Too real


My friend Barbara Yaffe has always been a little too house horny to be healthy. But then, she’s in the media. It’s hard to stay normal.

Still, I think even she’s come to realize this national fetish now borders on perversion. Here’s what she wrote her Vancouver Sun column a day or two ago, describing shopping for a house with less than a million:

“In a visit to one open house – a Kitsilano townhouse selling for $800,000-plus – the first step through the front door revealed a mildew smell. After that, it didn’t matter that the wall-to-wall carpets looked soiled or the kitchen and bathrooms were circa 1970. A tour through a succession of unimpressive properties – a few with bedrooms on the lower floor or a kitchen on the top floor – led me to believe sellers were pricing their properties too high – by $100,000 or more.”

Babs also points out that in a city where a detached house on the west side averages $2.06 million, and on the slummy east side $844,600, the average family earns just $66,970 – less than the national average. This is why people in BC have a negative savings rate of 8%.

The fact average folks can’t afford average houses without (a) unrepayable mortgages and (b) strangers living in the basement is making Vancouver unaffordable and unlivable. “And so, a lot of Vancouverites rent,” she says. “Or purchase compact condos. And many large west-side properties these days are being converted into two-and three-unit townhouses or half-duplexes.”

Well, the latest Teranet-National Bank house price numbers are out, and they reflect what you already know about July – a market bounce. I found it telling how the Globe and Mail chose to lead off its story. “The sky is not falling,” it said (their emphasis). “Neither are Canadian house prices.”

This is what you get in a country where 70% of people on average, and higher still among the poor Boomers (who run the media), are fully invested in one asset. In fact 60% of family net worth in Canada is in a house. (Imagine if that was Blackberry stock.) Higher prices are always good news, even when it swells risk, widens the generational divide and ensures more grief down the road. We just can’t help ourselves.

But the big question is, how do you break it to Brad Lamb?

This week a Toronto magazine asked me to answer some questions about the market – and is doing the same of the Condo King, along with a Realtor to the Rich and a Rock Star Economist. Here’s what I had to say. I will tell you shortly how they replied.

So, where is the market at now?

The housing market’s being torn asunder. Condos are increasingly unloved, glutted, vaguely declining in value, suddenly uncool with a growing whiff of danger. Houses over a million are like Psy – hot last year, neglected now. When the feds cut off seven-figure listings from mortgage insurance it was a blow few understood. Now listings languish and prices trend lower. So, it’s left to the blazing middle – properties 600ish to 900ish – to keep the average house price stats alive. In this zone frenzied GenXers have been bidding crazily for $750,000 dodgy semis in Lesliville, using still-cheap mortgages and fueled by emotions they’ll come to deeply regret.

It’s an unhealthy, unstable, wobbly and unreliable market. Sellers are smart. Buyers not so much.

According to real estate market research firm Urbanation, T.O.’s condo sales are down 18% for Q2 of 2013. Is this indicative of coming crash? Or are we going to see a simple correction?

Toronto won’t crash as did Phoenix or Miami. That means nobody should expect a 25% decline in the average price. More like 5% in traditional demand areas, 15% in the trendy, high-mortgaged zones and 20% in the glass towers. But with tens of thousands of buyers since 2010 who have less than 5% equity, it’s still a disaster. So a mere correction has the power to seriously impact the entire market, slicing sales, swelling listings and rendering many properties illiquid.

At the leading edge of this, no doubt, will be condos. There are 19,000 unsold new units as I write this, with 53,400 more in the pipeline, plus at least 10,000 resales on MLS or Kijiji. Figure it out. Doomed.

How has this alleged glut of luxury condos affected the condo market?

It hasn’t. Media creation. Who cares if there are 150 million-dollar condos for sale in a market with 93,000 active units? Leave those for hockey players and rap stars. They need spanking.

The housing market, on the other hand, has seen one of the highest surges in sales for July since 2009 (16%, according to the Star). Does this mean that high demand is here to stay?

The July number is unlikely to be repeated any time soon. Far from being a market rebound, it was the result of a small stampede into offers made by people worried about mortgage rates. June’s three bumps higher in five-year money (thanks to Mr. Bond Market) freaked those with cheap-rate pre-approvals coming up to expiration. Poor souls. If they only knew that higher rates inevitably bring lower house prices.

How do you feel higher interest rates will affect the market?

They’re the key determinant of prices. How can anyone look at the experience since 2008 and argue otherwise? Household incomes are flat, the economy’s staggering, unemployment is structural, and yet real estate prices have soared as mortgage rates hit historic lows. Few people are making more money, but most people are borrowing more. Household debt is a record. So is the price of a house in Toronto. Coincidence? Is Rob Ford a sobriety role model?

The inverse is true. With the US Fed starting to taper back stimulus, bond yields will inevitably retrace and mortgage rates rise. The days of 2.69% five-year money are gone. Forever. When 5% loans are the norm, house values will simply have to adjust.

Where do you think the market will be by year’s end?

Sales similar to last year. Prices level. Mortgage rates slightly higher. Economic news worsening. Market disparities deepening. More important will be the trend. Prices cannot continue to gain, especially in an environment of rising rates, without robust economic growth, more jobs and higher incomes. Like gold, this market has seen the top.

Would you advise parents to cash out of a big house now?

In a heartbeat. The groups most at risk are the kids with their equityless condos and the wrinklies with the bulk of their net worth in a house. Boomers who drank the real estate Kool-Aid their entire lives, who failed to diversify and build up portfolios of liquid investments along the way, will regret it. The market still has some legs, and that’ll continue until mortgage rates pop. It’s the last, best chance to exit with most equity intact.

Pry ‘em out of that damn McMansion, lest they end up in your basement. Oh, the irony.


#1 Julie on 08.14.13 at 7:20 pm

Almost first………to listen to Garth and start renting?

#2 TurnerNation on 08.14.13 at 7:20 pm


#3 Josef on 08.14.13 at 7:21 pm

First!!! Oh YEAH Baby!! Josef is #1 Garlieber!!

I pity you. — Garth

#4 Piccaso on 08.14.13 at 7:31 pm

#193 Westernman on 08.14.13 at 3:37 pm

No, and who cares? Grow up…


Quit replying to stupid posts on pathetic blogs, unless you believe everything you read. lol

#5 Sideline Sitter on 08.14.13 at 7:37 pm

I’ve been watching a house languish on MLS for almost 80 days… could have traveled around the world in that time.

I’m going to see it tomorrow, and if the wife is OK with the location, I’m going to offer 26% BELOW asking.

Yeah, it’s quite the haircut, but we’ll see how desperately they need to sell :)

#6 Sideline Sitter on 08.14.13 at 7:40 pm

oh, and I should mention… I’m not moving on my offer either!

#7 Observer on 08.14.13 at 7:41 pm

Why are we still on emergency rates when the economy has long since gotten off the mat? On a side note, why is this government inviting a huge US phone company up here under what appears to me to be very favourable conditions. The phone companies here employ a lot of tax paying Canadians and also pay stock dividends to many more as well as providing rural service.

#8 ILoveCharts on 08.14.13 at 7:45 pm

She’s right about one thing. Lots of garbage on the market. Poor ventilation. Building envelope problems. Noisy. Disfunctional layouts.

On the plus side, it’s an amazing place to live.

#9 Sideline Sitter on 08.14.13 at 7:46 pm

#7… I have no sympathy for the devil.

#10 Steve French on 08.14.13 at 7:55 pm

I’m #8…. two days in a row!!!

Yeeeehhaw stick it in your grandma!

I see we have a quality crowd with us tonight. — Garth

#11 Old Man on 08.14.13 at 7:57 pm

There is one equation that all are missing about the stats in Toronto especially in the condo market, as have seen it all. Just forget about these figures, as say 50% down in the core for condos, and this will spread quickly. The trigger will be fear and panic for a quick chase down with selling out. In the human condition it is imperative to identify the trigger mechanism with all levels in life pertaining to any decision.

#12 Uwinsome on 08.14.13 at 8:05 pm

Best July in 8 years for BC home sales. Prices up 12.5% province wide YOY.

#13 Suede on 08.14.13 at 8:05 pm

Blogs popping up all over the place these days. Was thinking of blogging on my chart that shows RE has gone up inversely proportional to the number of cassette stereos sold in North America.

Read this one (after GF of course) if you get off on other peoples misery. Which I’m sure most here do.

#14 Nemesis on 08.14.13 at 8:16 pm


Curiously, the two ChapsAdorned HarleyRidingGentlemen without reservations declined the management’s kind offer of a special rate for tonight’s only remaining room…

The BridalSuite.

I was so sure they’d go for it. So to speak.

#15 not 1st on 08.14.13 at 8:20 pm

If the RE boom has been going unabated since about 2006, wouldn’t anyone that wanted to buy have bought by now? I mean nobody looks for a house for 7 years. Either you held your nose and got in or you never will.

And I know for a fact that only a small percentage of new immigrants are able to purchase right away after getting here and are not loaded with HAM. Most of these people live 2 or 3 to an apartment to make ends meet and are sending most of their paycheck back to family overseas.

So if everybody is already in, and those who aren’t could never have bought anyway, where is the next leg of demand going to come from???

#16 macys on 08.14.13 at 8:29 pm

lousy retail sales from us. some recovery. q e wil increase not taper.
screw europe. only fools would trust the piigs. there are going on siesta forevrr. silver and gold both up lately. what does that tel u. bye bye losers

#17 Pounding sand in Peachland on 08.14.13 at 8:41 pm

Quality crowd indeed. Its the power of attraction

#18 TurnerNation on 08.14.13 at 8:43 pm

Smoking man. Which coffee blend do you prefer? 1, 2, or 3?

