed mortgages….. how about 5% ?
this would cool down the housing market
Soft landing …
Like very, very soft.
Wow. So soft you cant feel the matress. Its like floating.
Or falling.
i am sure everyone’s seen this one already…linked more so to yesterday
http://www.cbc.ca/news/business/story/2013/03/04/business-mortgage-bmo.html
Chicken little wish I could take credit for Lemon Bros, Damn auto correct on his supposed smart phone. Lol
Remember back in Sept when I put on and shared my apple short every analysis and there brother where calling for Apple to be between 700 to 800.
The herd is also stock buyers
Ba haha haha
“Montreal is down 14%.”
This is for January or February 2013?
The “Ghost Cities of China” is not new news. It’s been known for several years.
http://www.dailymail.co.uk/news/article-1339536/Ghost-towns-China-Satellite-images-cities-lying-completely-deserted.html
Went to a real estate seminar in Phoenix and the prices to rent ratio were awsome for investors.Talked to a vancouver man who sold all assets in Vancouver.He told me he bought a newer house in Surprise Arizona for $105 000 that has a renter that pays $850 a month.I guess Canadians have higher incomes for higher price real estate.
#29, it makes me feel so much better to hear that the ghost cities of mars (woops, I mean China) have been standing empty for YEARS, as opposed to months.
Help us, John Carter!
It sounds like Fitch is saying what I’ve been proposing as a likely scenario all along:
That Canadian home values might drop quite significantly in real terms over a prolonged period of many years. But the price declines would be largely masked by inflation, so nominal prices would not drop by as much as many expect. This would give people the impression that home values are fairly stable, when in reality RE may be dead money for a long time.
I also said that due to different supply and demand dynamics from SFHs, it would be the Toronto condo market where any real crash would occur.
“We’ll see,” said the Zen master.
Homeowners with big mortgages, good paying jobs, and salary increases that keep pace with the CPI should hope for a robust economy and very high inflation. Maybe call [email protected] and encourage him to “get to work!” (even more so, if that’s possible.)
#20
Real estate will always go up. They don’t make them any more. … Wait a minute, Chinese people are making them like running shoes! Condos … made in China … soon available in Great Wall Mart. Here’s another thought … we make them here in Vancouver and Toronto … for HAM. Go figure.
Pete and Val – if you are moving back to Ottawa rent something, and a lease is usually one year, and go month to month after the fact, as you do not have to renew a lease. Test the waters to see if the landlord is hungry; no matter how big they are in life as have done this all. Offer all cash up front for the year for a 6% discount, and the principal may say yes.
Fitch says: “If growth halted and prices began to drop, it would be expected to take several years for home prices to revert to their sustainable values, depending on a number of factors such as government support and credit availability. With this time frame, the actual observed decline in prices could be as low as 10 per cent.”
Interesting… that -10% drop prediction is the same as certain analysts are calling for in China:
http://www.cnbc.com/id/100516350
…China’s latest measures to crack down on property speculation and investment demand could lead to home price declines of up to 10 percent over the next six months…
Housing prices will be like the market.
A correction, then a rebound, then a correction down again, then capitulation and soon all the king’s men will own all the houses just like in the olden times.
What do they say now? The top 400 people in the US own as much as the bottom 70%.
Crazy world indeed!
I can sell this house !
Waterfront…good drainage(so far) ….fishing from inside the basement…they are not making any more land..( in fact less and less in this case)
PS let me get my bikini models and boat from the bailiff .
House for sale: must be located to new owner’s property. Must be closed ASAP.
Garth, did you forget to throw the wrinklies impact into the blender this post? Buying a house over the next ten years will be a crap shoot. If you have the money to lose, do it. If not, then rent.
Fitch jumps in, Canada RE 20% overvalued and BC 26%. Earlier the Economist said Canada was 34% overvalued based on income, 78% overvalued based on rents. I guess Vancouver would be about 40-50% overvalued on the basis of income.
And to support these prices Canada’s second half annualized 2012 GDP was +0.6%. Or total stagnation. In December a -0.2% (annualized) growth was registered, further indicating an economy that is definitely in contraction. And all this at record high oil prices, Canada’s meat and potatoes.
The overall backdrop is a slowing global economy, and no help from the US now with taxes now rising and some sequestration cuts coming in. It will take a miracle to keep this thing going, and the best BMO can do is chop a dime off their 5-year. Good luck with that.
#30 happy renter on 03.04.13 at 10:50 pm
Went to a real estate seminar in Phoenix and the prices to rent ratio were awsome for investors.Talked to a vancouver man who sold all assets in Vancouver.He told me he bought a newer house in Surprise Arizona for $105 000 that has a renter that pays $850 a month.I guess Canadians have higher incomes for higher price real estate.
…………………
Wrong,
America is stupid, paying 850 rent when they can own for 5000 a month….
Toronto solid.. FITCH, Wrong, now if there anaylist were high school drop outs and they said that…. I would be afraid……
The schooled don’t know shit as demonstrate, over and over again.
Now homeless people, they know shit, next time a bum asks for some lot, pick his brain, flip him a five…..
Damb auto correct last post should be 500 not 5000
The Fitch model looks interesting as long as the down turn remains demand driven. If supply were to increase significantly then the Fitch model may become unreliable. Will our market switch from one currently characterized as a demand-driven downturn to one that is characterized by a glut of housing? Are home owners willing and able to wait a year to sell their home rather than a month or two? Is real estate about to become very illiquid?
Toronto Still HOT, this rethoric actually prevents a buble from being pumped. Stop the blog for 1 year, prices will increase 30% then crash 50%
Keep the blog active, prices will inch higher with inflation. Are you sure you do not work for the banks Mr Turner?
Just kidding of course, but one can’t wonder.
When are salaries expect to shoot up? The median salary in my field seems to have stayed about the same for the past several years, not even keeping up with inflation.
Garth,
You are preaching in the quire. Let me tell you something. People behave like sheep and will continue doing the same thing over and over again as long as they see others doing the same thing. It’s even worse in the case of BC where people have come to believe that there is something in the nature called permanent exponential growth. They forget that a temporary exponential growth in living processes is always followed by a fall forming a Bell curve. The law of gravity exists for a reason!!!!
The case in point: When Apple stock price fail from $700 to $580 two months ago, I told everybody I knew to sell 80% of their positions and hold on just 20%. Guess what? They thought that I was crazy because Apple is star and can never be questioned by the laws of the market – see where AAPL is today at the following link:
http://finance.yahoo.com/echarts?s=AAPL+Interactive#symbol=aapl;range=2y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
#30 happy renter on 03.04.13 at 10:50 pm
“…..I guess Canadians have higher incomes for higher price real estate……..”
=========================
Which is why Canadian jobs continue to be off-shored and out-sourced to countries whose citizens don’t require high wages for half-million dollar bungalows.
Harper’s (in-)Action Plan:
Expensive housing and Temporary Foreign Workers.
RE Manipulation by governments is real. They create the bubbles that they try to deflate later. Is there a motive behind this?
http://www2.macleans.ca/2013/03/04/return-of-the-bubble-2/#more-355228
@Mark #23
That o’leary guy peddles garbage. Take a look at some of his mutual funds like OHA.UN – far underperforming the tsx. Now put smoking man on lang and o’leary (i mean lang and o’smoking man exchange) and I’ll start watching.
~Nisjots
Lets revisit this after the first desolated spring selling season
Fitch says: “If growth halted and prices began to drop, it would be expected to take several years for home prices to revert to their sustainable values, depending on a number of factors such as government support and credit availability. With this time frame, the actual observed decline in prices could be as low as 10 per cent.”
take a look at the US, it took three years for prices to drop
http://www.nytimes.com/interactive/2011/05/31/business/economy/case-shiller-index.html?ref=business#city/IND20
“depending on a number of factors” – well sure Fitch cannot be expected to know them all
meanwhile in China:
Lesley Stahl: So if the bubble bursts, who’s left holding the bag?
