Careful what you believe

dogcop1

Just a day after Ottawa threw the latest bucket of cold water on a horny housing market comes more evidence the poor thing may be shrivelling on its own. Of course, most people (including the feds) have fallen for this realtor meme that real estate is back. Too bad they’re not paying attention.

And I don’t just mean the BMW thing.

What? You didn’t hear?

The condo scene in the country’s dominant housing market is so bad that one developer’s been forced to give away new BMWs in order to find buyers. It’s a 133-unit development in faraway Markham, where prices start at $460,000 (for 650 square feet). Buy one at The 6th Angus Glen and you’ll get a quick $35,000 towards the purchase of any new Bimmer. That’s equal to an immediate 7.6% price drop – even before you start haggling.

The 6th, by the way, is under construction and due for completion in the winter – six months from now. According to BuzzBuzz Home, 44% of listed units remain unsold. Can you say “wir sind geschraubt!”?

BMW

For your mother-in-law who tells you only boys with condos attract quality girls, here are a few facts worth reciting.

  • Sales of new condos in the GTA crashed 18% in the last few months (the second quarter) over the same period last year.
  • Building permits are tumbling, too – a sure indication real estate’s chilling. Permits for SFHs across Canada were down 7.4% last month while condo permits took a 13% dive. In Toronto the decline was far more significant – 29.6%.
  • Already there’s evidence of some troubled days ahead for the massive condo/construction sector. At no time in the past decade, with the exception of the crisis year of 2009, were there so few new housing projects launched as in the last six months.
  • At the end of June there were 19,394 condo units like those in The 6th – on the market, but unsold. It’s impossible to tell yet how many projects currently being marketed will never actually be built.
  • And despite the brakes being applied, it’s far too late to stop a tidal wave of new inventory from hitting the streets. Currently 57,461 condos are under construction in the GTA. Thousands of them were sold one or two years ago when the market was sizzling and prices rising, which means a lot of buyers are now gulping Tums
  • Speaking of buyers, one of the surest signs a market has turned speculative and will self-destruct is when homeowners are replaced by flippers, speckers and amateur landlords. It’s estimated as many as 70% of all buyers last year were investors, not end users – a number which is falling fast as it becomes apparent flipping days are over.
  • Meanwhile it remains impossible to buy a condo with 20% down and rent it out for positive cashflow – certainly not when the lost earning power of the downpayment is included. And with 57,461 condos on the way, don’t count on higher rents.

Now, for comic relief, we flip over to Phil Soper, CEO of the company that owns Royal LePage. Said he this week as quarterly results were released: “It is the view of management that we will see sales volumes start to trend upward on a year-over-year basis in late 2013, and as we work our way through 2014 we also expect to see house price appreciation return to long-term historical averages.”

Sure thing. Click your heels and repeat it three times. By the way, did I mention that company profits just dropped 57%?

Like peeing into a hurricane, this heroically pathetic blog has argued for months now that market fundamentals are vastly weaker than real estate board frankenumbers suggest. New home sales in the bellwether GTA are the second-lowest in a decade and are running 34% below the average. Condo sales are now at the second-lowest level on record. Only 2009 – when we were all going to die – was worse.

Property virgins have been repelled by higher rates, shorter amortizations, stiffer hurdles and fatter payments. And as condo humpers and dumpers feel squeezed, the ripples eventually flow up through the entire real estate food chain. Now with CMHC turning back the tap of riskless funds to major lenders, the inevitable will happen a little sooner.

Want a Bimmer? Just buy one.

153 comments ↓

#1 TurnerNation on 08.07.13 at 6:37 pm

Just sat down at my PC, refreshed all tabs. Is this weblog on a timer?

#2 Vancouver on 08.07.13 at 6:44 pm

Garth: Would love to see some analysis of recent Vancouver numbers.

#3 Nosty in Vladland on 08.07.13 at 6:54 pm

#175 Old Man — “. . . but this means the establishment of a precedent to destroy the Charter, and don’t let him get away with this.”

Harper said in the mid-2000’s, “You won’t even recognize this country when I’m finished with it.”

True enough, and this is what he may have been referring to — here and here. However, this wrench may upset the apple cart too, esp. if it becomes a strong foothold.

#4 Fisc on 08.07.13 at 7:00 pm

Another bad month for Montreal:

http://communications.centris.ca/Tableaux/2013/Tableaux_Communiques_CIGM_2013M07_ENG.pdf

On Montreal Island, 1,014 sales is a very low number for July. Also on Montreal Island, condo prices decline 5% YOY, plex prices decline 3% YOY and flat prices YOY for single-family. New listings soar (2,128 is the highest number since several years for July). And active listings are still very high! Ugly, ugly, ugly… Montreal implodes!

Garth, what do you think about the future of Montreal Real Estate market?

#5 wallflower on 08.07.13 at 7:01 pm

The Bimmer, and
It’s a 133-unit development in faraway Markham, where prices start at $460,000 (for 650 square feet).
————————

My 17-year old son and I drove by that billboard yesterday.
He said, “Huh? What’s that all about?”
I explained the rationale and the math (albeit with some bias).
His reaction: “What a bunch of bozos.”
He was referring to both sides, the buyers and the seller.

#6 heloguy on 08.07.13 at 7:03 pm

Garth, With the fed hinting quantitative easing is over, how low do you think the Dow will go and over how long a period? Is this latest hit just a temporary blip?

Cheers

#7 Win on 08.07.13 at 7:04 pm

Garth

It’s “Wir sind geschraubt!”

#8 Alana on 08.07.13 at 7:04 pm

Does this mean renting condos will get any cheaper?

#9 What Gives? on 08.07.13 at 7:04 pm

$460,000 for a 650sqft’er!
No way you will ever cash flow this with rental incomes.
What does that get you just over the water in NY?
I got 300 hits on MLS just in Buffalo under $75,000! Thats right, your DP and closing costs gets you a house 150km away. Buy a boat with whats left and you even shorten your commute.
I don’t know a thing about either of those places but, when a 150km and a pourous border makes that kind of price difference something is gonna give. And I don’t think its F.

#10 MWerk on 08.07.13 at 7:06 pm

It could be worse… at least it is cash towards a bimmer, not a kia :)

#11 CrowdedElevatorfartz on 08.07.13 at 7:13 pm

With building permit applications dropping.

Does this mean there will be fewer elevators for me to “ride”?

:(

#12 Ryan Roy on 08.07.13 at 7:28 pm

Starting to believe that (most) condominium units in Canada will be soon viewed as depreciating assets long-term, in the same category as most other consumer goods.

#13 Ogopogo on 08.07.13 at 7:29 pm

Brilliant idea: combine two depreciating assets into one colossal cluster @#%& for the buyer.

Condo + BMW = Crash Test Dummy.

#14 Marginal on 08.07.13 at 7:29 pm

“For your mother-in-law who tells you only boys with condos attract quality girls,…..”
————————————————————
Roared laughing….you’re going for the Stephen Leacock award (though this was more like Twain). Not sure if I read this blog for the excellent info (both host and many of the posters) or for the sheer entertainment. My DH says I’m addicted ;-)

On a more serious note, it is a scary thought that young, first-time property owners who can barely scrape together enough for a condo will now also be saddled a very expensive car (insurance and maintenance). Although, maybe the MIL will take the car and give them the cash?

We are definitely into the “end times”.

#15 Renter in Markham on 08.07.13 at 7:32 pm

I live not very far from this community and I have to agree that the pricing is ridiculous – well they are targeting HAM I guess ;-))
I’ve rented a brand new 2750 sqft home for 2K a month from a ‘Flipper’-Landlord and very happy with the decision…

#16 Donald Trump on 08.07.13 at 7:35 pm

Re: blog photo

I thought they called them “pigs” ?…

#17 Renter in Markham on 08.07.13 at 7:36 pm

Win – I think “Wir sind beraubt!” is much more “passend” – Compared to GTA and especially Mark-HAM German property market seems fairly valued…

#18 An Importation to Prop the Ponzi Scheme on 08.07.13 at 7:40 pm

Still, whatever sales they had burned through the CMCH funds for the whole year. So there were a significant number of sales.

#19 tigerbaby on 08.07.13 at 7:40 pm

> Dude, if you could have a 6 figure job tomorrow why are you a realtor today?

I have a feeling he meant teaching English in Korea …

#20 Rob on 08.07.13 at 7:57 pm

Yeahhhhhhhhhhhhhhh, death to real estate. Bimmer today, hummer tomorrow, wait till 2014 maybe a boat, 2015 perhaps a motorhome with a satelite and chandelier.

#21 Chopper on 08.07.13 at 8:17 pm

Funny you post about the BMW give away in Markham I was driving by there today and noticed the bill board as I came go a traffic light and took a picture of it. I said I will have to share this with Garth but you beat me to it. How can I post a picture here?