#19 Backstep on 08.14.13 at 8:44 pm

If you’re predicting a mere 5-15% drop in the price of boomer’s houses, it seems like a stretch to predict that they’re going to be living in their kids’ basements anytime soon.

#20 wow on 08.14.13 at 8:51 pm

#13 Suede. Looks like a repeat of the 80’s doesn’t it. I wonder how long before this becomes the norm in the GTA. Looks like friends in Vancouver got out in time. I often wonder how all the speculators I know in Toronto will do over the next year of new builds. They definitely had a harder time finding money but no one has slowed down on the flipping. The projects just get more and more expensive.

#21 wow on 08.14.13 at 8:54 pm

Confirmed by my banker that condos are bust in the GTA. Also confirmed that houses are in the process of being reappraised. He says not to expect interest rates to go to 80s highs… but definitely will be going higher. In the near future around 4.5% and then could go to 5-6%. It doesn’t sound like a lot since I paid 4.5% in the past and thought it was a deal… but for those living on the edge.. and there are many currently maxed out, working multiple jobs just to swing it. Times will be tough for many. People just ask what the monthly payment is and then max out on their house purchase without thinking about what happens when that monthly payment increases.

#22 CrowdedElevatorfartz on 08.14.13 at 8:56 pm

@#12 uwinsome

1 month, does not a rally, make.

#23 Unplugged on 08.14.13 at 8:57 pm

The reality and word on the street today is the market is far from firing properly on all cylinders, it is surging and backfiring just as any “engine” would when unbalanced and poised to stall. There is simply too much risk involved now with buying in any urban market these days, especially if considering such a purchase an investment.

See here:

#24 Screwed on 08.14.13 at 8:58 pm

#12 Unicorn and Skittles

One month does not make a trend.

Let’s see August and Q3/Q4 this year.

YoY prices will be DOWN in the Lower Mainland by at least 5% come Q2 2014.

Sellers of 1mio + listings will need to adjust to levels the local buyers can afford. Chinese cash buyers are notably absent in Kerrisdale, Vancouver and West Van.

CMHC turns off the tab as per F directive. Banks crank up their rates to well over 3%. Bonds are moving higher and the direction is set.

At some point the real estate propaganda in the media will sound like the tales of the Ogopogo or Sasquatch.

#25 dosouth on 08.14.13 at 8:59 pm

Zillow says my house is worth…

#26 RE Observer on 08.14.13 at 8:59 pm

#6 Sideline sitter – Don’t move on you offer! We offered $19,000 below asking on a place that was on the market for 2 months before we made our offer. They would not come down, and we only went up by $2000. The house then sat on the market for another month and a half, at which point it sold for $7000 LESS than what we offered (so $24,000 less than original asking price). Stick to your guns!

#27 BigEnglish on 08.14.13 at 9:03 pm

Are we close to the bottom of the number of sales yet?

#28 s on 08.14.13 at 9:04 pm

House prices rise by 12.5% in BC Y/Y in July
Most sales for July in 8 years

I thought Vancouver was slightly only above the 10 year average, where did they pull these numbers. As far as I know most of BC except the lower mainland has been in a funk for awhile.

Garth can you dissect these numbers?

#29 Freedom First on 08.14.13 at 9:14 pm

The future of the RE market in Canada is bleak. Countries world wide are writing and talking about the overpriced Canadian housing market, with a puzzled slant to the articles/newscasts about why Canadians didn’t learn anything from their RE crashes. There has been lots of links posted on this blog/comments to these sites. It won’t be long until the letter F won’t involve any elfin pixie dust, but be automatic for “Foreclosed”.

Hey, Have you ever noticed that many wealthy people buy assets when there is blood in the streets? It is a good habit to get into. Becomes second nature. It is in having the right thinking. Not to be mistaken for: thinking with “house horny” emotions, being pus_y whipped, [email protected]’d, MIL’d, F’incentiveized, or enlarged ego’d/status’d.

Keep in mind, there is always lots of RE “condo kings”, etc……etc. who can smell blood during RE bubbles. And it is not their blood. Deal with them, and “You’ve been played.” ……..Listen to Garth. I am interested in Garth’s coming post(s) on the other people asked to contribute their views. I know I expect more bs.

#30 Something on 08.14.13 at 9:15 pm

I don’t post too often, but I disagree with you Garth about how it will end.
As I said before the market will start crushing March 2014. I know so many people who took their properties from the market. They all believe next spring the market will recover. When next March lots of people will try to put their properties on the market again they will find a very interesting thing from their “honest” real estate agents. The price they can sell now is even lower than they could sell summer 2013. That’s where emotions will kick in 100%. Panic and fear will be all over the place. Some will try to rent out their properties, good luck when the rent market will be flooded by offers. Rising unemployment and decreasing spending will push the crush faster and faster. The rising mortgage rate will help as well. On September 18 the famous B will announce tapering bond buying, which will push mortgage rates for another 1-2%. Watch for the bond market of emerging countries. That’s where the biggest pain will be. Gold will touch again 1200 level and even can go to 900.(I think it would stay around 1000 for a while). B has to do that. He wants to be remembered as a man of his word before he leaves in January 2014. After that he doesn’t care at all what happens.
Smart speculators and flippers are trying to unload the properties right now and will be doing the same thing till February 2014. The rest of Canadian population will believe in spring’s miracle.
Now the funny part. I will try to predict how much the prices will drop. As any any other market the housing market during the crash has a momentum. It is so huge, so the price will go lower than it should be.
Vancouver : 60+%
Toronto: 50-60%
Montreal : 50+%
The rest of the country: 30-40%
It will not happen overnight, so be patient.

#31 timmy on 08.14.13 at 9:19 pm

Rob Ford is a buffoon and an embarrassment to this country. Hard to believe we have someone like this clown representing the largest city in the country…but then why am I surprised when people elected Christy Clark?

#32 Old Man on 08.14.13 at 9:21 pm

The greatest author was well ahead of his time when he wrote 1984 and that was George Orwell, so let me equate his words of wisdom to the Real Estate mess in Toronto and elsewhere. One only has to look around you with a rational mind and ask what happened in the last 10 years, and the trigger mechanism was fear to bring society down on its knees for control.

The key element was to be taken into room 101 to confront your greatest fear to be broken, and with Real Estate the trigger is to lose all, as some of you will believe that such is impossible to take a hit for 50% or less; some will do better than others, but denial will get you nowhere, as will take a decade to get your losses back.

I say might be too late for most, but sell out if you can, and for those fools that are buying now R.I.P., as the bell is tolling for you now, as you will be trapped into a debt nightmare with no way out. This is a play before me that is called a dark drama in the third act, and the curtain is about to come down with silence and no applause.

#33 Weedeater on 08.14.13 at 9:26 pm

“compact condo” hahahaha” Micro-loft or whatever. At under 300 sq ft most dorm rooms aren’t much bigger. How much does stupid cost per sq ft?

#34 great comment on 08.14.13 at 9:28 pm

quick note to #14 Nemesis

you cracked me up. I don’t know what your are referring to but I spit out my pepsi.

thx for that!

#35 Westernman on 08.14.13 at 9:28 pm

Picasso @ # 4
So your hobby is making up stupid crap and posting it on pathetic blogs?
How old are you – 12?

#36 Screwed on 08.14.13 at 9:30 pm

#26 // “the first offer is always the best offer” – maybe the only true thing a realtor knows.

Your seller had a shitty re agent.

#37 Donald Trump on 08.14.13 at 9:39 pm

” The housing market’s being torn asunder. ”


Small typo: Correction should read

” The housing market’s being torn ass- under. “

#38 JSS on 08.14.13 at 9:40 pm

“Would you advise parents to cash out of a big house now?

In a heartbeat.”

Not necessarily. Unless Dad worked for CN Rail and mom worked for Worker’s Comp in Winnipeg, both have defined-benefit pensions, $400K in RRSPs and savings, and a 1,900sf house in Southwest Winnipeg (Lindenwoods) that was paid off in 1994.

Should also throw in that Dad may have bought and kept CN shares in the late 1990’s.

#39 MarcFromOttawa on 08.14.13 at 9:40 pm

#15 not 1st

Sure only a small percentage of new immigrants can purchase homes but there’s still over 250 000 of them becoming PRs every year.

There’s also the children of the boomers who are in their mid 20s.

And don’t forget divorced families where one adult needs to look for a new home.

#40 still looking on 08.14.13 at 9:41 pm

was looking at an apartment in Calgary recently on Seemed nice, location was what I wanted, price seemed good. Pondered it about 10-15 minutes. Hit refresh, listing was gone… wtf? Called the realtor, place sold while I was looking at it. Market is so hot, no point even listing a place. “I have a place for sale” is enough to sell it. Of course, high value 1 million plus properties are slow to sell, but anything between 200-400 is instant sell. A market crash from these conditions will only bring the market to normal levels. Calgary is so hot it might take until 2143 before we get any sort of pull back. If your point of reference is Toronto and Vancouver, who cares. I could travel across all of Europe faster than I could go from Calgary to Toronto. It’s so far away it’s like a different country/planet. So who cares. Toronto could disappear from planet earth and Calgary will still be booming

Bottom line, Realestate is REAGION SPECIFIC. Talking about Canada as one market is completely ridiculous. It’s like comparing Detroit to Manhattan. Vancouver and Toronto could go to zero and Calgary will keep going up. It’s the best city on earth. It’s clean, its multicultural, it’s liberal, it’s wealthy and the economy is booming. Nobody cares about Toronto and it’s crack smoking fat white guy mayor that looks like he’s out of some comic book making fun of fat white republicans.