Gillem Tulloch: There are multiple classes of people that are going to get wiped out by this. People who have invested three generations worth of savings — so grandparents, parents and children – into properties will see their savings evaporate. And then, of course, 50 million construction workers who are working on all these projects around China.
Wang Shi: Yes, if that bubble – that’s a disaster.
Lesley Stahl: If it burst?
no kidding Sherlock!
oh yeah the link
http://www.zerohedge.com/news/2013-03-04/chinas-housing-bubble-goes-mainstream-america
40 Smoking Man on 03.04.13 at 11:46 pm
“Wrong,
America is stupid, paying 850 rent when they can own for 5000 a month….
——————————————————————–
Americans can only buy a house with cash. Very few are able to get a mortgage these days . :-)
Scientifically TESTED. Only costs a couple grand, and looks just as good on marketing.
“lash serum”
You really add all the subtle descriptors to a story. lol
Mr. Smoking Man:
Please admit you are simply a failed M.I.T. algorithm.
Either that …..or runner up for HAL in “2oo1: a Maple Leaf Cup Oddyssey”
Can’t believe nobody else sees the opportunity in today’s photo. The big clue was yesterday’s reference to Tom Vu. What was Vu’s #1 rule?
BUY DISTRESSED PROPERTY
Fraser Valley sales of Single Family Homes:
(Jan. 1st – March 4th) are down 48% (820) as compared to the same period in 2012 (1392),
they are down 56% compared to 2011 sales (1628),
and down 50% compared to 2010 (1446). They are even 12% below 2009 sales (820) following the financial crisis of 2008.
For You White Rock Mom:
White Rock Sales of Single Family Homes are:
down 54% (95) compared to January 1st through to March 4th 2012 (209).
They are down 74% compared to 2011 (360),
and they are slightly below 2009 sales (117) following the 2008 financial crisis.
Can anyone see a trend here … Kudos to Garth for calling the Canadian housing correction when all the pundits said no bubble here …
As sales continue to fall, prices will follow, as prices are set at the margin … i.e. it’s the recent sales that are used as comparables in setting the asking prices for all new listings.
pw
People have a hard time waiting for a traffic light to change or for winter to turn to spring. Now is never good enough, life we be better when ____________ happens… we are slow learners.
Well Garth, you have to be prepared to take a little heat from people as you’re predictions from ’08 look absolutely rediculous now. You had solid arguements and in reality, the market probably would have corrected if interest rates weren’t so low. I was swayed by your blog and didn’t buy a place in Calgary in ’09, and regret it. But we all make our own decisions and blaming others is childish. The wife and I have managed to save for a good sized down payment in the time being, and we haven’t paid the bank a dirty amount of interest. Look on the bright side people.
Looked at a house on the weekend. Neeed a lot of work, but great location. It was asking $495K. We thought of a fair price was $300K, but backed off on that as the house had a salmon creek in the backyard and the risk of having the Sierra Club show up and protest or halt the renovation was too high. Maybe $250K and I’d have $50K left to fight the Sierra Club. Other than that… not interested.
Welcome to BC!
“It took a decade for this bloat to happen, and it could take as long for prices to revert to the mean. ”
———————————————————
Seriously? Are you revising your forecast? Another 8 years until we see the bottom. Brutal！
Our overlords cannot allow for deflation to happen. It would crush every wet dream of the ponzi masters in its wake. ALL government liabilities and entitlements are based on economic growth. All assets must remain marked-to-fantasy as opposed marked-to-market value. The money and loans that central banks and banks created based on fantasy valuations are also fantasy. The 500,000 mortgage was never loaned from properly secured deposits. The leverage on deposits that is required to create these massive loans is modern day alchemy, trying to make gold from hay. Subsequently the vast record breaking billion dollar profits by banks are also bogus. Unfortunately for the majority of us, the bloated balance sheets are creating havoc for our economy and pose a great threat to our all well being. The day that the establishment tries to have their cake and eat it too, is the day this ponzi comes crashing down. Few understand what this means.
–
Pic reminds me of Sicamous (north Okanagan) last spring.
“P&V read this blog because doing so will make house prices come down. Everybody knows that. It’s guaranteed. Just like Regenerist Micro-Sculpting Hydrating Eye Cream and Lash Serum. All scientifically proven.” — See Garth? Somebody said that once you were outta polytix, you would be far more dangerous. How true!
“Well, when is it the RIGHT time to BUY?” — In a decade or two, and possibly never. A lot of people in Europe are quite happy renting throughout their lives.
—
#27 Smoking Man — “Remember back in Sept when I put on and shared my apple short every analysis and there brother where calling for Apple to be between 700 to 800. The herd is also stock buyers. Ba haha haha” — Your last comment is correct, also describes stock buyers!
#39 Roy — “The overall backdrop is a slowing global economy, and no help from the US now with taxes now rising and some sequestration cuts coming in.” — Good point.
No one has any idea as to what tomorrow will bring, and in fifty years none of this will matter anyway but one doesn’t have to see too far to see the west is in a kerfuffle.
*
Cigars Never knew cigars contained kitty litter; 5:52 clip GS violating Volcker’s rule? 12% rise Careful not to choke on your food bill; Who Rules America? Chart in, and Austerity was here long before the sequester; Leapfrog Tycoon overtakes Buffett; HSBC This is what the UK boss makes PER DAY, Blnaires. dumping stocks Why? This economist knows but Storm Clouds? Same old, same old; Financial Globalization Incl. chart; Car sales hit the skids; Zara Taking out Sears and JC Penney Boeing and Sikorsky Next gen. helicopter; Council Housing Ex-politicos are now rich landlords.
*
0:59 clip — SMan Frank Zappa was dead on with this! Plus Goodbye Blue Sky; Lotsa pix Spring in Russia. GW? Lingo Bingo Multi-culturalism gone batty? Plus ESL English is the second language for 40% over UK; Obomba Plutocracy preparing for civil war? Birds Of A Feather . . .; Russia – US War talk? FEMA Camps a joke? Check out these pix from 1942, when the US (and Canada) interned Japanese citizens. The cycle never stops turning, just rhymes and repeats; Biden’s BS Iran doesn’t want or need a nuke bomb. Israel has plenty of them; Detroit Self-defense killings 2,200% higher than national average; Pope Benny Lightning, thunder and a small ‘quake; Smart Meters Correcting the lies; Giant Moons We’re not talking rear ends or fat asses either; Hindenburg Took 76 + years, but it may be solved; CIA Here as your friendly local Murdering Machine; Methane Gas leak Tectonic plates shifting? And Salt Dome collapse, not sinkhole.
Wow, i have been following the Supreme Court Vancouver, daily lists the amount of mortgage companies, banks etc going to court on a daily basis is way up…… lots o foreclosures, people who owe owe o.
Watch BC real estate prices fall faster and faster
Victoria prices remain delusional. 40% overpriced is an understatement.
Victoria sales are actually down 21%. Math isn’t the VREB’s strong suit
Realtor arrested for stealing clothes from home for sale
http://www.myfoxdc.com/story/21481590/realtor-arrested-for-stealing-clothes-from-home-for-sale#ixzz2MdxetSGd
#2 Aleksey My call is 30-40% for Vancouver /
——————————————————
there is no part of the vancouver that is not an urban demand area, so is it 30-40 , or 5%?
sfh westside gassed up prices have already cooled somewhat and the rest seems pretty stable. (condos excluded)
nearer reaches of bby,nvan seem to be in plenty demand too.
btw, BC comes out swinging with a big full page ad in the cheekily covered economist this week – btw good on them for supremely taking the piss out of slick slivio!
all this pope talk on the national makes reading the blog so much easier(;
like bloomin summer here today, got the bike fired up for the season, oh yeah, and apparently my kid is ‘gifted’ in school, no offense SM. i teach her to not be a track6’er!
Watching that Tom Vu commercial prompted even more laughs than it did when it was aired away back in the 1980s. Thanks for posting it, Garth.
