Useless

beholder1

Jim and Rhoda are nearing 70 and bailed last September. “Close,” the former airline flyboy says, “things really went to crap about two months later.”

They sold a three-year-old, swishy oceanview, four-bedroom, 3,000-foot bung in what was (until two years ago) the trendiest place in the country for the wrinkly set. “We lost money, of course,” Jim says, “but we also dodged a bullet.”

The house on Vancouver Island an hour or so north of Victoria was worth $985,000 when they bought, and $868,000 when it closed eight months ago, after 208 days on the market. Today a similar model changes hands in the sevens.

Lillian faced a different problem eight weeks ago.

The Toronto home she’d lived in for 37 years, raised three kids in and watched her husband die in, was now uninsurable. Water poured into the basement with every rain. Floors were uneven and the insurance company sent a letter saying the knob-and-tube wiring had to be completely replaced before a new policy would be contemplated. Making the century-old wooden structure habitable would cost at least $200,000 – impossible for a woman living on air and CPP.

Fortunately for Lillian, she lives in a trendoid area where Vespas collect in front of two Starbucks and four canine specialty stores. There were seven offers and the place sold in days for well over asking. Now Lillian has nine hundred thousand dollars.

These stories are true. I met both people. They help highlight the incredibly local nature of real estate, where the shifting sands of supply and demand can wipe away equity or bestow windfalls. The market’s fickle, dominated by human emotion. While house lust blinds some Toronto buyers to rot and dank, fear of loss has many BC sellers desperate for deals.

The latest Teranet housing numbers highlight the impossibility of measuring the beast. While the big headline said real estate grew 1% more valuable last month from April (a surprising bloat, suggesting the bubble continues to inflate) regional differences are acute. Here’s how National Bank economist Marc Pinsonneault interpreted the numbers:

“Although stronger than expected, May’s price increase from April is not exceptionally large. Indeed, it is below the average of 1.2% in May in the last 12 years – including a recession year. Without Calgary and Edmonton, the composite index would have risen just 0.9% in May, the second-lowest increase for that month in the last 12 years. So, last May’s increase in the composite index is not a display of strength in the Canadian home resale market. However, it is consistent with an overall balanced market … as soft conditions in most of the eastern provinces and B.C. are offset by tight market conditions in the Prairies.”

So while Hamilton (for example) shows a 5.8% price gain in a year, along with a 4.6% advance in Winnipeg and 3.9% in Toronto, Victoria is off 4% and Vancouver down 3.2%.

In those last two numbers, analyst Aman Bhangu sees more hurt coming for Van, where two years ago the housing market was torrid. “Victoria is 1% away from double digit drops from their peak,” he says. “What does this mean for Vancouver?”

It means losses, he contends, since those things whacking Victoria – tighter mortgage rules, slow economic growth, household debt – are just as influential in Vancouver or Toronto or Montreal, and will emerge as dominant as foolish buying and reckless speculation end.

“With the recent weakness of Victoria home prices, Vancouver is now priced at more than two standard deviations above the historical average home price ratio of these two markets.  There are only three possible observations/outcomes:
1) Historical averages are not relevant because Vancouver and Victoria are no longer comparable entities.  Seriously?
2) Victoria home prices surge upward to close the price gap with its mainland sister city.  Unlikely!
3) Vancouver home prices drop, mimicking the price action in Victoria. Likely!”

Meanwhile, how are things in BC’s fabled Okanagan Valley? Brad lives in Kelowna, is a seasoned and experience real estate investor, and says they suck.

“The local market here is suffering greatly. We have been directly involved with buying and selling two properties in this region this year and I can tell you there is DESPERATION in the air! Local Realtors are dumping their own “investment” properties like expired milk and BMW’s are slowly being replaced by Kia’s and the odd Hyundai.”

The lessons here are simple:

  • All real estate is local.
  • National market numbers are, like this blog, interesting but inherently useless and probably fattening.
  • The ‘soft landing’ will be a myth in most parts of the country.
  • If you have the chance to steal money from an urban, latte-sucking, house-horny, media-manipulated, snowflake ingénue, please take it.

152 comments ↓

#1 T.O. & GTA bidding wars debunked June 12 on 06.12.13 at 8:59 pm

http://recharts.blogspot.ca/2013/06/to-sfh-bidding-wars-debunked-june-12.html

http://recharts.blogspot.ca/2013/06/gta-sfh-bidding-wars-debunked-jun-12.html

#2 Smoking Man on 06.12.13 at 9:03 pm

Garth it matters not what the facts or truth is.

Reality is what the Herd believes. The Herd is the Market. The Herd in GTA hates stocks and bonds, They love real estate. Tax free gains, with margin…

#3 Ab on 06.12.13 at 9:05 pm

Can’t wait till prices really start to drop.

#4 mark on 06.12.13 at 9:11 pm

Hyundai, the poor man’s Kia.

#5 Small Town Steve on 06.12.13 at 9:11 pm

Smoking man, reality is NOT what the herd believes. Reality is reality regardless of what one wishes to believe. This is why the house horny herds get kicked in the teeth. They get kicked in the teeth because they are blind to and evade reality. Garth’s blog here is a very poignant reminder and warning against reality evasion. Do they listen? Some of us do! Many do not.

#6 TurnerNation on 06.12.13 at 9:18 pm

Smoking man, who’s your source? Deep Croat.?

#7 AK on 06.12.13 at 9:18 pm

#2 Smoking Man on 06.12.13 at 9:03 pm
“Garth it matters not what the facts or truth is.

The Herd in GTA hates stocks and bonds.
——————————————————————-
Don’t forget REITS.

#8 TurnerNation on 06.12.13 at 9:20 pm

The elevator repair guys are on strike in Toronto, for weeks now. Picketing and marching downtown. Why, if they are the only game in town and can charge whatever they’d like? Buildings are scrambling.

#9 Renter's Revenge! on 06.12.13 at 9:23 pm

Garth,

It’s been a while since you’ve analyzed (dumped on) the market in Winnipeg. What’s your take on the increase in prices?

Is it a lack of quality rental supply driving people to buy? (Don’t let the bed bugs bite!)

Is it immigration? (I think we just net lost 1000 Manitobans last year, mostly to Sasaskatoon)

Is it something in the water? (New fluoride treatment plant went in a few years ago)

Is a 34 year old 900 sq ft house in Transcona actually worth $270k??

#10 Devore on 06.12.13 at 9:26 pm

#2 Smoking Man

Reality is what the Herd believes. The Herd is the Market. The Herd in GTA hates stocks and bonds, They love real estate.

What does the herd in Victoria believe?

Fact is, it does not matter what you believe, or wish. It only matters what is. You can ignore reality without consequences only so long.

#11 Mikey the Realtor on 06.12.13 at 9:26 pm

#8 TurnerNation on 06.12.13 at 9:20 pm

The elevator repair guys are on strike in Toronto, for weeks now. Picketing and marching downtown. Why, if they are the only game in town and can charge whatever they’d like? Buildings are scrambling.
—————————-

they aren’t looking for more money, one thing they want is the monkey(boss) off their back, they want the GPS removed from their trucks, they had enough of micromanaging bosses and I don’t blame them.

#12 Tripp on 06.12.13 at 9:28 pm

“Making the century-old wooden structure habitable would cost at least $200,000…”

This is a major issue, most of the Canadians are not aware they are pouring money into homes built by one of the poorest construction methods. Woodframe homes are not comparable with solid masonry homes, they are not meant to last and the “maintenance” costs are actuallly supposed to cover large bills reflecting major renovations every quarter century or so. We keep comparing our cities with Paris, London, Berlin, Singapore, etc but we are not even close to their building standards. I wouldn’t mind paying half a million for something that would last at least fifty years, without the need to replace the roof, rebuild the walls, rehaul the plumbing, waterproof the foundation etc. on a regular basis. Unfortunately that quality of craftmanship is hard to find here, and most of the contractors and builders don’t even know it’s possible, let alone deliver it.

#13 detalumis on 06.12.13 at 9:29 pm

Prices won’t be dropping in central Toronto neighbourhoods walking distance to the subway with stores at the end of the street. The reason – in the entire country you have maybe .005 percent of houses that have walkability and services and subways and head office jobs.