#41 Donald Trump on 08.14.13 at 9:41 pm


Which has a shorter gestation period…

(i)a BC condo
(ii)a HAMster

#42 Morgan on 08.14.13 at 9:50 pm

Garth, your estimates for the coming haircut in prices make a lot of sense, however, I’ve noticed that you and I share a tendency to underestimate how little markets make sense. The Toronto housing market, for example, stopped making sense to me about 6 years ago. And yet, the rise continues… and it makes no sense!
By the same token, the drop won’t make sense either. A realistic return to averages might be a 5-15% haircut, the reality is more likely to be a panic, and continue for far longer than it should by any objective standard. By that time, I’m hoping to have some nicely liquid assets kicking around to apply to the situation.

#43 TheCatFoodLady on 08.14.13 at 9:57 pm

I sincerely hope most don’t “get off on peoples’ misery”. In many cases, those people overleveraged, overextended on damned near everything, are friends & family, coworkers; neighbours with whom we socialize.

Far too many people bought according to the paradigm that “housing always goes up” because in their relatively short adult lives, that’s all they’ve experienced & witnessed – prices increasing & sometimes at a delirious clip. It’s understandable – to me anyway – that many dove in as soon as they had the minimum required at the time – whatever the minimum, whenever the time.

Perhaps in their twenties many here were glued to financial news & planning ahead with great maturity & foresight. Alas, I was being foolish with my money. I could always earn more! The future will look after itself! Sure… & I’m holding Friday’s Lotto Max winning ticket. I humbly submit not many young adults think as far ahead as a distant retirement & what they’re going to live on.

There are, as mentioned by a previous poster today, psychologicals tipping points, where people see something happening & rush to follow to avoid losing their shirts. Ironically that crowd behaviour often hastens the fiscal demise of many.

Who knows how many parents will end up in their kids’ basements? I’d like to hope not many. But undeniably, too many boomers are holding most of their net worth in their house. If that ‘net worth’ floods the market too quickly – they’re going to have to redo their retirement budgets.

I fear more for the young families, couples & singles who are leveraged to the hilt on homes they own as well as consumer debt. They have NO wiggle room. Any real hiccup in the housing market, interest rates or family emergency & they’re sunk.

Does anyone really want that? Is anyone heartless enough to gloat over such a scenario?

Doubt it.

All Garth & most here are espousing is a BALANCED approach to finance rather than every egg in an increasingly weak basket.

#44 brillo on 08.14.13 at 9:59 pm

4 years of gloom and doom for a 5% “correction”? During the past 4 years, prices almost doubled….

How on earth is 5% a correction? This is a serious question.

No it’s not. I referenced a 5%-20% correction, varying by area and property type. — Garth

#45 Dr. Bunsen Honeydew on 08.14.13 at 10:01 pm

#10 Steve French on 08.14.13 at 7:55 pm

I gotta say between your TPB-referenced name and that there comment you posted I had to chuckle out loud.

#46 Chickenlittle on 08.14.13 at 10:03 pm

#13 Suede:

Thanks for the link! It was funny at first then left me with a sick feeling in my stomach. I would hate to be those people, and yet I have no sympathy for flippers.

Ya, you’re right, Garth. Those first few posters make me look like Alan Greenspan. (Mind you the “Garlieber” moniker actually IS funny!)

#47 Kothar on 08.14.13 at 10:05 pm

What happened to all the nice to look at pics? I demand return of babes in bikinis at least once a week!

#48 Don't read his post on 08.14.13 at 10:08 pm

Garth, what the hek is happening with our beloved REITS????? Is this a buying opportunity or should we wait for lower levels?

#49 Spiltbongwater on 08.14.13 at 10:14 pm

Garth doesn’t like stangers living in the basement. Well then Garth, why not buy a condo and build a lock off suite inside it, and rent out the unused space in your 2 bedroom condo? Looks like it is going to be Vancouvers new strategy to help maintain affordibility.

#50 Too real — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer™ on 08.14.13 at 10:17 pm

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

#51 Sean on 08.14.13 at 10:21 pm

5 – 10 -15% Gimme a break! Even the lame ass bunch of commies OECD say that Canada is 70+% overvalued… and of course T.O. and the Lower Rainland are at the heart of it! It will easily be 40% in T.O… don’t wuss out on us, Garth.

#52 Cristian on 08.14.13 at 10:23 pm

More BC good news today, apparently BC students have highest student debt in Canada.
All kind of explanations given, except the most important: parents are too indebted themselves to help with education costs. After all, why help your child when you can instead spend a million dollars on a shack?! Duh…

#53 Sean on 08.14.13 at 10:24 pm

#40 still looking..

Get out a bit, buddy… Calgary is a bleak, brown, often frozen wasteland. Any of us who have left are still just marveling at the fact that the outside world has.. colour!

#54 Jesse Ventura Jr. on 08.14.13 at 10:28 pm

Garth, you are to the Canadian real estate machine….what Jesse Ventura is to America. A voice of intelligent reason.

#55 Sean on 08.14.13 at 10:28 pm


#56 Old Man on 08.14.13 at 10:32 pm

Now some of you are making a big mistake to focus on the price for buying or selling a Real Estate asset, as that is not the issue, as you must consider the costs involved to bring it all around into reality. For example to sell a property might cost as much as 10% of value for a true net, so when I say 50% down in some cases with condos really mean a 40% haircut with lots of cost adjustments.

#57 Wpg3rdNation on 08.14.13 at 10:34 pm

I wonder how people are able to afford those huge mortgages. Got my place under 150k year 2007. I just renewed and have to ask bank for extra cash for renovations (windows replacement, added garage). I ended up with a larger mortgage 160k. And I guess by renewal time again after 5 years, will need more money to renovate again (roof).
How do I get out of this sinkhole, Garth :-)?.

#58 Led on 08.14.13 at 10:42 pm

Garth – I want to open up a TFSA – I have never had one and my bank seems unsure if I can put in previous years now (they referred me to revenue canada’s website). Do I have to start with 5k or can I put the previous years in now?

1. Put it all in. 2. Get a new bank. — Garth

#59 Donald Trump on 08.14.13 at 10:48 pm


#1 !!! Numero Uno

10….count em “TEN” B.C. Lower Mainland Local Gov’ts are in THE TOP 10 North America cities re Gas prices.

A clean sweep of the $%#@&*$ awards.

I am so proud….UB2 !

#60 Mike Leblond on 08.14.13 at 10:51 pm

“Hailed as the savior of the U.K. economy when appointed nine months ago, Bank of England Governor Mark Carney is facing growing skepticism just seven weeks after taking up office.”

#61 Big Sexy on 08.14.13 at 11:02 pm

About 4 weeks ago, Garth mentioned a mortgage interest calculation that made a mortage very easy to pay off quickly. E.G a accelerated weekly payments… But how did the interest have to be calculated? Monthly instead of daily? Anyone remember?

#62 blablabla on 08.14.13 at 11:05 pm

#48 “Garth, what the hek is happening with our beloved REITS????? Is this a buying opportunity or should we wait for lower levels?”

Disclaimer: tea leaf readings ahead
This one is very hard to “read”.

Hourly timeframe: my instinct tells me controlled, non-human initiated shorting of XRE (and of its components I guess) in cooperation with hesitant and panicking investors/speculators.

Weekly timeframe: Looks overdone but still in the midst of forming a major 2nd bottoming leg and that this will pop up forcefully like a ball that pops up after being pushed deep into the water.

Daily timeframe: Looks like “they” want to give this one more shove downwards for another 6-10% downwards move (my guess over the next couple of weeks). 6% target downwards but could be pushed to 10% from panicking investors. That will probably produce the 2nd major bottoming leg (single leg or rapid double leg not sure) from which this will soar again. I see the gaps ($15.75, $16.25) as a mid-term target after the next horrifying flush (the 7-10% mentioned above).

My opinion may change after looking at it again though…

#63 Uwinsome on 08.14.13 at 11:41 pm

Garth, according to your recent prediction, it sounds like most GTA properties may face around a 15% correction.

During the last 4 years that you’ve beeen writing this “pathetic blog”, GTA real estate has risen in price more than that? So was this all a waste of time and money?

You’re right. You can take over. — Garth

#64 Derek R on 08.14.13 at 11:44 pm

#60 Mike Leblond on 08.14.13 at 10:51 pm wrote:
“Hailed as the savior of the U.K. economy when appointed nine months ago, Bank of England Governor Mark Carney is facing growing skepticism just seven weeks after taking up office.”

I’m not a big fan of Carney’s low interest rate approach but this is classic whining. The UK has been doing things wrong for years so it invites a foreign expert in to show it where it’s been going wrong. He suggests something new and immediately the Great and Good start doubting him because “that’s not the way we’ve always done thing round here”. Here’s a newsflash — The way that the UK has always done things is what got it into the mess. Maybe the G&G don’t know as much as they think they do. And just maybe things won’t change until the UK starts taking the advice it’s paying for.

#65 Uwinsome on 08.14.13 at 11:45 pm

How about BC and Alberta? What’s your call? Only about 15% on average there too?