Real inflation is running at 5 to 7%.
Much of it is increased taxation which is running rampantly out of control in BC in particular.
Look at our bridges that are now tolling. Commuters are adding $70.00 per month to cross the river.
We are raising gas taxes as fast as unelected Translink officials can get it approved. One raise after another. More people are now crossing the border to buy gas. The last tax increase netted Translink less money because everyone said screw it and crossed the border for gas.
Even if real estate does not drop for 10 years but also does not rise, it will be halved in value.
Has anyone had any experience with purchasing real estate in Costa Rica? It just seems too beautiful to be true, but I may be wrong.
http://playalagartocostarica.com/site2/landingpage1/?gclid=CJTCrcSI5bUCFUhV4AodLyUAFg
Love the photo Garth! Looks eerily similar to a high rise condo in Toronta:)
#18 Toronto_CA: “if construction and other FIRE activity comes to a halt with sales dropping as much as they have we could see a real recession. That would be a downward spiral for prices, and a hard landing.”
Exactly, and that’s what the ‘soft landing’ crowd fail to understand: a slow-down in FIRE will cause cascade failure, resulting in increasingly large price drops. The little snowball becomes an avalanche in time.
As for people wondering about when to buy: just stop thinking about it. Rent, save and invest. When it’s time to buy, it’ll be obvious — you won’t have to email someone and ask.
My wife and I are renting a nice condo for considerably less than the owners pay out every month, and they’re already underwater. We used to want to buy asap, but now we don’t even care. We have money saved every month and we have mobility, and we’re in no rush to catch a falling knife.
Garth, I read the piece Toronto Life did on you. I can’t think of another group I hate more than ageing hipsters. They titled the piece “Bubble Boy”? C’mon! Nothing like wanna-be New Yorkers living in Toronto.
http://www.youtube.com/watch?v=2buteHswvBA
Hey Garth, sorry for posting twice but it’s two different topics. At my Scotch tasting over weekend, talking to my friend, he started going on about how he feels he’s struggle. His career isn’t going the way he hoped and just had another kid. In some way he feels like a failure because he can’t afford a house at 40. I tried to comfort him using the positive aspects of renting that I read here,(staying liquid, investing the difference, etc). But then he asked me then why did I buy a house last year if renting is so good? I felt kind of hypocritical and didn’t know what to say to him. My reasons were that the house was being sold by a couple going through a divorce, I borrowed the 20%downpayment and it’s close to the kids’ school where they’ll be going for the next 8 years. In 10 years time, who do you think will be the bigger loser?
http://www.youtube.com/watch?v=LEP6-ICsjgg
Hi – Brit here coming to Montreal.
UK market is similar. Overpriced, falling outside major cities. Only London keeping pace with inflation.
Here we are having a soft landing because there has been no external shock that has forced the issue. People *have* to move when they lose their job or when rates go up. Employment has held up in the UK and rates are record lows. However inflation is eating away at people, causing a slow rate of attrition. Any step change and the game changes though. State praying for no step change. I don’t think they will be so lucky….
#68Luc I believe Coata Rica has a law that says anyone can move in and take ove a vacant property! In other word, when buying offshore, don’t assume that other countries have the same iron clad prperty rights we enjoy in Canada
Good old realtor math:
http://www.theglobeandmail.com/report-on-business/economy/housing/toronto-home-resales-sink-in-february-as-rebound-proves-ellusive/article9295541/
There were 5,759 sales during the month, down from 6,809 in the same month during 2012. However, the Toronto Real Estate Board, which represents the city’s realtors, noted that 2012 was a leap year and had one extra day in February. Adjusting to compare a 28-day-period last year to a 28-day-period this year results in a sales decline of 10.5 per cent, it said.
So, 1/29 = 4.5% in “realtor math”???
Everything that comes out of their collective mouths is a giant lie!!!
Delay in buying anything increases and protects wealth.
Why line greedy pockets and give sellers, realtards and TPTB satisfaction? Let sellers continue to pay taxes, energy, upkeep and fees whilst prices inevitably come down. Make them wait- buyers can nearly always wait longer. Every day they wait, they lose more equity.
TPTB are hoping like crazy that their nifty little fiscal tricks will carry them to a “breakthrough” in the economy. A happy surprise……
They harbour a deep primal desire to someday be able to say “we were right!” Cue the back slapping and restaurant celebrations…..NOT!
They can reduce interest rates to zero and it won’t help. Good jobs are being lost in their thousands weekly, and are not coming back, perhaps for decades. McJobs are simply adding to youth’s piles of frustration at having to forfeit their lives to chronic, unbridled greed. The amount of debt that youth carries equals lost decades of wealth building and their RE-heavy parents won’t be in much of a position to help. They want to sell their millstones so that they can “travel and have fun”. They do have a bucket list, after all.
TNMATB said to me yesterday that TPTB are “importing inflation from abroad”. Small wonder that keeping your money gets more challenging by the year.
Get out of debt, save, reduce spending to a trickle and save some more.
The fiscal future is not friendly, with global market pricing (whether it is actually relevant to local markets or not) eroding savings or categorically adding to piles of debt.
@Smoking Man (#41)
“Damb auto correct last post should be 500 not 5000”
There’s no auto-correct software in the world that will, by default, correct “500” into “5000.” Don’t blame Steve Jobs for your fat fingers.
#69. Luc
There is a website http://www.welovecostarica.com
Although it is run by a realtor, a British expat, he does a thorough job of detailing the pros and cons of living there. Cons that the pretty pictures don’t talk about: Spanish is the national language. if you don’t speak or try to learn, it may be difficult for you wrt day to day activities and social isolation. It also sounds like you have to demonstrate that you are bringing a certain amount of money into the country each month in order to obtain a type of permanent residency. If my kids were older I would consider it more strongly.
I find it hilarious that F is publicly condemning a small drop in the 5-year mortgage rate (something that might actually help people if they lock in their existing mortgage) but his government has no problem with the high interest rates by PayDay loan sharks and credit card companies (something that might drive the over-leveraged over the cliff).
GTA February resale numbers: http://goo.gl/p2s2d
Garth et al. – Any idea of where Fitch is rating Halifax and/or Nova Scotia as a whole?
http://www.theglobeandmail.com/report-on-business/economy/housing/toronto-home-resales-sink-in-february-as-rebound-proves-elusive/article9295541/
Sales over the MLS of existing condos in the downtown area covered by the 416 area code dropped 20 per cent this month. And the sharp decrease in sales in recent months is now catching up to prices, which were 4.7 per cent lower in February than a year ago downtown. Condo sales in the 905 area code that covers the suburbs surrounding the city were also down about 20 per cent, but their prices continued to rise.
When he made the rule changes to tighten the market in July, Mr. Flaherty cited Toronto’s condo market as one of the areas in the country he was most concerned about.
Detached home sales were down 16.9 per cent in the 416 area and 15.8 per cent in the 905 area, with prices still up by 0.1 per cent and 3.4 per cent respectively.
New listings in the Greater Toronto area came in at 11,052 this month, down from 12,592 last February.
US markets are a rocketship . Financials leading. FAS.US is on its way to previous high ~170. Stay long till June. TSX? Who care, unless oil and metals rally here.
TLT is flashing.
From the archives. :-)
http://www.greaterfool.ca/2012/11/07/relax/
Nov 7, 2012 – . #79 TurnerNation on 11.08.12 at 9:38 am. #12 Smoking Man. As I always say, we’re not going to rally/breakout until TLT.US gets and stays under 120 for good.
The house shown in the picture that accompanies this article does not exist. The realtor has confirmed that it is an artistic rendering of what someone might build on that spot! From fake buyers to fake houses…is anything about this real estate market ‘real’ anymore?
http://www.calgaryherald.com/business/real-estate/Vancouver+home+sales+plunge+February+prices+fall/8046649/story.html
Based on the formatting of this article, it looks like you can actually see that the Vancouver Sun has copied and pasted a press release from the Real Estate Board of Greater Vancouver.
http://www.vancouversun.com/business/real-estate/Home+sales+boost+Fraser+Valley/8046141/story.html
Garth, I didn’t see you address the specifics of the Ottawa market in your article, and this has been noticeably absent from your columns in general, where you often mention cities other than Ottawa. Would you have any comments to make on this subject? Thanks.
