Rubbers

BOOTS

Just when you thought housing was set to blow up overnight, a reprieve. Maybe. Sort of.

As you know, this week’s mortgage bump crossed a threshold. Five-year home loans are now a full 1% more expensive than they were just a few months ago. That got boring economists saying newsworthy things, and turned the media’s crank. The meme is that real estate’s so 2012, a hideously bloated thing about to deflate and asphyxiate Mississauga.

Of course, higher mortgages bring lower house prices. The reason’s simple, and it’s not because anyone has to pay $200 more a month to own the average bungalow. Instead, higher rates and tougher debt service hurdles mean buyers qualify to borrow less money. So they’ve less to offer. If sellers want to sell, they have to lower the asking. Ergo, a correcting market.

If you need any evidence of what higher mortgage rates bring, it came Friday. Purchases of new houses in the US have tanked – by 13.4% last month, the biggest dive in three years. Rates have been climbing there, too. Back in May (when a five-year home loan was available here for 2.69%) Americans could get a thirty-year, fixed for 3.35%. Today it’s 4.58%, the highest in two years.

This is a shocker. And buyers are protesting there, as they are here. It’s why new condo sales in Toronto have plunged, along with land purchases in Calgary and building permits in Vancouver.

But this housing setback is also a clear warning sign to central bankers that the real estate retrace could get seriously out of hand, should interest rates be allowed to spiral higher. And what would cause that? Yup. More cowboys in the bond market, dumping debt and goosing yields on the expectation the US Federal Reserve will substantially cut back on its stimulus spending.

Let’s be clear. The dudes running central banks in the US, Canada and around the world haven’t spent trillions of dollars and kept rates at absurd levels for four years just to have it unwound in a few months. The damage rising rates could have is incalculable. In Canada more than 20% of the entire economy might as well be labelled ‘Re/Max’ – a bigger share than all the mines, oil wells and tar sands put together. Add another 1% to the cost of a mortgage, and that soft landing F wanted turns into a crispy crater.

That’s where these fresh housing numbers come into play. They were so bad that they turned rubbery good. The stock market got one whiff of danger in its snout, and headed higher. Traders now understand that crappy news just increases the odds that the Fed will be extra careful – and slow – as it takes its foot off the gas.

That means the ‘tapering’ of stimulus will still start before the end of the year, but in as mousey a way as the Fed can make it. Any crash in job-creation numbers, any further erosion in real estate or a dive in car sales, will probably slow the process further. The hair-shirted doomers who come to this site to foam and moan will be deprived of the collapse they so fervently wish. The US recovery will continue.

What’s it mean?

Well, it’s all too late to save the Canadian real estate market, at least as we know it. Sales and prices will melt lower as the leaves change and the snow falls. Every market is unique, but all buyers are now faced with higher payments or less house. And as local conditions weaken, more listings will appear. It always happens when sellers finally realize next year will probably be worse.

For investors, a slow-walking Fed means stock and bond markets can stop hyperventilating and retreat to normal. That probably means a nice recovery for the price of interest rate-sensitive securities like preferreds, REITs and, of course, bonds. People who understand that now, and realize why those income-producers were unfairly sideswiped in the first place, have a fat opportunity at hand.

So now you know what to sell and buy. Investing is such fun.

199 comments ↓

#1 TO and GTA Sales and Stats 2013-08-23 on 08.23.13 at 8:02 pm

TO and GTA Stats and Sales 2013/08/23
GTACondos: http://bit.ly/19CxKYi
905SFH: http://bit.ly/19CxNnd
416SFH: http://bit.ly/19CxNDB

#2 dave on 08.23.13 at 8:02 pm

First!!

#3 mortgagebrokeron on 08.23.13 at 8:04 pm

hi garth,

floating rate funds, how do i invest in them?

#4 TurnerNation on 08.23.13 at 8:05 pm

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

Ancient & Accepted Blog Dog

Yield Hound

Bozzing Beaver

DETELED

Golden Klaxon

Joe Howmuchamonth

How to talk to a Track6er (if you must).

Dip the Drain Operator

Buster Reeko

Stephen who?

Sticky Figures

REITa MacNeil

Chancellor Rebalancer

Reserved:
Blog Dog Poloz

#5 Is this guy an idiot or he is right? on 08.23.13 at 8:06 pm

Those locked in rates only lasted for 30 days, or 120 days at a higher rate (which defeats the purpose as 30 day rates today are close to the same). Rates made the first big jump above 3% in late May early June, so all these buyers would have had to ‘lock’ in in May and June. The 30 day rate hold mortgages at 2.79 and 2.89% are long gone, and wouldn’t explain August sales. This also completely avoids the simple concept that all these pre-construction house and condo sales are too far away to get one of these 30 days / 120 day rate holds. Frankly the myth held on by the desperate RE crash theorists that mortgage rates all of a sudden being the cause for sales to move higher is hillarious. That window has mostly passed already.

But we had a drop of rates since that initial June jump, and now another increase. Clearly it’s the interest rate boogyman causing all these sales, nothing else. Couldn’t have been the tightened mortgage rules July last year severely hampering sales last year as desired. Nah that would make too much sense…
—————————

He is basically saying that everybody is wrong and actually it is the market that is rock solid and there is no reason to panic because of increasing rates.

#6 Confused on 08.23.13 at 8:09 pm

So what, now no RE crash in Canada?

Never said there would be. But, yes, a correction and melt. — Garth

#7 AlioshaParen on 08.23.13 at 8:10 pm

I agree, Canadian housing market is beyond the point of being saved. Thought you can still buy a house in toronto for cheaper than a condo. Yet apparently there are 10 signs of condo bubble in Toronto. Some mixed signals lol!

#8 MarcFromOttawa on 08.23.13 at 8:12 pm

Rubbers aren’t comfortable but they serve a purpose.

Wear socks. — Garth

#9 Herb on 08.23.13 at 8:15 pm

Forget the Beemer with the house, how about a Jag?

http://blogs.ottawacitizen.com/2013/08/23/how-about-a-jaguar-with-your-new-home/?postpost=v2#content

#10 Confused on 08.23.13 at 8:17 pm

Will the fed’s ever be able to taper QE without having markets swings so abruptly? And if so under what conditions? This is the 3rd time they’ve tried to taper QE and all three times the same thing happened.

#11 Steven on 08.23.13 at 8:17 pm

Saving the real estate market requires that prices fall or the working poor get gigantic pay increases and probably both. If that is impossible then don’t expect any real recovery for real estate any time soon.

#12 Daisy Mae on 08.23.13 at 8:19 pm

#2 dave: “First!!”

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

That is so impressive, so enlightening, so informative.

#13 Jim on 08.23.13 at 8:25 pm

#5

Not sure if he is an idiot, but in the big picture the argument over rates and timing is irrelevant. Canadians are deeply indebted, and their houses cost far too much compared to their incomes and rental yields. It is not sustainable, period. All this talk of rates rising and the like is a matter of timing. Useful for those trying to time the market, but ultimately unimportant compared to the longer term trend.

Housing bubbles are also creatures of mass psychology. As Garth has pointed out, the psychology seems to be changing. It should be VERY interesting from here on out.

PS: For a laugh I compared prices in central BC to central California. A crap shack mobile home in BC costs more than a nice home with an acreage out here.

#14 Potential buyer in GTA on 08.23.13 at 8:27 pm

Is housing bubble ready to burst or not????????? OR still have to waitttttt

#15 too little too late on 08.23.13 at 8:32 pm

The US debt is insurmountable. Buy guns, stockpile food. This will not end well.

#16 Nemesis on 08.23.13 at 8:33 pm

Rubbers?

Strictly speaking, it would appear that not all makes are genuinely ‘fit for purpose’…

http://www.crownjewelscondoms.com/heritage.html

#17 Catalyst on 08.23.13 at 8:37 pm

Thanks for your post Garth – do you think REITs and preferreds have a little more to drop yet? I know you are mainly buying for yield but asset appreciation is great too especially if I only have to wait a few more months.

I see interest rates going up another 40-60 bpts upwards in the coming months, which might hinder the aforementioned instruments.

I know you don’t like to talk about individual stocks, but maybe some other readers can comment, good time to short facebook? Dramatically overvalued on the assumption they can monetize mobile effectively while their ceo is busy saving the world.

#18 observer on 08.23.13 at 8:47 pm

Real Estate could of had a soft landing earlier this year.

But the Government let CMHC, CREA put out false and meaningless stats to keep the party going.

Remember, most canadians don’t understand interest, principal, amortization, or basic business and finance.
They live day to day and wobble in the wind.

Now were in this point of no return. Be prepare to match the US at 4.58%. That means if your were barely able to buy a 800,000 house. The next person to buy can only afford a house that is 400,000 / 500,000.

As interest rates goes back to normal. The price of housing will fall.

Also note if your a old retired and only have a house as equity, it going to be hard to watch your net worth fall every month for the next several years. You should sell now before you loose it all

#19 shocked and appaled on 08.23.13 at 8:48 pm

Isn’t this the third time this has happened? What will allow the feds to taper QE without having the markets swing so abruptly?

#20 Catalyst on 08.23.13 at 8:49 pm

Also, lets not get too worked up about interest rates. It has been a nice divergence from trying to convince people with fundamentals and right angle like charts of price increases that defy logic.

All the latest increases will do is push people to variable rate mortgages (tied to BOC rate) which will be at comatose low levels for another 4 years atleast.

I still think the catalyst for housing’s decline will be recessionary causes like a spike in unemployment or regulatory changes that would make too much sense like limiting CMHC to $500K or 10% down.

I seriously question the ability of ANYONE to pay down a 500K mortgage. Are there that many people out there making 150K+? I would even say that 2 incomes above 75K each is upper 10% of the population but is required if you want a fixer upper in most of the GTA. I don’t get it.

To get a VRM borrowers need to qualify at the posted rate, so forget that. At best it will buy 18 months, at about .5% less. No solution there. — Garth

#21 pathcontrolmonk on 08.23.13 at 8:51 pm

Solution is simple, move to another less stupid country.

#22 Victor V on 08.23.13 at 8:52 pm

Carrick on money: The tipping point for housing arrives

http://www.theglobeandmail.com/globe-investor/personal-finance/carrick-on-money/carrick-on-money-the-tipping-point-for-housing-arrives/article13932307/

#23 Scott in Gibsons on 08.23.13 at 8:53 pm

The US housing numbers show that the doomers are right. The economy (US or otherwise) cannot tolerate higher interest rates. So the CB’s will again use the only tool they have and print, print, print. Gold is confirming. Broken clock Garth will have to wait a few months or years before he can (briefly) gloat again. Oh well Garth, hope you enjoyed feeling right for the few weeks it lasted……..

US new home sales are insignificant compared to the resale market, which is up 17% with prices ahead 13.2%. Do some research before you snicker. Saves embarrassment. — Garth

#24 Liquid on 08.23.13 at 9:03 pm

I think buying is still a viable option to renting in select growing parts of the country like in Calgary or Regina, but I do expect Vancouver and Toronto home sales and prices to drop in the next 12 to 18 months :) Which isn’t really a bad thing because I believe it will be healthy for market to cool off.