People who go to retire one hour north of Victoria or in the Okanagan or in quaintsville Nova Scotia are living in a facade, no employment, poor local health care services, lousy transit, in fact you can’t live in these places when you get really old and can’t drive and not everybody wants to stare at the ocean and watch the waves 24/7, just like some of the wealthiest old people like to live in Manhattan and stay connected. So no some places ain’t going to collapse.

#14 Kreditanstalt on 06.12.13 at 9:32 pm

“•If you have the chance to steal money from an urban, latte-sucking, house-horny, media-manipulated, snowflake ingénue, please take it.”

Only you’re likely NOT stealing money from such people at all, but from the sappy taxpayer and holder of Canadian dollars, who WILL pay, if and when these losers fail, via government backing of mortgages and price inflation…

Socialist Canuckistan…where no one is permitted to ever FAIL.

#15 Cory on 06.12.13 at 9:40 pm

the words ‘soft landing’ that these real estate so called experts keep repeating is an admission that residential real estate was, and is, priced too high and in an obvious bubble.

Once again I say, these guys are not that smart. The govt keeps tightening and wants things to correct fast and these dummies keep pumping it up which will cause another inevitable tightening of something….such as 25 year amort’s for all mortgages in Canada for example.

Smart people would say nothing and stay under the radar, such as the Rothschild family for example.

#16 Alex K on 06.12.13 at 9:42 pm

hey Smoking Man why don’t you have a big cup of STFU

#17 Dave on 06.12.13 at 9:43 pm

I was just in Kelowna. Lots of sold signs everywhere. Quite a few lots selling in the new subdivisions as well. Nothing moving in the million plus range though. Prices are way down from the peak, and I think they could go a little lower still.

#18 Smoking Man on 06.12.13 at 9:48 pm

The Machine

Via my connection to the Universal Consciousness Consolidator I knew years ago big brother was watching, I threw a wrench into it’s gear box with the invention of KeysMe app, over million downloads in Russia, like 500 in North America, shows you how dumb we are here.

The NSA Prism program the mother of all machines, every tweet, every face book post, every email goes into the box, the box runs Algo’s looking for predetermined keys words. As a side program the little voice inside my head is saying they pay particular attention to Capital Markets, Mergers and Acquisitions, leveraged buy outs, and anywhere an insider can make a fast buck.

50 % of the USA slaves think it’s cool allowing big brother to snoop, cause someone in a far off land got his hands on a pressure cooker.

Not realizing there million dollar idea is already in someone else hands, that if one day they go into politics or journalism they will be owned by the machine based on what they said in past.

Spy masters are particularly interested in folks that don’t like Israel, Believe in the constitution, like guns allot.

With all this effort of late to disarm the American people my super brain tells me, the chatter on the electronic frontier is for revolution, let’s face it 8% have 90% of the wealth in the USA and the 8% who control the machine are scared shitless.

Even admitting the existence of Bilderburg this year and now branding it as a debating club.

That’s fear. They fear the people. I suspect Prism woke them up to the fact that the little club they thought was a secret is not a secret.

After all history always repeats, but this gang thinks it’s smarter, they have drones, know what people type and think and feel they can pre-empt the any threat.

Problem, Too many on food stamps, Too many in poverty that remember what a good middle class life was like, and when it reaches critical mass a few in-sighting incidences and it’s game over for the 8%, friends will betray them, allies they think they have will back stab them. The troops will not shoot their brothers and cousins. They will turn the guns on their masters. And bring back the guillotine
The herd will follow the new alpha….Game gets re set for another 200 years.

Damn see what happens when reading 17th century French history all week end, I go all crazy.

#19 Suede on 06.12.13 at 9:49 pm

Houses in East Van going in the 700’s
Houses in North Burnaby going in the low 800’s
Houses in North Van going in the low 800’s

Tables have turned Mr Bond, market

Half-ass pun, meh.

Smoking Man – The generation of which i belong to is several years away from being “mad as hell and not going to take it anymore” but it could very well happen before the 20-teens are out. Trudeau should capitalize on this sentiment (and he will, if he’s smart).

#20 Piccaso on 06.12.13 at 9:49 pm

#15 Smoking Man on 06.12.13 at 9:48 pm

What a pile of drivel, got bored on the second paragraph and dropped it.

#21 Mike on 06.12.13 at 9:49 pm

Garth,

Should people keep their asset allocation the same even in retirement?

Risk should diminish with hair. — Garth

#22 Carpicker on 06.12.13 at 9:54 pm

@18 topically Serbian thinking.

#23 timmy on 06.12.13 at 9:59 pm

Huge difference between Vic and Van. In Van we have jobs and rich immigrants who launder their money through real estate. Take a walk to Coal Harbor if you are in doubt

#24 T.O. Bubble Boy on 06.12.13 at 10:01 pm

@ #2 Smoking Man on 06.12.13 at 9:03 pm
Garth it matters not what the facts or truth is.

Reality is what the Herd believes. The Herd is the Market. The Herd in GTA hates stocks and bonds, They love real estate. Tax free gains, with margin…
___________________________________

I completely agree that the “herd” (a.k.a. Track 6’ers) love real estate because of the low barrier to entry (5% down or less, easy bank approvals thanks to CMHC).

There are also many cultural factors driving housing lust, including the parental pressure to buy, the belief that “no one will marry you if you don’t own RE”, and the fact that many countries such as China and India lacking financial investment options — i.e. savings accounts and RE are the only investment vehicles that many in the GTA have ever known.

Anyway — my point is — all it takes is one correction to change that. Everyone loved bonds in the 80’s, dot-com stocks in the 90’s, and Oil/Gold/etc. in the 2000’s. Every bubble eventually deflates.

#25 JSS on 06.12.13 at 10:09 pm

Ok folks –

here’s the real question…how many of you bought Dundee REIT (D.UN) today, sporting a 7.03% yield, with monthly distributions?

#26 TurnerNation on 06.12.13 at 10:12 pm

Gonna be a fun day tomorrow. Overnight Metals, Bonds making a moonshot. Asia, agape.
Only USD not behaving as expected.

#27 Smoking Man on 06.12.13 at 10:13 pm

#16 Alex K on 06.12.13 at 9:42 pm
hey Smoking Man why don’t you have a big cup of STFU
…………………………………………..

Now Sing Along Alex

https://www.youtube.com/watch?v=bPZktyrTUzQ

You shout it loud, but I can’t hear a word you say
I’m talking loud, not saying much
I’m criticized, but all your bullets ricochet
you shoot me down, but I get up

I’m bulletproof, nothing to lose
fire away, fire away
ricochet, you take your aim
fire away, fire away
you shoot me down, but I won’t fall
I am the smok…..ing man
you shoot me down, but I won’t fall
I am the smok…..ing man

Cut me down, but it’s you who’ll have further to fall
Ghost town and haunted love
Raise your voice, sticks and stones may break my bones
I’m talking loud, not saying much

I’m bulletproof, nothing to lose

fire away, fire away
ricochet, you take your aim
fire away, fire away
you shoot me down, but I won’t fall

I am the smok…..ing man
you shoot me down, but I won’t fall
I am the smok…..ing man

I am the smok…..ing man

I am the smok…..ing man

Stone hard, machine gun
Fired at the ones who run
Stone hard, as bulletproof glass

You shoot me down, but I won’t fall
I am the smok…..ing man
You shoot me down, but I won’t fall
I am the smok…..ing man
You shoot me down, but I won’t fall
I am the smok…..ing man
You shoot me down, but I won’t fall
I am the smok…..ing man
I am the smok…..ing man

Enough. — Garth

#28 Smoking Man on 06.12.13 at 10:19 pm

#24 T.O. Bubble Boy on 06.12.13 at 10:01 pm

Your right it will deflate, but not this year

Ok Garth, I’m done for tonight, heading to the wine cellar :)

#29 Small Town Steve on 06.12.13 at 10:23 pm

#25
I didn’t! I actually bought..*gasps* a stock! Rogers Sugar Inc @ 6.00/share. It pays 5.95% dividend payed quarterly. Normally I justttt stick to ETFs. I only bought 165 shares. I may as well DRIP it for s#%ts and giggles.

