Too human

MOOSE

Not much has changed, I see. When things go down, people fear them. When things rise, they’re coveted. We have two reports.

First, financial assets. Over the past few weeks that correction I told you to expect has, verily, come to pass. Stocks are down about 3%, but interest-sensitive things like bonds, preferreds and REITs have seen a correction of up to 9% (prices improved in Thursday’s rally). This has mystified a lot of analysts who think the moves were overdone and irrational. And they were.

The meme is the US Fed will stop its massive bond-buying program in the months to come, so investors have been dumping debt to cash in on historically-high prices. That forced yields up, swept mortgage rates higher, and sideswiped other assets people buy for yield, like preferred shares and real estate investment trusts.

Of course, those securities continue to pay investors to own them – about 5% for preferreds and more than 4% for most big REITs. Unlike GICs, which give half that amount, this stuff is 100% liquid. Plus, preferreds pay you in dividends, resulting in half the tax. What’s not to love?

Ironically, when the price of these securities falls, the effective yield actually goes up – since people can buy them at a reduced cost. Over the last few days this has had smart investors gorging on one REIT exchange-traded fund (owning the biggest, most established trusts) whose yield rocketed to about 7%. More love.

On Thursday it looked like this was starting to dawn on most people. REITs jumped about 2% and preferreds 1%, while the ETF that paces the biggest 60 companies on the Toronto stock exchange gained a point and a half. And should you have any doubts that the doomers who forecast this is the prelude to another 2008 are wrong, be comforted that nobody who actually understands this stuff seems worried.

Analysts at National Bank agree that this interest-rate-scare-sell-everything mentality is lame. Rates are still at historically-low levels and any move higher will be glacial. Meanwhile demand for assets paying 4-7% with relatively low risk should be enough to keep prices long-term stable. Over at Sentry Investments portfolio managers Dennis Mitchell and Michael Missaghie are reminding investors the biggest risk to REITs is not rising interest rates, but “a deep economic recession or a credit crisis – and we don’t foresee either of those…”

Neither do I. Not even close.

If you bought REITs or preferreds (or their ETFs) for yield, then relax and collect your cheques. If you’ve been waiting to get in at lower prices, well, duh. If you freak when values temporarily dip, go buy a condo.

No, wait! We have a report on that, too. Condos may blow, according to the new dude running the Bank of Canada.

Just a week after the Toronto Real Estate Board said this: “A growing number of households who put their decision to purchase on hold as a result of stricter lending guidelines are starting to become active again in the ownership market”…

…the central bank said this, about the GTA’s hyperbolic condo market: “If the upcoming supply of units is not absorbed by demand as they are completed over the next 12 to 30 months, the supply-demand discrepancy would become more apparent, increasing the risk of an abrupt correction in prices and residential construction activity.”

Yikes. “Abrupt correction in prices”? In Toronto, where they always go up?

There’s more: “Any correction in condominium prices could spread to other segments of the housing market as buyers and sellers adjust their expectations… These adverse effects would weaken the credit quality of banks’ loan portfolios and could lead to tighter lending conditions for households and businesses. This chain of events could then feed back to the housing market, causing the drop in house prices to overshoot.”

Translation: if the house-humpers, flippers, sleazy speckers, commission-starved realtors, developers, builders and manic mortgage-floggers succeed in reflating the housing gasbag, then the Big Bank is gonna spank ‘em. More tightening. More restrictive lending. Sooner rate hikes. Higher downs. Whatever it takes.

Because even after shortening mortgages, clipping CMHC insurance, ditching cash-back loans, upping loan regs and throwing seven-figure listings overboard, markets in places like Toronto and Calgary continue to swarm with greater fools. The Bank of Canada (like the mighty F) wants not only lower sales, but also lower prices. Without both, household debt will never meaningfully decrease and the economy be at heightened risk.

Of course, the feds will win this. But it will be lost on the Yonge + Rich. It’s why I so prefer Old + Right.

107 comments ↓

#1 Randy on 06.13.13 at 8:02 pm

How much for the dog ?

Free with the sign. — Garth

#2 TurnerNation on 06.13.13 at 8:11 pm

Dose of reality. This 152-year old small town newspaper north of Toronto will be shuttered for economic reasons:

http://www.thepost.ca/2013/06/13/lindsay-post-closing

The area’s unemployment rate is as high as 15%.

And, there somebody’s flogging ‘golf course’ houses. Even pumped on this radio station:

http://www.640toronto.com/BromontHomes/index.aspx

(I dub it “the call-in station for angry white men”.)

#3 Victoria Real Estate Update on 06.13.13 at 8:16 pm

The Teranet-Western Bank house price index results have been released for the month of May. House prices in Victoria dropped another (-0.80%). This is the fourth consecutive monthly price drop for Victoria and prices have now fallen in 8 of the last 10 months. The average and median prices for properties in Victoria also declined in May.

This is only the beginning. House prices will correct a lot more before they reach bottom. When the US housing market started to correct/crash in 2006, some cities (Phoenix and San Francisco, for example) started early while other cities (Seattle) started later. (Click on the city on the left and it will be highlighted in the chart.) The cities that started correcting first generally experienced the most severe corrections by the time they reached bottom. Victoria is the first major city in Canada to start its correction so we can expect the total correction for Victoria to be the biggest (or close to it) of all Canadian cities.

Canada is no stranger to housing market crashes. George Athanassakos, professor of finance at the Richard Ivey School of Business (London, Ontario) notes: “We have experienced bubbles and busts before in Canada, it’s nothing new, I don’t know why this time would be different.”