“Fitch is developing a new financial model which can estimate potential losses among Canadian mortgages if the housing market jumps the shark the way it did in the US.”
Fitch? Really? What next, Bozo the clown opens his own rating agency? Why not, he’d have at least as much credibility as Fitch!
Have you done any research? — Garth
This central Halifax property has dropped from $239,000 to $129,000 in ~1 year. Ouch!
http://www.viewpoint.ca/property/cutsheet/00180695?no-nav=1&no-footer=1
Housing bubble = Humans = Virus
I’d like to share a revelation that I’ve had during my time here. It came to me when I tried to classify your species and I realized that you’re not actually mammals. Every mammal on this planet instinctively develops a natural equilibrium with the surrounding environment but you humans do not. You move to an area and you multiply and multiply until every natural resource is consumed and the only way you can survive is to spread to another area. There is another organism on this planet that follows the same pattern. Do you know what it is? A virus. Human beings are a disease, a cancer of this planet. You’re a plague and we are the cure.
Cure = Correction
http://www.youtube.com/watch?v=-Na9-jV_OJI
The slimy elite have too much at stake to let prices fall in Canada…..they want to keep prices high so that tax revenues still gush in and pay for the fat pensions and perks.
http://www.vancouversun.com/travel/Canadian+businesses+fuming+border+guards+shoppers+skip+fees/8048035/story.html
Instead of going after the people who have created the problem…the divide and conquer strategy of going after the consumer has trickled down from the propagandista’s to where the little guys are fighting over scraps that fall through the wide net of the union elite cadre.
People should be banding together and attacking the real reason that prices must be kept so high. The culprits are at the top…….get rid of the parasites and the need for high taxation and prices could fall dramatically.
#79 Canned Goods and Buckshoy on 03.05.13 at 8:55 am
#69. Luc
There is a website http://www.welovecostarica.com
Although it is run by a realtor, a British expat, he does a thorough job of detailing the pros and cons of living there. Cons that the pretty pictures don’t talk about: Spanish is the national language. if you don’t speak or try to learn, it may be difficult for you wrt day to day activities and social isolation.
Cost Rica is an excellent choice for retirement location. Still reasonably priced, safe, good heath care, solid economy based on moderate manufacturing, pharmaceutical manufacturing, software design, fruit exporting and eco tourism. My friend is a retired doctor and he has lived there since 1999. Although retired he ventures into the jungle almost every day to study botanical s as new sources of drugs to treat diseases. I visited him and was really impressed with this country. Although not Canada he said the medical system is actually quite good. It is ranked quite high apparently. I have considered it as a retirement location for if not the entire year at least 6 months. Yes if you do not speak Spanish then it can be a little intimidating. Mi español no es malo, sin embargo, si yo vivía allí yo lo uso todos los días!
Feliz jubilación!
58 VI renter – FYI re: riparian area rgulations which apply in many areas of VI
http://www.env.gov.bc.ca/habitat/fish_protection_act/riparian/riparian_areas.html
“It does not apply to a development permit or development variance permit issued only for the purpose of enabling reconstruction or repair of a permanent structure described in section 911 (8) of the Local Government Act if the structure remains on its existing foundation.”
Check with local government to see what permits are required. You can also get an assessment to see what parts of the property are affected and check for covenants on title. General rule of course is dont
destroy/harm fish habitat.
Housing War
Over four years ago, the house was a box of burden and panic. Had to sell the house at the bottom price with a loss and had to wait for a loong time to get the buyer and almost to carry him on the shoulder and to tour him around the house with the ripoff realtor walking on the side.
still shocked!!!!!!
Since then the faked housing market been created and the 70% or the house owners got a VIP class to borrow money at very cheap rate and if they want they don’t have to work since their house value is hitting the sky with the bidding wars and the buyer has to carry the seller on the shoulder and offer more money.
Renters and hardworking people not allowed to get the low rate to payoff their debts even though they pay taxes and property taxes and they contribute to CMHC.
The government , banks and the realtors are creating the monster by extending the stimulas plan to the infinity.
The history shows the cure for recession/depression has to go through the natural course where people has to feel it and try to contribute in order get things back on track.
The present housing market is joke/fiction or scam but we have been forced to believe it as legal and real.
At the end , buyers with an average income waited and will wait more, till they change the magic formula from 10x annual income to below 5x annual income.
note: not good in financing or economics but I learned it the hard way.
it is jungle out there , still renting and waiting for the miracle.
I have been considering the pros and “cons” of the Macquarie EquityPlus program. Is this a horrible deal? Has anyone had bad experiences with them?
Somewhat costly and offers TSX-traded securities only. Not enough diversification on its own. But good for people without money. — Garth
#59 Van Guy: “Seriously? Are you revising your forecast? Another 8 years until we see the bottom. Brutal!”
**********************
Revising forcast? Not at all. Garth has been telling us all along…we will have a ‘slow melt’. And, it’ll take 8-10 years.
Garth – What you are suggesting is soft landing. There is always hard landing in real estate market. Do have any example or market or country where soft landing has occured
So now decent hoods in Alberta could get nicked for only 5.0%? “Could?”
What kind of dramatic info is that for all the nutjob followers.
And the automatic stabilizers kick in…
Wait?!? What? this wasnt supposed to happen… our currency and rates are supposed to protect the economy from downfall… it is supposed to nuke everyone in Canada while leaving me unharmed, so that I can exactly time the bottom of the real estate market…
Save your energy… invest wisely within your means in any asset class… choose the life you want to live…
***our currency and rates are not supposed to protect the economy from downfall…
attempt at sarcasm fail…
How is everyone doing staying out of the stock market as it charges to record highs?
Some markets are over valued while others are undervalued or properly priced.
Canada is a big country.
It’s worth noting that Toronto February sales haven’t been this low since 2001, aside from the crash in 2009.
Quote from Garth:
Simple. The advice for buyers is ‘wait.’ The advice for sellers is ‘don’t wait.’
It took a decade for this bloat to happen, and it could take as long for prices to revert to the mean. Because most homeowners would rather eat bugs than take even a small loss, sales and market momentum must fall for months on end before asking prices seriously decline.
If you can’t wait, at least don’t whine. Go out like a hero.
=====================================
“Buyers wait” versus “sellers don’t wait”…
The news reported many “boomers” are choosing to stay in their SFH homes, not willing to downsize.
That may be coded language for (i)NO way in hell am I going into a strata hell and (ii) NO way in hell are the kids going to be suckered into this RE mania and be debt slaves for life.
In other words…there may be a 180 degree turn from selling, simply more efficient use of the existing home.
Finally, one has to see the insidious social engineering/cultural marxism the boomer have been subjected to, the climax of which is quickly approaching and maybe its time for a backlash.
Toronto_CA on 03.04.13 at 10:12 pm
I knew that Fitch article would make it to today’s post!
Anyway, while I agree with Fitch about the slow melt, if the economy hits a contraction in Canada as the yield curve suggests may happen; all bets are off. A soft landing can happen if the economy otherwise is strong while people deleverage; if construction and other FIRE activity comes to a halt with sales dropping as much as they have we could see a real recession. That would be a downward spiral for prices, and a hard landing.
—————————————————————–
Look at the GTA retail sales are slowing down alot. Look at christmas sales and how bad they were. The malls i recall had light volumes during the last week. People are maxed out and many are starting to lose their jobs in the GTA. Stores are reducing workers or closing down. Look for a hard landing as the situation snowballs.
