Shame list

bikers2

There are 238,000 comments on this blog site. Consistently, about 1% of the people visiting on a daily basis leave a comment. Of those, an average of 98% are published – not including deletions where Smoking Man describes groping his nether regions or Mikey the Realtor suggests things I can do with my own orifices.

Deleted comments from whacks and bullies are archived, since the cops might be interested when my Hummer is taken out by a drone strike. To the end of July, that single-spaced document is at 159 pages for the year. I think that’s a record.

I also believe this weekend’s post generated a near-historic number of contributions to my Shame List. Seems the last thing a ton of realtors and house-humpers want me saying is that a bump in sales last month is not the beginning of a new bull market for real estate. Which it decidedly isn’t.

As some have astutely pointed out here, the overriding factor in July’s higher sales numbers was probably June’s mortgage increases. When the bond market erupted (thanks to US Fed boss Ben Bernanke), five-year, fixed rate home loans popped three times in about as many weeks. Those 2.69% deals of last spring turned into 3.2% to 4.99% mortgages by Canada Day. Potential purchasers with pre-approvals from April and May saw their commitments running out, and accelerated buying plans. We’ll find out in a few months if these were brought forward or, like the realtors claim, it’s really the phoenix.

I have no doubt what the answer will be. Nothing’s changed to make buying a house more attractive or affordable. Prices are still extreme. Listings in major markets have shrunk. The economy’s barely pulsing. Sellers are delusional. Debt continues to expand. Rent-price and price-income ratios are whacked. And mortgage rates are up.

But whadda I know? If house horniness flares up, economics takes a back seat – at least until the reckoning.

In the meantime, all those abusive comments over the weekend that I tucked away remind me of some principles worth remembering, whatever real estate prices do during the rest of the year.

First, never buy a house when there isn’t snow. As I have shown a few times, the price of a detached home can swing by up to 15% based solely on what month in which it sells. Buy in May, and you’ll pay top dollar. Buy instead the following January, and you’ll fork over less – up to $80,000  or a hundred grand less for a SFH in a city like Toronto or Vancouver.

Yes, hormones flow like sap. I realize that. But vendors are vastly more motivated in February than in June, usually because they have to sell for personal reasons, while buyers are few and far between. No competition means no multiple bids, no above-asking offers and a good chance you can snatch at a healthy discount.

Second, remember why I am so cautious about residential real estate. Not just because it’s inflated and dangerous right now (it is), or because most realtors are being disingenuous about the future (they are) or because any economic shock can topple an indebted people (it will), but simply because this is crappy financial planning. And few people get it.

It’s perfectly okay to own real estate and have a house, but not if that’s where you’ve stashed the bulk of your net worth. Like the litigation lawyer who came to me for help – $1.4 million non-descript house in Toronto, leased Bimmers, two kids costing $100,000 a year for private schools, camps and sports, $500,000 annual income, no pension, Holt Renfrew wife and just $150,000 in RRSPs. At 56, in a year when billings have slumped, he’s panicking. As he should. The decision to dump every dollar into mortgage and kids could end in disruption and heartache if his practice tanks. As it is, he’ll have to sell the house in order to retire – and worries what the market will be like in four or five years.

At least he has equity. How about the Calgary kids and their 95% leveraged condos? Or the thirtysomething parents in Vancouver with an $800,000 starter home, a baby, and zero savings? All these people are gambling and praying that real estate will hold its value, when there are no valid arguments it will be so.

So, third, don’t put all your money in one place. Especially a house. If the economy turns sour or your life starts to suck, or you divorce or get a job elsewhere, you can always turn ETFs or other financial assets into cash instantly. Real estate, not so much. In hot markets a house can sell after 30 days listed and typically close two months later – 90 days, if all goes well. In soggy markets (Vancouver Island, Nova Scotia) a sale can take months, even a year or two. If you need the money, every day is a struggle.

Beyond that, with too much money in a single asset in one address in one town, your risk is so much greater than with a diversified portfolio, of which real estate is but a part.

Don’t have enough wealth to buy a house and also have liquid assets?

Then don’t buy. Dis me all you wish, but this market is not ascending.

119 comments ↓

#1 zee on 08.04.13 at 7:36 pm

Garth there are no signs that real estate is going down at this time in toronto…..after all these mortgage changes it still has held up…..if it is harder to buy now then why after one year has there not been serious cracks in the market…

Many high-end and low-end properties sell for less than they did in 2012. But, as I said, if you can’t afford to buy, then you shouldn’t. — Garth

#2 Derek R on 08.04.13 at 7:38 pm

And that’s the approach in a nutshell. Live within your means whether you’re buying a ham sandwich or a house.

#3 Tomas on 08.04.13 at 7:43 pm

Came back from an open house here in the Ottawa west-end this Sunday afternoon…stayed for an hour cause the listing agent was a buddy of mine…not a single person came to see the house

“Steady as she goes. No major fluctuations for Ottawa resales,” says latest media release from Ottawa-Carlton Real Estate Board. One of you is fibbing. — Garth

#4 father on 08.04.13 at 7:47 pm

garth I think they r dissing because they have NO I MEAN NO FINANCIAL DIVERSITY and that is what you taught me, from renting a 2400 3 level house for 3500 to renting a mouldy low life big beautiful 1650 sf basement for 1400 ah life is good with savings in the bank and money earning money who cares about image when your making money and enjoying life I could buy a house with no mortgage but I ain’t that stupid

#5 CrowdedElevatorfartz on 08.04.13 at 7:49 pm

I think those Harley Riders parked in the Handicapped zone WERE truely “disadvantaged”.

They should have bought BMW’s

#6 Priced Out in Toronto on 08.04.13 at 7:53 pm

I have an above average salary and can’t afford the rent or to buy in Toronto… any tips on what to do?
(Luckily – no debt)
Any good places in Canada to move to… preferably with good jobs, cheap rent/real-estate, they speak English, and not too far north… or is that just too much to ask for nowadays?

#7 RayofLight on 08.04.13 at 7:53 pm

Notice it is Harley owners who parked their bikes in the disabled parking lot. You wouldn’t see Goldwing owners doing something like that.

#8 rosie "moving forward" on 08.04.13 at 7:58 pm

The great unwashed will not get,it until they see it. People these days don’t read so much. More into visual stimuli. http://heckeranddecker.files.wordpress.com/2009/05/recession-02.jpg

#9 CrowdedElevatorfartz on 08.04.13 at 8:03 pm

@#2 Derek R
“Live within your means whether you’re buying a ham sandwich or a house.”
++++++++++++++++++++++++++++++++++
Total agreement.
Ironically enough I work with several financial illiterates. One lives paycheck to paycheck.
The other one is WORSE.
August rent is due and not enough funds, cell phone bill 2 months in arrears, hydro is gonna be cut off, car payment late, NSF checks floating around, family memebers hounding him to repay personal loans…… everywhere….. And what did he have for lunch on Friday?
While I “brown bagged” it….. he drove 1 block to Subway($8.50), 7-11 ($9/pack cigarettes and $2 pop) and then the liquor store for a bottle ($26.00) for the evening “entertainment”. All on his unemployed wife’s credit card…..
Then he told me how he was going to buy a house next year when “he paid off some loans”

#10 Spiltbongwater on 08.04.13 at 8:03 pm

No need to save the comments for the police Garth. The NSA is already reading these comments.