The Canadian housing market crashed in the early 80s and in the 90s. The price bubble that had formed in the early 80s in Canada was much smaller than today’s price bubble, yet the crash devastated Canadian families from coast to coast. These numbers give you an idea of what it was like back then. Why would the correction/crash that has recently started in Victoria be any less severe than what these cities experienced in the 80s?

Vancouver:
Peaked in 1981 at $550 K
By 1985 prices crashed (-49%)

Calgary:
Peaked in 1981 at $317 K
By 1985 prices crashed (-47%)

Edmonton:
Peaked in 1979 at $325 K
By 1985 prices crashed (-50%)

Why didn‘t I include Victoria? The reason is that I was unable to find the necessary information for Victoria from that time period. Yearly price charts do not work for this. In order to do these calculations properly, you need 3 month or 1 month price data which I was able to find and use for Vancouver, Calgary and Edmonton.

Do not buy a house in Victoria for at least another 15 months. Prices are in a strong downward trend and this will continue for years. Most Canadian cities have not really started to correct yet, but once they do, expect even bigger price declines for Victoria.

Girls and guys, if you have held off from buying a house in Victoria since last summer, you have done well. Prices are obviously lower now. There will be a time to buy in the (not too distant) future. Wait at least another 15 to 24 months and then consider your options. Buying a house at the wrong time will ruin your financial future. Renting for now is actually helping your financial future immensely.

Until next time – Cheers!

#4 Piccaso on 06.13.13 at 8:18 pm

Is it possible to make this blog a tad more high tech, it would be nice to put constant dribble on ignore.

#5 T.O. & GTA bidding wars debunked June 12 on 06.13.13 at 8:18 pm

Sorry for being late today :-) I am preparing the condos heat maps for GTA. Stay tuned!

http://recharts.blogspot.ca/2013/06/to-sfh-bidding-wars-debunked-june-13.html

http://recharts.blogspot.ca/2013/06/gta-sfh-bidding-wars-debunked-june-13.html

#6 Early Spring on 06.13.13 at 8:34 pm

Your blog is great Garth, I thoroughly enjoy reading everyone. I am patiently waiting for the one where you rip on Saskatoon and Saskatchewan though! I am 26, great/secure job and renting and investing. I love it. But sometimes need a reminder why not to buy(greaterfool cures that) and some extra ammo for when explaining I still choose to rent. Thanks, keep up the good work and I will patiently wait for a harsh one to be laid on s’toon!!!

#7 JSS on 06.13.13 at 8:35 pm

“Over the last few days this has had smart investors gorging on one REIT exchange-traded fund (owning the biggest, most established trusts) whose yield rocketed to about 7%”

which one? D.UN? tell me.

#8 Realtor on 06.13.13 at 8:41 pm

You can still get 30 year mortgages

#9 timmy on 06.13.13 at 8:44 pm

We’ve been waiting for the big correction for four years now…any time now…

#10 Mikey the Realtor on 06.13.13 at 8:57 pm

#7 JSS on
which one? D.UN? tell me.

D.UN is not an ETF, I would say he’s referring to XRE. Either way, save yourself the headache and buy tangible re, buying into the robmarkets is a losing battle.

#11 The Canadian on 06.13.13 at 9:06 pm

Good video on bail ins coming to Canada. Also at 25min gets into the flawed housing market and illusionary banking system:

http://www.youtube.com/watch?v=qi0fYo2ngko

All Canadians must see.

There will be no bail-ins. Period. — Garth

#12 timmy on 06.13.13 at 9:08 pm

BC Leads Canada in Foreign Millionaires
http://www.vancouversun.com/news/metro/leads+country+foreign+millionaires/8517874/story.html

And Ham is not a factor in BC?

#13 Patiently Waiting on 06.13.13 at 9:08 pm

Looks like the man who’s hair can be seen from space is coming to Vancouver to flog his latest condo project … talk about bad timing for the Donald …
Likely it will turn out as bad as his Trump project in Hogtown … littered with law suites LOL … We’ll soon see how deep the greater fool gene pool is in Vancouver …

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

#14 Fudginald on 06.13.13 at 9:19 pm

Any insights into cottage country properties?

#15 Smoking Man on 06.13.13 at 9:25 pm

I’m thinking LaughingCon has capitulated, thrown in the towel, bought a condo.

Or he’s waiting for the seasonal price decline that starts in the summer…

#16 Faith on 06.13.13 at 9:33 pm

I just opened a TFSA direct trading account. Does anyone have advice on which ETF’s, preferreds, etc, to invest in….or a really good website where I could find out? I’m new to this, so it would be much appreciated.

#17 Smoking Man on 06.13.13 at 9:36 pm

#9 timmy on 06.13.13 at 8:44 pm

We’ve been waiting for the big correction for four years now…any time now…

………

17 more months, but sadly, bit of a spike before the soft landing which will take us to about where we are now.
Gta 416 I’m talking.

Don’t know or care about other markets..

#18 Ralph Cramdown on 06.13.13 at 9:36 pm

#10 Mikey the Realtor — “save yourself the headache and buy tangible re, buying into the robmarkets is a losing battle.”

Ohh, the headache, the headache! Getting money every month and a T slip at the end of the year is SUCH a headache compared to maintenance, vacancy allowances, property management fees, accountant’s fees &c &c. In the last week I backed up the truck, and it wasn’t to a place I had to pay land transfer taxes on. Best of luck Mikey!

#19 HockeyNightinAmerica on 06.13.13 at 9:43 pm

What has been failed to be mention is what actually caused the decline in those assets (preferreds, bonds, etc)? There have been some huge margin calls on the far east side of the continent causing big investment firms to dump their assets to cover their positions. The amount of leverage in the markets as a percentage is greater than before the 1929 crash, 87 crash, 2000 bubble and 2008 crisis. The effects of loose monetary policies and globalization….

