Stats

BILLS1

As the real estate boards of major cities release their Frankenumbers to a breathless people this week, more experts grow worried. Expected are robust sales as buyers rush to beat mortgage hikes. Alas. Poor, dear fools. Grabbing cheap rates to lock up houses at values that higher rates will knock down is a classic mistake. Then again, we’re a nation of debt dummies.

The flashing yellow signs seem everywhere.

Here’s housing economist Wilf Dunning, for example, warning that a mere 1% increase in mortgage rates would crash Toronto real estate sales by 15.3% and drop prices almost 6% over the next year. In fact a jump of only half that – which we just got – will bring a 9% sales slump and shave 2.6% off values. Which supports my point that anyone buying in a rising rate environment is paying too much.

Dunning is the same guy, by the way, who thinks Ottawa’s mortgage-tightening aimed at deterring newbie buyers will gut construction and result in 150,000 fewer jobs. So far, he’s right on. Housing starts in the GTA are already running 35% below 2012 levels.

Key quote: “Once house prices start to fall, the outcome is unpredictable. It could be that once consumers start to expect prices to fall, the reduction in demand will be larger than it needs to be and therefore price reductions will be larger than they need to be.”

Now here’s Ipsos, the polling people, to show us just how badly real estate has screwed up personal finances. An astonishing one in 10 families has already gone over the edge into that abyss the Bank of Canada calls “highly indebted.” To achieve this unique status you must have debts equal to or greater than 250% of gross income, and a killer mother-in-law.

DEBT

These Twinkies last year accounted for a record 13.5% of all households. Says Michael Hsu of Ipsos: “Looking at these figures one would think Canadians are accumulating debt at an alarming rate. But most of the debt is going into real estate, and right now the real estate market is holding up quite nicely.”

Not so fast. Here’s CIBC economist Benny Tal – usually a housing pumper – saying you’re probably nuts if you think this will last. He was quoted this week in a New York Times piece on Canada’s teetering housing market as saying, “There is no question that the housing market in Canada is overshooting. Now the cocktail party conversation in Canada is: ‘Will this lead to a U.S.-style crash?’”

Holy crap. Benny just used the ‘C’ word. To an American reporter, no less. How embarrassing.

“In Canada during the recovery it was almost a crime not to take a mortgage,” said Tal, who works for a unit of the Canadian Imperial Bank of Commerce, one of the five large banks that dominate the country’s mortgage lending business. “We were able to borrow our way out of this recession, which is why we are now sitting on this elevated debt level.”

His prediction: a price reduction of 10%, followed by “four or five years of stagnation.” But is that realistic, when the Bank of Canada will be raising its key rate repeatedly, when household debt’s at historic levels, and after real estate’s become the crack cocaine of the Canadian economy? As Wilf Dunning cautions, once the ‘housing wealth’ starts wearing off, it’s a recipe for slower growth and higher unemployment.

And if that happens, who’s gonna sop up all those 55,000 shiny new condo units slithering down the development pipeline in Toronto?

Nobody smart, says macroeconomist strategist Sheryl King. Her published piece in the Globe and Mail this week was an upscale, erudite version of the pathetic drivel and anguished logic published here daily. Given the recent hike in mortgage rates, anyone who thinks they can buy a Toronto (or Vancouver) condo and rent it out as an investment must enjoy pain.

After carrying costs the net yield on the average condo leased at the going rate is a mere 0.16% – about the same as your chequing account. And this doesn’t even factor in the lost earning power of a 20% down payment or the danger of condo prices ending up like those exploding glass balconies as tens of thousands more units flood the market.

Yet, guess who’s buying an estimated 70% of all those new little boxes? That’s right, ‘investors.’ People borrowing excessively to snap real estate at values destined to decrease, so they can rent it out for a pittance which can be wiped away with one vacancy or a monthly fee hike. Does this sound sustainable to you?

“Condominium builders completed 17,000 units in the past year, yet still have more than 50,000 units under construction,” says King. “As such, the facts are that builders are sitting on more than three years’ supply at a time when it will only take another half-point point rise in mortgage rates to put a rental investor into a position of negative carrying costs.”

So, you can believe the realtors this week when they brag of balanced markets, increased demand and buyer confidence. Or, not. This still ends the same way.

149 comments ↓

#1 Barb Rennie on 07.03.13 at 7:29 pm

An average house in Richmond BC was priced $500-700K in 2009, and today the same house is priced $900-$1.100K. Is it that hard to believe that prices can drop more than 10%? If prices reverted back to 2009 levels then that would equate to a crash? Then I believe we will see a crash soon.

#2 TurnerNation on 07.03.13 at 7:31 pm

The real market’s closed tomorrow. Take the day off, Gents.

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What the hell is that? — Garth

#3 CrowdedElevatorfartz on 07.03.13 at 7:40 pm

@#2 TurnerNation
Nope, didnt “render” worth S#&T !
Put your pants back on and try again with feeling.

#4 PasEnMontreal on 07.03.13 at 7:52 pm

We in Montreal are shielded from all this irresponsible buying behavior that will lead to a collapse of the housing market outside of Quebec. Quebequers have beeb very very responsible, so no housing bubble here. Vive les quebecois!

– Jean Putin

#5 PasEnMontreal on 07.03.13 at 7:53 pm

Beeb –> been

#6 Smoking Man on 07.03.13 at 7:55 pm

Turner Nation now that’s encryption.

#7 Spiltbongwater on 07.03.13 at 7:55 pm

Someone get Turnernation his meds. He is going crazy. Used to be one of the biggest Garth nutswingers on here.

#8 Dean Mason on 07.03.13 at 7:57 pm

Real estate in the GTA and most of Canada is sustainable like the Dow Jones rising from 777 in 1982 to 11,300 in 2000. A 16.05% annual rate of return compounded for 18 years increasing the Dow Jones 14.54 times in 18 years.

The Toronto Stock Market was 2000 in 1982 rising to 11,700 in 2000.This is 5.85 times higher in 18 years.This is a 10.31% compounded annually for 18 years.Not as ridiculous as the Dow Jones but still high.

Look since 2000, the Toronto Stock Market is only up 3.81% for 13 years or 0.293% annual increase.The Dow Jones is up 32.65% for 13 years or 2.51% per year.These do not include dividends.

This is why over the next 15-20 years low returns for real estate,stocks are a given.They will be 3 times less than the golden age of stocks.You can look at the Nasdaq,Hang Seng,Nikkei 225,FTSE 100,CAC 40,Bovespa,China Shanghai composite etc.

#9 T.O. & GTA bidding wars debunked July 03 on 07.03.13 at 8:02 pm

http://recharts.blogspot.ca/2013/07/gta-condos-damn-lies-july-02.html

http://recharts.blogspot.ca/2013/07/to-bidding-wars-debunked-july-03.html

http://recharts.blogspot.ca/2013/07/gta-bidding-wars-debunked-july-02.html

#10 CrowdedElevatorfartz on 07.03.13 at 8:04 pm

@#4&5 Montreal
Quebecers havent been more responsible than all the idiot greedy anglo cochons.
Just busy watching the latest corruption scandal on tv.

#11 Bob Builder on 07.03.13 at 8:05 pm

#4 Jean Putin, do you have statistics to back up your claim?

#12 Villa Madrona on 07.03.13 at 8:11 pm

Villa Madrona finally sold for 6.6 million. This was listed as high as 19.25 million. It was built by former chairman of the board of Sunkist.

http://www.timescolonist.com/north-saanich-home-sells-for-6-6-million-1.340690

#13 Andrewski on 07.03.13 at 8:13 pm

Here’s an interesting article from across the pond:

http://www.guardian.co.uk/money/2013/jun/28/new-class-landlords-profiting-generation-rent

Wonder what’s the extent of this happening in Canada?

#14 Dwilly on 07.03.13 at 8:19 pm

As disheartening as it sounds to say this, I guess I am actually a bit surprised that ONLY 13% of Canadians have debt greater than 250% of gross income. If you had asked me to guess, I would have guessed higher than that. Even if we’re real generous about personal income – say, $100k – or family income – say, $160k – then that only equates to mortgage debt of 250K to 400k. Ain’t many places left you can buy a house for that today, so I guess I figured that number would be higher. Nevermind cars or anything else.

