Die Hard

deathwish3

“FYI,” was how she began the email blast to her realtor clients Tuesday afternoon. “5yr to move up 10bps tomorrow to 3.59%.  Any clients interested in purchasing within the next few months please send first and last name by midnight so I can hold them the rate for them.”

Chip, chip, chip. Another day and another nibble out of the housing market as major banks slowly, quietly, jack the rates they’re willing to extend to preferred customers. And now that war’s back on the agenda, bond yields are rising again. The benchmark Canada 5-year added 6 more bips Tuesday – equivalent to a 3.23% increase. If this continues – and there are plenty of reasons to believe so – the Scotiabank lady will have a few more breathless emails to fire off.

The first day after summer, and already there’s smoke. The Economist once again looked at Canada and shook its head in disgust and warning. I told you weeks ago how the influential global mag was dissing us for having weird housing prices compared to the rest of the world. When measured in price-to-rent or price-to-income ratios, homeowners in Canada are shouldering more risk than Bruce Willis after being shot twice and hurled off an F-35.

Our houses, says The Economist, are overvalued by 30% in terms of what we can actually afford, and 74% compared to what they rent for. This, of course, was exactly my point with yesterday’s post – there’s no way you can buy a house and own it without paying roughly 50% more than you’d shell out to rent it. This bizarre behaviour makes sense only when real estate values are continuously rising. But the Scotiabank lady, the bond market, and F, are pretty much guaranteeing that won’t happen.

Despite flat or declining markets in many centres (Halifax, Montreal, SW Ontario, Edmonton, Vancouver, Victoria), prices have stayed sticky and debt continues to rise. In fact prices have gone up three times faster than incomes, and credit continues to expand. By the end of next year it’s estimated our poor, delusional homeowners will be shouldering at least $1.24 trillion in mortgage debt – which has doubled in 10 years, and is about to grow more expensive.

Now, one of two things will happen.

Either higher-still loan costs will torpedo sales, multiply listings and pull down prices. Or the elfin deity will do it himself. Months ago, for example, I told you the feds were on the verge of banning all 30-year mortgages, which are still available to people who have 20% to put down. That remains on the table, along with other changes that could restrict credit growth and make financing a house more difficult.

Why would F want to do that? Because Canadians apparently have no discipline or self-restraint. None. As I’ve told you, 70% have houses and record debt, yet 51% can’t find $10,000 to post bail for their kid. Retirement savings have plunged and lines of credit are off the charts. What do people think is going to happen? That rates will stay at emergency levels forever? That we’ll all get big pay increases in the middle of a torpid economy? That greater fools will always be there to buy our houses at the same dumb prices?

Like I said, risk. It’s swelling.

For your relatives and co-workers, the risk is that houses will be worth less and debt costs rise – an ugly combo for the years ahead. For the feds, the risk is that credit continues to expand and people have less disposable income to buy Kias and iPhones. So there could be one more round of house-killing measures out there – as detailed in a Globe story on Tuesday. Those working in F’s office who still have the cajones to talk to me verify it all. The bank cop, OSFI (Office of the Superintendent of Financial Institutions), is thinking hard about new restrictions on lending.

Head cop Julie Dickson is flummoxed that despite killing of 30-year insured loans, tougher rules for first-time borrowers, an assault on cash-back mortgages and stripping CMHC coverage from million-dollar properties, housing won’t croak. In fact some markets (a certain self-absorbed city in southern Alberta springs to mind) are now reliving the speculative  and ill-fated excess that ate Vancouver. There’s no doubt how that will end.

The bottom line is simple. Most thinking people can see these dangers. It makes no sense for assets to rise without end, on borrowed money instead of higher incomes. Most unthinking people – alas, the majority – are victims of recency. What just happened will go on forever.

This week real estate boards will give us the latest, August, numbers. Should be all the ammo Ottawa needs.

173 comments ↓

#1 Steve French on 09.03.13 at 8:20 pm

First!!!

(hate the game, not the playaaaaaa…)

#2 Art on 09.03.13 at 8:26 pm

2nd!

#3 Andrew Toronto on 09.03.13 at 8:27 pm

Garth ,does our government ever stop to thik the reason the us housing calpased was because the u.s government new that was the only way to bring metrics back inline …

If your buddies in ottawa continue to think they can cause a soft landing they’re nuts .. it’ll ownly continue to swell because no one will believe theere is risk , till they actually see realestate go down..

ONLY way people will change their view on Realestate being a risk is when we see a big correction , then and only them will people change their minds ON REALESTATE RISK, NOT YOU NOR HARPERS GOVERNMENT..

#4 DaleFromCalgary on 09.03.13 at 8:27 pm

The self-absorbed city in Alberta will have a steady real estate market for at least one year thanks to the Great Flood. Probably longer because new rental accomodation for families takes a couple of years to be built. If you have kids and/or pets and are looking for a place to live in Calgary, I pity you.

I have family members renting in Airdrie because there is nothing for them in Calgary that is suitable for kids.

#5 Mark on 09.03.13 at 8:31 pm

Garth, it boggles my mind that you are calling for a 10 to 15% price correction in most markets. At least that’s what I recall you writing a few weeks ago. After all of this, how can you be so optimistic? Housing bubbles have burst all around the world in recent years, and they have all been significantly deeper than that. What makes Canada different?

#6 Big Sexy on 09.03.13 at 8:32 pm

Oh, Steve, cut it out.

#7 Robert on 09.03.13 at 8:32 pm

The game that H&F have been playing is to depreciate our currency by printing “future” dollars through loosened lending. The illusion of prosperity ushered in a majority government but the pigeons are coming home. Will they roost before the next federal election or will H exit stage right and hand on the mess as Mulroney did to Kim Campbell? Better still, will the Cons toss the hot potato to Trud-Cair and let them take the heat. To be fair, this strategy beats the mega make work project that took us out of the last Great Depression. Interesting times.

#8 TO and GTA Sales and Stats 2013-09-03 on 09.03.13 at 8:32 pm

August stats posted.
TO&GTA Stats and Sales 2013/09/03
GTACondos: http://bit.ly/18pg68A
905SFH: http://bit.ly/18pg9kQ
416SFH:http://bit.ly/18pg6pf
GTACondos: http://bit.ly/18pg9RL
905SFH: http://bit.ly/18pg6W9
416SFH:http://bit.ly/18pga8x

#9 Rene Descartes on 09.03.13 at 8:33 pm

I think therefore I rent

#10 T.O. Bubble Boy on 09.03.13 at 8:33 pm

Dear Julie Dickson,

Just cut the maximum CMHC-backed mortgage to $500,000 (from $1M), and make CMHC insurance available to first-time buyers only.

Problem solved.

The only hot market right now is the sub-$1M SFH… take the $900,000 mortgage option away from the house horny Torontonians and the average price drops 5%-10% pretty quickly.

#11 Bigrider on 09.03.13 at 8:34 pm

Wonderful post today Garth and all well reasoned. The subjective part mentioned in the economist good backup.

Unless, of course, Toronto really is a world class city. I don’t believe it is but many do.

If so, well , then we have higher prices to go.

#12 T.O. Bubble Boy on 09.03.13 at 8:34 pm

When measured in price-to-rent or price-to-income ratios, homeowners in Canada are shouldering more risk than Bruce Willis after being shot twice and hurled off an F-35.

Funny, Bruce Willis took his biggest risk putting money into Planet Hollywood!

#13 StatsFreak on 09.03.13 at 8:39 pm

It is so hard watching all my friends and relatives continue thinking debt is OK and their homes will fund their retirements. I continue to sit patiently with my money in cash, waiting for the plummet. I have stopped trying to talk sense into people – they all look at me as if I have lost my mind.

#14 snake on 09.03.13 at 8:41 pm

Fire reveals ‘more than 10’ people in Markham house
http://www.cbc.ca/news/canada/toronto/story/2013/09/03/toronto-markham-fire.html

#15 Gor Gon Lin on 09.03.13 at 8:46 pm

Time to bail on Canada. More opportunity for tech workers in the U.S. and the houses are oh so much cheaper. Thank god I work for a U.S. company and can get an easy transfer. I can buy 3 nice houses in Dallas for the price of one crack shack in Vancouver and still have change for a couple of higher end import sedans (Audi or Merc).

So long suckers!

#16 visorman30 on 09.03.13 at 8:46 pm

Has the flooding not stemmed the housing appetite in Calgary?

#17 standatdesk on 09.03.13 at 8:49 pm

Garth, when do you realistically see real estate bottoming? in 5 years? or 10?

#18 Nemesis on 09.03.13 at 8:50 pm

Careful, AuldPol…

You know how I swoon when you begin in the ActiveVoice…

#19 X on 09.03.13 at 8:51 pm

New restrictions on lending are warranted. They need to protect the financially ignorant from themselves.

#20 Blasé on 09.03.13 at 8:54 pm

Southern Alberta sounds like an oxymoron.

#21 PKP801 on 09.03.13 at 8:55 pm

Great post as always Garth. I have one quibble with it.

I’m not convinced that we’ll run out of greater fools any time soon.

I can’t afford RE in the 416 so it’s a non issue for me. But I still see For Sale signs and my friends in RE are still doing good business. Seems like the honey pot is still deep enough for the foreseeable future.

#22 Smoking Man on 09.03.13 at 8:57 pm

Die Hard,

Ha exactly the title of my post tonight, do you have friends in the NSA Garth, or am I just physic?

Every Morning I wake up with a mother of headache, it’s the price one pays for an out of body experience the night before. Having perhaps 4 hours sleep At 530 am I push the button on my coffee machine brewing Timmy’s at 3 times the normal strength. I remove the SM suit and put on my Clark Kent disguise, off to the tax farm I go, escaping a premature retirement and suicidal boredom.