#20 DV01 on 06.13.13 at 9:48 pm

Over at Sentry Investments portfolio managers Dennis Mitchell and Michael Missaghie are reminding investors the biggest risk to REITs is not rising interest rates, but “a deep economic recession or a credit crisis – and we don’t foresee either of those…”

Neither do I. Not even close.
——————————————–
1) 07 GFC was just an appetizer
2) The “Greatest” World Depression is on its way
3) Currency wars & Trade wars lead to World war
4) Paper wealth will NOT protect you.

I doubt anything will protect you. — Garth

#21 Victor V on 06.13.13 at 9:50 pm

The B of C story is everywhere. Prominently on websites for The Star, Globe and Post as well as on the home page of the Yahoo Canada site.

http://ca.news.yahoo.com/overbuilt-condo-market-poses-risk-canadian-economy-bank-144029587.html

The condo market is toast.

#22 KingBubbles on 06.13.13 at 9:51 pm

Spank me bank$ter$ ….

#23 Pr on 06.13.13 at 10:05 pm

Its about time! A 10% cash down will do the job. The new *king* at the Bank of Canada seem to have some ba…, he tells the truth right from the start.

#24 Nosty Incognito on 06.13.13 at 10:21 pm


#134 Smoking Man on 06.13.13 at 4:59 pm — “CIA is reading my posts, buggers, passing on my great ideas..” — No need to be concerned with those pipsqueaking “. . . tiny brained wipers of other people’s bottoms.” They might actually learn something!

For real intrigue plus what the CPC and Harper are doing behind our backs, see Nice headline Part One, nnaaahhhh, What’s Up Doc? and Nice headline re: Harper, The Video “And there you have the real motive for the raids! And if CTV has not seen the video, it is because they don’t want to. It took a single web search to bring up multiple copies!” wrh.com. Compared to Harper’s Liars, who gives a shit? Flying Bikes Still in the development stage. Short clip. Lucifer incarnate? or Lucifer incarnate?

#25 putuporshutup on 06.13.13 at 10:26 pm

Garth.

Perhaps it is time that we the readers respectively request that we bring the concept of performance measurement to your blog. As you yourself say, it is entirely possible that the market will NOT go down, as expected. The reason is completely meaningless – greater fools whatever – it is the market forces at play. But how are we to measure YOUR performance. At what point are YOU fired. Of course, you, as a wonderful writer and very smart dude, can presumably find many other topics to write about. I want to read your fiction – honestly. But if this does end nicely, regardless of the reason, will you please bring this chapter of your life to a close, admit defeat, and move on. Stop going to the gravesite twice a day and get on with your life. You have so much more to give on so many other important topics – seriously. Even Tiger misses the cut once in a while…assets DO NOT always have to revert back to the mean – the mean can change dude…

Oh, it’s different this time? — Garth

#26 Kreditanstalt on 06.13.13 at 10:26 pm

Wow! REITs, eh?

A perpetual motion machine: their price stays high while rates stay low yet they somehow pay you more even when their market value declines…

Risk has been defeated!

But what happens when the great 30-year bond bubble begins to turn? When, despite central bankers’ redoubling their manipulations, rates begin to rise?

Payouts will be cut when the real economy begins to show through the smoke and mirrors…

#27 Ralph Cramdown on 06.13.13 at 10:28 pm

#19 HockeyNightinAmerica — “What has been failed to be mention is what actually caused the decline in those assets (preferreds, bonds, etc)?”

The important questions are:
– Will the issuer be able to continue to pay on schedule?
– Am I being compensated enough for the risks I’m taking?
If yes, buy. If no, sell. Who cares what other investors are thinking?

#28 LUXURY YACHT on 06.13.13 at 10:35 pm

Just renewed my mortgage again in Victoria at 2.84 for a 5 year fixed. The Royal bank report told me the only way to do better is to get a better rate somewhere else then they would match it. I was told that 2.79 would be the best I could get so for the 300 bucks I would of saved I went with the 2.84. The entire process took 2 minutes. I asked if they checked our credit score because I was curious what ours was when the report laughed saying they don’t bother checking on renewals and how we both could not even have a job and it would not matter. Sooner or later this loan free money ignorance will catch up to us

#29 Cristian on 06.13.13 at 10:35 pm

Stocks down 3% a ‘correction”?…
Ha ha ha, Garth, you must be one of those guys who micromanage their portfolios, calculating how much they go up or down every hour or so.
Only that could explain that you call 3% down a correction.

You’d be surprised. — Garth

#30 The Canadian on 06.13.13 at 10:36 pm

11 The Canadian on 06.13.13 at 9:06 pm

Good video on bail ins coming to Canada. Also at 25min gets into the flawed housing market and illusionary banking system:

http://www.youtube.com/watch?v=qi0fYo2ngko

All Canadians must see.

There will be no bail-ins. Period. — Garth
——————————————————-
Why would they implement this on p145 of the budget?
Why mention it if not planning on using it
Why is Carney of Goldman pedigree, coincidence?

Old, dead topic. Move on. — Garth

#31 Yellow rox rock! on 06.13.13 at 10:37 pm

The Toronto condos story was all over CBC today: The website and Lang and O’leary.

#32 Montrealer on 06.13.13 at 10:45 pm

CIBC still gives 3% cashback.