Back in April I anticipated we would see higher mortgage rates this year, which is why I decided to open up a home equity line of credit against my home in May and was approved for $21,000. Not much, but I plan to use this capital to invest in interest rate sensitive securities like you mentioned. Maybe increase my exposure to REITs for example :) My plan is to lock in the HELOC amount before my home’s assessed value can have a chance to fall, and use the liquidity to purchase fixed income securities or agricultural assets http://tinyurl.com/l4xdj2d Taking advantage of interest rate trends is a great strategy Garth :D Looks like we’re on the same page. I agree, investing IS very fun :)

#25 Mr. Reality on 08.23.13 at 9:13 pm

One problem Garth. The US recovery cannot occur without a housing recovery.

The US recovery talk will end very soon. They are already in a Japanese style era of deflation with QE trying to cover it all up.

#26 george soros on 08.23.13 at 9:18 pm

Let’s see. Consumers are carrying more debt than they did in 2007. Corporations are carrying more debt than they did in 2007. The Federal government is carrying 60% more debt than it did in 2007. Cities and States are carrying more debt than they did in 2007. Interest rates have jumped by 80% in the last three months. The economy is clearly in recession, as retailer after retailer reports horrific results. Stocks are as overvalued as they were in 1929, 2000, and 2007. China is experiencing a real estate collapse. Japan is experiencing a cultural/economic/societal collapse. The Middle East is awash in blood. The European Union is held together by lies, delusion and false promises. What could possibly go wrong?

And I hear we’re all going to die. Bummer. — Garth

#27 T.O. Bubble Boy on 08.23.13 at 9:19 pm

That probably means a nice recovery for the price of interest rate-sensitive securities like preferreds, REITs and, of course, bonds.

Yep. Many U.S. Preferreds up 2%-3% today (after tanking for a few months). REITs up 1%-3%. Even the Canadian Preferred ETFs (CPD, ZPR) up 0.5%.

#28 T.O. Bubble Boy on 08.23.13 at 9:20 pm

(or, just invest in Microsoft on the day Ballmer announces he’ll be retiring)

#29 Goldy Goldbug on 08.23.13 at 9:27 pm

Re: #23 comment by G.Turner. Why don’t you save yourself from embarrassment and make a few trips south of the border and actually talk to the people who are living through this. You will find that this recovery you think is happening is predicated on one thing and one thing only. Quantitative Easing. This is working in the U.S. as well as it worked in Japan. I am really surprised at your lack of knowledge as to what is really happening here but because you are an economist, you only look at numbers and not what is reality.

#30 Franco on 08.23.13 at 9:28 pm

I will say that some people that wish for a housing crash do not understand the implication to the economy as a whole. Houses may become cheaper, but fewer people will also have less to spend and more unemployment and less pay will be the norm. I am hoping for a correction and a slow melt. Hopefully we can ride it out without too many people getting hurt.

#31 mark on 08.23.13 at 9:29 pm

CBC radio links for Garth’s interviews?

Too scary. — Garth

#32 AK on 08.23.13 at 9:37 pm

Peter Schiff explaining the meaning of Propaganda Yawn….

#33 Dus10 on 08.23.13 at 9:38 pm

Garth… You have a book titled “after the crash”
And it’s a great read. But this book seriously contradicts your reply to a post where you say you never said RE will crash… What gives.

Then you didn’t read my book. The crash refers to the GFC, not real estate. — Garth

#34 t on 08.23.13 at 9:39 pm

Id rather take the nuckle rapping than have my post deleted…..

Then don’t come here and pump gold. — Garth

#35 DEBTMAN on 08.23.13 at 9:41 pm

DEBTMAN SAYS…..GET MORE DEBT!

#36 El Cid on 08.23.13 at 9:47 pm

Lets see….The price of Gold is up as the shorts get hammered. Yields in the bond market are on the rise. China and Japan are starting to dump US treasuries. S&P earnings are starting to tank. The Fed is making noises about the trigger for tapering because they know that if they begin to taper they will drive up the bond yield and then the US starts to have issues with sovereign debt….Gore Vidal was on to something –

“The four most beautiful words in our common language: I told you so.”

#37 As Is Old Man on 08.23.13 at 9:47 pm

Governments around the world are desperate for cash as have bills to pay. Global interest rate war will ensue as Europe stabilizes so rates will increase dramatically…

#38 george soros on 08.23.13 at 9:57 pm

US new home sales are insignificant compared to the resale market, which is up 17% with prices ahead 13.2%. Do some research before you snicker. Saves embarrassment. — Garth
But the point is that the us is not in recovery on its own 2 feet only with the help of QE sorry garth you can massage the numbers how ever you want but seems like the doomers consistently point out this fact ,and it is fact we will see how the USA will hold up this imaginary recovery (which BTW is 5 yrs in the making )without QE .Who will be the buyer of bonds sold buy sellers ?????? riddle me that Garth plz where will the money to buy the bonds come from ?????more QE ????what about the precious US dollar ? wont more QE hurt the dollar ?does’nt printing money devalue it ?you seem to think that deficits don’t matter
you remind me of Dick Cheney who said deficits don’t matter please give me a good reason why they don’t matter

#39 Uwinsome on 08.23.13 at 10:00 pm

Tempering your estimates for a housing correction.

Tempering your rising rate forecast.

Tempering your sure-thing-tapering stance.

Please don’t start pumping gold ($1400 by the way)

Housing will correct. Rates will rise. Tapering will commence. Gold is dead money. — Garth

#40 94 on 08.23.13 at 10:05 pm

So now you know what to sell and buy. Investing is such fun. – Garth

——————————————————-

Just for some clarity.
Start beefing up on income producing assets is what your saying? and if so, during the re-balancing, sell off some profits from the equity funds?
And, if you have time to answer, should the income producing assets hold a greater percentage going forward?

I just need help with this transition period.

Thank you

#41 Happity on 08.23.13 at 10:11 pm

Funny how a us economic renaissance is causing an inverse head and shoulders pattern in gold and silver.

2.9% on the ten year after years of the cheapest money in history and housing cracks? That is not a us economic renaissance.

Emerging markets are collapsing. Asia is dumping us treasuries. Europe continues to walk down a road of darkening financial reality. Who is buying us goods, Antarctica?

#42 Leaky Condo on 08.23.13 at 10:13 pm

Ahh.. Vancouver we are progressively evolving from leaky condos to underwater condos. It rains too much here. http://bit.ly/14qNRYh

#43 The Burning & Stinging Is The Worst Part on 08.23.13 at 10:23 pm

Does all this doom and gloom about Canadian property only relate to owning residential properties? Generally speaking, does commercial property present less risk?

Depends on the cash flow – which separates residential from commercial. — Garth

#44 FATHER on 08.23.13 at 10:24 pm

GARTH so if the U.S. tapers only a little will that have any more affect on bond mortgage rates?

#45 Vancouver Mortgage Broker on 08.23.13 at 10:30 pm

The Monarchs of Money: http://youtu.be/7T_VxdLJdDU

#46 45north on 08.23.13 at 10:36 pm

Liquid: I decided to open up a home equity line of credit against my home in May and was approved for $21,000. Not much

no it really isn’t. I mean suppose you are right and you invest in REIT which goes up 20% over the course of a year but let’s also suppose that it doesn’t go straight up, in fact the first half of the year it dips down 10%. Remember you are checking it on the internet 12 times a day so after a month you’ve seen it down 360 times. Okay the one sure thing is you will be paying interest on your line-of-credit. RBC says 6.5% What do I know? Let’s say 6.5% so on $21,000 you pay $113.75 a month. Sound about right? So at the end of the first month you will be paying $113.75 for the privilege of losing $2000. Further, you have checked this 360 times in the course of the month.

Frankly you would have way more fun with a new truck.

#47 Keith in Calgary on 08.23.13 at 10:39 pm

The US is not in a recovery.

It is on life support…………

If the FED stops printing money to support the crooks on Wall Street, and keep the fraudulent stock market afloat, the entire economy comes crashing down.

“If” the US was in a genuine consumer induced, job creating recovery, then they could stop the money printing. US housing is not in a recovery. New home prices are down 14% and the only people buying existing property are CASH speculators, which is slowly putting a false floor under that market.

The Sword of Damocles is sharper than it has ever been and the horses hair suspending it is growing weak.

US new home prices are up 6.5 per cent. Not too big on facts, are you? — Garth

#48 TRON on 08.23.13 at 10:44 pm

Predictions have a 50% accuracy rate much like decisions. We take the information at hand and make the call. Sometimes we’re right and sometimes we’re wrong. We can’t be right all the time unless of course we could see the future.

Calling what the US economy is going to do over the next 5 years is bold and reckless in my opinion. Too many unknowns and uncharted territory.

Let’s not forget to admit when we’re wrong so that our predictions have some credibility.

#49 takla on 08.23.13 at 10:44 pm

no more gold pumping ….your blog i get it.Can you give us a brief explaination why you believe gold is kaput,dead money going forward,if you can convince me i got some liquidating to do.

#50 toughguy on 08.23.13 at 10:46 pm

Just visited USA the plywood business is a good business to get into seeing all them windows boarded up ,sad sad country

The USA comments here are beyond comical. — Garth

#51 ILoveCharts on 08.23.13 at 10:48 pm

Re #5
“Those locked in rates only lasted for 30 days, or 120 days at a higher rate (which defeats the purpose as 30 day rates today are close to the same). Rates made the first big jump above 3% in late May early June, so all these buyers would have had to ‘lock’ in in May and June. The 30 day rate hold mortgages at 2.79 and 2.89% are long gone, and wouldn’t explain August sales. “
__________________________________________

Not true. People still have 2.89% rate-holds that are valid until October.

PS: How do you make quotes show up as italics?

#52 ILoveCharts on 08.23.13 at 10:49 pm

Ignore the above question about italics. I got it figured out.

#53 Snowboid on 08.23.13 at 11:08 pm

#11 Steven on 08.23.13 at 8:17 pm…

Precisely!

#13 Jim on 08.23.13 at 8:25 pm…

More precisely!

When we bought our place down south, you couldn’t find a mobile home in the Okanagan for the same price.

Although the value of the home has risen far more than expected in three years, it still isn’t worth what a starter two bedroom condo would cost in Kelowna.

With Okanagan prices still ten to fifteen percent too high, we have a ways to go, but are patient as ever.

#54 Wonk on 08.23.13 at 11:10 pm

The US fed thinks it is the market. Is it the market?? There maybe a time once again when rates are set based on the credit worthiness of the debtor.

#55 Ray on 08.23.13 at 11:10 pm

#14 Potential buyer in GTA

Dude you missed the boat. SFH 416 is safe bet.

#56 Smoking Man on 08.23.13 at 11:20 pm

Garth what if this happens?
Garth what if that happens?
Garth what is the meaning of life.

