Facts

facts1

Gather round, kids. It’s media appreciation time!

As you may know, back in the day I reported for, or edited, newspapers and magazines. The Globe, Thomson dailies, Canadian Business, Torstar, Sun Media. I was the business guy at CTV and wrote for Reader’s Digest (they used every third word). Now the traditional media world is crumbling as advertisers, readers and viewers migrate online. A pathetic blog like this can mate with more eyeballs in a day than many dailies.

Consequently, the reporters are often J-school kids who’ll work for nearly nothing, while editors and fact-checkers with experience and perspective are considered needless overhead. Media releases have headlines and bylines slapped on them, and news columns turn into advertising support. No wonder readership has tanked. When credibility leaves the building, little of value remains.

Worse, TV newsrooms get their hard news from print media. No wonder your idiot brother-in-law and the girls at work think the economy’s good, house prices always go up, RRSPs are products you buy, cars are decent investments, debt doesn’t matter, TFSAs are for vacation savings and the stock market’s dangerous.

Outfits like Re/Max, Royal LePage and CREA count on this media crumble. Getting their spins out in an unfiltered and unopposed fashion is central to selling houses. People only borrow massive amounts of money to buy big assets at inflated prices in a wobbly economy if they can be convinced it’s riskless, and everybody else is doing it. Then they pile on.

A small example. On the weekend the Canadian Press moved a story, picked up by scads of papers across the country, about the latest house sales numbers in Toronto and Vancouver. The headline: “July housing sales surge in Toronto, Vancouver as homebuyers return to market.”

Here’s how it read:

Home sales in two of Canada’s most expensive cities — Toronto and Vancouver — remained strong in July, according to housing figures released Friday.  The Toronto Real Estate Board said total residential sales were up by 16 per cent to 8.544 units in July — the highest they’ve been in four years. Sales increased across all types of housing, with sales of semi-detached properties in Toronto gaining the most at 28.8 per cent compared with the same period a year ago.  The average sale price of a home also went up in July by eight per cent to $513,246 year-over-year.

The two key ‘facts’ the Toronto Real Estate Board wanted spun were (a) sales were ‘the highest they’ve been in four years’ and (b) the ‘average sale price of a home went up in July by 8%.’ Combined, that’s enough positive market intelligence to make any property virgin certain the time to buy is now. What could go wrong? This market’s smokin’.

Except, it’s not true.

Below is a chart showing monthly sales in the entire GTA over the last three years, carefully rendered by the GreaterFool Research Department. It doesn’t take an MA in journalism to see that July’s number is not the highest over this time, or even the second or third-highest. July actually represented the 12th-best month in 31. But it was the first month in 2013 where sales didn’t tumble below those of the same month a year earlier, despite lower mortgage rates. Doesn’t exactly have the same ring, does it?

SALES

And as for prices going up 8% in July?

The average house price in the GTA in May was $542,174. In June it was $531,374. In July it was $513,246. See what I mean? The trending is down, not up.

Be careful what you are told, and what you believe.

Be more careful of what others believe. For therein true risk lies.

190 comments ↓

#1 Vancouverite on 08.05.13 at 5:31 pm

Overall, newspapers readership has been declining and its longterm survival is questionable.

Washington Post just sold.

http://www.cbc.ca/news/world/story/2013/08/05/washington-post-amazon.html

The Washington Post Co. said it has sold its flagship newspaper to Jeff Bezos, the founder of Amazon.

#2 East Van on 08.05.13 at 5:36 pm

“…carefully rendered by the GreaterFool Research Department.”

There is a rendering plant near my place. It dosn’t smell good.

#3 David McDonald on 08.05.13 at 5:42 pm

My better half has consented to rent for a year. I am satisfied that things won’t get more expensive by next year and that there is a fair probability condo prices will fall. Garth is right that this is a contrarian message. My wife won’t read TheGreaterFool and thinks it is nonsense but she is willing to humour me. For that I am grateful!

#4 Michael on 08.05.13 at 5:44 pm

They get away with this in spinning real estate and in selling the cratering of parliamentary democracy as a “strong, stable majority government.”

#5 Mike used to be in Leaside on 08.05.13 at 5:51 pm

Garth, in last couple days you’ve dug into the TREB stats to come to a different interpretation. I don’t quite agree with your use of the word “tumble” looking at your chart above.

I was in real estate previously and always found the best indicator was number of months of supply of listings on the market against sales. Simply put, a two months supply of listings is a ‘sellers market’ and a five month supply is more of a ‘buyers market’. The July TREB stats show 8500 sales against 20,500 active listings – about 2 1/2 months supply. I don’t think we’ll see prices tumbling until those ratios change to closer to 4:1 or 5:1.

#6 Renter in Markham on 08.05.13 at 5:53 pm

My in-laws listed a month ago a 1.2 mln home in Markham ON and still waiting for the HAM to show up and grab the 3600 sqft home ;-))

#7 VancouverGuy on 08.05.13 at 5:54 pm

It’s true about the MSM…. Sad to see they couldn’t adapt.

Would be great if you could shed some light on the Vancouver facts!

#8 Eneu on 08.05.13 at 5:58 pm

Great article as always Garth! Have a happy Holiday Weekend.

#9 TurnerNation on 08.05.13 at 5:59 pm

Attn. new blog dogs. The following usernames are still available; reserve yours today.

Baublehead

D.I.Y. Dodo

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Dip the Drain Operator

Never used yellow highlighters

Buster Reeko

AnointTurner

Otto B. VanDelusional

Sticky Figures

Slob’s real estate log

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Mattamy_Swooner

REITa MacNeil

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Reserved:
Blog Dog Poloz

#10 Sideline Sitter on 08.05.13 at 6:02 pm

I guess the 8% increase was over July 2012?

It’s tough to debate the wife when she hears headlines and reacts… it’s tough being tough, but I think she’s come around to the fact that an $800K mortgage is not ‘affordable’.

#11 WillIEverBeAbleToBuyAHomeInThe604 on 08.05.13 at 6:02 pm

First?

#12 Exilled on 08.05.13 at 6:09 pm

Mr Turner: I am surprised that that you have not disclosed that news is no longer ” NEWS “. Harper reclassified news as ” Entertainment”. What that means is it does not have to be 95% factual! As entertainment it does not have to be honest or real! So any lie that can be made up can be published. The media paid for Harper and Co. so of course they are not going to stop. But due to this blog, people are now ( some ) are questing what is being said or written. For this we owe you a get honor. Tag team with Ken Page or the former federal budget watch dog? That would be awesome and ” Entertainment”

#13 Alberta Ed on 08.05.13 at 6:16 pm

That’s why the G&M’s 99 cent a month on-line subscription isn’t worth the money.

#14 Cow Man on 08.05.13 at 6:20 pm

Sir Garth:

Eventually you too will be bought out an closed down by the development sector; which runs the main stream news outlets. You will have to sign a non-discloser clause, and then there will be no source of truth. Thanks for holding out for a higher price.

#15 Paully on 08.05.13 at 6:20 pm

It seems to me sometimes that you are starting to get really pissed-off with the virgins and schmucks that keep lining up to bid up houses in the GTA. I know that I am. If every clown that is worried about being “priced-out” would just sit down and take a break, the wheels would finally be free to come off this thing, and we all could get back to the land of reasonable house prices. Wouldn’t that be nice?

#16 CrowdedElevatorfartz on 08.05.13 at 6:21 pm

…..And the cover of this weeks The Economist mag is……”The Unsteady States of America”.

Focusing on the crushing public servant debt load that many American cities and States are either going to “buck up” and raise taxes to pay for OR, pull a “Detroit” and declare bankruptcy.

Aprox $2.7,000,000,000,000.00 ( Trillion) in pension benefit payouts which may double($5.4 Trillion) if you take into account health benefits for senior pensioners that are living longer.
How many minimum wage jobs will have to be created to pay THAT debt off?

AK ? Can you say, “prolonged fiscal nightmare”

I knew you could.

:)

#17 AK on 08.05.13 at 6:25 pm

#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.”
====================================

That’s some scary shit. It took them 30 years to figure this out?

#18 Freedom First on 08.05.13 at 6:28 pm

Thank you Garth. I just realized in reading todays post on your free blog, that I can’t remember the last time I paid for a newspaper or magazine or any print media. Thank you as you had a part in that I am sure. Thank you to the blog dawgs who link the articles they link. I find it is so easy today to research the news myself that is available for free and do my own editing/thinking of everything available. Garth, I count your blog as a big part of my business news that carries the already researched news/facts and can be accepted as the truth. In todays world, most unfortunately, this is extremely rare. Not only do you write the facts/truth Garth, I thank you for outing all of the liars by naming them all. The list of liars you have outed is now very long. No wonder you get so much hate mail, which you stored for the RCMP in case
of these people acting on their innuendos and outright threats. You are very brave Garth, thank you, sincerely, Freedom First…….

#19 Mark on 08.05.13 at 6:38 pm

They probably meant to say ‘strongest July in years’ but they accidentally a few words. Maybe they’re working with your old Readers Digest buddies, Garth. lol.

#20 Yellow rox rock on 08.05.13 at 6:38 pm

Awww…. That picture is nasty!

#21 marco on 08.05.13 at 6:39 pm

#113 TheCatFoodLady

The case presented for 5 years is sell before it crashes. Get out before you get wiped out. DO NOT buy RE. Rates are going to double maybe triple. Boomers will be forced to sell or eat cat food like you.

RUN baby run was the message and I say;

Ride Sally ride

Then we switch from the Twilight Zone to reality TV and none of that has happened. Jersey Shore makes more sense with all those tats.

You don’t want to understand my point, is my point. Slumlords will take their cash out, on the next leg up and all the renters will be just like the Griswold’s, Uncle Eddie, living in RV’s.

Or buy at the highest price housing has been at in 6 years.

Simple; low inventory, higher prices; no inventory, outrageous prices.

Remember nothing is free in life, especially advice.

#22 X on 08.05.13 at 6:44 pm

Do any of the blog dogs know what the historical statistical average for a single family home should be, adjusted for inflation, in Canada, GTA or any other stat that they may have.

Just curious to know how far these low rates have actually skewed RE valuations the past 8 years or so.

#23 OttawaMike on 08.05.13 at 6:47 pm

May I present exhibit “A” for today’s blog:
http://www.thestar.com/life/homes/2013/08/02/what_they_got.html
If you read the first summary, it would appear the house has tripled in value since 2004. I am almost certain that the original sale was a tear down and replaced with the million dollar home shown. There is no need to waste ink with pesky details that detract from the story.

#24 Bill Gable on 08.05.13 at 7:01 pm

After 45 plus years in media, I was so fed up with the shenanigans, so well described by our bearded host, that I retired.

I couldn’t go on the radio with a guy who said that RE would make your dreams come true, and look myself in the mirror.
Oh, and Mr. Turner, TV and Radio stations are so cheap now that they use unpaid INTERNS in many key positions.