Its not a no money down but at 2% its close to that…

#33 Roy on 06.13.13 at 10:45 pm

The crumbling Victoria real estate market

Asking price slashed in half
http://www.vancouversun.com/business/affordability/Asking+price+slashed+half+Bachelor+Canada+mansion/8523184/story.html

Average prices SFH in Victoria down 9% since May 2012.

Kelowna in the Okanagan, and Richmond in the Lower Mainland appear to be other ground zeros.

#34 Pounding sand in Peachland on 06.13.13 at 10:55 pm

I thought Picasso was dead

#35 Smoking Man on 06.13.13 at 11:01 pm

Ok bubble heads, been trading forex since Mar 14

Started with 50k in account, average trade 20k in play up 18, 677 in 3 months, that’s with a – 14k shit kicking a few weeks ago..

Now what does that work out annualized over a year, percentage wise. Remember I’m unable schooled, can’t figure it out

P and L on my blog this weekend

#36 Basil Fawlty on 06.13.13 at 11:15 pm

“There will be no bail-ins. Period. — Garth”

Then why are bail-ins allowed, for the first time, under the 2013 Federal Budget? Sections 144 and 145, I believe. Why did the Feds bother putting it the budget, if it will never happen?

Covered in depth previously. Stop lying to people. — Garth

#37 Pulp Faction on 06.13.13 at 11:18 pm

Great article.

#38 Smoking Man on 06.13.13 at 11:24 pm

#24 Nosty Incognito on 06.13.13 at 10:21 pm

Vladimir I don’t hate the zios, I understand them, I know there methods will back fire huge, but then again if they lose the war vs the crazy’s people like, me, atheist will be headless.

But the zio methods only work with a single source of brain washing. The herd is angry and cynical, the herd wants some one to blame for their plight, drinking the school cool aid, the zio’s who’s intentions are noble will enevatabley hurt the ones they try and protect.

B

#39 Yitzhak Rabin on 06.13.13 at 11:30 pm

The TSX Venture exchange is close to a 10-year low. Do you see any opportunites there? What about large cap oil and gas stocks that have yields north of 7%? Many of them like Pengrowth, Enerplus and Lightstream cut their dividends last year so sustain cash.

If the time to buy stuff is when they are loathed, couldn’t gold, silver and base metal mining shares be a potential bonanza?

#40 James on 06.13.13 at 11:37 pm

#6 Early spring

I second that. When are we going to hear about sask Garth?

#41 Van guy on 06.13.13 at 11:38 pm

The S&P went -5% from peak to the last bottom. Barely a correction. Next.

#42 KommyKim on 06.13.13 at 11:39 pm

RE: #16 Faith on 06.13.13 at 9:33 pm

Try this site for portfolio ideas:
http://canadiancouchpotato.com/model-portfolios/

Lots of good info on ETFs and investing on that site too.

#43 happy renter on 06.13.13 at 11:56 pm

The competion in Calgary to find fixer uppers to flip is fierce.You have to be there in a.m. with no conditions.Just like the old days.Oh well Calgary is booming for a few more years to catch up to Toronto and Vancouver prices.

#44 Sydneysider on 06.14.13 at 12:06 am

May I point out that “meme” is not a real word?

#45 Devore on 06.14.13 at 12:14 am

assets DO NOT always have to revert back to the mean – the mean can change dude…

Oh, it’s different this time? — Garth

Yes, the permanently high plateau theory. When everything else fails, baffle them with bs.

#46 Happy & Free in BC on 06.14.13 at 12:14 am

@ #16 Faith
Just opened my TFSA direct trading account a few months ago. I’m a DIY investor and have done fairly well thus far, which I owe, in part, to following this blog. Because I am a stay-at-home mom, I am now trying to find a financial advisor to manage SOME of my money. I say SOME because I really do enjoy investing but realize I don’t have the time to manage it properly. I am still working on building my portfolio but here are a few investments that I currently own : XRE & VNQ (REIT ETFS), IHE, PJP, VHT (Healthcare ETFS), COV, CNQ, QCOM (individual stocks), RBC North American Value Fund (Mutual Fund). I am trying to find out more info on preferreds right now…they are next on my list to explore.

#47 vangrrl on 06.14.13 at 12:15 am

#6: You’re only 26 and you feel you have to explain to people why you rent?? That is bizarre. However, explains a lot.

#48 The Canadian on 06.14.13 at 12:19 am

Old, dead topic. Move on. — Garth

———————————————————-
Soon you’ll be saying there will be no bail ins in the US.

#49 meslippery on 06.14.13 at 12:23 am

Cowpie #127 last post.
So you hate truck drivers and hot chicks???

#50 willworkforpickles on 06.14.13 at 12:26 am

The kind of therapy that is best for you when times are tough all around, no matter what, when all things earthbound seem damn bleak…. are the friends that make you laugh the hardest longest and loudest.
Here’s to the valued friends that can really turn the bullshit off in these truly screwed up times…

#51 Devore on 06.14.13 at 12:31 am

#12 timmy

BC Leads Canada in Foreign Millionaires
http://www.vancouversun.com/news/metro/leads+country+foreign+millionaires/8517874/story.html

Hmm, lets see….

The online survey was conducted between March 28 and April 11 with a random sample of 305 Canadian adults who have at least $1 million in investable assets

Riiiight…. http://cdn.overclock.net/5/51/5196dfa7_steal-70-looks-legit.jpeg

#52 Waterloo Resident on 06.14.13 at 12:38 am

Stocks / Equities are EASY to sell quickly, with few exchange costs (no taxes, very small fees / commissions).

Meanwhile, houses / condos are DIFFICULT to sell quickly, and there are huge fees / costs involved.