#22 Musty Basement Dweller on 08.07.13 at 8:31 pm

Let’s keep Brad Lamb’s advertisement handy as the Toronto condo scene plays out over the next two or three years. You know, the coloured glossy one with the picture of a condo. Let’s compare actual profits to his projections. Overhead drone alert on you Brad my MAN!!!!!!

#23 Unplugged on 08.07.13 at 8:36 pm

How many modern day vacuum cleaner salesmen are peddling are streets these days now selling us over priced, poor quality, cookie cutter real estate? How many of these high school graduate marketers and “industry professionals” are pushing products on consumers that are consuming in many cases 80% of some peoples take home pay? How far can this society full of fools, illogical thinkers, disillusioned minds and madness go before it finally collapses on itself, and once again draw that definitive line in the sand separating the losers from the winners.

#24 Victor V on 08.07.13 at 8:37 pm

#21 chopper

You can use an online image serving site that is free. Just upload your picture then post the link on the blog.

http://tinypic.com

#25 Musty Basement Dweller on 08.07.13 at 8:39 pm

#20 Rob.. Omg a motor home with a chandelier LMFAO

#26 totalinvestor.com on 08.07.13 at 8:40 pm

It’s a 133-unit development in faraway Markham, where prices start at $460,000 (for 650 square feet).

That’s $707/sq.ft to live in Markham. Bwahahaha!

#27 timmy on 08.07.13 at 8:43 pm

and the prices start dropping significantly when?…

#28 Smoking Man on 08.07.13 at 8:45 pm

Who cares about condo’s, Sfh in 416 has got a long way to go before a pause.

It’s the holly grall of the elusion of success.

Image is everything to the schooled… You Herd

In the USA take my guns from my cold dead hands.

In Canada it’s the house keys.

Why can’t any of you get that….

#29 An Cat Dubh on 08.07.13 at 8:53 pm

Bighorn estates in Okanagan Falls according to their commercial (which you may find on YouTube) reduced their prices by 20% and they will throw in incentives like a $1000 Costco card.

http://www.bighornmountainestates.com/

#30 takla on 08.07.13 at 8:53 pm

All realestate is damned to deflate at this time,especially hi-rise condo’s as well as low rise stick frame.This is my bread and butter and im on the front lines at this moment 50% thru my latest project ,12 story concrete condo with commercial \retail on ground in victoria .Last yr completed two hi rises in coquitlam both have not completely sold with price adjustment down as we speak.We went thru this winter of 08 thinking it was past,welcome to 2013,looks even bleaker this time around…..

#31 Victor V on 08.07.13 at 8:57 pm

http://www.theglobeandmail.com/report-on-business/economy/housing/building-permits-drop-10-per-cent-in-june-first-decline-in-six-months/article13629241/

The value of building permits issued by municipalities in June totalled $6.6-billion, down 10.3 per cent from May, Statistics Canada said Wednesday.

The federal agency said it was the first decrease in six months, and came mainly from the non-residential sector in Quebec and the residential sector in Ontario.

CIBC economist Peter Buchanan noted economists had expected a 2.8-per-cent drop and said the move suggests “housing starts may begin to slow in coming months from levels which continue to appreciably outpace underlying family formation.”

#32 Sebee on 08.07.13 at 8:58 pm

wir sind geschraubt = we are screwed.

Now you know. And knowing is 1/2 the battle.

#33 Condo crash 2013 on 08.07.13 at 9:01 pm

Wow. 700$ a square foot to live in Boonie land Markham. Oh wait. It’s right by Angus glen, must be worth it…. Pfffffttt!! LOLOLOL.

No wonder they have to give away bmw’s. Might be a Lambo soon! Hahaha

#34 Smoking Man on 08.07.13 at 9:02 pm

45north 

The die is not cast, still a huge demand, very little supply of skilled code smith’s in that field, not taught by scohools, a hobby used to maximize productivity in my business turns into a post retirement win fall of hoards of cash, never need to touch my investments for income, just grow and grow, and the best gets me out of the house, you try staying home after a few years.

Unix, your a dime a dozen… Note, I worked with the dude who invented it at bell labs, in wippany NJ. Show some respect… I will give you his tel number..

Keysme is c#
News picker vb. Net
Bastard rummor maker. C++ and Java…

I can do it all, learned from Google, but supply and demand dictates rates like everything else.

#35 Ralph Cramdown on 08.07.13 at 9:07 pm

I bought mine from a mortgage broker in the Fraser valley for 60% of ask, exclusively for my use when I’m vacationing in the Bimmeriest Place on Earth. A new little BMW says cash flow. An immaculate 7er nearing twenty years out of warranty says substantial available reserves.

#36 Chickenlittle on 08.07.13 at 9:09 pm

#27 Timmy:

They drop when virgin idiots figure out that shelling out $3000+ a month for 25 years is just plain cuckoo, and then, using their pea brains, decide NOT to buy an overpriced “rental” from the bank.

THAT’S when they drop…

#37 Alberta Ed on 08.07.13 at 9:10 pm

Skewered Lamb… delicious!

#38 Suede on 08.07.13 at 9:12 pm

#6 Heloguy

Temporary blip? the Dow Jones is up over 20% from the start of the year – that’s a killer year. Blips are like taking deep breaths.

Now for the analysis:

The DOW will retreat to 14,500 by September 8th. Once the MSI and Herdometer reach the weekly oversold level, buy the living merde out of it. Just don’t buy DOW, that’s Dow Chemical. You want the DOW JONES. Big difference.

I’m just looking at my crystal ball though..

#39 Borish ol smell on 08.07.13 at 9:14 pm

650 sqft Toronto condo best rented with Autoshare membership & folding bicycle.

#40 Andrew on 08.07.13 at 9:20 pm

You’re last line should have been “Want a Bimmer? Just lease one”

#41 East Van on 08.07.13 at 9:21 pm

The Olympic Legacy:

http://www.theprovince.com/news/City+Vancouver+taxpayers+facing+upwards+million+loss/8733640/story.html

Get ready for tax increases Vancouver.

#42 Donald Trump on 08.07.13 at 9:22 pm

Was in Seattle recently…

Beautiful city…and real contrast to Vancouver.

Not much new construction going on. Downtown area near waterfront did have some new condo projects(“Belltown”area etc.) but no more than 10 storeys .

No big marketing signs, pre -sales etc. Did observe the bad trend to have retail space on the ground floor of new projects, much of which sat empty, much like Vancouver. Overall, very few vacancies.

What SFH residential we did see was not the cookie cutter McMansions.

Quite the contrast and on the positive side.

#43 HAWK on 08.07.13 at 9:26 pm

I agree solidly with the substance of this entire post, but disagree with the example chosen to emphasize the madness.

Given that current prices for a 650-Sq foot at core downtown (Union Station) run around $360K – $375K (without parking), a 650 sq foot $460K condo in the back of beyond and middle of nowhere is overpriced by at-least $200K to begin with.

If the developer has actually suckered people to buy 56% of his shoe-boxes at those prices, he’s hasn’t made out like a bandit……..but like 10 bandits (well unless those condos are plated with Gold.)

This is one developer, who regardless of what he feigns won’t be shitting bricks but rather laughing (under his sleeve) all the way to the bank.

#44 win on 08.07.13 at 9:30 pm

#17 Renter in Markham
Win – I think “Wir sind beraubt!” is much more “passend” – Compared to GTA and especially Mark-HAM German property market seems fairly valued…

That’s true but Garth’s original was “we screwed” so I corrected it to “we are screwed”

Robbery – “beraubet” robbed also works.

#45 Tony on 08.07.13 at 9:31 pm

Nothing is selling in Markham at the present time. All new listings aren’t finding any buyers. Sylvia Houghton can’t even unload anything now.

#46 Timing is Everything on 08.07.13 at 9:32 pm

#156 Bigrider

As ‘bad’ as Vancouver is…Toronto is worse. T.O. has learned nothing. Zero. Nada.

http://tinyurl.com/n4m3te9
——————————————–
Flashback 1992…Just 4 fun…

http://tinyurl.com/azt7r5j

#47 Recession-ready on 08.07.13 at 9:34 pm

Always a good read, Garth, keep it going.

Few news from Montreal: I’ve been monitoring the re-possession listings for several years shopping for a second property on the cheap (already own a small but liveable property on the island, and I mean own it not watching after it for the actual owner).