#15 TurnerNation on 07.03.13 at 8:20 pm

Garth it’s supposed to be the ascii animal on this page…guess some formatting is a requirement. Beyond me!

https://post.craigslist.org/k/BpPExB7k4hGUBqLN-uFJ2g?s=preview

#16 TurnerNation on 07.03.13 at 8:28 pm

That T.O. slaughter house B. Lamb’s been lambasting in the Star, now a Fed favourite.
Some irony here. Maybe allegory.

http://www.change.org/en-CA/petitions/toronto-pig-save-no-taxpayers-money-to-quality-meat-packers-no-cuts-to-food-inspectors

Did you know that $3 million of our public money has just been awarded by the federal government to Quality Meat Packers slaughterhouse, located in downtown Toronto?

..
Shockingly, on the same day, the Harper government announced plans to eliminate the jobs of 100 meat inspectors at the Canadian Food Inspection Agency. This poses a threat to food safety by increasing the risk for e. coli, listeriosis and other food-borne illnesses associated with the mass slaughter and packaging of animals.

#17 Ford Prefect on 07.03.13 at 8:35 pm

The most popular comment on the Sheryl King piece in the Globe stated that her math was bad because she did not include the part of mortgage payment applied to principal as “return”! For all those that agreed, just think what that idea would do to your income tax – paying tax on debt reduction with no certainty that you would ever realize that “return”. If the selling price of the condo falls dramatically you could have paid income tax for 25 years on a net loss! Talk about counting your chickens before they are hatched.

Garth, your comment that Canadians are financial illiterates is aptly borne out by this example.

#18 BenF on 07.03.13 at 8:37 pm

TurnerNation – you need a monospaced font. Have a good day.

#19 Innumeracy Chick No More on 07.03.13 at 8:40 pm

It looks like an owl

#20 Innumeracy Chick No More on 07.03.13 at 8:47 pm

(\_/)
(O.O)
(> <)

lOL I'm bored

#21 GTA sales numbers (my estimates) on 07.03.13 at 9:00 pm

Something doesn’t look right in the condo section AND to my surprise the average for SFH went down BUT the average for detached went up.

http://recharts.blogspot.ca/2013/07/gta-numbers-for-june-2013-quick-preview.html

#22 Nemesis on 07.03.13 at 9:01 pm

@VillaMadrona/#12

66% HairCut. Yep. Sounds about right.

http://youtu.be/a5mGpQQZo4A

#23 T.O. Bubble Boy on 07.03.13 at 9:05 pm

@ #14 Dwilly on 07.03.13 at 8:19 pm
As disheartening as it sounds to say this, I guess I am actually a bit surprised that ONLY 13% of Canadians have debt greater than 250% of gross income. If you had asked me to guess, I would have guessed higher than that. Even if we’re real generous about personal income – say, $100k – or family income – say, $160k – then that only equates to mortgage debt of 250K to 400k. Ain’t many places left you can buy a house for that today, so I guess I figured that number would be higher. Nevermind cars or anything else.
___________________________

Exactly… I’m also shocked that it is so low.

Every $80,000/year earner with a $200,000 mortgage or $100,000/year with $250,000 mortgage on some entry-level downtown condo would be “highly indebted”.
(and – this doesn’t even being to look at burbs like Milton with $400,000+ mortgages on pressed-cornflake homes)

And, given the number of 5% down CMHC-insured mortgages that have been created over the past few years, I would have expected 25% or more of the population to be “highly indebted”.

#24 Nemesis on 07.03.13 at 9:08 pm

@ICNM/20

No it doesn’t.

On the other hand, what do I know?

[TheCompany’Couch’ invariably put away the Rorshachs after she’d tired of my incessantly mono-thematic lewd interpretations. In my defence – ow could I do otherwise? She was Smokin’Hot.]

#25 Editor on 07.03.13 at 9:16 pm

In the 905 we’re seeing a lot of houses listed on MLS drop their prices before they sell — and sell for less than that second list price. So they’re listing too high and buyers aren’t going for it. As best we can tell, sellers tend to get 92-95% of their list price now. Not a seller’s market any more.

#26 Canadian Watchdog on 07.03.13 at 9:18 pm

GTA's market in one chart.

It's pretty clear to me that you won't hear about a pre-market crash until it's an absolute disaster and the media can't ignore it anymore. If developers can lobby Rob Ford to postpone development charges, then they certainly can lobby MSM from reporting what's really happening behind the scenes.

#27 Piccaso on 07.03.13 at 9:25 pm

It’s so hilarious it’s actually stupid…

this 1,000 sq ft 2 story box with no garage for $330,000 in Edmonton

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=13292571&PidKey=-1193083877

or this 2,000 sq ft bungalow with a garage for less then half that price in Dallas

http://www.realtor.com/realestateandhomes-detail/8663-Darrington-Dr_Dallas_TX_75249_M87677-90633?row=2296

#28 Brian Ripley on 07.03.13 at 9:27 pm

To #4 PasEnMontreal who said in part “We in Montreal are shielded…”

It’s true that Montrealers have not bid up PRICES of single family detached houses to the same manic degree as other major metro Canadian buyers, but by my calculations median SFD prices have gone up at least 36% in the last 6 years and that is about what Vancouver average SFD prices have gone up in PERCENTAGE terms in the same time period. Comparitive chart here: http://www.chpc.biz/canada_chart.html

(Note: Montreal SFD prices are median from March 2007, and Vancouver are average)

So, sure nominal prices seem way better in Montreal and Whales do agree; High Net Worth Individuals discovered Montreal this year http://www.chpc.biz/whale_watching.html

…but let’s see if on the way down we get similar PERCENTAGE corrections. If we do, the shield may turn into a toboggan.

#29 CrowdedElevatorfartz on 07.03.13 at 9:31 pm

Uh oh.
Global tv 6pm ‘news” just discussed the “gasp” possibility of a real estate market slow down due to rising interest rates……..

#30 2CentsCdn on 07.03.13 at 9:36 pm

Someone help me out please ……. I’m a little slow : ) So a person (or family) with $100K income would owe a total of $250K or $350K?

#31 Mark W on 07.03.13 at 9:37 pm

http://www.news1130.com/2013/07/03/vancouver-home-sales-rise-in-june/

Says here that sales are up in Vancouver.

Someone is lying.

Sales up from May, down from 2012. Prices down 3%. — Garth

#32 Donald Trump on 07.03.13 at 9:48 pm

#2 TurnerNation on 07.03.13 at 7:31 pm

What the hell is that? — Garth

=================================
Pssttt…

…….its the latest Freemason lodge code…..

#33 Freedom First on 07.03.13 at 9:55 pm

Very interesting Garth, that 70% of those overpriced little boxes are bought by “investors”. I need to read stuff like this periodically, I mean, you just can’t make this kind of idiocy up. Keeps me in line to stay away from “greed and acts of insanity”. Balancing, Re-balancing, liquidity, and diversification is a beautiful thing.

Got me thinking too, Garth, how really simple your investment plan for people is, and, without taking into account how, if people follow the plan not only will they accumulate wealth, but just as importantly, it will protect them from not only their own financial insanity, but also their MIL’s.

#34 TheCatFoodLady on 07.03.13 at 9:57 pm

The ‘highyl idebted’ article – an Ipsos staffer is quoted as stay ing that most Canadian debt is going into real estate “which is holding its own”. Does that level of indebtedness then, not include mortgage debt? Or was it a clumsy reference to renos & repairs adding to debt?

‘Household’ debt is not ‘mortgage’ debt. — Garth

#35 young & foolish on 07.03.13 at 10:03 pm

We congratulate you sir, for bringing in all in together!

Great post!

#36 Halifax Observer on 07.03.13 at 10:04 pm

Halifax- worst June sales in 14 years. Record breaking inventory.

http://www.halifaxrealestateblog.net/

#37 Elcid on 07.03.13 at 10:10 pm

“Two years ago gold bugs ran wild as the price of gold rose nearly six times. But since cresting two years ago it has steadily declined, almost by half, putting the gold bugs in flight. The most recent advisory from a leading Wall Street firm suggests that the price will continue to drift downward, and may ultimately settle 40% below current levels.

