The sure thing

STREAKER1

Just wow.

Six hours before CREA posted its boring numbers, CBC news was pumping. “Canada’s realtors are expected to announce numbers today showing a booming market.”

s-HOUSE-PRICES-CREA-large300  Over at the hyperventilating HuffPost the headline was “Canadian House Prices Soar, Marking Possible Return Of Overheated Market,” accompanied by a picture of a house launching into space.  “Why housing is going to remain our national obsession,” said the Globe and Mail, on the third (count ‘em) remake of its real estate-dominated front page Thursday. A headline hours earlier: “Canada’s Goldilocks housing market: ‘Balanced and well-behaved,’ pickup seen in 2014. And at CTV: “Strong sales in Vancouver, Toronto boost national housing numbers,” the network said breathlessly.

But while the Vancouver Sun was reporting, “July home sales highest in eight years,” US-based Bloomberg was saying, “Canada Existing Home Sales in July Slowest in 5 Months.”

So let’s put a few things into context.

First, the latest realtor-generated stats about housing sales and prices last month are hardly impressive. Comparing July of this year to an abysmal last July is nice for percentages but doesn’t indicate a rising market. In fact, average prices have barely moved this summer, while the inventory of unsold homes is going up. In some markets, way up (like poor Ottawa).

In fact, inventories of buyerless homes are now swelling in 70% of the country’s markets. And it’s only August. Wait until the usual gush of autumnal listings materializes, and the chemistry in places like Toronto, Winnipeg, Montreal and Vancouver starts to change. (Calgary’s flood angst is a whole different story.)

Second, the CREA numbers speak nothing of the crumble now happening in the construction business. On Thursday CMHC said it expects housing starts to be lower this year by about 15%. In the GTA, as this blog has reported, it’ll be more like 50%. Developers in Toronto, Calgary and Van have slashed their investment in new development land by between 30% and 52%, while 19,000 new condos sit unsold in the 416.

Then we have mortgage rates. They popped three times in June, pushing a mess of dewey, delusional virgins into making offers before their pre-approvals turned into pumpkins last month. And there are more hikes to come. Bond yields bloated again Thursday as it becomes more obvious the US central bank will begin to taper down its stimulus spending – starting (as I told you) in the next few weeks. Fixed-term mortgage rates are determined by bonds, not the Bank of Canada.

And let’s not forget the CMHC money-rationing announced last week. It means banks will have less cheap, riskless cash to lend, taking rates higher by an estimated half point. Meanwhile, the Canadian unemployment rate just went up (while Americans create jobs, we’re losing them), wage gains are pacing inflation (so people with jobs aren’t getting ahead), household debt is at record levels and still growing and the Canadian economy’s barely registering any growth.

So why would people be willing to pay even more for houses, with demand rising – as CREA suggests? One reason only. They think real estate will go higher, because nobody buys stuff they believe will soon be cheaper.

Out in BC, head realtor economist Cameron Muir smugly says: “There are a few housing ‘bears’ in Canada that have for a number of years have decried home prices are unaffordable and have to fall dramatically. Certainly, the stats don’t bear this out. We’re at the bottom of a 25-year decline in mortgage interest rates, so our home price-to-income ratios have to be higher than the long-term average as a result of that.”

He’s right about one thing: low rates mean people pay more for properties. This is the bottom of the rate cycle. That also means it’s the top of the house cycle.

This brings us back to the headlines.

There’s no doubt the media cheerleading will have an effect. Always does. More kids will be convinced it’s okay to dump all their savings into a house, plus shoulder a massive mortgage. More wrinklies will figure with a rising market they’ve got lots of time to grab more equity before they must sell. And more financial illiterates will see houses as stable and safe while liquid assets are variable and risky.

It’s what our society is built on. Why 70% of us have real estate. Just like Ireland.

What can go wrong?

196 comments ↓

#1 shiny mirrors on 08.15.13 at 5:27 pm

FIIIIRST !!!

and one more for the list:

“The report may assuage fears that the hot Canadian housing market is headed for a downturn — whether a severe drop or the “soft landing” hoped for by homeowners, politicians and banks.”

http://www.cbc.ca/news/business/story/2013/08/15/business-crea-housing.html

#2 snake on 08.15.13 at 5:32 pm

I am first

#3 bill on 08.15.13 at 5:37 pm

the only good thing about that Irish video was when the the publican pulled the pint of Guinness.
the rest was pretty depressing.

#4 ILoveCharts on 08.15.13 at 5:37 pm

I’m probably going to be lambasted for saying this…
but are you really buying a house or are you buying a mortgage?

Expensive house with low interest vs cheap house with high interest… same size mortgage.
If you are planning on staying for a long time to live there does it really matter either way?

I suppose it makes more of a difference in five years when you renew.

#5 Donald Trump on 08.15.13 at 5:40 pm

Pearls before swine baby ……..YES !!!!!

#6 retired Boomer - WI on 08.15.13 at 5:43 pm

Interest rates bumping up today, stocks slip & fall. So, what’s new? SSDD…
The world turns as does the stomach. Thirsty Thursday time for a cocktail.

#7 Observer on 08.15.13 at 5:54 pm

GReate Video, sound too familiar. Sounds like the US, Going to sound like China and also Canada.

All have the same formula…. Cheap money backed by government, leaving tax payers on the hook.

Sound like Fanny and freddy and sound like CMHC. But why don’t we learn from other’s mistake. That is the question of the day

#8 GTA-Renter on 08.15.13 at 5:56 pm

FIRST! Rent now or lose your money!

#9 BillyO on 08.15.13 at 5:58 pm

Talked to a few agents doing condos in TO. Very slow right now for buying selling new and resale but renting quite strong. One beds pushing 1800/mo

#10 Michael on 08.15.13 at 5:59 pm

There’s a CRTC rule that says:

3. A licensee shall not broadcast
(d) any false or misleading news

http://laws-lois.justice.gc.ca/eng/regulations/SOR-86-982/FullText.html

Isn’t it time we all filed complaints?

#11 guelphstudent on 08.15.13 at 6:01 pm

Speaking of Ireland:
Ireland vs Canada home price graph
http://imageshack.us/f/62/6ysc.jpg/

#12 Halifax Observer on 08.15.13 at 6:02 pm

The RE mess left by Ireland’s Celtic Tiger is a great indication of what the great Screaming Beaver will do to Canada’s housing.

#13 Rob on 08.15.13 at 6:02 pm

It’s really sad to see all the vacant RE in Ireland, not to mention Detroit and other bankrupt burgs. It enough to drive one to drink, eh?

#14 dienekes on 08.15.13 at 6:03 pm

Hard to believe that it can happen here, but when you look at the building going on in Saskatoon, there is simply NOT that many people moving to Saskatoon. If you watch the relax sight, lots of the houses are not selling. Same homes month after month.

#15 Observer on 08.15.13 at 6:15 pm

13 Rob on 08.15.13 at 6:02 pm

It’s really sad to see all the vacant RE in Ireland, not to mention Detroit and other bankrupt burgs. It enough to drive one to drink, eh?
===============

Its not sad, its show one thing about human nature. Human are by nature Greedy. The banks could of put a stop to it. Bernie Maddolf could of stopped whenever he wanted.

But the all knew it. If they stop now , the ponzi scheme house of cards will Come Crashing Down.

EG. If they show fear and housing is slowing. People will completely stop. Ripping apart the builders/ supplier etc.

If prices fall 5%. Bank will have to re-evaluate their loans. Because, now they truly have 0 down or negative equilty and risk default.

Going to the next phase of more slowdown and bigger losses and more evaluation. Its becomes an uncontrollable spiral.

The feds will try to step in, but they are already too broke and the tax payers are beginning to get billions and billion of dollars of defaults handed back at the. Causing less money to fuel the government and our socialist society.

#16 dienekes on 08.15.13 at 6:21 pm

Remax site, bloody spell check

#17 Coho on 08.15.13 at 6:28 pm

#7,

The leaders of nations are abiding by the dictates of very powerful unelected ones controlling world affairs. Therefore, these are not ‘mistakes’ but deliberate moves to advance agendas that have nothing to do with the overall good of the average person.

For a person of conscience I suppose it would be a mistake to follow orders he/she knows will be detrimental to his/her countrymen, but there are few left and those few are marginalized, ignored, discredited and ridiculed.

Of course there are some among us who think we are different and thus immune to the hardship other nations face because we are smarter or that god likes us better. What’s not to like? While people are being massacred in Egypt by western backed despots we pray for home ownership.

#18 AndrewAb on 08.15.13 at 6:28 pm

I think we should name the real estate correction the “Crea Crumble”. It’ll be all the rage, all the kids will be doing it.

#19 bigrider on 08.15.13 at 6:39 pm

So long as the number of those with Italian heritage, residing in the GTA , remains stable and/or increases, so too will the obsession ,demand and price for RE also remain stable and increase.

#20 bigrider on 08.15.13 at 6:45 pm

When are you going to throw in the towel Garth ?

Syndicate mortgage deals for condo projects now sucking money in from RRSP’s as well as non registered
accounts and marketed to “accredited investors” ,such investors being promised future results from the promoters that would put a financial advisor in jail for same promises, let alone shut him down.

Give up already and sleep better. Real estate is religion in the GTA. Might as well convince people that there is no God. Better chance of success

#21 Gg on 08.15.13 at 6:46 pm

Wal-Mart cuts outlook as shoppers worldwide curb spending ?….Negative sales drop in US. What recovery?

#22 Babblemaster on 08.15.13 at 6:47 pm

“And more financial illiterates will see houses as stable and safe while liquid assets are variable and risky.” – Garth

—————————————————————-

The fact is that the financial illiterates have been right for the last 10 years. Who knows, despite the insanity of it all, they may continue to be right for quite awhile longer.

I know that I’m tired of sounding, and looking, stupid and have thus stopped cautioning against the purchase of a SFH in Toronto. If I get an irresistible urge to warn people about a correction, I think I’ll wear a paper bag over my head for anonymity.

A balanced, diversified portfolio has gained more in the past decade than Canadian real estate. — Garth

#23 Smoking Man on 08.15.13 at 6:49 pm

Oh to be a bubble head, sitting on the fence watching the latest msm real estate headlines….

Poised and ready to vulch, ha. Not so fast…

I’m not even going to say I told ya so. That cut is wider and deeper, I’ve put enough salt on it these last few years.

I’m developing a guilt complex, like maybe it’s my fault real estate has gone space shuttle again.

I have a vision, all the bubble heads look like Jerry Seinfeld, saying…. Numan…. UGH…..

HA HA

#24 Devore on 08.15.13 at 6:55 pm

Out in BC, head realtor economist Cameron Muir smugly says: “There are a few housing ‘bears’ in Canada that have for a number of years have decried home prices are unaffordable and have to fall dramatically.

Funny how he’s kept his mouth shut for several months. All it took was one modest YoY sales increase over a disasterous 2012 to bring him out of the closet.

#25 Smoking Man on 08.15.13 at 7:00 pm

Took pops for an MRI all is good

After done, I went out with son 3 cold calling, my new fast track documents management system. Actufally rapid invoice and work flow process.