During the day the world hits the back of my eyeballs in black and white, but at night with the SM suit snugly on, I go 3 wines over the line and see in magnificent techno colour. I really do. It’s addictive. Once in a while, Neo Citron and maybe a wee puff.

My current vision.

As the bubble heads impatiently wait for the demise of bricks and mortar here in Canada, and the owners having an orgy on there helock, I am focused on world events.

Blood will be split in Syria, more kids will die, all reasoning based on lies, more lies, all sides lie. That’s what they do. It’s what our leaders always do, it’s what our teachers do, mind you they are too stupid to even know they are lying.

Do I care, if every country in the middle east including Israel was vaporized under one big ass mushroom. Not really. The believers hit the jackpot; off to god you go with the entire family, cousins, moms, dads brothers and sisters and pets. A life long dream realized. What is wrong with that?

A good percentage of Religoydes spend there entire existence hating each other, the most common denominator, One side has a better version of the bearded man it the sky, than the bearded man in the sky on the other side.

Other than that they are the same, with the same goals, dreams and aspirations. The Namgnikoms who rule these people have it all figured out.

Why do they cry when their kids die. See that’s what bugs me. The hypocrisy of it all.

If I believed like they did I would throw a party, JR is hanging with god now. Woo Hooo.

You see I figured it out tonight, must have been the neo, it’s not that religion divides the people, religion is just a by product, a label of a demented belief system.

But what can you do, not too many SM around who don’t get to upset with the thought of maggots having a feast on my eyeballs after I buy the farm.

It’s just logic.

World Traveler above post inspired by you.

#23 Nemesis on 09.03.13 at 8:58 pm

Egregious!… I almost forgot:

BruceWillis is a ‘Pussy’ [except for R.E.D.].

http://youtu.be/lf3Kyv_iaNs

#24 BigEnglish on 09.03.13 at 8:59 pm

Trying to find reputable fee based fiscal advisor in Vancouver.

#25 TheCatFoodLady on 09.03.13 at 9:00 pm

Speaking strictly locally, (north end of Kingston), the market curled up its toes in August. I’m watching 3 properties within 3 blocks of my place as well as 4 more a few blocks further out. No sign of interest whatsoever. Even the RE agents seem to have given up – grass not being cut as often – decidedly unkempt looks to all places. What’s missing? Price drops on 6 of them… unless after this weekend, they’ve just not been posted online yet.

Several units in a townhouse condo project I follow for fun, (family member lives there), have a lot of units on the market & prices there are starting to drop – but not enough. Condo fees & taxes are cheap but the units are of an age where major repairs may be looming.

From yesterday – Johnnny. Financial planning isn’t intuitive for me, nor was it taught. I spent my life using the Scarlet O’Hara approach to spending & bills: “Tomorrow is always another day!” There were few stupid financial decisions I didn’t make. A bad divorce, (financially) & life happening sunk me good! Obviously killed my grammar as well.

My wonderful second, (& final!), spousal unit & I live on a combination of his Ontario Disability & what I can earn part time doing not so fun cleaning & gardening jobs – hey, it’s an honest living! Still – had I known then what I know now… things might be very different.

Warning for those NOT looking hard at their money & where it’s allocated. The Main Squeeze & I live on under $2,000/month. It’s doable but it means that literally EVERYTHING has to be in the budget or in the house – no room for error.

If you’re sitting on a pile of equity & that’s the basis for your retirement plan – sell the damned house! Invest the proceeds wisely in a diversified fashion. Read & learn… then read & learn some more. You both know more & know less than you think.

I’d love to be as smart as Johnnny – freely admitting he needs info & advice. I wish I’d been that smart decades ago instead of a complete airhead with money.

Better late than never.

And I’m not complaining one bit. First I live in a country that gives my love enough to live on. In this city, it IS enough.. .just.

#26 Smoking Man on 09.03.13 at 9:04 pm

Who kares?

The obediense brigade will keep it all going ahead.
My grafs that show me the outputs from my front leading market alrgorihths telle I am the greatest mind on earth as I bank another $30m in forex trading. I am the last one with brass nuts in the game.

You are al dum and I am the man. The universe changes the orbits of galaxis when I wake up.

Oh yes, did you know I can’t spell?, I never studied, my kids are in door to door sales and I have developed the only encryption system on earth that is NSA proof AND I have enough time on my hands to smoke, drink and dip my stick!

You are al looooosers!

#27 Suede on 09.03.13 at 9:05 pm

Good to see lifetime politicians taking their role as leaders of the free world and going (potentially) into a massive war very seriously.

John McCain busted playing poker during the Syria war hearings. Beauty!

http://www.washingtonpost.com/blogs/post-politics-live/the-senates-syria-hearing-live-updates/?id=ed01ca14-222b-4a23-b12c-c0b0d9d4fe0a

Might have to load up on those oil futures as insurance.

#28 father on 09.03.13 at 9:09 pm

garth this is good news but are we still on for shocking news still?

#29 Jas Girn on 09.03.13 at 9:10 pm

Garth, I need your dear help.

What do you think about optionsforhomes.ca? They sell brand new condo units for cheaper in Toronto, but I have my doubts. A basic parking space costs $36000 and a locker costs $6000. A one bedroom at bathurst and lawrence starts at 241k – after “stated options contributions.” I feel like they are ripping off people with this co-op type model of housing. The maintainance fees also start at 41 cents a square foot.

#30 Smoking Man on 09.03.13 at 9:14 pm

#5 Smoking Man on 09.03.13 at 9:04 pm

Not bad, fake smoking man, not bad.

#31 Marginal on 09.03.13 at 9:16 pm

Garth, this reminds me of the movie, “The Hunger”, a slick vampire (like RE) flick where the most recent victims could not become true immortal vampires but merely wraiths whose hunger can never be satisfied.

Amazing what low interest rates can do.

#32 jim on 09.03.13 at 9:18 pm

#4

“The self-absorbed city in Alberta will have a steady real estate market for at least one year thanks to the Great Flood.”

I am confused. You are telling us that the rental market is going well. How does that relate to the housing market? I cannot imagine that rental income can sustain mortgage carrying costs for most buyers.

#33 jim on 09.03.13 at 9:20 pm

#16

Head to the US as soon as you can. Prices are rising here, and the employment scene is getting better in certain key cities for STEM workers. It won’t last forever, but you can actually save money out here.

#34 David McDonald on 09.03.13 at 9:21 pm

House horny does not adequately describe my wife’s instinctual desire to own a house. She implacably rolled over all my objections because she had her dream condo in mind. She humoured my idea of renting for a while but found fault with every listing even when the rent was less than the condo fees plus taxes on her dream condo. It makes no economic sense but then economic logic doesn’t always prevail.

This may be the story on the macro level as well. Canada is a nation of immigrants coming from countries where nobody trusts the government or markets. The only sure thing in such circumstances is owning property. This bedrock instinct to own your own home may continue to prop up our crazy RE market.

#35 Big Sexy on 09.03.13 at 9:22 pm

CatFoodLady,

You wouldn’t happen to live in River Heights, would you? Because nobody in their right mind would buy there.
Ex-Dauphin Ave resident here

#36 Donald Trump on 09.03.13 at 9:28 pm

Another photo shop!

Beer and the alien spaceship in background !

#37 Donald Trump on 09.03.13 at 9:30 pm

Got 2 hand it to Smoking Man and Old man

http://www.theglobeandmail.com/news/news-video/video-ctv-toronto-rescue-drama-as-man-scales-building/article14068417/

……will naught taller-ate the presale condo line -up….will scope out the product like Spiderman !

#38 T.O. Bubble Boy on 09.03.13 at 9:31 pm

#9 Rene Descartes on 09.03.13 at 8:33 pm
I think therefore I rent
———————

winner! (best comment award)

#39 Ann on 09.03.13 at 9:32 pm

16 Gor Gon Lin on 09.03.13 at 8:46 pm
Time to bail on Canada. More opportunity for tech workers in the U.S. and the houses are oh so much cheaper. Thank god I work for a U.S. company and can get an easy transfer. I can buy 3 nice houses in Dallas for the price of one crack shack in Vancouver and still have change for a couple of higher end import sedans (Audi or Merc).

So long suckers!
.Don’t let the door hit your azz on the way out!
Good riddance

#40 Marginal on 09.03.13 at 9:40 pm

#35 David McDonald on 09.03.13 at 9:21 pm

“The only sure thing in such circumstances is owning property….”
————————————————————-

David, you are confusing apples with durian fruit. Condos are not property….there is no land.

#41 Victor V on 09.03.13 at 9:41 pm

http://www.theglobeandmail.com/report-on-business/top-business-stories/canadas-housing-market-among-most-bubbly-in-world-economist-finds/article14078925/

Canada’s housing market is still among the frothiest in the world, more than a year after the federal government moved to head off a bursting bubble, findings by The Economist suggest.

In results posted online over the long weekend, the magazine looked at how homes are overvalued or undervalued based on two measures: Price-to-rent and price-to-disposable income.

Where the first measure is concerned, The Economist found Canadian prices to be hugely overvalued, second among 18 countries studied.

Hong Kong was the highest, New Zealand ranked third behind Canada, and the rest weren’t even in shooting distance.

“On this basis, Canada’s house prices are bubbly whereas Japan’s are undeservedly flat,” the magazine said.

On the second measure, Canada ranked just behind France, while there was no comparison to Hong Kong.

The latest findings for Canada are just slightly better than those of last year, presumably the result of Finance Minister Jim Flaherty’s new mortgage restrictions just over a year ago.