Anyways, I’m recently seeing significant influx of re-possessed properties in all areas, mainly in francophone suburbs of Montreal. Expensive properties start to show up as repossessions as well. Few examples:

http://www.remax-quebec.com/en/inscription/M/16823713.rmx?fromsearch=foreclosed_14

(note the 20% below valuation, never lived in)

http://www.viacapitalevendu.com/laurentides/morin-heights/maison-a-etages-a-vendre/212-rue-augusta-mls:524490201?searchposition=43

(as close as you can get to a gated community in this area)

http://www.suttonquebec.com/propriete/Maison-a-etages-a-vendre-Blainville-Laurentides.html?no_inscription=MT9469786

(looks like even the grass was repossessed)

http://www.suttonquebec.com/propriete/Maison-a-etages-a-vendre-Saint-Jean-sur-Richelieu-Monteregie.html?no_inscription=MT9343865

(the realtor is proudly noting the driveway for 12 cars!)

http://www.suttonquebec.com/propriete/Maison-a-etages-a-vendre-Saint-Bruno-de-Montarville-Monteregie.html?no_inscription=MT10720406

(my favourite of pseudo-manor style, but where do I put my horses?)

Anyways, since I’m in the market for more something like

http://www.remax-quebec.com/en/inscription/M/11632379.rmx?fromsearch=foreclosed_15

but at half the price (still, note the -10% discount on muni valuation that is given here), I guess I’ll wait for few more years.

What about the repossessions in other markets, particularly ON?

#48 raisemyrent on 08.07.13 at 9:41 pm

ha! better to buy just the car, trust me!

and don’t forget, they come with 4 years (or 80,000km) maintenance for “free”

#49 Musty Basement Dweller on 08.07.13 at 9:43 pm

#27 Timmy, have you actually looked at the prices in your neighborhood of interest over the past 2 years? (not the Real estate board numbers). I’d be pretty surprised if you haven’t seen a 10 percent drop.

#50 The real Kip on 08.07.13 at 9:43 pm

I drove by those signs in Markham a few weeks ago and did a double take, couldn’t believe people could be gullible enough to think the developer was really buying them a BMW.

Oh well, I guess you can buy a BMW and get the CMHC to insure it with the taxpayers backstopping it!

#51 Ballingsford on 08.07.13 at 9:58 pm

Sad, really sad except for thr lice patrol pup in the police car. Really adorable.

Anyway, is the bimmer the new KIA? Kinda sucks to own a BMW with this going on.

Stick with the Mercedes-Benz folks.

#52 Smoking Man on 08.07.13 at 9:59 pm

#48 raisemyrent on 08.07.13 at 9:41 pm

ha! better to buy just the car, trust me!and don’t forget, they come with 4 years (or 80,000km) maintenance for “free”

………..

Leave the financial planning to the experts, car depreciation is about 30precent first year.

You will never see a condo do that in 416 ever.

#53 Smoking Man on 08.07.13 at 10:06 pm

#48 raisemyrent on 08.07.13 at 9:41 pm

ha! better to buy just the car, trust me!and don’t forget, they come with 4 years (or 80,000km) maintenance for “free”

…….

Leave the financial planning to the experts, car depreciation is about 30precent first year.

You will never see a condo do that in 416 ever.

Bought a Ford ranger, standard transmission, roll down windows, in a destresed market, still worth more than I paid. O well its got air.

Bought a Tahoe boat in USA, brand new, still worth more than I paid. Thank you bass pro shop Canada for charging 30 precent more to Canadians.

I take my time and find deals…. It’s a religion,

If I could only figure out how to stay away from casinos..
Mind you that’s a Hobbie.

#54 Tri State Pat on 08.07.13 at 10:14 pm

From the Montreal Real Estate Board release today…

…As at July 31, 2013, there were 28,705 active listings in the Centris® system, up 16 per cent compared to the same period last year and the 35th consecutive monthly increase. While all property categories registered a significant increase in active listings, condominiums stood out once again, jumping by 24 per cent. Active listings of single-family homes and plexes posted respective increases of 10 and 13 per cent.

For a twelfth consecutive month, the number of active listings of single-family homes registered the largest increase on the Island of Montréal, at 20 per cent. In contrast, the supply of single-family homes increased by only 3 per cent on the North Shore. The situation for condominiums was quite the opposite, as the increase in active listings was smallest on the Island of Montréal, at 18 per cent, but jumped by 47 per cent in Laval, 40 per cent in Vaudreuil-Soulanges and 33 per cent on the North Shore…

If you dig deeper in the data you can see that the inflection point was about 6 months ago more or less.

#55 Form Man on 08.07.13 at 10:25 pm

#52 SM

Factor in selling costs and you could see 30% drop in funds received. The market is very dangerous now. Several years of building at a faster rate than population growth cannot end well. I am surprised that blogdogs like you and Kip do not see this. Looks like you have become part of the herd……..

#56 Uh Oh Canada on 08.07.13 at 10:25 pm

The little blog that could. Garth- I see that you are now proud of this blog, as noted by this line:

“Like peeing into a hurricane, this heroically pathetic blog has argued for months…”

It’s Garth vs. The real-estate Cartel. Keep up the good work!

#57 TheCatFoodLady on 08.07.13 at 10:29 pm

70% of household already own – the rest, I’ll assume can’t afford to or choose not to. The next buying cohort is mired in debt, having trouble finding jobs with good pay & immigrations levels haven’t changed much. It points to a future flat market at best.

Add tighter qualification rules, skyrocketing prices in the country’s biggest markets… I only hope it floats to a reasonable landing & doesn’t crash. I don’t own a home, groan when I hear about or read about those making foolish decisions but the last thing I want is a crash. A crash is hungry kids, desperate parents, elderly suffering in silence & a cratered economy until we struggle towards something else on whcih to base future growth. Sorry, I can’t gleefully, smugly, wait for devestation & despair.

Rents may flatten in many markets over the next few years. As rental inventory hits the market, willingly or not, people will have more options & will become more picky. That should keep prices honest.

I really don’t get the eagerness to buy homes when it’s going to eat up so much of one’s income, when a person or family goes in with the minimum down, stretches an amort to as long as they can & only worries about the monthly carrying costs. I would ask them: “If I told you for $1,000 a year over three years, you could end up with a certificate cashable, for $1000 in total plus maybe another $250, would you pay the money for that? Most would look at me as if I were nuts. Yet by buying a home, that’s what people do & I haven’t counted any closing costs or carrying costs. If I bought, I’d rather suck it up, put down as much as I could for as short a time as I could & that’s only if I could still manage diversification.

People don’t think – RE is cool, it’s party talk, water cooler gossip. It reminds me of the era when shoeshine boys & elevator operators were apparently all in, bragging about their broker.

Now as then, time to get out or avoid.

#58 Ford Prefect on 08.07.13 at 10:30 pm

Huge decline of building permits has to be last step before total collapse of market. In Comox Valley Regional District permits have fallen from $144m in 2010 to a probable $40m this year. June saw only $1.7m in permits, compared to an average of $12m in 2010. Building here is virtually dead and real estate sales are anaemic. The main reason for the collapse was the massive overbuilding that occurred here to accommodate the “rich grey wave” that was going to wash away our spendthrift sins (after we trashed the fishing and forestry industries).

Many comments on your site still ask “why is it taking so long to crash?”. Here it peaked around 2006 and yet it took until this year before the crash became self evident – some homes selling for $300k losses. It seems to take an inordinate amount of time before the bonehead developers and builders realize that their hundreds of bare lots and homes are not going to sell. Until late last year the largest subdivision in this area was still being developed at a cost of many millions of dollars – and this in the face of years of decline. To date it appears not one lot has sold.

#59 Freedom First on 08.07.13 at 10:35 pm

#28 Smoking Man-You are dead right, unfortunately.

We get it though, especially Garth. I think that is why Garth spends so much time writing about RE, though he covers every asset class. The “herd” as you called it, is in trouble, as usual. Garth knows this and is trying to save as many as them as possible with his free blog.

Diversification, balance, and liquidity is where it’s at. Although I add debt free to this as well. Hence my handle……”Freedom First”.

#60 Careful what you believe — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer on 08.07.13 at 10:57 pm

[…] via Careful what you believe — Greater Fool – Authored by Garth Turner – The Troubled Future of Re…. […]

#61 Smoking Man on 08.07.13 at 10:59 pm

Vladimir, no worries about harpo, he’s done, him and big bird are applying us style politics to a herd that is tuned into the Web, plus we got CBC for balance.

It’s different here.

His fans are but a small group of Zillonsires who’s entire wealth can not move enough of the herd. Not to mention all the in fighting.

Justin will kick his ass without even trying, harpos handlers are an inept group of out of touch idiots who’s strategies will back fire huge. I wana hang with garth on election night, harpos boys have no connection to the universal consciousness consolidator.

The old corrupt competition last time around where easy prey

OUR charter will hold.

Relax

#62 Derek R on 08.07.13 at 11:05 pm

Ah, Geschraubt durch Technik, so to speak.

Even though they aren’t offering Audis.