In 3 hours we signed up 13 k in business, he’s 24, he is hiring slaves.

Took me to 32 to make my first million, he will be 26

Maybe he will throw me a bit of loot, seeing that I consived and created it..

Business have a lot of loot in Toronto, and when you give them a system that can get 1/2 a person to do the work of 3.

They throw loot at you. Never even evoked high pressure.

Time to raise the price…

#26 EB on 08.15.13 at 7:01 pm

Media people have mortgages too. Unconsciously or not, I’m sure they’re inclined to pick the spin that doesn’t imply that there’s a huge problem looming for them.

#27 Devore on 08.15.13 at 7:03 pm

#4 ILoveCharts

Expensive house with low interest vs cheap house with high interest… same size mortgage.
If you are planning on staying for a long time to live there does it really matter either way?

Of course it matters. A smaller mortgage is easier to pay off quickly. Pretty much gone are the days when a family could tighten the belt and pay off a mortgage in 10 years. You can see this for yourself by modeling making extra payments on various types of mortgages. Higher equity gives the necessary safety net and peace of mind to weather economic and life events.

#28 Donald Trump on 08.15.13 at 7:09 pm

I’m not Irish, but man , have they been royally screwed throughout history.

When I heard about the “Celtic Tiger”, and the economic boom,…it made no sense it had to be a rigged game that was set up to fail.

#29 Badger on 08.15.13 at 7:13 pm

Meh…

#30 Bigrider on 08.15.13 at 7:26 pm

WOW WOW WOW Anne POm Pom Rohmer NO Longer a cheerleader for the real estate scumbags on her show. She is really pounding these guys tonight and arguing for renting as opposed to owning on CP24 hot property.

She has switched sides !!!

#31 Evangeline on 08.15.13 at 7:33 pm

Garth: “… accompanied by a picture of a house launching into space …”

it’s a fun new bubble solution, the bubbles are shaped like houses

#32 not 1st on 08.15.13 at 7:36 pm

Garth, lets be honest after all, that is Ireland. We have national parks with a higher GDP than that place.

#33 DaleFromCalgary on 08.15.13 at 7:38 pm

Drove through High River today (August 15) en route to business appointment in foothills. On the west side of Highway 2A going into town is a prefab house manufacturer. Storage lot of mobile homes was two-thirds empty. Large billboard announced that they are now taking orders for September delivery. God bless the Great Flood!

Six weeks after the flood, most businesses still closed. Sobeys is open and doing good business from contractors buying food. Post office still gutted and citizens have to go to Okotoks for postal business. I also drove through Black Diamond/Turner Valley. Not as many dumpsters seen but damage to Highway 7 is incredible.

On the outside of town, very few places for rent or sale. “No Flood!” signs very popular for those places. That will be a standard line in High River and Calgary realtor ads for years to come.

#34 Suede on 08.15.13 at 7:39 pm

BoC bond yields all broke through resistance today. 5yr rates going to rise again soon.

That means the crowd will look at variable mortgages as the only way to fund their mortgages. 2.7% ain’t bad with prime rate not going anywhere in the near future.

I don’t see a mass stampede concern for RE until prime rate increase fears materialize and join the rest of rates.

However…At what point does variable change to prime-plus?

#35 Sockeyemoon on 08.15.13 at 7:41 pm

What you can get for $900K.
Ireland: un-Corked
http://www.myhome.ie/residential/brochure/oakhurst-low-road-cobh-co-cork/1921010

Vancouver: Stainless Steal!
http://www.realtor.ca/propertyDetails.aspx?propertyId=13362985&PidKey=-1342730474

#36 MWerk on 08.15.13 at 7:41 pm

Wow, supply and demand, it never fails.
Wordering how much of the CHMC loans are high risk… anyway at the end of the day tax payers will be on the hook.

#37 Bigrider on 08.15.13 at 7:42 pm

Dirtbag, Sl Sinclair from Remax Hallmark realty as well as Dave Currie from monster mortgage still pumping owning at all costs as opposed to renting.

They have confirmed that some lenders are still giving zero down loans and are encouraging people to get ” gifted” money from family and/or using RRSPs and LOC to ” get into the market ” !!

Incredible on CP24 right now !

#38 Nemesis on 08.15.13 at 7:46 pm

I believe it’s called the DutchDisease…

Falling Netherlands house prices leave owners stuck
Nigel Cassidy – Rotterdam, BBC News

http://m.bbc.co.uk/news/business-23681604

NoteToSmokingMan: The first million is always the hardest… As we used to say in the OnceGlorious Global PixFerBuxBiz [photographs, of course – dolleros are way easier]

#39 Donald Trump on 08.15.13 at 7:50 pm

Re: Blog photo

BTW: whats painted on the front of the streaker ?

Divot? or tee ?

#40 Sideline Sitter on 08.15.13 at 7:52 pm

#37… I’d love to watch the banter, but when we sold and started renting we decided NOT to get cable. Saved over $1000 so far, and we really don’t miss it.

As an FYI, we’re not broke just cheap with some stuff (and spend like stupid on other stuff, like dinner + wine)

#41 Bigrider on 08.15.13 at 7:52 pm

Al Sinclair just gauranteed that prices for single family homes , especially bungalows will be higher in 5 to ten years in T. O , much higher he said.

Garth, you have been smacked !

#42 Penny Henny on 08.15.13 at 8:00 pm

To all those Toronto bashers.
It is actually a great place to live.
Moderate climate, most times, interesting culture, the only problem is…….. wait for it.
there are too many friggin arseholes living here.
I know cause I’m won of them know. (that was for you S&M).
I can’t wait to get out of here.
But the best thing about torono is that immagration has brought property values up 300% over the last 18 yrs.
so thanks for the ride but I think this is my stop.

PENNY HENNY -woof

#43 Penny Henny on 08.15.13 at 8:01 pm

Choo Choo- next stop Welland.

#44 Penny Henny on 08.15.13 at 8:02 pm

Just looking at that pic.
I’m sure one of my friends had a hole in one there.

#45 Penny Henny on 08.15.13 at 8:03 pm

ANgUS Glen, I think.

#46 PJ Molla on 08.15.13 at 8:05 pm

First off, out of 950 000 so-called jobs created in the United States since Obama took Office, 77% of them are part-time crappy jobs that pay nothing.

I don’t get why you slam the cooked numbers in Canadian real estate, yet you believe the cooked numbers coming from the US.

There is no US recovery.

What we’ve seen today in the US stock market is a small-scale of the monster that’s coming.

1) Spike in bond yields
2) Equities plummet
3) Commodities go up as cash looked for a place to go.

Being a politician by trade, I understand you have to keep Canadians in that worthless paper money called fiat currency.

I do agree with you on the Canadian real estate though, so I continue to read your blog. But your lack objectivity on what’s (really) going on in the US and around the world is misleading both your readers -and you.

P.S. -I don’t care if you post this or not.

I wish you all the best.

PJ

#47 Evangeline on 08.15.13 at 8:14 pm

#21 “Wal-Mart cuts outlook as shoppers worldwide curb spending ?….Negative sales drop in US. What recovery?”

That was the first thing I thought when I read those stats this morning.

By the opposite token, many of the things that billionaire shoppers have purchased at the stock market over the past 12 months have either doubled in value, or close to it, including GM, The Gap, Citigroup, Pulte, Ford, Whirlpool, Home Depot, Nike, Tesla (up 491%), and on and on.

As the poor are getting poorer, the rich seem to be getting richer. Bono was recently educated on how to solve that problem, and it is not primarily through aid that ends up largely in Swiss banks.

God bless the child that’s got his own …

http://www.youtube.com/watch?v=7K3jvcrHrT8

#48 Smartalox on 08.15.13 at 8:15 pm

So what REALLY happened in Ireland? A fellow blog dog posted this recently, a piece written for Vanity Fair magazine:

http://www.vanityfair.com/business/features/2011/03/michael-lewis-ireland-201103

It’s very long, but well worth the time it takes to read, with many similarities between what happened there, and what has been described on this blog and elsewhere as happening in Canada. This, for example:

Morgan Kelly is a professor of economics at University College Dublin. Kelly saw house prices rising madly and heard young men in Irish finance to whom he had recently taught economics try to explain why the boom didn’t trouble them. And they troubled him. “Around the middle of 2006 all these former students of ours working for the banks started to appear on TV!” he says. “They were now all bank economists, and they were nice guys and all that. And they were all saying the same thing: ‘We’re going to have a soft landing.’ ”

The statement struck him as absurd: real-estate bubbles never end with soft landings. A bubble is inflated by nothing firmer than expectations. The moment people cease to believe that house prices will rise forever, they will notice what a terrible long-term investment real estate has become and flee the market, and the market will crash. It was in the nature of real-estate booms to end with crashes—just as it was perhaps in Morgan Kelly’s nature to assume that, if his former students were cast on Irish TV as financial experts, something was amiss. “I just started Googling things,” he says.

Googling things, Kelly learned that more than a fifth of the Irish workforce was employed building houses. The Irish construction industry had swollen to become nearly a quarter of the country’s G.D.P.—compared with less than 10 percent in a normal economy—and Ireland was building half as many new houses a year as the United Kingdom, which had almost 15 times as many people to house. He learned that since 1994 the average price for a Dublin home had risen more than 500 percent. In parts of the city, rents had fallen to less than 1 percent of the purchase price—that is, you could rent a million-dollar home for less than $833 a month. The investment returns on Irish land were ridiculously low: it made no sense for capital to flow into Ireland to develop more of it. Irish home prices implied an economic growth rate that would leave Ireland, in 25 years, three times as rich as the United States. (“A price/earning ratio above Google’s,” as Kelly put it.) Where would this growth come from? Since 2000, Irish exports had stalled, and the economy had been consumed with building houses and offices and hotels. “Competitiveness didn’t matter,” says Kelly. “From now on we were going to get rich building houses for each other.”

Their real-estate boom had the flavor of a family lie: it was sustainable so long as it went unquestioned, and it went unquestioned so long as it appeared sustainable. After all, once the value of Irish real estate came untethered from rents there was no value for it that couldn’t be justified.

Or this:

The Irish nouveau riche may have created a Ponzi scheme, but it was a Ponzi scheme in which they themselves believed. So too for that matter did some large number of ordinary Irish citizens, who bought houses for fantastic sums. Ireland’s 87 percent rate of home-ownership is among the highest in the world. There’s no such thing as a non-recourse home mortgage in Ireland. The guy who pays too much for his house is not allowed to simply hand the keys to the bank and walk away. He’s on the hook, personally, for whatever he borrowed. Across Ireland, people are unable to extract themselves from their houses or their bank loans. Irish people will tell you that, because of their sad history of dispossession, owning a home is not just a way to avoid paying rent but a mark of freedom. In their rush to freedom, the Irish built their own prisons. And their leaders helped them to do it.

Note that this piece was written for an American magazine, in March 2011. Nowhere does the author make any attempt to frame these events in a Canadian perspective; but the similarities in the tone, statistics and evidence cited by the Irish in this article and those cited by Garth in this blog are eerie.