#30 Chickenlittle on 06.12.13 at 10:23 pm

#12 Tripp
“most of the Canadians are not aware they are pouring money into homes built by one of the poorest construction methods.”

Tell me about it! I rent a townhouse and I can hear everything! I would never pay $360k for this matchbox.

When I lived in Romania I saw new construction. They made everything out of cement and it was SOLID. When my husband moved here he thought our construction was really, really bad.

Mind you, if you were poor and you wanted a new house in Romania you made straw and mud bricks, a la Charlton Heston and the Israelites in the Ten Commandments. Mind you, even that is better than what Mattamy does.

#31 Nemesis on 06.12.13 at 10:28 pm

@SmokingMan/#18

There’s nothing quite like the “Reign of Terror” to spoil a good weekend.

In other news, “Avalanche!”

And not just in Tokyo, OldPol.

Alas.

#32 OKbyme on 06.12.13 at 10:31 pm

Just sold our place in Kelowna.
List @ 679k, dropped to 659k after 30 days.
Sold for 635k.
Not pretty, but it’s gone. Nice place, and only cost 500k to build 8 years ago. Time to look at something with 1/2 the square footage. Who needs a monster house?
Banker pal tells me to look in the high 5’s and offer 450k. Works for me. He tells me many are overextended in the area.

#33 Alex K on 06.12.13 at 10:33 pm

okay Smoking Man so you’re funny but can you stop writing novels here LOL

#34 Rainman on 06.12.13 at 10:35 pm

Slightly off topic, but wanted to mention since just happened. I call my bank to renew my mortgage on my investment property. We go back and forth a bit and agree on a blended rate of 3.06. All good so far.. So [email protected] I usually deal with has moved to a different branch, so dealing with someone new. No big deal, but mentionable. So we go into sign the papers and she says this is your principle residence? I say no, it’s the investment property. She seems confused, but everything moves along. Asks me where I work, but nothing to my wife, who happens to have a new job. Anyhow, long story short, asks for no ID and we go onto sign the paper work and off we went. We had one year left on our 35 year mortgage, so 31 years left to pay this. I guess this is grandfathered?? just seemed so easy. we both could have been jobless… this is not going to end well….

#35 NotAGreaterFool on 06.12.13 at 10:41 pm

What is happening?

http://www.bloomberg.com/quote/NKY:IND

#36 Old Man on 06.12.13 at 10:52 pm

The markets in Asia are tanking bigtime!

#37 Japan's NIKKEI down 5% on 06.12.13 at 11:00 pm

NIKKEI 12,587.40 -701.92 -5.28%

#38 Stats Matter on 06.12.13 at 11:03 pm

Let me sum it up in two words…HA HA!

#39 canadian on 06.12.13 at 11:05 pm

I wonder where all the dumb asses that used to try to be the first to post on this blog are posting now,hopefully they’re aggravating each other.Good job to GTA bidding wars, keep up the good work.

#40 Pete on 06.12.13 at 11:10 pm

Walked into my boss’ office today. She’s like “Guess what! I bought a house!” Where? A liberty village “loft”. One of those cheapo excuses for a loft where they just squeeze in a little shelf space on top of your kitchen for a bed.

Good luck with that one, woman.

#41 will on 06.12.13 at 11:27 pm

#12 Tripp

Good point Tripp, about wood frame construction. I read a line of Buffett somewhere. Referring to RE he basically said why would someone pay/invest x number of $ in something that immediately begins to rot upon purchase and continues to rot the whole time you own it? These houses made from all sorts of industrial materials are all shit. As you say, they are not meant to last.

#42 Useless — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer on 06.12.13 at 11:31 pm

[…] via Useless — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate. […]

#43 Genxer on 06.12.13 at 11:31 pm

#28 Smoking Man

Your right it will deflate, but not this year

Ok Garth, I’m done for tonight, heading to the wine cellar :)

——–

Don’t you mean wine seller? Please leave the proper use of homonyms to us dumb educated folk. And maybe leave the songwriting to the pros too.

#44 will on 06.12.13 at 11:35 pm

#18 Smoking Man

I have no disagreement with anything in your comment today.

#45 BC BRING CASH on 06.12.13 at 11:41 pm

Talk about Kelowna and area RE prices. According to the MLS Real Estate Review. A listing of a Big White property listed for $259,900 is currently listed for $110,000 below price that the owner paid. Ouch! More bad news to come for RE owners in the Kelowna area.

#46 Ronaldo on 06.12.13 at 11:45 pm

#25 JSS on 06.12.13 at 10:09 pm
Ok folks –

”here’s the real question…how many of you bought Dundee REIT (D.UN) today, sporting a 7.03% yield, with monthly distributions?”

Better choice would be XTR, 7.45% monthly, .57 MER, extremely diversified including REITS, stable, low volatility. A real gem.

#47 Peter S on 06.12.13 at 11:50 pm

Smoking Man crap and those engaging him
are doing damage to the credibilty of this
great blog. I used to recommend Garth to everyone I met. Today I am unsure lest I damage my own reputation
for sending a friend to read a great blog with so many trashy responses.

#48 Peter S on 06.12.13 at 11:53 pm

A suggestion. Smoking Man get his own blog for him and
his followers. I will never go there.

#49 Victor V on 06.12.13 at 11:59 pm

PRICE DROP #16 – 15 Ridgewood Drive – FOREST HILL

http://themashcanada.blogspot.ca/2013/06/price-drop-16-15-ridgewood-drive-forest.html

My favourite listing has had another price drop!!!

Here is the history:

February 23 $4,398,888
March 5 $4,397,888
March 12 $4,396,888
March 14 $4,394,888
March 15 $4,393,888
March 16 $4,392,888
March 17 $4,391,888
March 18 $4,388,888
March 28 $4,349,000
April 15 $4,348,000
April 22 $4,299,000
April 29 $4,249,000
May 4 $4,199,000
May 11 $4,149,000
May 23 $4,099,000

Technically, I don’t think this is a price drop as it looks like this house has new agents!

But it does have a new price!

The price of this house was lowered…

To $3,999,000!!!

That’s a whopping $100,000 drop.

Bets on when it will go down to $3,948,000?

#50 Dimitri on 06.13.13 at 12:01 am

Sitting in a cafe in Victoria and I overheard the woman behind me: “.. and there is going to be a glut of condos in Toronto. Have you heard of Garth Turner? He sold his house already…”.

#51 KingBubbles on 06.13.13 at 12:02 am

@ #9

Winnipeg’s increase is a bit misleading. Two real life examples from the past week in the Peg.

A friend of mine just took her average 2 story place off the market in trendy River Heights because in 2 weeks and over 100 showings she got just one lowball offer for 10 percent less than asking. She has now decided to stay put and cancel upsizing plans. Her realtor told her she was shocked and had never seen this before.

Another friend of mine who rents just saw her rent go down and there are incentives like first month rent free in her apartment building.

I have been looking at house rentals recently and there are lots to choose from compared to last year. It is easy to haggle a couple hundred a month off of the rent. Perhaps these are houses that did not sell in April.

All real estate is local however Winnipeg seems ripe for a correction.

#52 Figmund Sreaud on 06.13.13 at 12:11 am

“Things really went to crap about two months…”
_____________________

Hmmm, … I think I will make a cash offer of $425,000 and see if they bite! [MLS # 355270]. It’s been on the market for about year and a half.

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=13093975&PidKey=-873158362

F.S.

#53 Blacksheep on 06.13.13 at 12:19 am

Smoking Man # 18,

There will be no ‘Storming of the Bastille.’ Pitch forks or plastic receiver AR-15 are not going to get the job done. A large scale civil uprising would be answered with a disturbing display of drone technology, (requires few highly paid contractors) curbing any future delusion of whom is in charge. I thought you were inner circle? This game is multi generations old and control will not be relinquished, under any circumstances.

Public perception used to be important.

It’s quickly becoming irrelevant.

#54 live within your means on 06.13.13 at 12:30 am

Garth – you didn’t get my permission to post my pic when I was in my 20’s. !!

#55 Okotokian on 06.13.13 at 12:37 am

Smoking man,

I skip your posts. Read a few. You’re not very bright nor are you any kind of thespian.

You’re boring. Go write your next post on a square of toilet paper, wait until your bum eats it, and flush it down the toilet (where all your past post should of found a home).