#66 Joe on 08.15.13 at 12:27 am

I agree with much of what you say Garth but when I look around my neighbourhood in North Van there are loads of properties being bought up by foreigners.
It’s the homegrown people that are going to feel the pain because some immigrants will buy in at any cost to relocate. There’s a heap of foriegn cash out there.
I am blown away when I walk the seawall in West Van sometimes it’s 70% foreigners or more, year around.

#67 saltpony on 08.15.13 at 12:42 am

“The days of 2.69% five-year money are gone. Forever. When 5% loans are the norm, house values will simply have to adjust.”

Garth, I’m wondering if you could answer this at some point:

What was the cause of 2.69% money? Was it simply supply/demand? All those boomers with excess equity, tripping over themselves to lend it? If we understood why it happened, we could understand why it won’t again. Thanks.

PS. I was on a two-week road trip to Utah and Colorado. Had a lot of catching up to do reading this blog. I’m surprised that no one commented on Smoking Man switching sides for Freddy Mercury. That is hot!

#68 Jason on 08.15.13 at 12:43 am

A great article. I’ve been skimming through the articles and I am surprised that People don’t hold the federal government more responsible, It must go down in Canadian History that under the Conservative Government, the Flaherty created a 40 year mortgage with nothing down during a time when the housing market was already heating up severely. Was it because they were a minority government trying to make the economy more heated up as the US was on the verge of correcting ?
In any case now I’m really concerned about the devaluation of our currency. I’m being told that are inflation is barely 2% for many years now, yet my power, housing, food & gas is up 100 % over the last 11 years.

Have you traveled to Singapore in the 1990s, and gone again recently? Our currency has really started to slide down. Dining out made NYC & Montreal seem so cheap! And everyone knows, especially the finer restos in Montreal, are up 250% in price since the mid-90s.

I believe more staple food items should be included in the Government given inflation rates, otherwise they aren’t really true.
Oh yeah, and the housing market here in Alberta…. I think is going down the toilet. I predict by April or May next spring we will see a huge flood of all the tens of thousands of empty units going for sale which could cause a real turn-down.

#69 Carpe Diem on 08.15.13 at 12:46 am

Today was a good day.

In a few months, we have a new place to live!

A place build in the 70’s where wood was King. No OSB crap involved.

For the owner, I believe, this place is overpriced since he bought it as a retirement home (whenever that comes). For us a shelter and 2 acres of fun forest for my kids to enjoy (after i make sure there are no critters living there) !

My wife and I had to send a rental/lease termination notice to my landlord. He’s a good guy. I feel for him and hope he gets that hockey player next time. If you want an awesome place to rent in Ottawa … let me know. I have a perfect home for you!

I also feel for my neighbors. They put an offer on a home that will equate on a 500K mortgage they surely will regret. They and their kids seem so house horny. I hope they don’t sell their home so their agreement falls through. They have no clue what awaits them … I tried a year ago but I can’t cure stupid. It is amazing how some people can be so smart with some topics but on economics and finance, they suck!!

#70 Yitzhak Rabin on 08.15.13 at 12:53 am

Condos have seen the top, gold hasn’t.

The best move possible is to sell your house/condo and buy gold. Then in 6-7 years you can buy several thin-walled condos.

I wonder if Garth thinks the people of India are all nuts with the lengths they are resorting to to acquire gold. Since it is “not money” perhaps they should simply put blind faith in the rupee and have their savings get ravaged by 14% inflation. Ditto for the Venezuelans and Argentinians. No use for gold there, in paper we trust.

The yen is next, US dollar after that. The 42 year experiment with non-gold backed money is unravelling.

Gold will make new highs and Garth will delete all comments, posts and references he made about it in 2013.

I see Soros and Paulson bailed. Maybe you should call them. (BTW, none of my comments have ever been deleted from this blog.) — Garth

#71 snake on 08.15.13 at 1:09 am

Florida condo complex refuses to sell to unmarried gay or heterosexual couples: report

Read more:

#72 Julie on 08.15.13 at 1:15 am

USA Mortgage applications continue to fall…….

Uh Garth?

#73 VanPerfecto on 08.15.13 at 1:19 am

Hmmmm I wonder how families making under 70 grand afford $844,600 homes.

Babs also points out that in a city where a detached house on the west side averages $2.06 million, and on the slummy east side $844,600, the average family earns just $66,970

#74 Blasé on 08.15.13 at 1:25 am

5% in traditional demand areas? Get real Garth. all areas are leveraged, no exceptions. A 5% decrease would mean what you’ve been preaching since 2009 is hot air. When you’re so close to the breaking point, why wus out?

Because CHMC coverage no longer is available for $1 million-plus properties. Hence, more equity and less impetus to sell with rate increases or other shocks. Use your noggin. — Garth

#75 Infused with Opiates on 08.15.13 at 1:29 am

61 Big sexy – interest on Canadian mortgages is compounded semi-annually but then re-compounded in
the mortage payment calculation to whatever the
payment period is ex bi-weekly payment interest (+1) is compounded to the 26th power to equal the quoted
interest rate divided by 2 (then +1) with the result
squared. There may be very minor differences as
lenders may use 26.071 for bi-weekly etc. It is actually quite simple but difficult to explain.

The trick then is not in how the interest is calculated, but rather the accelerated payments which means you are
paying more than required which comes off the principal
more quickly – by approximately one full monthly
payment per year.

If you are mortgage shopping, get one that allows prepayments each calender year, and pre-pay at the start of the year.

But with rates this crazy low, you could invest elsewhere and hope for a better return.

#76 samantha fox on 08.15.13 at 1:32 am

Toronto won’t crash as did Phoenix or Miami. That means nobody should expect a 25% decline in the average price. More like 5% in traditional demand areas, 15% in the trendy, high-mortgaged zones and 20% in the glass towers.

I do’t get it Garth. You are saying then that 750k – 1 million dollar homes are still the norm in Toronto and Vancouver?

With the tapering and the coming skyrocketing interest rates? The only scenario where this is possible is zirp- zero interest rates and extensive money printing which will effectively reduce the currencies to junk.

If this is the case I better be buying energy stocks and precious metals, Seriously.

If we are to speak about a correction and a return to the fundamentals (not to account baby boomers) we are looking at at least 50-60 percents drop in house prices. And I am not even speaking about the moral hazard of CMHC and the 1.1 trillion of mortgages it is insuring, + additional 75 billions limit er year.

To put it in perspective the whole CPP fund has a little over 100 bilions in total.

Screwed is putting it mildly.

#77 samantha fox on 08.15.13 at 1:44 am

If one compares Canada to Germany (one of the economic engines of the world these days) our real estate is overpriced 2.5-3 times compared to the german’s real estate considering income and economic conditions.

And they don’t have land while we do.

The questions is: How come germans did not get the property bubbles that ALL the English speaking countries with central banks run by ex-goldman sax Marc Carney alike bankers got, how there governments are are more responsible than ours?

I don’t get it how million dollars homes are called affordable housing. If this continues I will transfer all my funds out of Canada and will jump for a high-risk mortgage with the minimum possible down payment.

In a see of idiots where irresponsible behavior is encouraged by the governments it hurts to be normal.

I have no doubts that the BRICS will fix it for us. Pretty soon judging by the markets actions lately.

#78 samantha fox on 08.15.13 at 1:46 am

and excuse my typos, it is 1.30 a.m.

#79 Devore on 08.15.13 at 1:48 am

#13 Suede

Read this one (after GF of course) if you get off on other peoples misery. Which I’m sure most here do.

Apparently you get off on wasting your time posting on blogs you have no interest in. Seems to me you could use a hobby to give yourself something productive to do. Or a girlfriend.

#80 StatisticsFreak on 08.15.13 at 2:05 am

#58 Led
Garth’s comment should havd been:
1. change banks THEN #2 put it all in.
(can cost you to transfer a TFSA)

#81 William Bell on 08.15.13 at 2:08 am

$3195 rent per month on a $355,000 house

#82 JWD on 08.15.13 at 2:31 am

C’mon Garth. 5-15% ?? That’s like prices not even 2 years ago. With all that your saying for years, which the vast majority of us believe, it must be more like 20-30% in the horniest of cities like Van and T -Dot.

With prices that have basically doubled over the last 8 years how can the correction be any less?

I’m predicting about 20% across most of the areas you continue to highlight. This would only take us back to about 2007. Maybe PEI will hold…

#83 Notta Sheeple on 08.15.13 at 2:37 am

“……. I found it telling how the Globe and Mail chose to lead off its story. “The sky is not falling,” it said (their emphasis). “Neither are Canadian house prices……”

With regard to journalistic integrity in print media, The Globe appears to be neck and neck with the Slum News Network in a race to the bottom. Witness the following news headline in a recent Globe:

“One dead after TTC bus crashes head on with cube truck” – Globe an Mail

The truth, as correctly reported in other media including The National Post:

“TTC bus crash leaves one dead and 12 injured after cube van slams into it at transit stop” – National Post

Only after being slammed by a series of follow up readership comments, did The Globe change the headline to laughably partial truth:

“One dead after TTC bus, cube truck collide”

I think I’ll save the Globe’s monthly 99-cent paywall for something a little more useful from Dollarama.

#84 Zed on 08.15.13 at 3:24 am

Re #58 Q&A, only years that you are 18 yrs old + count for contributions to TFSA. If you are 19 yrs old now, so 2 years.