The rest of the article is gripping. If you want to have a look at the landscape and political fall-out of Canada’s future, you’ll get a pretty good idea from reading the rest of the article. Granted, Canadian banks and bankers have probably learned from this experience and have insulated themselves, but I suspect the stories of small-time property developers and speculators will be widely repeated.

#49 Smoking Man on 08.15.13 at 8:16 pm

What a stroke of luck, I lock my keys in the truck.

Now how is this lucky, I walk one block over to my buddy James house, last week tells me his nabour Paul, good guy owns a tow truck.

Walk over introduced myself he comes over unlocks it, wants no money, cool, he finally excepts a bit of loot.

But get this, you think I’m bad ass, nothing compared to Govt.

They changed the drinking laws in stealth
. 03 to. 07 is no longer a warning, 1 beer is. 03

Your car gets impounded with a 3 day suspension, closer to. 07 car is impounded for a month, 3k to get it out.

Your insurance goes threw the roof.

Oh those liberals, keep taking and taking pad the pensions. Delete emails While we the private sector have more and more of the tax burden.

That’s it, moving to an island or Vegas.. Canada losses the next Einstein

Thanks Mr Tow truck man…..

He’s never been busier

#50 takla on 08.15.13 at 8:16 pm

Seems things are a changeing….Not only is houseing deflateing in most markets across canada,Now we have stocks beginning to collapse,400 points last 5 days,How many brave souls will leave thier money in the stock market threw the weekend??More collapse??humm and gold up over 100.00 per oz.Price of oil beginning to spike on current affairs happening in the middle east.Carefull out there folks!!

#51 raider on 08.15.13 at 8:16 pm

I’ve been to Dublin in 2010 – 2011, when they went down. It was not pretty. Housing being slow like you previously suggested here in Canada, is not just what happened there.

At least I see similarities between some areas like Milton & Brampton and housing divisions in Ireland that were built in the middle of nowhere, no infrastructure such as shops etc. (and marketed as being scenic). The one thing that made it somewhat bearable in Ireland was the ready supply of Stout & Whiskey, here we would have a melting housing market, the LCBO, and provisions against drinking in public.

In addition all public funds dried up in late 2010 there. With all the low taxes and tech. companies moving into Ireland, the government also increased spending on research and development. I knew people in the public sector, who’s budged just disappeared after they had to prop up their financial system … most of these guys went back to Germany after and Ireland had a significant brain-drain in general.

Garth, are you suggesting things could get as bad as in Ireland housing & financial-wise?

#52 The real Kip on 08.15.13 at 8:20 pm

We’ll see what the August numbers for housing bring. If they are good as well it will shut up some of the Canada haters. It’s a great country and a great place to live!

#53 Penny Henny on 08.15.13 at 8:23 pm

Welcome to todays Toronto—
http://www.theglobeandmail.com/news/toronto/two-car-crash-victims-robbed-in-toronto-as-they-waited-for-paramedics/article13800239/

now I think I’m gonna puke.

#54 Evangeline on 08.15.13 at 8:24 pm

#38 “The first million is always the hardest…”

and when you are a billionaire that can buy enough shares in a company to move it up or down on the stock market, Ichan it’s even even easier

#55 Evangeline on 08.15.13 at 8:26 pm

that is “Icahn”

#56 Randy on 08.15.13 at 8:29 pm

Any way to protect ourselves when CMHC blows up ?

#57 DreamingingTechnicolour on 08.15.13 at 8:41 pm

“Pop Goes the Bubble” – Deflation!

#58 Victor V on 08.15.13 at 8:42 pm

http://www.theglobeandmail.com/commentary/editorials/flaherty-cooled-the-housing-market-without-dousing-it/article13795097/

It is important to make sure homebuyers do not overextend themselves just because rates are low. Many Canadians have no flexibility to handle higher costs that will come with even a small increase in mortgage rates.

There is danger in complacency. Rates have been at rock bottom for years now, and many young people coming into the housing market for the first time have no idea what it is like to juggle the substantial payments that are required when a mortgage rate is at six or seven per cent or higher. It is inevitable that rates will rise, and some people will not be able to afford their houses when it is time to renew.

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

No sunshine from this Globe and Mail editorial.

#59 Mahmoodi on 08.15.13 at 8:46 pm

Vancouver is headed for ruin. Complete ruin. That city is toast in terms of real estate values. Major collapse has already been witnessed. Further erosion of values and equity is guaranteed. That city has zero support behind incomes. There is no major industry left anywhere in Scamcouver, because it is a huge scam. That city is headed straight to the shitter. Zero sales, and zero growth are headed straight for scamcouver. Time to get out.

#60 pathcontrolmonnk on 08.15.13 at 8:50 pm

only $90 billion in bailouts for Ireland, what multiple of that will Canada be?

#61 Toon Town Boomer on 08.15.13 at 8:50 pm

I found the perfect shirt for Canadians.

http://pinterest.com/pin/266697609156669701/

#62 Donald Trump on 08.15.13 at 8:53 pm

Dear Garth:

RE: Posts

#49 Smoking Man on 08.15.13 at 8:16 pm
#50 takla on 08.15.13 at 8:16 pm
#51 raider on 08.15.13 at 8:16 pm

all came in at the same time…8:16pm

How do you break the tie ?

Does Smoking Man get cereBRAl handicapped cyber space parking exemption ?

#63 Blase on 08.15.13 at 8:59 pm

I’m Blase, and I approve today’s message.

#64 TO and GTA Sales and stats 2013-08-15 on 08.15.13 at 9:11 pm

TO and GTA Stats and Sales 2013/08/15
http://recharts.blogspot.ca/2013/08/416905-condo-sales-and-stats-2013-08-14.html
http://recharts.blogspot.ca/2013/08/905-sfh-sales-and-stats-2013-08-14.html
http://recharts.blogspot.ca/2013/08/416-sfh-sales-and-stats-2013-08-14.html

#65 Joe Calgary on 08.15.13 at 9:13 pm

Garth, for the last few months you’ve been talking about property virgins not being able to qualify for mortgages because CMHC was making it harder to get approved and rates were going up, and amortizations coming down, all of which will affect the ability for these ppl with minimal down payment to qualify, and now they will keep buying because the media told them it was a good idea? So at what point will the media stop telling them to buy?

It’s in the governments best interest to keep the housing market intact, so they will manipulate the media, stats whatever to keep the consensus. The fact that amortizations were brought back to normal (25yrs) just gives the government room to increase them again when rates increase. Unfortunately it’s been ingrained in society that ‘owning’ a home is the best savings strategy. And how exactly does Ireland compare to Canada economically? What do they produce? What raw materials come from there? Nothing. Oh wait, Guinness.

So although I agree with you that todays younger generation in Canada has lost their minds with the amount of debt they will incur to ‘own’ a home. I don’t think we’re gonna see any sanity in the market any time soon.

#66 David McBride on 08.15.13 at 9:18 pm

Central banks can influence interest rates in short to mid term. In long term it is the bond market vigilantes that determine the interest rates.

Latest actions show us that the interest rates on 10 years treasury bonds (the most important bond indicator) are slowly crippling up. So the time of zero interest rates is soon coming to an end.

With all the consequences.
I have no doubt that some economic illiterate financial ministers or central bankers could try to defy gravity for a while with excessive money printing.

The situation on the markets today was very indicative on what is coming soon to a town/country near you:

Weak dollar, bonds and stocks all at the same time!
Mark that day/today as probably an early indicator of the beginning of the end. What is means is run out of dollar denominated assets.

Interest rates if normalized will shoot north of 7-8 % with all the pain coming with it. Housing, CMHC would be completely busted. The alternative is huge runaway inflation, collapsing currency at very dangerous time.

With the dollar weakening we need strong currency more than ever. We won’t have it thanks to F and M.C.

#67 Smoking Man on 08.15.13 at 9:19 pm

From last year. About a year ago
Ha I’m good, who wants an autograph
……..

#26 Smoking Man on 09.30.12 at 10:52 pm

MoneyBunnie,I have to agree with The Gartho on this one. Canadian rates are going higher, and track sixears will use this as a catalyst to bomb more hard earned cashola into the GTA.Prices will spike big-time, once rates start shooting higher next year.Mark this in your calendar and put it next to your wheaties, we are going higher on both fronts.

#68 David McBride on 08.15.13 at 9:20 pm

Any way to protect ourselves when CMHC blows up ?
——————————-
Short the Ca dollar.

#69 East Van on 08.15.13 at 9:23 pm

http://www.commondreams.org/headline/2013/08/15-2

#70 Blase on 08.15.13 at 9:26 pm

takla, stocks are up 20% since January and up 50% yoy, I hope you aren’t too concerned about a 2% pullback ;)

Bigrider, I like your insights from the inside, keep them coming!

Smoking Man, when are you going to take it public, and will you allow the blogdogs first crack at your IPO?

And one final word: never bet against Buffett. If he’s buying stocks, then get in the game.

#71 Blase on 08.15.13 at 9:30 pm

Forgot to mention, watch for changes in Congress that will deal with the part-time jobs problem that has followed Obamacare. A 75-90% rate of new jobs being part-time kind is not good for the economy. Wal-Mart is finding that out and is having to eat it’s own cooking. The 6 heirs are getting a reality check right now, and watch for changes coming through the pipeline before the next political season, which will begin in late fall of this year.

#72 Cici on 08.15.13 at 9:33 pm

#7 Observer

Jackpot! Now if everyone else would wake the %$#* up!

#73 Smoking Man on 08.15.13 at 9:35 pm

Turner Nation your good too we called it, pre Edward Snowden……..

Last year.

Been going threw the archives looking for my last year post saying MSM would blow sunshine the second re got to over corrected, found some beautiful predictions..

Turner Nation you call it good too…..

#107 TurnerNation on 12.03.11 at 6:39 pm

Smoking man is correct: every keystoke, every google search, every email IS recorded, stored, and filtered. Keep in mind we are using military techology – the internet was developed by early 1970s for military use

#74 Kreditanstalt on 08.15.13 at 9:36 pm

Who cares about home “sales” numbers anyway?

What’s REALLY rising are personal and governmental indebtedness.

This will go on just as long as the governments are able to still find buyers for their debt.

#75 Blase on 08.15.13 at 9:36 pm

A fearless prediction: CMHC reduces the limit on its’ loans to $250,000 within one calendar year. They killed the over-a-million market with no warning and so shall they with the rest.

#76 Squatter on 08.15.13 at 9:37 pm

I don’t even try anymore to understand Garth’s pictures at the top of his blogs. Way too subtle for me…
Maybe tonight he’s trying to please the female blog dogs?

#77 takla on 08.15.13 at 9:43 pm

re#62 donald trump……..give “smokin man the cerebral handicapped cyber parking space,he can have it……,I want Garths handicapped parking pass for MY Harley!

#78 Ogopogo on 08.15.13 at 9:47 pm

Sad thing is, when untold thousands lose their shirt in the real estate market there will be little humility on their end. Instead, they will blame everyone from mothers-in-law to Flatulenty, elfin minister extraordinaire.