The rout says a lot about consumer confidence in the worldwide recovery. The sharply reduced rates of inflation combined with resurgence of other, more economically productive investments, such as stocks, real estate, and bank savings have combined to eliminate gold’s allure. Although the American economy has reduced its rapid rate of recovery, it is still on a firm expansionary course. The fear that dominated two years ago has largely vanished, replaced by a recovery that has turned the gold speculators’ dreams into a nightmare.”

New York Times article published on August 29, 1976. What happened to the price of Gold between 1976 and 1980? Hmmm…..

It increased before it collapsed. Buying gold s gambling, not investing, wholly unsuited for most people. — Garth

#38 Peter on 07.03.13 at 10:16 pm

Hi Garth, your response to #21 Shawn,

are you sure they are counting household debt without the mortgage debt, the graph references the reason for the debt being the housing boom, why would they reference that part.
If that is BIGGEST threat, I , too, would have thought it was way worse than that and still manageable. Why bother showing that without most households largest debt?
Thank you

Big mortgages, big consumer debt go nicely together. — Garth

#39 Smoking Man on 07.03.13 at 10:21 pm

Gee Wizz garth, Franken numbers ha.

They weren’t Franken numbers last fall when we were in seasonal decline..

Definition of Franken number = when stats go against someone’s wishful bias.

Rising fix rate mortgage will not cause a listing boom, not while the over night rate ain’t going no where.

To put massive inventory on the market hence causing down ward spiral of prices.. We need massive prices rise spike, owners will run over each other to cash in.

#40 Canadian Watchdog on 07.03.13 at 10:28 pm

GV sales data is getting so out of whack that Landcor's reported sales (that includes presales and all title transfers) was lower then REBGV sales in March. It should always be higher, not lower!

#41 Fat Duffy on 07.03.13 at 10:30 pm

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/ \

#42 Fat Duffy on 07.03.13 at 10:31 pm

DELETED

#43 Not Baffled by BS on 07.03.13 at 10:33 pm

Dwilly and T.O. Bubble Boy,

Take Ipsos polling about gross debt to income ratios with a HUGE grain of salt. These are experts that predicted a landslide victory for the BC NDP party in the May provincial election. Accurate, they are not!

#44 Smoking Man on 07.03.13 at 10:33 pm

Even today at the tax farm, very savey trader was shocked to learn a dump on his street sold for crazy money, that put a seed in his mind hell I can get a few million for mine.

See that’s what you need to prick a bubble, huge spike in the price curve,

The delama for a fence sitter, after the spike, they might not fall back to where they are today, especially in a market that has a positive population and job growth like Toronto..

#45 TurnerNation on 07.03.13 at 10:33 pm

I just read today’s article. (Really this weblog could publish just a picture and blog dogs will gnash and wail amongst themselves.). Was too busy BBQing on rental kando’s rooftop.

1 million dollars in debt. That’s the late-20s couple I know of. Bought a condo for 270k now worth 470K+ must’ve taken a HELOC, buying a 905 area McMansion (avec income suite!).
Condo is rented out.

That’s what he said to me: 1 mill in mortgage debt.

This is like McKinseyian logic: 1-in-10 has a force multiplier of debt?

#46 Danforth on 07.03.13 at 10:38 pm

Hi Garth,
An idea for a future column,which I haven’t seen you address recently (Admittedly, I miss a posting here and there)…

Wile the Smith Manoevre is interesting and well-documented, I’m curious about how the math stacks up for those who own their house outright, and then choose to borrow using the house as collateral, put the borrowed investment capital into something ‘safe’, with the primary objective of the tax deduction of the investment interest. This is interesting for earners in higher tiers. I know there are services out there who manage all the paperwork for you.

Thanks for giving this some thought…I know you have plenty of fodder for columns.

Cheers.

#47 TheCatFoodLady on 07.03.13 at 11:00 pm

“Looking at these figures one would think Canadians are accumulating debt at an alarming rate,” said Michael Hsu, vice president at Ipsos in Toronto. Still, he said “most of the debt Canadians are accumulating is going into real estate and right now the real estate market is holding up quite nicely.”

The statement above is what is throwing me. It implies some of that debt may be due to mortgage debt; or could imply that. The way many articles are poorly written these days, it can be hard to tease out what’s really being said.

#48 Donald Trump on 07.03.13 at 11:18 pm

Not quite sure about the latest Blog faux -deaux.

I think its discrimination to not include William Tell, William O’Reilly , Pamela Wallin and Pee Wee Herman.

PS 2 Garth: Can we do “Richards” aka Dicks next ?

#49 Tom from Mississauga on 07.03.13 at 11:30 pm

How did the Q1 estimate drop to 10% from 13.5% in 1 quarter? Should I email the author?

#50 Devore on 07.03.13 at 11:42 pm

#13 Andrewski

Wonder what’s the extent of this happening in Canada?

Never heard of it. I doubt much of that is happening, as we have plenty of landlord slumlords already, and their costs would be lower than subletters.

http://bc.ctvnews.ca/deadly-east-vancouver-house-fire-confirmed-as-homicide-1.1345919

Police said the fire started in her home was deliberate and more than 20 people lived in the residence upstairs.

#51 Nimoucha on 07.03.13 at 11:44 pm

#67 Notta Sheeple on 07.02.13 at 11:13 pm wrote:

[…] “Slimus REALTURDUS® Parasiticus” […]

GREAT POST!!! ROFL :-) Makes up for all the moronic “Fuurzztts” who think they’re funny.

#52 KG on 07.04.13 at 12:01 am

You can take rest now.

#53 zbrah on 07.04.13 at 12:02 am

To #27 Canadian Watchdog:

Do you happen to have the June numbers willing to share? Thanks in advance!

#54 jaguar on 07.04.13 at 12:03 am

Garth…I sold my suburban home in Calgary in Oct.2012. House sat over the winter months with my worldly goods in storage and just took possession of a leased apartment in an area of Calgary that was hit hard by the recent flood. (Sunnyside). It’s small. A compromise. It reminds me of the same apartment I was in 20 years ago before I bought my last two houses in the city..(made serious money on both due to the house horniness at the time…).
It’s a funny feeling to be back as a renter in an apartment so similar to the one I leased so many years ago. But I wasn’t so liquid back then. All this capital beneath me, I feel quite free. Living inner city, no property responsibilities,….
It’s a ‘time out’. Opportunity to review the landscape. No pressure to jump into anything half considered. I like it.
I just feel as though there is a great adjustment in attitudes coming, driven by financial realities. I would wish to be a bystander. Let the ‘Tsunami’ arrive. I will watch it from my high ground, and see what my best course of action is afterward. I really enjoy your blog, Garth. You could write other stuff if you were inclined to do so….

I wish you would tell us more about your dog. I know you love him a lot..

#55 Waterloo Resident on 07.04.13 at 12:09 am

HERE IS THE MAIN REASON WHY A SINGLE MAN SHOULD NOT BUY A HOUSE: DIVORCE !!!

– If you rent a house, then you marry a lady, and then 2 years later she wants a divorce because she changed her mind, the divorce for the guy is easy and painless. (that is if he had the smarts to have her sign a pre-nup where she states that she won’t ask for any alimony if a divorce happens).

– If you marry the lady, and then buy a house, and then she wants a divorce, family law courts generally give to her the house in the settlement, and even though the man is not allowed to live in that house, he has to continue to make mortgage payments on it for the next 30 years !!!! Yes, unfair but that’s marriage in Canada for you.

So if you are a single guy, rent, don’t buy. Otherwise, you will be so sorry.

(all it takes is to ask her to work and help support a family, that is enough for many women today to demand an end to the marriage).

#56 George on 07.04.13 at 12:13 am

Latest household credit numbers (to the end of May 2013) from the Bank of Canada.

http://credit.bankofcanada.ca/householdcredit

#57 Debt Runner on 07.04.13 at 12:21 am

So the Canadian housing market will crash and take us into the abyss? Probably right.

But what then of the US? They had their housing crash but are now fine? This is where Garth is wrong. The US has Frankennumbers as bad as Canadian real estate agent’s. Jobs, GDP, unemployment, CPI – you name it and they are fudging it worse than a Chinese politburo insider.