Losers……….

On another note, wee Truedough coming out as a ounce in awhile toke, brilliant.

Fat basterd and his henchmen reaction, all I got to say. The kid sucked you guys in like a midget playing a tuba.

Petet Magoof, it’s against the law…

Ba hahaha..

So out of tune…… So going to get asses kicked in next election…

#57 Smoking Man on 08.23.13 at 11:32 pm

In fact when I look at how Fatty, big bird, and all the other humpy dumpteez one word comes to mind.

What the British refer to as a cigarette, but that would offend gay people, I like gays.

Have a limited vocabulary, some one please help,

I need a word….

#58 FATHER on 08.23.13 at 11:46 pm

so if the U.S. tapers a little bit I guess it wont have any more affect on interest rates. I thought we would see the rate at 5 % at the end of this year, maybe it will be at that level at the end of 2014 so we wait again

#59 Canadian Watchdog on 08.24.13 at 12:00 am

Video: Former F.D.I.C. chair, Sheila Bair says what central planning really is, straight out. Link

"Fueling a growth through increasing levels of leverage, eventually will collapse…and I'm afraid that with cheap interest rates, that's what it's designed to do, to get people to borrow and spend again. It's just not sustainable."

#60 KommyKim on 08.24.13 at 12:09 am

RE: #51 ILoveCharts on 08.23.13 at 10:48 pm
PS: How do you make quotes show up as italics?

This would be in italics if I didn’t put spaces in between the i, /, and the brackets etc.

Use b the same way for bold and u for underline. Hopefully the above displays properly without the italics. ;-)

#61 KommyKim on 08.24.13 at 12:13 am

OOOps. It didn’t (well it worked too well) work.

Maybe if I try another way.

This would be in italics if I didn’t put a * in between the i, /, and the brackets.

#62 KommyKim on 08.24.13 at 12:16 am

RE: #51 ILoveCharts on 08.23.13 at 10:48 pm
PS: How do you make quotes show up as italics?

Here you go:
http://en.wikipedia.org/wiki/BBCode
I don’t know if all the codes work on this blog.

Garth: you can delete my 2 previous posts if you want.

#63 HDJ on 08.24.13 at 12:27 am

DELETED

#64 Nemesis on 08.24.13 at 12:28 am

“…beyond comical…”

Really?

…”And he was caught in VA’s notorious disability claims backlog, which at its peak in March included more than 900,000 compensation requests from veterans, two-thirds of them waiting for more than 125 days. When Somers died, his case seeking full disability for his PTSD had been awaiting resolution for 20 months.

“Is it any wonder then that the latest figures show 22 veterans killing themselves each day?” Somers asked in his note.”…

http://www.washingtonpost.com/politics/after-veteran-daniel-somerss-suicide-his-family-has-a-new-mission-improve-va-services/2013/08/23/ae67b2c2-0526-11e3-9259-e2aafe5a5f84_story.html?wpmk=MK0000205

#65 Carpe Diem on 08.24.13 at 12:40 am

Today, I found out that I am one level of separation from the home I’d like to buy. No less from my neighbors that are in financial stress but dodged the bullet by not “upgrading” to an OSB $750K home.

My target home is nice + has an In-law suite that built over the years. Perfect for my aging parent(s) to stay a few months at a time. A few acres of wood. I can have chickens and no one would call by-law.

But this place is overpriced. The owner is an ex-realtor who has all his cash in one asset – the house. I don’t care who’s uncle it is …. although the place looks perfect, he will seriously have to reduce his price before I buy.

He has tried for 3 years to sell the place and failed.

Now I await vulture time and I have time renting a new home close by.

#66 Babblemaster on 08.24.13 at 12:47 am

“That means the ‘tapering’ of stimulus will still start before the end of the year, but in as mousey a way as the Fed can make it. Any crash in job-creation numbers, any further erosion in real estate or a dive in car sales, will probably slow the process further. The hair-shirted doomers who come to this site to foam and moan will be deprived of the collapse they so fervently wish. The US recovery will continue.” – Garth

———————————————————–

In other words, the fake, credit-fueled US recovery will continue.

#67 VanPerfecto on 08.24.13 at 12:53 am

HAM will save the day. Not sure. Time will tell
http://www.vancouversun.com/news/Douglas+Todd+Asians+story+North+American+largely+success+with/8825818/story.html

#68 Derek R on 08.24.13 at 12:55 am

#10 Confused on 08.23.13 at 8:17 pm wrote
Will the fed’s ever be able to taper QE without having markets swings so abruptly? And if so under what conditions?

Yes. The condition they need is a drastic reduction in debt — private debt. That means more paid off mortgages and fewer people buying stocks on margin. The trouble is that low interest rates encourage people to take out more debt, so they need to find some way of getting people to reduce their debt and being politicians they want a painless way. Which likely doesn’t exist.

Trouble is that all the methods that don’t involve bankruptcy are pretty radical. The simplest one is probably Steve Keen’s proposal to give QE money directly to citizens instead of to the bankers.

#69 Derek R on 08.24.13 at 1:11 am

#52 ILoveCharts on 08.23.13 at 10:49 pm wrote
Ignore the above question about italics. I got it figured out.

Good man. I guess that means you now know to make them bold too.

#70 angela on 08.24.13 at 1:48 am

Gold is dead money. — Garth
Hmmm gold or petrodollar ….even a kindergarten kid would choose a shiny gold coin over a piece of paper but lets be frank for a moment garth do you really honestly believe that the petrodollar is that loved seems like the world is slowly moving away from this reserve currency and doing currency swaps with China and everyone else and the us isnt part of this new club anways whats the big deal if they lost that status who cares britain survived after they lost that reserve status to the pound sterling in 1946 it was just devalued 50% overnight no big deal to us ,well the brits didnt fare well but who cares those that held gold were fine you make it sound like this would be impossible ,cant happen ,well logical thinking economist would say its plausible not saying it is going too but very plausible nothing doom and gloom here i thing that the way things are looking its plausible …oh im not a gold bug just understand what it represented the brits and hungarians in 1946 (hungarians had hyperinflation) nothing doom and gloom here just factual history and if history repeats itself then this could happen or the petrodollar is here to stay and history is useless knowledge

#71 MEANWHILE IN EUROPA on 08.24.13 at 1:51 am

Wow. Why do so many Canadians have such negative sentiments against the US?

I don’t get it. Not only does that neighbor of yours carry most of your load economically, but they also never ever bash Canada or it’s somewhat jealous citizens.

The US is not a perfect country, but in the sum of all things I’d pick Palm Springs over Kelowna any day.

#72 Kilby on 08.24.13 at 2:02 am

#9 Herb on 08.23.13 at 8:15 pm
Forget the Beemer with the house, how about a Jag?
_____________________________________________

“Bimmer” No motorcycles (Beemer), just cars with purchase..

#73 Devore on 08.24.13 at 2:45 am

#26 george soros

So, in other words, nothing has changed in 2000 years. Crisis all over the planet. Everything’s going to hell in a hand basket. Tell us something we don’t know, tell us what is different.

#74 Big English on 08.24.13 at 2:46 am

Have been renting since October 2012, wife up for another 12 months in the mouldy city. Housing market is slowing down.

Conversations about RE are not as excitable as before. Individuals attempting to unload ‘investments’ are finding buyers unable to qualify for mortgages for there boxes in the sky.

Good quality rentals are in demand.

#75 P. Winterton on 08.24.13 at 3:11 am

>>The US recovery will continue.

Continue to dive.

In the total absence of any data to back up your assertions that the US economy is improving, all we have is the hot air coming out from both ends of your intestine. Or have you found some data at last?

Almost daily, for two years, the retracing of economic growth in the US has been detailed here. It’s hard now to put 72% of S&P companies beating profit expectations or a 13.2% y/y rise in resale housing prices, or 200,000 new hires a month or a lower federal deficit in any other context. Your insulting tone does not bolster the counter argument. I imagine you own gold? — Garth

#76 dominion on 08.24.13 at 3:39 am

Here’s the problem with the housing “bubble”. No one in power wants to deflate it-you destroy the nest egg of a generation. Everyone wants to re-inflate it. It’s great! People work building, people buy furniture and tvs and so on.

Never assume that anyone is working to make a house remotely affordable in vancouver. They aren’t. And if prices WERE to drop by 25 per cent, they’ll bail you out to keep you in the house anyway.

#77 Scott in Gibsons on 08.24.13 at 3:59 am

Don’t pay too much attention to existing home sales Garth. 60% of them are cash sales with no mortgage attached. Numbers are inflated by the rent seekers and gamblers that have destroyed the world’s financial system. Meanwhile, homebuyers are stunned by the recent and sudden large % increase in loan costs. Sticker shock. Combine this with a crappy jobs market and $100 oil and the US consumer is stuck. Maybe a war in Syria will help………

#78 The real Kip on 08.24.13 at 4:32 am

The US is a nation addicted to stimulus. Just the hint that tapering might begin is enough to send markets into a tizzy as the thieves on Wall St. cash out.

Oh well, another month, another 85-billion they don’t have. Reflate reflate reflate!

#79 Kook on 08.24.13 at 4:49 am

Watch real price history for the last year.
MLS-leaks here: http://lower.yolasite.com/

If somebody find something increasing – let me know :-)

#80 Mike T. on 08.24.13 at 5:18 am

My contributions to this (scotch fueled?) web-blog are usually relevant. Not so today but…..holy crap some guy wants to clone John Lennon from a rotten molar he bought at an auction. Housing stories aside….WTF?

http://www.today.com/entertainment/owner-john-lennons-tooth-hopes-clone-late-beatle-6C10975692

I just thought people should know this is happening.

#81 joe on 08.24.13 at 5:32 am

DELETED

#82 Onthesidelines on 08.24.13 at 6:06 am

#48TRON on 08.23.13 at 10:44 pm

“Calling what the US economy is going to do over the next 5 years is bold and reckless in my opinion. Too many unknowns and uncharted territory.”

Agree, completely. Same could be said about Canada and, indeed, a huge chunk of the rest of the world.

Just came back from a summer in Spain. Half of the ground floor retail boarded up and for sale or rent in most of the coastal cities. Hard to imagine that the EU has stabilised or where the money is going to come from to bring these businesses back.

Nobody’s out of the woods yet, methinks.

#83 bigrider on 08.24.13 at 7:13 am

#55 Ray-“SFH 416 a safe bet”

Just wondering why you think thy are a safe bet.

They weren’t in 1989 when they dropped in price about 50% or so ,over the next 7-9 years until the bottom in 1997ish when they started finally turning around.

We had a lot of immigration in the 90’s as well.

Why are they ‘safe’ now especially since they have doubled and tripled in value past 15 years amongst lowest interest rates ever.

You realtors and house humpers need to be muzzled.

#84 drydock on 08.24.13 at 7:19 am

#26 George Soros
“What could possibly go wrong.”
_______________________________________________

Check out the disturbingly freaky picture at the top of the page, it can always get worse.