#42 einsturzende neubauten on 09.03.13 at 9:43 pm

i kept saying it is different here in calgary. am myself surprised how righ i was…

#43 Ralph Cramdown on 09.03.13 at 9:53 pm

#7 Robert — The game that H&F have been playing is to depreciate our currency by printing “future” dollars through loosened lending.

I don’t know how you figure they’re ‘future’ dollars. I’ve borrowed my share and used them to buy productive assets. The balance in my account didn’t have an asterisk beside it before I spent them, and the recipient has no idea they’re ‘future’ dollars. Likewise when the US Fed buys bonds, the sellers get real dollars, and invest them in something else. When house humpers go to the bank to get pre-approved, bid high and win, the sellers have no idea they’re getting paid in ‘future’ dollars, and those dollars work just as good as any others.

In fact, you could say that a loan at 8% creates a lot more future dollars (for the lender, anyway) than one at 4% does.

If your worldview says we should see big overall inflation once those dollars hit the system, it’s time to change your worldview, because those dollars are already circulating.

A note to savers who feel they’re being had:
http://coppolacomment.blogspot.ch/2013/09/savings-investments-and-dose-of-realism.html

#44 Obvious Truth on 09.03.13 at 9:57 pm

How bout adding US dollar exchange to the housing and investing equation.

A 500 000 mortgage cost you taken out a couple of years ago buys you 15% less US dollars today. On the other hand 500 000 in US securities or even dual listed stocks is worth 15% more on exchange only.

Those with massive debts are losing US dollar buying power by the day.

It’s amazing that there are people that ever thought housing was an investment. It never has been and ever will be.

Keep renting Jason. You may be US dollar richer than you think.

#45 Manyquestionsfewanswers on 09.03.13 at 9:57 pm

What puzzles me is how do so many of these people even qualify for a mortgage? Supposedly the median family income is $69,860, how does that get you approved for a house just shy of a million? Or even half of that price?

#46 HAWK on 09.03.13 at 9:59 pm

#35 David McDonald on 09.03.13 at 9:21 pm

Yup till the shit hits the fan, ………interest payments can’t be made on mortgages and the realization sets in that one “owns” jack all until the last $ has been paid back to the bank, the real owner in the aftermath.

“The ownership society” – redefined

#47 The Cat Food Lady on 09.03.13 at 9:59 pm

#36 Big Sexy. Yup – one minor correction – Rideau Heights not River Heights. The infamous ‘Heights’ where on olde maps the space is simply delineated & a caption stating: “Here Be Dealers” point to the area…LOL

Don’t know when you were last here – some pretty infill housing – towns, semis & small singles went in over the last 8 years on Briceland. Lots of military, lots of turnover & an increasing number of retirees buying the bungalows.

The rest of the housing stock is old & falling apart – too many years of sketchy tenants. The exception to that is the Portuguese enclave – exquisitely maintained homes & properties but most of those are handed down through families or end up being sold within the community.

The area hasn’t gotten any better. I’ve lived here 5 years in a semi-decent apartment building right on the edge of the district. The location keeps the rent about $200/month below much of the rest of the city & we’re not right in the projects – thank God. But that also applies to homes for sale. Most being sold are simply turned into upstairs/downstairs, (basement), rentals. The landlords do as little as possible in the lines of maintenance & take advantage of the fact that most tenants don’t know the Residential Tenancies Act. To be fair, a great many tenants could care less.

Looking for cheap entertainment? Take a walk any summer evening about 48 hours before social assistance cheques are due. Lots of loud & ‘interesting’, very public discussions of a spousal unit’s many failings with some of the most creative uses of the F bomb imaginable. Sketchy skids, twitching & jonesing for whatever they’re hooked on, restlessly roaming.

Crime rate is surprisingly low – domestics & property crime rates are higher but no higher than the rest of town. I can walk anywhere I need to go – downtown is only 4 km. & the nearest grocery store – 2 km. I’m 10 minutes from the river, marshes & lots of wild spaces.

In short, I got used to living on the wrong side of the tracks. Sadly, an increasing number of people are moving here because they have to & I feel for them. The area, the schools, the… everything is lot to hoist aboard at once.

#48 takla on 09.03.13 at 10:00 pm

just another day in the land of make believe,the young house horneys are scambleing for the bankers door to get that last low rate offered before the enevitable rise in ca. interest rates…good ,lets get this party started!!The sooner the over extended houseing market crash’s and resets to “normal{1995} prices the better.maybe down the road my kids will actually be able to afford thier first home on thier salaries

#49 JSS on 09.03.13 at 10:01 pm

Bravo to Garth; thanks for another (as usual) entertaining and informative article.

#50 kc on 09.03.13 at 10:05 pm

Today my wife and i went down to our bank and paid off our mortgage, credit cards, paid off and closed our line of credit.

All of it, including the mortgage, was about $65,000. Garth would probably give me a solid bollocking for not investing that cash in a balanced portfolio (would you not garth?).

But honestly the ability to walk around proud cock knowing we don’t owe a red cent of debt to anyone is, at least for now, well worth it. Certainly now we can dump $1500 a month into a balanced portfolio.

So i encourage all of you to avoid going into debt and don’t buy real estate if you are already liquid.

#51 Mark W on 09.03.13 at 10:10 pm

http://www.vancouversun.com/business/your-money/Vancouver+seniors+debt+rate+increase+outpaces+other/8865584/story.html

“Vancouver seniors’ debt rate increase outpaces other age groups.”

Drink some more Kook Aid in Lotusland and everything will be fine … !!!

#52 Jose Penate on 09.03.13 at 10:15 pm

Garth,

Why mention the Economist “newspaper” at all? You’re more credible than them.

#53 Ralph Cramdown on 09.03.13 at 10:19 pm

#18 standatdesk — “Garth, when do you realistically see real estate bottoming?”

Oh come now! It is difficult enough to call tops and bottoms in markets (and all RE is local) as they happen. Claiming to be able to see around one corner (e.g. “we believe the market will experience a major correction this fall”) is usually shamanism. Claiming to be able to see around two (“a big fall retracement followed by a renewed rally to new highs in the spring”) is collateralized shamanism squared — and yet I see it all the time among pundits in the media.

N.B. (US, obviously): http://www.calculatedriskblog.com/2012/02/housing-bottom-is-here.html

#54 Big Sexy on 09.03.13 at 10:25 pm

#48 The Cat Food Lady on 09.03.13 at 9:59 pm
#36 Big Sexy. Yup – one minor correction – Rideau Heights not River Heights. The infamous ‘Heights’ where on olde maps the space is simply delineated & a caption stating: “Here Be Dealers” point to the area…LOL

Don’t know when you were last here – some pretty infill housing – towns, semis & small singles went in over the last 8 years on Briceland. Lots of military, lots of turnover & an increasing number of retirees buying the bungalows.

The rest of the housing stock is old & falling apart – too many years of sketchy tenants. The exception to that is the Portuguese enclave – exquisitely maintained homes & properties but most of those are handed down through families or end up being sold within the community.

The area hasn’t gotten any better. I’ve lived here 5 years in a semi-decent apartment building right on the edge of the district. The location keeps the rent about $200/month below much of the rest of the city & we’re not right in the projects – thank God. But that also applies to homes for sale. Most being sold are simply turned into upstairs/downstairs, (basement), rentals. The landlords do as little as possible in the lines of maintenance & take advantage of the fact that most tenants don’t know the Residential Tenancies Act. To be fair, a great many tenants could care less.

Looking for cheap entertainment? Take a walk any summer evening about 48 hours before social assistance cheques are due. Lots of loud & ‘interesting’, very public discussions of a spousal unit’s many failings with some of the most creative uses of the F bomb imaginable. Sketchy skids, twitching & jonesing for whatever they’re hooked on, restlessly roaming.

Crime rate is surprisingly low – domestics & property crime rates are higher but no higher than the rest of town. I can walk anywhere I need to go – downtown is only 4 km. & the nearest grocery store – 2 km. I’m 10 minutes from the river, marshes & lots of wild spaces.

In short, I got used to living on the wrong side of the tracks. Sadly, an increasing number of people are moving here because they have to & I feel for them. The area, the schools, the… everything is lot to hoist aboard at once.

Whoops, almost. Nice to hear it’s still the same. Moved out in 1992, haven’t looked in the rearview mirror since. Well, to be honest, I was just a kid then.

#55 Smoking Man on 09.03.13 at 10:27 pm

#28 Suede on 09.03.13 at 9:05 pm

I have a HUGE BET right now, Oil Futures. Stand to make a fortune if they do it.

I know how the world works, AIPAC applying huge pressure on the white house and congress, which I don’t understand, a wise Jewish Man, my mentor as a young man, he taught me business and told me. It’s always better to deal with the devil you know, than the one you don’t.

Rebels are AlKida. Don’t make sense. Something not right.

It looks like I’m going to make a killing, but then something about this whole thing bugging me.

It might not happen. Not an official smoking man prediction, fundamentals are to strong at this point.

But all the same, go light on the bet….My tummy is sore on this bet.

#56 The Cat Food Lady on 09.03.13 at 10:31 pm

#51 – kc – the heartiest of congrats to you & your wife. The day the Spousal Unit & me retired our last bit of debt… I won’t forget that day ever. Nothing beats calling up your online account statements & seeing every last thing in the black.

Strictly speaking, it may have made more sense to invest the money but what price peace of mind?

Now stick to that plan of investing that money monthly or you’ll really get a bollocking.