The fact is, all developed economies are stagnating. We are all becoming Japan. Their support of indebted banks didn’t help them, and it won’t help in the US, UK or elsewhere. But that won’t stop the flow of funny money that the fed uses to buy all those bonds.

And we aren’t doing QE in Canada, but it is not because we have great financial leadership from Carney (who escaped just in time) or Flaherty or Harper or even the almighty Canadian bankers (for they are as bad as any out there). The reason we didn’t need to build up a QE balance sheet at the central bank is because all our soon to be crappy mortgages were packaged up by the banks And sent to the CMHC which funded the mortgages through bond sales. And those bonds, by the way, are backed by none other than the Government of Canada.

So our messy balance sheet is not with our central bank – it is with the CMHC and, by extension, with the Government itself.

Oh Canada!

But just because we are doomed does not mean others are less so.

#58 meslippery on 07.04.13 at 12:23 am

My House in York Region less than $200 000 paid.. In theory
is still worth more than I paid for it and its almost paid off.
Thing is I have not had a raise since 1999

How do people make to days prices work????

#59 Stats — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer on 07.04.13 at 1:02 am

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

#60 Hurly on 07.04.13 at 1:10 am

Should see the self serving lies the cartel is spewing today in Victoria’s Times Colonist. Sheeple eat that [email protected] up!

#61 Sideline Sitter on 07.04.13 at 1:29 am

StatsCan says “Household Debt” is the percentage of ALL debt versus Disposable Income. They also put the average Canadian at 161% (or so).

http://www.statcan.gc.ca/pub/75-001-x/2012002/article/11636-eng.htm

If houses are selling great at $600K in Toronto, I really doubt that the average household makes $300 of disposable income.

My guess is that MANY Canadians owe nothing on their property, or own no property at all (which is WAY worse).

#62 Kingathur on 07.04.13 at 1:32 am

#4 Jean Putin: Real estate in Montreal is flat for the same reason I left 41 years ago: no one trusts the provincial government, no matter which party it represents! Montreal: great place to visit…

#63 Sam on 07.04.13 at 1:48 am

Re: #39 – Not to beat a dead horse, but are you sure household debt does not include mortgage debt?

The Stats Canada website says the following:

“household debt is defined as mortgage debt on all residences and real estate, and consumer debt (including debt outstanding on credit cards, personal and home equity lines of credit, secured and unsecured loans from banks and other institutions, and unpaid bills)”

http://www.statcan.gc.ca/pub/75-001-x/2012002/article/11636-eng.htm

#64 Bobby on 07.04.13 at 1:51 am

******Victoria BC Times Colonist

Real estate sales have increased every month this year and prices remain steady in the first half of 2013, according to the latest data from the Greater Victoria Real Estate Board.

“The market is definitely rebounding,” said board president Shelley Mann.

Real estate sales dropped off last July after the federal government introduced tighter mortgage rules, sending buyers to the sidelines to watch where prices would go. Mann said fewer sales in the last half of 2012 and the first three months of this year reflected that caution.

“I think with the upswing in the last couple of months, buyers are confident that we had hit rock bottom and now they are getting into the marketplace.”

July and August are traditionally quieter months for sales, with a pick-up in September. Mann said. “It will be interesting to measure the next six months because that’s when our market really started to tumble last year.”

********************

So many for sales signs in Victoria…one might reason a tsunami is on the way and people are trying to get out.

#65 Buy? Curious? on 07.04.13 at 2:10 am

Default! Default! Default!

Crash! Crash! Crash!

Christmas time will be pure horror!

http://www.youtube.com/watch?v=2Ox1Tore9nw

#66 Joe on 07.04.13 at 2:47 am

EU officials are saying that at least 13 banks are involved in derivative manipulation.
More corruption in the banking system.

#67 willworkforpickles on 07.04.13 at 4:31 am

Exploding glass balconies ….Weak 2nd rate (brand new) shifting under their own load structures. Bay windows popping out even 40 story’s up. Lets get one ……no no – the one on the right….that looks good . .. yeah …the one without the living room window. There’s gotta be a sale on that one. And i have a roll of plastic and a ton of duct tape for emergencies like this.

#68 Observer on 07.04.13 at 4:37 am

31 2CentsCdn on 07.03.13 at 9:36 pm

Someone help me out please ……. I’m a little slow : ) So a person (or family) with $100K income would owe a total of $250K or $350K?
================

Yeah, then they had some mortgage broker spinning that interest rates hasn’t gone up. sure 1 % isn’t much but it a 30% increase on your mortgage. Now that is huge.

You can get variable rate still pretty cheap. How interest won’t rise quickly. Well if 30% isn’t quick, in a month then I don’t know what quick is.

#69 Mr Buyer on 07.04.13 at 5:10 am

#40 Smoking Man on 07.03.13 at 10:21 pm
……………………………………………………………….
WOW. Just WOW.

#70 Buy? Curious? on 07.04.13 at 6:50 am

Hey Everybody! This is a great business! Where do we sign up?

https://www.youtube.com/watch?v=tIwH7ptHCWc&feature=player_embedded#at=137

#71 M D on 07.04.13 at 7:27 am

I’ve been reading this big since 07, no housing correction yet…… bought and paid off my first condo since then. good thing I didn’t listen to Garth…lol…no…,but real estate is going into the gutter though…oh and Garth is still cool!

There was no blog in 2007. — Garth

#72 T.O. Bubble Boy on 07.04.13 at 7:37 am

@ #58 Shawn on 07.04.13 at 12:22 am
————
I agree with the point you’re making (a trend of the past 10-20 years is more likely to reverse than continue another 10-20 years, especially when you look at the interest rate factor).

However, are we not entering a new type of “zero sum” growth, where globalization brings down wages in the West, and Government spending cuts also reduce GDP growth? In other words, even if real estate stops rising, growth in other investments could still be flat.

#73 T.O. Bubble Boy on 07.04.13 at 7:39 am

@ #71 M D on 07.04.13 at 7:27 am
I’ve been reading this big since 07, no housing correction yet…… bought and paid off my first condo since then. good thing I didn’t listen to Garth…lol…no…,but real estate is going into the gutter though…oh and Garth is still cool!

There was no blog in 2007. — Garth

———

Classic!

#74 craig on 07.04.13 at 8:09 am

That graph tells me we are in the best shape we’ve been in in 3 years. How is this a bad thing?

#75 bigrider on 07.04.13 at 8:13 am

#73- M.D- ..” bought and paid for my first condo already. Good thing I didn’t listen to Garth ”

Does that imply that you will be purchasing a second and third ?

We all sure hope so…LOL

#76 neo on 07.04.13 at 8:16 am

at #50Tom from Mississauga on 07.03.13 at 11:30 pm
How did the Q1 estimate drop to 10% from 13.5% in 1 quarter? Should I email the author?

It’s called deleveraging aka deflation aka pray it’s a soft landing.

#77 Smoking Man on 07.04.13 at 8:30 am

#71 Mr Buyer on 07.04.13 at 5:10 am

#40 Smoking Man on 07.03.13 at 10:21 pm……………………………………………………………….WOW. Just WOW.
……….

Obviously you have never sat in front of a monitor with candle sticks, making a bet…

All the bubble heads on here praying for a crash.. I Bet If you won the lotto first thing you would do is buy a house, and have a party and invite all your friends that have homes, you would have a bigger and better, and try and make them feel bad as they do you……

416 SFH prices have one direction and it’s up…. The herd rules……

#78 economictsunami on 07.04.13 at 8:35 am

“Housing starts in the GTA are already running 35% below 2012 levels.”

True but general construction rose by 43,000 in May alone.

From time to time I make unscientific/ lunch time, observations of core TO condo construction sites.

Nice days, why not?

What I see is ever increasingly larger crews and more equipment (especially new pickup trucks.) then I have ever noticed before.

It appears the race is on to quickly bring big volume to an already bloated market sooner then competitors.

It reminds me of a flight I once took into Mexico City during the late ’80’s:

The pilot stated that turbulence were rough but he expected a soft landing.

Much to my dismay while sitting in a window seat I could see the wings actually making flapping motions.

We bounced down the runway, (alternating sides of tires actually making contact) while a wing tip on my side came perilously close to actually touching the runway.