#85 NoName on 08.15.13 at 7:36 am

#198 CalgaryRocks on 08.14.13 at 4:57 pm

there are better thing to do with our time instead of waiting 25 min in line, to get free ice cream. What i observed was that in each line was only few parents
with kids waiting for free ice cream. Average age of people waiting for icecream was old… (an adult).

dont remember where I red that on average year americans cumulativly spend around 35 billion hours waiting for something.

#86 KG on 08.15.13 at 7:56 am

Yes, the irony. Sometimes you say the low mortgage rates will not be able to save the home prices, but today you say the markets have legs untill the rate pop.

My comments were GTA-specific. Some markets are already tanking, despite rates. Others – where six million people live, for example – have additional dynamics. You want simple? Read the Sun. — Garth

#87 Don't read his post on 08.15.13 at 8:01 am

#62 blablabla on 08.14.13 at 11:05 pm

That’s exactly the answer I was looking for.
I understand the technicals behind xre and all the REITS right now. But I’d like to figure out why such a dump fest. I know we’ve had a great run since ’09.
Oh well il just keep nibbling away at them.

Thanks. Blablala.
I knew Garth wouldn’t answer back cause he has no answers. (I’m trying to piss him off so that he gives us a stock to buy. Remember HEQ??)

Irritate me all you wish, but I do not suggest individual securities since it is unethical and unprofessional, when I have no idea who is asking. As for REITs in general, they were sold off along with all income-producers in June after achieving historic highs. The bleating on this blog is amazing. I thought people knew enough to avoid high and buy low. Apparently not. — Garth

#88 rosie "moving forward" in the knowledge that, "this won't end well" on 08.15.13 at 8:04 am

If we are going to have a pool, I’ve got dibs on 43.5%.

#89 Piccaso on 08.15.13 at 8:20 am

#35 Westernman on 08.14.13 at 9:28 pm

and getting a reaction from posters like you, seems to be working, no?


#90 TurnerNation on 08.15.13 at 8:20 am

More Bay St. layoffs.
Not surprising…

Canaccord revamps trading desk leadership

Haywood Securities scales back in small-cap drought

#91 jerry on 08.15.13 at 8:22 am

The future of equities?

Invest in America where business is being done in America?

Invest in America where business is being done outside of America?

#92 Catalyst on 08.15.13 at 8:24 am

“More like 5% in traditional demand areas, 15% in the trendy, high-mortgaged zones”

I am surprised you are only calling for a 5-15% decline in prices as fundamentals call for a much larger correction (imho about 30-40%)

Why do you recommend boomers cash out if they only stand to suffer 5% decline? That is nothing compared to the 200% increase they have seen in the last decade. When REITs went on ‘sale’ during their recent dip you recommended to buy, will you do so with housing also? KPIs like price-rent and price-income will still be way out-of-whack after the decline if it unfolds as you predict so I’m not sure where you come up with these figures other than tempering your estimates for the main streamers to not sound like an alarmist.

You have made a great case to be bearish on Canada, especially GTA, real estate. Stick to your guns.

Sigh. How many times do I have to remind people that a ‘correction’ is a temporary event. This one will (as I’ve said often) be followed by a long and slow decline, based on demographics and economics. Anyone not bailing now, who needs liquidity, will seriously regret it in the years ahead. — Garth

#93 pbrasseur on 08.15.13 at 8:35 am

To me those july stats really look like a dead cat bounce.

Yet in my hometown of Montreal that cat is hardly bouncing at all, does not bode well for the coming months.

No wonder, Quebec’s economy, thanks in part to multiple waves of tax grab assaults by this governement and the previous one, is shedding jobs like in a recession. Yet the real action has not even begun…

#94 Standard Deviation on 08.15.13 at 8:41 am

Just got back from a couple of weeks in Ireland and Scotland, and saw the real estate wastelands that Ireland is now living with. My Brother-in-Laws house is now 50% of its peak value during their boom and the empty buildings downtown make it look like some sort of surreal china cabinet where nothing happens inside these glass towers, they are just sitting there gathering dust. I was taken to see row upon row of $7 Million homes that were built and cloned on the coast. $7 Million dollars in a country with 4 million poeple, high unemployment and plenty of land? Well, they were worth that; now they’re worth whatever people may be prepared to offer. If people cannot get out of their ponds to see the big picture here they will get hurt in the exodus.

#95 CrowdedElevatorfartz on 08.15.13 at 8:58 am

@#40 Still Looking
“…..and Calgary will keep going up. It’s the best city on earth. It’s clean, its multicultural, it’s liberal,…….”

Bwahahahahahahahahahahahahaaha, hahaahhahahahahahahahahahahahahahahahahahahaa, hahahahahahahohohhoohohohohohohohohohohohohoohohohohohohohohohohohohoho.


#96 Babblemaster on 08.15.13 at 9:58 am

“The market still has some legs, and that’ll continue until mortgage rates pop. It’s the last, best chance to exit with most equity intact.” – Garth


And that pop (to any significant degree) is, unfortunately, not about to happen.

It already did. Guess you don’t follow the bond market. — Garth

#97 Uwinsome on 08.15.13 at 10:08 am

REITS have gone down 18% and you were preaching to us to buy when they were still at their high.

Now, you’re been telling us the the GTA real estate market will only fall around 15%?

Actually I suggested REITs were worthy of holding three years ago. Besides, you buy for income, which is undiminished. Further, they’re now on sale. As for real estate, my 15% correction call is consistent, and reasonable. Deal with it. — Garth

#98 Dad on 08.15.13 at 10:13 am

@#40 Still Looking

I do business in Calgary, you’ve lost your mind. My oldest son is moving up there. The market is saturated with homes in the middle price range. Maybe if buying up a sh*t shack and slapping an in-fill is your game it might be competitve. But even places in Tuxedo and Bridgeland are languishing unsold.

We found a rental for him with a ratio of 27, walking distance to the downtown core.

Let me know if you have a daughter.

#99 blablabla on 08.15.13 at 10:18 am

#77 samantha fox

I remember reading somewhere that Germany is a nation of renters (understood that you need owners for their to be renters). The most shocking stat is that when it comes to personal net worth they are far lower than say Italians as they invest more in their businesses than their homes etc. (don’t quote me on that, but check around on Google).

#100 bobby on 08.15.13 at 10:24 am

Interest rates are creeping up. Should be a reduction in house prices in August sales.

#101 Doug in London on 08.15.13 at 10:33 am

@Don’t read this post, #48;
Well, I ignored your advice and did read your post. REITs are on sale now, some trading at 52 week lows, so if you don’t yet have any now’s the time to buy. I would much rather buy REITs, which are on sale now and pay me to own them, rather than a grossly overpriced house in Toronto, Vancouver, or other any other overpriced market.

@Standard Deviation, post #94;
Real estate on sale in Ireland you say? You’re not the only one to notice that, and that’s why CAP REIT (CAR.UN) just bought some underpriced income producing property in Dublin. Did I mention CAP REIT is trading near a 52 week low?

#102 David McBride on 08.15.13 at 10:41 am

Garth, look at the folllowing:

Are these numbers correct? Is this just another attempt to manipulate and massage data in order to spin the ‘correct message’ by the ultrastupid

media and the manipulative real estate cartel?

I don’t think there are many greater fools left out there (not that we are not stupid-er by far than the rest of the world judjung by the real

estate prices…) but it kind of hirts my intelligence and self esteem knwowing that one have to actually live surraunded daily with so much

stupidity and lack of common sence.

Is there any legal way to stop F’s follies with CMHC?
The guy obviously has no clue what he is doing but what really scares me is the complacency and political correctness of the people and economists

along with the clearly gambling habbits that F shows (but he gambles with other people’s money…).

I won’t even speak on the media behaviour and the obvious lack of professionalism/independent optinion/investigative journalism here.

#103 Donald Trump on 08.15.13 at 10:41 am

The reason the sky is NOT falling is all the hi – rise condos are holding it up.

#104 blase on 08.15.13 at 11:25 am

I’m trying to use my noggin Garth, but what you’re putting down isn’t getting through.

Bond market yields increasing, tapering on the way which will drive up rates (significantly) further, CMHC retracting to pre-2008, CMHC progressively turning off the MBS tap (slowly but surely, water-torture style), boomers dying off or downsizing. Now, with all that, you’re telling me the high-end Toronto market goes down 5%? That’s it? Or are you saying goes down 5% in the next year, and then slowly goes down another ..% over the next X years? It seems like you are saying the latter. Makes sense, unless there’s a major bond shock this fall. I’m expecting at least a 25% retraction for Toronto detached, within the next 5 years, based mostly on rate shock, and less on a deteriorating economy. How can this not all end horrendously? So are you sticking to 5% for a year, or what’s your 5-year outlook. O

#105 blase on 08.15.13 at 11:29 am

Garth, you can delete my above post. I read your response to Catalyst. But who cares about a temporary correction? Giving a 3-5 year outlook based on a doubling or more of rates is more reasonable.

#106 rosie "moving forward" in the knowledge that, "this won't end well" on 08.15.13 at 11:38 am

But they said it was immigration, or was it that they don’t make land anymore. I point to 2006 when the real action got started. Those conservatives are so good with money.

#107 dosouth on 08.15.13 at 11:53 am

#40 still looking – … Called the realtor, place sold while I was looking at it.

On – yeah right. It takes days for listings to be removed once the subject to’s are removed and the final sale is secured.

Keep on looking in your “REAGION SPECIFIC” area and good luck with your realtors licence, you are probably a shoe in.