#57 lawboy on 09.03.13 at 10:31 pm

More news about that shady realtor that got shot:

http://www.theprovince.com/news/Shot+Maple+Ridge+councillor+legal+wrangle+over/8865309/story.html

#58 takla on 09.03.13 at 10:41 pm

garth ,just had a weird vision…..whats the chances that your a ghost writer with the Smokeing Man moniker{why the h#% else would you permit his delusion??/

Beyond weird. — Garth

#59 Dan on 09.03.13 at 10:45 pm

#10 T.O. Bubble Boy on 09.03.13 at 8:33 pm Dear Julie Dickson,

Just cut the maximum CMHC-backed mortgage to $500,000 (from $1M), and make CMHC insurance available to first-time buyers only.

Problem solved.

The only hot market right now is the sub-$1M SFH… take the $900,000 mortgage option away from the house horny Torontonians and the average price drops 5%-10% pretty quickly.
———————————————————-
I’ve been saying this for years that Canadians are a stupid mass of people who will borrow until they are bankrupt. No one has money but everyone is able to borrow $900K to gamble on a house. If they go bust they will all walk. The CONservatives are spend happy with taxpayers money . They have lent out $600,000,000,000.00 in sub-prime mortgages back by the taxpayer. CONservatives are a threat to Canada and Canadians.

#60 Canadian job leave Canada on 09.03.13 at 10:49 pm

Canadian jobs continue to leave Canada for cheap labour USA. Why hire a Canadian worker for $30 when you can hire two Americans for $15 each? The difference is the American work can buy a home for under $200 vs the $600K+++ in KA-RAZY Kanada. Say bye bye jobs

#61 not 1st on 09.03.13 at 10:50 pm

Why should people who were prudent and put together a 20% down payment now be thrown under the bus with all the other hornies and crazed buyers? Thats not fair F!

#62 not 1st on 09.03.13 at 10:51 pm

#18 standatdesk — “Garth, when do you realistically see real estate bottoming?”

Use the U.S. model for that. Peaked in 2006, crashed by 2008 and flatlined for the next 3 years.

So assume our peak was May 2013, next year or two will tell the story.

#63 Jimmy on 09.03.13 at 10:53 pm

The first day after summer, and already there’s smoke.

Garth, some question what planet you’re on.
On this blue marble up here in the northern hemisphere summer ends September 21.

All naturalists know it ends when the last person throws up at the CNE. — Garth

#64 AisA on 09.03.13 at 10:56 pm

First it was 50%
Then it was 60%

As I completely underestimated the degree of hopium my fellows have been smoking during the years I was off in Europe enjoying the debt crisis. I am now looking at 70% crater in the works. No force in nature can stop prices from burrowing way past the mean with this much air in the balloon.

Keep stretching that rubber band until the Wile E Coyote moment. Sheesh. Canadians are not house horny, they are money for nothing horny. When has that ever ended badly.

#65 Die Hard | The Affluent Boomer™ on 09.03.13 at 11:01 pm

[…] Die Hard […]

#66 retired Boomer - WI on 09.03.13 at 11:02 pm

KC #51 Bravo!! A man after me own heart. Congratulations on becoming completely Debt Free. I am
privileged to be in that club myself, having paid off the shack back a few years.

Strange, but after you’re debt free, you build up the emergency fund, and retirement savings. When you can afford to stroll the mall, and buy almost anything, you’ll find there isn’t much there you want.

Wife retires this December (assuming we & world are still here). Despite all the BS it’s still a working world, and we don’t have all the dough in the world, we are thankful if we have “enough” STAY Debt Free if you can

#26 CAT FOOD LADY

Sounds like you live in an interesting area. Yes, same sounds can be heard here in our rural village. People have essentially the same problems & habits the world over.

Whether you live in a big city, medium town, or rural hamlet the days are the same, the concerns, the regrets, the future hopes similar. We ARE all in this together, and hopeful that the younger think before making the mistakes us older ones have made. Fat Chance of that, but it is a wonderful thought! Did we listen to grown ups?

I feel for any Canadian still buying RE in this bloat!

#67 not 1st on 09.03.13 at 11:09 pm

I hope it all crashes really hard and fast…mostly so I can start to hear Garth talk about something, anything else.

Did I make you come here? — Garth

#68 Ralph Cramdown on 09.03.13 at 11:10 pm

OK kids, time for the advanced mortgage class. And I’m not the teacher, I’m just setting the question.

Devore brought this to my attention in a post yesterday about League [of their own] soliciting door-to-door condo shillers in Victoria by paying them $20 for every warm body they could drag to a meeting with a closer.
http://league.ca/real-estate-developments/league-equity-mortgage
League’s various affiliates are a classic West Coast realty play, in that everything I’ve ever heard about them smelled fishy.

What IS this equity mortgage of which they speak? Briefly:
– you bring at least 5%
– they add 15-30% which, at minimum, means no pesky CMHC insurance and possible thumbs-down from Emili
– no principal or interest as long as you don’t sell or refinance. Free money!
– Their “second mortgage” is non-recourse, and not payable if you sell and lose your equity. Free put!
– BUT if you sell or refi and GAIN equity, they want 5.5% a year on their “money” plus half of your capital gain, plus their “money” back

The questions:
– How do the first mortgagor’s appraisers value the property? Is there similar stuff around? Presumably if League had willing buyers at near asking with cash and credit they wouldn’t be offering these schenanigans.
– How would you value the second mortgage? I’m picturing a grid with actual (unknown?) value at purchase on one axis and appreciation since purchase on the other, with a surface showing the mortgage’s value. But there’s the time value of that 5.5% as well, so now we’ve added a third dimension.
– I’m not humble, but I figure if I can’t grok this thing, it’s pretty close to inscrutable — i.e. a scam to sell these things for 20% less than list with other banks holding the uninsured bag (er, mortgage). Unless it’s legit and they really believe in the future appreciation of these turkeys and want to participate…
– for our Australian and U.K. friends: The page says “This is a form of shared-equity mortgage, variations on which are common in other parts of the world including the United Kingdom and Australia.” Are they? How do they work there? (just send URLs) Are they usually just a way for dodgy overextended developers to move product to rubes?

I’m curious, and my limited understanding of derivatives (I’ve got Hull&White, but I don’t entirely understand it…) isn’t helping. Too many variables, but all comes down to honest price and developer hoping to steal over half of your unit’s appreciation, or total scam, and developer hoping to unload unit on unsuspecting buyer and his lender?

#69 Nosty the Vladman on 09.03.13 at 11:18 pm

#23 Smoking Man — “Blood will be split in Syria, more kids will die, all reasoning based on lies, more lies, all sides lie.”
along with
#28 Suede — “John McCain busted playing poker during the Syria war hearings. Beauty!”
ending up with
#24 Nemesis — “Egregious!”

The option exists, I believe, to place McCain in the same position as said actor — attached to one of the missiles — then blasting him off to where he wants all these kids to go. That will be one useless moronic carpetbagging loudmouth out of the way, no? Here.

SMan, your call on long oil futures may be right. Gettaloadofthis — Evidently, Iran could cause some trubble in the Hormuz Strait with these. Wonder what the real reason was the USS Nimitz did a U-turn and is heading toward the Med?

#51 kc — Spot on and well done! Not owing anyone anything is a great feeling!

#70 Freedom First on 09.03.13 at 11:23 pm

Die Hard……great title for today’s blog Garth.

Got me thinking. In today’s society world wide it seems to be extremely difficult to go against the masses insane thinking.

Simple question for the in debt/house horny’s. Ask yourself: “Would I rather have a net worth of $500,000, or would I rather be in debt $500,000.” Now, to acquire $500,000 of net worth requires sane thinking/knowledge. To acquire $500,000 in debt requires insane thinking/ignorance. No exception/excuses. None. Garth provides the sane thinking/knowledge. It is up to you to use the information(FREE), or not(EXPENSIVE). Your choice, your consequences.

#71 Smoking Man on 09.03.13 at 11:31 pm

#59 takla on 09.03.13 at 10:41 pm

garth ,just had a weird vision…..whats the chances that your a ghost writer with the Smokeing Man moniker{why the h#% else would you permit his delusion??/
Beyond weird. — Garth
…….

Seriously, ha

What delusion, I hit a nerve with you, damn.

You can’t bend what you can’t offend is my motto.

Garth is normal, he’s proud of that,

I’m equally proud that I’m insane.

Seems to me I have stuck a pin in your eye ball belief system, a failed attempt at Appling passive aggressive presure on garth to have me banished.

Something about war in the air, and having logic spear crazy beliefs in the heart.

Seriously offer me a contract, I have only loyalty to dollars..

#72 The Cat Food Lady on 09.03.13 at 11:35 pm

retired boomer – very true. Around here, it’s the sleepy little hamlets that are churning out the meth labs & more, big time. Big crime is no longer restricted to big cities.

What breaks my heart in this area is the multi-generational poverty, assisted by, in many cases, overly generous social assistance. In far too many cases, the kids are last on the priority list. Parents are happy to have the kids fed at school – leaves them more money for cabs, take out, drugs… I fel for the parents stuck, desperately trying to get off assistance & while they work at it, trying to keep their kids civilized. Most who were born & grown up here can best be described as feral children. Less than half will get a high school diploma. Working for a living is for losers – they don’t see the connection between their cheques & hard working tax payers.

The adults are no better. I get sneered at for working even part time because 50% of what I earn is deducted from the Main Squeeze’s cheque. I loathe that attitude. No one is entitled to a free ride & I’m simply grateful we don’t live in a country where there is no social safety net whatsoever.

We need to do a better job with the kids – in the form of expectations, standards that mean something & accountability for one’s actions. Until the tide reverses & we see that again, we’re losing a big chunk of the younger generation.

#73 Snowboid on 09.04.13 at 12:02 am

#3 Andrew Toronto on 09.03.13 at 8:27 pm…

You are Smoking Man Jr. – right?