Realtor caught stealing. When given his pink slip, he likely asked if he could try it on?
http://bc.ctvnews.ca/video?clipId=877761
There’s no mention of how rising interest rates could spark some activity. Wouldn’t this be the kind of catalyst that could affect sellers’ willingness to sell and put some life in a stagnant market? Or would it do the opposite and chill the market entirely?
Important thing about todays GTA housing numbers is that sales were actually worse than any other February in last 10 years – except during the crisis… so TREB – forget leap years, weather, sunspots and asteroids – bad is bad.
You’ve summed up the Victoria seller perfectly. A quick look on UsedVictoria profiles the type of seller living in Victoria.They want full price for a Mount Washington 6 pack on the last day of the season. Delusional. Imagine what it will take for them to sell their home for anything less than they paid for it. I see sellers holding for a while or for as long as they can. It might be a bug diet for a several years.
Front page in the Toronto Star the last hour:
http://www.thestar.com/business/real_estate/2013/03/05/gta_house_sales_down_15_per_cent_in_february_as_highend_homes_take_huge_hit.html
The best part of this? Here’s a quote from this story, truly worthy of the Manipulators Hall of Fame:
“I’d be cautious about suggesting there is any kind of trend here,” said Jason Mercer, senior market analyst for TREB.
@BarryB,
Here is the link to the latest spin from the Ottawa realtor cartel:
http://www1.ottawarealestate.org/home/NewsInformation/LatestNewsRelease.aspx
Notice in particular, the contradiction in the heading with the first line of the text.
Ottawa resale market up from January
Ottawa, March 5, 2013 – Members of the Ottawa Real Estate Board sold 914 residential properties in February through the Board’s Multiple Listing Service® system, compared with 1,008 in February 2012, a decrease of 9.3 per cent.
It looks like somebody has eaten enough bugs in the last 100 days.
http://www.torontomls.net/PublicWeb/CL_CF.asp?link_no=47574054.175000&t=l&fm=F
Take a look at ’16 Brookers Lane 802′
Sold for 288K with initial price 325K. Poor investor.
There is an article in the Financial Post by Terence Corcoran that says “it’s a great time to be in debt”. “If you’re not in debt right now, you are losing out on one of the great financial bargains of maybe the past 100 years.” I, like most people on this blog have no debt and have investments that in part fund the borrowers. According to the people of this blog, I’m in a good position. Right? But the longer this goes on, the more convinced I am that there will only be two groups of people: those who join the party, and those who pay for it.
Overall, I am happy with the general financial trends I see for now. Cheap money and QE are here for a while as TPTB try to stop the deflation of asset values. A crash won’t do anyone any good – even those with gold buried in their backyard. My biggest concern is good jobs in the private sector. I suspect many jobs will disappear with boomer retirements as their knowledge and experience residing in their head will be transferred to computers – even more so in the bureaucracy. I am hopeful more and more people will see the nanny state as a fraud that can’t deliver 100% on promises and that it consumes more than it gives. Obama is worrying me as he seems intent on expanding the power of his office at the cost of American’s personal freedoms to make choices. The sooner we get on reforming the system that creates concentrations of power/wealth and dumbs down the masses, the better. It would be a shame we have to wait for an asteroid to hit and have changes forced on us. This will not end well if we continue on our current communal path.
This young man (he is now over 30) could become a disciple of Tom Vu’s teaching (money for nothing and the chicks are free). At least he is happy. I have a pretty good idea where his inheritance is going.
Man Has Alarming Level Of Pride In Institution That Left Him In Debt, Unprepared For Job Market – YouTube
I also meant to include this link. You know things are bad when the powerful openly cheat to keep winning. I read a few too many articles regarding ethics as a barrier to wealth/power. Darth Vader is a cheat ! – YouTube
I also meant to include this link to my prior post. You know things are bad when the powerful openly cheat to keep winning. I read a few too many articles regarding ethics as a barrier to wealth/power. Darth Vader is a cheat ! – YouTube
Re “Realtor Math” (#76 T.O. Bubble boy) – Yes, the math does seem goofy, although it wouldn’t be 1/29th difference, because the difference is in the number of business days (21 to 20) rather than total days (29 to 28). There’s roughly a 5% difference in days. They seem to have chopped that 5% right off the 15% drop, reducing it to a 10% drop. I don’t understand those numbers and it doesn’t seem correct. Perhaps they will issue a math correction later, after the headlines have come and gone.
There were 5,759 sales during the month, down from 6,809 in the same month during 2012. However, the Toronto Real Estate Board, which represents the city’s realtors, noted that 2012 was a leap year and had one extra day in February. Adjusting to compare a 28-day-period last year to a 28-day-period this year results in a sales decline of 10.5 per cent, it said.
So, 1/29 = 4.5% in “realtor math”???
Everything that comes out of their collective mouths is a giant lie!!!
What sort of crazy person sells their home in May, gloats about making some money, then thinks about buying another one in the *exact same city* less than a year later? :/
re “right time” there is quite a list of life events that
never seem to be at the right time, getting canned,
married, pregnant, dieing, etc; purchasing a house is
just another bump in the road.. enjoy.
Just driving around this morning. Alot of the houses that were for sale several weeks ago, pull out their signs this week.
Some of these houses has been for sale for over 2 years and still hasn’t reduce the prices. Each time they re-list they place a new listing sign. I also notice several condo development in east van, has given up selling and has rental signs replacing the for sale signs.
I am downtown GTA on a 45-floor building and we are still in the ground with completion set for Spring 2014. We just received the news last week that the building is sold out. Yep, imagine that!
I’ll e-mail that information to Fitch so they can plug in the good, or should I say bad news into their new model.
That’s like guaging the equity market by the value of a single stock. I thought a guy in a crane would have a better view of things. — Garth
“What if the person doesn’t have a job?”
“Fund ’em,” the – the guy said.
And I said, “What if he has no income?”
“Fund ’em.”
“What if he has no assets?” And he said, “Fund ’em.”
===================
Falllout from ‘Untouchables’ Documentary: Another Wall Street Whistleblower Gets Reamed
POSTED: March 4, 2:31 PM ET
===============
To tell the truth ,get dismissed ,win a wrongful dismissal only to have it reversed?
#111 Victor
Yikes – the maintenance fees on that $60,000 condo are $773.67 monthly. Isn’t that about what you might get for rent in that awful location?
#76 T.O. Bubble Boy on 03.05.13 at 8:48 am
#81 GB19scndBase on 03.05.13 at 9:09 am
#83 Victor V on 03.05.13 at 9:22 am
Regarding TREB numbers, there was an 18% decrease in sales compared to last years unrevised numbers.
#120 The real Kip – just heard a rumour that some developer still in the ground took off with all the deposit money and headed for Nassau to live the good life and bought himself a nice home, but am sure it must be someone else.
Funny, Dundee is funding Alzheimer’s research:
http://pipeline.corante.com/archives/2013/03/05/taurxs_funding_is_odd.php
#122 HogtownIndebted on 03.05.13 at 2:57 pm
The condo fees in Toronto are scarily ridiculous, even compared to Vancouver. I don’t know what justifies them, but they are there and make me think twice about buying a condo here in the GTA even if prices plunge to reasonable. Who is to say that you won’t get hit with a massive condo fee that renders the place totally unsellable by charging a monthly fee greater than the rental value? And if enough people stop paying the condo fee then the building goes to hell because maintenance isn’t done and all kinds of problems happen (see Florida). Rent a condo, buy a house (caveat with 20% down, that you will live in a long time, that the mortgage and prop tax isn’t more than 35% of your take home pay, be diversified, etc.)
Wish I became an economist – The sheer lack of accountability is mind boggling.
I became an engineer instead, where accountability is as close to absolute as it gets – If your bridge doesn’t stand, or your electronic design smokes, or your software hangs.. Usually clear who screwed up.
Not so with economics, apparently. Experts make predictions, and when they’re totally wrong, they reach into the magic hat & pull out new reasons to explain it away. Then, without pausing for a beat, they make a NEW prediction! Back in business, just like that :)
#98 dark soilder on 03.05.13 at 11:53 am So now decent hoods in Alberta could get nicked for only 5.0%? “Could?”