One last point – as to Newspapers being dead as Stephen Harpers eyes.
When you took the Bus, or Go Train, or Skytrain – when did you last see someone reading a newspaper?
How about a magazine?
Have you seen recent ad revenues for magazines? The ads are migrating to the Web.

It’s a new era. Tighten your seatbelts.

#25 Confused on 08.05.13 at 7:11 pm

What is truly amazing is how Garth Turner continues to recommend that vendors use this industry.

#26 Debt Free and Smiling on 08.05.13 at 7:13 pm

My husband and I live in Richmond, we sold our Steveston Village home in February. And while we miss our old neighbourhood home we knew that it was time to sell. Locally our market is nearly flooded with listings. We glad we sold when we did. Our new rental home is not very far away and is pretty decent. It took work finding the right place but it was worth it. Even our dog loves the yard!

The best thing of all is we are liquid and debt free as we approach our retirement years and that feels great. When the time is right will jump back in to buy but it will be a much more of a basic home and one that won’t take up more that 40% of our assets.

#27 Facts — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer on 08.05.13 at 7:16 pm

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

#28 Sparky55 on 08.05.13 at 7:21 pm

#20 Yellow rox rock on 08.05.13 at 6:38 pm

Awww…. That picture is nasty!
******************************
I had to look at it for a few seconds – what’s wrong with a sink beside the urinals? Then I noticed it had no depth to the sink, and there was a pic showing a drinking glass being filled….

#29 Sparky55 on 08.05.13 at 7:24 pm

#22 X on 08.05.13 at 6:44 pm

Do any of the blog dogs know what the historical statistical average for a single family home should be, adjusted for inflation, in Canada, GTA or any other stat that they may have.

Just curious to know how far these low rates have actually skewed RE valuations the past 8 years or so.
******************************************
Take the average household salary of $60,000 to $70,000 and x 3 it – eg average house $180,000 to $210,000.
GTA wages would be higher, so adjust accordingly.

#30 Siva on 08.05.13 at 7:28 pm

What timing. It was just announced WaPo was sold for $250 million, a lot less than $313 million HuffPo was sold back in 2011.

#31 Lynne on 08.05.13 at 7:30 pm

Garth, I have read your blog and attended your seminars for over fifteen years. I don,t blog although I try try to read your post daily. I used to capture you on Facebook but lately haven’t received you. Did I get dropped because I don,t post? I come here to learn and do not post because I think you say it all. . Thank you for years of Advice Lynne Fay

#32 marco on 08.05.13 at 7:33 pm

Your own chart, from your own research department, shows sales are higher in this July then the last 2 July’s.

Yet you don’t hesitate to call the RE Board a bunch of liars and that everything is far lower, worse then they’re reporting, along with a bunch of nasty name calling.

What are you talking about?

Are you now pro RE?

Even for a realtor, that made no sense. — Garth

#33 Marginal on 08.05.13 at 7:36 pm

Facts are easily ignored. People have their minds set at an early age as to how life should unfold.
That’s the only way I can reconcile the comments and the blog postings. Does the lawyer not talk to his Holt Renfrew wife? Do the male blog dogs (referring to those who self identified…I realize there are many women reading and posting) not talk to their wives about incomes and outgoes and monthly budgets? Hard to believe so many men have wives that don’t get the family reality and share the family dreams, hence the wife and mother-in-law comments.
What happened to the dinner chats sharing family realities? Certainly happened in my family growing up. When we were old enough to understand the meaning of bank deposits, mortgage payments, and why we had to eat bologna for a month because we had to ship the pig, you didn’t make unreasonable demands.
People need to start communicating with their significant others. When times get tough, housing downturn or disappointed renters, you need to be in sync. It’s either that or you will meet the litigation lawyer who took up family law as a more lucrative line of practice.

#34 IM in C on 08.05.13 at 7:39 pm

There is one miscalculation in our belief that all boomers are now going to sell their homes. Today’s boomer is -on average 60 years old. They will not be selling their homes ‘until they are in their 80’s. the great demographic sell off predicted in this column won’t happen for another 2 decades !!

Over 70 percent have no pensions. Of course many will have to sell. — Garth

#35 AisA on 08.05.13 at 7:39 pm

Travel the rest of the western world and not just cuba and you will understand just how differen’t things are here. I won the rent vs. buy argument with my wife who currently resides in west Ukraine awaiting her permanent residence. We bantered back and forth for what seems like ages over mls listings within an hours drive of my work (both of them, not the listings, my jobs). Eventually I just couldn’t stand it anymore.

I said to her, “browse the listings without looking at prices and send me links to homes THAT REPRESENT THE STANDARD OF LIVING (paraphrasing now) you would expect in your former soviet block country with average salaries between the both of us. She couldn’t find a thing on the Island of Montreal for less than 600,000$.

You’re all hooped, whatever that means.

#36 Chickenlittle on 08.05.13 at 7:49 pm

I always wondered what SM wrote about that would get him deleted….

You should write a book using the deleted posts.

The country is unready. — Garth

#37 Siva on 08.05.13 at 7:49 pm

#22 X on 08.05.13 at 6:44 pm

RE in GTA has doubled in last ten years. Fundamentals do not justify this steep appreciation. Only reason is cheap and easy credit. Adjusting to inflation, arrival of new immigrants etc its over valued by at least 40%.

#38 AK on 08.05.13 at 7:55 pm

#16 CrowdedElevatorfartz on 08.05.13 at 6:21 pm
“…..And the cover of this weeks The Economist mag is……”The Unsteady States of America”.

Focusing on the crushing public servant debt load that many American cities and States are either going to “buck up” and raise taxes to pay for OR, pull a “Detroit” and declare bankruptcy.

Aprox $2.7,000,000,000,000.00 ( Trillion) in pension benefit payouts which may double($5.4 Trillion) if you take into account health benefits for senior pensioners that are living longer.
How many minimum wage jobs will have to be created to pay THAT debt off?

AK ? Can you say, “prolonged fiscal nightmare”

I knew you could.

:)”
====================================
Yeah, No shit.

My Defined Benefit Pension was killed 10 years ago. I don’t feel sorry for them.

#39 James on 08.05.13 at 7:55 pm

No doubt many clueless people are fueling the housing market, but you’re wrong on the cause on this one Garth. It’s not print media, or even mainstream media.

Those people don’t read newspapers, in fact some can probably barely read. But they do watch a ton of shows about buying/reno/changing/flipping homes, which now occupy half of all reality shows and it seems like 80% of TLC’s entire lineup. Hugely popular, they make everything look so easy. Never a bad story told.

I recently went to rent a storage locker. Lady there told me there has been a 500 – 1000% increase in people wanting to bid on abandoned storage lockers. This is purely driven by shows about storage lockers. Same deal with housing – don’t underestimate this. Entertaining people and appealing to emotions is more effective today than ever before.

#40 Andrew on 08.05.13 at 7:57 pm

Garth you are really stretching these days…

#41 Marginal on 08.05.13 at 8:03 pm

“Over 70 percent have no pensions. Of course many will have to sell – Garth”
—————————————————-
Even worse, many kept topping up their “housing” pension, buying ever larger and more expensive homes because principal residence capital gains are tax free. Many people thought this was the way to go, without considering other economic factors.

As Garth has mentioned before, don’t have all your eggs in one basket…..even more dangerous in retirement years.

#42 JimH on 08.05.13 at 8:10 pm

#25 Confused
“What is truly amazing is how Garth Turner continues to recommend that vendors use this industry.”
===================================
What is the confusion?
If you really want to sell your house, you can still find a skilled seller (a diamond in the rough) and exploit the industry resources, which are considerable. Plan ahead, get an expert, reputable realtor that you can trust as much as could a good horse-trader, read all the fine print, and go with them.
You’re looking for a talented salesperson; not a saint!

#43 marco on 08.05.13 at 8:11 pm

Even for a realtor, that made no sense. — Garth

I’ll type slower;

You have been preaching that all data from the CREB is a lie, fudged, total BS. You say RE is dropping, the sky is falling and anyone with 1/2 a brain should sell.

You’ve been singing that tune for 5 years.

Then you post your own chart showing sales are at a monthly high in July compared to the last 3 years,…. still with me?

In other words your own chart completely supports the CREB’s data, who you’ve been calling liars.

Get it?

CREB is the Calgary board. I did not reference it. My post highlighted media incompetence, and did not question sales figures. Suggest you type when sober. — Garth

#44 45north on 08.05.13 at 8:15 pm

Now the traditional media world is crumbling as advertisers, readers and viewers migrate online.

Superman was a newspaper man. So was Spiderman. I mean we see the newspapers as being the defenders of our society – right and wrong, justice. Naturally Superman and Spiderman are extensions of this view. In public school Mr. Langley gave a talk on the printing process, he was proud of his job. I delivered the Star. I was proud of my job.

Worse, TV newsrooms get their hard news from print media.

so just when we need them newspapers have become a pale shell of their former selves.

#45 Van guy on 08.05.13 at 8:17 pm

Month over month sale price comparison means ditto. Why? Because in the short term, prices cannot be measured due to price volatility. We really don’t know if the trend will continue downward. Months ago out here in Van, some areas looked $&@!ed!!. But now listings are eroding and sales perked up. Homes expiring and not being relisted have caused inventory shortage for some areas. At this point, the market looks healthy. I want prices to fall, but its not falling at this point. It’s not as bad as Garth makes it seems. And that’s the truth!!!!

#46 Shawn on 08.05.13 at 8:19 pm

WASHINGTON POST IS MORE THAN THE WAHINTON POST

The Washington Post company has a market cap of over $4 billion. Meanwhile the Washington Post newspaper is being sold for $250 million.

Not sure the recent news makes this clear at all.
Clearly the Washington Post company had wisely diversified years ago.

#47 Van guy on 08.05.13 at 8:20 pm

Over 70 percent have no pensions. Of course many will have to sell. — Garth

Ya sure, how many drug dealers and criminals that have money shoved under their mattresses or in a foreign account? Don’t count the Asian people in these stats, they know where to hide money :)

That was ugly. — Garth

#48 takla on 08.05.13 at 8:25 pm

Garth how do we stop the economic suicide these house hornies are setting themselves up for??First law in investing is “dont catch a falling knife”.The signs are all over that this resurgence in the u.s economy is stalling with Detroit {houses on mls starting at 100.00 each !!}haveing the largest ever municiple bankruptcy filing in american history with many more cities in the same shape,canada is four yrs of missery behind the U.S and it seems everything possible is being done to confiscate weath that in effect causes the collapse in the velocity of money and is cratering the larger economy.strange times indeed,come on folks start stacking cash{and PM’s} and paying down debt,dont assume anymore!

#49 AisA on 08.05.13 at 8:27 pm

It’s not difficult, it’s impossible to see it for those that have skin in the game.

We are in the market phase called complaceny, it occurs after major historical tops have been ripped to shreds by new tops, those tops being left behind, are somewhere nearby. As long as that top is within reach, only opportunity to recover lost ground is seen by those with said skin in the game.

All who stood aside, missed the ride, or just called a spade a spade and looked the other way, they smell blood. We are legion.