#85 Mr Buyer on 08.24.13 at 7:37 am

Like so many things turned out to be…Smoke and Mirrors…House prices divorced from past earning multiples is a disaster of epic proportions in and of itself. Just start tracking the percent of GDP that services interest on mortgages. Obscenity is the nicest label I can come up with.
How does the song go…
Save a lot of money spending money you don’t got

#86 Mr Buyer on 08.24.13 at 7:47 am

As economist types like my good buddy point out. Percent of GDP servicing interest payments on mortgages is not the best way to go about putting a magnitude on the amount of interest collected on mortgages. I do understand this but most financial illiterates like myself grew up with news and radio relating the magnitude of spending to percent of GDP so even though I suspect there is a better way to go about quantifying the magnitude of interest payments there is a great number of financial halfwits like myself that have grown accustomed to relating things to percent of GDP (even if it is often comparing apples and oranges).

#87 The Truth on 08.24.13 at 7:58 am

Rates up, CMHC tightening, over leveraged public, negative outlook for Canadian bonds, increased likelihood of US bond yields increasing, glut of properties on MLS, huge supply of condos coming in next 12 months, properties taking longer and longer to sell, most luxury properties not moving at all, international investors bailing out of Canada, MTM sentiment has changed, etc.

We’re finally here – every last drop was squeezed out of the orange – not sure how bad it’ll get, but there will be pain – whoever buys now is completely out of their mind or can’t stand up to their spouse lol

#88 T.O. Bubble Boy on 08.24.13 at 8:05 am

So, Rob Carrick (Globe and Mail) highlights Garth’s blog in one article, but then puts together this video about finances of 30-somethings that has virtually no content of value:
http://www.theglobeandmail.com/globe-investor/investment-ideas/lets-talk-investing/video-lets-talk-investing-the-worst-money-mistakes-30-somethings-make/article11402522/

The best part: Q: “do you have to be close to paying down your mortgage in your 30’s?” A: “No, I don’t think so”. … “I’m glad you said that” … “In many cases, it’s just not realistic”

While this is of course true, it is shocking that this is considered “advice”!!!

#89 Mr Buyer on 08.24.13 at 8:09 am

I just started reading Conspiracy of the Rich by the guy that wrote Rich Dad Poor Dad. There are a good number of lines in there that either the author lifted out of Smoking Man’s posts here or Smoking Man lifted from the book or they independently came to describe events and ideas with similar vocabulary. This is my seventh financial type book now. As I did with science, I started off with the lightweight coffe table stuff just to get the lay of the land and become slightly aware of technical jargon associated with the subject matter. The trips to libraries and University bookstores to buy course texts is still a little ways off. What a waste of precious little time I have. I would rather be studying molecular biology and computer science. I see the necessity of the nonsense due the commitment on mass to this delusion that is financial markets and profiting from them. I am left wondering how intelligent people can look each other in the eye and pretend this stuff has anything to do with boots on the ground but stranger things have come to pass. Look how the church have served a purpose but then took on a life all its own (I went to catholic school so even as a scientist type I must beg forgiveness now just in case). As a catholic I have decided to attenuate the fear of god baseless or not with the rationalization that iff there is a god he (or she or it) has given us brains in our heads to use them and to take 100% responsibility for ourselves and each other and use our brain power to that end as if there was nobody watching. I am guessing we and our endeavors serve as entertainment for want of a better word. Perhaps that is too harsh, maybe we are an experiment whose only purpose is to serve to sharpen the great scientist in the sky’s powers of observation and analysis after all these are perishable skills and after attaining perfection the opportunities to maintain and and sharpen such skills have likely become few and far between hence experiments purely for the sake of experiment even though all eventualities have long ago been quantified and verified.

#90 jerry on 08.24.13 at 8:09 am

Superman? Batman? The Hulk?

……….or Bond Cowboy?

Is James Carvel’s fantasy hero out there at work?

#91 Mr Buyer on 08.24.13 at 8:13 am

And all protocols and methods of investigation have long since be revealed implemented and optimized through infinite iterations of use and improvement

#92 John on 08.24.13 at 8:20 am

US economic recovery is as real as Rob Ford beating Hulk Hogan at arm wrestling….not sure why Garth is so sensitive about anyone who disagrees with his assertion that US recovery is underway…..where are the facts to support this US recovery? Bernanke has painted himself into a corner and 2014 may end up far worse than 2007 due to the unprecedented experiment of QE….without disposable income consumers cannot contribute….everyone is tapped out and retailers are spiralling…a good friend of mine is a major commercial land developer in the GTA….he tells me that ALL the large clothing retailers are struggling and not taking space in new shopping centres…same in the US…there is no recovery when bellwether like Walmart sales are down…car sales have spiked because of low rates which has cannabalized from future sales…QE is a disaster that history will never forget…all because of greedy fraudsters like Angelo Mozilo and his ilk….Flaherty patting himself on the back for orchestrating a stable housing market is like Wallen and Duffy misunderstanding expense reports….deplorable

Your files are touching. — Garth

#93 MiniMe on 08.24.13 at 8:33 am

#51 Ilovecharts

I think that the opinion that I quoted belongs to a limited mind person. Or to someone invested in RE and refusing to accept the reality. The whole point here is not the interest rate but rather the economic impossibility to endlessly sustain the cheap money supply, correlated with economies and stock markets that have become addicted to this.

If you look at Canada’s economy and Finances you kind of feel sorry, we have no bullets left. Although we were called an economic powerhouse right now we have no means to control which way we are going. The global economy is at the point when only real global powers can change something and obviously we are not one of these countries. We suck! We are just a milk cow, we sell our resources ..if we have clients for that. Oh and we sell each others houses in some sort of RE sexual self stimulation and we think we are great.

On the other side you have economists and investors betting against Canada because of our own stupidity and yet we (some of us, like the idiot quoted above) continue to calculate interest rates like our entire existence depends on selling each other houses. Limited mind people like the one above don’t look ahead. They don’t plan, they don;t anticipate, they don;t try to estimate the effects of their decisions. They enjoy the short term victory in a battle but they lose the war. And this is what the entire Canada did.

Calculating interest rates and their effect on mortgages has become national obsession (like the entire RE thing) …for God’s sake we have 70% ownership in this country and we continue to sell each other houses like this is all we can do.
Only if you consider the unprecedented rate of ownership you should see a downtrend compared with previous years simply because everybody has a house. The demographic factor the fact that people upgrade their houses should not be enough to sustain this unprecedented demand of houses and their construction, yet this still continues.

If you look at this country and you ask yourself what will we do when if we stop selling resources you realize that there is NOTHING we can be proud of. We had a couple of companies like RIM and Nortel and we sucked their blood to death.

If this is sustainable the next generations (our children) are fucked! Nobody can explain how the prices can continue to increase,how those who invested in the last 5 years a make profit with stagnating salaries and how these next generations will be able to buy the houses that the current generation invested in. Some just don;t think ahead.

Praying for a soft landing at this point is in itself admitting that we are in trouble but nobody seems to notice that.

The common sense has left this country long time ago and I don’t think it is coming back any time soon.

Planning their actions and estimating the consequences of their doings differentiate the humans from primates …

What makes me wonder is why some of these primates continue to read this mostly human blog!

No worries dear monkeys, the recent interest rates will not change anything …anything you could see or understand.

#94 Mr Buyer on 08.24.13 at 8:36 am

I wanted to go over Newton’s and or Liebniz’s Calculus again because it is very powerful and I now can understand it ever so slightly after the shock that was Calculus 1 and 2 decades ago (take solace Smoking Man you and the author of Rich Dad Poor Dad are like Newton and Liebniz in that you simultaneously and independently brought forth realizations and descriptions of them to share with humanity). Anyways my infantile understanding and lack of application of the Calculus will have to stand as there is no time for it because I have to familiarize myself with this financial stuff and frankly I am not impressed so far but I am a long long way from describing myself as even a novice in field of high finance. So far lots of of jargon masking simple ratios that sometime see the denominator having little to do with the numerator and the resultant ratio used as an indicator of yet another quantity with little or no relation to the previously mentioned numerator and denominator. I happened upon a few complex algorithms that suggest to me that the field is going the way of theoretical physics in that the relationship to reality is almost inconsequential, the equation is predictive at an acceptable frequency (these limits differentiate theoretical physics from financial type algorithms in that the acceptable limits a far more relaxed relative to theoretical physics) and thus the validity of the equation has been proven (more on this danger when the two neurons left in my pickled brain can form a plastid on either of them to facilitate a new connection between them). Did I just say all that out loud?

#95 economictsunami on 08.24.13 at 8:57 am

We are merely fooling ourselves when we hold too tightly to the idea that rates will normalize and will do so because of the “recovery.” (A word used far too often to describe less then trend positive economic data points.)

Global economic data is still far too sluggish and stagnant for rate rises to be seen as anything but a negative towards progress. On the other-hand rates have been too low for too long and have less of a positive impact on real economies; just additional cheap debt.

If rates are on a true course to sustainably normalize, then it is because of far reaching liquidity drained away from emerging markets and true RISK is being more accurately repriced/ reflected into the investment equation.

The Fed easily chased capital out of USTs and MBS but as it flows away from carry trades to find better yields, it will be interesting to see where this massive flow will settle.

Keeping short term rates low and QE may do wonders for the finance economy but has little sustainable impact on the real economy.

Denying and papering over problems, in the still wounded global financial sector, may have delayed a resolution but it will not prevent some sort of reckoning…

Read Bond Market Misconceptions, Facts, and Fallacies; Bond Market About to Collapse? by Mish Shedlock

Also:

How the Fed can taper without killing housing

http://money.cnn.com/2013/08/23/news/economy/fed-taper-housing/index.html

#96 Smoking Man on 08.24.13 at 9:00 am

My Favorite Smoking Man is back in business. After years of re-branding, polishing the pitch

The Al Gore medicine man’s road show has loaded the bus with his bands men and is making a comeback.

The latest product in the tax the bastrards tour is

CATAGORY 6 HURRICANES

love this guy, his Bull shit is so outrageous, yet presentation amazing.

Go get em Al

#97 Julia on 08.24.13 at 9:24 am

Good Saturday morning read.
Home ownership: how the property dream turned into a nightmare. http://www.theguardian.com/books/2013/aug/18/defrault-line-extract-faisal-islam-housing

Here’s a quote:
The property ladder was a one-off opportunity for a lucky generation-and-a-half. Now we are back to a kind of neo-feudalism, in which your quality of life depends on who your parents are, and what they owned.

#98 upsidedown on 08.24.13 at 9:38 am

Garth, and gang, you will laugh at this: This is a clear proof that the Real Estate Market is upside down in Canada

http://www.realtor.ca/propertyDetails.aspx?propertyId=13552764&PidKey=-1786465062

#99 Ralph Cramdown on 08.24.13 at 9:39 am

#49 takla — “Can you give us a brief explaination why you believe gold is kaput”

http://lmgtfy.com/?q=site%3Agreaterfool.ca+%22INSANE+IN+THE+BRAIN%22

#100 Ray on 08.24.13 at 9:47 am

#82 bigrider

Reasoning is pretty simple. Its pretty clear there wont be a crash by now. Even Garth stated that many times.