#11 Borish ol smell on 08.04.13 at 8:08 pm

I read legal & financial is at risk of near future job loss to enhanced software.

#12 Smoking Man on 08.04.13 at 8:13 pm

Ha I made the front cover,

Posted this earlier don’t see it, try again

Quite boring when I’m not posting,The whole summer’s been boring, Vegas, boating, ladies of the night booze and gambling.

Will ET finally beam me up, and take me for a ride.

Smoking man offspring Inc. Week 1Son 1 going to Halifax to start up ADT dealer office.

Son 2 spent 60 bucks rock garden flyers, yield 4 jobs sales totaling 12k

Now this one pisses me offSon 3 selling order management CRM software daddy created, saves companies thousands and thousands, in productivity dollars, total sales after 7 demos4k

Canadian business back wards, stupid, we are taken this show to the USA..

Business here in the stone ages… With neanderthal knuckles draging owners.

Who are damn lucky that people work for nothing here.

P’s, never remembering posting about groping my self, but while we are on topic, I do,

:)

#13 Jimmy on 08.04.13 at 8:18 pm

Garth,
How about moving to Cowtown and running for mayor against our purple clown?

I hada dream a couple nights ago and in it I was recommending preferred shares and reit ETF’s thanks to you. Keep up the good work.

#14 sasquatch on 08.04.13 at 8:19 pm

Let me see. Since leaving the nest, I have lived in perpetual debt for 10 years. Just about to be debt free and if the Karma, Irony, and Luck gods permit: Get ahead.

I also know that there is a unhealthy number of people in my situation. This can’t end well if the average person by thirty still doesn’t have a fiscal pot to piss in.

#15 TheTruthAboutCanadianRE on 08.04.13 at 8:20 pm

Homes are overvalued by about 20%-30% because of mortgage rates, predictions that they will never go up and greed. On to greed now, this market is no different than the dot com stock markets in early 2000’s.Everyone bought dot com stocks because that was what the herd was doing. Herd mentality folks. That’s Canadian real estate for you. Buy because everyone else is. Forget historical averages of how home prices usually go up, mortgage rate increases and any other reason that could negatively affect home values.

By the way, I’m a successful mortgage broker for 13 years and I can tell you 100% guaranteed that the rate of house price increases in the last few years is completely unsustainable. It is mathematically impossible unless incomes start going up about 10% a year very soon.

I sold my house this summer for top dollar. Now banking over $1 million in proceeds and sitting pretty, living off regular income and investment income, watching the oncoming melt in prices. Will consider buying again around 2018 I’m guessing. By then, you will see 20% minimum get shaved off the home prices at least, and no, rates don’t have to be 7 or 8%, a 5% average rate will do the trick.

Buy low, sell high. Didn’t any of you watch Wall Street? :)

#16 southeast asian expat on 08.04.13 at 8:22 pm

#6 Retire in Owen Sound… Where you want to live! Reasonable property prices and cost of living.

#17 retired Boomer - WI on 08.04.13 at 8:25 pm

Today I noticed the last foreclosed house in town has sold, and is undergoing a reno. I had looked at it, a 3 br double wide ranch, full basement 2 car detached garage corner lot about 1250 sq ft. Quite trashed, it needed new mechanicals, deck. front steps, roof, paint & new floor coverings. Had mold in basement, too.
Bank asking 89,900 I offered $22K. That was 9 mo’s ago. Local contractor bought it, he’s better situated to do reno than I
place looking decent. He’ll rent it. He has quite a string of rentals, I hope he got for under my 22K offer. The b ann would deserve that poke. Still will make a decent $650-$750 mo. rental here in a small town. RE may not always sell, but it always rents – if you’re in it right.

Same applies to dividend paying stocks, preferred, REITS , rental property, etc.

Somehow, there is no good substitute for a good job, or good investments. Life has that attitude doesn’t it?

#18 AK on 08.04.13 at 8:26 pm

#188 CrowdedElevatorfartz on 08.04.13 at 4:39 pm

“Would those friends be the ones with full time jobs?

Because THAT was the question I was asking.”

LMFAO”
====================================
Yes, they all have full time jobs. But what is the point?
According to you, every American eats and works at McDonalds.
The URL you posted is filled with useless propaganda.

Here are some more tips for you.

The U.S. dollar is heading higher, much higher.

The S&P 500 is in the early stages of a secular bull market.

The worst is also over in Europe. Keep an eye on this one.

A number of months ago I told you to buy ‘MS’ and ‘MET’, but you didn’t listen.

Keep laughing your Ass Off. It’s good for you.

#19 retired Boomer - WI on 08.04.13 at 8:28 pm

oops – the “b ann” should read “Bank.” sorry for the smoking man spelling tonight

#20 Smoking Man on 08.04.13 at 8:32 pm

Wife ust one 16k at senica, we are heading over to fallsview,

Any dogs make it to club 360 tonight drinks are on me…

#21 45north on 08.04.13 at 8:36 pm

from yesterday: AK: Anybody interested in buying a Mall?

A month after lenders took control of the Boulevard mall, the Las Vegas shopping hub is up for sale.

http://www.vegasinc.com/news/2013/jul/30/lenders-seeking-best-offer-boulevard-mall/

the story reminded me of the Algo Centre Mall in Elliot Lake:

http://www.thestar.com/news/canada/2013/07/18/elliot_lake_mall_collapse_owners_son_called_a_liar_at_inquiry.html

Nazarian thought that he was getting a good deal but it turned out the mall was basically falling down. He should’ve been more careful. I guess that’s why you buy REITs and let the pros do what they do.

Here’s an article about Andy Miller who sold his malls before the bubble burst.

http://www.financialsensearchive.com/editorials/casey/2010/0209.html

#22 Future Expatriate on 08.04.13 at 8:53 pm

Even the much-vaunted “recovery” in the US is a complete and utter sham. At least 60-90% of all foreclosed properties are being held by the banks OFF THE MARKET in order to create fake shortages. Which is compounded by idiot flippers and idiot investors creating cash bidding wars because they read all the right-wing “economic” propaganda that the economy is ending (because there’s a liberal in the White House, but that’s just the usual lying rationale) and are putting their cash into this fake real estate rally instead of stocks and bonds, and partying with realtors. Truly stupefying. Meanwhile, no families can buy houses with loans, everything is cash. This is not a dead-cat bounce, it’s a crime against The People. And once they come to their brandead senses (if ever) and see the stock market rally is for real and runaway inflation will never happen again, kiss the “rally” good-bye, the banks finally give up and dump everything on the market, and Hiya, Detroit prices EVERYWHERE.

You forgot the Black Death. — Garth

#23 TurnerNation on 08.04.13 at 8:58 pm

Lucky one! A bidding warrior. Metro style.

http://www.thegridto.com/life/parenting/selling-the-kids-on-the-new-house/

It was a big gamble. Chantel and I were taking the kids to see the new house for the first time. We’d won a bidding war the previous night, and all the documents were signed. Things had happened so fast that I sort of forgot I’d promised the kids we’d vote on the place before buying it. So I lied: I told them we were going to take a look, and then we’d vote. My job over the next 30 minutes was to sell the kids on the neighbourhood and the house. And if they hated it? Basically, I was screwed.