For this reason, stocks often rise or drop rather suddenly, and dramatically, meanwhile even if the number of houses being sold drops 95%, the prices still remain way up at extreme levels for decades, as no one wants to sell at a loss, they would rather just walk away from their house than sell at a loss.

So while stock markets might drop 4% to 6% in a few weeks, it might take centuries before we see houses drop any more than 10% from their previous selling price.

What happens is that cheaper houses sell while the more expensive houses sit unsold, so this makes it ‘APPEAR’ that home prices are falling, because more ‘cheaper/smaller’ houses selling makes the ‘AVERAGE’ selling price drop.

What you have to do is analyze each house; find out what it sold for ealier and what it sold for recently, and when you do this you will discover almost ZERO reduction in prices.

Real estate is sticky, prices go in only one direction, that being UPWARDS.

#53 The Man From Nantucket on 06.14.13 at 12:52 am

Today, out with a few friends. I’m hearing stories that they have just put down deposits on the latest and greatest downtown condo project.

Pretty sure she’s just about over. I think we’re just about at the point where the barber and cab driver are going to start telling me how to make a killing speculating on “desirable” rental properties.

Let’s pop this gas bag and at least try to get high on the contents that are released.

#54 NorthVan Stan on 06.14.13 at 1:04 am

Garth have you been on the North Shore lately? Condo development everywhere…I mean everywhere. I keep asking anyone who’ll listen”Who’s buying these things?” No one seems to know…HAM indeed.

#55 Dean Mason on 06.14.13 at 1:50 am

Wait until next week when the U.S. Federal Reserve meets and talks down recent upward movements in bond yields.You will see next week.

#56 Too human — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer on 06.14.13 at 2:12 am

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

#57 Martin Lazi on 06.14.13 at 5:04 am

Old, dead topic. Move on. — Garth

Same as you dude.

The issue of ‘bail-ins’ was covered adequately on this blog when it was still news, complete with an explanation of why the March federal budget provision has no impact on depositors in the more-than-unlikely event of a major Canadian bank failure. You can beat this dead canine all you want, but it still won’t hunt. There is no issue. The rudeness of your response, however, reminds us again of how many metals fanatics have lost their way. — Garth

#58 Josh in Calgary on 06.14.13 at 5:58 am

#16 Faith,
Most banks will have a model portfolio or an ETF research page. Every investor is different, but a good place to start is 50% fixed income and 50% equity. For the fixed income you can go with XBB for your bonds, find a preferred share ETF and maybe a REIT one as well. For your equity go with equal portions of Canada (XIU), US and Global (I forget the symbols for those). I believe some companies like iShares actually have a balanced portfolio ETF which hold several other ETFs and make for an easy one stop shop if you’re ok with the allocations they hold.

#59 World Traveller on 06.14.13 at 7:11 am

Aren’t we glad what a police state Canada has become?

Glad I got out of that hellhole…

http://www.thestar.com/news/gta/2013/06/13/police_raids_no_warrant_provided_in_apartment_search_man_alleges.html

#60 Ralph Cramdown on 06.14.13 at 7:17 am

#34 Smoking Man — “Ok bubble heads, been trading forex since Mar 14”

http://www.dummies.com/how-to/content/how-to-figure-your-probability-of-ruin-from-day-tr.html

#61 jess on 06.14.13 at 7:34 am

gearing …lions and tigers and bears oh no

http://treasureislands.org/race-to-bottom-fosters-shadow-insurance-industry-may-need-bailout/

Shining a Light on Shadow Insurance
A Little-known Loophole
That Puts Insurance Policyholders and Taxpayers at Greater Risk

New York State Department of Financial Services Benjamin M. Lawsky, Superintendent of Financial Services June 2013
http://www.dfs.ny.gov/reportpub/shadow_insurance_report_2013.pdf

#62 T.O. Bubble Boy on 06.14.13 at 7:44 am

Here’s a headline that would have seemed insane pre-2008: Are 4 percent mortgage rates the new norm?
http://www.bankrate.com/finance/mortgages/mortgage-analysis.aspx

I suspect that 30-yr fixed mortgages @ 4% will also be unimaginable in 2-3 years from now.

#63 Ralph Cramdown on 06.14.13 at 7:50 am

#51 Waterloo Resident — “What you have to do is analyze each house; find out what it sold for ealier and what it sold for recently, and when you do this you will discover almost ZERO reduction in prices.”

Or you can let someone else do the work for you. It’s called a repeat-sales index. The Canadian ones are at http://www.housepriceindex.ca/ and the US ones are called the Case-Shiller indices, available wherever fine data is charted.

And while you’re doing that, contemplate how HSBC came to have $14 million in liens (per link at #32 Roy, above) on a house they’re trying to sell for $4.988 and which is assessed at $4.49. Maybe it’s one of them fancy collateral mortgages? Contemplate how many of their average sized mortgages at their net interest margin are going to have to perform this year just for them to get back to even… Then contemplate that the former owner of the house is a failed real estate developer, and that HSBC was owed $250 million on the project. Maybe it stands for House Sold Below Cost?

#64 World Traveller on 06.14.13 at 7:51 am

Perhaps Toronto’s pant load of a mayor might actually be done?

http://www.businessinsider.com/police-raid-rob-ford-crack-video-complex-2013-6

#65 jess on 06.14.13 at 8:11 am

http://www.bloomberg.com/news/2013-06-12/lawsky-targets-48-billion-backed-by-shadow-insurance.html

hum….
http://www.bermuda-insurance.org/x-bm_facts.htm
http://www.royalgazette.com/article/20130612/BUSINESS02/706129921

#66 peter on 06.14.13 at 8:33 am

What were your economic predictions in the summer of 2008? Do you think emergency level interest rates of today are normal, healthy and here to stay?