#63 Smoking Man on 08.07.13 at 11:07 pm

#59 Freedom First on 08.07.13 at 10:35 pm

Dude garth has great advice, I’ve taken it, I’m not an idiot. but logic rules my life.

Are real estate prices insane in Canada, ya man, will the herd keep buying sfh in 416 ya man.

He’s to fixated on fundamentals is all I’m saying, emotion, believe system of herd is more powerful than logic.

It rules the markets….

#64 espressobob on 08.07.13 at 11:20 pm

#57 TheCatFoodLady

For what it’s worth, I enjoy your thoughts!

#65 Donald Trump on 08.07.13 at 11:24 pm

A Texan, while visiting Toronto, found himself in the back seat of a taxi cab on the way to his hotel. Passing by the Royal York the Texan asked the cab driver “What’s that building there?” “That’s the Royal York Hotel” replied the cabbie. “The Royal York? How long did it take to build that?” asked the Texan. “About 12 years” replied the cabbie.
“12 years? We build ‘em twice as high, twice as wide and four times as long down in Texas, and we do that in six months.”

A while later the cab driver makes his was past the Metro-Toronto Convention Centre. “What’s that building over there?” asked the Texan. “That’s the Metro-Toronto Convention Centre” replied the cabbie. “Convention Centre? How long’d it take to build that?” asked the Texan. “About three years” replied the cabbie. “Three years? We build ‘em twice as high, three times as long and four times as wide as that down in Texas, and it only takes us about two weeks.”

Shortly thereafter the cabbie drives past the CN Tower. “What’s that building there?” asks the Texan, pointing at the tower. “Danged if I know” replied the cabbie, “It wasn’t here when I drove by yesterday.”

====================================

As you can tell by reading this…the cabbie did not have an accent.

#66 Jean le Pute on 08.07.13 at 11:36 pm

#4 Fisc “what do you think about the future of Montreal Real Estate market?”

Those negative data are just a temporary blip on the fantastic radar of montreal real estate. Like the price of gold, it is bound to skyrocket again soon! Invest mnow before it is too late! More and more wealthy immigrants from tbe Middle East are coming to our amazing city, the best in the world, and they bring lots of cash and desire to outbid anyone else in the condo and SFH markets. Act now and make a killer imvestment!

– Jean

#67 Earl on 08.08.13 at 12:04 am

Wow $700 sq/ft. My wife and I just bought a townhouse in Albuquerque, NM, at $135 sq/ft. It’s 4 yrs old, 2070 sq/feet, 3bd/2 1/2 bath with a 2 car garage, and nicely finished. ABQ has mild winters, mountains and IMO a well kept secret with theatre/shopping/restaurants galore. The bad news was we could not get a US bank to provide a mortgage despite putting 65% down. Anyone else experience mortgage troubles in the USA?

#68 Shawn on 08.08.13 at 12:14 am

CHEAP AND NEW APARTMENTS IN DOWNTOWN TORONTO?

Can this be true? Bargain price paid?

Killam Properties Inc. (TSX:KMP) says it has acquired a newly constructed eight-storey mixed-used building in downtown Toronto for $40 million.

The Halifax-based residential landlord said Wednesday the building on Queen Street West contains 21,242 square feet of retail space and 179 apartment units.

The purchase price is equivalent to $145,000 per suite and $659 per square foot of commercial space,

This too good to be true? Desperate seller of new building?

http://ca.finance.yahoo.com/news/killam-properties-buys-toronto-building-40m-sees-small-233924271.html;_ylt=AlUXzW1YkyNK0u5q_AasPcihuYdG;_ylu=X3oDMTBzaWx1a29pBG1pdAMEcG9zAzIEc2VjA2xuX0NhbmFkYV9nYWw-;_ylg=X3oDMTBhdnVpNmo3BGxhbmcDZW4tQ0E-;_ylv=3

#69 Andrew Woburn on 08.08.13 at 12:14 am

#58 Ford Prefect on 08.07.13 at 10:30 pm

Building here is virtually dead and real estate sales are anaemic. The main reason for the collapse was the massive overbuilding that occurred here to accommodate the “rich grey wave”
===========================================================================

I am part of the “Grey Wave” though I will pass on the rich part. My guess is that the Comox developers misread the new generation of retirees. I get the strong impression that younger people think that when you turn 65 you are forced into an “old people” brain transplant that makes you want to live somewhere where nothing ever happens and all you want to do is fish, play golf and complain about your children but I believe there has been a big generational shift. My parents’ generation loved places like Courtenay/Comox. They liked television, golf and getting swacked with their friends. All that drinking you see on Mad Men is historically accurate. They didn’t go anywhere or do much outside the home and church and boredom was easily solved with another double. But they were like this at forty-five. At sixty-five, they just continued the same pattern in a retirement community.

Far more of the currently retiring generation are city kids. We still want to go to rock and classical concerts, symphonies and plays and enjoy fine dining. We want decent libraries and recreational facilities. If we can’t afford the city we will find a place close to the city. In our case, that was Nanaimo.

#70 45north on 08.08.13 at 12:17 am

smoking man: The die is not cast, still a huge demand, very little supply of skilled code smith’s in that field and the best gets me out of the house, you try staying home after a few years.

I meant that the die is cast for me. After 40 years in information technology unix is what I know. I’ve now adopted linux, cheap and reliable. It’s more of a hobby now.

Recession-ready: Morin Heights $409,900! I looked up Morin Heights on google map. I thought it was in Montreal.

#71 VanPerfecto on 08.08.13 at 12:23 am

What if the Fed goes Nuclear and demands 20% down payments and the prices still continue to rise?

#72 Dean Mason on 08.08.13 at 12:27 am

The CMHC mortgage backed securities bond program was started in 2001.The Chretien and Martin Liberal team set this one up.

This is a big push for everyone to buy homes with lower mortgage rates if such a program did not exist.

Wrong. MBS in existence in the 1980s. — Garth

#73 Realtors in trouble on 08.08.13 at 12:29 am

Many financially hurting realtors will suffer a painful 2013 followed by a worse 2014 and an even more painful 2015 . How many will be forced to look for other work? The only problem is jobs will be tight in this housing crash.

#74 Dean Mason on 08.08.13 at 12:30 am

Correction the CMHC mortgage backed securities MBS bond program helped keep mortgage rates lower than they would be otherwise in 2001 started by Chretien,Liberal team.

#75 Jaimie on 08.08.13 at 12:38 am

Garth,

Although it’s nice to read about that stats you stated. Can post the source/links?

thanks.

#76 Beck on 08.08.13 at 12:53 am

Garth
My impression of reading in the nat post today about Obama declaring that the guidelines around housing and mortgage regulation must change seems wrongheaded. It seems the US wants to simply get back on the horse again by “doing housing better”, that by changing the rules, housing can save them from the mess it got them in. That it will be different this time. You preach diversity of investments, shouldn’t an economy be diverse as well? It seems to me in North America the main driver of our economies is housing. Why am I not reading about how gov in Canada and US are diversifying into new markets such as green technologies and no longer relying on housing to be the main driver of our economies so that housing can go back to being just a place to live?

In today’s fast changing world, doing the same old thing only better is wrongheaded. You need to do things differently. Ask different questions, look for different answers. It seems to me our gov’s are simply asking the same old questions by simply trying to do housing better. Why aren’t huge amounts of $ going into education, research, science, tech, math? Why aren’t we grooming young students to be entrepreneurs who will truly diversify our economy by replacing housing with a host of new economic drivers? I feel our leaders are missing the big picture.

#77 Carpe Diem on 08.08.13 at 1:12 am

I gave my dad a cheque this week. I owed him cash for a while and instead of investing in my RRSPs and RESPs ,this summer, I paid him back! I almost made my dad cry for his 75th b-day! He saw his kid deliver on a promise while having 3 kids and homemaker to take care of.

I could have taken that cash and drop it into the a -5% down market but I thought delivering on a promissory note was more important.

Since I rent (a mansion), it should be able to catch up for my 3 kids’ RESP, my RRSP (hmm maybe i should make that a spousal RRSP) and non-registered accounts … My extra contract should ease that as well.

I think we will renew the lease on the mansion – negotiate the same rent, get some upgrades and repairs so he is motivated to keep us around a few more years.

I’d love to stay where I live. I got some cool neighbors that enjoy the same tunes and like to drink when we have parties.

Although, my questions seem to indicate they are all in financial stress. Some tried to sell their homes, others have wives that think a budget are for poor people (meanwhile, I see the blank face on the husbands). Others are financial idiots. But all are nice people.

My wife … she’s ready for the next adventure and move … she is grateful we are renting and free.

Me … I would like our budget to be stable but it seems some months are worst than others in life. This month was hard to see a bunch of cash go … but seeing my dad speechless was so much better!!!