#50 Realtor # 1 on 08.05.13 at 8:29 pm

The trend is always down during summer and winter,
The question is will it remain down during the fall?

Actually the post was about the media. Defensive? — Garth

#51 CrowdedElevatorfartz on 08.05.13 at 8:34 pm

@#36 ak

Once again you miss the point while devolving into vulgarities.
The Govt employee public pension plans lack of funding are merely the tip of the iceberg.

The US is still in a massive fiscal quandry.
Irregardless of how many “friends in the US” tell you how well things are going.
US Bank stocks are “flattening’ as new regulations kick in, more people in the US are refusing to purchase big ticket items (AK , that means a house or a car). Forgoing purchases and paying off their debts before purchasing anything.

Can you say ‘Deflation”?

I knew you could.

#52 takla on 08.05.13 at 8:35 pm

ps….by the way garth,missed the blog yesterday but dig the pic,now that i know what your rideing,have you ever tryed the roadglide with fixed shark-nose fairing,,,,way more stable @hi speed

#53 Reader on 08.05.13 at 8:45 pm

Here’s another instance where the media takes a special interest group’s numbers at face value without question; when even a cursory examination proves the numbers to be exaggerated:
http://www.huffingtonpost.ca/mark-hasiuk/vancouver-pride-parade_b_3690822.html

#54 Devore on 08.05.13 at 8:45 pm

#35 IM in C

There is one miscalculation in our belief that all boomers are now going to sell their homes.

All boomers? Our belief? Whose belief is that, exactly? Only fools deal in absolutes.

#55 Peter is always Stiff on 08.05.13 at 8:50 pm

Garth, I know you believe the baby boomers will cause prices to soften when they sell. But usually those homes are mortgage free. So why wouldn’t they hold out for top dollar when not “forced” to sell? Also if they die, the heirs may take less than asking but in no way will they simply sell for a song (love the alliteration).

Silver beneath 20 bucks an ounce. The boys at Gulldhall wealth are gonna have all my money. All in for silver.

Remember QE is forever baby- yeah.

#56 calgary rip off on 08.05.13 at 8:54 pm

Garth your viewpoint is respectable for the majority of the population. Many people are sheep and follow the majority. Advertising and media only provide information to those who know what they want, to the rest they implant ideas of what to do. This argument does not address the reality of cost of living in several major Canadian cities. To advocate waiting when rents are the same as mortgages is a risk. If the market does in fact tank as you are suggesting then it really wont matter about buying a place anyway because many readers will be unemployed. And yes if a mortgage is purchased there is a risk come 2018 if rates rise and values plummet. However with financial upheaval what is really important will arise: Edible food, water, and how to pay for those things. Most of what is seen as “important” is nonsense, all of it. Health and well being is worth more than any stock, dividend, or whatever. So the mindset of with certainty decision making regarding mortgage acquisition is unwise based on a speculative future. Balance and a level head are required in this screwed up planet. In Calgary it is wise to rent if your job is unstable, you are old, or you wish to move. Otherwise, the gamble of acquiring an asset that generally increase in value with age(one of the most retarded things) may require a serious look. There are no rent controls in Calgary and it is not as simple as just find another place, often times there arent many choices. So this is why people are still buying in Calgary, much of which has nothing to do with the media. I think you blog is a wakeup call to the sheep that dont think for themselves and it is valuable, however your advice to wait needs to be examined for the individual’s factors in securing the mortgage. The facts are that Calgary sucks in terms of real estate, either renting or buying, and unless you are in the buyers who bought pre 2004, you are being ripped off, big time.

#57 AK on 08.05.13 at 9:02 pm

#52 CrowdedElevatorfartz on 08.05.13 at 8:34 pm
“US Bank stocks are “flattening’ as new regulations kick in, more people in the US are refusing to purchase big ticket items (AK , that means a house or a car). Forgoing purchases and paying off their debts before purchasing anything.”

Can you say ‘Deflation”?

I knew you could.
====================================
You obviously have not read this report.

Consumers Push July U.S. Auto Sales Up Sharply

#58 Smoking Man on 08.05.13 at 9:09 pm

The only way to resuscitate print news papers is to feature top less ladies, every 5 pages, at the same time only making one pic available on line..

Sell a lot of papers.

It will work, we all know the fiction disguised as news is waste of time to read.

Infomercials are the rage

#59 John Prine on 08.05.13 at 9:27 pm

#25 Confused on 08.05.13 at 7:11 pm
What is truly amazing is how Garth Turner continues to recommend that vendors use this industry.
______________________________________________

It is still the best way to get exposure and sell, after selling and buying privately in better markets and having the 1% flakes bothering us, our last home would not have sold (2011 Okanagan)without the exposure and marketing we got from R—–L—– sold to people from Ottawa who purchased without physically seeing the property, we were grateful and the commission was well worth it because we SOLD and got to move on with our lives and plans……

#60 Marginal on 08.05.13 at 9:37 pm

#54 Reader
“Here’s another instance where the media takes a special interest group’s numbers at face value without question”
————————————————————–
I was interested until I read your link and found that the only source for trashing your concern about the number of Pride Parade participants was the article’s “expert” source, the math teacher at Regent Christian Academy, a private school in Surrey.
Come on…..do you not remotely question the fact that a teacher at a Christian Academy would be anti-gay which might skew his evidence?
I don’t think your comment remotely aligns with the thesis proposed by our host, namely, the foxes in the hen house should not be assigned to counting chickens.

#61 Nosty in Vladland on 08.05.13 at 9:42 pm

#37 Chickenlittle — “You should write a book using the deleted posts.” — “The country is unready. — Garth”

True, but only for the unprepared ones. Most here would view it as an extraordinary leap of faith to show the rest of us simpletons how to make good dough, and whether it’s legal or illegal is besides the point.

I’m with Chickenlittle on this — a published book of SMan’s prose and etiquette, selling for $9.95 sans tax would be great xmas gifts!

#62 brainsail on 08.05.13 at 9:46 pm

The installation of a drinking fountain in a rest room that incorporates toilets or urinals is prohibited by code.

#63 Evangeline on 08.05.13 at 9:49 pm

To all wannabe Warren and Warreena Buffets …

… here is a resource that you might enjoy: Benjamin Graham and David Dodd’s “Security Analysis” in the form of a McGraw-Hill audio book on YouTube.

http://www.youtube.com/watch?v=kZI6GDW-8uM

#64 TheCatFoodLady on 08.05.13 at 9:57 pm

Marco, I’m neither trying to be combative or muleheaded.

There ARE far too many boomers, as well as older/younger cohort members who have most of their assets in their house. Their plan is to sell, realize the capital gains free gains, invest them & live off that, CPP & OAS. If there aren’t many planning to do that – no problem. I know many in their 80s who’ve made that work well. Not all boomers will want to sell & those who do won’t hit the market at once but it won’t take many to start affecting prices of certain types of houses. If home ownership is already at 70%, who do they sell TO?

No, none of that has clearly happened yet. I think it’s beginning – not evenly across the country but certain markets I follow are showing weakness, longer DOM, flattening prices but until we scrape the bottom of the pool of buyers, it should hold fairly flat. The crucial question is… where’s the bottom of the buying pool? No one can be certain but were I in that position, (needing to realize gains for retirement), I’d prefer to know well ahead of time in order to rethink my financial planning.

Slumlords may choose to take their cash out, either on the next leg up or before a leg down. I’m seeing the small timers here trying to sell. SFH they rent as either 1 or 2 units. To be blunt, the quality of tenants they can attract means inevitable losses & they’re fed up. Most rentals in my town are low rise purpose built buildings with, up to now, solid ownership. The buildings are older & there’s no pressure to spend money on making them pretty. Assuming owners/management does a good job with tenant screening, it’s not a bad deal. Our REIT talks coyly of 9% annual returns. Judging by the shortvuts bing taken here – I believe it. No reason for them to sell. We saw a spate of selling among the real small timers when HST kicked in & boy could you get a deal on 4-8 plexes.

I think that’s where I lose you on the RV thing. Those buildings aren’t going away & we won’t all be relegated to RVs. Even if rental rates go up that much or look to be, get into a building built before 1991 & STAY there – then rent control covers your butt.

I’m far from anti real estate. Were our financial circumstances different, damned right I’d buy. It would be a small place, suited to US & with as much down as possible. I’ve learned to hate debt of any type. I’ve owned before – twice & appreciate why people want to own a little piece of wherever they live for their own. It’s deeply satisfying… unless every damned cent you have is being shovelled into a house you can’t really afford.

Simple; low inventory, higher prices; no inventory, outrageous prices.

Remember nothing is free in life, especially advice.

#65 Julia on 08.05.13 at 10:03 pm

#9 TurnerNation on 08.05.13 at 5:59 pm

What about Gentleman Preferreds Blonds?

#66 Smoking Man on 08.05.13 at 10:07 pm

#62 Nosty in Vladland on 08.05.13 at 9:42 pm

HA Vlad

I would buy it too, as most of my deleted posts have been written while hammered, next day I see deleted, have no idea what I wrote…

#67 OK Kingpin on 08.05.13 at 10:15 pm

The root problem here isn’t only with crackpot reporting etc.. it is also in the readers, and the intelligence of the greater population absorbing the media as a whole. CREA and organizations alike rely on the generally lower IQ of large populations that do not question what they read, nor question the data and how it is presented..

#68 John in Mtl on 08.05.13 at 10:20 pm

@ 35 IM in C on 08.05.13 at 7:39 pm

There is one miscalculation in our belief that all boomers are now going to sell their homes. Today’s boomer is -on average 60 years old. They will not be selling their homes ‘until they are in their 80′s. the great demographic sell off predicted in this column won’t happen for another 2 decades !!

Over 70 percent have no pensions. Of course many will have to sell. — Garth

Ah but they do have a pension if they worked: CPP. And OAS. If the house is paid and they don’t have a glamorous lifestyle plus some small savings, is it not possible to make it out to 80 before having to move to a retirement community complex and paying their stay with the proceeds of the sale of the house?

CPP and OAS were never intended to be income replacements, only supplements. Nobody can live a comfortable life on that dole. — Garth

#69 Sebee on 08.05.13 at 10:23 pm

Then only way this crashes is under its own weight. And the F – scared for jobs, banks – scated for loses, RE boards – scared for lost commissions, media – scared for marketing dollars, well, they are all doing a splendid job keeping this house of cards standing so long. Let’s not forget the “fearless” buyers.

Let’s be honest, they all deserve an “A” so far. This has to collapse under it’s own weight. None of the above mentioned parties wants to be the one with blood on their hands.

#70 not 1st on 08.05.13 at 10:25 pm

Garth, why don’t you just tell the truth bluntly instead of your round about prose. Money and outside interests ruined mainstream media. Didn’t you spot this back circa 1980 when it was gaining steam. Its a wonder those “papers” lasted this long. Love when the internet steamrolls dinosaurs.

#71 piccaso on 08.05.13 at 10:28 pm

#59
Infomercials are the rage
…………………………………………………………………..