(a) Scary. (b) No. — Garth

#67 Fluoride-free on 06.14.13 at 8:46 am

Everything is rigged.
http://www.businessinsider.com/latency-in-trading-2013-6

#68 Patrick on 06.14.13 at 9:27 am

The South China Morning Post is such a racist newspaper (sarc). They actually point the finger at wealthy Chinese buyers for pricing locals out of Vancouver’s real estate market:

“Vancouver has become such a popular destination for overseas investment that locals can scarcely afford the price of an average house in the city.

And because many of the new flats in some areas are purchased by investors who then leave them empty, local businesses are having a hard time surviving.

On paper, Vancouver is not a wealthy city. But it is a city that is attractive to wealthy overseas buyers, mostly from mainland China, who are driving up prices. Unable to afford real estate, the locals are struggling…

In downtown Vancouver’s Coal Harbour, an estimated 23 per cent of all condos are empty. The wealthy owners have not rented them out.

“People who can afford to buy those condos are so rich they don’t even care about the return on their investment,” Fung said.

For florist Tim Hiltz, however, the empty condos have ruined his dreams of running a store in Coal Harbour. Because so many of the condos sit empty, and many of the residents return to China or the US for half the year, his business is failing.

“It’s easy to understand why Vancouver attracts people from around the world,” Hiltz said. “But when neighbourhoods experience dramatically low occupancy rates for a significant part of the year, it’s impossible to sustain a small business, because there are so few residents.”

http://www.scmp.com/property/international/article/1258574/rich-foreign-investors-drive-home-prices-vancouver-locking

#69 Ralph Cramdown on 06.14.13 at 9:35 am

#66 Fluoride-free — “Everything is rigged.”

Yep. And I consider that outrageous. But releasing a number like that while markets are open is the root of the problem. And you know what? It doesn’t affect me one bit. I don’t trade on these numbers; I’m in for the long pull. If YOU are planning on putting on or liquidating positions based on these numbers, you can either pony up for the early data (which is nothing compared to the exchange data and colo fees, and the salaries of your programmers), or accept that you’re going to lose a few bps to people that do.

#70 Holy Crap Wheres The Tylenol on 06.14.13 at 10:03 am

#5 T.O. & GTA bidding wars debunked June 12 on 06.13.13 at 8:18 pm

Sorry for being late today :-) I am preparing the condos heat maps for GTA. Stay tuned!

http://recharts.blogspot.ca/2013/06/to-sfh-bidding-wars-debunked-june-13.html

http://recharts.blogspot.ca/2013/06/gta-sfh-bidding-wars-debunked-june-13.html

Holy Crap Oakville is awash in red. I am amazed with the values in the east end. Where the rich 6 & 7 figure Oakvillians live. I’m on the west side of Sixteen Mile Creek where the poor 6 figure people of Oakville reside. We usually don’t see bidding wars here. Just wealthy stupid people whom don’t care how much that doggie in the window costs. They see it, they buy it!

#71 TheCatFoodLady on 06.14.13 at 10:06 am

I live in a small, smug Ontario city that believes “it’s different here”. Not according to the local REA – whose website I found last night. Prices are up a snitch year over year but just as in the bellwether, house horny cities indicated some time ago, we’re starting to teeter. Listings are up, sales are down & just going by my own, local observations, many places are staying on the market far longer.

Retirement friendly properties that are well priced are moving well – as they should. Small, 2 bedroom bungalows built on slab with little property to maintain continue to do well. The country ‘micro-estates’ & larger suburban dreams are starting to drop. Fixer uppers? Forget it.

The rest of the summer should be interesting.

#72 fancy_pants on 06.14.13 at 10:27 am

and the search for scapegoats begins…
http://www.cbc.ca/news/business/story/2013/06/13/business-condo-bank.html

#73 Beach Girl on 06.14.13 at 10:54 am

Beat line today

If you freak when values temporarily dip, go buy a condo.

HAHA the wit.

#74 Rainlouds on 06.14.13 at 11:22 am

#58 World traveller

Aren’t we glad what a police state Canada has become?Glad I got out of that hellhole…

“hellhole” is a bit extreme

stay where you are. please.

#75 Joe Calgary on 06.14.13 at 11:35 am

So a couple of days ago I posted how a friend of mine sold his townhouse in shawnessy (suburb of Calgary) and sold in 5 days with a profit of $130000(100%). Deal fell apart because the buyer wasn’t approved for financing. Put back on the market wed, sold again today this time with a pre approval. There is a full out housing orgy going on here, makes me wonder if Calgary will be affected by this housing slow down.

#76 Old Man on 06.14.13 at 11:45 am

#74 Joe Calgary – Calgary will be fine as there is nothing to worry about and sleep well at night. Do pigs fly in Alberta now?

#77 Suede on 06.14.13 at 11:49 am

The equity market bears that argue “Stock Markets are rising b/c the fed is printing and pumping money”

what’s your argument when Japan has printed and eased since the early 90’s to no avail?

Clearly there is not just one variable.

#78 Canadian Watchdog on 06.14.13 at 11:53 am

Fun new tool for those who can't add numbers.

http://www.myclosingcosts.ca

Not like MAC Marketing Solutions crossword puzzle content, the owners of this site happen to be real estate lawyers who seem much smarter and creative when it comes to generating leads in a falling market.

Now it's spilling over to the core.