I’m also finally debt free !

#78 Donald Trump on 08.08.13 at 2:10 am

#59 Freedom First on 08.07.13 at 10:35 pm

#28 Smoking Man-You are dead right, unfortunately.

=====================================

Whew..

Thankfully, proper punctuasian, grammar and spellink are naught exstink.

This could have read

“Smoking Man-You are dead , right ?, unfortunately”.

#79 A Vancouver on 08.08.13 at 2:28 am

Vancouver market is hot. The sales in July increased 40.4% comparing with last July.

#80 Notta Sheeple on 08.08.13 at 2:39 am

“….For your mother-in-law who tells you only boys with condos attract quality girls….”
========================

In reality, condos are merely vertically-stacked mobile-homes with a view, and smaller at that. Instead of throwing money away on trailer pad rent you get to throw money away on condo fees, and in today’s bubble, both are depreciating assets.

At least with a mobile home you get windows on every wall, can bring your groceries to within 10 feet of your front door, and let your K9 out for a pee in the hurricane.

Still, many on the other hand, prefer the illusional grandeur of a condo over the stigma of a mobile home.

#81 Paul on 08.08.13 at 3:16 am

And in the UK Garth, sales have supposedly gone nut upward and now Mr Mark announced low interest rates for 5-7 years. Everyone’s so happy now on the news last night because now they can buy all the stuff they’ve wanted to now there rates are secure.

#82 Wise Guy on 08.08.13 at 5:35 am

I don’t know what the fetish is with condos here in Toronto. First of all, you live in a tiny 600 sq/ft piece of the sky. More than likely, your condo has a view of another condo or the Gardiner Expressway. When you want to leave, you have to take the elevator down 20 floors, walk all the way to your car and then fight traffic as you leave your condo complex.

For my wife and I, we rent, but no way would we rent anywhere near what they ask to live in those condos, upwards of $1500/month or more. Instead, we rent the middle floor of a house, which is only about 600 sq/ft for $1100/month in a house in a very desirable neighbourhood. This house just last year sold for $975,000.

Furthermore, when I walk out of my house, I take 5 steps to my car. When I look across the street, I have a beautiful view of the river and trees. When I want to head downtown, I hop on the highway 2 minutes from my home and can be at the CN Tower in less than 7 minutes.

I hear people complain that there aren’t enough rental units in Toronto, but I really wonder, where they are looking, because there are tons and in very nice neighbourhoods and NO, you don’t have to live in a basement.

Instead of thinking Condo, think apartments in houses, where you’ll feel more a sense of the community and also be paying far lower in rent.

Also, no, we’re not rich, but we have $200,000 in the bank, but we certainly will not tie it up by buying a home in this market.

Patience is a virtue!

#83 Condo Minion on 08.08.13 at 6:58 am

Form Man has it right, Smoking Man

Your “thinking” (which is to be rather flattering to you) is precisely the thinking of the herd.

Do you not remember 1989-2003 in SFH prices in Toronto?

It happened. It was real, more so than any “idea” or nutbar conspiracy theory you choose to see as real.

By trying to separate yourself from “the herd”, you merely demonstrate how trapped you are within it.

No go check out Roswell, I hear some aliens have landed and are being covered up by the government there…and check your tap, I hear fluoride causes you to vote NDP, and of course 911 was an inside job, most likely by the Kardashians……….

#84 Paul on 08.08.13 at 7:36 am

Today in the UK papers it now says low interest rates for 3 years.

#85 TurnerNation on 08.08.13 at 7:54 am

Latest Toronto Kando realty bumph in my mailbox. Realtors in a panic?

http://www.remaxcondosplus.com/report-display.php?id=165&report_date=1374552000

“For those expecting June sales to match those of May (count us among that group), sales actually declined by 9.7%; making May the top sales month for this year, for the second straight year. Small consolation, the May to June decline in 2012 was 13.4%. In 2011, June was actually the biggest sales month and 2011 was the second biggest sales year on record for the Toronto Real Estate Board. If the all-time record was in 2007 – six years ago, how much lower can sales really go??”

#86 TurnerNation on 08.08.13 at 8:23 am

BMW? In my office about 1-in-5 drive some ‘luxury’ marques: BMW, Mercedes SUV, Audi. Richer than they think? Just middle class salaries.

If I needed a car I’d get one of these classics (something I can work on myself.):
One of the best looking coupes, besides Pininfarina’s bodies:

http://ontario.kijiji.ca/c-cars-vehicles-classic-cars-1985-BMW-635-CSi-W0QQAdIdZ502150520

http://ontario.kijiji.ca/c-cars-vehicles-classic-cars-1984-BMW-M635CSI-W0QQAdIdZ497679838

#87 rosie "moving forward" on 08.08.13 at 8:42 am

#82
Deja-vu all over again.

A man without land is nobody. Maybe it should read a man with land is nervous. http://business.financialpost.com/2013/08/07/builders-bet-housing-boom-ending-as-residential-land-investment-falls/

#88 :):( Ying Yang on 08.08.13 at 9:13 am

#77 Donald Trump on 08.08.13 at 2:10 am
#59 Freedom First on 08.07.13 at 10:35 pm
#28 Smoking Man-You are dead right, unfortunately.
=====================================
Whew..
Thankfully, proper punctuasian, grammar and spellink are naught exstink.
This could have read
“Smoking Man-You are dead , right ?, unfortunately”.

Spelin, gramur, puncuashin arnt importint for the leader of the widespread perception merge. He and his brood of anti teacher, anti social, anti herd, anti slaves are going to rule the world through his universal consciousness consolidator. According to Kashmir, Shaivism, is to merge in Shiva or Universal Consciousness, or to realize one’s already existing identity with Shiva, by means of wisdom, yoga and grace. It is categorized by various scholars as monistic idealism (absolute idealism, theistic monism, realistic idealism, transcendental physical ism or concrete monism). It is a school of Śaivism consisting of Trika and its philosophical articulation Pratyabhijña. Smoking Man is a religious teacher wow. It’s strange he knows how to spell universal consciousness consolidator every time correct though?

#89 homeless in calgary on 08.08.13 at 9:14 am

I live in Calgary and have been following this blog for the past 5 years waiting for a housing correction to buy into. 5 years ago I could have purchased a condo I liked for $250k. That same condo now is $350k. I have also blown about 100k in rent payments over that time. So instead of owning a condo with about a 150k mortgage i’m looking at a 100k loss and another 100k in price increase. That condo would have to crash from 350 to sub 200k just for this wait to have been remotely worthwhile. The advice from doom and gloomers has been terrible.

Wrong. According to the Calgary Real Estate Board the average condo price on the day this blog started (March 2008) was $311,812. Currently it is $302,058. Can’t you realtors, posing here as disgruntled renters, lie more convincingly? — Garth

#90 dave b on 08.08.13 at 9:18 am

Greg Klump says “who cares about price”.
http://www.creacafe.ca/who-cares-about-price/

#91 Siva on 08.08.13 at 9:23 am

#70 VanPerfecto on 08.08.13 at 12:23 am

//What if the Fed goes Nuclear and demands 20% down payments and the prices still continue to rise?//

Those who have saved enough to put 20% down are most likely prudent, disciplined and informed. They will not be buying RE at this inflated prices. Just my opinion.

To clarify: the Fed is the US central bank. In Canada mortgage insurance for high-ratio loans is provided by CMHC, which dictates minimum down payments. Currently the level is 5% to qualify for insurance, which is mandatory for financings with a LTV ratio (loan-to-value) of 80% or above. — Garth

#92 fancy_pants on 08.08.13 at 9:35 am

Apprehension soon to follow. Reckless monetary policies and greed will bring the global economy down. 2009 was a cakewalk compared to what is in store. Fed intervention is not a medicine but a poison. there is no free lunch? Nah, let us live in exuberance while the can is kicked further down the road. Live for today, tomorrow will worry about itself right? go buy that $460k beamer with free condo thrown in; as a fiscally responsible taxpayer and member of society I’ll be paying for your stupid choices when it all goes tits up.

#93 kilby on 08.08.13 at 9:38 am

5 TurnerNation on 08.08.13 at 8:23 am
BMW? In my office about 1-in-5 drive some ‘luxury’ marques: BMW, Mercedes SUV, Audi. Richer than they think? Just middle class salaries.

If I needed a car I’d get one of these classics (something I can work on myself.):
One of the best looking coupes, besides Pininfarina’s bodies:

http://ontario.kijiji.ca/c-cars-vehicles-classic-cars-1985-BMW-635-CSi-W0QQAdIdZ502150520
____________________________________________
These old 6 series cars require a LOT of maintenance so be prepared for an expensive ride. The best BMW’s to own if you are not a mechanic are the e 36 and e 46 made from 1992 to 1998. Parts are inexpensive and they are a lot of fun to drive. The e 46 330i has 228 hp and gets 41 mpg highway. Cheaper to own than a mini van and a lot of fun to drive. $5,000 to $12,000 for a really good, well cared for example.