The moral of the story:

The Nimrods who failed to take heed of the buckle up sign were needlessly injured; and while bouncing around the cabin, also hurt those more prudently strapped in.

You can’t fix stupid but buckle up anyway…

The May number of 43,000 you reference is, presumably, employment gains. That is generally believed by most economists to be a rogue and unreliable stat. — Garth

#79 gotthardbahn on 07.04.13 at 8:42 am

‘…yet still have more than 50,000 units under construction…’

I can believe it. Quite aside from the overheated box-building fever around Yonge & Eglinton in Toronto – I can count three pits, a pre-pit, two proposals and a further three or four tower cranes hard at work during a four-minute walk to the tube – yesterday I walked west on Queen from University and tried to ignore all the tower cranes I saw. This is nuts, and it will not end well. All these ‘investors’ snapping up these boxes will get what they deserve. I wish I could say I feel sorry for them.

#80 Morgan on 07.04.13 at 8:45 am

I have friends who just took out a $600K mortgage for a house (rolling in closing costs, taxes, student loans and a few other things, they’ve basically put 0% down on the house). Family income is roughly $160-$180K with both of them working. I wouldn’t be able to sleep if I was in their shoes – for the next 25 years neither of them can get laid off, get sick or face any other major setback without disaster striking… and they are both in their early 40s.
I’m like others on this blog and surprised that the number of people in this position is as a low as 13%. Just comparing Vancouver incomes to housing costs would make me think everyone in the city is deep in the hole.

#81 Dean Mason on 07.04.13 at 8:50 am

If you believe 9.00% returns than you have no problem with a 55,000 Dow Jones in 2028,84,000 Dow Jones in 2033.For the TXS,44,000 in 2028,68,000 in 2033.

As for interest rates,most people when talking about interest rates don’t understand that they have to be specific what interest rates they are referring to.

Longer term 30 year bonds U.S. or Canada rising another 2.00% is a much more worst for the stock market than a rise in 10 year bonds or the Fed or Bank of Canada rising 2.00%.If the U.S. 30 year bond reaches 5.50% than stocks as we seen in 2007 will blow up and come down.

In 2007 U.S. 30 year bond reached 5.55% and than down hill to 2.35%.Now we are at 3.49%.This is not sustainable,you will see.Growth will be half what it used to be the next 20 years versus the last 20 years.Stocks,interest rates,real estate can’t rise much in such an environment.The law of averages are at work.

In 2000, U.S. 30 year bonds were 6.74% at their peak.See what happen to stocks.Overvaluation.Like I said before with dividends and the rise in he Dow Jones and TSX they will lucky to be at 38,000 in 2033 and 31,000 in 2033.

You can believe what you want but Japan’s economy went through a similar crash and then slow decline because of the high prices of stock market,real estate and slow terrible growth with disinflation with deflation.We are seeing similar signs in the U.S. for the last 13 years.

It has been more than 20 years in Japan and still their in a economic,financial malaise.Do not think that we are going to be much better.Believe what you want but nobody predicted that the TSX would be at almost the same place after 13 years or the Dow Jones would only be 3,700 points higher in 13 years.Look at the Nasdaq,it is a disaster.

#82 frank le skank on 07.04.13 at 9:11 am

#82 Morgan on 07.04.13 at 8:45 am

I have friends who just took out a $600K mortgage for a house (rolling in closing costs, taxes, student loans and a few other things, they’ve basically put 0% down on the house). Family income is roughly $160-$180K with both of them working.

———————————
If they have a household income of 180K then the mortgage/dept consolidation is a little over 3 times their income. Given recent ratios its seems pretty safe to me, I’m sure the bank offered them at least 800K. I’m not certain why anyone would want to amortize a student loan for 25 years? Its seems indicative of poor financial management.

#83 T.O. Bubble Boy on 07.04.13 at 9:18 am

GTA housing numbers… fudging continues:

June 2012 reported sales = 9422 (from July 2012)
http://www.torontorealestateboard.com/market_news/release_market_updates/news2012/nr_market_watch_0612.htm

June 2012 reported sales (today) = 9129 (over 3% magically dissapeared)
http://www.torontorealestateboard.com/market_news/market_watch/2013/mw1306.pdf

However, I don’t dispute the 8.1% average price increase for Detached SFH in the 416 area, or the 9.5% average price increase for semi-detached in the 416… as noted several times, CMHC’s introduction of the $1M price limit has significantly skewed the market towards that $1M level (since anyone with a pulse can apparently still get a 5% down mortgage for that price point). More proof that the entire Canadian market is dependent on the banks passing CMHC-backed debt to the sheeple.

#84 FS on 07.04.13 at 9:34 am

Garth, Check Sheryl’s math or see the first comment in that article. She should turn in whatever degree she has and Globe editors should be embarrassed. I don’t dispute the precariousness of people’s finances or the state of the condo market or the risks those both pose but using faulty math is a poor way to support an argument.

#85 Calgary Rip Off on 07.04.13 at 9:51 am

“As the real estate boards of major cities release their Frankenumbers to a breathless people this week, more experts grow worried. Expected are robust sales as buyers rush to beat mortgage hikes. Alas. Poor, dear fools. Grabbing cheap rates to lock up houses at values that higher rates will knock down is a classic mistake. Then again, we’re a nation of debt dummies.”

On the surface this premise is accurate. There are variations according to locale. It is best to look at house purchasing as a major event not like buying an apple. The above quote minimizes the individual event and supports numbers as if individuals were numbers. This is inaccurate for individual variables.

For example, in Calgary history has shown steady increases for a long long time. This plus the lack of rental price controls is a motivating factor for many who live in Calgary regardless of what they believe about the market values. Market values are $200K above what they should be. Rates are determined by what persons are willing to pay and because of the rental situation in Calgary most people if they can afford will purchase a mortgage. And hopefully most calculate into their mortgage choices and house purchase whether they can renew as the interest rates go up. There are those who dont look at this factor and buy of course.

Which situation is better: Long term job in Calgary, age 30s-40s and renting or purchase of a mortgage given that both fees per month are about the same? Yes there is flexibility in being able to move. There is also great comfort in knowing the landlord can increase the rental amount at any time in Alberta.

#56: The key to the dilemma is to marry the correct woman and then make the relationship solid through daily effort. If you cannot do this and adapt to a woman, you should man up and not get married. If a man is humble enough he can learn tons from any woman. All this and physical benefits too.

You mean it’s different in Calgary? Seriously? — Garth

#86 broadway skytrain on 07.04.13 at 10:12 am

ecb rates flat or dropping says draghi.——————–

“It is pretty significant. Not only are they pledging to keep rates low for an extended period, he went out of his way to say that another cut was possible and the position of a negative deposit rate was possible as well.”

#87 TS on 07.04.13 at 10:31 am

Today’s news about June GTA property market, is it called slowdown or correction?

#88 brainsail on 07.04.13 at 10:32 am

“Canada Dollar Falls With Crude Oil as Egypt Concern Eases”

“The currency fell against the majority of its most traded peers before a report tomorrow that will show Canada lost 7,500 jobs in June after adding 95,000 positions the month before, according to a Bloomberg survey of 20 economists. A report on non-farm payrolls in the U.S., Canada’s largest trade partner, is forecast to show 165,000 job gains tomorrow.”

http://www.bloomberg.com/news/2013-07-04/canada-dollar-falls-with-crude-oil-as-egypt-concern-eases.html?cmpid=yhoo

#89 robert james on 07.04.13 at 10:37 am

I checked a Calgary realtor`s blog just to see if there was any info on the flood regarding real estate and the only thing this guy can come up with is this.. Truly weird !!!!! He seems to be stalking Garth.. lol http://bobsrealestateblog.com/

#90 broadway skytrain on 07.04.13 at 10:41 am

‘Someone is lying.

Sales up from May, down from 2012. Prices down 3%. — Garth’
—————————–
read carefully – sales UP from 2012 (but still below 10yr avg and down from may2013) – and more importantly, listings shrivel like a cold you know what…

“Sales rose almost 12 per cent to 2,642 compared to a year earlier”

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,874 in June. This represents a 13.2 per cent decline compared to the 5,617 new listings reported in June 2012 and a 13.8 per cent decline from the 5,656 new listings in May of this year.