#56 Property Accountant on 06.13.13 at 12:38 am

RE: #JSS # 25
“here’s the real question…how many of you bought Dundee REIT (D.UN) today, sporting a 7.03% yield, with monthly distributions?”
———————————————————

I am buying it tomorrow, waiting for cash transfer to complete. According to their Q1 Report, AFFO is $0.61 / unit, Dividends are $0.55 / unit, meaning dividends payout ratio 90%, meaning Dundee REIT actually makes you roughly 7.8% annually at this price level.
Average Occupancy 95%, Total Debt / Total Assets less than 50%……well diversified across provinces…….it is a BUY call.

Best to BUY it on a modest margin, paying 3% cost of the borrowed funds and reaping 7% gain (all being tax free for first 10 years, as those “dividends” are not actually dividends but a “return of capital invested”).

#57 Freedom First on 06.13.13 at 12:40 am

#18 Smoking Man

Never thought I would say this SM. I enjoyed reading this post. I know a lot of what you post is just part of your SM character, but when you reveal yourself in lucid language, I read what you have to say. More of it would be nice….

#58 Joe on 06.13.13 at 1:28 am

Smoking Man
Forget the cellar, go for the cheese it goes well with the whine.

#59 broadway skytrain on 06.13.13 at 1:30 am

-1000 pt day for japan? was -800

go blackhawks!

japan just gets more wild by the day, getting a bad feeling about stocks in general, seems most asset classes are moving down in unison right now.

as reits drop in price, what is the risk of the divs being cut?

re RE, many new projects breaking ground all around here, the end of the lineup of buyers remains unseen.

#60 Andrew Woburn on 06.13.13 at 1:36 am

What is the Man Smoking?

#61 DON on 06.13.13 at 2:13 am

#5 Small Town Steve on 06.12.13 at 9:11 pm

Smoking man, reality is NOT what the herd believes. Reality is reality regardless of what one wishes to believe. This is why the house horny herds get kicked in the teeth. They get kicked in the teeth because they are blind to and evade reality. Garth’s blog here is a very poignant reminder and warning against reality evasion. Do they listen? Some of us do! Many do not.

@@@@@@@@@@
and the herd can and will change direction at the slightest scare. Now that… you can take to the bank – they know it to be the truth.

#62 Jay Currie on 06.13.13 at 2:14 am

Stuff sells Victoria. But nothing over $900,000.

The sweet spot seems to be 699k which, realistically, get you a pretty okay house in the less interesting burbs of Victoria. The big stuff the Rocklands, the Uplands, Oak Bay, if it goes over $900,000 just sits.

People are smart enough to realize that they really don’t need a 5000 thousand square-foot house with single pane windows and a leaky basement.

#63 DON on 06.13.13 at 2:22 am

#17 Dave on 06.12.13 at 9:43 pm

I was just in Kelowna. Lots of sold signs everywhere. Quite a few lots selling in the new subdivisions as well. Nothing moving in the million plus range though. Prices are way down from the peak, and I think they could go a little lower still.
@@@@@@@@@@@@@@

on Vancouver Island in any given area one can count about 20 real estate signs in two minute drive or less in some areas. Whole condo develops empty – no inhabitants at least not human.

#64 angela on 06.13.13 at 2:26 am

#11 Mikey the Realtor on 06.12.13 at 9:26 pm

they aren’t looking for more money, one thing they want is the monkey(boss) off their back, they want the GPS removed from their trucks, they had enough of micromanaging bosses and I don’t blame them.

hey mikey the Government micromanages your life and has access to your location through the use of On Star in your car,chip in your credit/debit cards ,transponders in your vehicle ,GPS locator in your cell phone infact if you give out your cell # there are now apps that can tell me your location ,so next time your in the strip club your wife can tell where you been .You should protest the government or learn to love the new norm

#65 A Yank in BC on 06.13.13 at 2:28 am

“… an hour or so north of Victoria.”
“… in what was (until two years ago) the trendiest place in the country for the wrinkly set.”

Duncan is an hour north of Victoria. Surely you don’t mean Duncan.

I didn’t mean walking. — Garth

#66 OAU on 06.13.13 at 2:53 am

Where do you find all these images garth

#67 VanPerfecto on 06.13.13 at 2:58 am

Oakridge Mall development coming online in Vancouver with huge towers on tap. Supposedly to make Vancouver “affordable”? Until CRA cracks down on offshore ownership, home ownership will be out of reach for most who live here. Stephen Harper’s dream vision has become a reality. Sell to the highest bidder

#68 VanPerfecto on 06.13.13 at 3:02 am

Timmy, Coal Harbour is mostly US owned , if this is what you mean by immigrants. Again, CRA get off the couch and do your job. Americans and other people who don’t work here should be taxed to the hilt. Americans living in Coal Harbour should pay Canadian Taxes on their gross income if they own a home here
#23 timmy on 06.12.13 at 9:59 pm
Huge difference between Vic and Van. In Van we have jobs and rich immigrants who launder their money through real estate. Take a walk to Coal Harbor if you are in doubt

#69 Buy? Curious? on 06.13.13 at 3:04 am

Garth, why are you ok with the youth of today being suckered into buying a place that they can’t afford and will be forever enslaved to, while encouraging old people who have one foot in the grave and the other on a banana peel to sell as quickly as they can? Has that generation gotten enough out of life?

Oh well, in 10 years time, the transfer of wealth will be nice. I might add a swim up bar to the jaccuzzi.

And here is an article taken from the New York Times about rates going up.

http://dealbook.nytimes.com/2013/06/11/in-a-shift-interest-rates-are-rising/?nl=business&emc=edit_dlbkam_20130612

#70 World Traveller on 06.13.13 at 5:44 am

Damn see what happens when reading 17th century French history all week end, I go all crazy.

Uh, SM, the crazy happened a long time ago for you.

Feel free to quote Titanium by David Guetta again…..

#71 World Traveller on 06.13.13 at 5:51 am

#41 Pete on 06.12.13 at 11:10 pm

Gah! Liberty Village, Toronto’s disaster in the making, take a potentially great tourist and cultural centre and completely ruin it with condos, such potential wasted…

#72 Sometimes Lucky on 06.13.13 at 5:59 am

Prophetic or inevitable, Der Spiegel article “End of Cheap Money: Can the World Handle Higher Interest Rates?”

Quotes from article:
“But for people buying real estate, rising interest rates will eventually pose a problem, because the low rates at which they have borrowed money in recent years are usually locked in for only five or 10 years. After that, the mortgages are generally renegotiated.”

http://www.spiegel.de/international/business/bernanke-and-us-fed-change-course-on-interest-rate-policy-a-905242.html

#73 meslippery on 06.13.13 at 6:08 am

Talk tonight about construction methods?
Toronto 80 years ago, wood and nails.
Cost a few thousand. Now millions for that old wood.

#74 bigrider on 06.13.13 at 7:13 am

Ugly equity and bond market.

The fed is trying to dance a real complicated economic dance.

A backup in rates kill bonds but if we have strong economic growth equities do ok in the back half of the year.

On the other hand, a back up in rates with low growth and watch out. A wipeout ahead.

Or, like the corrections in 2010, 2011 and 2012, you can ignore it and do fine. — Garth

#75 steve p on 06.13.13 at 7:21 am

“If you have the chance to steal money from an urban, latte-sucking, house-horny, media-manipulated, snowflake ingénue, please take it”

that’s a good line, that’s really good writing

#76 Tripp on 06.13.13 at 7:26 am

#30 Chickenlittle

“…if you were poor and you wanted a new house in Romania you made straw and mud bricks…”. True, but they don’t have to pay half a million for those.

It is not very common lately in Eastern Europe to build of mud bricks, although it is one of the most comfortable methods, without doubt more than woodframe. The walls’ mass creates a microclimate inside that provides naturally very little variations in temperature and humidity. Just like adobe or earthship methods used in southern US. I would not trust the structure if it wasn’t reinforced with concrete or steel and they need to be very well protected from rain and snow.

#77 Kent on 06.13.13 at 7:46 am

#18 Smoking Man –

True, accept I don’t think the 8% are running scared.