#94 Jaimie on 08.08.13 at 9:40 am

No source/links I see. Just spewing numbers out like TREB. Very very very credible……

Of course I make up all the numbers. Pick any one. Prove me right. — Garth

#95 Dad on 08.08.13 at 9:48 am

BMWs quality has fallen in the past 10 years anyway they have become just another car. I don’t even measure them at the same level as Audi, Mercedes or Lexus anymore.

#96 Jaimie on 08.08.13 at 9:52 am

Of course I make up all the numbers. Pick any one. Prove me right. — Garth

Aug 5th Post

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.

———————————————————————–

You showed a graph for the number of sales and trend. Great.

How about the math or source for the average GTA home prices? You always claim the TREB stats are fudged. Well show us how you computed the numbers.

I didn’t. They came from TREB reports for those months. And they are 416 SFH stats, not GTA-wide. Go find something more productive to do between Open Houses. — Garth

#97 Musty Basement Dweller on 08.08.13 at 9:53 am

When I bought my first house in Prince George in 1980 (without CMHC backing) the Royal Bank required that I put 30%down. And I had (still have) a permanent provincial government job. I think this gives a good idea of how much big banks truly trust in young house hornies when CMHC is not backing the banks risk . Interesting times are coming.

#98 Sebee on 08.08.13 at 10:15 am

IIHS 25% front impact test proves KIA bashing by Garth to be correct. Poorest score for both KIA models tested. Now, is there a IIHS equivalent 25% offset front impact test for RE boards?

>
In the case of the two Kia models, the cars’ seatbelts spooled out too much, allowing the crash test dummy to move too far forward. At the same time, the side curtain airbags didn’t provide protection that far forward in the car, allowing the dummy’s head to hit the windshield pillar and instrument panel. The Kias’ steel structure also provided insufficient crash protection in the tests, according to the Institute.

#99 Jaimie on 08.08.13 at 10:19 am

I didn’t. They came from TREB reports for those months. And they are 416 SFH stats, not GTA-wide. Go find something more productive to do between Open Houses. — Garth

Well if you had linked/provided TREB data and specified that it was for 416SFH then perhaps I wouldn’t be questioning you. Seriously, even tough this is not some PhD paper, let’s provide all the sources so that ALL your readers are well informed.

They are. – Garth

#100 kilby on 08.08.13 at 10:22 am

#94 Dad on 08.08.13 at 9:48 am
BMWs quality has fallen in the past 10 years anyway they have become just another car. I don’t even measure them at the same level as Audi, Mercedes or Lexus anymore.
_____________________________________________You have hit the nail on the head…._
BMW’s since 2006 (e 90) are nothing but trouble, mechanics at dealers and independents will gladly admit. Run flat tires, no dipstick, failing engines (320/323). Mercedes, especially the C series since 2007 are a much better bet for a mid size German rear wheel drive car. It is too bad as BMW have catered to the luxury/status market instead of true sports sedan lovers.

#101 refinnow on 08.08.13 at 10:33 am

Actually the Bimmer idea in not a bad one.

For those buying them as investments, with such a surplus of rental units, they can offer the Bimmer to the tenants.

I can see the adds now….

Brand new 650 sq apartment for rent, $2000 per month, includes use of a BMW.

#102 Daisy Mae on 08.08.13 at 10:40 am

#15 Renter in Markham: “I’ve rented a brand new 2750 sqft home for 2K a month from a ‘Flipper’-Landlord and very happy with the decision…”

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

For how long? Obviously, this flipper couldn’t find a buyer. Flippers want to flip, not rent.

#103 fancy_pants on 08.08.13 at 10:45 am

#66 Earl on 08.08.13 at 12:04 am

mortgage your Canadian home and use the $ to buy the US one outright. It’s different here.

#104 kilby on 08.08.13 at 10:46 am

The best BMW’s to own if you are not a mechanic are the e 36 and e 46 made from 1992 to 1998.

I meant, 1992 to 2005………

#105 JWD on 08.08.13 at 11:02 am

This reminds me of Dubai in 2007 Garth. Giving away cars, vacations, maybe some gold bars… All part of a huge speculative bubble. Obviously, Canada is highly regulated it comparison but in Dubai it crashed so hard, people left their cars at the airport and vanished. The real estate market was like a casino. Chips flying all over the city. However, once the developers get desperate and start turning to creative marketing it can turn very fast. This happened near the end of the peak when the last of the greater fools stepped in and it took about another 6-12 months before it capitulated. The tide turned and almost nobody was wearing any clothes :)

Of course this is thousands of miles away in a very different country, but what I do see as similar is the impending over-supply, level of speculation and assumption of price appreciation. How many investors really intend to live in these units? We shall find out at some point in the near future.

#106 brainsail on 08.08.13 at 11:05 am

“‘Canadians should have first crack at jobs’: Ottawa to charge $275 fee for temporary foreign worker applications”

http://news.nationalpost.com/2013/08/07/ottawa-to-charge-employers-275-fee-for-every-temporary-foreign-worker-application/

#107 Mister Obvious on 08.08.13 at 11:06 am

#96 Musty Basement Dweller

My story is very similar. I first bought a SFH in 1985 in Burnaby. I had a secure job and my paycheck came from the federal government.

The Bank of Montreal required 25% down to avoid the requirement for mortgage insurance. After a few years of sacrificial saving I was able to provide 30% down. The home cost about three times my annual wage.

As I recall, none of the banks were tripping over themselves to write mortgages at that time. They were much more conservative places that usually didn’t even bother to open on the weekend.

If you managed to get a meeting with a loan officer it was a good idea to act reverential and show up in a suit.

If you really wanted to provide them with a good chuckle you would threaten to take your business to a competitor.

#108 Mister Obvious on 08.08.13 at 11:20 am

#100 Daisy Mae

“Obviously, this flipper couldn’t find a buyer. Flippers want to flip, not rent.”
—————————

Absolutely! To a flipper, renters are huge nuisance to be dispensed with as soon as possible. They will do the absolute minimum to meet their responsibilities, if you’re lucky.

Always seek professional management in purpose-built rentals of higher quality. Its still much cheaper than owning. At least in Vancouver.

#109 Rob_in_TO on 08.08.13 at 11:43 am

The cheapest one is going for 458K for 681 Sq.Ft = just under $673/sq.ft. It’s not so long ago that I saw billboards reading $15,000 off, granite countertops and all, even a few that said the first year’s maint. fees would be paid by the builder.

This one takes the cake – “receive $35,000 toward a new condo purchase at the E 6TH.” Obviously, all the builder did was jack up that prices by that amount, NO builder gives anything away.

It looks like your figure (estimate) of as many of 70% of all buyers last year were investors, bye bye flippers – good thing I guess.

I must remember to record tonight’s infomercial ‘Hot Property’ at 7:10 PM on CP24 and see their latest spin on what’s going on. The usual pumpers will be on, saying how strong the RE market is and pushing their featured properties as usual. I’ll watch it at some point later and fast forward through the parts when it causes nausea to kick in.

A little sidenote – I just looked off in the distance at the next main intersection, nobody working on those cranes for some time now, and these are “sold” units.

#110 Holy Crap Wheres The Tylenol on 08.08.13 at 12:07 pm

#92 fancy_pants on 08.08.13 at 9:35 am
Apprehension soon to follow. Reckless monetary policies and greed will bring the global economy down. 2009 was a cakewalk compared to what is in store. Fed intervention is not a medicine but a poison. there is no free lunch? Nah, let us live in exuberance while the can is kicked further down the road. Live for today, tomorrow will worry about itself right? go buy that $460k beamer with free condo thrown in; as a fiscally responsible taxpayer and member of society I’ll be paying for your stupid choices when it all goes tits up.

Reckless monetary polices account for the predicament we are about to engage, warning signs are abounding. All indicators suggest that the market manipulation we’ve seen over the last fiscal period is about to collapse in on itself. European economic collapse and a listless U.S. economy suggest that this ride on the U.S. stock market is almost.

#111 Jeff in Moose Jaw on 08.08.13 at 12:25 pm

To fight off inflation I though interest rates need to rise?
Mark Carney says keeping interest rates ultra low will do the trick to reduce inflation which is running above target in the UK.
http://www.youtube.com/watch?v=vCVHQgHf26M

#112 Old Man on 08.08.13 at 12:26 pm

Take note about the $35,000 giveaway for the purchase of a new BMW, as smell something. The Realtor or Developer if you will, has engineered a partnership with one dealer, so the condo buyer must go there to meet Mr. X. Get the big picture now, as won’t spell this out for you, but looks like a bait and switch routine to me. :) My lips are sealed!