There will be some correction but the recovery will be pretty quick due to demand in SFH vs condo. I expect price to recover within 5 to 7 years depending on the hood.

#101 Kent on 08.24.13 at 10:01 am

We’re moving to Uruguay, just have to convince my wife. N. American and Europe are doomed.

#102 Ralph Cramdown on 08.24.13 at 10:21 am

#76 Scott in Gibsons — “Don’t pay too much attention to existing home sales Garth. 60% of them are cash sales with no mortgage attached.”

Source? I got a table that shows that only two markets were above 50% cash sales in June — Las Vegas, and Florida condos (which are purchased for cash in significant numbers by ‘furriners.’

And even if your facts were true, what of it? Is there some theory that cash buyers are dumber than those who need to borrow, or that a recovery can only be built on debt?

#103 Nemesis on 08.24.13 at 10:40 am

#OkanaganZen #HolidayWardrobeAlert

…”International Go Topless day is held every year on the Sunday closest to Women’s Equality Day, which falls on Monday this year .”…

[CBC] – Topless blogger keeps Kelowna mayor abreast of equality issue

http://www.cbc.ca/news/canada/british-columbia/story/2013/08/23/bc-topless-kelowna.html

*At last! Now we know why our magnanimous host won’t link to his recent CBC interview….

#104 Nemesis on 08.24.13 at 10:50 am

#CaveatEmptor #NotSoZen

[G&M] – Crime and no punishment: Canada’s investment fraud problem

…”A 2012 survey conducted by the British Columbia Securities Commission found that 17 per cent of Canadians over 50 believe they have already been the victim of an investment fraud at some time in their lives, a number that jumps to 29 per cent among people who say they are active investors. Given the regulatory and legal resources available to victims of fraud, few of these individuals will get help. For years, victims and investor advocates have complained that smaller securities fraud cases – those that don’t get national media attention – rarely lead to criminal charges and jail sentences. Laws on parole and sentencing for white-collar criminals have been tightened in recent years, but that hasn’t brought more scam architects before the court.”…

http://www.theglobeandmail.com/report-on-business/crime-and-no-punishment-canadas-investment-fraud-problem/article13938792/?page=all

#105 Ralph Cramdown on 08.24.13 at 10:50 am

#46 45north — “Remember you are checking it on the internet 12 times a day so after a month you’ve seen it down 360 times. Okay the one sure thing is you will be paying interest on your line-of-credit. RBC says 6.5% What do I know? Let’s say 6.5% so on $21,000 you pay $113.75 a month. Sound about right? So at the end of the first month you will be paying $113.75 for the privilege of losing $2000. Further, you have checked this 360 times in the course of the month. […] Frankly you would have way more fun with a new truck.”

What you say is true in all respects. Some would say get a GIC and sleep soundly. Others would say only check your statements monthly or quarterly and sleep soundly. Both wrong! Get used to the volatility, learn to accept that there’s very little profit without volatility, learn the difference between “this looks like a dip I should ride out” and “this looks like a growing problem I should sell before I take more losses,” and discover that checking 12 times a day is a little TOO often.

It’s cheaper and easier to learn this in your 20’s, 30’s or 40’s than to take the standard advice to pay off the mortgage on your oversized house and then start to invest at about age 59, weighed heavily towards fixed income (because it’s too late to ‘gamble’ of course).

I think I need a new truck, too. It turns out that what works as a secretly cheap wealth signifier in the lower mainland (to wit, an older chauffeur-class German automobile) is useless in the BC interior. There, one signifies cash flow by purchasing a large truck, modifying its exhaust, attaching a boat trailer or travel trailer of at least two axles, and endlessly towing it up and down a mountain. Fascinating.

#106 Donald Trump on 08.24.13 at 11:08 am

Re Blog Photo

Are those Fukushima Fox Terriers?

#107 Donald Trump on 08.24.13 at 11:29 am

#104 Nemesis on 08.24.13 at 10:40 am

#OkanaganZen #HolidayWardrobeAlert

…”International Go Topless day is held every year on the Sunday closest to Women’s Equality Day, which falls on Monday this year .”…

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

Fully in support of this equality.

In fact, after they clean the house, wash dishes and do laundry, go for it !

#108 Godth on 08.24.13 at 11:41 am

Are you ready for some more Shekhinah?

http://www.zerohedge.com/news/2013-08-23/pentagon-preparing-cruise-missile-launch-against-syria

#109 Mister Obvious on 08.24.13 at 11:43 am

I know its off topic, but it is the weekend.

Re: The attempt to clone John Lennon from a tooth.

I wish it were possible for John Lennon to somehow hear about this from beyond the grave. I’m certain he would find it extremely entertaining.

If another John L were physically cloned its entirely possible he could emerge as a talentless bum. (Of course, that was my father’s opinion of the original John Lennon.)

However, I’m reminded of Beatles producer George Martin who recently said something to the effect that any “John Lennon” appearing in these times wouldn’t have the slightest chance of musical success.

#110 Texasboy on 08.24.13 at 11:47 am

What about paying cash? I paid cash in the US (Texas, imagine that) two years ago when I came back from an international assignment. Had a week to find a place and didn’t want the hassle of applying for a mortgage after not using credit for 5 years away. House was less than 15% of my net worth and had to live somewhere.
How is that an indication of no economic recovery? BTW, Texas certainly “feels” recovered…

#111 Jason Burns on 08.24.13 at 11:47 am

Garth. Loading up on fixed income may be premature. The recent sell off in the bond market may be due to musings over QE tapering sooner rather than later. However the US is going to hit their debt ceiling soon. Yields could go up if there is any loss of confidence in the issuer.

Loss of confidence in the most stable, desirable assets in the world? Not in your lifetime. — Garth

#112 Namblin Man on 08.24.13 at 11:49 am

https://www.youtube.com/watch?v=Qc-mwFeV2mk

I haven’t been a fan of rap music for a long time. This has made me believe again.

How does this relate to houses & economy? He talks about how we have screwed ourselves & will continue to do so until we are extinct.

There’s more Deltron coming. Full album in October & a tour with a 16 piece orchestra.

Listen to good music while civilization collapses.

#113 Nemesis on 08.24.13 at 12:00 pm

#WeekEndBonusZen

…”As an actor starting out, you can have so much free time on your hands,” Winters said. “I used to have the nicest apartments and people would say, ‘Hey, can you help me out?'”

Renner and Winters, who were both in the Oscar-winning film “The Hurt Locker,” started flipping a dozen years ago, turning around a $600,000 house in the Nichols Canyon area for $900,000.

“We didn’t have any clue as to what we were doing,” Winters said of the first flip. “But we made a really nice chunk of change.”….

[LAT] – House flipping: Stars get in on the act: Celebrity sweat is behind some of the biggest house- flipping projects in L.A.

http://www.latimes.com/business/realestate/la-fi-celebrity-house-flipping-20130824,0,2565171,full.story

NoteToSelf: Wow! If actors can do it, how hard can it be?…

#114 HDJ on 08.24.13 at 12:18 pm

#64 HDJ on 08.24.13 at 12:27 am

DELETED

No joking allowed?

#115 Ralph Cramdown on 08.24.13 at 12:22 pm

Quiz time! Who said this?

“I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.”

#116 Canadian Watchdog on 08.24.13 at 12:27 pm

#69 Derek R

The trouble is that low interest rates encourage people to take out more debt, so they need to find some way of getting people to reduce their debt and being politicians they want a painless way.

The only way to pay off debt without reducing aggregate demand and having bank failures is to inflate asset prices, which is what central banks will continue to do at whatever cost. What you're likely to see over the mid-to-long term is central banks gradually moving away from inflation targeting and into other experimental policies, such as forward guidance and NGDP targeting. In laymen's terms: the former means sustained low rates with continued asset purchases while the latter is just straight out massive money printing to steer the GDP path above trend.

It's not about the numbers for central banks, rather them trying to influence what the market thinks and expects future growth to be. But as noted by Carney early last year in a press release: in order for these new policies to be effective, the market (including general public) needs to understand them (BoC says we're printing more; you get scared and go borrow/spend). In Canada's case, the BoC determined not to adopt NGDP as a new policy and renewed its inflation-control target agreement with Government of Canada until 2016.

My word of advice for all those who watch our economy with their nose pressed against the glass: if you want to understand central banks' intentions, then i) stop looking at daily or month-to-month noise and observe our markets in quarters and years ii) don't fight central banks because you are likely to lose if you're betting on tapering iii) be antifragile and learn how to gain from volatility and disorder. It's possible.

With the aforementioned said: there is always a risk that unconventional monetary policy goes completely wrong as every central bank fully understands that any newly-embarked policy will not assure the public's confidence.

#117 Ogopogo on 08.24.13 at 12:32 pm

#53 Snowboid on 08.23.13 at 11:08 pm
#11 Steven on 08.23.13 at 8:17 pm…

Precisely!

#13 Jim on 08.23.13 at 8:25 pm…

More precisely!

When we bought our place down south, you couldn’t find a mobile home in the Okanagan for the same price.

Although the value of the home has risen far more than expected in three years, it still isn’t worth what a starter two bedroom condo would cost in Kelowna.

With Okanagan prices still ten to fifteen percent too high, we have a ways to go, but are patient as ever.

Same here. Patient as ever. This is what is beginning to happen in Kelowna. This 2bd/2bath condo would likely have been listed at 250K+ in 2008. It’s now listed at 150K, BUT in the same building a delusional seller is listing a LESSER unit for 70K more than the other guy. A comparison is in order:

150K: http://www.realtor.ca/propertyDetails.aspx?propertyId=13334396&PidKey=-2010586035

220K: http://www.realtor.ca/propertyDetails.aspx?propertyId=13272370&PidKey=581459614

Notice the hilarity of the more delusional seller to justify the higher asking price: “New Tile and Laminate flooring, freshly painted.” I guess plastic wood and a new coat of paint are worth 70K. Plus, the cheaper unit is on the top floor, while this one is on the first.

My point is that the seller listing for less will set a new low for the whole building, thus dragging down prices. Assuming of course that they can sell even at that price. I doubt it. From what I’ve seen of the Kelowna condo market, it basically has to go down to 100K for the last remaining greater fools to even consider it.

Meanwhile, I chuckle at the sea of angry red dots in Kelowna as I look out from my luxury rental (top floor too) over our overrated little burg.

#118 Ogopogo on 08.24.13 at 12:34 pm

Snowboid, I should have mentioned in my previous post the comical detail of the realtors listed as agents for the 150K seller: the clownish father-son Krieg duo!

#119 More Calgary on 08.24.13 at 12:56 pm

Garth, love your blog – thank you for your work.

I’m troubled because it seems like you’re hedging your bets of late. Language that now indicates a “reprieve” and simple “correction” all amidst a tone that implies the near future will be “epic”.