#78 jess on 06.13.13 at 8:04 am

mechanisms

Mortgage fraud: New and improved
Lenders have tightened standards, but scam artists have found new ways to beat the system.
http://money.cnn.com/2008/10/17/real_estate/new_mortgage_fraud/?postversion=2008101715

…”Advanced information technology and photocopying equipment have gotten so accurate that very convincing papers, including income statements, savings accounts and tax returns can be produced on demand. ”

Ronan said there are Web sites that provide believable documents that scam artists use.

“Because they say it’s for ‘novelty purposes,’ you can’t really do anything about it,” he said. “They don’t say it can be used to defraud.”…

http://en.wikipedia.org/wiki/Mortgage_fraud#cite_note-6

http://www.bbc.co.uk/pressoffice/pressreleases/stories/2003/10_october/29/money_programme_mortgage.shtml

#79 TurnerNation on 06.13.13 at 8:18 am

Yes I come here for trading ideas. I’ve set a price alert for D.UN at $29.50. See ya there.
Never underestimate a. A trend’s strength, b. Irrationality.

I drop by this scotch-fuelled weblog around 8:30am and pm (when futures are open).

#80 2CentsCdn on 06.13.13 at 8:21 am

Hey …… Smoking Man may be a bit of a kook (ok …. a lot of a kook)….. but his view of how the world works is much closer to reality than most of us would like to admit. So try to see through the semi-drunken, self back patting, border line crazy excuse of a self proclaimed “success story” …… and listen to the messages ….. most are right on the money (in an “OMG what has this shitty world come to?” kinda way.)

#81 leeman on 06.13.13 at 8:54 am

Good story telling skills…woman with kids sold a crappy house and made 900k…trying to illustrate the greater fool affect…

I cannot people come here religiously to pray for a clapse in prices so they can come buy for cheaper.. Lol…

This is very sad… These readers must be driving by and logging on mls to watch for their favourite houses everyday wishing they could buy instead of rent their current place

#82 Stickler on 06.13.13 at 9:06 am

@ #47 Ronaldo on 06.12.13 at 11:45 pm

Better choice would be XTR, 7.45% monthly, .57 MER, extremely diversified including REITS, stable, low volatility. A real gem.

———–
XTR pays a distribution of $0.06/Month. That is $0.06 X 12 months = $0.72 / year. Its current unit price is $12.08. So $0.72/$12.08 = 5.9%

It is comprised of interest rate sensitive stuff (60% bonds + REITs, preferred, utilities).

After holding it for almost 1 year the total return is less then 2%…and yes I have some.

#83 Form Man on 06.13.13 at 9:11 am

The expectation in Kelowna has been that the boom in Alberta would result in an influx of retirees from the prairies, resulting in good times for the Okanagan. Might still happen, but the reality has been a steady migration of workers from Kelowna to Alberta and Saskatchewan, leading to a stagnant local economy (and falling housing values ).

#84 sciencemonkey on 06.13.13 at 9:14 am

I like Smoking Man, even though I don’t have that subversive quality that would make me a Smoking Man as well.

SM is right, the herd is reality. Their decisions *directly* set the price of things like RE and financial assets. If you’re thinking of the reality of the herd not being able to live beyond their means forever, well that may be true, but in the end it’s simply another variable that influences the herd.

#85 fancy_pants on 06.13.13 at 9:41 am

#50 Victor V on 06.12.13 at 11:59 pm

I find comparing selling prices is the only way you have a yardstick to measure by. Asking prices are anything the agent and seller make up and hold no information of value other than it reveals the RE agent’s lack of credibility as an accurate appraiser and out of touch with the market.

sometimes, the agent with the highest set price gets the listing. In the long run it becomes a shot through the foot for the agent – gaining the reputation as one who can’t move a property, and the seller – holding a stagnant property.

I have also then seen agents pull and relist on MLS to make it look like a new listing. oh, the games people play.

#86 Ret on 06.13.13 at 9:52 am

Hamilton +5.8%? Do you have a link?

The Teranet site link to the Composite Home Price Index is triggering my Bit Defender anti virus program.

Hamilton looks more like Detroit every day. Maybe their are more Toronto drug dealers and slumlords buying up properties?

#87 fancy_pants on 06.13.13 at 9:59 am

The reality is I herd that tulips were once a great deal in 1637 just like Canadian RE is today.

#88 crash&burn on 06.13.13 at 10:01 am

Vancouver isn’t just an inflated bunghole…it’s an infested plague center waiting to happen.

http://www.theprovince.com/news/Vancouverites+might+have+learn+live+with+rats+population/8511861/story.html

And check out the Beg Bug Registry sometime….off the charts for condo, city building and hote…….why would anyone buy here, visit…or work…especially in the downtown core.

Actually the rats are pale in comp to the roaches which have reached third world infestation……..it started with the last strike which went on for months…..and never abated cause its illegal to kill innocent critters….hah hah….now with the chicken coops…..2 week garbage pick up….recycling boxes and raw garbage in composts the roaches and rats have expoloded. I talked to a guy in pest control and he told me you’d never eat in a restaurant if you saw what he does every day….in downtown Vancouver and elsewhere!!

This on top of the 800 million liters of raw sewage and hospital waste that are pumped into English Bay every day of the year…..yeah baby…we’re #1

#89 Jean Le Poutine on 06.13.13 at 10:07 am

Thankfully Montreal will have a soft landing, see
http://www.huffingtonpost.ca/2013/06/13/new-house-prices-canada-april-2013_n_3434358.html?utm_hp_ref=canada-business

#90 greatestfool on 06.13.13 at 10:08 am

GARTH!!!
I’VE BEEN READING YOUR BLOG FOR A FEW YEARS NOW. GREAT ADVICE. YOU ARE RIGHT ON THE SPOT WITH THE REAL ESTATE. IT’S TANKING LIKE HELL.
THANKS FOR EVERYTHING!!!

#91 Unpoovvio on 06.13.13 at 10:19 am

#80 TurnerNation

Re: D.UN — Using my sticks & lines “analysis” I also see another 5% down in the cards (about $30). Which to me means it is still a good buy even at this point if you don’t want to risk missing the exact “bottom”…though in no rush to pull the trigger (already done enough falling-knife catching in the past few weeks).

#92 Sebee on 06.13.13 at 10:34 am

Big Award logo rolled out front and centre and Garth doesn’t even throw an Amazon themed party to celebrate.

#93 Rational Optimist on 06.13.13 at 11:01 am

#87 Ret

Hamilton is a divided city. West Hamilton, Dundas and Ancaster are to a large degree fairly tony; Mountain is middle-class and a lot of new cookie-cutter construction; the rest is pretty well absolutely slummy (the parts you probably see from the highway). The numbers also usually include Burlington- my point is, not all is slum.

The polite fiction in Hamilton is that a lot of buyers priced out of Toronto are coming to town. I think some people may actually believe this, and so there is a “now or never” mentality.

The realtors in Hamilton are actually trying to convince people that it will be as expensive as Toronto.

http://www.thespec.com/news-story/3252025-bidding-wars-housing-gone-crazy/

#94 Ronaldo on 06.13.13 at 11:27 am

#74 – Meslippery –

”Talk tonight about construction methods?
Toronto 80 years ago, wood and nails.
Cost a few thousand. Now millions for that old wood.”

It’s no different that those 1.2 million tear downs in Vancouver. The wood and nails are worth nothing. It’s the dirt they are sitting on that is supposedly worth the asking price. That can change quickly.

#95 Fed-up on 06.13.13 at 11:32 am

Lots of Smoking Man negative comments today.

It took most of you this long to grow tired of his posts? I have been skipping that drivel from the 1st time I came onto this blog.

#96 Old Man on 06.13.13 at 11:50 am

The Bank of Canada just issued a warning that there might be a sharp correction in Real Estate values in the coming months. Gee what a surprise!

#97 Realtor on 06.13.13 at 11:54 am

Starting to get interesting
New listings are starting to increase m/m when normally they should be decreasing m/m.
Also days on markets is increasing above the average.

#98 Old Man on 06.13.13 at 12:02 pm

#96 Fed-Up – Smoking Man is a cool dude, and makes me smile, as life is too short to take words of wisdom and not pay attention to the humour of it all. I see people all day lined up at Tims for a daily fix, and they will drive for miles bringing a coffee home. Why? I have no idea, and it matters not, but am sure there is something special in that coffee.