Even now you see the mentally incompetent coming here to gloat that the inevitable corrections hasn’t happened yet. For these poor, myopic souls “long term” means the next quarter or year’s end. They can’t see the perils of 5, 10, 15, 20 years down the line, which is actually shorter than most mortgages being doled out.

There will be pain, but little sympathy from those of us who are savvy renter-investors watching the circus from the sidelines as we collect tax-efficient dividends all the way.

#79 Inglorious Investor on 08.15.13 at 9:51 pm

Another great post, Mr.Turner.

Ramblings…

Highest in eight years? Slowest in five months? Pick your time frame; spin the results. Today the S&P hit its lowest point EVER (if you started tracking the S&P in mid-July).

If housing starts collapse, won’t that goose prices for existing digs? At least temporarily? The same way that rising rates can increase demand at first, as would-be home ‘owners’ rush in to rent homes from their bank before rates REALLY go up.

So in Canada 70% of households own their home. I took a look at home ownership rates around the world (even before Garth illuminated the issue a while back). Here’s one source: http://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate

It certainly seems counterintuitive, but home ownership rates seem higher in poorer countries generally. Is Canada on the road to 80% ownership? How many of us own multiple properties for our own personal use? Surely the stats are rising there as well, if friends and family are any indication. Soon, having only one house may be a sign of pecuniary weakness.

Hint for the specuvestors: you don’t want to own something everyone else already has.

It is interesting to see how RE is playing out in Canada, particularly during a period of time that I believe historians of the future will dub ‘The Second Long Depression.’

BTW, the guy in the picture? That’s not the 19th hole. That’s the first hole in the alphabet.

#80 Chickenlittle on 08.15.13 at 10:07 pm

#30 Bigrider:

“WOW WOW WOW Anne POm Pom Rohmer NO Longer a cheerleader for the real estate scumbags on her show. She is really pounding these guys tonight and arguing for renting as opposed to owning on CP24 hot property.”

I wonder if she is just sick and tired of playing RE spin doctor.

As Triumph the Insult Comic Dog once said, “Even Joe the Plumber couldn’t unclog all the crap coming out of their mouths.”

#81 Spirit of the West on 08.15.13 at 10:08 pm

Nice, just locked in for 10-years @ 3.79% on a rental with a P/R ratio of 12, thanks for the head’s up Garth. I’m on a roll. 7th?

#82 Chickenlittle on 08.15.13 at 10:12 pm

#75 Squatter:

“Maybe tonight he’s trying to please the female blog dogs?”

If he was he would show Henry Cavill shirtless or Channing Tatum. Tatum is as dumb as a post, but who cares when you look like him in a bowtie and a thong.

The guy in the picture has a terrible back 9…

#83 Spirit of the West on 08.15.13 at 10:14 pm

#17 Coho salmon, “…people are being massacred in Egypt by western backed despots …”/

What crap. The Arab Muslim world requires no encouragement from outsiders to wipe each other out, as they have always done so and always will.

#84 AK on 08.15.13 at 10:17 pm

Buffett’s Berkshire buys Suncor, Dish as stock bet grows

#85 Almost a newbie on 08.15.13 at 10:18 pm

This house just sold for $70K under asking!! It has been on the market for 2 months.

http://www.realtor.ca/propertyDetails.aspx?propertyId=13406015&PidKey=298802343

People, low ball your offers, sellers will be forced to accept them!

#86 No Debt About It on 08.15.13 at 10:21 pm

Anybody care to take a stab at explaining the following to me ? It’s from an article on the CBC site

“The Canadian Real Estate Association report shows Hamilton sales were down nearly five per cent from June to July, but the national average barely moved. It’s up by just 0.2 per cent (both seasonally adjusted).

Despite this, home prices jumped 10.8 per cent in Hamilton year over year. The average price increased by over $37,000 from July 2012 to July 2013. The average residential home price is at $383,340. That’s above the current national average price, $382,373.

That’s the third highest increase in Canada, below Sherbrooke, Que. and Vancouver, according to the report. ”

Hamilton house prices above national average? How on earth did that ever happen? Is it the Ancaster thing? People crazy enough to do the commute driving prices up? Surely it hasn’t been the local economy.

#87 Framl on 08.15.13 at 10:21 pm

You can still get sfh in downtown Toronto for well under a million dollars, if you can be quick enough when they are up for sale, not too many listings.

#88 maxed out and going bankrupt on 08.15.13 at 10:24 pm

Penny #53

Many are losing their jobs or maxed out on debt as all their incomes goes to pay for the housing bubble. Look for crime to increase. The CONS have destroyed Canada it’s just Canadians don’t know it yet. The big city are nothing but a ponzi scheme needing more suckers in order for the bubble to grow. Toronto is a great example of a so so city built on dummies paying top dollar for garbage. Lucky I bought before the new suckers. I wouldn’t know what to do if I had to buy now. I make 100k and couldn’t afford the home I bought ten years ago. It will be impossible for the suckers masses to wake up. People are stupid but that makes me richer. I like stupid people.

#89 blablabla on 08.15.13 at 10:35 pm

#19 bigrider
“So long as the number of those with Italian heritage, residing in the GTA , remains stable and/or increases, so too will the obsession ,demand and price for RE also remain stable and increase.”

I told my old Italian father the other day something about all these McMansion/mini McMansion houses declining eventually, he said “houses don’t go down”.

Unfortunately I don’t think the demographics look good for the Italian future generations here with all these princesses who’re either too picky, play chicken with marriage/starting a family, or have low relationship drive. There are far more single men than women everywhere in the western world*, but between Toronto and the GTA its unreal how many males I know who are well on their way to being dead branches.

*(off top of my head ~1/4 mil more single men than women in Ontario, ~half of that is between 20 & 34; 7%-25% more males than females depending on age bracket)

I’m only temporarily in an area that is stereotypically an Italian stronghold but I do notice an increasing amount of E. Indians wherever I go. I think these girls also fall prey a little bit to playing chicken with marriage though there is 10x more shame/pressure for an Indian girl than an Italian girl if she is not married by her early 20s.

#90 Donald Trump on 08.15.13 at 10:37 pm

I tell ya..

If Smoking Man would just go on E-bay or craigs-lust … and search for a SPELL- Chechenker… he would do a Nobel- Pryzz sweap… at leeest a trifecta.

Dah $$ is sitting on the table….

#91 Koshy Alex on 08.15.13 at 10:39 pm

Just watched the CBC pumping of the housing market recovery in The National, the 30 something couple featured in it was talking about getting their dream house in their dream neighborhood after several bidding wars, the only thing CBC failed to inform the viewers was how much they bought their house for and how much this young couple is making annually. CBC is now the new Global !!

#92 Cici on 08.15.13 at 10:40 pm

#52 The real Kip,

Yeah, it’s a great place alright. Did you catch post #53, from Penny Henny, right below your own? Oh, the irony.

#93 Junkieman on 08.15.13 at 10:41 pm

Off topic #73 Smoking Man “Smoking man is correct: every keystoke, every google search, every email IS recorded, stored, and filtered. Keep in mind we are using military techology – the Internet was developed by early 1970s for military use” Funny story in my younger days as plain clothes Loss Prevention Security for a establishment-Conglomerate that sells liqueur. We had a freshly immigrated former Thames valley police officer as our supervisor he was a former anti terrorist task member and later a member of Prince Harry’s security entourage. The movie Eagle Eye had recently came out during our training he over heard me and another trainee speak of this movie. This individual explained in depth to us the use of most electronic devices can be used to track an individual over time or in real time. We didn’t take his wisdom whole heartily, who would leave a career like that to work as a as loss prevention security position; turns out he to Canada for a woman he in London, after 6 months at his position he received a job off from a embassy in Ottawa, take a guess which one.

#94 Jpn on 08.15.13 at 10:49 pm

Let’s face it… All of us need a home “rent or own” therefore we will have a monthly nut … ” rent or mortgage” clearly many cannot afford the monthly rent payment as well as investing in other avenues. Why is it so difficult to relize this is why so many want to own if only to feel that at the very least their home is somewhat of an investment into the future. Money towards rent, money towards a mortgage.. At least the mortgaged home may appreciate “if purchased correctly”.

#95 Christopher Lackey on 08.15.13 at 10:50 pm

Resist the cult.

The blog dogs have been commiserating here forever scorning the smug masses’ fear and ignorance. The crash has yet to come to pass. The pressure and obsession to buy real estate in Canadian society have become toxic and pervasive, so much so that the media keeps dancing even though the music’s over. People think earning 1% on their savings while paying thousands in interest on various debts is how you get ahead in this world; they don’t realize the majority of businesses in the market never stop making money – because if they did they’d be toast. Stocks run on earnings while real estate runs on delusion – what do you think is safer? That’s why you get money to own stocks in the form of dividends. Sadly people remember the exceptions not the rule – nortel and enron and now blackberry have scared people into lifetimes of enslavement and penury. And that’s a shame because you can’t win if you don’t play.

#96 Smoking Man on 08.15.13 at 11:01 pm

Not all is well in Smoking Man Land

I am human… After all

2 is killing me.. I see the future, don’t know what to do.

Should I bother, I’ve tried, or just let it happen, am I being smoked by a ruthless adversary, or blinded by love thy child, or is it real, to close to analyze, to much risk to experiment.

It’s not good all the same.

Any shrinks out there, need help.

Drugs, oxy, I’m thinking. Or just a good guy that sees no future…

#97 Coho on 08.15.13 at 11:04 pm

#83,

No doubt the middle east is like a like a tank full of gas ready to explode. That said, the west is only too happy to provide the spark. Certain heads of state whether despots or otherwise are the west’s friend one day and enemy the next — whatever is needed to make inroads and move the chess pieces around.

Some groups are programmed and manipulated through religious extremism and other groups by godless unprincipled hedonism. And then there’s everything in between.

#98 TooBigToFail on 08.15.13 at 11:12 pm

Garth…for as much as some may be house horny…you are clearly US horny. The odds of the Fed tapering in September are slim to none. The bond market spiked today and the Fed had to react driving yields back down at the expense of the US dollar. How else would you explain the implosion of the US dollar today?

#99 Andrew Woburn on 08.15.13 at 11:19 pm

Inglorious Investor on 08.15.13 at 9:51 pm

It certainly seems counterintuitive, but home ownership rates seem higher in poorer countries generally.

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

Poorer countries generally lack as much opportunity to leverage investments with low down payments so land prices tend to remain more in sync with incomes. They tend to have more of their population involved in agriculture so there is less tendency to concentrate the mass of people in a few relatively expensive urban areas. Being more “backward” than us, they value family life and the related role of the family home and are willing to finance new construction through sharing a home with family members. One of the joys of being backward is they can make do with less regulation and build what they can afford as they can afford it without worrying about city planners (as Canadians used to do).

#100 Cory on 08.15.13 at 11:24 pm

Honestly, Flaherty should be embarrassed that a bunch of flunky realtors keep making him look bad. Fact is Flaherty can’t control this market. These uneducated realtors and banks keep finding ways around the “rules” and the financing continues.