My forecast has been consistent. The timeline is fluid, for obvious reasons. This blog is rolling history, not the Bible. — Garth

#120 Bill Still on 08.24.13 at 12:57 pm

“US new home sales are insignificant compared to the resale market, which is up 17% with prices ahead 13.2%. Do some research before you snicker. Saves embarrassment. — Garth”

… and almost all cash sales thanks to The Fed (QE) largese, and the reicipients (TBTF banks of course) are scrambling to dump on “Greater Fools” as we speak, through IPOs… hurry, before you miss the boat!

Wrong. Total cash sales were 20% before the GFC and are now 50%. There’s a good reason – prices are a fifth less and mortgage regs are far more restrictive. Has zero to do with QE. “The surprisingly large cash-share of purchases helps to explain why home sales have jumped over the past two years despite more muted increases in broad measures of new mortgage activity, such as the MBA’s mortgage application index. There’s no exact way to know who is responsible for all of these cash purchases, though they are likely to include some combination of investors, foreign buyers, and wealthy homeowners that don’t want to go through the hassle of getting a mortgage before closing on a sale. Mortgage lending standards have sharply tightened up since the housing bubble, with banks scrutinizing borrowers’ tax returns and bank statements to verify their incomes and the source of their down payment.” Source. — Garth

#121 Donald Trump on 08.24.13 at 1:08 pm

Try as I may, my 3-D printer can only produce Liberals and NDP in 2-D

#122 Happity on 08.24.13 at 1:12 pm

The CPI along with so many other indicators have been modified so much in definition, as well as in reporting and then later adjusted. Main stream media and in particular those reporting in their category such as real estate have been proven incorrect, grossly so even by this blog.

But the irony is why some chose to take housing figures on USA real estate at face value in order to support their own opinion.

For example:

“Of course, higher mortgages bring lower house prices.”

And then,

“The US recovery will continue”

Both are true statements. — Garth

#123 Timing is Everything on 08.24.13 at 1:25 pm

#65 Nemesis

Free health care in the US…

http://tinyurl.com/mfujxxz
http://tinyurl.com/6fu7jqn
http://tinyurl.com/lo6ktr9
http://tinyurl.com/kaxp9pf

#124 AK on 08.24.13 at 1:52 pm

#78 Scott in Gibsons on 08.24.13 at 3:59 am
“Don’t pay too much attention to existing home sales Garth. 60% of them are cash sales with no mortgage attached. ”
====================================

Where are you getting your info from?

He obviously makes it up or reads doomer web sites which make it up. — Garth

#125 Musty Basement Dweller on 08.24.13 at 1:52 pm

“Hair-shirted doomers”
Love it. I am getting so friggin literate reading this pathetic blog.
Main Entry: hair shirt
Function: noun
Date: 14th century
1 : a shirt made of rough animal hair worn next to the skin as a penance 2 : one that irritates like a hair shirt

#126 Musty Basement Dweller on 08.24.13 at 2:02 pm

The bozo fed self important central bankers of the world are just prolonging the pain and will make it worse in the long run. It’s the old analogy of quickly or slowly taking the bandaid off. It’s the fundamentals of affordability that matter in the long run. The rest of it actually gets kind of boring. I say they should back off and let er rip. Or as one eloquent pathetic blogger recently put it shut up, bend over and take er with lube.

#127 LP on 08.24.13 at 2:41 pm

#116Ralph Cramdown on 08.24.13 at 12:22 pm

James Carville said that. (I had to look it up – I’m not that smart.)

#128 dv8 on 08.24.13 at 2:46 pm

Loss of confidence in the most stable, desirable assets in the world? Not in your lifetime. — Garth
may i ask do you work for the fed as a bond pumper ?most stable for real ? do you own these bubbleliscious products because the last i checked china and were dumping these stable assets china purchased more gold and dumped the stable asset .You write good stuff on realestate but on economics you confuse me

I can see that. — Garth

#129 brainsail on 08.24.13 at 3:00 pm

At last! So long stainless!

http://refrigerators.reviewed.com/News/So-Long-Stainless-Whirlpool-Introduces-a-New-Finish-For-Premium-Kitchens.htm?utm_source=taboola&utm_medium=cpc

#130 Happity on 08.24.13 at 3:06 pm

Both are true statements. — Garth

And there is the rub, because that truth is yet to arrive, to be proven over the next several quarters or even years, right now it is simply your opinion on the future because rising interest rates take time to affect the economy, 2 months clearly is not yet sufficient.

You also predicted for many many years interest rates would rise and all the time they went down until just 2 months ago.

Actually rates have risen about when I suggested they would. The BoC hike (2010) was followed by the rate equivalent amortization move (2012) and now a string of increases (2013). More to come. — Garth

#131 Mike in Surrey on 08.24.13 at 3:24 pm

#20 Catalyst
Why would you want to pay down a 500K mortgage? It’s your ability to borrow that 500K to enjoy that 4000 SF McMansion that counts. So if you have 30% down payment, and you just pay 3.79% interest only for 5 years; refinance 500K again after 5 years. Monthly payment for years 1 to 5 is about $2,100 per month, need income of 80K. It’s how fast you can built-up that Down Payment really matters, I did it when I turn 40, and I know many did it at 35 years old; 2 incomes.

#132 Old Man on 08.24.13 at 3:30 pm

I will give my humble opinion on the above noted caption as a picture, and some of you have this all wrong, as are thinking dirty and shame on you:) This is portrayed as rain wear getting ready for the Real Estate storm that is before us all, as the storm clouds are before us so get for a downpour – enough said!

It’s actually what some rural Newfoundlanders do with old boots. — Garth

#133 45north on 08.24.13 at 3:41 pm

Ogopogo: two condos in Kelowna for sale, same street, very similar, one for $150,000 the other for $220,000.

My point is that the seller listing for less will set a new low for the whole building, thus dragging down prices.

yeah for sure

there was a real estate agent in Kelowna, DA who posted here every day, sometimes more. He should have an idea of the eventual selling price.

DA tell us.

#134 Nemesis on 08.24.13 at 3:51 pm

@TexasBoy/#111

I’ve long wanted to check out Austin and environs… But for now that will have to wait…

In the interim, it’s important to remember that Texas’ growth has predominantly been at the expense of its neighbors [esp. California]… e.g.:

…”Texas, where the jobless figure was 6.4 percent, is portrayed by many conservatives as the ideal business climate and by Democrats as a laissez-faire state of high poverty and low-quality services.”

[BBG] – Perry Aims to Poach Illinois Jobs as Texas Blast Lingers

http://mobile.bloomberg.com/news/2013-04-24/perry-aims-to-poach-illinois-jobs-as-texas-blast-lingers.html

#135 Old Man on 08.24.13 at 3:55 pm

I went to the Royal Bank today with a transfer to my branch for $1,500.00, as use the phone as all will be recorded, as will do nothing on the internet as the hackers might be watching. So am on a budget and asked for $200.00, and when they updated my bank book some fool sent $150,000. Some of the gals in my branch bank were smiling at me, and need this not, so will reverse this all soon, as am a poor man.

#136 Screwed on 08.24.13 at 3:55 pm

Now, you’re cooking with gas!

Fear of real estate collapse due to potentially much higher rates under attack by the bond vulture is having an effect on the overall economy. Thus bad real estate numbers will put pressure on the Central Banks to keep rates low until the economy has stabilized and the debt mountain chopped off before rates can normalize.

Stocks are churning higher as a result because that’s where the yield is. Foremost gold and gold miners are surging for a couple weeks now.

Disclaimer. I don’t own any stocks at the moment. Cashed out and waiting patiently until the taper talk is off the table.

#137 Donald Trump on 08.24.13 at 3:58 pm

It’s actually what some rural Newfoundlanders do with old boots. — Garth

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

And somewhere in Vegreville are some mighty mad citizens walking around in socks…

#138 I know the Kriegs on 08.24.13 at 3:59 pm

#119 Ogopogo

just to be fair, and I know the Kelowna RE market as well as you…the Kriegs are still selling houses in this market. As delusional as they appear to folks like you and me….they are still selling.

Remember that RE agents have a legally binding agreement to represent the seller in the best possible light. Cue the delusion. Karma will get them when it is time. Until then let us both enjoy our landlords sub-sidising our rents (I pay 800 all in at the Lakes 1 bdrm) and the last of the Okanagan summer.

Cheers!

#139 Penny Henny on 08.24.13 at 4:06 pm

Actually rates have risen about when I suggested they would. The BoC hike (2010) was followed by the rate equivalent amortization move (2012)—Garth
—————————————————–

no rate hike, in 2012, for those who didn’t need 30 yrs ams.
sorry Garth, but you’re dead wrong on that one.
if you have to stretch so much to make a point instead of just saying you were wrong on that one, it’s so sad.

The context is the impact of rates on housing. The drop from 30 to 25 years raised rates effectively by 0.9%, and was done deliberately so the increase could be targeted. In that way the BoC could curtail borrowing yet avoid a general economic impact. That you do not understand this is quizzical. — Garth

#140 Old Man on 08.24.13 at 4:21 pm

Now for some of you that have never visited the ROCK which is Newfoundland take a vacation there, as to become a citizen in good standing had to kiss the Cod Fish, and was in. You will never find such good food; a society of people that are down to earth; and ambience of fun and joy; and will not say a word about the young women. The problem with Canada is to explore this great country, and get to know it all, as if you don’t might be missing out, as the so-called newfies which are put down with jokes are great Canadians that will welcome you as a tourist.

#141 cynically on 08.24.13 at 4:42 pm

#72 MEANWHILE IN EUROPA – very well put and I know what you’re saying about PS.
The American bashers just don’t get it. They’ll never have the position in the world that the US holds and they know it and it must rankle them. If only they would put all that vituperation into correcting Canada’s many politiical and financial situations , they would be doing something positive, although their method would still be too strong. Then again maybe they don’t believe we have serious problems but surely they can’t be that ignorant. Let the Yanks try to resolve theirs and the Canucks ours. Peace.
An aside to #76 P. Winterton – A H!

#142 johnnny on 08.24.13 at 4:49 pm

#138 – Vegreville? Try Prince Rupert.Makes Vancouver look
like Arizona.

#143 Casual Observer on 08.24.13 at 4:57 pm

Rising interest rates may speed up the process, but are not needed for RE prices correct. Bubbles can collapse under their own weight.

For most of the 90’s prices drifted lower in Canada as interest rates trended downwards, and don’t forget the experience of the Japanese after their bubble burst – 20 years of lower rates with falling prices.

#144 Canadian Watchdog on 08.24.13 at 5:01 pm

MLS-leaks here: http://lower.yolasite.com

It was only a matter of time before some realtor lost his or her shirt and figured they start MLS-Leaks to warn others by exposing listings, cause by the looks the blog, there's a motive behind it.