#99 franke le skank on 06.13.13 at 12:08 pm

MSM use to say, “house prices will NEVER go down.” Then, when global economic uncertainty materialized and YoY sales decreased for 8 consecutive months the MSM started regurgitating “we are experiencing a soft landing.”

We are now in month 12 of YoY sales declines and this is the first article I’ve seen from MSM that reports on the possibility of an abrupt correction in prices. This is a sign that the tide has turned and we will starting seeing more of these.

http://www.theglobeandmail.com/report-on-business/economy/financial-system-risks-reduced-but-housing-prices-still-a-worry-boc/article12510142/

#100 Ret on 06.13.13 at 12:13 pm

Ian Lee, Sprott School of Business, just commented on BNN about BoC comments about debt/ CMHC exposure in the housing market. CMHC exposure is 3x the Canadian GDP. Could this be accurate?

His view is that Toronto and Vancouver are separate housing markets from the overall Canadian market due to foreign buyers in those markets.

Frances Horodelski asked the 50 cent question. Are the international buyers getting government backed mortgages?

Ian Sprott replied that many wealthy foreign international investors come in and pay cash, at least they did when he worked in the industry. The rest of the country’s RE markets are perfectly fine in his opinion.

Average incomes in these two major cities are actually much higher than reported due to the influx of wealthy foreigners who earn their money elsewhere so RE price increases are not really a problem in those cities that they would appear to be.

(Sorry, the link to this segment on BNN is not up yet.)

Garth, you two guys really need to do lunch sometime.

#101 Holy Crap Wheres The Tylenol on 06.13.13 at 12:26 pm

#18 Smoking Man on 06.12.13 at 9:48 pm
The Machine
Via my connection to the Universal Consciousness Consolidator I knew years ago big brother was watching, I threw a wrench into it’s gear box with the invention of KeysMe app, over million downloads in Russia, like 500 in North America, shows you how dumb we are here.

Dear Readers, Smoking Man may be insane, crazy, dyslexic, a heavy drinker, an insanely brutal corrupter of the English language and or paranoid delusional, however he was savvy enough to slip in his sales pitch right under your noses with KeysMe app. How many of you googled it?
Once a salesman always a salesman.

#102 Mister Obvious on 06.13.13 at 12:27 pm

#95 Ronaldo

“It’s no different that those 1.2 million tear downs in Vancouver. The wood and nails are worth nothing.”
—————————-

I’ll say. I worked for a few years in the early eighties renovating those old west side Vancouver homes.

The structural lumber was hard as iron. You couldn’t pull the rusty old nails out. The heads would just pop off. I threw thousands of pieces of nice looking, perfectly straight but completely non-reusable lumber into the waste bin.

#103 Garth is not God on 06.13.13 at 12:28 pm

This is the comment from BOC “The most important risk to financial stability in Canada continues to stem from the euro area.”. Remember this when a Canadian Bank fail and your deposit gone or you cant find your RRSP because of rehypothecation

#104 Panhead on 06.13.13 at 12:36 pm

#95 Ronaldo on 06.13.13 at 11:27 am
#74 – Meslippery –

”Talk tonight about construction methods?
Toronto 80 years ago, wood and nails.
Cost a few thousand. Now millions for that old wood.”

Years ago I bought a house in Burnaby that was built in the 30s. Was constucted of completly clear fir. Not a knot in the house. If you had that lumber now it would probably be worth more than I paid for the house.

#105 robert james on 06.13.13 at 12:36 pm

Those nasty banks are up no good.!! The shadow inventory is coming out of the shadows.. lol http://finance.yahoo.com/news/prices-rise-banks-repossess-more-135039739.html

#106 Squatter on 06.13.13 at 12:40 pm

#97 Old Man
The Bank of Canada just issued a warning that there might be a sharp correction in Real Estate values in the coming months. Gee what a surprise!
————————————————-
BofC’s new boss reads this blog every day.

#107 Mike on 06.13.13 at 12:56 pm

Hi Garth,

Can you pls tone down the pics. Most are funny; this one is bordering Not Safe For Work. I love to read your blog at the office, so can you pls make the pics a little more office-friendly for those of us web-surfing work-evading basement-dwellers?

Thanks!

No. Get promoted so you can have a private office and read this all day. — Garth

#108 bill on 06.13.13 at 1:06 pm

89 crash&burn on 06.13.13 at 10:01 am
”This on top of the 800 million liters of raw sewage and hospital waste that are pumped into English Bay every day of the year…”
where exactly is this ”Raw sewage laden with hospital waste” outfall located?
there isnt one so it kinda makes you doubt the veracity of the rest of your post…

#109 Old Man on 06.13.13 at 1:10 pm

I believe that music can capture the moment for the greater fools who bought Real Estate at the top, so dedicate a tune who will be sliding down into the meltdown, and you will blame each other, but the divorce lawyers will be waiting.

“Stayed in bed all morning long to pass the time. There’s something wrong here, there can be no denying. One of us is changing, or maybe we’ve stopped trying. And it’s too late baby, now it’s too late. Though we really tried to make it.”

Yep, for those horny to buy debt for their pie in the sky will be eating cake in the near future, as Carole King had it right – It’s Too Late Baby. Mr. Turner warned you all, did he not?

#110 Smoking Man on 06.13.13 at 1:11 pm

#97 Old Man on 06.13.13 at 11:50 am

The Bank of Canada just issued a warning that there might be a sharp correction in Real Estate values in the coming months. Gee what a surprise!
………

Old Man you of all people know not to take things at face value.

Stephen Prozac, has had a long stint with export developed, he needs to get the dollar down in light of global currency wars, the weapon, over night rate. It has to go down. HOW can he do that when the herd keeps buying condos.

Continuation of Carney, talk down the market, the problem the herd can’t hear him with all the noise generated from construction equipped.

O and Fed Up please read post #27

#111 recharts on 06.13.13 at 1:27 pm

@#97

The Bank of Canada just issued a warning that there might be a sharp correction in Real Estate values in the coming months. Gee what a surprise!
———————

Do you have a link for that?

#112 Roial1 on 06.13.13 at 1:42 pm

#12 Tripp on 06.12.13 at 9:28 pm

This is a major issue, most of the Canadians are not aware they are pouring money into homes built by one of the poorest construction methods. Woodframe homes are not comparable with solid masonry homes, they are not meant to last and the “maintenance” costs are actuallly supposed to cover large bills reflecting major renovations every quarter century or so.

Really????? Ever try to repair bricks and mortar???? Cost it out and you will sing a different tune.

My wood frame house was built in 1930 and the frame is still 100%. Been trough several minor and one major earthquake.

Yes, we have done some renovations and added a room, but the main frame is still original. It has always been easy to maintain and in an earthquake I would feel a WHOLE lot safer.
(shakes but does not break like bricks and mortar )

The life of a roof is the same for both.
Up grades to both are done with the same frequency (or not).
So all in all the statement by you about the costs is bogus.

All that being said, “NEW houses” (especially “Mc mansions” are not made of the “best” of materials (pressed board , pine and staples) so that reference would be appropriate for them.

#113 FATHER on 06.13.13 at 1:51 pm

#98 It’s in the globe & mail

#114 recharts on 06.13.13 at 1:52 pm

http://www.thestar.com/business/real_estate/2013/06/13/overpriced_toronto_condo_market_a_risk_to_economy_says_bank_of_canada.html

#115 Holy Crap Wheres The Tylenol on 06.13.13 at 1:53 pm

The lessons here are simple:
All real estate is local.
National market numbers are, like this blog, interesting but inherently useless and probably fattening.
The ‘soft landing’ will be a myth in most parts of the country.
If you have the chance to steal money from an urban, latte-sucking, house-horny, media-manipulated, snowflake ingénue, please take it.

Absolutely true Garth, As my wife and I left a trendy little restaurant on Lakeshore Drive in Downtown Oakville last night I suddenly realized why we are not sustaining the same damage as others areas. Before I got to my American made car (no its not super high end just a regular mid size car) parked out front I passed two Maseratis, two Porsche, three BMW, one new Corvette, one Cadillac SUV, one Lincoln MKZ and to top it off one Bentley. The other cars parked along Lakeshore where all fairly new nice cars, nothing exotic just new and shiny. Not one Kia, Yaris, or crappy old Chevy. Oakville is pissing money, we have our own little micro climate here. I have said it before if you buy a home here you can still reno and flip for a profit. Come and get the money boys before its gone! This can’t last forever!