Sorry Garth, as much as the housing market should be long dead, it just ain’t gonna happen in this lifetime. With the media, banks, and realtors pumping, how can financial illiterates fight it? They can’t as is obvious by the never ending continually inflating bubble in Canada.

#101 Scully on 08.15.13 at 11:40 pm

In reality I think Smoking Man is an English Professor cracking under grammatical pressure. :)
He is bang on regarding mass psychology or the power of the herd though. Anecdotally I witnessed a buying spree due to the fear of an uptick in interest rates, which caused some mouth breathers to jump into the action, or else be forever priced out! More thought going into buying a pair of shoes. It’s gonna be nasty when the market turns.

#102 Ray on 08.15.13 at 11:40 pm

Garth, make up your mind. Is it gloom and do or not?

5-15% drop in price hardly anything to worry about. Just a blip when one lives in a house for 25+years.

The Ireland video is so unnecessary because Canada is not going to experience a crash of that style like you said. Stop scarring people.

#103 Jpn on 08.15.13 at 11:41 pm

? Seriously.

#104 Nosty the Vladiator on 08.15.13 at 11:56 pm

#17 Coho,#83 Spirit of the West and #97 Coho — FWIW, I agree with Coho. See the report from the late 1990s when the US and west discussed the planned overthrow of various ME countries. This was in the works for a decade and a half before the troubles began.

#96 Smoking Man — “Any shrinks out there, need help.” — Hi there SMan.

Let the world worry about the stuff of this world. Nothing anyone can do about it. Let him find his own way.

Chill in Bangkok, Tierra del Fuego or Barcelona for a few months. When you get back, he should have sorted himself out. No charge!

#105 Carpe Diem on 08.16.13 at 12:04 am

News from West Carlton (Ottawa West) …

I met my new landlord today. What a nice guy. He’s a military officer and his wife has some job in government.

Some days I wonder if being a merc is better than being a soldier with a pension plan. For sure, he can retired before I can (age-wise)…

He bought his dream home but has to rent it and keep living in his suburban home. I don’t get that part and won’t question it.

I want to rent since I think my investments can make more elsewhere + if I need to move closer to my aging parents in a few years … it will be easy.

My family is getting a downgrade from the Tudor Manor we rent now so we can save $600 bucks a month. Why? Because, the manor sucks more cash in heating and $600 per month equates to almost the $7500 in RESPs required for 3 kids.

Meanwhile, my neighbors want to increase their mortgage to $500K so they can have their dream home… with a pool. They still have to sell their home for that!

So far, I see renting is cheaper and funner than owing. And not having a 300k+ debt sure keeps things stress free.

#106 T.O. Bubble Boy on 08.16.13 at 12:19 am

@ #87 Framl on 08.15.13 at 10:21 pm
You can still get sfh in downtown Toronto for well under a million dollars, if you can be quick enough when they are up for sale, not too many listings.
————————–

Sure – but the CMHC-fueled bidding wars ensure someone will pay $999,999 for any detached SFH, typically in bidding wars against other CMHC-backed buyers and all-cash offshore buyers (who often win because they can actually pay $1,000,000 or higher).

#107 The sure thing — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer™ on 08.16.13 at 12:24 am

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

#108 Notta Sheeple on 08.16.13 at 12:28 am

“….Meanwhile, the Canadian unemployment rate just went up (while Americans create jobs, we’re losing them)…..,”
==========================

Expensive Canadian housing requires expensive Canadian wages.

More Canadian jobs (e.g. Caterpillar) will continue to be outsourced to countries whose citizens don’t need high wages to pay for half million dollar bungalows.

#109 Donald Trump on 08.16.13 at 12:42 am

Brad Lamb..working his karma magic in the GTA pre-sale market

http://www.liveleak.com/view?i=4e0_1376600179

#110 daystar on 08.16.13 at 12:57 am

#100 Cory on 08.15.13 at 11:24 pm

Higher rates are coming. It won’t matter what industry does when it hits. As affordability erodes, so the does the market and all the spin and Frankenstein numbers in the world won’t change that. The first variable hikes should begin next year, possibly as early as next spring, ahead of what happens with U.S. central banking. What mystifies me is how people can still be down on the U.S. recovery. Check this out, U.S. trade deficit hits $34 billion:

ne.wsj.com/article/SB10001424127887323968704578651734228576550.html

The last time U.S. trade deficits were this low was over 10 years ago.

Yields rise on recovery:

http://online.wsj.com/article/SB10001424127887324823804579014511380799136.html

U.S. unemployment drops (now at 7.4%):

http://www.tradingeconomics.com/united-states/unemployment-rate

Oil production soars:

http://seekingalpha.com/article/1636272-u-s-oil-output-increased-2-million-barrels-per-day-in-just-2-years-to-a-24-year-high

Dow hits record high (July 18th)

http://news.yahoo.com/stock-futures-flat-eyes-bernanke-morgan-stanley-jumps-121535546.html

U.S. housing values grow by 12% year over year. Housing starts are due this weekend and should be strong. Where is the weakness besides gold values and the b.s. gold blog’s hype as truth?

#111 homie on 08.16.13 at 1:25 am

#12 Halifax Observer on 08.15.13 at 6:02 pm
The RE mess left by Ireland’s Celtic Tiger is a great indication of what the great Screaming Beaver will do to Canada’s housing.

Thanks buddy, you made my day…. LOLOLoL0LOL

#112 Alberta Ed on 08.16.13 at 1:36 am

Someone needs to tell the mouth-breathers at CBC.

#113 cynically on 08.16.13 at 2:12 am

Today’s blog seems to prove, at least to me, that Canadian media is as confused and addle-headed as its business organizations. If we didn’t have riches in the ground we’d be Greece or Ireland muddling through our economy. We’re definitely not world leaders and probably never will be unless current immigration brings in the best and even then it will take years. Alas.

#114 No Debt About It on 08.16.13 at 3:33 am

#93 Junkieman on 08.15.13 at 10:41 pm –

I can and do take steps to protect anything I see worth the effort. It can be done.

#115 Poor Ottawa on 08.16.13 at 4:29 am

In poor Ottawa over the past 2 weeks, sold stickers have be slapped on much of the inventory that had been stagnating since May.

No idea if this real estate rally has legs, but your statement about Ottawa is stale. August numbers for Ottawa will be shockingly good.

#116 The real Kip on 08.16.13 at 6:58 am

“#92 Cici on 08.15.13 at 10:40 pm
#52 The real Kip,

Yeah, it’s a great place alright. Did you catch post #53, from Penny Henny, right below your own? Oh, the irony.”

Cici, if you hate Canada so much why don’t you move to Afghanistan? Or maybe North Korea or Egypt or Libya or…

#117 jerry on 08.16.13 at 7:09 am

Bond yields bloat again. Why? Not because of the underlying basics but rather because of fear about the US Fed tapering off stimulus. USA job numbers are anemic at best with questionable integrity as to their depth. BOC says interest rates to stay low. Canada economy slowing. Bonds and stocks are more emotionally influenced than horny nubile real estate purchases.

Where are the sound indicators that USA can reduce stimulus and BOC can fundamentally start raising interest rates? Rising unemployment? Declining construction? Limp GDP? How do you get rising interest rates out of this?

Bond yields have nothing to do with fear. As the Fed buys fewer securities, demand and prices decline, so yields rise. It’s all about making money. — Garth

#118 Franco on 08.16.13 at 7:13 am

I will say it again, the housing market in Toronto will not crash. The price of houses are still affordable and have a lot of growth potential and even if there is a correction, it will be so small that most people will not feel it. The only person that is calling for a crash is madani and he has been consistently wrong.

#119 bigrider on 08.16.13 at 7:16 am

#89 Blablabla repies to bigrider at #19.

Yes, blablabla, an Italian father only half as bad as an Italian mother though, in the undying belief that houses are the ‘besta investamento’.

You and I understand this all too well.

Our blog host is terribly handicapped with regard to his understanding of these deeply held cultural beliefs, due to his high level of education and cultural background. He knows not what seismic influence this rudimentary thinking has on the market here in the GTA.

#120 brainsail on 08.16.13 at 7:32 am

“Canada’s red hot housing market teeters on the brink”

http://www.cnbc.com/id/100967192

#121 maxx on 08.16.13 at 7:54 am

Great post Garth.

We can expect much more of this creative, broad-spectrum MSM manipulation going forward.

When government-sanctioned cheap money devices evaporate and the overdue and necessary tapering become the norm, there will be ear-splitting howls of anguish from the RE cartel.

These howls will usher in the start of a healthier economy and the ones left behind will be those with debt and/or unsellable property with declining prices.

#122 Babblemaster on 08.16.13 at 8:04 am

#101 Scully

“It’s gonna be nasty when the market turns.”

—————————————————————-

I now believe that there’s no sense in waiting for that to happen for someone that wants to buy a house. For the market to turn and reverse, interest rates would have to go up significantly (by several points). That won’t happen for a long time to come. They can’t. The government won’t let it happen. I believe they’ll chose massive inflation rather than have a housing crash.

#123 TurnerNation on 08.16.13 at 8:07 am

Smoking man, I’ve eliminated the most cognitive dissonance (and any need for psychotropic drugs) realizing the following:

Top Four businesses in the world – owned by our so-called elites:

1. Oil
2. Drugs – legal and illegal
3. Human Trafficking
4. Weapons (“We know he has WMD!”)

(Not in Canada you say? Pity. Look at the F-35 debacle. H’s Foreign Workers program. It’s indentured.)

The retail schmoes are left fighting over spot gold and spot residential real estate.

The most highly paid? The elites know, we need a stream of Bread & Circuses.

Profane “Entertainers” – paid millions. Athletes – Paid 15-30 million for seasons, throwing balls around for a few months. Imagine. Our heros.

Let me tell you who’s overpaid now. Teachers! Entrusted with the mind sof our most precious resource. They should “STFU” and learn to work for minimum wage.
Or we use foreign-imported workers as teachers…paging H to the blog, your next coup.

Pass the fluoride…

#124 Jeff in Moose Jaw on 08.16.13 at 8:18 am

What actual on the street inflation looks like, just got the Shaw speed 10 – internet bill yesterday.
Without changing services, paying in full every month, this is how the bill has been increasing each year (taxes included):

2011: $50.00
2012: $55.00
2013 $60.50

At 10% annual increase, I can see a trend here; by summer of 2014 $66.55 is possible.
In a zero-sum world, increase in expenses isn’t met with an increase in wages, that $5.50/month comes out of potential savings.

I run things down to the last dollar. Not like I wake up one day, gather the family around and say “I have big ideas to cut expenses, and streamline family operations” – I do that every day. So I notice these increases, hard not to.

Real inflation, this is what it looks like to most Canadians.

#125 amazon girl on 08.16.13 at 8:20 am

Amazon girl to Bigrider you on fire today…
Garth where are you ? responde please

I try not to encourage him. — Garth

#126 Castaway on 08.16.13 at 9:03 am

Out in BC, head realtor economist Cameron Muir smugly says: “There are a few housing ‘bears’ in Canada that have for a number of years have decried home prices are unaffordable and have to fall dramatically……….