#91 Bargains everywhere on 07.04.13 at 10:42 am

Garth, I have to say I don’t really understand what is happening in the Toronto market these days. Sales of detached homes were down 6.9% in June but prices were up 8.1%. This is with an increase in active listings of 7.9% and an increase in average days on market of almost 10%.

If sales are dropping and inventory is increasing and taking longer to sell, why are prices still increasing? This doesn’t make any sense.

The rest of the world says our housing market is grossly overvalued and yet prices keep going up. There must be a lot of greater fools out there buying or I am missing something.

Higher prices on reduced volume is completely consistent with a market past its top. — Garth

#92 Rational Optimist on 07.04.13 at 10:51 am

#83 Dean Mason, you mentioned Japan’s economic malaise.

Read: http://en.wikipedia.org/wiki/Demographics_of_Japan

And then: http://en.wikipedia.org/wiki/Demographics_of_the_United_States

Tell us if you notice any important differences.

#93 Bargains everywhere on 07.04.13 at 10:56 am

#85 T.O. Bubble Boy on 07.04.13 at 9:18 am

Yes, I have a hard copy of the TREB report from June 2012 as well. Reported sales last year were 9,422 but this year it shows only 9,129 for June 2012.

Frankenumbers. — Garth

#94 Smoking Man on 07.04.13 at 10:56 am

And the Toronto Franken numbers are out. Ha

http://www.torontorealestateboard.com/market_news/release_market_updates/news2013/nr_market_watch_0613.htm

Oh bubble heads, time to up your lotto purchases if you ever want to own a SFH in the 416

Mortgage rules tighten, 1 years worth of gloomy real estate reporting, BOC Threats… And… And

Boom!!!!! Herd pushes it up by 8. 1 present… On detached 416ers.

But hate the messenger, the man with vision, the I told you so guy……

#95 T.O. Bubble Boy on 07.04.13 at 10:59 am

re: strength in the GTA housing market… I’m pretty sure that people wouldn’t be burning down their partially-built McMansions if you could still sell them for big profits:

http://www.cp24.com/news/suspicious-fire-destroys-houses-under-construction-1.1352822

#96 TorontoBull on 07.04.13 at 11:17 am

@#96 SM- you rock!
also notice the 9.5% price increase in semi’s in 416…perhaps this is the parabolic rise associated with the final bubble top phase?

#97 Grantmi on 07.04.13 at 11:20 am

Chavez’s 70% Gold Bet Unravels on Reserves Plunge: Andes Credit

,,,,After rewarding Venezuela with a rally of almost 400 percent in the past decade, gold has tumbled 25 percent this year, pushing the central bank’s reserves to an eight-month low and compromising the government’s ability to repay foreign bondholders. The yield on Venezuela’s dollar-denominated debt has risen 62 basis points, or 0.62 percentage point, to 11.84 percent in the past month, compared with an average increase of 57 basis points for other countries in Latin America. ,,,,,

http://bloom.bg/14t6GZl

Couldn’t happen to a nicer guy!!!

Payback for him confiscating so many mines and oil companies that had legit claims based on international law.

(Hope he’s rotting in hell with all the other scum dead Latin American dictators…)

#98 Canadian Watchdog on 07.04.13 at 11:34 am

Today's TREB data shows year-over-year sales for <$500,000 category hit its 14th consecutive decline (since May 2012). These figures don't even amuse me anymore. What does amuse me is that an agency like TREB that oversees $40 billion in annual transactions is completely incompetent of writing a monthly report consisting of more then 250 words to inform buyers of changes within the data. Instead, TREB once again puts two muppets in front of camera telling viewers that sales are hampered by Toronto's Land Transfer Tax.

#99 Oceanside on 07.04.13 at 11:39 am

A friend is looking at this house for sale in Nova Scotia, interesting to see what houses should be valued at

..http://halifax.kijiji.ca/c-real-estate-houses-for-sale-Million-Dollar-view-of-the-Mahone-Bay-for-only-227-500-W0QQAdIdZ495151460

#100 Smoking Man on 07.04.13 at 11:43 am

#98 TorontoBull on 07.04.13 at 11:17 [email protected]#96

SM- you rock!also notice the 9.5% price increase in semi’s in 416…perhaps this is the parabolic rise associated with the final bubble top phase?
………

Yes I do rock, no parabolic spike, spring started late, prices fall from June to Dec the late start to buying season, hence moving the numbers forward to a seasonal slower time makes them look better.

Look for the arch next year… Or the next, carney actions in UK has made it nearly impossible for Prozak to spike our over night rate here.

#101 Piccaso on 07.04.13 at 11:45 am

Great story…

Friends living in a $850,000 house with all the trimmings and they had all the late model 4×4 toys. A true picture of success…. WRONG!

The big “D” happened and when it was all sold off and liquidated there wasn’t even $80K cash come out of that picture.

LMAO

#102 Dean Mason on 07.04.13 at 11:49 am

#94 Rational Optimist

We are not exactly like Japan.The points I was making is that the past of high growth,much higher inflation and consumers and governments that were much less indebted is not the world we living in today.It will not be the world that will be living in 15,20 years.

People want to believe that the 9%-10% stock market returns and 6%-8% bond yields are coming back.Like I said again half it and that is what you will get if we are lucky.Maximum 4.50% to 5.00% stock market returns,3% to 4% bond yields.If they ever go much higher than these numbers,they will fall back again.

This is my 15-20 year average returns,yields outlook not bottom and peaks of either.

#103 Herb on 07.04.13 at 12:24 pm

#99 Grantmi,

you got something wrong: only the “scum dead Latin American dictators” who were American puppets are rotting in hell. The others tried to do something for their countries and redeemed themselves.

#104 neo on 07.04.13 at 12:33 pm

Garth,

I told you, miultiple months of sales declines mean nothing. Happened in 2011 and now and prices are still higher. GTA prices up 4.7%.

Don’t get too cocky. Seldom works out well. — Garth

#105 gotthardbahn on 07.04.13 at 12:41 pm

#103 Piccaso

A nasty case of schadenfreund there, EH?

#106 Ann on 07.04.13 at 12:43 pm

#103 Piccaso on 07.04.13 at 11:45 am
Great story…

Friends living in a $850,000 house with all the trimmings and they had all the late model 4×4 toys. A true picture of success…. WRONG!

The big “D” happened and when it was all sold off and liquidated there wasn’t even $80K cash come out of that picture.

LMAO
.—————————————————————–

LMAO?????
Great Friend You Are???

#107 cynically on 07.04.13 at 12:46 pm

#2 TurnerNation – Canadian relativity?

#108 Old Man on 07.04.13 at 12:51 pm

#101 Oceanside – Great Province and nice home, but value going forward must be located within an ocean view near the water; that is where the value lies for future demand.

#109 neo on 07.04.13 at 1:00 pm

at #100 Canadian Watchdog

As I said to Garth, consecutive months of sales declines means nothing. Look up GTA sales data from May 2010 to May 2011. Twelve straight months of sales declines. Here we are 24 months later and prices are still marching forward.

#110 neo on 07.04.13 at 1:04 pm

Don’t get too cocky. Seldom works out well. — Garth

Not cocky at all. I saw that thesis play out in the States and waited for it to happen here to prognosticate when the price decline would start in the GTA. Low and behold it happened…..but the prices kept going up. I had to eat crow. I was humbled. Was just trying to steer you away from thinking the same thing.

#111 Smoking Man on 07.04.13 at 1:04 pm

What the hell happened to LaughingCon AK( Realtor’s in an all out panic)

Guess he’s an owner now,

Welcome to upper society grass hopper.
Was only a matter of time before you left those minions (renters)

#112 father on 07.04.13 at 1:05 pm

realtors r gettin a little cocky too

#113 Penny Henny on 07.04.13 at 1:22 pm

To-#100 Canadian Watchdog on 07.04.13 at 11:34 am
Re-Today’s TREB data shows year-over-year sales for <$500,000 category hit its 14th consecutive decline (since May 2012).

Well, duh!
Less sales happening under the 500k mark because what was 495k last year is now 535k.

Again. Duh.