What kind of dramatic info is that for all the nutjob followers.
———————————————————-
Alberta will take it hardest, boom-bust capital of the world. Provicial budget coming in 2 days. We’ll see.
I try to read lots of different opinions, from lots of different sources, including some from different countries, about the current state of the world economy and how it may affect both Real Estate values and investments.
The biggest thing I’ve learned from doing all this research is that no-one, not even the so called Economists, seem to know for sure where we’re all collectively heading. For every prediction, there is a counter predicion; sometimes even in the same newspaper on the same day.
But it seems to me that IF Real Estate prices were to crash, as many seem to be hoping they will, that the overall economy, and therefore many of all of our investments, will crash right along with it. Jobs would be lost, pensions reduced or eliminated, and financial disaster for all. Why on earth would ANYBODY be hoping for such a scenario? Yet some of you doomer bloggers seem to be hoping for exactly that.
Give your heads a shake, and stop just thinking about what kind of a house you’ll be able to afford if there is ever a crash. Instead, start looking at the bigger picture, and keeping your fingers crossed that such a crash never materializes. Because if it did, and you became unemployed, you wouldn’t be able to buy a house anyway . Heck, you might not even be able to afford to rent. Tent city anyone?????
Personally I don’t think things will ever get that bad; I’m merely pointing out that if the huge crash in RE prices that some of you are hoping for were ever to happen, that other unpleasant realities would be bound to accompany it.
#128 Dorothy. Your one of the few talking about a crash. A correction is happening and as Garth has repeated many times a “slow melt” for some yrs to follow.
“That’s like guaging the equity market by the value of a single stock. I thought a guy in a crane would have a better view of things. — Garth”
Actually no, the view from the crane is more blue collar and immediate thankfully. We leave all that long range crap to the white collar boys and they are usually wrong but no matter, 2013 is shaping up to be a very good year in spite of the Fitch outlook for Canada.
#129 Dorothy on 03.05.13 at 3:26 pm
Dorothy, there was a crash in the US Real Estate Market 5 or 6 years ago. And yet, the Dow just hit a record high today; investors have mostly recovered if they stayed the course. A housing market correction in Canada does not mean we’ll all move to tent cities and have 40% unemployment. It means that house prices move back to historical normal levels relative to rents and incomes. That is what people on this blog are hoping for, as that is good for Canada. The longer it stays out of wack the harder the correction and the more likely a very bad recession will come with the correction.
Dorothy, your privileged whining is tiresome. We get it, you were lucky to be born into a generation with opportunity or a family with money, and why can’t all those who don’t have that advantage stop whining???
I heard a comment last night by Celente which is something that I had never thought about in USA. Those that are graduating from university have $1 trillion in student loans, and will not be able to buy homes for many years if they can even find a job, so who will be buying the start-up homes to fuel the economy?
129 Dorothy
Gee – would never have thought of that….
#133 – Science Monkey
How wrong you are! I was born into a working class family at a time when my generation outnumbered all others. Consequently, the sheer size of the graduating classes at that time made for VERY stiff competition for any and all available jobs. Plus, havng so many buyers competing for housing resulted in the cost of housing (particularly in cities) being very high relative to income, and mortgage rates were in the double digits. That was because interest rates were forced to artificial highs to fight rampant inflation. The cost of all borrowing was sky high. At one point car loans were running around 23%.
Each and every generation has it’s challenges, and it is up to the members of each generation to figure out how best to meet those challenges. Sometimes, those from an earlier generation can share some of the things they’ve learned over the years, and sometimes those from the current generation can learn from those shared experiences. But the current “blame game” that some bloggers are playing right now, blaming their parents generation for all their current woes, in addition to being misplaced, serves no useful purpose. It is just another form of “whining” – which you seem to abhor.
Whining is not limited to any one generation; there are many whiners from each and every generation on this blog. All I’m trying to say is that instead of “whining” or sitting around waiting for some sort of economic crash to happen, people need to be thinking of ways to survive this current economic mess that our Governments and financial elites have created for us.
If you really want to play the “blame game” quit blaming the working class boomers and focus instead on those in both business and Government who make the decisions that affect us all.
#129 Dorothy on 03.05.13 at 3:26 pm
I hope there’s no crash…. I hope my salary increases 100% in a relatively small period of time to catch up to the price of houses. Does this line of thinking make me a better person Dorothy? Please grant me approval so I may continue to live my life.
Full PDF of GTA February numbers:
http://www.torontorealestateboard.com/market_news/market_watch/2013/mw1302.pdf
Stat of the month: condo prices in the 416 down 4.7% year-over-year!
(and – detached houses in the 416 up only 0.1% year-over-year, despite bidding wars in the sub-$1M market)
@Dorothy #129:
You make the classic mistake regarding conflicting opinions, assuming that one is right, and the other is wrong. Good answers are never that easy. You claim to seek opinions from different sources and different points of view, but that’s not enough: you also have to evaluate each opinion, connect the evidence that you observe to the effects that are predicted. This blog does a pretty good job of this, but even Garth has had to revise his statements as new information became available.
Do falling sales lead to lower prices? They have in the past, and it’s likely that they will in the future. Are people over-comitted to real estate? Some are, but others aren’t. Is diversification better than betting the majority of one’s net worth on a single sector of the economy, let alone a single asset? History, statistics and probability would all suggest that this is true.
But don’t take my word for it, go and collect your own data. Talk to neighbours, co-workers, and [email protected]. Hear their stories, and balance it against what others are reporting, and then decide which prediction to believe.
#126 Toronto_CA
A little digging about these desperately cheap condos with sky-high maintenance fees came up with this article from two years ago.
http://www.theglobeandmail.com/news/toronto/faulty-towers-the-hidden-dangers-of-low-condo-maintenance-fees/article585103/
I find this passage especially relevant, and perhaps ominous, considering the old buildings as well as all the falling-glass crap condos built in the last few years in Toronto:
“The condo tower is just one of hundreds in the GTA that will need tens of millions of dollars in repairs in the coming years, as older buildings in less affluent neighbourhoods show their age. It’s the dark side of the city’s decades-long condo infatuation, and could prove devastating for many low-income condo owners who can’t dig into their pockets to finance court-ordered repairs.
“This is a coming crisis that nobody is talking about,” said Chris Jaglowitz, a lawyer who specializes in condo law for Gardiner Miller Arnold LLP and a member of the Condominium Managers of Ontario. “You have all of these older buildings, and someone needs to pay for long-neglected repairs. And many people won’t be able to cover their share.”
That’s because condo buildings are owned collectively by the residents, and all repair bills are shared equally. Condo boards are able to levy special assessments in addition to condo fees to pay for projects. But the boards are made up of residents, who are sometimes motivated to keep fees low. And they serve short terms, which means long-term planning is often difficult.” (G&M May 2011)
#118 big tony on 03.05.13 at 2:52 pm
re “right time” there is quite a list of life events that
never seem to be at the right time, getting canned,
married, pregnant, dieing, etc; purchasing a house is
just another bump in the road.. enjoy.
———————————————————–
Well said … we’re only going around once ….
I will have to be more careful when I post links. I don’t notice until it is too late – grrrr. They were just for entertainment. I will give up if they fail again.
Young man http://www.youtube.com/watch?v=UOg6czPMmac&feature=player_embedded
Mr Vader http://www.youtube.com/watch?v=Gaefca5E-hs
#129 Dorothy on 03.05.13 at 3:26 pm
Personally I don’t think things will ever get that bad; I’m merely pointing out that if the huge crash in RE prices that some of you are hoping for were ever to happen, that other unpleasant realities would be bound to accompany it.
Dorothy is correct in saying we shouldn’t be hoping for this to occur, unfortunately its like being in a free fall, there is no way to stop it. All you can do is watch it happen and when you land boom! You’ve killed a witch but your still in trouble. I don’t think were in Kansas any more Toto!