#108 Roy on 08.15.13 at 11:55 am

Media puts out headline “homebuyer angst” but it is really about homesellers who struggle to sell. LOL

Their answer- Take what isn’t selling off the market and expect the situation to improve despite the fact all the fundamentals point the opposite way. The media pumping its message of what owners should do: don’t adjust your price expectations just remove your listing.

US 10 year up, stocks another bad day. One day closer to the taper. Cheap money created this bubble, the end of cheap money will end it. Expecting 5-year fixed mortgages to be at 4.5% soon, over 5% by next year on the way to normalization. The Fed is going to create a bond market disaster = Not a soft landing

#109 Suede on 08.15.13 at 11:57 am


DOW going on sale…

#110 crazed and a little confused on 08.15.13 at 12:04 pm

well garth,
your prediction is decrease is kinda modest

“No it’s not. I referenced a 5%-20% correction, varying by area and property type. — Garth”

its hard to imagine 20 % is going to make much of a difference in vancouver , lower mainland. just to review the math a vancouver home would drop from $880 K to $704 K approximately. the majority of locals will still be priced out…especially given the interest will be definitely higher..
there will be a lot of whiners blaming you on not buying sooner..” I listen to you ..blah …bah”. but people just gotta take ownership of their decision. you are an adult.

i want to put it as simply as possible” you will not die if you do not own a house”
you may not have a girlfriend/ wife / partner . but that is a different story
Garth …you have given us tool to diversify ourselves. it up to ourselves to put it into use. how successful we are at it is up to us.
i know people its rough out there. we are affected by decesions other people make whether its a son who perputually comes home to live with you and pays no rent or help with maintenance… only way to get rid of him is to sell

or someone sick and you need the money $$$. but here we are not able to own again in the city you grew up in. oh well… it could be worst. all i can do is move forward . repeat my successes with stocks and not repeat my mistakes . so far my last 3 purhases have proved pretty good
oil up 12 % with 3.something divend
science/ manufact up 19 % w/ 2.7 % div
us steel down 10 % w/ 5 % dividend

research…read. but so tough in life. i spend the last 5 years of my life working/ rehabbing a broken leg/ getting an advanced commerce certification. done with school no more.
so u guys out do not let despair/ anger run your life…because its the ony one you’ve got

#111 canada man on 08.15.13 at 12:13 pm


#112 Jesse Ventura Jr on 08.15.13 at 12:20 pm

Gold lovin’ wanks… former gold bugs says “we’re holding trash bags”

#113 daystar on 08.15.13 at 12:21 pm

As for REITs in general, they were sold off along with all income-producers in June after achieving historic highs. The bleating on this blog is amazing. I thought people knew enough to avoid high and buy low. Apparently not. — Garth

Just want to add as well, that REIT’s are interest rate sensitive. As the cost of borrowing rises, fundamentals change in terms of leveraging for new acquisitions and renewing terms and leases and last but not least, net income. At the end of the day, REIT’s are about profit, profit potential, (buying, leasing and selling assets) balance sheet strength and the effects higher rates will have on all three. If REIT investors don’t know the dangers rates pose on the sector as a whole and consider owning REIT’s for any length of time, they should stay away from this sector until they do.

When I looked into REIT’s a few months ago, I found 2 of 9 ETF’s I looked at that I considered to have sound fundamentals and balance sheet strength to invest in considering their value as well as a rising interest rate environment that I consider to be a negative headwind for any REIT investment. The REIT that owns the building Garth commutes to for his work rituals is 1 of the 2. (impressive building in architecture and construction, I must say)

#114 Westernman on 08.15.13 at 12:23 pm

Picasso @ # 89
Well, if that’s how you get your thrills…
I guess it breaks the monotony of constant gaming in your Mom’s basement… I’m sure you don’t have anything like a job or anything to occupy yourself with…

#115 Godth on 08.15.13 at 12:33 pm

43 TheCatFoodLady

I sincerely hope most don’t “get off on peoples’ misery”. In many cases, those people overleveraged, overextended on damned near everything, are friends & family, coworkers; neighbours with whom we socialize.

Scary isn’t it? Our debtlords avoid me these days, lol. Ignorance is bliiisss. I’m a lot of fun to socialize with, though I feel as though a pre-recorded message is looping as a response “I don’t want to talk about it”.

We will be talking about all sorts of substantive things in the future though, head in the sand only lasts until the asses get a sunburn.

#116 GTA_SEARCH on 08.15.13 at 12:35 pm

5-20% correction..Big deal…

So whoever listened to Garth for the past 4 years lost time and $$$. Oh an a nice house to live in.

Actually I have always forecast a similar correction, and not a crash. More important than price though, is the ratio of net worth in a house. You realtors want it to be 100%, and encourage people to buy at the top. It’s why you enjoy so much public respect. — Garth

#117 GTA_SEARCH on 08.15.13 at 1:09 pm

Thanks for deleting the truth. Something you can accept.

Nothing was deleted. You posted 30 minutes ago. I was busy. Suck it up. — Garth

#118 Depends on your perspective on 08.15.13 at 1:13 pm

@ #46 – “The market makes no sense”
Depends on how you look at it. It makes no sense to an economist or someone who was told their whole life not to borrow money, that saving was the right thing to do.
But, when you got you first credit card at 18, maxed it out by 18 1/2, and asked your parents to pay it off (which they did.)
When you went to school for 4-8 years, all on debt, and then only had to make miniscule payments on that federal backed debt. Then you graduate after years of people telling you that your future is all unicorns and roses because you have a masters degree and that you will be making $150,000/yr minimum.
It makes sense when you realize these people don’t know what debt is and have never actually had savings. They have never held debt (that they had to pay off themselves) that was over prime +2% and prime has never been higher then 2% in their memories. All they care or see is the monthly payments and whether they can stay afloat. Very little consideration of the future and when it is there it is unrealistic, prime at 1-2% forever!
Add to this a general feeling of armageddon. So many young ones coming up today figure the whole world will be such a mess by 2050 that it doesn’t matter what they do to save or plan. Global warming, eco-cide through Fukishima and GM foods, depleted fishstocks, over population, water scarcity, etc etc etc.
They are looking at a Judge Dred world by 2050, if not all out Mad Max.
These young ones are just trying to get a piece now and hold onto it before the whole thing crumbles. They don’t think they will ever have to pay it off.
Jokes on them though. If those are your beliefs, the actions you should take are the exact opposite of course. Save, stock, buy land with cash in low tax, fertile areas and learn to generate your own electricity.
Not a doomer, trying to bring another perspective that I hear from the young ones regularly.

#119 Randis on 08.15.13 at 1:21 pm

@ #5 Sideline Sitter

Great move, best of luck with the offer.

The other day I went into a house and made an offer 40% below asking … You would like to think the sellers would be offended and wouldn’t counter … Wrong, they countered with another with $10000 below asking and I went ahead and counter back with $10000 below my offer … that’s when they probably got pissed and stopped playing with me … Bottom line, greedy sellers need a freaking whack at the head with the price for real.

#120 Old Man on 08.15.13 at 1:29 pm

Some of you are trying to time the market with REITS, as secure cashflow is the target. Nevertheless, here is my formula for buying, as establish a capital limit say for example $40,000 max in XRE which is a basket to spread out your risk. Buy today for $10,000, and if you believe it will go down establish a buy target for another $10,000 and so on. In other words do a dollar cost averaging, as do this when I am buying or selling, as have no crystal ball.

#121 Dupcheck on 08.15.13 at 1:35 pm

If the Canadian dollar fell by 30% compared to the US dollar, would that mean that the home prices are now 30% more affordable when compared to the neighbours down south? Maybe that is what we are waiting here is it?

#122 ILoveCharts on 08.15.13 at 1:37 pm

Latest CREA numbers are out.
“Canadian home sales hold steady in July”

I thought that even the bears were predicting that these numbers would “look” good.

#123 blablabla on 08.15.13 at 1:38 pm

Sorry for hijacking/polluting the blog here…but for XRE I just found an interesting “comparison”…take a look at the TSX Cap Reit Index first 1/2 of 2004 and notice the startling similarity in the takedown.,icydo8D#0 (TSX REIT Index — there are two images)

Again, hard to say where we are here compared to 2004; we can be at “the” bottom, or at May 1st, 2004, or neither!

#124 TO and GTA Sales and stats 2013-08-15 on 08.15.13 at 1:38 pm

TO and GTA Stats and Sales 2013/08/15

#125 Piccaso on 08.15.13 at 1:41 pm

Stocks Slide for Second Day as Rates Climb to 2-Year High

#126 happity on 08.15.13 at 1:54 pm

Yup, stocks were praised as the foundation of a USA economic renaissance, but they have been faltering and have demonstrated many omens. Real estate is crumbling just a couple months after it was held up as a beacon of recovery.

Meanwhile gold and silver, bashed by the garth, have been vaulting nicely.

The best recent trade would have been the opposite.

What say you garth?

The Dow is up 20 per cent this year. Gold is down 31 per cent. US house prices have gained 12 per cent in the last year. What was it you were saying? — Garth

#127 Godth on 08.15.13 at 1:55 pm

Speaking of Too Real…

#128 Jim on 08.15.13 at 1:58 pm

Canadians need to get out more. I’ve had the opportunity to see 12 US states in the last two months, driving through and really getting to see the local areas. The cost difference between Canada and just about every place I have visited is astonishing. Even Silicon Valley (where I live) and the best areas in DC look like bargains compared to the prices in Vancouver. When you compare average and median family incomes to average and median family home prices, it is just laughable.