#114 Something on 07.04.13 at 1:22 pm

About stats from U.S.A.
Think about that:
46,609,072 People on Food Stamps in 2012. Record 47,791,996 in December. Nearly a quarter of the people living in Washington, D.C. are on the program.
The Commerce Department’s U.S. Census Bureau projects that on January 1, 2013, the total United States population will be 315,091,138.

P.S.
A little bit of math:
Today 15% of United States population live on Food Stamps.

In 2000 it was only 17,194,000 on the program.
The total United States population was about 282,160,000.
In 2000 6 % of United States population have been living on Food Stamps.

#115 Penny Henny on 07.04.13 at 1:27 pm

To#103 Piccaso on 07.04.13 at 11:45 am
Re-Great story…

Friends living in a $850,000 house with all the trimmings and they had all the late model 4×4 toys. A true picture of success…. WRONG!

The big “D” happened and when it was all sold off and liquidated there wasn’t even $80K cash come out of that picture.

LMAO

Question for you-You seem to see great joy in this, but why? You said they are friends??

#116 Old Man on 07.04.13 at 1:30 pm

#111 – Old Man: Took another look and something does not add up, as the map dot is miles away from Mahone Bay, but there is a picture of a nice view up close in Nova Scotia with a perception that a potential buyer is looking at the Bay from the home window. I do not get it! Looks like a con to me; just don’t get it, so beware of ads placed on the internet. I am sure that must be in error.

#117 Craig on 07.04.13 at 1:37 pm

” European Central Bank said that interest rates will remain low for an extended period, …”

Like I said, rates aren’t going anywhere. A blip of .25% is nuttin.

QE is though….

#118 peter on 07.04.13 at 1:56 pm

Victoria’s numbers improved vs. the same period last year. More sales and prices hanging in there. Its hard to believe but those are the facts. http://www.vreb.org/mls_statistics/current_statistics.html
The money printers have no option than to continue their insanity which was confirmed today with statements from Carney and Draghi. QE and monetary debasement continues. How much more of this can the market accept?

#119 Dupcheck on 07.04.13 at 2:02 pm

I heard rumours Canada is adding Turks and Caicos to its provinces list soon. How would the RE be affected if that happened?

#120 CP on 07.04.13 at 2:02 pm

Garth quick question, do you ever tire of being right?

http://business.financialpost.com/2013/07/03/ottawas-new-rules-creating-red-hot-market-for-homes-under-999999/?__lsa=6dd6-1a02

#121 Old Man on 07.04.13 at 2:04 pm

Now the other day went with some stock offered at $26.00 a share well above premium, and someone was ahead of me, so placed an order at market with no restrictions. I had to leave for a few hours, as this was a thin trader, so was going to take him out, as know how the game is played. I checked the status of trades, and after closing and all hell flew with 002 and anon making trades around $25.93 which to me was a cross in house.

Did I get out for a nice capital gain? I am not going to check with a phone call, as could care less, as do my own thing in life and have better things to do, as the amount of capital worries me naught. I never use a computer for discount trading, as want everything recorded for an error by them. I will call in time for a confirmation when I need to do something else.

#122 Devil's Advocate Condo Renter on 07.04.13 at 2:04 pm

I am not disagreeing with the majority of posters on this website in the sense that I do think that Condo construction has gone a little rampant in Toronto, however, in the building that I live in, every person that I talk to loves their new condo, loves living in their neighborhood, loves not having to deal with major renovations or gardens or repairs, and generally are completely satisfied with their condo living lifestyle.

These condo dweller’s are of all ages, shapes and sizes and do not fit one certain demographic. I really do think that there is an overall lifestyle shift occuring. Society is placing more emphasis on living life experiences vs. having stuff – and having a detached home will tie you down and make it more difficult to travel and “experience” life. You will still have a population base of people wanting more property and more land and more house – but generally people are becoming more intrigued by living life and experiences vs. being tied down by homes. The owners in the Condo that I rent in are living proof of this…boomers downsizing to get away from home maintenance and youth happy to have no home maintenance to worry about. There are even some young families living in larger units that enjoy this lifestyle shift. Additionally, the trade off to live closer to work (many more jobs in Toronto vs. the Burbs) can not be overlooked. Time spent in a car on the hwy is time wasted not living your life or spending time with your children.

Again, I am a small town kid with no ties to condo ownership or Real Estate as a whole – but offering my input on what I am seeing and experiencing as someone actually living in a condo. I think that many of the posters on this blog are people not directly in touch or experienced with what condo living in the City is really like for some.

I should disclose that the cond that I am renting is in a loft building that is not exactly in the Core and is located in a quieter neighborhood and is only 8 floors, so it is a little different from some of the super high rises – but I still felt it was relevant to give a real life perspective.

Apologies for the novel.

#123 Smoking Man on 07.04.13 at 2:19 pm

#118 Penny Henny on 07.04.13 at 1:27 pm

Could not agree with you more, perhaps a more suitable world like advisory would have been a better choice than friend…

#124 angela on 07.04.13 at 2:37 pm

The question is whether “QE” programs have actually sparked any type of substantive, organic, growth or simply inflated asset prices, and pulled forward future consumption, for a short term positive effect with negative long term consequences?

#125 JUNO on 07.04.13 at 2:43 pm

#58 Debt Runner on 07.04.13 at 12:21 am

==============
The answer is simple. People were willing to buy US Debt to support the US, even after its printing.

Don’t you dare compare us to the US the have the biggest economy, we have squat! A better comparison would be greece or spain.

When greece went down no one wanted its debt, they had to raise interest raise to entice people to lend them more money. And in the end the people who lend them money lost out. Because they don’t have the ability to pay!

#126 Old Man on 07.04.13 at 3:02 pm

#122 Dupcheck – I have news for you, as this gig with the Turks and Caicos Islands has been in the works for decades, and is old news, as just keeps coming up, but nothing happens.

#127 Potato on 07.04.13 at 3:18 pm

#47: you misunderstand what a tax deduction is. You’re not alone in that, if that makes you feel better.

If you borrow $100 at 3%, put it somewhere “safe” at 2%, then you’re going to lose $1 each year. Under the right conditions you can deduct that loss, saving perhaps as much as $0.50 in tax as a high earner — but you’ll still be out $0.50 at the end of the year. It doesn’t make any sense to lose money just for a tax deduction.

If you want to borrow to invest, you have to invest in something woth the expectation of providing more return than your borrowing costs — which will involve assuming some risk.

#128 Keith in Calgary on 07.04.13 at 3:23 pm

The City of Calgary has just announced that is building an upscale trailer community in the cities northeast (ATCO trailer units probably) to house 2,000 displaced families/individuals for up to 18 months as a result of the flooding.

I bet you the landlords in Calgary are none to happy right now. Gotta love our mayor, he’s worth re-electing just on this premise alone !!!

#129 Spiltbongwater on 07.04.13 at 3:50 pm

#131 Keith in Calgary on 07.04.13 at 3:23 pm

Sounds like Canadas version of a FEMA camp.

#130 sciencemonkey on 07.04.13 at 4:04 pm

@131 Keith, I wish we had trailer parks everywhere, because they honestly seem like an affordable housing option. Also gives you the freedom to move around for job opportunities. That’s our first world country, with people wishing they lived in trailers, because they can’t afford real structures.

I would also enjoy the daily shitstorms between Ricky and Mr Lahey.

#131 Iso-Classical World on 07.04.13 at 4:05 pm

#125 Devil’s Advocate Condo Renter

Couldn’t agree with you more! Same story here in Edmonton and the people I talk to. I rent a condo as well, couldn’t be happier! Lock the door on the way out and not a thing to worry about…freedom!!!!

Anyway, well said, cheers!

#132 frank le skank on 07.04.13 at 4:05 pm

#125 Devil’s Advocate Condo Renter on 07.04.13 at 2:04 pm
Try raising a family in a 600 square foot box and you will know what a lifestyle shift is like. Now imagine if you’re in the above situation and because of oversupply and price decreases your condo becomes illiquid. You’re financing for way more than you could rent or buy and there’s not even enough room to fit a full size couch/table/bed. At this point you may want to stay away from the balcony.

#133 craig on 07.04.13 at 4:20 pm

I’ve heard more renter horror stories over the past year, that’s it’s incredible anyone rents anymore.