Next was Bellevue Square Park, where the wading pool hosted the usual collection of parents and tots. The kids clambered off the bikes and headed for the playground while I examined the park, for the first time, the way a resident might. A girl in her 20s lurched around with a hula hoop by the bike path. A little way along, her friends hunkered under a cloud of pot smoke in grimy cut-off denim. While I was pushing my daughter at the swings, a couple of undergraduates sprinted up and commandeered the two neighbouring swings.

“This is awesome,” the one giggled.

“Oh, dude,” was all his counterpart could manage.

Wow, were they stoned. My eye alit on all the garbage the wind pressed against the playground fence. And a thought occurred to me: Did I want my kids to live around all this?

#24 Future Expatriate on 08.04.13 at 8:59 pm

P.S. That Boulevard Mall in Las Vegas is a TOXIC DEATH ZONE. Al Phillips the cleaner, right across the street, dumped TONS of toxic waste right into the ground for the 30 years he was there. The waste is slowly spreading to the east. The entire mall Al Phillip’s anchored (Maryland Square) has been razed to the ground for almost a decade now, like I said, a toxic death zone just five minutes off the Strip. Luckily, EAST of the strip.

Toxic Death Zone Map

#25 Future Expatriate on 08.04.13 at 9:00 pm

#22 You forgot the Black Death. – Garth

Not so fast!!! I think I got it with the next post! ROFL

#26 Future Expatriate on 08.04.13 at 9:02 pm

P.S. And I did mean “real estate recovery”. Of course the stock market and bonds and Big Biz are rockin’ and will probably continue to do so in spite of cons pundits.

#27 David McDonald on 08.04.13 at 9:07 pm

There are lots of houses and condos on the market in Ottawa but prices still seem pretty solid. On the other hand it is a renters paradise. I have never seen so many units for rent in 30 plus years living here. Many of these units are new condos owned by investors.

After all my whining my wife has agreed to rent for a year. Of course if I can prove the case that prices are falling sharply by next spring then I can probably convince her to wait longer. That is now my time horizon for a 10 to 15 percent drop in real estate prices: spring 2014 or bust.

#28 TO and GTA Average and Median prices-Historical charts 2013-08-04 on 08.04.13 at 9:11 pm

TO and GTA Average and Median prices-Historical charts 2013/08/04
http://recharts.blogspot.ca/2013/08/toronto-and-gta-average-prices.html
http://recharts.blogspot.ca/2013/08/heat-maps-for-android-and-internet.html

#29 jess on 08.04.13 at 9:27 pm

… there is no such thing as a “secure server?”

“I, sitting at my desk,” said Snowden, could “wiretap anyone, from you or your accountant, to a federal judge or even the president, if I had a personal email”.
==============

XKeyscore: NSA tool collects ‘nearly everything a user does on the internet’
http://www.theguardian.com/world/2013/jul/31/nsa-top-secret-program-online-data

Glenn Greenwald now reveals the exact software program about which Snowden was speaking, called Xkeyscore.

XKeyscore: NSA tool collects ‘nearly everything a user does on the internet’• XKeyscore gives ‘widest-reaching’ collection of online data
• NSA analysts require no prior authorization for searches
• Sweeps up emails, social media activity and browsing history
• NSA’s XKeyscore program – read one of the presentations
Share 64574
inShare.802Email Glenn Greenwald

#30 James Joyce on 08.04.13 at 9:28 pm

Garth: I also believe this weekend’s post generated a near-historic number of contributions to my Shame List
———–

That’s too bad. But in my case, you’ve deleted my message, even though I was polite and coherent. And was just making a point comparing the sales of Vancouver VREB year to year sales.

Not deleted. — Garth

#31 TheCatFoodLady on 08.04.13 at 9:39 pm

About the snarky agents & others in the industry wanting to eviscerate you & who knows what else… if they’re honestly & ethically selling a product they believe in, there’s no need to get defensive or aggressive/threatening in comments to you. Methinks they protest too much.

The principles you enumerated & explained are sound financial planning principles that have as the saying goes: ‘worn well in the wash’. Diversify, balance, live just under your means & invest for your future – whatever the future may bring.

Incidently for renters. If like me, you’re really low income, (53% spent on housing costs & not by choice) or are looking to rent to save for a house or anything else later – here are my personal rental guidelines.

KNOW whatever legislation covers landlord/tenant relations & obligations. If you live in a province with rent controls – find out the framework of those controls. Don’t just look, (if you’re poor), at what you can afford today. We took a look at the rent being asked here & extrapolated 5 years into the future, assuming a 2.0% rent increase yearly. It worked so we took the place.

You don’t need the best when ‘good enough’ will do. Pick a viewing selection of solid looking buildings. Drive or walk by several times before your viewing appointment – Friday nights, especially when pay cheques or government cheques have just come out, is a time you can’t afford to miss. Decide needs from wants in an apartment. If it’s clean enough, solid & the layout works for you – keep it on your list. Don’t go too big. Look at where you live now – how many rooms/areas do you really use? Honestly?

Be a good, no a GREAT tenant. Keep the place clean & report any needed work promptly. Be a good neighbour. No noise, no meth labs…LOL. Pick up after your dog if you have one – a sore point with me & one of the few real hassles in my building.

STAY where you are as long as you can, especially if you’re under rent control. If you move, you’re subject to market rent. We’re currently almost $200/month under market rent because of rent controls & staying put. If you’re trying to save, keep track of what new tenants are being asked to pay & invest the difference.

Know that no matter how little you have coming in, you can probably cut back somewhere if you need to.

Your investmant account will thank you some day. Your kids might too if you don’t decide to blow it all on exotic holidays as you get older.

#32 Freedom First on 08.04.13 at 9:43 pm

Garth, this has got to be your most succinct post ever. And yet it is priceless crystal clear sound financial advice which will save the financial well being of anyone who heeds it. I got warm and fuzzy feelings all over in reading it, intensified even more so at the realization that all the people who send you hate mail for telling the truth, will be overcome with fiery internal feelings of immense agony within their hostile brains and writhing abdomens. Life is good, eh Garth:)
……keep on keeping on!

#33 Smoking Man on 08.04.13 at 9:50 pm

In the smoking lounge at falls view, the girl, employee cleaning tthe butts, chic in red heals admiring my tan, me listing to Freddy Mercury, the only man in this world I would consider changing teams.

Listing to who wants to live for ever live at wibly , knowing that he knew he was going to kick the bucket.

I love life, it’s only 10

#34 Catalyst on 08.04.13 at 10:01 pm

Garth, love your blog.

I very much agree that price-rents, price-income et all are pointing at an overvalued market but the delusion of ever increasing house prices is so deeply ingrained in every co-worker who has ‘made a fortune’ while I have sat on the sidelines, I am starting to lose the faith.

At this point all I can see reversing this madness is if we got interest rates in the 8-10% range that make mortgage payments unaffordable to over indebted households. Do you realistically think this is going to happen?