#145 rosie "moving forward" in the knowledge that, "this won't end well" on 08.24.13 at 5:11 pm

#130

Simple marketing. Everyone who wants, has stainless. Time to re-do the kitchen honey, it’s kinda dingy and these appliances are so yesterday.

#146 Schmenge Brothers on 08.24.13 at 5:20 pm

No Boots ? No Ties ??? … NO service for you !

http://www.youtube.com/watch?v=i95wUzsnbO4

#147 Donald Trump on 08.24.13 at 5:46 pm

Why you should sell your RIM stock..

……they can NOT keep up with the quality control !

http://www.liveleak.com/view?i=cf7_1356505998

#148 Smoking Man on 08.24.13 at 7:13 pm

DELETED

#149 @Canadian Watchdog -I need a wikileaks for Toronto ...:-) on 08.24.13 at 7:24 pm

Thanks for the link for Vancouver MLS WikiLeaks
If you come across one for Toronto I would love to see it :-)

You are a treasure
thanks

#150 Daisy Mae on 08.24.13 at 7:45 pm

#78 Scott: “Numbers are inflated by the rent seekers and gamblers that have destroyed the world’s financial system….”

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

Excuse me?

#151 Daisy Mae on 08.24.13 at 7:55 pm

#129 dV8: “You write good stuff on real estate but on economics you confuse me.”

I can see that. — Garth

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

Now, THAT is priceless! ;-)

#152 Rubbers — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer™ on 08.24.13 at 7:56 pm

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

#153 Howard on 08.24.13 at 8:10 pm

What REITs are you reccomending?

#154 45north on 08.24.13 at 8:38 pm

But this housing setback is also a clear warning sign to central bankers that the real estate retrace could get seriously out of hand, should interest rates be allowed to spiral higher. And what would cause that? Yup. More cowboys in the bond market, dumping debt and goosing yields

Ben Rabidoux reproduced a chart showing that foreigners reduced their holdings of Canadian bonds by $19 billion in June. That is a lot of money.

I’ve have a lingering fear that our debt could be turned against us in a short space. I do suppose that the banks have this statistic in mind when they set their mortgage rates.

#155 Smoking Man on 08.24.13 at 8:44 pm

DELETED

#156 espressobob on 08.24.13 at 8:47 pm

#137 Screwed

You won’t make a return on your investments trying to time markets! Get over the gold thing, a waste of time! In fact a diversified portfolio holds all these sectors, why would you worry?

Take some profit!!! Re-balance.

#157 Tony on 08.24.13 at 8:52 pm

Re: #137 Screwed on 08.24.13 at 3:55 pm

A day trade may present itself for short silver on the last business day of this month. I expect silver to gain an additional 5 percent this month from its present value. If it doesn’t pullback all month long short it at the close on the 29th for a day trade on the 30th buy HZD. You could also chance the open on the 30th then buy HZD for a day trade at 9:30am. It may not work out because silver could be sharply lower on the 30th at the open.

COMEX Silver Bear Plus ETF (HZD) look for a gain anywhere from 6 to 12 percent on the day.

#158 Smoking Man on 08.24.13 at 8:57 pm

DELETED

#159 Big Brother on 08.24.13 at 9:01 pm

Smoking Man MKULTRA says you are drunk at Senica Again.

#160 Snowboid on 08.24.13 at 10:22 pm

#118 Ogopogo on 08.24.13 at 12:32 pm…

Great comparison, glad to see my favourite RE team at work!

We are in a building a few blocks from Leon – luxury condo, although not top floor. Our deck reminds me of the vultures’ roost we’ve seen down in AZ – we often perch out there and watch the greater fools around us.

#161 Snowboid on 08.24.13 at 10:33 pm

#139 I know the Kriegs on 08.24.13 at 3:59 pm…

No doubt they are great at selling RE, that’s what keeps things so bubbly.

Last time I checked there were 1200 realtors in the Central Okanagan. The average number of listings sold per month this year is 374.

Source http://www.omreb.com/files/07%20-%20CO%20Statistics%20July%202013.pdf

That means there are likely a large number of realtors that have second jobs or are seeking other employment.

As prices come down, so do commissions – maybe that’s why we see so many former agents working as property managers for rentals.

#162 Donald Trump on 08.25.13 at 12:17 am

Smoking Man:

…….a trifecta of DELEtED?

Dammitd…and I was going to forward you the winning LOTTO #’s

Blame U GNu hoo

#163 Cici on 08.25.13 at 1:03 am

#141 Old Man

I’ve haven’t YET been to Newfoundland, but I have to say, I’ve never met a Newfie that I didn’t like. A great-spirited people, with a great sense of humour and zest for life.

#164 Joe on 08.25.13 at 1:31 am

It’s not a US recovery it’s a coverup.

#165 Rural Rick on 08.25.13 at 4:17 am

I’m wondering why do people such stupid shit. Obsess about chipboard shacks with financial demands beyond reality . Slavery really. Indentured. Meanwhile our whole biota is being destroyed. That which sustains and empowers us all is ruined by greed corruption whatever.
So long thanks for the fish

#166 OffshoreObserver on 08.25.13 at 5:29 am

@Julia: Your link should be:
http://www.theguardian.com/books/2013/aug/18/default-line-extract-faisal-islam-housing

#167 jess on 08.25.13 at 9:17 am

“stacked gates “Global Event Driven arbitrage teams with special situations portfolio
private equity partners -carried interest

http://www.economist.com/news/finance-and-economics/21584022-leveraged-buy-outs-face-legal-scrutiny-tax-attack
=

http://en.wikipedia.org/wiki/Olympus_scandal
Exposure-Olympus-Scandal-Whistleblower-Woodford/

#168 Bigrider on 08.25.13 at 9:17 am

“In Canada more than 20%of the entire economy might as well be labelled Remax”

Classic LMAO.

100% of Woodbridge !

#169 jess on 08.25.13 at 9:21 am

145 Canadian Watchdog

and this by walker the scary talker

http://truth-out.org/opinion/item/18378-ap-goes-off-the-deep-end-with-deficit-scold-david-walker

#170 Penny Henny on 08.25.13 at 9:38 am

The context is the impact of rates on housing. The drop from 30 to 25 years raised rates effectively by 0.9%, and was done deliberately so the increase could be targeted. In that way the BoC could curtail borrowing yet avoid a general economic impact. That you do not understand this is quizzical. — Garth

I fully understand the why and the impact.
But it was of no consequence for those that did not need a 30 year am and it was not a rate hike.

Of course it was. This will turn out to be one of the aggregated factors making your house worth less. Consequential for the majority. — Garth

#171 and tonights show is on 08.25.13 at 9:44 am

well i guess here comes ww 3 under a democrat president

only the gold bugs inderstand american history…

…and want war. — Garth

#172 Oh Canada on 08.25.13 at 9:52 am

Stocks I’m am not firmly SHORT ;
HCG home capital group
MIC Genworth MI Canada
MCAN Mortgage Corp
FN First National Financial

Folks shorting these stocks and others is analogous to buying my first condo in Mississauga during a receivership sale in 1995. Looking to add more names to this short list.

Enz

#173 Newfoundland on 08.25.13 at 9:53 am

#141 Old Man
#164 Cici

Spent the month of June-uary in Newfoundland lol! Amazing, breathtakingly rugged and beautiful beyond belief. If pressed for time do the west coast from tip to tip through Gros Morne Park up to the Viking settlement. You will be immersed in beauty! To really experience Nfld you need to get off the highway and drive out to all the little fishing out ports, whale watching, icebergs and warm welcoming people. Go in July or August. A must do for the bucket list!!!

#174 Ret on 08.25.13 at 10:31 am

#72- “Wow. Why do so many Canadians have such negative sentiments against the US?”

We have to discriminate against someone to feel good about ourselves. It is human nature at the most base level. Governments have pandered to and allowed this negative sentiment to continue for decades in a pathetic attempt to divert Canadians from looking at the real issues that undermine the Canadian economy.

Our taxes, industries and workers are not competitive but we can blindly ignore all of that and blame Americans when factories go back to the US. We still can’t ship a dozen eggs from one province to the next in this country. So much for competing in that global economy.

If we just keep telling ourselves that we are superior in every way to the most productive, prosperous and powerful country on the globe, then it must be true!

It’s just easier for governments to just blame the US for our own failings. Jean Chretien played that card for 13 years while Canada de-industrialized under his watch.

In addition, the MSM has had a long standing hate-on for anything American. “We good, they bad,” seems to be the CBC mantra.

The uneducated electorate are gullible and easily manipulated at election time. No jobs, no worries. Justin has a solution to keep everybody happy! Party on Canada!

#175 aprilNewwest on 08.25.13 at 10:32 am

Canadian Watchdog. #145 – No information on those links.

#176 Canadian Watchdog on 08.25.13 at 10:42 am

Here we go again…

U.S. has 'little doubt' chemical arms used in Syria: senior official

The United States now has little doubt the Syrian government used chemical weapons against civilians last week, and President Barack Obama is studying how to respond, a senior official in the U.S. administration said on Sunday.

Sure, just like the last time…

The Pittsburgh Press – Oct 25, 1991: Iraq Chemical Weapons Arsenal Is Staggering

In April, Iraq said it had about 12,000 chemical bonds, shells and missiles, but inspectors found about 46,000 loaded weapons along with 79,000 unfilled munitions, more then 600 tons of chemical warfare agents and 3,000 tons of related chemicals.

And then…

The Guardian, September 18.  2004: Iraq had no WMD: the final verdict

The comprehensive 15-month search for weapons of mass destruction in Iraq has concluded that the only chemical or biological agents that Saddam Hussein's regime was working on before last year's invasion were small quantities of poisons, most likely for use in assassinations.

A draft of the Iraq Survey Group's final report circulating in Washington found no sign of the alleged illegal stockpiles that the US and Britain presented as the justification for going to war, nor did it find any evidence of efforts to reconstitute Iraq's nuclear weapons programme.

#177 Oceanside on 08.25.13 at 10:59 am

Parksville and Qualicum Beach residential sales are doing well although sales prices are down around 10% from last year, sales in the sub $400 are in the highest demand.

July 2011. 107 sales

July 2012. 111 sales

July 2013 130 sales.

August has been very busy as well…

#178 Macrath on 08.25.13 at 11:07 am

Garth Turner on CBC– @12:59 min.

http://www.cbc.ca/thecurrent/popupaudio.html?clipIds=2390710248

#179 Nemesis on 08.25.13 at 11:40 am

#YouCantMakeThisStuffUp #WeekEndBonusZen

Clearly, a PositivePlethora of PonyObsessed BritishColumbian GirlyMen would benefit from prolonged exposure to SmokingMan’s SchoolForScoundrels’ curriculum…

…”Seeing a guy watching a show for little girls causes a lot of people to raise a red flag,” said fan Daniel Collins. “‘What’s going on? Why are you into a show for little girls?’ And I say, “You have to see it for yourself because I cannot describe it.”…

[CBC] – Guys gather for My Little Pony convention in B.C.

…”The brony phenomenon began shortly after the first episode of My Little Pony: Friendship is Magic aired in 2010, more than 20 years after the original My Little Pony television series.