For the few that do, maybe its because they can’t scrape up the down payment, don’t have a job, bad credit, etc.

So to make themselves feel secure they bash 70% of Canadians who do own a home and are proud of it.

Why don’t these renters ever share what its like to deal with a landlord that refuses to fix anything; furnace not working properly in the winter, air not working in the summer, leaks, running toilets, mould, broken hinges / doors, roof leaks, cold draughts, etc., etc., etc.

Getting punted to the curb when the rental unit gets sold out from under you.

WHY is it we never hear the reality of renting from the rental crowd.

Afraid to tell the truth??

Trying to convince yourselves that the $100,000’s you’ve thrown away in rent over the past 10 years is gone forever and you have nothing to show for it except a few % points in the market….which most homeowners ALSO have.

Go luck and thanks for paying off the landlords mortgage along the way.

I rent. — Garth

#134 Smoking Man on 07.04.13 at 4:51 pm

To all my USA fans and enemies happy forth of July, and to the NSA analyst reading this post, a ha sucks to be working today…

#135 JUNO on 07.04.13 at 4:52 pm

#125 Devil’s Advocate Condo Renter
===============

My brother in law just paid for his property taxes, a whopping 4600 bucks. And that’s for a house which is close to tear down.

Add mortgage / opportunity cost, maintenance (time and resources) and all the other fees and man, does renting looks cheap.

BTW that is almost 4.4 months of my rent.

#136 Old Man on 07.04.13 at 4:56 pm

#125 Devil’s Advocate – this was a great posting, and what caught my eye was she said was a small town girl living in the big city renting a condo having fun. Now many people who are living in TO came from small towns years ago, and the best time in my entire life was renting a box many years ago which was very small near Bloor and Spadina. Give me a break as was just a small dorm room, but had more action in life within a social context, and the memories will never escape me. It is never about the big home going into debt or how much money one had, but rather taking the moment to explore with others what we had at the time together on the streets. It was a blast!

#137 broadway skytrain on 07.04.13 at 5:00 pm

#119 Old Man on 07.04.13 at 1:30 pm
#111 – Old Man: . I do not get it! Looks like a con to me; just don’t get it, so beware of ads placed on the internet. I am sure that must be in error.
———————————————
relax old man, remember you are trusting the accuracy and diligence of a realtor to get it in the right place.

i’ve seen many where the dot is on the RE office location, and others where it’s miles away.

#138 Ahead of the Curve on 07.04.13 at 5:06 pm

13.5% of Canadians with debts over 250%???? Ouch!

From reading some posts, it seems that there is some confusion in that this 250% debt is excluding the cost of a mortgage.

Imagine a family that generates an annual income of 120k, without including the mortgage, this family has 300k in additional debt!

Stats Can says in Canada there are 13,320,615 private households. This translates into approximately 1.8 Million households that have essentially mortgaged their future and that of their children.

Ouch indeed…

#139 Old Man on 07.04.13 at 5:26 pm

#140 broadway skytrain – I might be old but am not a fool, as this was not listed with a Realtor, but an ad with Kijiji, so bye for now, and as do better next time.

#140 dienekes on 07.04.13 at 5:38 pm

99 Grantmi
Chavez was no dictator, he was consistently re-elected by his people with the highest popularity numbers of any democratically elected leader in the world, over 62%.
And former US presidents who monitored the elections in Down there stated they were the fairest elections they have seen.
You are just a moron who does not understand the difference between a Capitalist society and a Democratic society.

#141 Dont get it on 07.04.13 at 6:14 pm

I don’t get it.
I think the word is that ~13% of folks have 250%+ of gross income in debt without a mortgage? How is that even possible? It would take alot of car, washer/dryer, renos, student loans and maxed credit cards for me to get to 250%! Alot!
Unless these are unemployed students with mountains of debt how do they rack up that much without a mortgage? Who is giving a $50,000 credit card to a poverty level individual and who, making $20,000/yr, is racking up a $50,000 CC?

#142 picasso is a d-bag on 07.04.13 at 6:16 pm

@108, 109, 118

FYI, if I am not mistaken, picasso is a d-bag who once on this blog boasted about how great it is to be living in a motel in Texas (?)

Hence the apparently gleeful schadenfreude…

#143 bill on 07.04.13 at 6:23 pm

Craig said:
Afraid to tell the truth??
hell no!
I am an assistant apartment manager here in Kits/Vancouver.
all the problems you referred to are dealt with on that day or the next.
fridge dies? replaced in a day or two.and we have a spare to tide you over till the brand new one arrives. plumbing ,electrical,
etc is done as soon as one of our maintenance people are apprised of the situation.
our maintenance people are ‘in house’ and work on the several apt blocks owned by our company.
investment by the company on our apt block since I started 10 years ago would be a new roof[250,000] a repaved parking lot out back and in the underground parking area [just under 95 thousand I believe] and completely re-plumbed water to the tune 350,000.
we have a very nice garden out front as does the rival apt block across the street.
in our area it is very easy to spot the condo’s as they all look like they were dragged through a midden due to lack of maintenance.
ie they grow weeds in their gardens not flowers.

#144 craig on 07.04.13 at 6:30 pm

#146 bill on 07.04.13 at 6:23 pm

Condo landlord has condo fees vs home = big difference

#145 Alpha Bravo on 07.04.13 at 6:54 pm

O
O ^__^
o (oo)\_______
(__)\ )\/\
||—-w |
|| ||

What the hell is that? — Garth

————

LOL!!!!!

#146 bill on 07.04.13 at 7:15 pm

not to mention that we have a regular schedule to renovate apartments when there is time,that is if the apt does not rent immediately, we redo hardwood floors,replace cupboards and counters [with faux granite no less!]and replace old electrical fixtures with new ones.
for example a single light bulb for the dinette would be replaced by a ceiling fan with three lights or with some other fixture if its in the budget.
should there be a condo renovation nearby ie the plastic shrouds so common in kits condos and elswhere as they fix the membrane failure or what ever…we
re bait all the rodent poison stations because as sure as night follows day the mice head to some other quieter less disturbing environment like our apt block.

#147 bill on 07.04.13 at 8:08 pm

#146 bill on 07.04.13 at 6:23 pm

Condo landlord has condo fees vs home = big difference

could you define ‘condo landlord ‘ a bit?

#148 CrowdedElevatorfartz on 07.04.13 at 8:48 pm

@#136 Craig
I also rent.
Came back from holidays, fridge had gone on the fritz. 1 phone call.
New fridge…..
Off to the swimming pool now……

#149 Devil's Advocate Condo Renter on 07.05.13 at 8:30 am

#135 Frank le Skank on 07.04.13 at 4:05 pm
Try raising a family in a 600 square foot box and you will know what a lifestyle shift is like. Now imagine if you’re in the above situation and because of oversupply and price decreases your condo becomes illiquid. You’re financing for way more than you could rent or buy and there’s not even enough room to fit a full size couch/table/bed. At this point you may want to stay away from the balcony.
___________________________________________

You clearly missed my point – There is a large segment of the population that is happy to own and live in a Condo. Families just don’t pop up out of nowhere…It takes at a minimum 9 months to deliver one of your own even if its accidental. If you are adopting a child, then some thought goes into this process in most instances. My point being – that you can plan for these things and if having a family is in your sights and you are living in a 600 sq ft box then maybe you can plan to move into a bigger unit or sell and rent a detached home. Besides 600 sq ft is plenty for a couple and a baby. I’m living proof of that. We are in a 610 sq. foot unit and have a baby – and it has been fantastic! Mom gets to spend quality time with her baby and doesn’t have to worry about yard upkeep – gardening, etc…The important part is that she is spending time with her baby. Besides, living in 610 sq feet also prevents you from buying “stuff” as you don’t have any room for it anyways…instead you can spend the money you saved from not buying “stuff” on taking a quality road trip or vacation with your young family.

Bringing this all back to my original point – which you clearly missed – a drop in price will not have an impact on a boomer or a young professional because they are living a lifestyle that they enjoy and it is this lifestyle that society is shifting towards. Why spend thousands on a riding lawnmower, gas and time to cut a lawn – when you could be taking a family trip to Boston and walking around Boston common for the price you pay to ride in circles cutting your lawn.