#116 robert james on 06.13.13 at 1:55 pm

BOC warning link,, for what it is worth.. http://www.cbc.ca/news/business/story/2013/06/13/business-condo-bank.html

#117 Roial1 on 06.13.13 at 1:56 pm

32 OKbyme on 06.12.13 at 10:31 pm

Banker pal tells me to look in the high 5′s and offer 450k. Works for me. He tells me many are overextended in the area.

Don’t you READ what Garth says???

WAIT!
That “High fives” will be 2s or 3s in a year or two.

Invest and wait.

READ what Garth is saying.

#118 Roial1 on 06.13.13 at 2:09 pm

#53 Figmund Sreaud on 06.13.13 at 12:11 am

Nice house and great location………….BUT.
On a small island, Facing the storms on the gulf,
and a pig to heat.
I would not buy it.
Let someone with money to burn have it.

#119 BoC report on 06.13.13 at 2:12 pm

From http://www.theglobeandmail.com/report-on-business/economy/financial-system-risks-reduced-but-housing-prices-still-a-worry-boc/article12510142 :

“But Canada’s central bank warned that housing prices in this country could be subject to “a sharper correction” than the so-called soft-landing now under way stemming from the globe’s chronic economic problem child: Europe. Meanwhile, the bank reiterated earlier warnings that a glut of unsold new condos in Toronto could lead to an “abrupt correction in prices” in the next 12 to 30 months and spread to other segments of the housing market and the broader economy.”

#120 ItoldUitwascoming on 06.13.13 at 2:19 pm

Next 2 years are going to be PAINFUL !!

http://www.timescolonist.com/asking-price-plunges-for-len-barrie-s-former-home-on-bear-mountain-1.320088

#121 Ronaldo on 06.13.13 at 2:23 pm

#99 – Mr. Obvious – ”I’ll say. I worked for a few years in the early eighties renovating those old west side Vancouver homes.

The structural lumber was hard as iron. You couldn’t pull the rusty old nails out. The heads would just pop off. I threw thousands of pieces of nice looking, perfectly straight but completely non-reusable lumber into the waste bin.”

Had exactly same experience back in the 90’s doing a reno on an old 1920’s model on the NW coast. Stripped it right down to the bare walls, complete gut job. Had been reno’d many times by DIYers over the years. Windows relocated and put in without proper headers and cripples. Lots of floor rot and under windows and ends of rafters. Foundation consisting of timbers on blocks and timbers rotting. The wet climate does not mix well with wood over that many years. Absolutely #1 fir lumber but as you said, nails would not pull out without breaking off let alone trying to pound a nail in it. Would have been easier and faster and cheaper to build one from scratch. I understand why they tear some of them down. No doubt those built in the higher end parts of the city were built much better but those are the mansions from those days and not the cookie cutter models that we see in most parts of the city.

#122 Ronaldo on 06.13.13 at 2:34 pm

#96 Fed-Up –

#99 Old Man on 06.13.13 at 12:02 pm

”Smoking Man is a cool dude, and makes me smile, as life is too short to take words of wisdom and not pay attention to the humour of it all”

If you listen to a fool and you don’t learn anything, who is the real fool?

You can learn something from everyone. Nobody is forcing you to read his posts. SM provides us with a bit of entertainment as we browse thru the various posts, most of which I skip.

#123 Ret on 06.13.13 at 2:39 pm

#94 Rational Optimist, Re:Hamilton

Agree completely with 95% of your observation.

Delete West Hamilton/ Westdale as tony. Fifty percent or more of the houses are student rooming houses filled with McMaster students or whoever will pay the rent.

Druggies and the mentally not well from downtown have slowly started to move into the area to rent the cheap dank basement rooms. Landlords like 12 months of rent over the 8 months that a student would pay. More crime, break-ins and tagging every year.

No one with a family would now move into West Hamilton. Westdale would be a gamble. Hopefully soon, we’ll sell out to a slumlord as most of our neighbours have already done.

Basically, Hamilton is a clapped out, over taxed and decaying industrial city of a bygone era. The city has deep union roots that just about guarantee that any up and coming businesses go elsewhere. What’s left ain’t pretty.

#124 gladiator on 06.13.13 at 2:47 pm

Garth,
look what Robert Cavcic says in his research paper:http://www.bmonesbittburns.com/economics/reports/20130613b/sr130613b.pdf

It is ok for young families with long time horizons to buy detached houses, so what are you fussing about?

#125 Just Say No on 06.13.13 at 3:19 pm

Winnipeg? 900 sq. ft. 2 bedroom side by sides for 250,000.00??? correction is needed. Should another fool be had? Lucky is the seller!!!

#126 Cowpie on 06.13.13 at 3:52 pm

#108 Mike on 06.13.13 at 12:56 pm
Hi Garth,

Can you pls tone down the pics. Most are funny; this one is bordering Not Safe For Work. I love to read your blog at the office, so can you pls make the pics a little more office-friendly for those of us web-surfing work-evading basement-dwellers?

Thanks!

No. Get promoted so you can have a private office and read this all day. — Garth
——————————————————————-

Gotta agree with Mike: not everyone that reads this blog is a trucker. Tasteless photos insult my intelligence.

Smarmy images are no longer risque but very mainstream these days. Yawn…boring. Why not push the envelope by using wit to make the point?

You think today’s picture is “tasteless”, “smarmy” or “risque”? A woman modeling? This is interesting. — Garth

#127 Joe on 06.13.13 at 4:04 pm

Re Bloomberg today US housing forclosures up 11%

#128 FATHER on 06.13.13 at 4:10 pm

#117 cbc has prices up @ 515,000 for toronto & 735,000 for vancouver on their map

#129 Canadian Watchdog on 06.13.13 at 4:14 pm

Ontario, elementary teachers reach deal to bump salaries

Ontario’s public elementary school teachers have reached a tentative deal with the province that would give them a roughly 2 per cent salary bump that they lost in a previous round of bargaining.

So much for Ontario's spending cuts. As they say… You have the best government money can buy.

#130 dosouth on 06.13.13 at 4:35 pm

Yes even here on Vancouver Island oh how the mighty do fall (plunge)……..

Look out below, warning to all readers – the spin is thick

#131 Mikey the Realtor on 06.13.13 at 4:42 pm

#65 angela

You better stop reading that conspiracy drivel or your brain will decay, I can’t recall the government ever calling me and asking me why I decided to stop at tim hortons and what I was doing, I would love to tell them I’m dropping a deuce that reminds me of them.

#132 Marquis de Sale on 06.13.13 at 4:51 pm

#124……But Dundas is tony. I have agents coming by and licking my house hoping to sell! Toronto folk are moving in en mass. The dog poop on my lawn is minty.

#133 Smoking Man on 06.13.13 at 4:59 pm

Ha, few days ago I said us govt should not go after Snowden, call him a lair, egnor him…

Well look at here, Mike Rogers chairmen of the intelligence committed did just that…

CIA is reading my posts, buggers, passing on my great ideas.. To late idiots, should have done it on day one.

2 million a year, tax free and you have my brain… Exclusively….

#134 -=jwk=- on 06.13.13 at 5:01 pm

#25. I am overweight in RE, houses in fla and all that… Went for the cm. Pr. Y (cibc prefs), which are almost back to their 25 issue price. 6.25% bank preferred? Thanks, I’ll take that..

#135 Ralph Cramdown on 06.13.13 at 5:05 pm

#116 Holy Crap Wheres The Tylenol — “I passed two Maseratis, two Porsche, three BMW, one new Corvette, one Cadillac SUV, one Lincoln MKZ and to top it off one Bentley. […] Oakville is pissing money, we have our own little micro climate here.”

I pass a lot more than that every day walking my son to and from school. Except for the Maseratis; I only passed one today, and usually none. Pity the fool in Oakville who buys one for the exclusivity and then has ANOTHER Maser owner park in the handicapped spot in front of him!