#79 Eyeshurtfromrolling on 06.14.13 at 12:17 pm

“So a couple of days ago I posted how a friend of mine sold his townhouse in shawnessy (suburb of Calgary) and sold in 5 days with a profit of $130000(100%). Deal fell apart because the buyer wasn’t approved for financing. Put back on the market wed, sold again today this time with a pre approval. There is a full out housing orgy going on here, makes me wonder if Calgary will be affected by this housing slow down.”

WOW !! Thanks for the hot tip ! Buy as much as you can in Calgary, you betcha !

I don’t need any more info than a four sentence story, based on third hand information, from a two bit hustler on the internet.

I’m literally running to put myself several hundreds of thousands of dollars in to debt based on your post.

#80 Old Man on 06.14.13 at 12:21 pm

#70 TheCatFoodLady – You remind me of a call years ago that I received from a Pastor. He was going to buy a home and asked me to assess his purchase, so he gave me the details. Nice neighbourhood of normal homes, but there was one strange problem, as told him it was market, but was buying a car with no engine.

It was constructed on a slab with no basement, and he was being conned or set up for a fall by a member of his flock who was a Real Estate agent, and he owned it too. Can you believe this all, and just laughed, so told him to take a fast walk away. I received a blessing for my honesty, and established the Pastor with a man of integrity for a discounted commission to look around for him. I will never tell if received a finders fee :).

#81 dave on 06.14.13 at 12:40 pm

Can anyone find the price difference for this property. It was recently re-listed. IIRC it was listed at $899 or $799.
http://www.realtor.ca/propertyDetails.aspx?propertyId=13318889&PidKey=-1132178834

#82 Canadian Watchdog on 06.14.13 at 1:12 pm

#82 dave

2012/01 W2273305 49 POPLAR AVE $379,000
2013/04 W2618098 49 POPLAR AVE $899,000
Current: MLS®: W2664764 $599,000

Just keep generating new MLS numbers to reset the DOM and throw every price you can out there until you find the next sucker.

#83 Old Man on 06.14.13 at 1:14 pm

#82 dave – took a look and worry not, as no investment value there whatsoever at any price.

#84 Chickenlittle on 06.14.13 at 1:21 pm

“I prefer old + rich.” – Garth

I prefer old + rich + three hours to live. Nothing is hotter than an eighty five year old billionaire with 3 hours to live…says Joan Rivers. I believe her.

#85 sciencemonkey on 06.14.13 at 1:21 pm

Are bungalows on concrete slabs so bad? No basement storage or finished basement, but on the other hand no worries about leaky basements or foundation problems.

#86 calgary_rip_off on 06.14.13 at 1:28 pm

Joe Calgary # 74: Housing isnt an “orgy” as you describe in Calgary. What is happening isnt good. Rents are as much as a mortgage and people scramble to save for downpayment, then they hastily rush to buy a place hoping they dont have a bidding war. Housing is a joke in terms of prices, way way overpriced, and yes, Im not a renter. Its always comforting knowing that your mortgage is DOUBLE what the guy next door is paying, just because.

There are no options in calgary: You either pay the schmuck who bought the place and owes zero or you support the rip off that defines market value. The only thing that Calgary has going for it is jobs and nice scenery but people are big time corrupt here so plan wisely before you make the leap

#87 Basil Fawlty on 06.14.13 at 1:31 pm

Covered in depth previously. Stop lying to people. — Garth

Page 144 of the 2013 budget specifically mentions the implementation of a bail-in program.

What am I lying about?

It doesn’t involve depositors. — Garth

#88 Ralph Cramdown on 06.14.13 at 1:31 pm

#82 dave

2012-01-27 Fri W2273305 – $379,000
2013-04-26 Fri W2618098 – $899,000
2013-05-20 Mon W2639156 – $849,000
2013-06-13 Thu W2664764 – $599,000

But you could’ve just googled the address and seen a number of sites still showing its previous price of 849, without even having to click through. Looks like the seller and agent have decided to let the market tell them what it’s worth.

#89 zap on 06.14.13 at 1:35 pm

#75 (Old Man):
I’m sure Sen. Duffy has flown into Alberta from time to time, yes.

#90 Godth on 06.14.13 at 1:45 pm

Japan to adopt ‘bail-ins,’ force bank losses on investors if needed, Nikkei says
http://finance.yahoo.com/news/japan-adopt-bail-ins-force-181947896.html

World Bank Insider Blows Whistle on Corruption, Federal Reserve
http://www.thenewamerican.com/economy/economics/item/15473-world-bank-insider-blows-whistle-on-corruption-federal-reserve

The Network of Global Corporate Control
http://www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0025995#s3

calling all parrots, conspiracy theorist, conspiracy theorist – have a cracker and shut it.

The Japanese bail-ins (like those proposed for Canada) would involve investors in new classes of securities, not depositors. — Garth

#91 Godth on 06.14.13 at 2:03 pm

The Japanese bail-ins (like those proposed for Canada) would involve investors in new classes of securities, not depositors. — Garth

Thank Godth.

#92 mortgagebrokeron on 06.14.13 at 2:14 pm

Wow the deals are available, 13 million dollar home reduced to 4.98 million

http://www.vancouversun.com/entertainment/Asking+price+slashed+half+Bachelor+Canada+mansion+Vancouver+Island/8523184/story.html

#93 Ralph Cramdown on 06.14.13 at 2:21 pm

Oh, bail-ins, bail-ins, bail-ins!

Correct me if I’m wrong, but the depositors in Cyprus were earning 5%, their deposits were denominated in Euros rather than Rubles and not subject to confiscation by Putin and his band of merry men, and those whose deposits were below the 100k insurance threshold were — eventually — made whole. Here in Canada — correct me if I’m wrong — deposits earn about nothing, GICs earn about inflation (i.e. nothing in real terms), and banks have invented myriad fees and charges to keep shareholders happy and depositors sad. There is NO excuse for keeping large amounts of money on deposit for long periods in Canadian banks.