Before you slip into unconsciousness
I’d like to have another kiss
Another flashing chance at bliss
Another kiss, another kiss
The days are bright and filled with pain
Enclose me in your gentle rain
The time you ran was too insane
We’ll meet again, we’ll meet again
Oh tell me where your freedom lies
The streets are fields that never die
Deliver me from reasons why
You’d rather cry, I’d rather fly
The crystal ship is being filled
A thousand girls, a thousand thrills
A million ways to spend your time
When we get back, I’ll drop a line
https://www.youtube.com/watch?feature=player_embedded&v=_VN8JFPSmZs
“We’re even seeing multiple lowball offers on properties,” says toronto realtor. “But owners are holding out. They’re not coming down that much.”
LOL is this the new bidding war of 2013 in toronto
Dorothy, you have it backwards and muddled up.
1. The last time real estate prices ‘crashed’ (90’s) it was because of the recession, not real estate causing a recession.
2. Jobs WILL be lost, however investments won’t if one is diversified.
3. Pensions are going to be reduced/eliminated irregardless of what real estate or the stock markets are doing. There are not enough people contributing to pensions to cover the shortfalls , and the number of people contributing will decrease over the next two decades. This is why pensions are frequently called ponzi schemes.
4. I want a crash. It is about time young families are able to buy affordable homes, not these overpriced ‘investment vehicles’ currently on the market.
5. Of course there won’t be tent cities as the rich boomers are more than happy to pay extra taxes to shelter the less fortunate.
6. I will be paying cash for the next home I own.
THe GReaT PeOPLeS BuBBLe…
http://www.zerohedge.com/contributed/2013-03-05/great-peoples-bubble
Must be getting bad if that clown Tsur Somerville is now saying Vancouver could drop more than 15%.
http://www.news1130.com/2013/03/05/metro-vancouver-homes-overpriced-by-about-a-quarter-report/
Might want to ask for an apology, Garth.
SPINNING BUBBLES or Spring Bubbles….
(Spinning Wheel, Blood, Sweat & Tears)
What goes up must come down
Bloated asset bubbles got to fly around
Talking about coming trouble it’s a crying sin
Ride a leveraged pony
Let the asset bubbles fly
http://www.youtube.com/watch?v=P3mPERksUAo&feature=player_embedded#!
Here is comes, I’m Eight Miles High.
Almost four years after its 2009 bottom, the Dow Jones Industrial Average ($INDU +0.89%) pushed past both its 2007 closing high and its all-time intraday high on Tuesday.
http://money.msn.com/top-stocks/post.aspx?post=0ef29336-7f06-4d11-909f-054ec777a092
#112 FullofFear on 03.05.13 at 1:52 pm
Here is the article:
http://opinion.financialpost.com/2013/03/04/terence-corcoran-race-to-the-bottom-proves-its-a-great-time-to-be-in-debt/
Of course, the vacuity of Corcoran’s opinion is almost immediately evident. He is suffering from a bad case of What’stheMonthlyitis and gambling that interest rates won’t rise or that asset prices won’t fall (two stupid assumptions). He also fails to make a proper distinction between smart debt and dumb debt (most debts are dumb, by the way).
Corcoran’s notion that it would be irrational to not borrow excessively in view of the low interest rates suggest to me that he doesn’t really understand what “irrational” means.
Corcoran’s trouble with rationality is validated by his concluding statement:
It’s quite painful that garbage thinking like this gets in the Financial Post. One would have to have a brain akin to a badly tuned weed whacker engine in order to agree with that sort of weak-minded conclusion.
But, what do I know? It might be great time to massively over-leverage to buy a hugely overvalued asset. I mean, hey, why not? What could go wrong?
TEMPLE
You can have your cake and eat it too now…
Health authorities in China have confiscated nearly two tonnes of chocolate cakes imported from Sweden by Ikea after finding high levels of bacteria commonly found in the human intestinal tract.
http://www.thelocal.se/46544/20130305/#.UTZjDa6vdc8
So its true…..China has emptied its citizens onto dupes like Canada and there’s no one left to buy in either country…..how does one say ‘Brad Lamb’ in PinYin?
http://business.financialpost.com/2013/03/05/its-like-walking-into-a-forest-of-skyscrapers-but-theyre-all-empty-see-for-yourself-chinas-ghost-cities/
#136 Dorothy on 03.05.13 at 4:21 pm
“The cost of all borrowing was sky high. At one point car loans were running around 23%.”
——————————————————————-
I remember those days, 1981. :-)
Rampant consumer spending stimulated with credit money – has been the major driving force behind the current economic model. This model has been exploited for the last 30 years. A huge financial infrastructure has been created within this period. Look at the financial sector – it has increased drastically since seventies. Their big bonuses and substantial salaries – has been taken them for granted and everything’s been good until now.
The problem is that in order to use the current financial model the prime rate should always go down otherwise refinancing is not possible and people won’t be able to get more credit and support economy with continuous spending. The situation is simple: no cheaper credits – no spending. No spending – no economic growth and no bonuses for financial sector. There are simply not enough sweet candies for everybody from financial elite anymore. Who will give up huge bonuses without a fight? So BMO’s 2.99 Special – is the backlash…
#145 Tkid on 03.05.13 at 5:04 pm
“6. I will be paying cash for the next home I own.”
—————————————————————
If you live in the U.S., then you will not have a choice. The Banks are still not giving any mortgages.
Sommerville adds local home values could drop even more than the 15 per cent predicted by Fitch.
“If there was to be a correction, you might expect to see a bigger correction in house prices than in condos,” “It’s the land. Land is a bigger component of the value of a detatched house than it is in an individual condo unit.”he explains.
#147 mark on 03.05.13 at 5:14 pm
I thought Tsar said they weren’t making anymore land in Vancouver, and land values would always stay high.
China’s ghost cities have been common knowledge (at least I thought so) for 3+ years…Crazy to see that people are now just hearing this for the first time.
Makes me realize that Canadians will not realize that real estate is a bad investment here for a few more years.
All your base are belong to us
A decade of falling prices is too long. We should pull the bandaid off quickly, bite the pain in the short term, and enjoy another decade or two of prosperity and growth after (like the U.S market tanked).
@ #117 Edward on 03.05.13 at 2:48 pm
What sort of crazy person sells their home in May, gloats about making some money, then thinks about buying another one in the *exact same city* less than a year later? :/
>> Agree…that’s wack.
@ #127 Kris on 03.05.13 at 3:25 pm
Wish I became an economist – The sheer lack of accountability is mind boggling
>> Agree, like being a weather man, or home inspector.
Ridonkculous
The Feb.. numbers were just released for the Okanagan Medium price dropped from $404,955 in Feb 2012 to 380,000 for Feb 2013 or 6.16 percent YOY..At the peak in April 2008 the medium price was $497,500..Ouch !!! Perhaps DA could shed some light on this fine kettle of fish for us.. Things do not look to rosy in the North Okanagan either..
http://www.omreb.com/page.php?pageID=120§ionID=2
#138 T.O. Bubble Boy
Don’t get to excited, had the big snow storm, which killed a weekend, also 416 condos bringing down averages……
Dorothy, if mere wanting of something to happen is enough to make it happen, then I guess you should scold the bears. These bears are the younger generation who are behaving responsibility by not buying into the ponzi scheme of paying for the retirement of the older generation. Why should the boomers such as yourself feel that you are entitled to cash out on the RE market. Keep up the finger wagging and perhaps your children will pay $10m for their entry level home
#145 – Tkid
You often refer to the CPP and other pension plans as being some sort of Ponzi schemes, yet there are many, many articles about the CPP in particular explaining how it is perfectly sustainable well into the future. I’m posting a link to a blog that discusses this very issue, and explains it far better than I ever could.