#74 retired Boomer - WI on 09.04.13 at 12:04 am

#73 The Cat Food Lady

Same here. Drugs are everywhere. Iowa has found big labs cranking out meth on old farms. Why Iowa? Distribution to major cities it is centrally located. Why old farm? No nosey neighbors to smell it, hear it, or monitor the trucks coming & going. Very ingenious!

The US does not have as well developed a social service system as Canada but we have just as many lazy freeloaders, among the deserving. Again – human nature there is always that percentage that would not take a job if you wrapped it up with a bow and decent pay!

As for the young, we get what we grow, much like farmers. We dumbed down school standards, we get less educated kids. We declare all participants are winners, it demeans the truly exceptional. We have failed to instill a sense of personal responsibility, that you are liable & fully responsible for your own actions. Drop out of school, you lose. Sure, some will do ok, but not the majority. Same with everything else really, their is great variation in endings though all were more or less equal at the start.

I used to tell my kid, “listen I brought you into this world, I will take you out if you do not listen to what I say, and don’t do what I do.” probably get arrested today for those threats, child abuse or some such thing, but they did the job.

Parenting does not come with much of an instruction manual, but we do try and do the best we know how. It doesn’t always work.

#75 Robert on 09.04.13 at 12:08 am

#44 Ralph C. Money that you borrow is essentially a promissory note, not money earned nor wealth created. You are promising to pay it back at sometime in the future. In effect, future dollars are created and poured into the economy and yes, they do look and smell just like the rest but have the effect of diluting the value of circulating currency. The currency “war” we (the western economies) have been engaging in over the last decade is these guys (http://www.epi.org/publication/revaluing_chinas_currency_could_boost_us_economic_recovery/). Since they wouldn’t float the Yuan, our guys cranked up the printing presses by loosening fractional lending standards and goosing the property markets. Bit of a race to the bottom all around. As I suggested, a strategy to engage in economic warfare with bills instead of bullets. Inflation is coming, the pot is just on simmer right now.

#76 dienekes on 09.04.13 at 12:15 am

No vacancies in Calgary, no housing for displaced people in high river. What a bunch of horse sh*t.
Go on MLS, there are piles and piles of homes for sale in Okotoks. Why aren’t these so-called displaced families buying these?
There are more now than ever, not less, and the prices are lower.

#77 Devore on 09.04.13 at 12:27 am

#35 David McDonald

Canada is a nation of immigrants coming from countries where nobody trusts the government or markets. The only sure thing in such circumstances is owning property.

I’m having trouble squaring this circle…. if you distrust government, owning immobile property at a fixed address would be just about your last priority.

#78 dienekes on 09.04.13 at 12:30 am

61 Canadian job leave canada.

Tell that to the new super union unicor or whatever they are called. They are going on the offence. To single handedly push all Manufactering into the USA, morons.

#79 bigdeal on 09.04.13 at 12:38 am

so what exactly is wrong with a 70% homeownership rate in Canada? Yes of course all these home owners are stupid they should all rent. Those 30% got it right. Garth you realize that even after the housing crisis in the U.S. that home ownership still stands at about 67%??? With an average of 65% for the past 20 years. I continue to fail to understand what your point is and your 6 year campaign predicting (incorrectly) some housing crash. Even if prices did crash they probably will still be higher than 6 years ago. Also implying that 3.5% is anywhere close to high is ridiculous. Did higher rates cause the U.S crash? Again I find you arguments confusing. I think something called Supply and Demand has something to do with current price levels. Look it up you might find the definition enlightening.

#80 Jesse Ventura Jr. on 09.04.13 at 12:41 am

Apparently ol’Garthie has it all wrong…we are all ‘richer than we think’…according to Andrew Coyne at least

http://fullcomment.nationalpost.com/2013/09/02/the-myth-of-income-inequality/

#81 Joe Calgary on 09.04.13 at 12:43 am

Calgary prices will keep rising, way to many dillusional ppl here for a correction.

#82 CrowdedElevatorfartz on 09.04.13 at 2:01 am

Smoking Man
…….. time for a different prescription.
You’re becoming lucid.
I’m very worried.

#83 VanPerfecto on 09.04.13 at 2:02 am

The litmus test is here. Either you are right or horribly horribly wrong. The question remains will offshore gobble it all up or is the game over. The movie theatre is full now watching and waiting for the results

#84 kc on 09.04.13 at 2:03 am

51 kc on 09.03.13 at 10:05 pm

I don’t want to come across as a prick, but would you mind using a different name?

I have been using this name since early 2008 in here. I don’t write as much as I used to, but still like to be known as who I was in case some of the old people ever came back into the mix.

thanks and cheers.

In case anyone was wondering, I am the one who lives on the west coast and was torn apart for being able to have the opportunity to live cheap on the farm. To those who might remember, My mom has figured out that her buying into that 55 plus condo in the Okanagan was a mistake. she has been trying to sell it for 6 months to be able to move back to the coast…. I told her to find the lowest priced for sale in her area and slash it by $10K. She didn’t listen and is now going to chase a falling market. Another wrinkly who is toast.

laters

#85 Fed-up on 09.04.13 at 2:09 am

@#40 Ann
“Don’t let the door hit your azz on the way out!
Good riddance”
———————————————————————-
Why so pissy Ann? Because he’s smart and doesn’t want wait around to live in this blood bath? Or is it because everything he said was spot on and 100% correct?

#86 wow, blast from the past on 09.04.13 at 2:13 am

thanks to #43 einsturzende neubauten on 09.03.13 at 9:43 pm

just seeing that band name reminded me of being young and single and squatting in Berlin, way before the wall fell…meeting those guys and hanging out…was 1984.

hm. they had a few things right about housing iirc

peace out

#87 JimH on 09.04.13 at 2:48 am

#34 jim

Head to the US as soon as you can. Prices are rising here, and the employment scene is getting better in certain key cities for STEM workers. It won’t last forever, but you can actually save money out here.

Shhhhhhhhhh! Jeeze Louise! We got enough loud and obnoxious Canadians here already!

#88 Siva on 09.04.13 at 7:32 am

#80 bigdeal on 09.04.13 at 12:38 am
Garth you realize that even after the housing crisis in the U.S. that home ownership still stands at about 67%???
_____________________________________________

No, it’s in low sixties and falling

“The “real” homeownership rate, adjusted for foreclosures and serious delinquencies, stood at just 62.1 percent in the second quarter of 2012, down from a peak of 68.3 percent reached during a couple of quarters in 2004 and 2005, according to an analysis by Sean Fergus, manager of research at John Burns Real Estate Consulting. That sets it back to levels last seen in 1965.”

http://www.businessweek.com/articles/2012-08-29/real-homeownership-rate-at-nearly-50-year-low

#89 Ann on 09.04.13 at 7:38 am

#86 Fed-up on 09.04.13 at 2:09 am
@#40 Ann
“Don’t let the door hit your azz on the way out!
Good riddance”
———————————————————————-
Why so pissy Ann? Because he’s smart and doesn’t want wait around to live in this blood bath? Or is it because everything he said was spot on and 100% correct

*I guess if you are staying it must be saying you are not to smart?

#90 maxx on 09.04.13 at 7:45 am

Citizens in a healthy economy understand, accept and work with the true cost of money in order to build wealth.

Thanks to meddling wet dreamers in legislation and FIRE, we haven’t seen the true cost of money in over 10 years and as a result, people have piled on huge amounts of both mortgage and consumer debt.

Legions of debtors have rapidly moved in the opposite direction of wealth accumulation, expecting that RE will take them to net-worth rapture. This is quite damaging to the nation’s economy as a whole, as there is always eventual spillover, rotting the real economy from lack of non-credit spending.

Consumers have not only taken on enormous risk with their wealth and futures, there is also the daily diet of emotional fallout from spouses and collection agencies- on top of a “no more guaranteed jobs” kind of world. This stress does not contribute to optimal performance at work nor in family life. Consumers, often in a futile attempt to assuage this stress, continue spending on junk and bridge the gap with cc and lines of credit at an increasing rate. Tragic, as the hole just gets bigger, faster.

“A recovery and RE price increases are just around the corner”. Demographic, job and global stability fundamentals don’t support this. The global economy is a minefield- seemingly good in some sectors, but most definitely risky. Small wonder there exits a casino mentality in the markets. Buy on the dips- sell on the blips.

Consumer credit is poison. Mortgage credit is as well, if not used wisely….and many don’t. The cupboard is less than bare.

Anyone borrowing any amount of money should use a business calculator. It shows you in seconds what the true cost of borrowing is. And while you’re at it, add in the income and retail taxes you will have already paid on money borrowed. Then, just for fun, take that amount and project its value into the future based on current interest rates or Garth’s portfolio recommendation. Then base your decision on that figure.

Consumer credit hangover, coupled with years of interest payments is a nasty world of hurt.

#91 TurnerNation on 09.04.13 at 8:07 am

From (D)ING Canada’s web site: 2 months ago, posted 5 year fixed at 2.79%. Today’s 3.79%.
A 35% move off bottom?

#92 detalumis on 09.04.13 at 8:09 am

#73 catfoodlady, social assistance here is not really multi-generational in the sense you think. I grew up in white-trash country in one of the worse neighbourhoods in Hamilton which now has the dubious distinction of having a life expectancy of 65.5. It is a hotbed of baby mammas, crack addicts and the worst hopelessness you can imagine. However this has all happened in the last 30 years. These people are the collateral damage from free trade. Before that everybody pretty much worked in factories. I actually remember only 1 welfare family when I grew up there.

What people don’t think of is that not everybody can be trained to be an engineer or RN, probably 1/3 of the population just doesn’t have the smarts. It doesn’t matter how much education you throw at them. By removing all the means for them to live a normal life, raise a family and have stability we created these people ourselves. So no, I don’t blame the victims. I used to mind you, but not anymore.