Economist? He should know That the only stat that matters is average house price vs average salary PERIOD. Must have missed that chapter of his textbook. Dumb *ss academics.

#127 reddy on 08.16.13 at 9:12 am

Wow – the smoking man is correct… Yikes

http://www.mto.gov.on.ca/english/safety/impaired/fact-sheet.shtml

#128 rosie "moving forward" in the knowledge that, "this won't end well" on 08.16.13 at 9:43 am

Free tuition for a semester at the University of Lethbridge! Where do I sign?! http://globalnews.ca/news/778650/southern-alberta-housing-market-unlikely-to-crash-chba/

#129 Old Man on 08.16.13 at 10:01 am

#122 Turner Nation – the best paying part-time job today might be that of a highschool supply teacher. I had a friend in 1980 in Toronto that was paid $147.00 a day for a few hours of labour, so what would this easy work pay today? Just another year and could have gotten my ticket to paradise.

#130 amazon girl on 08.16.13 at 10:05 am

Amazon girl to bigrider you on fire today…..

#131 TnT on 08.16.13 at 10:11 am

#122 TurnerNation

Let me tell you who’s overpaid now. Teachers! Entrusted with the minds of our most precious resource. They should “STFU” and learn to work for minimum wage.

*****

Wow… it’s sentiments like this that pull and stretch the fabric of our community apart.. what’s the end game here? Seasonal temporary workers as our children’s teacher? What have you done to better our school system?

#132 TnT on 08.16.13 at 10:27 am

#129 Old Man

Wrong….

Supply teaching is a hit and miss

#1 you may or may not get a call to work
#2 too many teachers in the pool
#3 never know when or how far to get to work
#4 you wake up every day to prepare and may not even get a call
5# classroom respect is next to zero for supply teachers
#6 it’s a lonely job as you never bond with co-workers

#133 Old Man on 08.16.13 at 10:32 am

My cousin was a teacher in KW, who graduated from some commerce courses going to Ryerson in the 1970’s, and ended up becoming a computer geek. She had no degree behind her name, but the local school board hired her to teach computer science. I saw her annual salary in 1997 – $54,000 – go figure, as could never understand this all.

#134 outthe liars on 08.16.13 at 10:41 am

#131TnT…The solution is to level the playing field and bring civil servants wages down to what the average Canadian earns. The idea that they should look to an international standard for wage comparable ( to equal the private sector) is ludicrous.

At the same time we need to claw back all publicly funded and subsidized pensions and have civil servants get their OAP and CPP like everyone else.

This simple accounting would pour billions into infrastructure and increase social services to the benefit of all.

#135 Doug in London on 08.16.13 at 10:46 am

@Blase, post #71:
What’s wrong with part time work? I would absolutely LOVE to work part time, 3 days a week would be about right. That way I have more free time to do what I want. If more people worked part time instead of fewer people working 40 hours a week, the unemployment problem would be solved.

#136 Old Man on 08.16.13 at 10:58 am

Now am going to blow you away with the educational system in Ontario when the Government comes up with a scheme, as am sure they mean’t well. My cousin’s husband was a major Real Estate developer that built custom homes in the KW area, and he had to declare a major bankruptcy in the 1980’s, so he sat at home for years taking care of 4 children, and did part-time work in the black. The Ontario Government was short of trades in the highschool system, and needed electricians in the late 1990’s. He applied based on past work experience, and was awarded a certification as an electrician, but could not find any position in any highschool. Hey, no problem with him, as could now work as an electrician in Ontario to earn a living. I kid you not as this is what happened.

#137 Bob on 08.16.13 at 11:00 am

Kelowna Developers are pulling out all the stops to try to reduce inventory. This tells you the reality of the market:

http://globalnews.ca/video/740195/free-kelowna-town-house

#138 Rob_in_TO on 08.16.13 at 11:15 am

#9 BillyO

One Bedrooms pushing $1,800/month. I rent one like that, has me worried when renewal of lease comes up. It’s a condo, so no rent control – hope my landlord does not increase it to an unmanageable amount, dread the thought of moving again.

#139 sciencemonkey on 08.16.13 at 11:20 am

Where is nonna nicola when you need him?

@123 and @131:
Yes, the tired old saw about how poorly paid private sector workers shouldn’t drag the public sector workers down to their level. Regarding teachers, I couldn’t care less, because I won’t have children, and the current education system seems to produce lots of morons regardless.

It would at least be nice to see the same percentage of foreign temp workers and outsourcing in the public sector as there is in the private sector. Or am I talking out of my a$$ and there actually is a significant amount?

Below is an email I received from the CPC 8 days ago. How about instead of making it more difficult, you ABOLISH it.

I wanted to make sure you heard the news – the Harper government has made changes to the Temporary Foreign Worker Program (TFWP) to ensure Canadians are given the first chance at available jobs:

Employers will have to pay a $275 processing fee for each temporary foreign worker application
Employers will have to make greater efforts to hire Canadians before they can apply to the TFWP
English and French will be the only languages that can be identified as a job requirement for employers intending to hire temporary foreign workers
We’ve changed applications to ensure the program is not used to outsource Canadian jobs

These improvements help ensure the TFWP is only used as intended — to fill acute skills shortages on a temporary basis.

The Harper government’s number one priority remains jobs, growth, and long term prosperity – for all Canadians.

If you’re with us, add your name to the list of Canadians who support our changes to the TFWP:

http://www.stephenharper.ca/tfwp

Sincerely,

Jenni Byrne
National Campaign Manager, 2011

#140 Blase on 08.16.13 at 11:23 am

#131 Fully agree. Teachers are not overpaid. Firefighters who sleep and eat 95% of the time on duty however…

#141 Ray on 08.16.13 at 11:25 am

#130 amazon girl

He is not wrong. Nobody will budge if there is only 5-15% price correction given the RE appreciation for the past 4 years. Drop in a bucket.

It certainly isn’t inconsequential if you have less than 10% equity. Nor is a correction the end of the process. It is the beginning. — Garth

#142 Rational Optimist on 08.16.13 at 11:31 am

49 Smoking Man on 08.15.13 at 8:16 pm

Smoking Man’s on to something here. If a certain level of alcohol is dangerous, it should be a crime. It should not be a “warning” that involves a temporary suspension of your driving license and a fine in the form of tow truck and impound fees. Is it illegal to drive above .08, or is it illegal to drive above .03?

In many countries, the particular solution to the problem of drinking and driving is that you are not to drive with any level of alcohol in your blood. The risk is eliminated completely, and it is simple for people to know what to do (do not drive after drinking).

Here, we know that drinking and driving is a problem that causes unnecessary costs (including deaths). But the rule is that you can have one drink, and you’ll probably be operating within the law, you can have two drinks but you receive a “warning” and a fine, and if you have three or four drinks you’ll probably face longer-term consequences. I think we could make this less clear somehow.

#143 Canadian Watchdog on 08.16.13 at 11:33 am

GTA REALTORS® Release Mid-Month Resale Figures

"August 16, 2013 — Greater Toronto Area REALTORS® reported 3,359 sales through the TorontoMLS system during the first two weeks of August 2013. This result represented a 22 per cent increase compared to 2,743 sales in August 2012. Sales were up on a year-over-year basis for all home types. Total new listings were up over the same period, but by a much lesser rate than sales."

There you go. A 22% year-on-year increase in a month that historically sees lower volume from the previous month. If that's what's reported, then GTA's housing market must be back.

What gives such coincidental impetus to home buyers in Toronto, Vancouver and other major cities to just run out and buy homes all at the same time? No, it's not because rates are rising and brokers are highly motivated to call their pre-approved clients with the biggest fear tactic selling point of all: "rates are going up, so buy now." (sarc off)

Of course, we've seen this before, as demand is pulled forward (again) leaving the following 3-4 quarters with less sales volume and more crickets in every sales offices across Canada.

So all is good and buyers are back, until next week when RealNet new home sales figures are reported, leaving many scratching their heads as to why buyers are not speculating on new homes if they expect higher home prices.

#144 Godth on 08.16.13 at 11:36 am

It will be so much fun if the Fed. “tapers”, let’s watch interest rates rise and insolvent banks implode…oh yeah. Not long now it seems until the dogs of war are unleashed, good times. Global unity.

What a sad, strange species; so much potential wasted.

The Fed is not going to allow rates to rise sufficiently to undo the progress that buckets of money has been spent achieving. Obviously. — Garth

#145 Bigrider on 08.16.13 at 11:42 am

Garth- ” I try not to encourage him”

No encouragement required.

Now , off to one of my many cousins house for lunch, a nice plate of pasta made by his mama and then downtown to buy a condo…LOL

#146 anon on 08.16.13 at 11:43 am

Teachers are grossly overpaid in Canada, blame the only powerful unions left in this country. Teachers, Nurses, Public Employees, notice a pattern? For some weird reason (again notice the pattern) those unions weren’t smashed in the 80s.

Big wigs needed their wives and daughters to have guaranteed incomes for the future.

#147 Rational Optimist on 08.16.13 at 11:45 am

#86 No Debt about it

There are parts of the City of Hamilton (like Dundas, Ancaster, Westdale, Waterdown) whose average prices would be above the national average. There are other newer subdivisions for crazy commuters, too. But the real reason is because the realtors do not track prices in Hamilton proper, but rather in the region, which includes Burlington and Grimsby. That’s the answer.

Nobody said Hammer prices are higher than Toronto, Van or Calgary. It was the rate of price appreciation being referenced. — Garth

#148 NoName on 08.16.13 at 11:52 am

#114 No Debt About It on 08.16.13 at 3:33 am

Oh… At this point no one can escape being tracked, maybe we can minimize it to some degree, but that is irrelevant now days. Data mining is here to stay , unfortunately soon if nor allrady products services you name it, will be made to be just good enough for premium price.

#149 Uwinsome on 08.16.13 at 11:56 am

#137 – Bob – “Kelowna”

… And it’s a fine looking town house too, for only $367,000. What a POS.

#150 poorgeoisie on 08.16.13 at 11:57 am

Bigrider, my Nonno said “dey builda too much, dey gonna getta caught”. Could it be a cultural awakening? And he’s in MTL he hasn’t seen the mess of cranes in TO. My big sis is petitioning to stop a condo down in the king spadina area, I guess she thought they would stop after they built her 1.5 mil dream box and now they are blocking her view. Her place is pretty kick ass though, but I think she and many more paesani will be challenging stereotypes by taking a massive bath in the near future.

#151 Rational Optimist on 08.16.13 at 11:57 am

139 Blase on 08.16.13 at 11:23 am

A guy I work with who has a background in such things was telling me yesterday about how improvements in building codes over the years have slowly made fire fighters less necessary as a proportion of the population. But that the unions somehow have difficulty accepting this. So their downtime is a fundamental result of the fact that are simply too many of them.

I’m not sure about that, but check this out: http://blogs.windsorstar.com/2013/08/13/star-editorial-taxpayers-cant-win/ The City of Windsor tried to take a fire truck off the road to save money (without reducing service). The Union grieved, and an arbiter eventually ruled that Windsor was in the wrong.