People in Vancouver and Toronto are deluded in thinking that their cities are so great that they can sustain these housing and consumer goods price differences.

I should also add that San Jose has a ton of third world immigrants (largely annoying and terrible at driving, just as in Toronto). Immigration doesn’t explain the high prices in Vancouver and Toronto.

#129 Julie on 08.15.13 at 2:01 pm

Garth……what the hell is up with gold? I was hoping to buy it under a grand as a small part of my portfolio.

Go ahead. Tell us how it works out. — Garth

#130 happity on 08.15.13 at 2:18 pm

Garth, you want to stand on 6 months performance?

Over the last decade gold has outperformed stocks and real estate.

Wait until interest rates really do rise with impact, your multiple years prediction will finally come true, but stocks will tank then.

Oh! Look at this! — Garth

#131 TonyMontoya on 08.15.13 at 2:19 pm

dont be so quick Garth, to say, that we wont have a Miami or Las Vegas s†yle real estate crash in Vancouver and Toronto. I beg to differ, and expect a huge downturn in equities world wide and real estate.

Its also becoming obvious that the US (so called ) recovery is over and trending down again. Looks like Bernankes money printing bonanaza only delayed the inevidable implosion in both Europe and NA, while giving banks time to profit and ready themselves for the greatest depression of all time.

#132 Piccaso on 08.15.13 at 2:22 pm

#114 Westernman on 08.15.13 at 12:23 pm

I’m obviously thrilling you.

#133 Old Man on 08.15.13 at 2:24 pm

I see so much nonsense in the main stream media, about Real Estate evaluations in Canada am beginning to think that the cabal and the media are working together with instructions from Caesar. Trust Mr. Turner as he knows the score, as this bubble is huge, and will not disappear, and reality will come quickly and sharp sooner or later.

#134 not 1st on 08.15.13 at 2:27 pm

Folks, manufacturing is about to be repatriated…right into your own living room.

REITs are heavily invested in malls and office buildings, but with telecommuting on the rise and retail outlets about to become passe’, how do REITs not take hit??

3D printing, solar energy, fusion, electric cars and other technologies are about to kill a lot of dinosaur industries.

#135 ss on 08.15.13 at 2:31 pm

Is this the US recovery you have been talking about?

#136 Daisy Mae on 08.15.13 at 2:33 pm

#31 timmy: “Rob Ford is a buffoon and an embarrassment to this country. Hard to believe we have someone like this clown representing the largest city in the country…but then why am I surprised when people elected Christy Clark?”


We’re pretty pathetic, aren’t we?

#137 Don't read this post on 08.15.13 at 2:34 pm

I think you should do a segment on REITS
I believe we could see a 10-15% drop

#138 happity on 08.15.13 at 2:39 pm

First it’s claiming success based on 6 months performance, then it’s a link to the main stream media to try to support your point?

So in effect you are using main stream media for investment decisions?

Weren’t you just bashing main stream media for their performance in honesty?

What next?

If you’re smart, you’ll read the story next. — Garth

#139 Westernman on 08.15.13 at 2:40 pm

Picasso @ # 130
Don’t flatter yourself…
Now you can go back to browsing for your next tattoo…

#140 Rancher on 08.15.13 at 2:41 pm

No one on this blog seems to be talking about rural or farm properties. Any perspective on this; specifically around the GTA?

#141 Old Man on 08.15.13 at 2:42 pm

Ok lets do a reality check with some rational thought, as there are only a few things that can hold up this massive bubble in Real Estate. One is a huge wage increase going forward; need to see hyper inflation; one has to see employment and jobs being created with good wages; and the debt ratio per average home buyer must come down. Now if this is not the case, guess what is going to happen?

#142 Piccaso on 08.15.13 at 2:46 pm

#126 Jim on 08.15.13 at 1:58 pm

Newbs have no idea how out of whack Canadian incomes to house prices are.

They think this housing pyramid is the norm.

Buy a house on 649 Lotto Avenue and your rich.

#143 Delete This on 08.15.13 at 2:46 pm

Yo Garth- what are the markets telling you about tapering??? Gold and Silver up- why because Yellen will be even more dovish. The only way is for war baby!! Look at the Middle eAST. kIND of reminds us of Europe circa 1910 to 1911- A powder keg. Look at oil. Up because of Middle East. You are too narrow mineded Garth, You don’t see the global big picture. Its all about to crash. Own a Home, a gun, and BULLION!!!

OMG. — Garth

#144 Spiltbongwater on 08.15.13 at 2:49 pm

When the SHTF and the Pamala Wallins come knocking on doors to steal people money, why would we want to have our net worth in a balanced diversified portfolio that they can seize to pay their expense accounts? I think it would be better to put all my net worth in my house, and protect it with guns.

Please send us your address. — Garth

#145 today on 08.15.13 at 2:54 pm

Lots of testy people on the blog today… wow… anyways. According to my insurance nurse a couple of days ago when I asked her how many clients she sees a day, she says since the recession in the last couple of years the amount of clients she sees for life insurance policies has decreased to half. on a good day it’s a decrease of one quarter. She says the insurance industry got heavily affected by the recession because people just don’t have the money for policies.

#146 GTA_SEARCH on 08.15.13 at 2:55 pm

Actually I have always forecast a similar correction, and not a crash. More important than price though, is the ratio of net worth in a house. You realtors want it to be 100%, and encourage people to buy at the top. It’s why you enjoy so much public respect. — Garth

Don’t assume everyone like that is a realtor. You should limit your thesis to condo buyers and the select few with no equity. Most people have a lot of equity in their home. SFH is solid and the best thing people should invest in for personal use.

False statement. — Garth

#147 DW on 08.15.13 at 3:08 pm

We will have to keep saving to afford that semi in North York priced at $700,000.

#148 head scratcher on 08.15.13 at 3:15 pm

perhaps you can help quell the inevitable tide of OMG that may be looming?

I bought a rancher in a gate community in the okanagan in 2010
2011 I locked in the mortgage…5 years as you suggested in your blog…comes due in 2016
35 years…woo hoo, if Im still walking, I’ll be mortgage free
equity 130 000
remaining 230 000
on the OMG side of things
i’m a wizened teacher…….if Christy Clark has her way I may not have a pension :) or much of one. Heck, I may not have a job! full pension is another 10 years in the distant, far distant future, far far far future (I’m hoping I will have a future! I’m 58)

now what
duck and run?
dig in and start praying? seriously praying

what do you think?
dodge the bullet or try to catch it in my dentures?

#149 GTA_SEARCH on 08.15.13 at 3:16 pm

Don’t assume everyone like that is a realtor. You should limit your thesis to condo buyers and the select few with no equity. Most people have a lot of equity in their home. SFH is solid and the best thing people should invest in for personal use.

False statement. — Garth

I am right. No matter how slice and dice it your network is most cast is better of with homeownership. Even if price stays flat for the next 25yrs.


That spreadsheet is a riot. Thirty-five years in a condo. — Garth

#150 Chris L. on 08.15.13 at 3:24 pm

Regarding below. He’s right Garth. If you aren’t going to erase all the gains of 4 years FIRST then retract 5-10%, the advise should have been buy 4 years ago, not wait. Now if we’re talking about a 20% decline, then the advise should have been wait. But this is dragging on far too long for your predictions to be correct – certainly not 4 years ago and certainly not at 5% with your advise last year as the market is already up 5% this year. You call on RE has been a bust. You can’t be right on all your calls.

Had someone bought 4-5 years ago with a 5 years to some sort of bottom still puts the buyer way ahead of the game with nearly half a house paid for all else equal.

“5-20% correction..Big deal…

So whoever listened to Garth for the past 4 years lost time and $$$. Oh an a nice house to live in.

Actually I have always forecast a similar correction, and not a crash. More important than price though, is the ratio of net worth in a house. You realtors want it to be 100%, and encourage people to buy at the top. It’s why you enjoy so much public respect. — Garth”

Thanks, but I’ll stick with my advice. Sell high, buy low. Diversify. This is high. — Garth

#151 CP on 08.15.13 at 3:26 pm

Garth after reading your responses to the comments posted today, I think you’ve earned yourself a drink.

Hang in there

#152 GTA_SEARCH on 08.15.13 at 3:32 pm

That spreadsheet is a riot. Thirty-five years in a condo. — Garth

Always picking fringe cases. Let’s try a SFH in Toronto.

#153 Mike T on 08.15.13 at 3:33 pm

I was having lunch at a pub yesterday in Kelowna and overheard the table next to me discussin trying to sell their home.

They have had 3 legitimate offers and all 3 fell through because the buyers could not qualify for CMHC insurance.

1 house in 1 market does not tell any type of story….but I am certain this scenario is repeating itself all over.

#154 Donald Trump on 08.15.13 at 3:37 pm

#142 Spiltbongwater on 08.15.13 at 2:49 pm

When the SHTF and the Pamala Wallins come knocking on doors to steal people money,


I just ROTFLMAO at these ex -media types that do a 180 once they are on the other side of the public trough.

I had thought Duffy and Wallin were good reporters and interviewers. Now look at it.

I have noted that the new journalism career formula is to get established, then some go’vt agency or large corporation hires you to be the Media Rep , y’know, the spearcatcher to protect the other losers with a bunch of BS mixed with hot air.

#155 TnT on 08.15.13 at 3:40 pm


The type of person who would buy and live in the same condo for 35 years is not going to have financial obstacles, or a “life partner” or any dependents… that person would be a fringe case….