I have read that greater than 20% of the economy in Canada is employed in some fashion connected to real estate (agents, lawyers, contractors, home decor, construction, developers) – Do you really believe the governments will LET this fail? It seems with the easy money philosophies of today’s governments that they are willing to make this party last at all costs.

I try to counter with, “this easy money will lead to inflation and thus higher rates” but all the inflation numbers are rigged. Everytime I go to the grocery store it is a higher price for the same good or a smaller quantity for the same price.

It seems governments have too much skin in the game with CMHC to let housing fall, so I ask, for waiting on the sidelines, am I the greatestfool?

#35 OK Kingpin on 08.04.13 at 10:04 pm

Normal human behavior.. when somebodies livelihood and income is threatened their animal instincts take over, they say and do whatever they need to ensure they are protected from perceived threats.

The end here is clear, it has been for a while.. unnatural hyper inflation of many type of real estate across most urban areas coupled with Realtors all fighting and competing against each other for the next pay check.

When any engine nears it end “mechanical or economic” it is normal to see huge unnatural fluctuations in performance measures.. then it stalls.

http://mayer320.wordpress.com/2013/07/28/these-things-never-really-end-well/

#36 benfitzg on 08.04.13 at 10:11 pm

nobody ever mentions Montreal….

#37 Big Brother on 08.04.13 at 10:15 pm

MK-Ultra is watching you hope you declared your win

#38 dave b on 08.04.13 at 10:29 pm

BenfitG…….are you listening to Garth; it’s not different!

#39 LP on 08.04.13 at 10:32 pm

#13Jimmy on 08.04.13 at 8:18 pm

Garth, there’s something about this poster’s first sentence that just rankles. Is it me or what?

#40 prairie person on 08.04.13 at 10:34 pm

Don’t know the overall figures but two houses in the neighbourhood that have been for sale for over a year have sold signs on them. May have taken a beating on asking price. Still, the sold signs are up. One is being gutted and renovated. Haven’t been out and around lately so no chance to check what is happening in the Victoria city area.

#41 Big Brother on 08.04.13 at 10:41 pm

#20 Smoking Man on 08.04.13 at 8:32 pm
Wife ust one 16k at senica, we are heading over to fallsview,

Any dogs make it to club 360 tonight drinks are on me…

MK-Ultra says is your wife won 16k then she just paid Uncle Sam $4800, that means you waltzed across the Border with more that $10k hope you declared Smoking Man we know these things at the border.

#42 BG on 08.04.13 at 11:05 pm

Garth,

I’ve been reading your blog only for a few weeks. I’m just starting looking at 2 bedrooms condos (low-rise) in Montreal.

As a prospective buyer, I honestly wish for an adjustment to happen in the next 2 years.

You reasoning is perfectly logic. I love logic.
But I think you’re underestimating the power of the human mind.
You often mention housing hornyness in Canada, and propaganda from Realtors and banks.
What if these are strong enough to prevent an adjustment for the next 10/15 year?

In this scenario, people buying a place to live in might have only two choices:
-buy now at a high price
-rent for 10 years before buying at a lower price. But is the wait worth it?

There will be no 10-year-long boom. — Garth

#43 Devore on 08.04.13 at 11:25 pm

July would be a very unusual month to show market strength. Particularly lacking any positive breakthrough news about fundamentals. As several posts yesterday described, this is not pent up demand (people who were sitting on the fence for the last half year had a couple of months to make up their minds), this is demand being brought forward. People rushing to cash in their rate holds before they expire. This is the definition of forward demand. Even so, as “strong” as July appears to have been in many markets, it was actually not that great. MoM metrics didn’t budge, and even went down from June.

#44 CrowdedElevatorfartz on 08.04.13 at 11:29 pm

@#18 Ack
“A number of months ago I told you to buy ‘MS’ and ‘MET’, but you didn’t listen.”
++++++++++++++++++++++++++++++++++
Sorry, you have me confused with another one of your eproctophilliacly challenged amigos.

Gee, CNN has just reported US July hiring stats are ……wait for it……… down.

I guess your friends are…….wait for it……wrong.

#45 James on 08.04.13 at 11:32 pm

Dear Garth. Newly liquid, area man age 30, seeking advice.

Just sold house, moved to Regina. Living with family. 250K in bank. Small car, paid for. No debts. Wife, baby, job. Nothing else.

Need place of our own soon. Average house 325K. To rent same size of place: $2100 – 2500 / month. Vacancy rate 1.9%.

Where to go from here? Thanks in advance.

#46 Questions on 08.04.13 at 11:51 pm

3-6 months ago, I was confident the unreasonable prices would get pulled into line and the mass mindset about housing in Canada would reconfigure. Apparently we’re bad at math and not satisfying each other enough.

I think there’s a quarter tank left in this run up. Not until the stats on this blog are decimated, those waiting and hoping to vulture and lick tears are long gone.

Only then will it correct, undramatically, to numbers that will still be disproportionate to old ratios and rules of thumb like income x 3, etc.

Consider this:
Can a soft landing happen, engineered or not? Yes! In a relatively undramatic place like Canada, yes!

When will rates be 5 or 7% again? 5-10yrs is an acceptable answer. Sooner the better so we can have some cushion again to play the long game on our planet and quality of life.

If housing breaks the old rules globally (in most places that matter), and the RE market is a lumbering and easily timed chart, why expect Canada to tumble in an isolated way? Small planet, someone out there is down for buying up RE in a place that sucks less.

Blah…

#47 Debtfree on 08.04.13 at 11:59 pm

At the risk of being too politically correct. Is it not possible for disabled people to ride motorcycles as either an operator or passenger ? @ # 24 FE . You got nothing to worry about . All the people that had no immunity to bubonic plague were all dead by the end of the 1300s .That’s why the Black Death hasn’t been back . Garth is just trying to scare you . Did it work ?

#48 FATHER on 08.05.13 at 12:00 am

I would never vote for the conservative cons ever again we have been screwed twice first time under a different name with the gst and now by this housing mess that will take a long time to recover from

#49 drydock on 08.05.13 at 12:20 am

#36 Benfitzg
Nobody ever mentions Montreal…
_______________________________________________

Corrupt city hall,leaking water system,roads overpasses and bridges falling apart,pieces falling off of buildings and tunnels,sewers in trouble,tourism down two years running,language lunatics as provincial gov’t,streets with potholes,lousy job prospects for those looking for work,subways that keep shutting down even though the transit system head honchos just gave themselves obscene raises.
Montreal mentioned.

#50 Carpe Diem on 08.05.13 at 12:28 am

SM … you made the front page!!! Congrats!

Ottawa …

We went window shopping a few weeks back. My wife loved the place (minus the lack of an extra room or crawl space as a basement).

I think we could have chickens and bylaw would never notice!

This place was awesome, the price OK, and it had a forcefield-like fence to keep the wildlife away.

But this person, seemed so wanting to sell.

We were window shoppers but she a person whom our kids go to school together and was ready to negotiate downwards ….

I felt for her and when we got a few emails from this lady. It was time to make it NOT happen.

I see lots of homes for sale in the well-to-do rural areas. And no movement.

I wait.

#51 Siva on 08.05.13 at 12:32 am

“Don’t have enough wealth to buy a house and also have liquid assets? Then don’t buy.”

Golden words! Pass this message to everyone.