I hate Infomercials, they wake me up off the couch at 3:am

#72 The real Kip on 08.05.13 at 10:38 pm

Spin it any way you like, over 8,000 sales in July for the GTA is a strong month and hardly an indicator of a collapsing housing market.

Who said anything about ‘collapse’? Exaggeration weakens an argument. — Garth

#73 Dominion on 08.05.13 at 10:45 pm

Where do you get your numbers from? If its that easy to show that the little press releases are bs, then surely someone needs to be interested in main stream media in running with the story.

How can they get away with “the highest they’ve been in four years” if its absolutely indefensible? You can’t even argue interpretation.

#74 OttawaMike on 08.05.13 at 10:46 pm

The most important issue nobody is talking about regarding the imminent demise of newspapers is how are we supposed to wrap fish, pack parcels and light fireplaces without them?

#75 young & foolish on 08.05.13 at 10:58 pm

People will get interested in quality information again when things get bad ….

.. will they know where to go and get it?

#76 Canadian Watchdog on 08.05.13 at 11:07 pm

#74 The real Kip

Spin it any way you like, over 8,000 sales in July for the GTA is a strong month and hardly an indicator of a collapsing housing market.

This chart gets tiring, but I'll post it again for newbies: All GTA Home Sales

Oh and high-rise prices (units purchased two years ago that are now being completed) are back to 2010 levels. RealNet High-Rise Price

Yep. No crashig market here. At least not one that's being reported.

#77 The Truth is Out There on 08.05.13 at 11:12 pm

Did you leave Shadowstats on good terms Garth?

#78 KommyKim on 08.05.13 at 11:34 pm

It’s good news that Harper was unable to pave the way for Fox News style reporting in Canada. They failed at this:
http://www.theglobeandmail.com/news/politics/crtc-plan-to-lift-ban-on-false-news-prompts-political-investigation/article1898147/

#79 DreamingInTechniColour on 08.05.13 at 11:40 pm

# 21 Marco

You obviously have not seen how monthly rents have flatlined across the country since the mid 1980’s (30 plus years )- do you know why ? with every new home built, a suite goes in – with every retiree looking for some extra cashflow every month, a suite goes in, with every household where a parent stays home to look after kids or a job is lost and extra income is needed, a suite goes in – so keep dreaming about rents going up – if anything monthly rents will stay stagnant or even drop as more and more suites in houses become available to renters to select from.

#80 Alpha Bravo on 08.05.13 at 11:40 pm

#63 Nosty in Vladland

“A published book of SMan’s prose and etiquette, selling for $9.95 sans tax would be great xmas gifts!”

—————-

Keep the receipt handy.

#81 Derek R on 08.06.13 at 12:40 am

#63 Nosty in Vladland on 08.05.13 at 9:42 pm wrote:
published book of SMan’s prose and etiquette, selling for $9.95 sans tax would be great xmas gifts!

Yeah, can you imagine the delight on the little faces on Christmas morning, when they rip the wrapping paper off and find they’ve got their own personal copy of the Smoking Man’s Little Blue Book of Deleted Sayings?

Nope, me neither.

#82 Mrs Hubris on 08.06.13 at 12:44 am

#33 Marco

‘Yet you don’t hesitate to call the RE Board a bunch of liars and that everything is far lower, worse then they’re reporting, along with a bunch of nasty name calling.’
…………………………………………………………………………..

Now that is amusing; that would be the Boards who:
– calculate sale price stats using the most recent asking price instead of the first even if there have been multiple reductions in the interim
– who recently withdrew historical sales information (No Longer Matching) so buyers can’t find any sale price more than a couple of weeks old (thank you Victoria Real Estate Board)
– who formulated the HPI to minimise integrity and clarity in price trends
-who have been known to augment end of month sales figures from Toronto
-who seriously spin the stats every month in every major newspaper in Canada

But ‘nasty name calling’? Tsk Tsk. Now that’s really unfair.

#83 TheRealTruth in La Jolla on 08.06.13 at 12:58 am

Blog Dogs:

I’m afraid prices are not going to go down in “In demand areas” in Canada —> Vancouver or Toronto

Here in San Diego, prices are shooting to the moon….

the world is awash in money.

looked at a property out of my range today…$17 Million…

#84 blase on 08.06.13 at 1:06 am

News Flash:

The housing market in Canada will crater if and when houses become unaffordable.

They are affordable right now.

When rates get high enough or there is high structural unemployment or the CMHC is no more, housing prices will tumble.

Until then, no news. That’s why Calgary, Toronto, Ottawa, Saskatoon housing prices are sticky.

If you have an itchy trigger finger, play the Warren Buffett game. Imagine that you own your house on current terms for the next 5 years. Will it be a good sell then? If not, don’t buy it.

#85 Steven on 08.06.13 at 1:18 am

Facts and truth don’t mean much to most people these days Garth. Most people are demoralized, brain washed and in thrall to the media, government and the banks. These are the politically correct gods of our time. If they say real estate is a great investment, Jews and Homos are moral people and we must suck up to Israel then because the leaders of society say it then it must be so. It all has nothing to do with truth and facts. The term conspiracy theory was created to keep people from considering or believing the truth and to keep them believing the official fairy tales spun by the powers that be.
My own mother didn’t believe me when I told her about the bail in provisions in the 2013 federal budget and sent her a link to download the 2013 federal budget. She had to hear about it on the TV before she would admit that I was correct.

Democracy has become a religion and anyone who criticises it is labelled a heretic.

Just remember:
When one person says it – he is just a nut.
When two people say it – it’s just a rumor.
When a whole group of people say it – they’re all just crazy.
But when the MSM says it – it must be the truth.

#86 Debtfree on 08.06.13 at 2:01 am

The media IS the message lol . More like the message IS the massage and the media is the massage oil . Either way its as slimy as ever . Thanks for the reminder I think .

#87 Observer on 08.06.13 at 2:43 am

#35 IM in C on 08.05.13 at 7:39 pm

There is one miscalculation in our belief that all boomers are now going to sell their homes. Today’s boomer is -on average 60 years old. They will not be selling their homes ‘until they are in their 80′s. the great demographic sell off predicted in this column won’t happen for another 2 decades !!
==============

Interesting you say this. Back around 10 years ago a house property would be about 800 bucks and after home owner grant about 500 bucks.

Today a house property tax is around 4000 bucks. So with no extract income coming in and house prices stagnant. How the heck are they going to pay for that and their livin 35 year old loser kid

#88 Canuck Abroad on 08.06.13 at 4:48 am

29 Shawn, seriously dude what is it with your man love for Warren Buffett? He is successful because he is in bed with the bankers and the government, and knows how to use lobbyists. He is not the messiah you make him out to be. Do some research and stop shilling for this old goat.

#89 Canuck Abroad on 08.06.13 at 4:53 am

Interesting take on why Bezos would buy the Washington Post, supports Garth’s article completely. It’s short so I’ve copied the whole post…

“…Newspapers don’t make much money any more (though in the 90s they made returns in the teens regularly.) What they do still have, though, is influence and power. Even though newspapers don’t have the reach television does, they determine the stories of the day—they control the news cycle more than any other part of the media. More than that, newspapers are intelligence bureaus. Rupert Murdoch, no fool, would spend hours on the phone with beat reporters, picking their brains.

Power leads to money. Amazon is under what Bezos must consider attack (as in making Amazon pay sales taxes), and he needs influence, power and intelligence in DC. The Washington Post, at 250 million, is an absolute steal, even if it loses money every day…”

Source: http://www.ianwelsh.net/why-jeff-bezos-purchased-the-washington-post/

#90 Intuitive Missus on 08.06.13 at 6:51 am

CMHC makes a move.

http://www.theglobeandmail.com/report-on-business/economy/housing/cmhc-moves-to-take-steam-out-of-housing-market/article13607534/

#91 Tkid on 08.06.13 at 7:24 am

Ah but they do have a pension if they worked: CPP. And OAS.

Relying on government handouts for your income is crazy. CPP and OAS will eventually be clawed back until you get nothing or you have to live until you are 93 to collect.

Pensioners of Detroit are about to collect a tenth of what they were promised.

Is it right? No. But the math shows most Western countries cannot afford their social programs & pension promises.

Get thee thine own pension fund and trust not the promises of politicians.

#92 Victor V on 08.06.13 at 7:39 am

Should the Canada Mortgage and Housing Corp. be taking steps to cool Canada’s housing market?

https://www.facebook.com/BNNTV/posts/10152105818233206

#93 marco on 08.06.13 at 7:49 am

#66 TheCatFoodLady

“If home ownership is already at 70%, who do they sell TO?”

Does anyone here think for themselves. You assume what…they’ll all start selling at the same time. gezz. Who says boomers will stop working…who says they have no savings, who says they won’t take on renters to pay the expenses…gezz. Think people.

” get into a building built before 1991 & STAY there ”

Really, you think no one else has thought of that? You have all the answers.

#84 Mrs Hubris

-who seriously spin the stats every month in every major newspaper in Canada

Really? Then why do Garths own stats support the RE Boards stats? This is where the stone throwing breaks down.

#81 DreamingInTechniColour

…”with every retiree looking for some extra cashflow every month, a suite goes in,””

So you agree with me that boomers will not need to sell, they’ll just take on a renter to pay all their bills.

#94 raginnn on 08.06.13 at 8:09 am

Ottawa is taking new steps to cool the country’s housing market.

Canada Mortgage and Housing Corp. is limiting guarantees it offers banks and other lenders on mortgage-backed securities. The measure comes amid the federal government’s efforts to protect taxpayers from financial risks in the housing sector, further cool lending and add upward pressure to mortgage rates.
The Crown corporation has notified banks, credit unions and other mortgage lenders that they will each be restricted to a maximum of $350-million of new guarantees this month under its National Housing Act Mortgage-Backed Securities (NHA MBS) program. The decision comes in the wake of “unexpected demand” for the guarantees, a spokeswoman for CMHC said in an e-mailed statement.

The conversion of loans into securities with CMHC backing has become a popular way for lenders to tap funds from a broad range of investors, enabling banks to issue more mortgages and at a lower cost.

http://www.theglobeandmail.com/report-on-business/economy/housing/cmhc-moves-to-take-steam-out-of-housing-market/article13607534/

#95 Ballingsford on 08.06.13 at 8:10 am

CMHC is taking steps to cool thhe housing market. It’s on the globe and mail website.
I’d post the link but I’m using my android and I don’t know how to do it if its even possible.

#96 gladiator on 08.06.13 at 8:15 am

Garth, you provide quality material on your blog, the copyright is yours, your blog gets millions of views a month, you have devoted followers and gaining new ones – why not put some ads here? At least, you’d be somehow rewarded for the time you write, you read the comments and, most importantly, for tolerating some nasties who come here to annoy you (like me, for example).
So what say you?