#93 World Traveller on 09.04.13 at 8:23 am

#72 Smoking Man on 09.03.13 at 11:31 pm

Seriously pal, everything you are posting here (once I decipher it), is far from earth shattering and new. Stop painting yourself as some sort of Nostradamus, you’re embarrassing yourself!

(See? a spelling error free post! It can be done if you try hard.).

#94 TurnerNation on 09.04.13 at 8:28 am

26 TheCatFoodLady

To rid your area of ‘undesirables’ follow a ‘Smoking Man’ method: hand out badly produced counterfeited bills to them.
Once passed on, its owner is likely to be collared. :-)
Penalty likely worse than panhandling, vagrancy ones.

#95 IM in C on 09.04.13 at 9:02 am

SFH prices in Canada will continue to irrationally rise because the reasons for their increase are irrational. Garth has touched on one of the reasons – ie, house ‘horny’ but there are others!!

#96 Canadians are BROKE on 09.04.13 at 9:11 am

More evidence that people in Canada have no money. Mainly because they jumped on the RE train recently and jugged the CREA KOOL AID…

http://www.theglobeandmail.com/globe-investor/personal-finance/half-of-canadians-dont-have-enough-cash-to-cover-surprise-costs-report/article14103842/

#97 Uwinsome on 09.04.13 at 9:14 am

Half of Canadians don’t have enough emergency cash:

http://www.bnn.ca/News/2013/9/4/Half-of-Canadians-dont-have-enough-emergency-cash-Report.aspx

#98 Penny Henny on 09.04.13 at 9:21 am

garth ,just had a weird vision…..whats the chances that your a ghost writer with the Smokeing Man moniker{why the h#% else would you permit his delusion??/

Beyond weird. — Garth
—————————————————–
Garth isn’t smoking man.
then maybe smoking man is garth

#99 gotthardbahn on 09.04.13 at 9:21 am

Hey Garth –

So Julie Dickson is gonna read the riot act to the Big Five / Big Six banks, is she? Like they’re just gonna roll over and play dead, just like that. If the elfin deity couldn’t restrain these guys, what make you think Ms Dickson will fare any differently? The big banks have lotsa money and they can buy Ottawa many times over, like they’ve been doing for years. No different this time, sir.

#100 Ralph Cramdown on 09.04.13 at 9:23 am

#76 Robert — “Inflation is coming, the pot is just on simmer right now.”

Robert, you have to bring something new to the discussion. The US Fed has been unprecedentedly clear about what it’s been doing these last few years, why it has been doing it, and how long it will continue to do it. Everybody got the memo. Given the rise of the internet and economics blogs, there’s been no shortage of digital ink spilled analyzing the system.

The theories that you’re espousing don’t say anything about future money or delayed inflation, especially when everybody knows that the printing press is running. We should already be seeing the effects of this inflation. But we don’t. Stock markets trade at reasonable P/E ratios, precious metals are way off their highs, commodities are in the dumps, real estate in most places can be had at attractive cap rates, and the ‘net is full of people moaning about how they’re lending money and only getting 2%. Why aren’t hard assets higher and bonds lower?

You need a theory to explain why inflation hasn’t happened yet, but will, in an environment where everybody knows how much money is being printed.

#101 Penny Henny on 09.04.13 at 9:23 am

I am thinking of moving.
does anyone here have any good or bad to say about Welland?

#102 Smoking Man on 09.04.13 at 9:29 am

#95 World Traveller on 09.04.13 at 8:23 am

How can a false ego and a made up character posably get embarrassed.

You need to travel more

#103 Fed-up on 09.04.13 at 9:29 am

#90 Ann on 09.04.13 at 7:38 am
#86 Fed-up on 09.04.13 at 2:09 am
@#40 Ann
“Don’t let the door hit your azz on the way out!
Good riddance”
———————————————————————-
Why so pissy Ann? Because he’s smart and doesn’t want to wait around to live in this blood bath? Or is it because everything he said was spot on and 100% correct

*I guess if you are staying it must be saying you are not to smart?
——————————————————————–

I’m not exactly staying. I bought a 3100 SQFT beauty in Mesa Arizona 2 years ago for next to nothing and just sold my home in Toronto to some idiot who thought that paying well over $1 million for what might be a $500,000 home in any sane market, was a great idea.

I will be renting a condo or townhouse in Toronto year round, but staying only from May-Oct and spending Nov-April in a climatic paradise in a paid off home with the rest safely invested.

We Canadians truly are suckers for putting ourselves in this fiasco.

#104 Ralph Cramdown on 09.04.13 at 9:39 am

#91 maxx — “we haven’t seen the true cost of money in over 10 years”

We see the true cost of money every business day. The world is full of people who’d rather make 5% or 8% on their money than 2%, and I can show you 100 ways to make 5% or 8% on your money, but every day, people decide to keep their money in demand or term deposits or government bonds, and earn 2% or less. The market is clearing, maxx. If the true cost of money was higher than what it can be lent and borrowed for today, people would buy hard assets or even consume today instead of saving and lending. But they don’t.

#105 Vincent on 09.04.13 at 9:42 am

The fed should change the maximum insured mortgage to $250k. That should solve the CMHC problem

#106 Westcdn on 09.04.13 at 9:54 am

Dollars??? – We don’t want your stinking dollars!!
http://www.youtube.com/watch?v=VqomZQMZQCQ
Inspired by a movie clip – a reason why people want hard assets like real estate and gold. They keep varying value and are useful when government lose control of their monetary system, oh, say a country like India. As I write, I see gold is taking another periodic beat down – it is curious that central banks keep such a relic. A paper dollar is nothing more than a medium of exchange that allows relative prices to be set for goods and services. Everything depends on peoples’ confidence that paper dollars have stable value to be earned and later exchanged for objects of desire or future paper dollar income. If paper dollar confidence is lost, it becomes worthless and something else must take its place. God forbid that we end up bartering things for things. We will be back in medieval times where you stand and die in place, excepting anointed ones.
So I hope that interest rates will rise to more normalized levels for current economic conditions (though I like cheap money and think 5% per year is too high for low risk loans). Since I am wishing on a star, please also save pensions plans because we don’t need more broke seniors and let Obama stop his hidden agenda moves. May he find the right people to end the stupidity of his(?) foreign and domestic policies. I wish he could be more forthright about the real intentions of risking wars and having most of the world turned against the American people. Is the petrodollar that important? I can see the rising risk of the US paper currency losing its value among the people of other nations. The replacement if required? – probably a new world currency based on a basket of domestic currencies and hard assets. When? – maybe never if the US gets their house in order and stops telling the rest of the world what to do. It is like being nagged by an evil stepmother who controls the purse strings.
Rant over…

#107 Ralph Cramdown on 09.04.13 at 9:55 am

#100 Uwinsome

That BNN article was pathetic. We, Canada’s big 5 banks, would like you, Joe Lunchbucket, to put half a year’s salary on deposit with us, earning less than inflation. We’ll do something useful with it, count on that.

#108 TheCatFoodLady on 09.04.13 at 10:16 am

#94 detalumis – I don’t blame the kids. They grow up to live what they SEE & here they see little more than rampant instability. Few of the adults in their lives are capable of long term planning – unless long term is Saturday. Money comes in at the beginning of the month & is gone in a week. It’s blown on an orgy of fast food/take out, beer deliveries, drugs, buying more minutes for their cell phones & other forms of ‘flash & trash’.

Civilized behaviours aren’t modelled. When mom is mad at the neighbour, the kids learn early that it’s best dealt with screeching obscenities at the neighbour, making threats & periodically – scuffles. That’s conflict resolution around here. Negotiation, giving in a bit on stuff – doesn’t happen often. It’s against the ‘wanna be thugster’ code.

The kids have to BE in school for anything to stick & too often they’re not. The smart kids are – it’s an escape & they learn not to count on mom getting them up & dressed to go – they just manage. I wish there were more kids like that, who desperately want out of the welfare trap.

The 9 & 10 year olds dream of the day some small time local dealer offers them a job as a bike courier – it’s big bucks! For a pre-adolescent too young to be charged.

Ordinary, middle class folks are seen as rich – they genuinely are by many of these kids & even older ones. No one can grasp how to get there; how to be ‘those people’. If it’s not instant – forget it. Deferred gratification isn’t a concept most get.

Scamming the system is learned at mom’s knee – but only midafternoon & on when she’s dragged herself out of bed. No practical skills are taught – no cooking, shopping, cleaning… when your place is too filthy for words – move. And don’t leave the hapless landlord a forwarding address.

Am I generalizing? Absolutely. I’ve known moms AND dads thrown on to welfare by a spouse leaving, c leaning them out in the process & often leaving them with the kids. If not on welfare, then bankrupt. They struggle mightily for years & dig themselves out. THEIR kids learn the value of work & a dollar.

We need solid mentorship programs for those kids determined to get out of the trap. Some exist but they’re not what they used to be. They can’t get the right volunteers, the organizations themselves are often hamstrung by their funding sources in terms of what they can do & approaches. The local schools do their best but it’s a losing fight.

I was raised by middle class fiscal idiots who spent no time teaching me anything about managing money. They were raised by parents who thought ‘rent to own’ was the greatest thing since sliced bread. I had to learn the hard way – debt. Debt is a four letter word for a reason in this household, now that we’re out of it.

Funny – now that we have money to spend, we find excuses not to spend, even when something is beyond needing replacing. I’ve got to get over that – as Garth said several posts ago, the goal in life isn’t to be cheap.