#52 Kessel on 08.05.13 at 12:45 am

Is there a greater real estate pumper than Al Sinclair? Heard this guy say buy know or be priced out forever. Even mentioned HAM buying 30% of all the new supply of condos coming on the market in 2014 and paying cash.

#53 Mark on 08.05.13 at 12:49 am

Anybody want a condo in the west end of Ottawa? Only $599k! Don’t worry, it’s worth the price – it has a garage, granite, and stainless. Get it while it’s hot! Free crack at the open house. The listing agent tells me* it’s good stuff.

http://www.realtor.ca/propertyDetails.aspx?propertyId=13136827&PidKey=-1424393704

* The listing agent did not actually tell me that.

#54 lee on 08.05.13 at 1:16 am

Maybe I am not understanding something about corporate bonds. If rates are rising, should I not be buying a st bond etfs, hope interest rates rise, and then buy more of the same bond etf?

#55 calgaryPhantom on 08.05.13 at 1:24 am

It’s your blog. Be a man, and keep doing the right thing !

#56 Shame list — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer on 08.05.13 at 1:44 am

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

#57 Derek R on 08.05.13 at 2:35 am

#13 Jimmy on 08.04.13 at 8:18 pm wrote:
Garth,
How about moving to Cowtown and running for mayor against our purple clown?

Even Garth wouldn’t stand a chance. Cowtown’s “purple clown” has done such a good job that he’s untouchable. Fact is that some other Canadian cities wish they had their own purple clown. Can’t say I blame them.

#58 Fortune500 on 08.05.13 at 6:37 am

Hey, look at me! I’m a member of the 1%

#59 esther fortier on 08.05.13 at 7:07 am

your head line could have been “futur user”

good day

#60 Realtor # 1 on 08.05.13 at 7:50 am

OMG. And the wait continues and the predications continue to incorrect. Never try to time the market.
You guys are the type of people who like to brag about the ” deals” you get. You always pay less than everyone else. Even a 20% reduction won’t bring you to 2010.
Have fun praying for job loses.

#61 Raven on 08.05.13 at 8:02 am

From The Trenches

Builders in the GTA are grossing 100K per house!
Permits for 2015, multi-res, SFD, have all but evaporated.
Builders adding basement apartments to use with “their broker” as income to justify their mortgage qualification requirements.
Trades/suppliers being “asked” to purchase condo units to offset their billings to builders, or have some other trade/supplier provide goods or services.
We are in the final stages of downward price pressures being applied throughout the RE industry.

If you think the insults and threats are bad now, wait till the market truly corrects, as it always does.
That is when the really bad decisions made by the heavily indebted, realtor led cabal, descend enmass to pronounce you the “cause” of their problems.

Honesty is the rarest wealth anyone can possess, yet all the honesty in the world ain’t lawful tender to buy a loaf of bread!

#62 The real Kip on 08.05.13 at 8:32 am

“Seems the last thing a ton of realtors and house-humpers want me saying is that a bump in sales last month is not the beginning of a new bull market for real estate. Which it decidedly isn’t.”

Maybe not, but it isn’t ‘Houseageddon’ either. For mid-summer, traditionally a slow month in real estate, the numbers are quite good.

From a crane perspective. — Garth

#63 Castaway on 08.05.13 at 8:45 am

Garth. Any way you can make it so comments to a post can be left directly below original. Would make it easier to navigate. Thanks.

Read everything. There is a test at 4 pm. — Garth

#64 RD on 08.05.13 at 8:57 am

Garth, you da man! You may not be a prophet but you are right to caution people about not giving in to house horniness. Just retired and am glad that I won’t outlive my money based on solid financial planning. Good luck to those out there chomping at the bit to buy a bigger, more expensive house…like our own kids. Can’t talk sense into them. They will learn the hard way that buying a house and owning it with ongoing debt and expenses are two different things. Love your blog!!!

#65 T.O. Bubble Boy on 08.05.13 at 9:08 am

There will be no 10-year-long boom. — Garth

Which really means: there will be no 25-year boom (since the current run has been almost 15 years now).

Without income gains, RE gains will not hold. — Garth

#66 T.O. Bubble Boy on 08.05.13 at 9:13 am

@ #48 FATHER on 08.05.13 at 12:00 am
I would never vote for the conservative cons ever again we have been screwed twice first time under a different name with the gst and now by this housing mess that will take a long time to recover from
———————-

Ironic then that the most recent 2% CUT to the GST is basically what is keeping Canada in deficit every single year. Books would almost be balanced with an extra 2%, despite H+F’s best attempts to funnel all tax dollars to senators and “economic action plan” propaganda.

#67 drox on 08.05.13 at 9:16 am

My real estate uncle sold his $650,000 house and bought a $400,000 house in July. Two sales right there!

I wonder how many of the sales were agents downsizing their homes before the crash.

#68 TurnerNation on 08.05.13 at 9:27 am

We are the 1%, then.

Well I’m here for the US market open. My trader’s sense says this week metals might pop.

A co-worker’s wife is a realtor selling Toronto Pre-con condos. Asked him who is buying these. Said overseas investors. Which country? Guess…

Cottage on Bigwin (Bug-win?) Island. Looks nice saw pics on theirs and golf courses web site. This one stuck at 299k for a while. Barometer.
Fire insurance? Loss would be total.

http://www.realtor.ca/propertyDetails.aspx?propertyId=13216408&PidKey=-1395026626

#69 CrowdedElevatorfartz on 08.05.13 at 9:39 am

Vancouver will trade a Clown on a bicycle as mayor for a purple clown Calgary mayor.

#70 Berniebee on 08.05.13 at 9:40 am

#34 Catalyst “– Do you really believe the governments will LET this fail?” (Ie: let prices fall.)

To rephrase the question: Do you think that the government has the power to prevent this fail?

Japan, Ireland, and the USA had real estate crashes.
USA prices crashed even with low interest rates.
Japan has still not recovered to prices of 20 years ago.
With low interest rates.

You should be asking yourself this: Is there any government, anywhere, that HAS prevented a crash from happening?

It comes down to this: House prices cannot outstrip inflation forever. (If they did, no one could afford a house by now.) Prices can lag or jump ahead temporarily, but inevitably prices return back to the inflation curve. Canadian house prices (Like USA prices in 2005) are now way, way ahead of inflation.

Prices will correct. The things that will be unique and “different” about the Canadian correction will be the trigger, the timing, the depth of the crash and of course, the excuses from government officials and real estate promoters.

#71 laughing on 08.05.13 at 9:50 am

still laughing :

#201 AK on 05.29.13 at 8:01 pm

“So, Treasury yields have risen a dramatic 50 points since the beginning of the month, and were pushed further on news of rising confidence and a real estate renaissance.”
——————————————————————–
Indeed. Over the past few days there has been a fire sale on all the REITS, mREITS, Utilities and Pipelines.

Yes, rates will go up, but there is no way they will skyrocket.

So, today I took the opportunity to add to the following:

T.D.UN
N.AGNC

#72 Daisy Mae on 08.05.13 at 10:09 am

“I have no doubt what the answer will be. Nothing’s changed to make buying a house more attractive or affordable. Prices are still extreme. Listings in major markets have shrunk. The economy’s barely pulsing. Sellers are delusional. Debt continues to expand. Rent-price and price-income ratios are whacked. And mortgage rates are up.”