Message boards and online community groups were formed where thousands of men revealed they were fans of the show.”…

http://www.cbc.ca/news/canada/british-columbia/story/2013/08/24/bc-brony-convention.html

#180 Godth on 08.25.13 at 11:53 am

(goldbugs)…and want war. — Garth

5 minutes for boarding. Orwell would be proud. The central bankers/corps. need some more Shekhinah (shock and awe).

#181 NoName on 08.25.13 at 12:31 pm

Not enough land here? Canuck on the moon
http://www.ctvnews.ca/sci-tech/canuck-on-the-moon-latest-space-roadmap-says-yes-by-2030-1.1425815

37,932,000 sq km Moon
9,984,670 sq km Canada

#182 Donald Trump on 08.25.13 at 12:32 pm

Had an interesting conversation with a person I know who is retiring soon.

He is a shop teacher, his son is an engineer working in the Tar Sands.

His son says that jobs for skilled trades go begging. His son had to go to the US for a stint and said was so much red tape involved, whereas Canada one literally has to tell the Gov’t they can’t find skilled workers and then import them.

The Newfies were a large part of the work force in Alberta, but now many are heading back home because the industry is ramping up there

He as a teacher says their is this disconnect with todays youth re: the job market.

I told him IMHO, when I was in school approx, 10% of the grads went onto university. Nowadays, it appears far too many choose to get degrees then hit the wall re jobs and student debt. For years I had stated that the demographics changed and catered to an immigrant class that felt university was the ticket.

I think this all too predictable ,perhaps even planned as a means to screw a generation.

#183 Grantmi on 08.25.13 at 1:18 pm

#159 Smoking Man on 08.24.13 at 8:57 pm

DELETED

Oh my god.. this is the best comment I’ve seen from SM all year.

#184 Old Man on 08.25.13 at 1:19 pm

I saw something today that have never seen for 20 years. A medium size indoor shopping centre with about 60 stores in a high density area serving some 25,000 people within a mile. I went to Shoppers Drugmart to get me 8 cans of Cloverleaf Salmon for $2.99; yes I cheated as waiting 10 minutes in the car to buy some more, and went through another cashier wearing sunglasses. The parking lot was devoid of cars, so times must be hard, as not all customers can be on vacation; never seen things so bad. Something is up, as people are hanging to their cash or going elsewhere for discount bargains like Costco wholesale for example.

#185 Grantmi on 08.25.13 at 1:49 pm

#185 Old Man on 08.25.13 at 1:19 pm

The parking lot was devoid of cars, so times must be hard, as not all customers can be on vacation; never seen things so bad. Something is up, as people are hanging to their cash or going elsewhere for discount bargains like Costco wholesale for example.

I have to agree Old Man… I was at Lougheed Mall in Burnaby BC yesterday around 3pm. You could have shot a cannon down the mall. Absolutely dead!!

Lived here in BC since 1969… never seen mall so dead.

#186 Pr on 08.25.13 at 2:24 pm

…should interest rates be allowed to spiral higher…

I am sorry to report that prices for real estate are still going up, mostly everywhere in Canada. The interest rate is the only way to stop this madness. The bankers know it.

#187 and tonights show is on 08.25.13 at 2:27 pm

– and want war- Garth

Despite what you think of us gold bugs- we are not deranged and we do not want war. The guys at the top want war to help them control people. We are just smart enough to understand their game, that’s all. This is all games Garth. The military complex runs America, and this is proven throughout history. Like Orwell wrote, War is Peace, etc. Although he was criticizing the likes of USSR, we can see how Orwell applies to todays Western worlds. Peace and God bless

#188 Typical flipper -where the gridiness takes you on 08.25.13 at 2:35 pm

Here we go again

They had a mortgage already but like any “serious entrepreneur” in this country, they wanted to make some money on the side so two years ago they decided to buy a condo. Now they want to assign the condo just six months before it is ready. They want to sell below the developer’s price and they will be charged a fee by the developer.
How many people like there are out there ?

Watch that forum you are going to see more and more posts like this….

#189 Donald Trump on 08.25.13 at 3:10 pm

#185 Old Man on 08.25.13 at 1:19 pm Many lessons here

QUOTE:

yes I cheated as waiting 10 minutes in the car to buy some more, and went through another cashier wearing sunglasses.

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

Many important lessons here:

Grammar #1 : If you went through a cashier was it painful ? Did you get stuck?

Grammar #2 Was it you wearing the sunglasses… OR the cashier?

Finally : may suggest that you not wear Elton John hand -me -downs(unless in Toronto- then you will blend in).

#190 TnT on 08.25.13 at 3:18 pm

#185 and 186

Drove from Toronto to grove city outlet in PA and it’s was packed on a Tuesday mid morning.

Louisville KY 4th street downtown packed with tourists
Memphis TN Beale street packed with tourists
New Orleans packed with tourists

In a few days will be in Savanna GA and I’m sure it will also be packed with tourists.

General feeling I’m getting down south is very upbeat mood on the economy.

#191 Old Man on 08.25.13 at 3:40 pm

#190 Donald Trump – I enjoyed your humour as 4 cans was the limit, so went back for more as cannot waste my money for gasoline. Now with a name like yours you have nothing to brag about, so take a hike and pick on someone else, as do my gig to save a bit of money as a cost effective trip to hoop me some bargains on a weekly basis. :)

#192 Gary M on 08.25.13 at 5:37 pm

#78 Scott in Gibsons on 08.24.13 at 3:59 am
“Don’t pay too much attention to existing home sales Garth. 60% of them are cash sales with no mortgage attached. ”
====================================

Where are you getting your info from?

He obviously makes it up or reads doomer web sites which make it up. — Garth

——————————————————————-

How about the WSJ?http://blogs.wsj.com/developments/2013/08/15/report-half-of-all-homes-are-being-purchased-with-cash/?mod=e2tw
What the article doesn’t point out, however, is that most of these are offshore buyers. So much for a recovery…

Cash-only buys are up from 30% before the GFC to 50%. Why? (a) Houses cost less. (b) Loans are harder to get. The rest you made up. — Garth

#193 Andrew Woburn on 08.25.13 at 6:40 pm

Donald Trump on 08.25.13 at 12:32 pm

demographics changed and catered to an immigrant class that felt university was the ticket
========================================

I totally agree. My immigrant mother pushed me into university in the Sixties when education inflation was just beginning. Like most parents of the time, she had neither attended university herself or really knew any one who had, but she had this mystical belief that university was where wise persons would imbue me with the Golden Light of Higher Knowledge and lead to a better job. The better job part was right because society fell under the illusion that three years spent drinking beer, studying Coles Notes and learning how to game the system was a better use of your time than three years of actual job training.

Just like particle board mansions, “education” conveys a pleasing sense of social achievement if often on a dubious structure. The B.A. is, like the granite counter top, a vitally important marker of social status, even if you never use it for its intended purpose. Not surprising then that hordes of thirty-somethings are deeply in hock for both. Parents who may privately doubt what they got out of university still push their kids because they want them to be able to marry the right people and because it would be socially embarrassing if they didn’t go. The right people tend to be those who have heard of James Joyce, are not quite sure what he wrote but certainly have no intention of reading it unless there are course marks attached.

I believe it is likely that, far from materially upgrading our productivity or even our cultural tastes, the mass ersatz education of the last fifty years has promoted unreal social expectations which underpin the inflation in urban housing costs and student loans. Nobody’s average anymore unless they are blue collar workers. It is OK to live in indentured servitude as long as you can easily walk to four Starbucks but it is not cool to go to Fort Mac and earn big bucks. It is perfectly all right to use arcane financial techniques to swindle pensioners but you’re a nobody if all you do is run a copper mine.

The housing bubble and the education bubble are unaffordable and must and will pop. I am all in favour of higher education for those who can benefit themselves and society in pursuing it and I would definitely include the arts and social sciences. However I doubt that more than 10% of us actually have the intellectual drive for life-long, productive learning. The rest of us need career training.

#194 Edward Ing on 08.26.13 at 3:11 am

Garth, one thing I don’t understand is the price stickiness of real estate. I am guessing that there are still buyers for properties at the listed prices but there are few of them. If you lined up all the prices by the prices buyers are willing to offer for a property in order on a graph, I imagine you would get a bell curve. Purchasers and their agents are chasing the last percentiles, i.e., the greater fool. Agents make money when there are transactions. Why don’t they advise sellers to lower their prices and chase a bigger portion of the bell curve? There is this consignment store in Toronto who lists 3 price for an item. The best price, the discount price if the item does not sell in 30 days and a further drop in price if the item does not sell in 60 days and after which the item is take off the market in 90 days. It is a great price discovery mechanism. If the buyer doesn’t act at the right price point, other buyers might jump in.

#195 John on 08.26.13 at 9:00 am

Smallest detached house (converted garage) in the GTA got listed for $229 000 http://news.nationalpost.com/2013/08/23/one-of-torontos-cheapest-detached-homes-and-likely-also-the-smallest-hits-the-market-at-just-229000/

#196 Bill Still on 08.26.13 at 12:23 pm

#121 “Wrong. Total cash sales were 20% before the GFC and are now 50%. There’s a good reason – prices are a fifth less and mortgage regs are far more restrictive. Has zero to do with QE…” Garth

Hmmmm, seems the NY (I believe WS id there) Times are wrong as well… good thing you’re around to set then straight. Also, your ref piece quotes “more than” 50%… that would be “most” I believe.

http://dealbook.nytimes.com/2013/06/03/behind-the-rise-in-house-prices-wall-street-buyers/

#197 zeeman1 on 08.26.13 at 2:16 pm

“For investors, a slow-walking Fed means stock and bond markets can stop hyperventilating and retreat to normal.”

Garth ,great article today, but the above sentence struck me as odd.

By definition, continued QE means these markets are anything but normal.

#198 Nimoucha on 08.26.13 at 4:53 pm

[quote]#190 Donald Trump on 08.25.13 at 3:10 pm

Grammar #1 : If you went through a cashier was it painful ? Did you get stuck?

Grammar #2 Was it you wearing the sunglasses… OR the cashier?

Finally : may suggest that you not wear Elton John hand -me -downs(unless in Toronto- then you will blend in).[/quote]

You REALLY think you’re funny?

#199 Bill Gable on 08.26.13 at 5:09 pm

The U.S. will hit the $16.7 trillion debt ceiling in mid-October, Treasury Secretary Jacob J. Lew said in a letter urging Congress to raise the limit “as soon as possible.”

“Extraordinary measures are projected to be exhausted in the middle of October,” Lew said in the letter today to House Speaker John Boehner and other lawmakers.
“At that point, the United States will have reached the limit of its borrowing authority, and Treasury would be left to fund the government with only the cash we have on hand on any given day,” he said.

He said the cash balance at that time is forecast to be about $50 billion.

> Mr. Turner > how does the US fix this….?

The US Treasury only has 50 billion on hand? W H A T?