The essence of this site is non-commercial information. I will shoulder the cost. Thanks for the concern. — Garth

#97 Keith on 08.06.13 at 8:46 am

For as long as I can remember, the reporting of real estate statistics in the newspaper has been sensationalistic, meant to sell newspapers, more than to give a true picture of what’s happening with real estate. And now as you correctly point out the big and experienced brains have left the building – news reporting will only get worse. The accountants are running the show and it seems to me that they are simply trying to make as much money as they can before the whole thing goes tits up.

#98 Jeff on 08.06.13 at 8:50 am

Ah data mining.

#99 EK on 08.06.13 at 8:52 am

The fact remains that it is impossible to predict what will happen in the future Canadian real estate market , within a specific (or even not very specific) time frame.

After seeing articles on the pending housing crash for many years, there has YET to be any meaningful softening of the real estate market in Canada (when that does occur, experts will not need to slice and dice specific monthly time frames, and make subtle arguments – it will be painfully obvious to everyone).

Of course real estate will return to long time averages at some point as the market is cyclic, but the truth is that individuals who have been waiting on the sidelines for this event to occur have unfortunately lost an opportunity this time out.

The resiliency of the market has stunned many experts over the past few years – I believe the best advice is to just to get on with your life, and view “Nostradamus type predictions” as “for entertainment purposes only”.

#100 BillyBob on 08.06.13 at 9:03 am

@Shawn

“Actually that would be more like the first law of trading, which has nothing to do with investing. True investors often buy things that have fallen in price.”

Well sure, if the price (in their estimation) has bottomed.

Does this really seem like the BOTTOM of a RE market? lol

#101 CrowdedElevatorfartz on 08.06.13 at 9:09 am

@#59 AK

Amusing, You dismiss my links to The Us Bureau of Stats and my quoting of The Economist as ‘propaganda” ….

All while quoting “friends in America” and posting a link to “The Daily Beast” as the foundation of your arguement. Bwahahahahahahaha

Thank you I needed a good laugh before starting work. Bwahahahahahahahahahahahahahahahahahahahahaa.

AK vulgarities to follow……….

#102 rosie "moving forward" on 08.06.13 at 9:39 am

# 93

Careful with that pension fund. All is not what it seems. http://www.salon.com/2013/08/06/big_finance_lied_401ks_will_not_save_aging_americans_partner/

#103 Whitey on 08.06.13 at 9:43 am

Garth, you poor man. You have to read everyone of these comments before posting? Besides your book of poor comments by a select few, there’s still lots of insanity to go around.

#104 Tony Right on 08.06.13 at 9:45 am

Sad that I have to come to this blog for truthfulness. Not getting it anywhere else. What have the Boomers done with Western society??

#105 Toronto_CA on 08.06.13 at 9:48 am

#101 EK on 08.06.13 at 8:52 am

“the truth is that individuals who have been waiting on the sidelines for this event to occur have unfortunately lost an opportunity this time out.”

Wow, that is stunningly wrong. If someone indeed bought and sold and is now renting, they have gained from the easy credit RE bubble of the last 5+ years, yes. However a vast majority of people who bought in the last 5+years still have mortgages, 6 figure mortgages.

Those mortgages will renew every 5 years in Canada, if they stay put (many don’t, they move and buy a bigger house taking out a bigger loan to do so).

When they renew, they will overwhelmingly face higher mortgage rates, possibly back to 6,7,8% and have a house that is not worth what they paid for it. Remember, incomes haven’t climbed (nor rents for those you think have “missed out”) and won’t be able to pay for houses at the current values with rates 2x what they are now.

I bet people thought like you in 2007 in the USA as well, that people renting who hadn’t recently purchased had “missed out” on a great opportunity. It turns out those who stayed liquid were the smart ones, and those up to their eyeballs in mortgage debt for an overvalued bungalow were facing bankruptcy.

So yeah, there was an opportunity that some missed out on if they bought and sold (and have cashed out) by now. With 70% homeownership levels and RECORD mortgage debt levels (and all debt levels), that just isn’t the case.

#106 Blasé on 08.06.13 at 9:56 am

Re: my previous post

-housing just took a big step off the affordability cliff

-CMHC will follow Fannie & Freddie

-if you have a 20+ year mortgage, you should be having heart palpitations

-don’t let the steamroller flatten you as your picking up those loonies

#107 Something on 08.06.13 at 10:02 am

Finally the pin is here to burst the bubble.
Here we go :)

http://www.cbc.ca/news/business/story/2013/08/06/business-mortgage-banks.html

If you want to stop something from happening you have to stop what caused the problem.
People have no idea about finance and completely relay on whatever bank says to them. So, stopping the people does absolutely nothing, you have to stop the banks, but it’s too late. The banks have done the damage. It’s going to be one helluva ride down.

Good luck to all of us. We need it.

#108 Victor V on 08.06.13 at 10:03 am

“Given the differentials in funding costs via NHA MBS or unsecured long-term funding, I could see [an additional] 20 to 65 basis points in the cost of funding mortgages for the larger banks,” he said. “All else equal, we could see mortgage rates start to move up in unison.”

http://www.theglobeandmail.com/report-on-business/economy/housing/cmhc-moves-to-take-steam-out-of-housing-market/article13607534/

#109 Sebee on 08.06.13 at 10:14 am

#92 Intuitive Missus

I love it! As RE associations lie, I hope those fake numbers are used by CMHC to act. Of course CMHC have the real data, but it’s clear that to stop further actions RE associations better recognize that it’s time to self-medicate and take the bitter medicine to get onboard with the % correction. If they continue to fudge their numbers to pump it up, they may continue to face further backend tightening from CMHC and F.

#110 Evangeline on 08.06.13 at 10:15 am

#90 “Do some research and stop shilling for this old goat.”

As far as I can tell Shawn is not “shilling” for the man personally, his political stripe or whatever, but for Buffet’s investing ideas that are in turn based on Benjamin Graham’s ideas on value investing and security analysis. Guess what, those ideas work equally well for both Republican and Democrat investors. Are you saying you think those ideas are worthless?

#111 Ace on 08.06.13 at 10:17 am

It’s crazy how many idiots are posting on here thinking that housing prices will always go up…. even if the media hype all lived up and prices continue to rise for the next few years think about what is going to happen to all the property virgins who were so excited to get into their first home that they maxed themselves out (I know a lot, how many do you know?)

Example in Calgary you can still buy what they call a starter home for $300-$350k. So lets use simple numbers and pretend we paid $300k. We maxed ourself out took out all our life savings to buy this make up our 5% ($15,000) and buy this home So we have a 25 year mortgage of $285,000. And we got a really great deal and locked in a 5 year rate at 2.79% back when it was offered so our monthly payments around $1320, which we can barely afford with upkeep and the new car payments added on (think about it, how many people do you know? I know lots who have maxed themselves out and cant even afford savings now that they bought a house).

Fast forward 5 years! The mortgage balance is now $240,000, there are 20 years left, now 5 year fixed rates are at 5%. Our new monthly payment is $1580. But wait a second, we could barely afford $1320… how can we afford an extra $150/month? That’s an 11% increase in our monthly payments.

I think all those people are in for a harsh reality when they come up for renewal, if the price drop doesn’t start soon it will when renewals start happening and people can’t afford there homes anymore so they start selling.

#112 Happy Rental Trash on 08.06.13 at 10:22 am

Ah OK saw the front page story today about CMHC turning off the money tap to the banks. Now it will be up to the big banks to show their ongoing faith in people with no cash or permanent jobs who want to continue buying houses. Think that will happen? LOL yeah right!! Maybe the real estate agent cartel has shot themselves in the foot with their constant lies and embellishments of how great the market is out there now. Remember it’s always a good time to buy.

#113 kenken on 08.06.13 at 10:22 am

Does anyone have figures on how much MBS is being sold by banks on a monthly basis? the more details, the better – monthly trends by banks over past few years!
any links??
thanks

#114 Timberrrrrrrrrr bye bye housing bubble on 08.06.13 at 10:26 am

Realtors are screaming this morning as word spreads that the free ride of doing nothing for money is over. The housing crash will take full hold now. The market was already crashing but now it’s all but done. Canada was sitting on the biggest housing ponzi pyramid in the world that needs a huge amount of cheap money which is now gone. Bye bye bubble. :)

#115 whatmedia on 08.06.13 at 10:27 am

Media…what media…..for decades we had nothing but a closely held belief that everything uttered by the CBC was gospel. In return we had two GG’s, many senators and thousands of cushy politically appointed positions gifted to the loyal media army of left leaning autocrats. When a change in government finally happened the ensconced liberal media and appointed bureaucrats and their union thralls went on a rampage against any suggestion of change.

As long as we still have the politically motivated dinosuars of the old guard liberal left urging revolution and a burning hatred of change we will continue to watch ‘media’ die off due to a lack of interest by Canadians who have no want of a return to the past.

I for one am glad to see the old guard being squeezed out….eventually a media that represents the populations aspirations will evolve and Canadians will enter a new era. Now lets unappoint the judiciary who are holding back progress and watch our country excell.

#116 Ace on 08.06.13 at 10:30 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.

#117 Happy Rental Trash on 08.06.13 at 10:37 am

In terms of the mainstream media quality becoming watered down and almost useless I couldn’t agree more. I stopped reading the globe and mail website since they started charging for it. Not only have I not missed it I am better off for it and wasting much less time now while still keeping as informed with real information as before.

#118 Daisy Mae on 08.06.13 at 10:44 am

#59 AK:

#52 CrowdedElevatorfartz: “US Bank stocks are “flattening’ as new regulations kick in, more people in the US are refusing to purchase big ticket items (AK , that means a house or a car). Forgoing purchases and paying off their debts before purchasing anything. Can you say ‘Deflation’? I knew you could.
====================================
You obviously have not read this report.

Consumers Push July U.S. Auto Sales Up Sharply

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

Sales up? It would appear consumers are adding TO existing debt…not paying it down, as is being suggested here. Being conned by the media and believing the economy is ‘strong’?

#119 earlybird on 08.06.13 at 10:51 am

It drives me INSANE when people say they are going to buy an RRSP……

#120 Falling GTA on 08.06.13 at 11:03 am

The RE industry just shot themselves in the foot. They know the market is falling down a hill and now it will be rolling a lot faster now. Realtors know banks wouldn’t lend out to 90% of the current buyers who fog a mirror and get $800K mortgage. CHMC should not be lending more then 500K and let the banker take the risk. The economy is dying as people have no money to go out and spend. They have to pour every penny into a house they can not afford. Businesses are hurting badly and the economy is on shaky ground. RE is going to be in a world of hurt.

#121 CHMC in crisis control on 08.06.13 at 11:08 am

From CNBC Aug, 6th – Canada’s version of Fannie Mae, which is called the Canada Mortgage and Home Corp.,announced that it will limit mortgage guarantees extended this month to $350 million (presumably, that’s $350 million Canadian, which is the equivalent to approximately 70 million Molsons). The idea is that this will help cool off the Canadian housing market and reduce risk to tax payers. Note, however, that if CMHC had proper controls over the quality of the mortgages it was backing, a dollar cap would be unnecessary. This “reform” is really an admission of quality-control failure.