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

I was absolutely amazed as I sat quietly and listened to the conversations I heard this weekend. They continue to believe only what they want to believe — RE data, media reports, and each other.

#73 Morgan on 08.05.13 at 10:12 am

#47 Debtfree – yes, actually. My friend’s father is disabled with a heart condition. He can walk, but not more than 20 feet or so before his heart rate hits danger levels. He drives a small motorcycle as a convenient way to get around, since he can get street parking very close to wherever he’s going, or even pull up on the sidewalk in a pinch.
That being said, I don’t see any disabled access stickers in the windshields of those bikes…

#74 AK on 08.05.13 at 10:19 am

#71 laughing on 08.05.13 at 9:50 am
“still laughing :

#201 AK on 05.29.13 at 8:01 pm

“So, Treasury yields have risen a dramatic 50 points since the beginning of the month, and were pushed further on news of rising confidence and a real estate renaissance.”
——————————————————————–
Indeed. Over the past few days there has been a fire sale on all the REITS, mREITS, Utilities and Pipelines.

Yes, rates will go up, but there is no way they will skyrocket.

So, today I took the opportunity to add to the following:

T.D.UN
N.AGNC”
====================================
Keep laughing.

While you are at it, why don’t you repost all of my other recomendations. The ones that have doubled in value.

#75 The real Kip on 08.05.13 at 10:23 am

Say it isn’t so! Litigation lawyers are in trouble as well as the construction workers? Is there no end to this carnage?

Take a look outside your BNS window and see the thousands of construction workers below you blocking off every artery, hardly the tens of thousands of unemployed that the mortgage brokers and you were so worried about a few months ago.

The forecast was made two months ago, is for the period leading through 2015 and nationally. Heights seem to make you exaggerate. — Garth

#76 AK on 08.05.13 at 10:29 am

#71 laughing on 08.05.13 at 9:50 am
“still laughing :

#201 AK on 05.29.13 at 8:01 pm

“So, Treasury yields have risen a dramatic 50 points since the beginning of the month, and were pushed further on news of rising confidence and a real estate renaissance.”
——————————————————————–
Indeed. Over the past few days there has been a fire sale on all the REITS, mREITS, Utilities and Pipelines.

Yes, rates will go up, but there is no way they will skyrocket.

So, today I took the opportunity to add to the following:

T.D.UN
N.AGNC”
====================================
Since you are keeping score. Add the following to the list.

T.BPY.UN
T.D.UN – Yes, again
T.MRG.UN
N.MGM
N.MS – Buy until it reaches book value
N.MET – Buy until it reaches book value

#77 Catalyst on 08.05.13 at 10:54 am

@ #70 Berniebee –

Interesting perspective Bernie, I do believe however that Canada is somewhat ‘different’ than the US, Ireland, and Japan for the following reasons:

– Rising interest rates did not cause the above crashes, a tightening of credit did. The banks had reason to tighten the amount of credit they were extending because the bank is on the hook for it. This is not the case in Canada, because of CMHC there is no reason to lend money responsibly. If you were told you could bet on football games and all your loses would be guaranteed, where is the incentive to do any homework or make smart decisions?

– Rising rates are somewhat affected by the overnight rate set by government but it is ultimately the bond market that guides the mortgage rate. Ordinarily this would be ‘outside government control’ but the governments are buying extraordinary amounts of bonds to manipulate bond prices artificially low.

-Lastly, to answer your question, is there any government who has prevented a crash, Canada has created an environment where there is little to no cost to borrowing massive amounts of mortgage dollars and no reason to lend responsibly from the banks. It is a deadly combination that has not existed elsewhere, so I am starting to think, Canada is different.

#78 Pounding sand in Peachland on 08.05.13 at 11:04 am

Great news………… Garth says” no more bull”

#79 AK on 08.05.13 at 11:10 am

#44 CrowdedElevatorfartz on 08.04.13 at 11:29 pm
“Gee, CNN has just reported US July hiring stats are ……wait for it……… down.

I guess your friends are…….wait for it……wrong.”
====================================
Did you check CNN to see the latest ISM number?

#80 Pounding sand in Peachland on 08.05.13 at 11:13 am

oops! Garth says no more bull ‘MARKET’

#81 CrowdedElevatorfartz on 08.05.13 at 11:19 am

Hmmmmm
Lets look at these statements….

“The U.S. dollar is heading higher, much higher.

The S&P 500 is in the early stages of a secular bull market.

The worst is also over in Europe. Keep an eye on this one.”
++++++++++++++++++++++++++++++++++++

The US dollar isnt heading higher so much as all other currency’s are dropping. The Euro, the Pound, The Yen, The Canuck buck. All recently dropping. A strong US dollar is terrible if they want to export. Just sayin.

“The S&P is in the early stages of a Bull Market.”

Hmmmm , perhaps your chrystal ball is shinier than most. You can predict the future. Nice. What are the next 649 numbers?

“The Worst is over in Europe……”

Please tell that to the next wave of 15,000 Greek public servants that were cut July 17th. Or the 27% of workers that are unemployed( soon to be 30%).
Or Italy where Standard & Poor just downgraded their credit rating(July9th) to the last level above “junk”. Their most popular politician(Beppe Grillo) is a former circus clown who ” wants to tear everything down…” And the former Prime Minister (Silvio Berlesconi) has been convicted of sex with a minor and tax evasion. We wont bother to mention their 24% unemployment rate.
Next is Spain where the current Prime Minister is embroiled in a corruption scandal involving the housing constuction industry. The unemployment rate is 25% ( or 45% if your between the ages of 20 and 40).
Portugal, more of the same. Leaders attacking each other while the economy spins into junk bond status ( Unemployment 25%)
Then we move on to France where the newly elected Socialist leader is at the lowest popularity rating ever. The economy is sputtering, deficit budgets above what is allowed by the EU rules. Unemployment 18%
Next stop Ireland where bankruptcies, suicides and unemployment are rising almost as fast as the taxpayers debt obligations to shamefully bad bank loans. Unemployment 25%
England, good old blighty. Barely creeping out of the 2008 meltdown after 5 long years
Germany, where exports have fallen over the past quarter and the unemployment is 6%. All other Euro unemployed flocking to Deutchland. Rascism on the rise.

Doesnt seem like the worst is behind them, it looks like its staring Europe in the face.
But im sure that this is all just “propaganda”

#82 The real Kip on 08.05.13 at 11:27 am

Hey Garth, can you find out if that litigation lawyer can swing a crane? If yes, I can set him up to make some extra money because we are out of men again!

On second thought, your litigation lawyer buddy makes a much better lapdog for his Holt Renfrew wife than he ever would a crane operator!

#83 Jean Le Poutaine on 08.05.13 at 11:49 am

#36 Benfitzg
Nobody ever mentions Montreal…
_____________________________________________

In montreal prices are going up and up, so buy now! We have so many new immigrants coming in and looking to buy, the time is better than ever to invest all of your savings in the housing market. Condos are the best target for sound investing, IMO.