#113 Chopper on 08.08.13 at 12:32 pm

Here is the link to the picture of the BMW bill board in Markham, this was taken yesterday Aug, 07, 2013 at about 12:15pm.

I had to take a picture as I could not believe how desperate the developers have become.

[IMG]http://i44.tinypic.com/nvtqqe.jpg[/IMG]

#114 gladiator on 08.08.13 at 12:32 pm

Garth says “To clarify: the Fed is the US central bank.”

Wrong. The Fed is a privately-owned bank POSING as the US central bank, printing its own money (only coins are minted by the US government), holding the US government as its indebted slave and getting away with it.
That’s more like it.

The Fed reports to Congress. It is the American central bank. — Garth

#115 Jeff in Moose Jaw on 08.08.13 at 12:35 pm

Found the answer….
interest rates go up inflation would go down…. why is Mark saying the opposite?
http://www.youtube.com/watch?v=Iz13bwGIMck

#116 Uwinsome on 08.08.13 at 12:36 pm

Another hit to already down and out Nova Scotia. Bay of Fundy fisherman are going to be hurt and real estate in the area as well.

http://www.cnbc.com/id/100947459

#117 Chopper on 08.08.13 at 12:48 pm

I’ll try again here is the link.

http://i44.tinypic.com/nvtqqe.jpg

#118 frog on 08.08.13 at 12:51 pm

Just to point out the obvious about the beemer:

1) Only the ignorant pay full MSRP for a car. Yet when you show up at Town+Country BMW with this $35,000 coupon, valid at THAT LOCATION ONLY, I guarantee you they will be in no mood to haggle (well, maybe a few hundred bucks, just to shut you up).

2) The coupon says $35,000… but the developer will be writing a cheque to the dealer for substantially less: maybe $25k. BMW is OK with this because: a) the customer is paying full MSRP, b) the developer is delivering locked-in-must-buy customers to the dealer on a silver platter, b) there’s lots of margin in beemer pricing, c) another BMW on the road means another BMW to service, at $150 per hour.

3) $35k doesn’t get you very far at a BMW dealership.

#119 Old Man on 08.08.13 at 12:54 pm

#116 Uwinsome – I agree with your general point, but Nova Scotia has much to be desired from the general to the specific, so Real Estate prices might be down a bit here and there – agreed! One must buy a unique location with ambience that is unmatched in Canada, as going forward in time will survive, as there will be people that will pay a premium for such, and those Real Estate prices will rise with demand for years to come as a key location.

#120 Timing is Everything on 08.08.13 at 12:54 pm

Garth, wrt showing sources/links for your numbers/graphs etc… What’s the big deal? Then it is clear(er). Adds cred too.

But, I just come here for the ‘free’ bimmers’…and the chicks.

The numbers are correct, and researched. Deal with it. — Garth

#121 The Prophet Elijah on 08.08.13 at 1:28 pm

Looks like Einhorn not wise to short Canadian subprime company Home Capital Group:

http://www.stockhouse.com/companies/quote/t.hcg/home-capital-group-inc

Guess anything can happen, but boy this RE correction is taking it’s sweet time.

Shorts are gamblers. — Garth

#122 Piccaso on 08.08.13 at 1:28 pm

Beamer boy, beamer boy, what ya gonna do, what ya gonna do when they come for you?

Parking stall included?

#123 Old Man on 08.08.13 at 1:30 pm

I will give my humble interpretation on the above noted caption or photo. Mr. Turner with his wit that is unmatched, might be mocking crime prevention with a K-9 unit supported with a Poodle which is symbolic for a pet treat at most, and will give a lick and a paw to shake your hand.

#124 RPM on 08.08.13 at 1:31 pm

@ JWD #105

“Giving away cars, vacations, maybe some gold bars… All part of a huge speculative bubble…once the developers get desperate and start turning to creative marketing it can turn very fast. This happened near the end of the peak when the last of the greater fools stepped in and it took about another 6-12 months before it capitulated.”

I would just like to point out that in the Vancouver area there have been developers giving away “free” cars with condo/townhouse purchase since at least last summer and we are still waiting for the crash. It almost feels like the crash will never happen, after last month’s big sales numbers. It’s great that F is trying to take down the bubble. But lending is still looser than when the Conservatives took office in 2006. They need to bring it down to 25 year terms and min. 10% down payment. Honestly, they also need to do something about foreign investment in real estate. Without these steps, I think the real estate bubble can keep floundering along. The Canadian housing bubble almost seems invincible, especially in Vancouver.

#125 Oliver on 08.08.13 at 1:47 pm

LOL @ people complaining about recent BMW’s. They had issues with their fuel pump in 07-08 but a recall fixed all this. Their quality is way above Audi’s, on par with Mercedes, but sportier.

After shopping for 6 months for a sports car, I decided to go with a 135i. It’s a 2011 model, bought in 2012. With the options, it was retailing at 65k CAD. Bough in 2012 for 40k (the car was imported from the USA of course).
This car smokes S4 and C350’s (even more when you uncork it and raise the boost). For the same money I hesitating between the 135 and a ‘11.5 5.0L mustang.

See how much money you can save while renting ???

PS. I know this is money lost forever, but at the price I got the car, it’s going to have cost me 20k in depreciation to drive in a 10,000 km fully loaded BMW for 5 years. Almost as much as driving in a “dealership new” KIA.

#126 Donald Trump on 08.08.13 at 1:50 pm

#116 Uwinsome on 08.08.13 at 12:36 pm

Here on the West Coast, I don’t see any discount.
Lobster prices are more or less the same.

If they have an oversupply, then catch less….or else pass the savings on and perhaps get more people to try lobster.

Simple economics.

#127 Donald Trump on 08.08.13 at 2:05 pm

While in Seattle, read this interesting article about growth of private ” loans ” in the U.S.

Companies have been set up to broker loans from individuals with cash to lend TO those borrowers who require a loan. In other words, the banks are out of the picture.

The borrowers are pre- screened and determined to be good risks. The loans are achieving higher interest rates…6%+. The default rate is approx. 4%.

The set up is that the borrower and their profile is posted on line and the lenders then submit their interest in lending. For the lenders it becomes “You snooze you lose ” as the system is fine- tuned and more quality borrowers are listed.

Seems like a win- win scenario. I will try to dig up the article and post the link.

#128 Happity on 08.08.13 at 2:12 pm

The FED now purchases 100% of US Treasuries according to Shadow Stats. Just earlier this year it was 70%.

There are over $400 trillion in interest rate derivatives that have wormed their way into practically everything. They are used as collateral to invest in more risky yields.

The USA will have the economic renaissance that Garth proclaims from the hills. When will it come? Just wait for it, when the 10 year goes up a couple percentage points those adorning themselves with paper and digital computer entries will have the most engaging experience of their lives.

#129 Old Man on 08.08.13 at 2:32 pm

The Real Estate market is at a critical stage, but the cartel with the support of the media is pumping out the propaganda. Always remember that the medium is the message which is being controlled by those behind the curtain as too much green is at stake. This won’t end well in the end as they are stroking it for the greater fools to move in. Now when reality hits there will be a sharp turn, as all will head for the door at the same time, and down she goes quickly like a storm moving in with no notice.

#130 jess on 08.08.13 at 3:00 pm

Canada Revenue Agency after offshore account holders Sun News
“KPMG is in a battle with the Canada Revenue Agency over trying to protect the identities of wealthy Quebec-based clients who they’ve sold offshore accounts to in the Isle of Man. (tjn)
=============
Mark Carney has said the Bank of England will not raise interest rates until unemployment falls to 7% of the available workforce, with some important caveats attached. But why 7%? This graph shows long term unemployment rates: Unemployment was at or above 7% from 1979 until 1997, almost exactly. Now, Thatcher fixed that by
Read the Rest…

http://www.taxresearch.org.uk/Blog/2013/08/08/why-is-7-considered-full-employment/

#131 Steven on 08.08.13 at 3:02 pm

It seems to me that builders always try to sweeten the deal somehow before a market down turn. This should be considered a warning sign to would be buyers.
FWIW paying $460,000 for a 650sqft condo is not a good deal.

#132 kilby on 08.08.13 at 3:03 pm

Beamer boy, beamer boy, what ya gonna do, what ya gonna do when they come for you?

Parking stall included?
______________________________________________

Beamer or Beemer denotes a motorcycle, when racing many years ago the Beamers often raced the Beezers (BSA’s) To differentiate between the two the cars have always been referred to as “bimmers”

#133 Whinepegger on 08.08.13 at 4:15 pm

It really is different here in Winnipeg:

http://www.winnipegfreepress.com/business/City-house-prices-see-highest-year-over-year-increase-in-country-218845151.html

Wir sind geschraubt!