I share the author’s belief about WHY certain parties like to perpetuate the myth about unsustainabilty. And if I’m right, its going to be up to you younger folk to make sure they don’t get away with it!!!
http://autonomyforall.blogspot.ca/2012/04/cpp-is-completely-sustainable-too.html
#151 -Swedish chocolate sold by Ikea seized by Chinese health authorities as unsafe. Yeah, right.
To be resold by corrupt Chinese government authorities perhaps? Did you get hit on your head in that big fall Humpty Dumpty?
Chinese afraid to dirty their new houses in ghost cities by living in them have no fears of buying used houses here. What’s with that? More Canadian folklore about the Chinese I guess.
I guess that we can now tell Chinese sellers here that their used homes in Canada aren’t worth zippo because they have been lived in. New Canadian custom!
#77 maxx — “TPTB are hoping like crazy that their nifty little fiscal tricks will carry them to a “breakthrough” in the economy. TNMATB said to me yesterday that TPTB are “importing inflation from abroad”. — That’s a nice way of stating the obvious! So there will be plenty more fiscal surprises in store for each of us — Tally-Ho and away we go!
#90 Holy Crap Wheres The Tylenol — “It came to me when I tried to classify your species and I realized that you’re not actually mammals.” — Correct. For the most part, most of us are pathetic dweebz, indescribable blobs of organisms capable of not much more than passing the buck. Good link!
#113 Westcdn — “I suspect many jobs will disappear with boomer retirements as their knowledge and experience residing in their head will be transferred to computers – even more so in the bureaucracy. Obama is worrying me as he seems intent on expanding the power of his office at the cost of American’s personal freedoms to make choices.” — Transferred to computers which will then be used to build ‘droids and robots, none of whom are paid to assemble things, no holidays and no tea / lunch breaks. Obomba is a puppet, simply doing what he’s told to do by TPTB.
#151 Humpty Dumpty — Interesting link. It reminded me of the Python’s Cannibalism Sketch, where Graham Chapman is talking about eating someone’s bowels!
#164 – I don’t recollect EVER saying anything about feeling I, or anyone else, should be allowed to “cash out” on the Real Estate market. So please don’t put words in my mouth.
My husband and I have put money into an RRSP every single year since we were 29, and I am NOT relying on my house to subsidize my retirement.
That said, it has been my experience that the societal group most responsible for bidding up the price of houses are the first time home buyers, who did not have the experience or the financial wisdom to be a little more savvy. I’m not blaming them for that; it’s just the way it is. But I don’t understand why some bloggers keeps blaming the Boomer generation for that particular state of affairs.
My husband and I bought our first house in the early 1980’s when interest rates were much higher than they are now. When we sold it we barely covered our costs, and the same applied to our second house. On our third house we actually LOST $25,000, and it was only on our 4th home (when we were both in our fifties) that we finally made a profit. However, almost all of that profit has now disappeared as the value of our fifth (and hopefully final) home as fallen. And while we’re not happy about that fact, we’re not crying the blues either. Because we have NEVER viewed our home as an investment. It’s a place to live, and to enjoy. And that’s ALL it is.
By the way, just in case your wondering, none of our moves were due to RE speculation. It was always to move to a new job, usually because the old one was in jeopardy. That’s the price you often have to pay when you work in the Resource industry.
Slumnaimo–everything must be ok ’cause Cam Muir says so:
http://www2.canada.com/nanaimodailynews/news/story.html?id=c6a4227e-c3c7-4a48-9e60-0a30318a193f
You often refer to the CPP and other pension plans as being some sort of Ponzi schemes, yet there are many, many articles about the CPP in particular explaining how it is perfectly sustainable well into the future.
If you would like to believe in the sustainability of the CPP Dorothy, feel free. But I don’t. There aren’t enough people contributing into the CPP and in particular work pensions to support those who have, and in the next 20 years, who will retire.
Apple stalk is starting to batman – time to make sum money
Remember…not making any more land…..and the sky HAS a limit too.
You want satellite crashing into your living room ?
Buy now or be….aaahhhh …whatever. Peel me another grape Bikini person.
–
Thought For The Day! (wrh.ccom) — “The rich will strive to establish their dominion and enslave the rest. They always did. They always will! They will have the same effect here as elsewhere, if we do not, by (the power of) government, keep them in their proper spheres.” — Gouverneur Morris, one of the authors of the U.S. Constitution
*
10:42 clip One trillion pounds for the UK bank bailouts, but where did it go? Maybe here — Gold and Money Supply Control the gold and control the money supply. Banxters do both very well; Portugal and US have one thing in common — austerity; Obomba threatening financial terrorism; Egypt Pyramids for rent; Maryland set to pass new gun control bill while Beretta moves out; George Osborne defeated, ‘tho it’s not a bad sign; TPP of free trade for most of the west; Death Spiral State Map incl.; Tomato Bubble Yes, tomatoes are a vital part of the economy.
*
Chavez dies “Venezuela, rich in oil, gold, and uranium, is in play. And already the US corporate media are bashing Venezuela’s government.” wrh.com. What else could one expect the paid-for and controlled m$m to say? Plus Japan prepares for war; US – Israel A cozy partnership turning bitter? Iran Lists all the years Israel said Iran had, or was getting close to having a bomb; Sony Is this one reason why Sony is in such bad shape? Dictatorship Yes, Obomba is allowed to kill US civilians (and anybody else he wants); Windows 8 Success (flashback), and Windows 8 Complete failure; Camels once roamed the Arctic; Canon invents night-vision camera which dies not use a flash.
This month’s REBGV release is interesting reading. No cheerleading detected. Thus, Operation CYA commences.
#27 Smoking Man
You’re such a genius. Only worthless cheerleaders, idiots and gold nuts expect something that’s gone hockey stick to keep going up.
#120 The real Kip: “….still in the ground with completion set for Spring 2014. We just received the news last week that the building is sold out. Yep, imagine that!”
******************
What’s so great about that? Anything can happen between now and 2014.
#122 Hogtown: “…..the maintenance fees on that $60,000 condo are $773.67 monthly.”
******************
These high ‘maintenance fees’ on most condos everywhere need to be investigated.
Herb
you made my blog tonight.
Was going threw the archives, halarious
#94 gus
History shows no such thing. History only shows the events that took place, even that always with its own spin.
If you learned from history, you already know what comes next from government policy: more of the same.
[…] Spring market — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate. […]
@129 Dorothy: “Why on earth would ANYBODY be hoping for such a scenario? Yet some of you doomer bloggers seem to be hoping for exactly that.”
*****************
I don’t get that impression. The posters are cautious and merely wanting to know when and how this will play out.
And there goes the hyperlink on a home run, out of the ball park..
It’s your blog. I take no offence I’m a guest here, know my place.
#116 Oakvillain
And you know things are really bad when they’re splitting hairs over the number of business days in a month. Never saw anyone counting working days when prices were going up 15% a year.
@ #163 Smoking Man on 03.05.13 at 6:46 pm
#138 T.O. Bubble Boy
Don’t get to excited, had the big snow storm, which killed a weekend, also 416 condos bringing down averages……
———————–
How does a lost weekend lower either the average price of condos or the price of detached homes?
I noted that condo *prices* fell (not just volumes), and SFH *prices* (not including condos or townhouses) were flat.
Spiltbongwater , Buy Curious and Dr. Hoof Hearted all are the same person likely.
HAL 9000 spat this out.
Good point bubble boy
Your right 1point on sfh detached, the lost weekend was for sales.
Just evaluated the Stats lower end of market selling more. bring down average.
Lot on my mind, not concentrating, now got to wait for the results. Every call has the potential to put us over the moon or to hell. Going to be a long week
[…] “I went to a real estate seminar in Phoenix and the prices to rent ratios were awesome for investors. Talked to a Vancouver man who sold all his assets in Vancouver. He told me he bought a newer house in Surprise Arizona for $105,000 that has a renter that pays $850 a month. I guess Canadians have higher incomes for higher price real estate.” – happy renter at greaterfool.ca 4 Mar 2013 […]