#122 Daisy Mae on 08.06.13 at 11:34 am

#98 gladiator: “Garth, you provide quality material on your blog, the copyright is yours, your blog gets millions of views a month, you have devoted followers and gaining new ones – why not put some ads here? At least, you’d be somehow rewarded for the time you write, you read the comments and, most importantly, for tolerating some nasties who come here to annoy you (like me, for example). So what say you?

The essence of this site is non-commercial information. I will shoulder the cost. Thanks for the concern. — Garth”

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

This way Garth is indebted to no one. And can speak his mind freely.

#123 Herb on 08.06.13 at 11:36 am

#118 whatmedia,

you couldn’t be more naive if you tried.

#124 calgaryPhantom on 08.06.13 at 11:44 am

Very smart move by CMHC. Now when the housing correction happens, they will be able to say that they were proactive about it.

#125 T.O. Bubble Boy on 08.06.13 at 12:02 pm

Regarding the CMHC news: doing the math, $350M a month = $4.2 Billion in new securitized mortgages per year (assuming that the same cap was in place every month).

Given that CMHC had $119.5 Billion for 2012, this seems like an insanely big drop!
http://www.cmhc.ca/en/corp/nero/nere/2013/2013-05-06-0815.cfm
(last stat at the bottom: Annual securities guaranteed = $119.5B)

Can anyone confirm that this is accurate?

CMHC will drop from $120 Billion to $4 Billion in new securitized mortgages?!?!?!?

#126 Squatter on 08.06.13 at 12:03 pm

#125 Daisy Mae:
The essence of this site is non-commercial information. I will shoulder the cost. Thanks for the concern. — Garth”
********************
This way Garth is indebted to no one. And can speak his mind freely.
————————————
I wouldn’t mind beer ads or Harley ads for example. Garth never recommends individual stocks anyways.
Of course, bank or realtor ads would be a a problem.

#127 Canuck Abroad on 08.06.13 at 12:08 pm

113 Evangeline, actually Shawn is shilling for Buffett. He posts about him almost every single day. It’s creepy. Buffett might have been a value investor back in the day, but no more. Now that there is no longer any concept of value, he just cosies up to whoever can line his pocketbook. Not saying there’s anything wrong with that at all. But let’s just call a spade a spade.

#128 calgaryPhantom on 08.06.13 at 12:09 pm

#125 Daisy Mae:
The essence of this site is non-commercial information. I will shoulder the cost. Thanks for the concern. — Garth”
********************
This way Garth is indebted to no one. And can speak his mind freely.
————————————

I won’t mind if you post adds like the one below.

http://beta.images.theglobeandmail.com/d13/life/the-hot-button/article8392159.ece/ALTERNATES/w620/JMC107_Sexy_Realtor_Ad_20130207.JPG

#129 T.O. Bubble Boy on 08.06.13 at 12:13 pm

Also – the 2013 plan called for $90 Billion of security guarantees (page 20 — $55B in NHA Mortgage-Backed Securities and $35B in Canada Mortgage Bonds):
http://www.cmhc-schl.gc.ca/en/corp/about/anrecopl/upload/CPS-2013-17_67838_en.pdf

So, that $350M cap for 1 month seems like at least an 80%-90% drop off… unless someone can point out if I’m comparing to the wrong numbers.

#130 T.O. Bubble Boy on 08.06.13 at 12:14 pm

Ahhh – the CBC article explains it:
http://www.cbc.ca/news/business/story/2013/08/06/business-mortgage-banks.html

“Earlier this year, Ottawa announced it would limit the amount of those mortgage-backed securities that it would guarantee to $85 billion this year. That’s a rise from from $76 billion in 2012.

But by the end of July, barely over halfway through the year, the banks had already tapped the program for as much as $66 billion, hence the need for the cap to stay under the annual limit.”

#131 Old Man on 08.06.13 at 12:20 pm

I have not bought a newspaper in 15 years, and noticed over time they are getting thinner, as all can be seen on the internet with updates. The libraries are not what they use to be, as people are reading at home with technology; small independent bookstores have closed down; record stores too. The latest gig is called O.T.A., and might ditch my cable, as can bring in 30 stations for free for a total package from Texas with free shipping; a range of 150 miles; and even a motor rotation system for about $100.00. Bye Bye Rogers!

#132 NetCentric on 08.06.13 at 12:30 pm

#35 IM in C “They will not be selling their homes until they are in their 80′s.”

That is not correct. By the time people are 80 the majority have ALREADY sold their homes. At age 65 there is a dramatic increase in home selling. The attempt by retirees to sell their homes for income will happen over the next twenty years, not twenty years FROM now as you suggest.

Please see the chart here which makes it very clear.

http://wp.me/p2klV5-gy

Once there click on the link to the American Planning Association for all the gory details.

#133 marco on 08.06.13 at 12:32 pm

#132 T.O. Bubble Boy

unless someone can point out if I’m comparing to the wrong numbers.

That $350M is per lender not total.

“”CMHC said Monday no one lender will get guarantees for more than $350 million worth of securities per month, from now on.””

#134 Not Baffled by BS on 08.06.13 at 12:46 pm

#134,

Old Man,

We have been using Over The Air television for over a year now, and subscribe to Netflix. We live up high and get 16 channels in Toronto. We paid $5 for the indoor antenna. The uncompressed HD signals are much better than anything you get from Rogers or Bell. The quality is shockingly good.

I am not sure why you are mentioning Texas because you buy those systems anywhere (in Ontario at least.) You can pay from $5 to $400 (top of the line, fully installed.) All major electronics stores sell them.

#135 Ret on 08.06.13 at 12:48 pm

$76B of CMHC insurance underwritten last year and $66B already out the door this year.

No wonder construction in the GTA is on fire. Fog a mirror and you are approved!

In another 12-18 months, CMHC could have $142B of 2012/2013 issued mortgages underwater if prices drop back even minimally.

#136 father on 08.06.13 at 1:07 pm

let the games begin

#137 Condocrash2013 on 08.06.13 at 1:13 pm

http://m.mortgagebrokernews.ca/news/glut-of-luxury-condos-in-toronto-market/174669/

#138 Money talks on 08.06.13 at 1:22 pm

Twitter feed is hilarious today when searching “CMHC”. Panic much?

“If you are thinking about buying, act FAST and call/contact…” says an agent and broker.

“Big Brother telling us what to do” says another mortgage broker.

If Big Brother is supporting your granite habit, he sure does have a say in what you do, where have people’s heads gone? Too many entitled people about to pay the piper.

Get your popcorn ready, the feature presentation is about to begin.

#139 Herb on 08.06.13 at 1:30 pm

why does the term “MBS” remind me of “ABCP”?

The shell game couln’t be continuing. Could it?

#140 Money talks on 08.06.13 at 1:35 pm

One more…

“What’s #CMHC up to? Two deals in a row dead because they refused to insure the deals. #yegre”

and

“Price drop! Previous deal died; Buyer couldn’t get financing.”

Same realtor.

#141 marco on 08.06.13 at 1:38 pm

The rental crowd is all pumped again…and again….and again. Only to see the market remain strong.

Sad.

Bankers have been lending money for 1000’s of years and now they’re going to get outta the game??!!

Sad.

This summer has been stronger now than it has been for years and you think a small process change will end it.

AHHAHAHAHAHAHA

Pay your rent on time or get out!

The line up is beginning now renters.

#142 Evangeline on 08.06.13 at 1:39 pm

#130 Canuck Abroad

short answer: Yes, you do think Graham’s ideas on value investing are worthless.

#143 Evangeline on 08.06.13 at 1:48 pm

Garth pre-nails it again:

Yahoo Finance News/Reuters

Fed may cut bond buys as soon as next month – Evans

Fed could taper in September but doesn’t have to: Lockhart

…..Stocks slid to near session lows on Tuesday following comments from the presidents of the Atlanta and Chicago Federal Reserve Banks that the central bank could start reducing its bond-buying program as soon as September.

#144 Old Man on 08.06.13 at 1:54 pm

#137 Not Baffled by BS – Imao, as in Canada the best technology for O.T.A. as a complete package cannot be bought in Ontario, as sent Mr. Turner the details. I might be old, but am no fool, so wish you the best of luck paying $400.00 for a complete installation from an ex- real estate sales person, and does it have a motor for turning the antenna without a wrapping into any direction?

#145 father on 08.06.13 at 2:07 pm

I think marco should be deleted he’s an douchebag and has nothing constructive to add, any other blog dawg second that?

#146 CP on 08.06.13 at 2:11 pm

Marco, dude, even if I wanted to buy a house you’re so f***ing annoying I would never work with someone like you. Also, its pretty telling how well business is going if you have time to post on Garth’s blog 6 times in less than 24 hours:

#21 marco on 08.05.13 at 6:39 pm
#33 marco on 08.05.13 at 7:33 pm
#44 marco on 08.05.13 at 8:11 pm
#95 marco on 08.06.13 at 7:49 am
#136 marco on 08.06.13 at 12:32 pm
#144 marco on 08.06.13 at 1:38 pm

I’m going to guess you’re single, lonely, and kinda regretting getting into real estate. Silver lining: you would make an epic fry flipper

#147 Ogopogo on 08.06.13 at 2:16 pm

#98 gladiator on 08.06.13 at 8:15 am
Garth, you provide quality material on your blog, the copyright is yours, your blog gets millions of views a month, you have devoted followers and gaining new ones – why not put some ads here? At least, you’d be somehow rewarded for the time you write, you read the comments and, most importantly, for tolerating some nasties who come here to annoy you (like me, for example).
So what say you?

The essence of this site is non-commercial information. I will shoulder the cost. Thanks for the concern. — Garth

gladiator, are you for real? That’s the worst idea since CMHC, Spam, The Clapper or taking Thalidomide while pregnant.

Garth is the lone voice of reason and financial logic in the realtese-infested media in this country. A single ad here would collapse the integrity of this blog beyond repair.

#148 someone on 08.06.13 at 2:26 pm

@Bill Gable # 24

“When you took the Bus, or Go Train, or Skytrain – when did you last see someone reading a newspaper?”

The skytrain seats and floors are plastered with the free rag newspapers 24 Hours (the orange one) and Metro (the green one). Those are total propaganda newspapers. They make the Vancouver Sun look like principled journalism, by comparison. Half those free rags are full of ads for real estate and most of the other half is lifestyle columns about how to decorate your condo. The small section on news is just tidbits of current events framed in the way our corporate masters want us to understand the world. Those free rags probably do a good business still of selling advertising. They hire people for minimum wage to stand outside the skytrain stations and hand out the newspapers. Some of those people can be quite aggressive, some really shout out quite loudly. You have to be skilled to by-pass them–just another obstacle in the daily commute in the post-post-modern city–the 21st century version of the town crier. I think they may have a quota for how many newspapers they hand out. Sometimes I take one from them to help them fill their quota and then I put it back in one of the boxes without even reading it (love to mess around with management’s ability to track employee productivity–wow, joe schmuck newspaper hander gave out 10,000 newspapers today–he met his quota, never mind most of them went unread and straight into the trash!). The floors and seats in the backs of buses and on trains are sometimes totally covered with those rag newspapers. The bus picks up speed and open window lets in some wind and those rags are flying all over the back of the bus. It really is quite a nuisance.