#134 maxx on 08.08.13 at 4:43 pm

#5 wallflower on 08.07.13 at 7:01 pm

Smart kid- you should be proud. At 17, that is impressive.
Many, much older than he, will never get it.

#135 The Prophet Elijah on 08.08.13 at 4:48 pm

Shorts are gamblers. — Garth

——————————————————-
Why? If you think something is grossly overvalued or going down it’s not different when you ‘invest’ in something you think is going up.

#136 Wally on 08.08.13 at 5:27 pm

Lots of chatter on this site about certain neighborhoods that have seen price declines. Helps to look at the big picture, courtesy of Stats Canada, Canada house prices up 0.2% for June, and that’s at least 12 months in a row of gains. And this data cannot be dismissed as coming from Real Estate Boards.

“New housing prices in Canada rose 0.2 percent in June after increasing 0.1 percent the month before, Statistics Canada data showed today. A Bloomberg survey forecast a 0.1 percent gain.”

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

That is for new houses, not all houses. You know, the ones which had had a 43% sales decline? — Garth

#137 Marginal on 08.08.13 at 5:33 pm

Excerpt from Harvard’s State of the Nation’s Housing Report 2013

“More members of groups with traditionally high homeownership rates are becoming renters, including married couples with children, high-income households, and white households.”

Canadian debt-free renters should be encouraged by this news. Perhaps a trend that has been in force in Europe for many decades may now take hold in North America.

http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/son_2013_key_facts.pdf

#138 Old Man on 08.08.13 at 5:35 pm

Mr. Turner do you remember a gal from Western in the past when you was getting your Masters Degree? Well her name was Susan, as had fond memories of you, so says hi, as will never forget you. Now am I bad, or am I pulling your leg in jest. :)

#139 DreamingInTechniColour on 08.08.13 at 5:39 pm

Sooner or later the banks are going to get very cautious with their appraisal reviews

#140 No Longer Innocent on 08.08.13 at 5:49 pm

Builders seem to know what is coming and are acting accordingly… sales of residential land are way down this year… http://business.financialpost.com/2013/08/07/builders-bet-housing-boom-ending-as-residential-land-investment-falls/

#141 World Traveller on 08.08.13 at 6:05 pm

Here we go, another story about how Ontario is descending into a police state. No wonder no one trusts the cops any more.

http://www.bramptonguardian.com/news-story/4020823-pregnant-woman-husband-left-angry-by-roadside-encounter-with-police/;send=false?fb_action_ids=10151815485021271&fb_action_types=og.likes&fb_source=other_multiline&action_object_map=%7B%2210151815485021271%22%3A696627240352054%7D&action_type_map=%7B%2210151815485021271%22%3A%22og.likes%22%7D&action_ref_map=%5B%5D

#142 Evangeline on 08.08.13 at 6:12 pm

#76 Beck “In today’s fast changing world, doing the same old thing only better is wrongheaded. You need to do things differently.”

like changing underwriting rules so mortgages can be granted to high risk people because real estate always goes up?

new ways may be worse and regressive ways not better ways

#143 Bill Gable on 08.08.13 at 6:28 pm

I just about choked when I read this:
Stand back, Mr. Turner and crew –

“Sales have been slow and unsold inventory has piled up in the Toronto condominium market, though according to one expert that’s not necessarily a bad thing.

The city saw 3,903 new condo units sold in the second quarter according to the latest data from the market research firm Urbanation. That’s a drop of 18 per cent from the same period last year.
New openings were down by about 1,000 units for a typical second quarter and the number of unsold “active” units edged up to just under 19,400 — data that appears to support lingering fears about the city’s condo market.
Not necessarily so, according to Urbanation Senior Vice President Shaun Hildebrand. He says, if anything, Toronto needs more condos.
“What’s really weighing down the market right now [is] we’re not seeing the volume of new projects opening up that you’d expect, particularly for the springtime,” Hildebrand told CBC News.”

Oy Vey.

http://tinyurl.com/lmmnvf2

#144 Daisy Mae on 08.08.13 at 7:33 pm

#73 Realtors in trouble: “Many financially hurting realtors will suffer a painful 2013 followed by a worse 2014 and an even more painful 2015 . How many will be forced to look for other work? The only problem is jobs will be tight in this housing crash.”

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

Talk to some and they’ll tell you they’re “busier than ever”. Gotta keep up appearances…

#145 Daisy Mae on 08.08.13 at 7:51 pm

#77 Carp Diem: “I think we will renew the lease on the mansion – negotiate the same rent, get some upgrades and repairs so he is motivated to keep us around a few more years.”

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

Are YOU doing the upgrades and repairs? This backfired on us when we were young and foolish. Every time we made improvements — paint, yard work (labor) because it was overgrown was the extent — landlord jacked up our rent. I knocked it down for ‘expenses’ we curtailed…but in the long run, she won. After we made the rental presentable, she sold it. Joke was on us! ;-)

Never again — “once burned, twice shy”. Learning is a lifelong experience…..

#146 Keith on 08.08.13 at 8:03 pm

Garth,

Can you share your thoughts on how all this coming inventory will impact the rental market in the coming months and years?

While there’s lots of talk about sales prices, there’s a lot less talk about rental rates. Is it just me, or is it ridiculous that 1-Bedrooms rent for $2200 per month in Yorkvile and 2-Bedrooms command well over $2K in most of Toronto’s core.

You want to live in Yorkville?? — Garth

#147 Keith on 08.08.13 at 8:20 pm

You want to live in Yorkville?? — Garth

No. But I do have a gay cousin who decided he wanted to live the high life for a year. Him and his sister shared a 1-Br and paid about that much.

I think it’s ridiculous that he did that. But I also think the rents down there are ridiculous in general.

Sure. Blame your gay cousin. — Garth

#148 Keith on 08.08.13 at 8:42 pm

Sure. Blame your gay cousin. — Garth

Ha! I did.

He’s since quit his very good day job and decided to travel abroad. And they’ve sublet the place while his sis moved back to our not-so-tony Scaroborough hood.

The thing I don’t get though is not that Yorkville is so expensive. It’s that rents all over the core are that high. Do you think that rents will at all be impacted by the coming slow down? Certainly, rents didn’t degrade much in the US during their crash.

#149 Nicholas Gunn on 08.09.13 at 12:25 am

Hi Garth, kind of a random question for you. I am just wondering what is the point of the CMHC?

#150 WiseGuy on 08.09.13 at 4:35 am

KEITH,

You’re not looking hard enough!

My brother rents a large 2 bedroom apartment in Yorkville for 2K/month. Is it worth it…NO, but he does…because he wants to live in Yorkville…..and there are vacancy’s in his building right behind the Park Hyatt.

I rent a very nice 1 bedroom for $1100/month in Bloor West Village in Toronto. All you have to do is look around!

There are so many rental units available in and around Toronto, it’s unreal, but if you absolutely need to live in a newly built downtown Condo, then of course, you’re going to be paying a premium, because that is what the landlords need to cover their mortgage.

#151 Peter Shift Radio on 08.09.13 at 11:45 am

http://www.usdebtclock.org/

tick tock – tick tock – tick tock……….ww3

#152 can't eat the scenery on 08.09.13 at 4:11 pm

#73 realtor in trouble
So, are those of us who ‘rent’ and LIVE to work on the ‘notsoleftcoast’ supposed to feel sorry for you? NOT
You and your greedy property-management company pals have contributed GREATLY to the enormously absurd and I mean ABSURD high rental costs in this part of the country.
While property investors from Germany and Saudi Arabia madly grab Canada’s land from the east, the west is literally OWNED by the Asia Pacific. So, here’s the math, an average ‘well-aged’ apartment complex in Victoria boasts 55 suites @ ave. $700 for 550 sq feet – no balconies, that’s $38000 a month = 462,000 per year to a ‘foreign’ investor. The building was constructed in 1948! Is iT mortgage free? Give you odds IT IS. Now, I said ‘average’ rental fee of $700, truth is they’re 725 – 775. HIGHER if you want TO LIVE IN something that resembles a view. To property mgmt co’s a view can mean not facing a parking lot!
Bottom line, to ‘live’ in Victoria a person needs to at least make $18 an hr, that will cover rent/food – barely! THERE’S an elitist arrogant pretentious populous here not to mention it’s the land of con-artists in both the investment and real estate fields. So, I say bring on the crash, you created it, you own it, take responsibility for your greed and either ‘man up’ or ‘suck it up, buttercup’!

#153 b on 08.10.13 at 10:50 pm

If someone offered me a car to buy real estate I would instantly conclude that it is a bad deal. Will people really fall for this? Will this gimmick work?