#109 August stats updated on 09.04.13 at 10:26 am

Aug stats updated due to late sales reports.
Condos: http://bit.ly/18pg68A
905SFH: http://bit.ly/18pg9kQ 416SFH:http://bit.ly/18pg6pf

Check the tables included in these posts to see how many sales are reported late. They do not impact the general trend but they add to the $volume number for that month. That is why TREB delays their news release up to 4 days after the end of the month

I wonder if they are going to publish their numbers today or they are going to wait one more day just to pump the numbers up even more

This will definitely convince the government to intervene. If I understand this correctly the bonds are on their way up and the Syria war is imminent.

I wonder what else can turn worse for Canada ?? The horizon is getting darker and darker.

#110 WhiteKat on 09.04.13 at 10:30 am

@Fed-up, Be careful, USA may consider you a ‘US person for tax purposes’.

http://isaacbrocksociety.ca/?s=snowbirds

http://www.thestar.com/business/personal_finance/retirement/2013/05/31/us_law_could_be_a_snowbird_tax_timebomb.html

#111 Ben on 09.04.13 at 10:39 am

Why do you keep pulling my posts?

Because you are a vacuous gold-pumper. Shoo. — Garth

#112 Derek R on 09.04.13 at 11:02 am

#95 World Traveller on 09.04.13 at 8:23 am wrote
Seriously pal, everything you are posting here (once I decipher it), is far from earth shattering and new. Stop painting yourself as some sort of Nostradamus, you’re embarrassing yourself!

(See? a spelling error free post! It can be done if you try hard.).

Well, almost. Since compound adjectives are correctly spelled with hyphens, that should be “earth-shattering” and “spelling-error-free”. In addition, there’s no need for the penultimate period in your last sentence.

But hey! Who cares? As long as people understand what you mean, the odd typo doesn’t matter. Unless you are criticising other people’s spelling of course.

#113 johnny d on 09.04.13 at 11:06 am

#80 bigdeal on 09.04.13 at 12:38 am
so what exactly is wrong with a 70% homeownership rate in Canada? Yes of course all these home owners are stupid they should all rent. Those 30% got it right. Garth you realize that even after the housing crisis in the U.S. that home ownership still stands at about 67%??? With an average of 65% for the past 20 years. I continue to fail to understand what your point is and your 6 year campaign predicting (incorrectly) some housing crash. Even if prices did crash they probably will still be higher than 6 years ago. Also implying that 3.5% is anywhere close to high is ridiculous. Did higher rates cause the U.S crash? Again I find you arguments confusing. I think something called Supply and Demand has something to do with current price levels. Look it up you might find the definition enlightening.

————————————————————————————

Wow… Everything you say is just plain wrong. If you truly find this blog ‘confusing’ to understand, I think there are other websites out there that are more fitting to someone like you. Nickelodeon has a website I believe.

#114 Craig on 09.04.13 at 11:17 am

#116 johnny d

Wow… Everything you say is just plain wrong.

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

Actually everything he said is plain RIGHT.

Surprised you didn’t call him a realtor or a commie.

There is no crash

There is no spike in interest rates.

What part of that are YOU struggling with??

#115 Nemesis on 09.04.13 at 11:19 am

DieHard, indeed… and clearly MuchHarder for some.

This morning’s Bizarro’Zen’, such as it is… a MacabreTale of YVR DES SRO Woe… (partly inspired by CatFoodLady’s fascinating FieldReports).

But first your ‘Rhetorical’…

Q: Why would a pharmacist MoonLight as a SlumLord [or should that be vice versa]?

A: [CBC] – Arrest warrants issued for Downtown Eastside landlord

http://www.cbc.ca/news/canada/british-columbia/story/2013/09/04/bc-george-wolsey-landlord-pivot.html

#116 fancy_pants on 09.04.13 at 11:27 am

this story has enfolded the same for how long? 2 long years. someone change the damn music. And the “subdued inflation” is bs. Where do these larger than life puppets shop for groceries? go ahead, kill us all with a wet noodle
http://www.cbc.ca/news/business/story/2013/09/04/business-boc-rates.html

#117 VanRant on 09.04.13 at 11:46 am

Hey Garth,
Can we have a voting (up or down) system on your comments page.

#118 Old Tom on 09.04.13 at 11:50 am

#27 Smoking Man on 09.03.13 at 9:04 pm
Who kares?
The obediense brigade will keep it all going ahead.
My grafs that show me the outputs from my front leading market alrgorihths telle I am the greatest mind on earth as I bank another $30m in forex trading. I am the last one with brass nuts in the game.
You are al dum and I am the man. The universe changes the orbits of galaxis when I wake up.
Oh yes, did you know I can’t spell?, I never studied, my kids are in door to door sales and I have developed the only encryption system on earth that is NSA proof AND I have enough time on my hands to smoke, drink and dip my stick!
You are al looooosers!

Dear Smoking Man or should I say Narcissistic, egotistical, self centered, arrogant, self absorbed, conceited, delusional Man.
Wow, do you actually ever read the crap you type? Holy $hit you are really a messed up dude. I don’t mind your idiosyncrasies and foibles but wow sometimes the crap that flows out of your mind is simply full of malevolence. You have a rigid system of beliefs with which a person is preoccupied and to which the person firmly holds, despite the logical absurdity of the beliefs and a lack of supporting evidence. Delusions are symptomatic of such mental disorders as paranoia, schizophrenia, and major depression and of such physiological conditions as senile psychosis and delirium. They vary in intensity, extent, and coherence and may represent pathological exaggeration of normal tendencies to rationalization, wishful thinking, and the like. Among the most common are delusions of persecution and grandeur; others include delusions of bodily functioning, guilt, love, and control.
If you banked $30m in forex trading then WTF are you doing on this blog. Talk about looooosers! If I banked $30m I would turn my back on all of this $hit and go and enjoy life somewhere warm without any radios or television. Please beam me up Scotty!
This planet has one too many Smoking Men on it.

The end.

BTW if the NSA wants crack your code they will either hack it with a better version of yourself already in their employ or just grab you off the street an kindly ask you to show them how you coded it. Don’t mess with the Machine.

#119 fixie guy on 09.04.13 at 11:52 am

#117 Craig: ” There is no crash.. There is no spike in interest rates. … What part of that are YOU struggling with??”

Thanks for the 2006 flashback. It brings mirth to struggling readers in collapsed real estate markets across the globe. Please come back when you understand the concept of historical valuations and how Harper’s policies are artificially pulling forward housing demand.

#120 Don Derc on 09.04.13 at 11:59 am

Bought a 2 bdrm twnhouse in Abbotsford in 2005 for $125K – (people paid $180K in 2008) – sold it in 2012 for $170K – the same strata complex now lists them for $145K…the best (worst) is yet to come…this is called a “soft landing”…all by design…as long as you have a job….

#121 Donald Trump on 09.04.13 at 12:06 pm

#121 Old Tom on 09.04.13 at 11:50 am

This planet has one too many Smoking Men on it.

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

That’s (2) too many !

#122 broadway skytrain on 09.04.13 at 12:25 pm

121 old tom

really?
one sentence in it was obviously a fake.

you spent 500 words and a lot of emotion and energy misreading a joke. (not even a decent imposter imho)

lay off the ultra-hyper-sensitivity and work on your piss poor critical thinking skills.
——————————————————
i bet you are the sick type who calls out for laws to ‘protect’ yourself from yourself – do you wear a bike helmet? go stand in a line-up somewhere and shut your pathetic pussy mouth the hell up.

#123 Ralph Cramdown on 09.04.13 at 12:26 pm

#119 fancy_pants — “And the “subdued inflation” is bs. Where do these larger than life puppets shop for groceries?”

http://www.statcan.gc.ca/pub/16-201-x/2009000/ct044-eng.htm

When I was a young child, my parents had this clicker thingy with three buttons, one for dollars, for dimes and for pennies. They weren’t using it anymore, but the gist was that as you placed items into your shopping basket at the grocery store, you clicked the buttons and it kept a running total.
http://www.wards5and10.com/haadpoadma.html
Don’t hold your breath waiting for those to go back into production. Or for Statscan to update their chart under the Harper antipathy-to-evidence government, for that matter.

You can buy a bag of rice, a bag of dried beans and some spices and feed yourself for almost nothing. You can shop multiple grocers, buy what’s on sale and prepare it yourself, and eat healthily for not much. Or you can buy whatever (at eye level) strikes your fancy at one grocer, including a lot of prepared and frozen convenience items, and contribute to my quarterly dividends. Num!

#124 broadway skytrain on 09.04.13 at 12:31 pm

#123 Don Derc
Bought a 2 bdrm twnhouse in Abbotsford in 2005 for $125K –
———————-
thats what you get for buyuing ‘a 2 bdrm twnhouse in Abbotsford’

houses in east van are up about 100% since 2005 and still clinbing- sorry about your poor choice of location and property type.

#125 sciencemonkey on 09.04.13 at 12:47 pm

How do we deal with multi-generational welfare families, or families that have seen their employment irrevocably lost to outsourcing and technology? It’s not right to let these people starve, but I don’t see how we can a) provide jobs or b) teach them responsible life skills.

My simple solution is to prevent future generations from being born into that painful cycle. As it stands, some welfare recipients try to have more children because they get more welfare money. I would instead incentivize permanent sterilization, for example through more welfare money. Yes this idea is cold-hearted socioeconomic eugenics, but it would work.