– Jean Le Poutaine

#84 Squatter on 08.05.13 at 1:13 pm

In montreal prices are going up and up, so buy now! We have so many new immigrants coming in and looking to buy, the time is better than ever to invest all of your savings in the housing market. Condos are the best target for sound investing, IMO.

– Jean Le Poutaine
——————————————–
Another realtor…

#85 TurnerNation on 08.05.13 at 1:17 pm

Cityplace condo complex: know a renter there. Landlord owns 60 (sixty) units. From overseas.
Y’all likely have no interest in specifically knowing which country…
Hint: it’s not germane ;-)

(a) Good for the renters. (b) Evidence foreigners can be fools, too. — Garth

#86 AK on 08.05.13 at 1:22 pm

#81 CrowdedElevatorfartz on 08.05.13 at 11:19 am

“Please tell that to the next wave of 15,000 Greek public servants that were cut July 17th. Or the 27% of workers that are unemployed( soon to be 30%).”
====================================
At least Greece is trying to get their house in order.

Let’s see how many civil servants Canada will be dumping over the next 5 years.

Also, how many jobs has Canada created during YTD 2013? Just saying . :-)

#87 AK on 08.05.13 at 1:25 pm

#85 TurnerNation on 08.05.13 at 1:17 pm
“Cityplace condo complex: know a renter there. Landlord owns 60 (sixty) units. From overseas.
Y’all likely have no interest in specifically knowing which country…
Hint: it’s not germane ;-)”
====================================
Can you say, “Bag Holder”. :-)

#88 TheCatFoodLady on 08.05.13 at 1:27 pm

Montreal marekt is going up, up, up is it? Not according to the Quebec Federation of Real Estate Boards:

http://www.montrealgazette.com/business/open-house/Quebec+housing+market+contracts+fourth+straight/8653228/story.html

#89 Namblin Man on 08.05.13 at 1:30 pm

Things are going to be nasty.

Thanks to my dog I have been lucky to witness all kinds of things about my neighbors (Westwood Plateau, Coquitlam, BC). The latest is that a party house was put up for sale.

The Dad works elsewhere & the boys “take care” of the house. Daddy came back a couple of weeks ago. There was a lot of arguing, a maid service showed up, the lawn was finally mowed & a For Sale sign appeared.

It’s not on MLS yet but they will probably ask over $1,000,000. My wife & I rent a basement across the street for $1100/month and have a dog that makes us watch our ridiculous neighbors commit financial suicide while she poops on their lawn (we pick it up).

There is no way this housing boom ends well. Even my dog knows that.

#90 AK on 08.05.13 at 1:33 pm

#81 CrowdedElevatorfartz on 08.05.13 at 11:19 am
“But im sure that this is all just “propaganda”
====================================
Yes, You are a quick learner.

Now try not to forget…..

#91 Basement Dweller on 08.05.13 at 1:52 pm

I’ve been waiting since 2010 to buy. When I started looking in 2010 I thought wow this is nuts, homes were being sold in weeks and prices seems to get higher ever month.
It is now 2013 and I wish I bought then, I keep waiting and believing that they will go down.
Till then I have to endure everyone telling me I made a mistake and that they will never go down 20%.

This has to be the longest and biggest housing bubble.
If the prices don’t go down this fall when 3% holders run expire then there will be no hope.

Stop being a drama queen. — Garth

#92 laughing on 08.05.13 at 2:05 pm

#74 AK on 08.05.13 at 10:19 am

====================================
Keep laughing.

While you are at it, why don’t you repost all of my other recomendations. The ones that have doubled in value.
______________________________________

you some sort of expert? financial adviser? you going to take responsibility for someone taking your advice and losing them money? you know you can get sued right? keep going. i’m laughing.

#93 Daisy Mae on 08.05.13 at 2:18 pm

#3 Tomas: “Came back from an open house here in the Ottawa west-end this Sunday afternoon…stayed for an hour cause the listing agent was a buddy of mine…not a single person came to see the house

“Steady as she goes. No major fluctuations for Ottawa resales,” says latest media release from Ottawa-Carlton Real Estate Board. One of you is fibbing. — Garth”

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

Are realtors so stupid as to believe this will not eventually blow up in their faces? And then what?

#94 Canadian Watchdog on 08.05.13 at 2:27 pm

Yellen, Summers…what's the difference? They'll both print into QEternity.

I'm a short/mid term bond buyer here.

#95 Zing on 08.05.13 at 2:38 pm

A neighbour down the road just listed her home (west of Toronto). Flood of agents and potential buyers in first few days.

As I’m walking down the street, an old real estate agent, approaches me.

Her: “Would you like to sell your home?”

Me: “No. I am renting”

Her: “Well, if you are ever in the market , would you consider me?”

Me: “No. Besides, I’m sitting this market out”

Her: “[Laugh] Good luck with that! I’ve been selling real estate for many years, and it’s always gone up. At most it will stay the same”

Me: “Yeah, I could tell you’ve been around the block. Take care.”

#96 Ogopogo on 08.05.13 at 3:03 pm

One of the many things I’ve learned since I began reading this prophetic blog nearly two years ago is that RE bulls will employ logic-defying “arguments” at every turn, though they will eventually almost always default to base name-calling and hateful comments. In other words, these poor, deluded souls are beyond help.

This was made painfully obvious after this week’s release of manipulated data showing an supposed uptick in sales. Witness the rush of foaming-at-the-mouth realtors and their ilk lashing abuse upon our patient host and his readers. No other profession (short of used car salesperson, pawn shop keeper) relies so much on lies and misinformation as the real estate cartel.

A realtor (former) friend simply ended a decade-plus friendship when he learned that I’m an avid reader of this blog. He actually went so far as to assume that I had made an anti-bubble comment in the Globe & Mail after he thought he recognized my moniker. He was wrong, though I shared the poster’s sentiments.

Realtors, I don’t hate you. I pity you. Former friend, if you’re reading this know that it was your decision to end our friendship. I’m still here if you decide to put your ego and frustrations aside. I know it has been a difficult time for realtors nationwide, but don’t take it out on those who listened to Garth and now reap the profits monthly as we rent units for much less than they cost owners.

Peace.

#97 marco on 08.05.13 at 3:13 pm

Deleted comments from whacks and bullies are archived””

Mine didn’t fit either one from the last blog.

My post didn’t even show as deleted and all I asked was if you are so confident that all the RE Boards are lying and / or fudging the numbers, then why not sue them?

The truth is out there….

So is the stupidity. — Garth

#98 Albert on 08.05.13 at 3:15 pm

how about buy Surrey now ?

#99 FATHER on 08.05.13 at 3:24 pm

I can smell some househornies on this blog

#100 FATHER on 08.05.13 at 3:29 pm

after the federal government change watch out the true mess will be put on the table and it will be nasty

#101 DreamingInTechniColour on 08.05.13 at 3:35 pm

Facts of Life out in B.C.

http://www.vancouversun.com/business/core+review+will+look+Agricultural+Land+Reserve+among+other/8733633/story.html

#102 young & foolish on 08.05.13 at 4:01 pm

What’s with all the realtor hate on here? They are salesmen, and they are trying to make their product look good just like everybody else who is “selling” something.

Don’t trust their numbers? Learn to think for yourself.