This is only one of the many reasons why the province of Ontario is heading for a crisis.

#152 Rational Optimist on 08.16.13 at 12:02 pm

Nobody said Hammer prices are higher than Toronto, Van or Calgary. It was the rate of price appreciation being referenced. — Garth

I wasn’t talking about prices in the Hammer being anywhere near Toronto, Van or Calgary. What was asked in #86 was “Hamilton house prices above national average? How on earth did that ever happen?”

Prices in Hamilton are evidently above the national average, if nowhere near the national leaders.

No, the local rate of increase is above the national rate of increase. That was the story. — Garth

#153 Ray on 08.16.13 at 12:02 pm

It certainly isn’t inconsequential if you have less than 10% equity. Nor is a correction the end of the process. It is the beginning. — Garth

There are no data that suggest people put 10% down on 600K-999K homes. Condo’s yes.

That’s a joke, right? — Garth

#154 Godth on 08.16.13 at 12:22 pm

The Fed is not going to allow rates to rise sufficiently to undo the progress that buckets of money has been spent achieving. Obviously. — Garth

I could take umbrage with your use of the word “progress”, and “money” for that matter, but I’ll refrain and simply say: We’ll see (big war). ;(

#155 calgary on 08.16.13 at 12:34 pm

i can confirm that prices are now declining in Calgary. though i would not buy until prices decline further by 15% at least. that may take a year or two.

#156 Canadian Watchdog on 08.16.13 at 12:39 pm

#153 Ray

There are no data that suggest people put 10% down on 600K-999K homes. Condo’s yes.

Maybe not 10%, but 7% yes.

Detached House Assignment Sale Jefferson Forest -Yonge & Jefferson

$824,900 ($25K Discount of Market Price)
Listing For: Sale on Assignment
Occupancy Date: February 2014
Deposit Paid to the Builder: $60,000

#157 2CentsCdn on 08.16.13 at 12:43 pm

#96 Smoking Man
“Not all is well in Smoking Man Land”

Come on smoking man ….. don’t throw in the towel now …. don’t let the crazy man society down. Even in a “no future” future …. some people will prosper …. reposition yourself … be one of those people. You’re my favorite nut job … most of what you say is 100% true. Show some guts, grind it out and get your mo-jo back. The world needs crazy people … we’re more interesting …. and more fun at parties.

#158 Vangrrl on 08.16.13 at 12:45 pm

Apparently there is already growing skepticism about Mark Carney across the pond there, according to my bro who lives in London.

#159 blase on 08.16.13 at 12:49 pm

Doug in London,

Part-time work not by choice. Employers in the States are required to pay health care for employees working 24+ hours. Since there is a ready availability of workers, employers like Wal-Mart only offer part-time work to new hires, and often overstaff and then send home workers if not needed. Quite a utopian workplace. This so that 6 heirs to Sam Walton’s legacy can have the same net worth as the bottom 30% of the entire United States population.

#160 Rational Optimist on 08.16.13 at 1:05 pm

No, the local rate of increase is above the national rate of increase. That was the story. — Garth

That was the story, but not the question. The average local house price is above the national average house price. That was the question from the commenter at #86. His comment was:

“Despite this, home prices jumped 10.8 per cent in Hamilton year over year. The average price increased by over $37,000 from July 2012 to July 2013. The average residential home price is at $383,340. That’s above the current national average price, $382,373.
That’s the third highest increase in Canada, below Sherbrooke, Que. and Vancouver, according to the report. ”
Hamilton house prices above national average? How on earth did that ever happen? Is it the Ancaster thing? People crazy enough to do the commute driving prices up? Surely it hasn’t been the local economy.”

My answer to his question is that the tracking includes Burlington and Grimsby.

#161 Ray on 08.16.13 at 1:09 pm

#156 Canadian Watchdog

Not a traditional high demand area. Try again.

If you need any evidence of how many people have bought high-end real estate with less than 20% down, look at what CMHC’s rule change has done to $1 million+ listings. A 10% deposit on a seven-figure home was common. — Garth

#162 TurnerNation on 08.16.13 at 1:21 pm

I was being facetious. But, foreign workers will be brought in, who will. Only upside, is less ‘bozzing’. Most of mine were.

#163 Canadian Watchdog on 08.16.13 at 1:23 pm

U.S. 10yr yield hits 2.85%. In other words, the $85 billion sequester cuts from a few months ago was just added back to the federal debt in interest payments, which was the whole point of the Fed's taper talk. Mission accomplished.

#164 Donald Trump on 08.16.13 at 1:39 pm

The young leave as new residents arrive, Ireland needs immigration reform too

http://www.irishcentral.com/story/roots/ireland_calling/the-young-leave-as-new-residents-arrive-ireland-needs-immigration-reform-too-217078901.html?showAll=y

QUOTE:

The ESRI team took that poll data and analyzed it for a chapter on immigration in their report. We’re so politically correct and paranoid on subjects like race and immigration that we did not even do our own research (in case we get an embarrassing answer). So for this study the ESRI relied on stuff from Europe that is more than two years old.

What we do know from our own census data is that the number of non-Irish living here is now well over half a million (a huge change in a very short time in a total population now at 4.7 million.)

QUOTE:

Meanwhile, of course, emigration of the young Irish out of Ireland has soared as jobs have dried up. The stresses that this situation is causing are now starting to emerge more frequently, and they are not all that different from what we have seen over the years in British cities with large immigrant communities which are still not integrated after decades.

QUOTE:

A whole industry grew up around making immigration work (support groups, lawyers, extra language teachers in schools etc., all funded by the taxpayer).

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

The last quote is bang on. The only ones who benefit are the usual parasites. Once the youth start emigrating….you know the end is coming.

#165 blablabla on 08.16.13 at 1:39 pm

#119 bigrider

Agreed on the Italian mother thing. She was the one who pushed my father to take a risk on a house in the 70s(?) as they were renting a small apartment (he had been here in the mid/late 60s). Also, other than maybe getting into a mutual fund or some stocks in the past 5-10 years they didn’t know anything outside of a savings/chequing account as a financial product.

#166 angela on 08.16.13 at 1:47 pm

so the fed funds rate is still basically zero

why are the cost of mortgages rising??

how do they justify that!?!?

banks get the money for free anyways

#167 Bottoms_Up on 08.16.13 at 1:54 pm

#27 Devore on 08.15.13 at 7:03 pm
—————————————–
Given what I’ve seen, (upper middle income) families in their 30’s with mortgages will not have them paid off for 25 years. And that’s assuming modest interest rates over a very long time period. Where’s the spending and economic growth going to come from?

#168 Pathetic on 08.16.13 at 1:56 pm

US stories did not have an affect here. Greek stories did not have any affect. Now, stories from Ireland?

None of the famous economist (the likes of Peter Schiff, Nouriel Roubini) say it is a critical problem in Canada.

In the four year you have been talking about correction, the price of real estate has nearly doubled in Canada.

The average house has gained 26.7% since this blog began. The stock market has gained 152%. — Garth

#169 The Big M on 08.16.13 at 1:58 pm

If in doubt change the formula to make your predictions look better.

The insanity continues south of the border:

Comprehensive GDP Revision and Advance Estimate for the Second Quarter of 2013

This morning the Bureau of Economic Analysis released a comprehensive revision to the National Income and Product Accounts, covering the full history of data since 1929. The revision showed that the recovery from the Great Recession has been slightly faster than previously reported, with real gross domestic product (GDP) expanding by a cumulative 8.5% from 2009:Q2 to 2013:Q1, compared to the previous estimate of 8.1% growth over that period. Including the advance estimate for 2013:Q2, real GDP has risen by 9.0% since the business-cycle trough in 2009:Q2 (see chart). In addition, real GDP surpassed its pre-recession peak in 2011:Q2, two quarters sooner than was reported prior to the revision, and is 4.4% higher than it was at the business-cycle peak in 2007:Q4.

http://www.whitehouse.gov/blog/2013/07/31/comprehensive-gdp-revision-and-advance-estimate-second-quarter-2013

#170 Ogopogo on 08.16.13 at 2:03 pm

Oh, I forgot to report my price-rent ratio the other day: 25.36

Sweet! No rent increase in 2 years either. Landlady, thou art a munificent goddess.

#171 CM on 08.16.13 at 2:08 pm

The CBC report certainly did trigger the “huh?” response. I credited the silly season, no-news thing that goes on during the summer. There is plenty of news, of course, but all the reporters seem to be on vacation. On “The National”, the video of the young couple who had gone through x-number of bidding wars so they could get just the house they wanted in just the area they wished to live (not sure where it was) was very depressing.

#172 Canadian Watchdog on 08.16.13 at 2:15 pm

#161 Ray

Not a traditional high demand area. Try again.

Suit yourself. Here's downtown C01 detached median and average prices. If that isn't high demand, then view the following table of YTD detached dollar volume until you find a high demand area of your choice.

#173 James on 08.16.13 at 3:05 pm

@#17 Coho

Your comment below may be one of the best I’ve read on this site in all the year’s I’ve been reading. I never post here (maybe “thrice”) but you’re spot-on below.

“Coho on 08.15.13 at 6:28 pm
#7,

The leaders of nations are abiding by the dictates of very powerful unelected ones controlling world affairs. Therefore, these are not ‘mistakes’ but deliberate moves to advance agendas that have nothing to do with the overall good of the average person.

For a person of conscience I suppose it would be a mistake to follow orders he/she knows will be detrimental to his/her countrymen, but there are few left and those few are marginalized, ignored, discredited and ridiculed.

Of course there are some among us who think we are different and thus immune to the hardship other nations face because we are smarter or that god likes us better. What’s not to like? While people are being massacred in Egypt by western backed despots we pray for home ownership.”

Pay attention, people. Don’t let the suburban lifestyle and mindset intoxicate you into complacency.

#174 @Canadina Watchdong -do you have the sales table for Condos in 416? on 08.16.13 at 3:16 pm

I am looking at my data and I am completely puzzled, I am seeing a very low $ volume for the first half of the month
It does not match the TREB data at all although the data comes from MLS. Perhaps it is incomplete (I have around 417 condo sales for Toronto, they have 585 ). If my data is correct and the trend continues the $ volume will be down around 30% ! which is scary. I must be wrong, please if you have the date share it.

#175 Toronto and GTA Sales and Stats with a new format on 08.16.13 at 3:19 pm

http:/recharts.blogspot.ca

Have a look and see if it is better
For those of you who asked for improvements in my reports, you should know that I got your message and I am working on it but my time is limited :-) Doing my best…

#176 angela on 08.16.13 at 3:26 pm

Walmart Earnings Disaster Exposes a Collapsing Economy: Davidowitz
http://finance.yahoo.com/blogs/breakout/walmart-earnings-miss-exposes-collapsing-economy-davidowitz-142435260.html

“Walmart (WMT) reported earnings of $1.24 a share this morning on revenues of $116.2 billion. Analysts had been expecting $1.25 on $118.5 billion.” What a disaster! — Garth

#177 Alberta Ed on 08.16.13 at 3:27 pm

The real pity about CBC’s pathetic reporting on real estate of late is that they don’t know any better.