#149 Realtors are in an all out panic on 08.06.13 at 2:30 pm

WOW ……… Realtors are out in full force screaming in financial pain as sales are falling as well as prices. Look at the out of work and hungry for money realtors posting day and night on garths blog and all over the internet. Banker buddy tells me 70% of deals will not go through as majority of buyers don’t have any money. The banks have lent out 600,000,000,000.00 in sub-prime loans. That’s 600 billion dollars. The taxpayer on the hook for 600 Billion dollars for people without money to buy RE? Canada is 100% a Ponzi scheme .

#150 western observer on 08.06.13 at 2:31 pm

re# 101 EK

What a refreshing post.

A voice of reason.

Those who are waiting for a crash are in for a big disappointment

#151 Mixed Bag on 08.06.13 at 2:35 pm

#64 brainsail on 08.05.13 at 9:46 pm

The installation of a drinking fountain in a rest room that incorporates toilets or urinals is prohibited by code.
—————————

Perhaps in this country.

#152 Tinfoil Hat on 08.06.13 at 2:37 pm

What does the new CMHC cap mean for future renewals?

#153 young & foolish on 08.06.13 at 2:37 pm

Wow … there are a lot of kool-aid drinkers posting here

No one is fooling you guys!

#154 Babblemaster on 08.06.13 at 2:39 pm

When it comes to Canadian RE, the fact is that facts don’t matter. Fundamentals don’t matter. Propaganda does matter. For some reason(s), that only Brad Lamb knows, Canadian RE has defied gravity. And that’s a fact.

#155 Toronto_CA on 08.06.13 at 2:51 pm

#144 marco on 08.06.13 at 1:38 pm

Is this marco guy a classic internet troll or is he really that lacking in self awareness that he doesn’t realize how incredibly stupid he sounds?

Either way, please go find another place to post your inane comments.

Can’t wait for Garth’s post tonight on the CMHC changes, the papers all have it as major headlines so will be interesting to see how the RE cartels spin it.

#156 father on 08.06.13 at 2:58 pm

when any kind of investment starts going down in value people tend to sell off so I wouldn’t doubt any different for housing it’s called herd mentality

#157 Old Man on 08.06.13 at 2:59 pm

Today was the first time in my life that was caught over this holiday weekend with no cash in my pocket and messed up bigtime in life, as did not pay attention to this all. I fear for those that are on welfare as know how much they are suffering, and we talk on this blog about big money? I had bills to pay and needed money in my pocket, so went to the bank, and so many people were there, so had to stand in line with a bad back, as had no choice in life. I needed cash and to pay my bills; hell might as well keep a $1,000 in reserve, but love the routine of going out daily for whatever I need in life, but this is just an option. I will never understand why so many people at 11:00 AM are not working in life, as they were all there in line. Perhaps it is time for me to get a pin for the cash machine, as that needs to be done for me to survive.

#158 father on 08.06.13 at 3:04 pm

I do not agree about the slow decay. I think housing will crash

#159 nonconfidencevote on 08.06.13 at 3:09 pm

@#121 Daisy Mae
“Sales up? It would appear consumers are adding TO existing debt…not paying it down, as is being suggested here. Being conned by the media and believing the economy is ‘strong’”

Yeah, that’s how I was kinda seeing it. More sheeple rushing out to finance cars at 0% interest or leasing with minimal down.

Because “image” is everything.
Time will tell if AK is wrong.

#160 Mister Obvious on 08.06.13 at 3:10 pm

#101 EK

“Of course real estate will return to long time averages at some point as the market is cyclic, but the truth is that individuals who have been waiting on the sidelines for this event to occur have unfortunately lost an opportunity this time out. “
————————-

People waiting on the sidelines as the market stalls at its peak will lose nothing. Especially if they have been investing in yield producing assets in the meantime.

But those who hold homes of grossly inflated value will forgo tax free gain without mitigation through yield. That’s not loss either… it’s a failure to profit.

#161 Ballingsford on 08.06.13 at 3:12 pm

House in neighborhood (Nepean) has been for sale for a while now. Realtor just posted a price reduction sign over the weekend.
Now it’s listed at $459, 000 instead of $469, 000. $10, 000 drop. Like that’s going to attract a lot of greater fools, but you never know.
An entitled princess hanging off the arm of some greater fool guy might do it.

Did you ever notice that folks who often buy these half million $ homes have Kia’s, Hyundia’s, or Toyota Corrollas parked in their driveway?

#162 Doug in London on 08.06.13 at 3:15 pm

Garth:
That’s a good summary of why you can’t believe everything you read in the papers anymore. It seems you have to get information from as many sources as possible, and don’t automatically believe something that doesn’t make sense. This sad blog, by the way is one such source of information.

@Paully, post #15:
Good point you make. Have you ever heard the saying the bigger they are the harder they fall? Similarly, the longer this bubble goes on the worst it will be when it deflates and returns to more normal prices. I read today in the Globe and Mail the government is doing more to try and control the bubble, so at least somebody in Ottawa knows what’s going on. The Globe is a still a somewhat reliable source of information, isn’t it?

#163 daystar on 08.06.13 at 3:20 pm

#142 Herb on 08.06.13 at 1:30 pm

CMHC 100% backed ABCP post GFC is why thanks to F.

F pimped CMHC to the big banks for 7 years now and now CMHC has hit the credit expansion wall. Either the $600 billion ceiling is raised or the days of CMHC 100% insuring mortgages with less than 20% down are over.

My guess is that CMHC will continue to gift 90% insured mortgage coverage to Genworth as they are American and will move ahead to privatize CMHC to American housing insurers as was the plan all along: give America majority market share of Canadian housing insurance. Sad, really, that Canadians can’t catch onto what the lobbyist Harper’s goals have always been “facilitate increased U.S. market share of Canadian markets in most if not all sectors, some much more so than others like insurance, energy facilities and grain marketing/handling, anything the U.S. wants.” Damn shame Canadians either don’t see it coming or don’t care when they do.

We will find out as always, that ignorance has a price.

And the #118, remarks one would expect from a dated, blind partisan 10 years ago. Out of touch, is putting it lightly, not worth more words. What is worth dialogue today is what CMHC’s nearing debt ceiling thanks to this government and greedy banker CEO’s squeezing 100% backed securitization to a trickle going forward will mean for the housing market and bond market yields for the rest of the year and beyond.

Its no secret that we have legislation in Canada that requires all housing that has less than a 20% down payment to be 100% insured through CMHC. If CMHC won’t hand out the candy, the buyer’s pool (mainly virgins) that can’t come up with 20% down is pretty much gone from the market. Readers, that’s a lot of buyers. Couple this with higher yields in the bond markets as higher risk gets priced in (mortgages go from 100% insured to 90% insured) and this one two combination is sure to rock sales… and values.

Readers, we saw an engineered real estate bubble blown by the Harper government and financial institutions in this country and now that the financing is running out, an engineered bust in the making.

Meanwhile, as evidenced by the 66 billion in CMHC loans so far this year, the pool of RE owners/borrowers with larger than life mortgages continues to grow year after year, this year being not so different than the last. Can this club handle interest rates with a 3 to 5% spread from the BoC rate alone upon renewal? Fast forward 2 or 3 years, price in a BoC at plausible 4% and mortgages now average 8% and creeping towards 10% within 5 years. Can the fat mortgage holders handle mortgage renewals climbing from 3% to 8%+ as terms come up for renewal effectively doubling payments from where they are now? Will the service industry, lion’s share of our economy, get the stuffing knocked out of it? Can the economy handle the predictable rate led defaults to come over the next 5 to 7 years? Can the economy handle the job layoffs coming from a recession in housing in the near and mid term?

20% of Canada’s GDP came from RE not so long ago. 1.4 million jobs come either directly or indirectly through real estate, possibly more. That’s roughly 10% of all working Canadians in this country. 900,000 jobs come through construction and service with the rest in sales and finance and the numbers in retail and mills could astound. Can the economy handle the damage done by this slow moving train wreck in housing by sopping up the unemployed with jobs elsewhere? Really?

No soft landing here, folks. Just the products of self serving leadership coming to an ugly conclusion this nation will take a decade to pay for, is all I see coming for Canada. This nation has, through poor leadership and an uneducated electorate, put itself in a position where we can’t handle high interest rates and by way of the hard way, we will find out why. I just hope it doesn’t destroy too many families as I fear it will as we do discover in time.

#164 Brian on 08.06.13 at 3:37 pm

I’m continually surprised by the unforeseen catalysts that propel this market higher. Interest rates hit a generational low in May that allowed buyers to lock in 5 year fixed rates below 3% – I believe rates were offered as low as 2.69%.

I would not be surprised if August sales are just as robust as buyers whom secured rate holds in May are eager to close before their 120 day hold expires.

Rates are now above 3.19%, meaning an average increase in monthly mortgage costs of about 5% for anyone getting into the market this summer for the first time.

I wonder, what comes next?

#165 Stoopid Idiot on 08.06.13 at 3:43 pm

http://www.jsmineset.com/

Jim,

This is for our friends to the North. Let’s keep in mind that CMHC is backed by the taxpayers of Canada. Bail-Ins are on their way to Canada and it is clear if you can read between the lines, the taxpayers will NOT be at fault (“Bailed-Out”) for CMHC insurance provided by the commercial banking institutions to the speculative home buyers. The four largest mortgage underwriters, Royal Bank of Canada, Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and Bank of Nova Scotia, are some if not all the that is framework of the “2013 Canadian Budget Action Plan” as you have noted to us in the past that will fall under the systemic failure policies put forth by the Canadian Government and Bank of Canada.
(Excerpt)
He is also taking steps to reduce the degree to which taxpayers backstop the housing market.

http://www.theglobeandmail.com/report-on-business/economy/housing/cmhc-moves-to-take-steam-out-of-housing-market/article13607534/

#166 Stoopid Idiot on 08.06.13 at 3:50 pm

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/8/6_Richard_Russell_-_I_Havent_Seen_Anything_LIke_This_In_60_Years.html

Richard Russell: “When things get this crazy, one has to go by the seat of one’s pants. According to Gene Epstein in this week’s Barron’s, the US jobless rate is not 7.6%, it’s actually 7.9%. Since the 2009 lows, the nation’s Gross National Product has swelled by $1.3 trillion, but the stock market has gained $12 trillion in value.

Meanwhile, the VIX has dropped to a multi-month low under 12, meaning that option traders see low volatility in coming months. And I’m thinking, after the calm comes the storm. For all the above reasons plus a churning in my stomach, I’m exiting this market (good-bye DIAs), and I suggest that maybe my subscribers might do the same. But it’s up to the individual. You might stick around with a mental stop loss on your DIAs if they break below 154.