#103 dosouth on 08.05.13 at 4:08 pm

This was actually a good post from House Hunt Victoria regarding price fluctuations and reasoning. Market still descending there – regardless of the drivel you receive from the “unloved” bashers…

sSkewmorphism

#104 rosie "moving forward" on 08.05.13 at 4:22 pm

The comment, at the end of the article, by Mithan sums it up. http://business.financialpost.com/2013/08/05/does-canada-have-too-many-homebuyers/

#105 marco on 08.05.13 at 4:36 pm

So is the stupidity. — Garth

Mature response.

A rental tsunami is coming and remember who warned you first. It will not end well dudes.

Landlords will bail as the market rebounds and you “great fools” will have earned your namesake. Forced into homeownership as rentals evaporate and the remaining units double in price before your eyes. Pay or get out!

The line ups will be for rental units not new sales.

Renter chant in 2014; WE WANT RENT CONTROLS !

Good tactic, realtor. Scare people into buying. You must be troubled. — Garth

#106 Cyclist on 08.05.13 at 4:39 pm

I dont see what’s wrong with the picture. People who
require mechanical engines to propel their bike are in
my view, handicapped.

#107 piccaso on 08.05.13 at 5:03 pm

#97 marco on 08.05.13 at 3:13 pm

All these blogs are pro head nodder, check out that bob truman site and say something against the grain there. It won’t appear either.

#108 marco on 08.05.13 at 5:12 pm

#105 piccaso

So what’s the point of a comment section?

HELPFUL REMINDERS FROM YOUR FORUM HOST, GARTH TURNER:

• Respectful, wide-ranging discussion on the topic of the posting is encouraged, and will not be censored.

#109 piccaso on 08.05.13 at 5:15 pm

#107 Shawn on 08.05.13 at 4:40 pm

From where I sit in Edmonton the economy is growing. Jobs abound. Those without jobs might want to move here like I did in 1989.

……………………………………………………………………

Has your wage quadrupled like your house price? Your lucky if your wage has gone up 12%

#110 2CentsCndn on 08.05.13 at 5:39 pm

The world is going nuts. Seems most people are going 100 mph, working harder than ever yet are spinning their wheels and are more confused and lost than ever. Sifting through the tons of crap, hype, lies and distractions and finding actual facts (aka: truth and reality) is key. Live within your means and build cushion (you know ……. cuz sometimes things change and go wrong?) … into everything (financial and other wise)you do. Maybe it’s too simple.

#111 TheCatFoodLady on 08.05.13 at 5:47 pm

***A rental tsunami is coming and remember who warned you first. It will not end well dudes.

Landlords will bail as the market rebounds and you “great fools” will have earned your namesake. Forced into homeownership as rentals evaporate and the remaining units double in price before your eyes. Pay or get out!***

Why do you see a rental tsunami coming? If house prices are still increasing – rebound HOW & from what? Someone who chooses not to rent is one thing, someone who can’t afford to own can’t be ‘forced’ into homeownership. Rising house prices puts landlords in a good position, especially in markets where vacancy rates are low. They can ask a hefty price for rental units – as long as they’re lower than ownership carrying costs, (high enough now & I’d imagine higher after your ‘rebound’) & their total carrying costs as landlords are acceptable to them. They can try increasing rental prices all they want but they’re going to hit a point where people flat out refuse to pay. Or people can always double up for a while.

Bail how? A SFH with a rental suite – not too hard. But a purpose built rental building? If too many landlords are trying to seel those & you end up stuck – might keep renting out the units & limit your losses.

Increasing numbers of rental units are owned by REITs – public & private – they’re not going to close up shop overnight.

I don’t understand your point or the reason behind it.

#112 CrowdedElevatorfartz on 08.05.13 at 6:28 pm

@#86 AK

“At least Greece is trying to get their house in order.
Let’s see how many civil servants Canada will be dumping over the next 5 years.
Also, how many jobs has Canada created during YTD 2013? Just saying . :-)”
++++++++++++++++++++++++++++++++++++

Canada? Once again you change the arguement half way through your rebuttal.
You mentioned the Euro countries economy , NOT Canada’s.

Please finish one debate before switching to an unrelated topic.

If you’re capable of focusing long enough.

#113 Berniebee on 08.05.13 at 6:29 pm

#77 Catalyst ” I do believe however that Canada is somewhat ‘different’ than the US, Ireland, and Japan”

Every country is different, in the sense that the government controls and banking relationships are unique.

But check this out: Pre crash, all three countries (US,Ireland,Japan) had relatively low interest rates, lax lending standards, and government policies and incentives that encouraged home ownership.
In each case, government officials at best only hinted at the possibility that there might be a correction.
All three countries had an “irrational exuberance”, a “positive feedback”, or a mania if you will. The belief that real estate only goes up. Real estate speculation became rampant, but the extent of speculation only became well known after the prices started to fall with conviction.

Canada’s real estate market has all these attributes.
I have seen reports about Vancouver’s “dark towers”, condo buildings where many units remain unlit at night, have no curtains or blinds, and are not for sale. They are almost certainly owned by absent speculators. There doesn’t appear to be hard numbers regarding Canadian speculation. Still, it would be hard to believe that speculation is not contributing to price rises, given how similar Canada’s situation is to other countries bubbles.

The bubble story is an old one. You can’t change it any more than you can change the seasons.
It’s a matter of when, not if the correction comes.

For what it’s worth, I own a detached house. No mortgage. We bought it about a year ago- it’s 40% less expensive than the previous house. (Like stocks, I chose to sell a little too soon rather than too late.) The substantial difference in price (we sold without an agent.) was invested outside of real estate. And it’s doing much better than real estate.

#114 Shawn on 08.05.13 at 7:09 pm

Wages quadrupled like House?

Picaaso at 111 randomly, after I mention jobs abound in Alberta asks:

Has your wage quadrupled like your house price? Your lucky if your wage has gone up 12%

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Actually, yes my wage is close to quadrupled since 1989, and it did not start out all that low.

Wages are strong in Alberta.

House prices are up mostly because interest rates are WAY down. Why do people keep thinking house prices must go up the same rate as wages? If most of the payment is interest and interest rates drop by 75%, what would you expect house prices to do?

#115 dosouth on 08.05.13 at 8:55 pm

It’s the 365 not 360 – phoney as his nom de plum that Smoking (wo)man is…..

#116 Cici on 08.05.13 at 9:33 pm

Gotta hand it to you Garth, you’re a big man for trying to guide and protect the sheeple.

Especially considering all the flack you get from the pumpers, who are now realizing the sky is falling and trying to pin the blame on you.

But I’m glad you do it, you put a big smile on my face everyday :-)

#117 Ace on 08.06.13 at 10:25 am

Also if the house was bought for $400k with $20k down. Payments will go from $1760 to $2110 increase of 19%! and this doesn’t include CMHC fees, or property tax, maintenance, etc.

#118 HAWK on 08.06.13 at 12:09 pm

#106 marco on 08.05.13 at 4:36 pm

A rental tsunami is coming and remember who warned you first. It will not end well dudes.

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Its the opposite of what you say, renters have all the leverage right now.

#119 Hugenewscmhc on 08.06.13 at 1:09 pm

Massive carnage on the way…. Mikey the realtor back in the rabbit hole!