#178 calgaryPhantom on 08.16.13 at 3:44 pm

Garth,

Question: I am currently working on my income portion of portfolio. I read today that there has been some 15 billion outward flow of foreign investment from canadian bonds.

Would you suggest if i can make an entry point here and average out my bond portion in coming few months. Or should i wait for now until feds settle the dust.?

#179 Ray on 08.16.13 at 3:49 pm

#171 Canadian Watchdog

My point is majority of people will not sell their homes just because there is temporary correction.

I don’t know about you but even as renters you don’t move every year do you unless you are forced too. If you own a home and established then you will be living there for the foreseeable time.

Garth’s buy low sell high mantra for RE is quite disruptive. Do you want to sell…rent..search…buy…land transfer tax…rinse repeat. It also doesn’t makes when you already have kids going to school.

Ok so I loose maybe 100-200K of “potential” profit. Big deal.

#180 Screwed on 08.16.13 at 3:53 pm

BCs Translink has 140 managers earning $100,000 p.a. or more for their “services”.

What the hell is right with this? Where does Translink need to employ all these managers to run the affairs of these bottomless pit of a “company”?

#181 Westcdn on 08.16.13 at 4:14 pm

“Often wrong, never in doubt” – anonymous
It goes with the territory when you make decisions based on your perceptions of the future. I don’t believe the future is set so there is plenty of time to make nonfatal mistakes between now and then. My mortgage is coming up for renewal so the problem is how long a term. Normally, I don’t guess the future more a few years out. My choice provided by RBC, have come down to either 3.4% for 4 years or 4% for 7 years. The question is whether 5 year mortgage rates are greater than 4% in 4 years’ time.
After all, deflation is a bigger threat than inflation and the economy looks to be weak for at least a decade because of known and unfunded debts. I think bank prime rates (Bank of Canada) of greater than 3% would trigger a recession because rates should depend on the strength of the economy. Interest rates should only rise when the economy is strong and fall when the economy is weak (ignoring Government fiscal policies).
However, current interest rates are artificially low due to the QE experiment. I think it will fail because it prevented a solution to crony capitalism and capital misallocations. My guess is the fear of QE tapering and the end of the experiment is overblown although the bank prime rate will rise at least 1%. I don’t see 5 year mortgage rates over 5% for an extended period during the next 7 years (unless the Cdn$ depreciates due to bad fiscal policy).
After considering my perceptions, it is a no brainer to take the 7 year term (I don’t think a mortgage break fee would be expensive). I am guessing for an average 4.75% mortgage rate and a recession from now to August 2020. Under these projections, I am confident that real estate values will deflate instead of crashing although it will accelerate in a recession. Housing will become more of a lifestyle choice than a piggy bank.

#182 Smoking Man on 08.16.13 at 4:15 pm

#127 reddy on 08.16.13 at 9:12 am

Wow – the smoking man is correct… Yikeshttp://www.mto.gov.on.ca/english/safety/impaired/fact-sheet.shtml

Dude that’s the old law, the new one can’t be found till you get nailed, you can fight the charge and win, but the suspension will remain on your record so the insurance industry an vultch…

It’s down right dirty and way bellow my fuzzy low bench mark line of morality..

If we are to pay a big price for something, let a jury or judge decide, not a entry into a database where compulsory insurance is a must to drive.

Libs in Ontario are scum………

I’m going to do something I have never done in my life before, Volunteer…..

Even crazier for a political party…. I must be really losing it.

#183 angela on 08.16.13 at 4:31 pm

“Walmart (WMT) reported earnings of $1.24 a share this morning on revenues of $116.2 billion. Analysts had been expecting $1.25 on $118.5 billion.” What a disaster! — Garth
Tru that but it does put a dent in your america is back thesis since consumption is what drives america

Hardly. US house sales have exploded, along with vehicle purchases. I wouldn’t get too fussed about a decline in kitty litter and face cream numbers. — Garth

#184 Screwed on 08.16.13 at 4:31 pm

#178 Ray

Depends on the % of equity in your home when the time to refi the mortgage comes. Banks may ask to see addtl. collateral or suggest a CMHC insurance on the mortgage.

To make a sound judgement call on this issue, one would need to see equity/mortgage stats and relate that to potential drops in home valuations.

Higher rates are sucking disposable incomes from mortgagees. Can they afford to pay those in a scenario where economic activity is declining? Mortgage defaults would naturally occur more frequently and houses would be foreclosed on which drives prices down regardless of unicorn and skittles propaganda by MSM and CREA etc.

I work across the entire Lower Mainland and see homes from West Van to South Surrey, from Delta to New West, from Kerrisdale to Burnaby, from Langley to Coquitlam. Yes, I drive allot on a daily basis.

Building activity has changed over the past year or so from primarily spec homes to high end renos or custom built. We’re not pumping 60+ home subdivisions and TH sites as we once were. The condo building is slowing down as well. Not much happening anywhere aside from False Creek right now. Couple builds in Burnaby.

Lots of “for sale” signs up and few “sold” stickers on 1+ million homes. East Van dumps are selling to be probably subdividing the lot and building 2 spec homes. North Van cheaper homes are selling because West Van is priced out of the market. Burnaby is seeing more activity with Chinese GCs because Richmond is slumping. Langley is still expanding and absorbing much of the white flight from Surrey. Not kidding, it’s true.

South Surrey Ocean Park is overpriced. Chinese buyers are not coming as much as they were and home grown buyers can’t afford it. OP doesn’t have what Kerrisdale has which is still the No. 1 preferred spot for the very wealthy Chinese.

#185 rosie "moving forward" in the knowledge that, "this won't end well" on 08.16.13 at 5:04 pm

A sad situation. One wobbly asset and few options. http://business.financialpost.com/2013/08/13/family-finance-her-situation-sounds-desperate-and-it-is/

#186 Canadian Watchdog on 08.16.13 at 5:30 pm

#178 Ray

My point is majority of people will not sell their homes just because there is temporary correction.

Correct! Which is why they'd rather default on other debts before losing their home. Gotta keep the kids in school!

Like all ponzi schemes, it works until it doesn't.

#187 Ogopogo on 08.16.13 at 5:48 pm

#184 rosie “moving forward” in the knowledge that, “this won’t end well” on 08.16.13 at 5:04 pm
A sad situation. One wobbly asset and few options. http://business.financialpost.com/2013/08/13/family-finance-her-situation-sounds-desperate-and-it-is/

I literally just finished commenting on this article, before I’d your post. Can you guess which one is my comment?

Worse still, this poor women is trying to sell her condo in Kelowna. I sure hope someone can save her when she goes bankrupt.

#188 elchavo on 08.16.13 at 5:59 pm

“Associate Minister Rick Fraser says the government will instead work with the real estate industry to ensure home buyers get the information they need before buying property at risk of flooding.”

http://www.theglobeandmail.com/news/national/alberta-backs-away-from-putting-mandatory-flood-warnings-on-land-titles/article13815708/

#189 mortgagebrokeron on 08.16.13 at 6:31 pm

Hi there, I am mortgage broker, we will see 4% plus interest rates by this time next year for sure.

The rates jump again these past few days … now 3.49 is cheap

#190 Devore on 08.16.13 at 6:42 pm

#178 Ray

My point is majority of people will not sell their homes just because there is temporary correction.

No one (reasonable, including Garth) is saying people will sell their house just because it’s down in price. SOME will, but that is a relatively tiny portion.

However, there are many forms of ownership and many types of real estate. You’re talking principal residence, which is just about the last thing people will cut back on. But they will cut back on other things, which will, ultimately, reduce overall incomes and employment, forcing some people to sell in order to downsize or relocate for work opportunities.

People who have non-principal real estate holdings may want to or be forced to sell. Things such as money-sucking recreational properties, second homes, pied a terres, money-losing investment properties.

These properties will be under pressure. It is not reasonable to believe that assets which people are leveraged into 5:1 or 10:1 or even higher will not experience the equivalent of “margin calls”, voluntary or otherwise. And of course these properties are not somehow segregated or isolated from other real estate. They are in your neighbourhoods and condo towers. They are direct comparables, and weigh down on prices everywhere.

“Garth’s mantra” is not disruptive. It is one of information, common sense, caution and balance. If your house forms the vast majority (or entirety) of your assets, it would be entirely logical to consider selling. People who have downsizing or retirement on their horizon, may wish to accelerate their plans and capture the outsized valuations of today. People who are considering “getting into the market”, may want to rethink. After all, as you say, why move if you don’t have to? Why plough into an asset likely to decline in value for the next 10 years, when there are more sensible things you could do with your money?

You bring up kids going to school, but that’s pretty weak to lean on that tired excuse. The kids will be fine.
I think adults are generally too protective and well underestimate the adaptability of children. If you are truly worried about them, the amount of time you spend with them is much more important than what school they go to, or which friends they hang out with. And the biggest factor affecting that amount of time, that is entirely within your control, is your commute. When prices and rents are so out of whack, you can afford to rent a much nicer home in a better neighbourhood closer to work than you can ever hope to purchase.

#191 Donald Trump on 08.16.13 at 6:45 pm

#165 blablabla on 08.16.13 at 1:39 pm

One thing to keep in mind….
Many immigrants came with nothing (or had lost everything)…and the most valuable thing to them was Real Estate.

It was THE security blanket.

Lots of stories of post WW2 parties that bought bought bought RE and became wealthy.

#192 Suede on 08.16.13 at 6:49 pm

So far August sales numbers in Vancouver are high-flying over last year’s 40+% (although 2012 was atrocious).

Get ready for some more exclamation marks in headlines in 2.5 weeks!

#193 Donald Trump on 08.16.13 at 6:53 pm

#179 Screwed on 08.16.13 at 3:53 pm

BCs Translink has 140 managers earning $100,000 p.a. or more for their “services”.

What the hell is right with this? Where does Translink need to employ all these managers to run the affairs of these bottomless pit of a “company”?

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

I read a post in The Province paper that some dude had gone on line in Burnaby re Public Sector wages. They found someone with a position that was part of the bureaucracy(ie not even the head honcho) that ran (2)… count em TWO public golf courses ..and whose salary was almost $150,000. WTF?

Pure and Simple….these are pigs at the trough…out of control….”DETROIT” coming to your Local Gov’t soon.

Translink?
I think it was created so peoples’ useless relatives could suck on the taxpayer teat.

#194 Marginal on 08.16.13 at 7:07 pm

#185 Canadian Watchdog

Great comment……

#195 Tony on 08.16.13 at 7:14 pm

Re: #188 mortgagebrokeron on 08.16.13 at 6:31 pm

I’m betting heavily you’ll see 5 year closed mortgages here in Canada at 2.49% next year. Don’t believe the crap you read in America. Once Bernanke’s out America will be back in the recession they never came out of. Canada will be almost in as bad a shape next year as America.

#196 Ray on 08.16.13 at 9:44 pm

#186 Canadian Watchdog

You are scaring me. Stop reading conspiracy books.