So why show up on a money blog and moan about bail-ins, rehypothecation, savers being punished, “artificially” low interest rates and the rest? It’s just telegraphing that you DON’T KNOW WHERE TO KEEP YOUR MONEY. The point of a bank account is cash management — getting paid and paying bills. You keep the minimum amount in it, either enough so it doesn’t go into overdraft, or enough that the bank charges no fees. If you’ve got anything more in there, or in GICs, or in “high” interest savings accounts or TFSAs, you’re doing it wrong.

#94 Old Man on 06.14.13 at 2:31 pm

#86 sciencemonkey – you are missing my point as have no problem with a home built on a slab if it has been discounted in value within the neighbourhood for a fair market value compared to others that have a full basement. Hey, it is like buying a car with no engine, so the offer must be realistic by a purchase, or one will become a greater fool in life if such is not done. Now any basement, and the walls can be sealed with a special application if one anticipates a problem.

#95 Old Man on 06.14.13 at 3:11 pm

There will be no bank in Canada that goes down, as we have a different system compared to USA. We have the big 6 with thousands of branches all across Canada, so if one gets into trouble the others will come in with a support system. This will all be managed with the Bank of Canada, and other elements in Canada. There will be no bank failure in Canada, so worry not.

#96 jess on 06.14.13 at 3:18 pm

…”Welcome to Democracy Now!, Professor Pyle. Talk about what you feel those real issues are. But before you do, explain what happened to you, how it was you revealed in the early ’70s what was going on in the military.

CHRISTOPHER PYLE: I received a briefing at the U.S. Army Intelligence Command that showed me the extent of the surveillance system. There were about 1,500 Army agents in plain clothes watching every demonstration in the United States of 20 people or more. There was also a records system in a giant warehouse on about six million people. I disclosed the existence of that surveillance and then recruited 125 of the Army’s counterintelligence agents to tell what they knew about the spying to Congress, the courts and the press. As a result of those disclosures and the congressional hearings, the entire U.S. Army Intelligence Command was abolished. This was before Watergate….

http://www.democracynow.org/2013/6/13/chris_pyle_whistleblower_on_cia_domestic

#97 T.O. Bubble Boy on 06.14.13 at 3:24 pm

Rob Ford calls on realtors to help him reduce land transfer tax:
http://www.theglobeandmail.com/news/toronto/rob-ford-calls-on-realtors-to-help-him-reduce-land-transfer-tax/article12565269/

Interesting to note the logic here… it is stated that the land transfer tax makes it more difficult to buy a home, but no mention of Toronto’s lower property taxes that would make it easier to carry the home each year?

#98 TakingResponsibility on 06.14.13 at 4:05 pm

#79 Eyeshurtfromrolling on 06.14.13 at 12:17 pm

“… don’t need any more info than a four sentence story, based on third hand information, from a two bit hustler …”

Haha! That is an incredibly apt description of the ‘rational thought’ process of many Albertans.

Made my day!

#99 Mikey the Realtor on 06.14.13 at 4:11 pm

#18 Ralph Cramdown

Backing up the dinky tonka truck your mommy bought you doesn’t count, tangible assets are always the best because nobody knows what the suits are doing behind closed doors yet you trust them with your money.

#100 Godth on 06.14.13 at 4:13 pm

#94 Ralph Cramdown

“DON’T KNOW WHERE TO KEEP YOUR MONEY”

you’d be wrong, I’m making a killing.
http://www.youtube.com/watch?v=_DwseDEzlgc

#101 Tony on 06.14.13 at 4:48 pm

Re: #16 Faith on 06.13.13 at 9:33 pm

The bear (2X and 3X) funds are your friend. This marks the longest bear market sucker rally to date and the next move will be an 80 percent drop in the U.S. indexes followed by one or two decades of flat lining. P.S. nice timing!! Your timing is worst than the people who bought just before the ’29 crash.

You’re boring. — Garth

#102 Tony on 06.14.13 at 4:56 pm

Re: #79 Eyeshurtfromrolling on 06.14.13 at 12:17 pm

Your friend would have done much better just buying GIC’s over the years. He obviously bought the condo way back in the early 1980’s to produce a double.

#103 espressobob on 06.14.13 at 5:05 pm

#100 Mikey the Realtor
#101 Godth

Educated optimists know how to make profit! For you two who adore pessimism, well, are you in for a shock! Good luck.

#104 local realtor told two is compamt 30 is a croud in single family dwelling on 06.14.13 at 5:32 pm

Approximately 30 construction workers occupying one single-family home in Grandin will be moving to new locations in the near future, according to the city manager.

The homeowner, identified as local realtor Trevor Matheson…..

http://www.stalbertgazette.com/article/20130612/SAG0801/306129974/-1/sag/two-is-company-30-is-a-crowd

#105 Stupesing in Cabbagetown on 06.14.13 at 5:43 pm

Mr. Turner, with regards to a recent blog entry where you discussed Canadian dailies’ unfortunate practice of getting rid of journalists, I discovered today that The Vancouver Sun has parted ways with David Baines. What a shame. His column made that rag worth reading.

In other news, it seems others are raising the same issues about Canada’s bloated housing bubble: Why so Bearish?

#106 Godth on 06.14.13 at 6:23 pm

#104 espressobob

http://en.wikipedia.org/wiki/Stockholm_syndrome

#107 Faith on 06.15.13 at 1:46 am

Thanks to those who replied to my investing comment. I appreciate it!