The drivers of this market are the money managers who are playing the upside for all it’s worth. After all, where else are they going to go? Some bears are predicting that the economy is not through deflating and deleveraging, and therefore the Treasuries should head higher.

There are just too many “ifs” in the stew for me, so I am happy to retire to the sidelines. Sure, with the Industrials and Transports at new record highs, technical analysis and the Dow Theory say that this market “should” go higher. But for me, it’s a case of the weird getting weirder, and it’s all a little too much for my tired nerves. The Dow Theory does emphasize VALUES, and the D-J Industrials now sell at 16.83 times earnings while dividends are a micro 2.35%.

… The markets are now trading on manipulated information (CPI and GDP) about the economy, and manipulated stimulus from the Federal Reserve. I will say that in the 60 years I’ve been studying markets, I’ve never, ever seen anything like the situation the markets and the economy now find themselves in. I have only one comment and prediction — It will not end in a good way.

#167 Blogget on 08.06.13 at 3:55 pm

Why is it when anyone posts an opposing view here that they get attacked, called names and chant delete him, delete him?

5 years and waiting for the big collapse maybe a tad frustrating?

Hey look on the bright side, Jehovah witness have been waiting hundreds of years and they still ring my doorbell.

#168 Old Man on 08.06.13 at 3:58 pm

#165 Doug in London – there is this gal that hangs out at the Wortley Roadhouse who was asking about you, as you was a bad boy with her, and wants you to meet her again, as promised her a dinner, so time to pay up, as gave you her phone number, but is still waiting for the call. So now what, as she is a bit angry with being played, so better man up, as she is angry.

#169 Grantmi on 08.06.13 at 4:10 pm

#171 Blogget on 08.06.13 at 3:55 pm
Why is it when anyone posts an opposing view here that they get attacked, called names and chant delete him, delete him?

5 years and waiting for the big collapse maybe a tad frustrating?

Because You guys go on and on how wrong us waiters are wrong too.

Just because you,ve had biblical low rates ever, that you right?

It’s just lasted a bit longer then anticipated… Wait till uncle Ben try’s to correct $17 – $20 TRILLION in debt, and rates NORMALIZE. (look up the word normalize)

#170 calgarydan on 08.06.13 at 4:19 pm

it’s rather amusing that for the past 5 years the housing market along with the stock market just keeps climbing a wall of worry. The more bad news that comes out, the higher prices go.

Lets think about it hypothetically. Back when you could buy a house for $200,000 in Calgary
“Don’t do it! It’s over prices, prices will crash, save cash”

ok, so the price of that house goes to $500,000 and you lost a ton of money holding cash due to inflation (because the market was rigged and you might need liquidity for the coming deflation housing crash so you didn’t stick it in the stock market bubble)

Now the bubble pops and that house CRASHES from 500k down to 350k. That’s a %30 crash. Guess what, that’s still WAY higher than the original price that you could have purchased that house for.

Bottom line. Yes a crash will come, but by the time it comes you’ll still be paying more than what you could have got the house for earlier.

All you gurus calling for a crash. Sure everything crashes eventually. But timing is everything. If a crash doesn’t happen for another 15 years what’s the point? If anything, guys like Garth and Peter Schiff that keep calling for crashes just cause others to lose money by waiting for ever.

You want to give us useful info? tell me when the crash will happen? I’ve been waiting since 2006 for this mythical crash. Maybe in 2053?

Waiting for a crash in Calgary since 2006? In 2007-8, the average Calgary SFD lost $92,499, or 18.3% in 18 months. So much for your credibility. — Garth

#171 Jayesbee on 08.06.13 at 4:26 pm

Hey Garth.. been following your advice and switch almost all my mutuals to ETFs. Im interested in knowing your feelings about one in particular.. ZPR.TO. its been on a downward tragectory lately. ive just picked up some more, but maybe you can ELI5 why this particular preferred share ETF is going down ?

#172 Siva on 08.06.13 at 4:34 pm

#164 Ballingsford on 08.06.13 at 3:12 pm

//Did you ever notice that folks who often buy these half million $ homes have Kia’s, Hyundia’s, or Toyota Corrollas parked in their driveway?//

Exactly my thoughts. On HGTV I see people driving Toyotas and Hyundais bidding $700k, $800k houses like there is no tomorrow. I was like what the what? This is crazy. People are out of their minds.

#173 Jayesbee on 08.06.13 at 4:54 pm

#176

I have seen plenty of people in BMW M3’s and Mercedes S Class’ living in semi’s. Its all about priority.

#174 espressobob on 08.06.13 at 5:00 pm

#175 Jayesbee

Sorry I’m not Garth. Sounds like your playing ZPR the right way! Average in. This ETF is laddered after all and you can enjoy the ‘Dividend tax credit’ for your troubles. Best of luck.

#175 Two syllable words on 08.06.13 at 5:02 pm

Time to switch topics around here cause a housing crash you’ve been praying for isn’t coming.

How about a stock market crash?

Lets chat about that.

Thoughts bloggets?

By any other name, you are still Marco. — Garth

#176 MWerk on 08.06.13 at 5:12 pm

It is really fun to read realtors posts in this blog, they seem bothered by Garths posts, and to me that is a sign that Garth is delivering the true news.

#177 valley renter chick on 08.06.13 at 5:19 pm

@ #122 earlybird
What does it drive you INSANE when people say they are going to buy an RRSP? SOMETIMES RRSP’s do make sense….especially when you can get a group RRSP where your employer match your contributions dollar for dollar :) Or how about when a small contribution will put you into a lower tax bracket etc. Please don’t go insane. Do however, be aware of your own situation.

#178 Siva on 08.06.13 at 5:41 pm

#177

There are lot of Mercedes’ and BMW’s in my condo. That’s not the point. People buying $800k houses should be driving a lot nicer than a Hyundai. When ever I visit my family in US some of whom live in 400k, 500k neighbourhood most of the cars are luxury makes. Hyundais are mostly in 200k neighbourhood. This ought to be the norm. But as you said I hope people in Canada are making a conscious choice to drive an ordinary car and buy expensive houses. But that doesn’t add up.

#179 Jayesbee on 08.06.13 at 5:53 pm

#178 espressobob

thanks! Glad I know what I think im doing is the correct thing to do lol. Follow up.. ZPR better for TFSA or RRSP.. or doesnt matter ?

Cheers for the help.

#180 brainsail on 08.06.13 at 6:09 pm

“Obama calls for phase-out of mortgage giants Fannie and Freddie”

http://politicalticker.blogs.cnn.com/2013/08/06/obama-calls-for-phase-out-of-mortgage-giants-fannie-and-freddie/?hpt=hp_t2

#181 calgarydan on 08.06.13 at 6:10 pm

Waiting for a crash in Calgary since 2006? In 2007-8, the average Calgary SFD lost $92,499, or 18.3% in 18 months. So much for your credibility. — Garth

A blip that was totally recovered in a year. Nothing goes up in a straight line but anybody that bought a house just 10 years ago is WAY ahead now. Buy a house today, ok it might blip down, but in 10 years you will be way ahead just like now. House prices only go up. Sure they blip down but there is no house since Calgary was created that is worth less now than it was 20-30-40-50 years ago.

But you said you’d been waiting to buy since 2006. Why didn’t you? — Garth

#182 espressobob on 08.06.13 at 6:21 pm

#179 Two Syllable words

Not to worry, the stock market will crash. Everyone here will be destroyed and mankind as we know it will be obliterated. Not to worry yourself but it’s all good?!?!?!

#183 AK on 08.06.13 at 6:31 pm

#103 CrowdedElevatorfartz on 08.06.13 at 9:09 am
“@#59 AK

Amusing, You dismiss my links to The Us Bureau of Stats and my quoting of The Economist as ‘propaganda” ….

All while quoting “friends in America” and posting a link to “The Daily Beast” as the foundation of your arguement. Bwahahahahahahaha

Thank you I needed a good laugh before starting work. Bwahahahahahahahahahahahahahahahahahahahahaa.

AK vulgarities to follow……….”
====================================
LOL. It must be nice. @ 9:09 am and you were just leaving to go to work? I leave to go to work @ 6:35 am. :-(

Okay, I will send you an official link. :-)
Believe me, the U.S. auto sales are heating up. Take a look at Magna’s(MG) report for additional confirmation.

I am expecting U.S. auto sale to be back at pre-2007 levels withing the next 3 to 5 years.

#184 bloggetter on 08.06.13 at 6:48 pm

Buying a car that depreciates by 80% in 5 years is not smart. Buying a house, that over time, always appreciates, is a smart move.

So logic dictates invest more in a house and less in vehicles.

It you saw a Ford would you stop crying. Talk about blog brainwashing.

Re/Max called, Marco. They want the balloon back. — Garth

#185 CrowdedElevatorfartz on 08.06.13 at 8:45 pm

@#187 AK
“LOL. It must be nice. @ 9:09 am and you were just leaving to go to work? I leave to go to work @ 6:35 am. :-(”
++++++++++++++++++++++++++++++++++

Ummmmmm, actually. I live on the west coast of Canada and 9:09am Toronto(Garths’ Blog site) time is 6:09am Vancouver time.

Its a new invention called a …..wait for it…. Time Zone.

Next week I’ll show you what a “Lighter” can do.

hint.
Encinoman called it “Flame-age”

#186 Herb on 08.06.13 at 11:04 pm

#166 Daystar,

thanks, Lorne, although you’re depressing as always. On second thought, it’s not you, it’s what’s happening that is depressing.

Wife and I were reminiscing to-day about the days when bankers were models of prudence and probity. What happened? “Shareholder value”?

#187 Doug in London on 08.06.13 at 11:22 pm

@Old Man, post #172:
Tell her to look for me at Skydive Grand Bend. More specifically, to look for the badass character who comes swooping in with the blue, white, and black parachute canopy. I don’t have any money to buy her vittles, as I spent it all on jumps as well as cheap REITs, preferred share ETFs (see Garth, I’ve been paying attention), and utility stocks. I’ll use the capital gains from my XEG energy fund to pay for any increases in jump costs as fuel prices go up. Great fun!

#188 Old Man on 08.07.13 at 2:50 pm

The hummer is a vehicle that would not want to own, as parking can be a problem. I knew this dentist that bought one who went to UofT together, and said why? He said needed a tank in a car crash, as guess who will win?

#189 the numbers don't lie on 08.07.13 at 4:53 pm

Those in detached homes with Hondas parked out front have made good decisions. They have invested more in an appreciating asset (land) than in a depreciating asset (vehicle). Steering clear of high end vehicles is a good way to save money for a detached home. As well, Hondas are more reliable than BMWs.

#190 Siva on 08.08.13 at 3:27 pm

#193

Yes, if they purchased the house for $300s. If they paid $800s then I doubt they will be able to afford it in the long run.

Regarding investing in houses miss two mortgage payments and we will see who made the real investment and who controls that investment.

Buying an automobile is not an investment and everyone knows it depreciates. But most people buying houses think it always appreciates and that at best is wishful thinking.