When I buy a stock, my ‘unit’ is more than I’ve ever paid for a car. Click – buy – click – confirmed. And my portfolio would be considered overdiversified by efficient market theorists. Point being that you can’t tell how rich someone is by his whip, especially in a superlow interest rate environment. Obviously the people you’re rubbing shoulders with have enough cash flow for a ride that costs them $30/day. Other than that, what do you know? Maybe they’re rich enough to pay cash for their cars and their houses. Maybe they’re levered to the tits. All I know is that if you drove from Brant St. to Ford Dr. collecting all the ‘For Sale’ signs as you went, you’d have enough lumber to build a small bungalow.

#136 Rational Optimist on 06.13.13 at 5:24 pm

#124 Ret: I agree with 100% of what you say. Thanks for pointing out Westdale- although I think Kirkendall and Strathcona are viewed (by Hamiltonians, whose standards continuously erode) as okay for families, I have seen some evidence of Westdale landlords starting to rent to the non-students to whom you refer. And the over-taxation can not be overstated, and is unlikely to ever be ameliorated.

#133: You’re absolutely right. Toronto folk are indeed moving in “en mass.” Why sell, given that, eventually, half of all Torontonians will be living in Hamilton and prices will be marching ever upward? My recommendation to you would be to buy a place or two and hold them for a few years.

#137 espressobob on 06.13.13 at 5:53 pm

Oh, why did the markets have to go up? More pain, more discounts. Dive, dive, dive! Hate sitting on dry powder. Love the doom & gloom & the amazon in that pic, nice!

#138 Cow Man on 06.13.13 at 5:56 pm

Amigos:
No need for a balanced portfolio. Just follow the fortune builders.
https://www.fortunebuildersregistration.com/LONDONHAMILTON/2.0000/Index.cgi?MID=3021747
I can’t believe this kind of event is still around.

#139 NoName on 06.13.13 at 6:15 pm

@ Smokingman
you should read about cambodia civil war, and what happened there when “hillibillis” took over the country, or maybe just watch Killing Fields movie.

#140 Uwinsome on 06.13.13 at 6:21 pm

Donald Trump thinks Vancouver real estate is still buoyant. So does the Holborn Group.

http://www.vancouversun.com/news/metro/Donald+Trump+Vancouver+visit+next+week+confirms+speculation/8521789/story.html

#141 Alex K on 06.13.13 at 6:55 pm

#23 timmy
are you related to willowdale? LOL

#142 baddog on 06.13.13 at 7:02 pm

#52
I thought that the Winnipeg market would have softened by now by now but anything between 2-300 grand is selling very well. Stuff that sits for a month or two seems to be priced wrong or is in rough shape. The market is not as hot as last year but is still doing quite well. I have been watching very closely and whenever I have mentioned the possibility of a correction to anyone they either look at me funny or laugh. No one here thinks that it is possible. They think that it will either play out like in the 90’s when Toronto prices tanked and Winnipeg just flatlined or Winnipeg will just rise with inflation. It’s possible I guess but I don’t know. As for the rental market homes in decent areas are in very short supply and landlords (I am one) have their pick of tenants. Most of the stuff on Kijiji are houses in sketchy areas and even those are getting a decent rent it seems. The market is slowing down but not very quickly. Hard to say how this will play out.

#143 Smoking Man on 06.13.13 at 7:12 pm

#102 Holy Crap Wheres The Tylenol on 06.13.13 at 12:26 pm

Like the way you think.

Redoing Web site, not sure will let the new version go for free. It’s un crackable, last thing I want is some religious fanatic of any faith get there hands on it.

Strickly for corporate executives… Of fortune 500 companies… $$$$$? Might put a more unique secure version for free don’t know yet.

#144 Eric on 06.13.13 at 7:26 pm

Garth,
Could you please ban smokingman and his friends forever?
It’s becoming more difficult to read normal people comments. That is what he wants.

#145 Peter S on 06.13.13 at 7:28 pm

Garth mentions the number of people who prefer GIC etc over the stock market. I am one of them. Tons of spare cash. No stocks in any form.

If only I could find an honorable company run by honorable people.

Results of a poll below

**********

Is the entire stock market (and the system it supports) completely corrupted?

Yes, it’s legalized theft. (76%, 1,035 Votes)
No, but it will be soon. (9%, 116 Votes)
No, and the system can still be saved. (8%, 111 Votes)
The system and the market are fine! (5%, 72 Votes)
No, and Democrats can still save it. (1%, 13 Votes)
No, and Republicans can still save it. (1%, 9 Votes)
********************
Link to the above article and poll

http://blogs.marketwatch.com/cody/2013/06/04/yes-the-market-is-corrupted-and-we-all-know-it/

Many people I know with over a million cash to invest
have no stocks or derivatives. Everything in
GIC type stuff.

Here Madoff explains what he believes is wrong with
markets.

http://www.marketwatch.com/story/madoffs-best-ideas-for-making-the-markets-fair-2013-06-05?link=MW_story_insert

You fear the wrong thing. — Garth

#146 Bill Gable on 06.13.13 at 7:32 pm

This sort of sums it all up nicely – from the Toronto Star’s Susan Pigg:
“It’s the giant unknown that is under a spotlight, yet again, in the wake of the Bank of Canada warning Thursday that Toronto’s highrise condo market is not only overbuilt and overpriced, but a risk to the country’s economic health.
No one really knows how many of the 55,342 condos now under construction across the GTA are owned by investors — or what they will do if Canada is hit by economic shock waves from other parts of the world that could send house prices tumbling and, with them, consumer confidence and spending.
The next 30 months will be key, the central bank makes clear in its latest assessment of Canada’s financial system, which singles out the growing inventory of unsold units in Toronto’s condo market and raises concerns that construction has been boosted by investor, rather than demographic, demand.”

>> Yipes. Like Mr. Turner has been trying to drum into our heads, this will not end well.
Vancouver, is not much better.

I am watching them slamming up these pillboxes, and the first floor or many of the Yaletown and West End Condos are retail mixed, with living units. Great = let’s buy an overpriced piece of junk, we can’t afford, over a grocery outlet.

#147 Fed-up on 06.13.13 at 7:45 pm

@#111 Smoking Man on 06.13.13 at 1:11 pm

O and Fed Up please read post #27

————————————————————————–

Oh Lord, no thanks. My toilet needs cleaning.

#148 Ralph Cramdown on 06.13.13 at 8:58 pm

#146 Peter S — “Many people I know with over a million cash to invest have no stocks or derivatives. Everything in
GIC type stuff.”

Thank goodness! There’s only so much income out there, and if everyone with money demanded their fair share, I’d be making a lot less.

“Win or Lose, everyone gets what they want out of the market.”

#149 Stojsin on 06.13.13 at 9:15 pm

#144 Smoking Man on 06.13.13 at 7:12 pm

Redoing Web site, not sure will let the new version go for free. It’s un crackable, last thing I want is some religious fanatic of any faith get there hands on it.
—————-

It’s funny how you think your encryption is the only game in town…

The website needs some work – I need to see an example before I hit the download key, and potentially download a program with a hidden keylogger that you secretly install and then sell my info to the machine for pennies on the dollar.

I also suggest you run spell check on, “The app changes your text to numeric values confusing spy Algo’s that montor all transmissions over the web “. Especially on the “montor” part…

#150 Belinda on 06.13.13 at 10:02 pm

Vancouver is headed into the gutter. There is no hope at all for that real estate market. Every single Vancouver home is poised for a collapse in values. Yes! Believe it!

#151 Doug, still in the South on 06.13.13 at 11:15 pm

@JSS, post #25, and Ronaldo, post #47:
Good move loading up on D.UN and XTR during these Boxing Week blow out clear the inventory NOW sales. Myself I loaded up on XRE, CAR.UN, XPF, and CPD during the sales of the last week. I have described many times in the past how investors should act like a governor, which responds to a speed drop by pulling the throttle open to give the engine more fuel, by purchasing more of investments when they are on sale. As for myself, not only was the throttle fully open, but the electric clutch then engaged the supercharger to produce even more power! Go, go, go!

#152 Tony on 06.16.13 at 7:41 am

Re: #13 detalumis on 06.12.13 at 9:29 pm

Live and learn… they’ll likely drop around forty percent in price.