Work out a “normal” person with less than 10% down starting at today’s prices who then sells in 3 years because they now have a life partner and / or dependent etc…

#156 Canadian Watchdog on 08.15.13 at 3:47 pm

Greater Toronto's Broken Wealth Effect – Chart

#157 GTA_SEARCH on 08.15.13 at 4:13 pm


You can change the parameters that makes sense to you. What matters is your net worth in the end. In some cases, it makes sense to rent (1M+ mansions) and other to buy.

As a matter of fact even if you factor in 7% avg return for the next 35yrs that Garth preaches and 0% growth in RE you are still better off buying.

The math doesn’t lie. You decide.

#158 Form Man on 08.15.13 at 4:18 pm

#130 Piccaso

westernman’s immature anger stems from childhood trauma. Instead of taking responsibility for his disastrous life, he lashes out at others with fury and rage. He once loved a girl from Saskatchewan. She spurned him, launching him into a lifelong journey of misogyny and despair. We all feel empathy for him, but sadly, he is the author of his own misfortune.

#159 espressobob on 08.15.13 at 4:18 pm

REITs on the ropes! Going down for the count? Did anyone take profit over the last 5 years? Oooops. XRE is looking sweet. Oh, and all that yeild.

#160 daystar on 08.15.13 at 4:23 pm

#139 Old Man on 08.15.13 at 2:42 pm

Healthy wage/income increases could do it. Hyperinflation is usually accompanied by higher rates that follow falling currencies… unless its income driven and this is what we need. The problem for Canada is that with trade in mind, we are commodity driven with exports that are priced in U.S. dollars. As the loonie loses steam relative to the strength of the U.S. dollar (and weakness of our own) and U.S. economic recovery so does our value for what we export and considering roughly 75% of our exports are to the U.S., we have weakness there. If its not made up in volume, we lose and looking at what’s happening with energy, our biggest export sector in terms of what the U.S. is doing with domestic energy production, Canadians should be far more apprehensive.

There’s a reason why we are running trade deficits and the growing spread between WTI and WCS over the last 6 or 7 years needs to be understood as an example to see it, which is why we needed a west/east pipeline 7 years ago, but not just stop there. We need Canadian refineries built to process oil out west as most of it will be heavy oil/gas, and most importantly to cut Canadian imports at Brent crude pricing. This would help reverse trade deficits in a big way.

Job creation from the private sector is a must to think about legislating wage increases. Employment demand coupled with wage increases could bring the debt/income ratio down for sure, but the most likely scenario to hope for with the government perspective in mind is for things to stay the same with jobs reshuffling from one sector to another over time. (really, its the government perspective that I try to see in looking at the true scope of the problem or assess risk)

I believe our feds decided that tightening banking regs coupled with tighter CMHC regs back in 2012 have chased away the risk by vetting new home buyers more stringently entering this market at these valuations and sales volumes have most definitely suffered for it to some acceptable degrees, but prices haven’t come down and this is the biggest problem for government right now. Even with tighter regs, vetting home buyers with, say, 10% interest rate scenarios is hard to do without putting the brakes on the industry as a whole outright and the problem is… that risk is there over reasonable timelines (5 to 7 years).

5 year terms can still be found around 3.5, 3.6%, which is still cheap. Once they climb past 4% (as expected with CMHC’s latest move), market apprehension will turn into fear and past 4.5 to 5%, fear will start turning into horror and we will see a flood of listings that realtors can’t talk sellers into delisting if it doesn’t move. Should interest rates move to 6% and beyond, horror will turn into depression. We’ll see major unemployment from the RE, construction and financials or entire industry (some 20% of GDP) and the feedback should cause a tipping point that leads into lost jobs in the service sector and then you have full scale recession in Canada that is likely to double and triple dip for as long as rates remain high which could be several years.

Btw, movement from 3.5% to 6% isn’t much of a jump. As Canadians are now acutely aware, rates in the bond markets have moved up close to a percentage point in a matter of weeks. The U.S. fed is talking about scaling back Q.E. in a matter of weeks as federal governments cuts in spending coupled with tax increases (payroll and incomes) and general income increases push tax receipts higher. Theoretically, scaling back Q.E. could push up bond yields higher and its effects will be felt world wide.

CMHC scaling back on 75 to 80% volume of 100% insuring mortgages will have an impact on mortgage rates as well, at least for the rest of the year and likely from here on in. 5 year closed terms at 6% mortgage rates could well be the new normal within 2 years.

I am, and have pretty much been in the “higher interest rates coming” camp and have established timelines with my hypothesis having consistently warned of mortgage rates for 5 year closed terms at 8% or higher within 5 years. Gross public debt has swollen by more than 40% under Harper, causing much greater risk to enter the balance sheets in Canada. 10 year bonds face 2 pressures, one stateside and the other with increased domestic risk in the form of deficit spending and this risk will continue to come by way of higher interest rates going forward:

I don’t see a rosy employment future considering commodities, exports and currencies over all, not until the loonie falls enough to support new manufacturing jobs and higher commodity volumes which will take seveal years to manifest (note, oil has been over $100 a barrel for the last quarterly):

Instead, I see more trade deficits (a big failure with this federal government behind it, Conservative policies have been appalling basically since they’ve come into power), credit contraction in financials, a serious housing correction in housing, higher unemployment, possibly much higher and recession and the catalyst is higher interest rates.

In short, our Harper government messed up huge with real estate. Regulations have been wreckless and appalling considering what was needed for the health and integrity of the system. Valuations been allowed to rise beyond sustainability and our banks have been allowed to focus far too much on profitability with residential housing as opposed to making money with industry. Its not just housing the Harper government has blown it with, its with trade and swelling public debt of which the latter contributes to risk with debt pushing rates up higher, the catalyst that exposes bad policy for what it is. I’m sorry to break it to the people who voted for and supported Harper but this is what we get when we allow lobbyists to run this nation.

#161 Stickler on 08.15.13 at 4:39 pm

@ #150 GTA_SEARCH on 08.15.13 at 3:32 pm

That spreadsheet is a riot. Thirty-five years in a condo. — Garth

Always picking fringe cases. Let’s try a SFH in Toronto.
Re your xls…
I put some numbers that i found to be a good compare. My changes:
350,000 property
1,500 rent equivalent
$20,000 down, and $70,000 down.

The renter was better off every year…and that is without changing your following assumptions:
– 1% appreciation EVERY year assumption
– 4% commission (5% is pretty common)

Just because buying was a better option 7 years ago, does not mean it is for the next.

#162 Stickler on 08.15.13 at 4:42 pm

@ #157 espressobob on 08.15.13 at 4:18 pm

REITs on the ropes! Going down for the count? Did anyone take profit over the last 5 years? Oooops. XRE is looking sweet. Oh, and all that yeild.


I prefer ZRE (equal weight) over XRE (cap weight).

With XRE -> Riocan & H&R make up 35% of the fund.

#163 Steven on 08.15.13 at 4:50 pm

Just as real estate has not bottomed out gold and silver has not topped out. In either case due to institutional resistance corrective price movement has been minimal if it happened at all..
Metal is too cheap relative to GWP, global M3 or financial assets and real estate is too expensive relative to a mans annual earnings. Therefore we are a long way from either market being realisticly priced.

#164 the USA gave me a hernia on 08.15.13 at 5:10 pm


#165 Julie on 08.15.13 at 5:14 pm

Pretty hard to buy it under a grand when its going to $1400. Your thoughts?

Almost time to buy some reits to pay my rent as well :-)


Garth……what the hell is up with gold? I was hoping to buy it under a grand as a small part of my portfolio.

Go ahead. Tell us how it works out. — Garth

#166 Julie on 08.15.13 at 5:18 pm

OH……and I have to say. I almost throw up every time we drive by Garrison Crossing in Chilliwack. We like to call it Kellogg’s Corn Flakes Village. Its a tight bunch of sawdust townhouses and condos pretending to be Dutch. Gross. I’ve been to The Netherlands. Their buildings and condos are made with brick and mortar, not corn flakes boxes. Average price of a tiny squeezed in townhome made of sawdust? $350,000 And this is Chilliwack. 125kms from Vancouver.

#167 Westernman on 08.15.13 at 5:37 pm

Daystar @ # 158,
Are you capable of making ANY point in less than 50,000 words?
What a self-important windbag you are…

#168 espressobob on 08.15.13 at 10:59 pm

#160 Stickler

You made an excellent point! Ironic I myself hold a 50/50 on ZRE & XRE for the reason you presented. Less concentration risk with Riocan, H&R, and Dundee. Lets hope for the best. Cheers!

#169 daystar on 08.15.13 at 11:28 pm

#165 Westernman on 08.15.13 at 5:37 pm

You’re an idiot, how’s that work for you?

#170 espressobob on 08.15.13 at 11:39 pm

#162 the USA gave me a hernia

When it comes to Peter Schiff, you might want to get examined at the Shouldice hospital!

#171 Doug in London on 08.16.13 at 10:36 am

@Don’t read this post, #135:
Once again I ignored your advice and read your post. That one must have been posted 3 months ago and was somehow lost in cyberspace all that time. If so, it was a good prediction because they have dropped about 15%. Looks to me like a good time to buy.

@Old Man, post #119:
That’s a good strategy, I’ve been doing the same dollar cost averaging. With yields above 5% on XRE and CAR.UN now, I enjoy watching those dividends roll in. I wonder what the next sector to go on sale will be?