Go away. — Garth

#126 Ann on 09.04.13 at 12:48 pm

Fed-up on 09.04.13 at 9:29 am
#90 Ann on 09.04.13 at 7:38 am
#86 Fed-up on 09.04.13 at 2:09 am
@#40 Ann
“Don’t let the door hit your azz on the way out!
Good riddance”
———————————————————————-
Why so pissy Ann? Because he’s smart and doesn’t want to wait around to live in this blood bath? Or is it because everything he said was spot on and 100% correct

*I guess if you are staying it must be saying you are not to smart?
——————————————————————–

I’m not exactly staying. I bought a 3100 SQFT beauty in Mesa Arizona 2 years ago for next to nothing and just sold my home in Toronto to some idiot who thought that paying well over $1 million for what might be a $500,000 home in any sane market, was a great idea.

I will be renting a condo or townhouse in Toronto year round, but staying only from May-Oct and spending Nov-April in a climatic paradise in a paid off home with the rest safely invested.

We Canadians truly are suckers for putting ourselves in this fiasco
*We Canadians ?? or part time when in suits or needs

#127 johnny d on 09.04.13 at 12:51 pm

@117 Craig

Sorry Craig, both you and ‘bigdeal’ are wrong. You see, bigdeal referred to the ‘crash’ that Garth Turner has been calling for. If you actually read this blog and not just look at the pictures you’d learn that Garth doesn’t believe there will be a crash or interest rate spikes. Rates will slowly rise in due course as all central banks are telegraphing way ahead of time to make things easy for slow people like you. As they rise, real estate will slowly lose some value. Flip to page 2 of your grade 9 economics textbook guys. Hearing someone attribute RE prices to ‘supply and demand’ and only that, it’s a bit sad. Learn a little more about the many other factors in play. I thing both you Craig and bigdeal could use some enlightenment.

#128 Castaway on 09.04.13 at 12:56 pm

#115 derek R

Best reply to a post on this site in months. ROFLMAO.

#129 DUI on Money Road on 09.04.13 at 1:11 pm

My house in Ottawa costs $3400 to own (mortgage, property tax, repairs, snow plowing etc.).

The same house would rent for $2400.

So that’s a 42% premium to own vs. rent.

However, that extra $1000/mo goes back to equity, so the equation is ultimately a wash.

I’m trading my time and effort (for repairs/maintenance, lawn cutting etc) for the fact that I “own” the place, and will outright own it in 25 yrs.

#130 HD on 09.04.13 at 1:28 pm

#129 Castaway on 09.04.13 at 12:56 pm

#115 derek R

Best reply to a post on this site in months. ROFLMAO.

—————————————————

I have to agree.

That was epic!

Best,

HD

#131 BillyBob on 09.04.13 at 1:35 pm

Best comments of the day:

-Derek R handing a Grammar Nazi his azz. Nice work!

-Old Tom getting punked to death by SM (the original or impostor, who cares). Seriously, you have been owned by the Smoker.

-Ann getting her panties in a twist because she can’t handle anyone escaping the tax slavery of Canada. I love my country, but the whole place is out of whack economically at the moment – a fact that seems clear to everyone in the world other than its citizens! One day. But for now, will keep moving metal in the Middle East and reaping the tax-free benefits. You guys get your housing correction underway and I’ll be back, cheque book in hand. But I will never pay one cent in interest again.

#132 94 on 09.04.13 at 1:52 pm

A 25 million dollar hair cut..

http://bc.ctvnews.ca/luxury-lowered-west-van-mansion-price-drops-by-25-million-1.1439945

#133 Name on 09.04.13 at 1:54 pm

So Garth,
Does it make sense to you to pay the minimum 5% down payment and pay the CMHC premium, even if I have the cash to put 20% or more down?
You have suggested to pay as little as possible towards your mortgage at rAtes this low and invest instead. Does this make any prudent sense?

#134 Canadian Watchdog on 09.04.13 at 2:04 pm

My shadowstats inflation rate using StatsCan's own data for all these items. Chart

#135 Derek R's teacher on 09.04.13 at 2:11 pm

Derek R., did you forget a comma after your last ‘but’? Shame on you! The correct grammar/spelling would be “But, hey!”

#136 Old Tom on 09.04.13 at 2:18 pm

#124 broadway skytrain on 09.04.13 at 12:25 pm
121 old tom
really?
one sentence in it was obviously a fake.
you spent 500 words and a lot of emotion and energy misreading a joke. (not even a decent imposter imho)
lay off the ultra-hyper-sensitivity and work on your piss poor critical thinking skills.
——————————————————
i bet you are the sick type who calls out for laws to ‘protect’ yourself from yourself – do you wear a bike helmet? go stand in a line-up somewhere and shut your pathetic pussy mouth the hell up.

Dear Broadway,

No helmets, no protection, no pussy cats, no laws, no sickness, just an old guy who reads this blog and sees the crap sputter out every day from this guy. I really don’t care about Smoking Man or his agenda, for that matter you either. Just felt like commenting on the insanity.

BTW For your information Smoking Man has a joke a day, every day. So read the DAM BLOG CLOSELY Broadway Skybrains.

#137 Bob on 09.04.13 at 2:25 pm

#110 Ralphy Cramdown

“That BNN article was pathetic. We, Canada’s big 5 banks, would like you, Joe Lunchbucket, to put half a year’s salary on deposit with us, earning less than inflation. We’ll do something useful with it, count on that.”

————————————————

I read the same article, but didn’t notice any suggestions by the bank as to where to place your money. The only pathetic thing, was Canadians lack of savings for emergencies (oh yea, and your comprehension skills).

#138 beefcake on 09.04.13 at 2:25 pm

Here are some numbers from Ottawa (courtesy of my realtor):
March $839,000
Reduced April $795,000
Reduced June $770,000
Reduced July $759,000
Reduced July $749,000
Reduced September $719,000

Now, someone might say that this was high to start with. However, they say that houses are priced to sell in Ottawa and it’s a balanced market. Food for thought.

#139 Craig on 09.04.13 at 2:32 pm

#128 johnny d

“you’d learn that Garth doesn’t believe there will be a crash or interest rate spikes.”

Now that is hilarious!

Carry on….

Craig has a reading disability. — Garth

#140 robert james on 09.04.13 at 2:45 pm

Indeed, Fed-up, I think you should be more Canadian and come to Kelowna and buy a house and maybe snap up a condo for an investment too.. There is a bit of an over-build problem here and not enough people wanting the “Okanagan Life Style” right now, aka . looking like a milloniare on 20 bucks an hour..lol

#141 eddy on 09.04.13 at 2:56 pm

That photo is a good photoshop job. But not as good as this-

http://i.huffpost.com/gadgets/slideshows/307019/slide_307019_2668183_free.jpg?1373288172320

#142 Smoking Man on 09.04.13 at 2:59 pm

#121 Old Tom on 09.04.13 at 11:50 am

The post your were referencing was fake, flattered you did an entire essay on it.

You where sucked in like a midget playing a tuba.

Mind you your description was bang on.

#143 unbalanced on 09.04.13 at 3:03 pm

To # 51 and # 106. Congrats. Enjoy life, ya worked for it.

#144 Ralph Cramdown on 09.04.13 at 3:11 pm

#130 DUI — “So that’s a 42% premium to own vs. rent. However, that extra $1000/mo goes back to equity, so the equation is ultimately a wash.”

It’s pretty easy to play with a spreadsheet to discover that it isn’t, ultimately, a wash. The renter wins by about 20% if he invests the downpayment plus $1,000 per month and gets an average of 7% on it. After 25 years, his pile is spinning off enough to cover rent and groceries, yours is just providing shelter at a value growing with the rate of inflation, and you’re still paying all that maintenance, tax &c. And that’s assuming that you get to renew at 2.99% every five years. If not, you have to decide whether to increase your payments to stay on track for 25 years, or extend to keep your payments the same. I assumed a $423,000 mortgage and a 5% downpayment, that rent and ownership costs both increase at inflation, and that the renter would have blown his closing costs on riotuous living rather than investing them.

#145 rosie "moving forward" in the knowledge that, "this won't end well" on 09.04.13 at 3:14 pm

#130 DUI

Should read DOA on money road

#146 -=jwk=- on 09.04.13 at 3:34 pm

@ 130 DUI
You are trading your time and money for what you hope to be a $550,000+investment. Because that is what you would have – with ease- if you put the $1000.month towards your retirement fund instead….

#147 Doug in London on 09.04.13 at 3:43 pm

@Ralph Cramdown, post #107:
Good points you make. Personally, I wonder why anyone keep their money in demand or term deposits or government bonds, and earn 2% or less. That’s especially true now, when much better places to put your money are still on sale such as REITs, preferred shares, and utility stocks. Boxing Week sales in September? Isn’t that just a bit early?

#148 Donald Trump on 09.04.13 at 3:43 pm

Re Education system and our children’s future.

Its a huge topic, but I have read to much to not see some sort of master plan.

Clint Richardson is am awesome researcher .He says to get to the bottom of any issue. …..get the annual financial report.

His contention is that public education all over the world is actually being directed by a international company based in India..yes India. How many times do we see the same sort of mission statements curricula focusses repeated all over in different jurisdictions.

What you are doing is creating these 2+2= “debatable” BS and “koom bay ya” global citizen punched out of the school system like marxist robots.

INTERVIEW

http://grizzom.blogspot.ca/2013/09/spingola-special-20130901.html

Annual Report

http://www.spingola.com/CETLAnnualReport2011-12.pdf

Simply stated…this is the Marxist model.

#149 sciencemonkey on 09.04.13 at 3:54 pm

Garth, y u no publish my previous comment?

@135 Canadian Watchdog: How does that work out for average inflation over the years? Certainly 8% spikes are alarming, but my eyeball guesstimate is that the last 6 years have been at 4%, and before that it was 2-3%.

#150 Dupcheck on 09.04.13 at 4:01 pm

It is almost end of the year. Why do things take forever to happen in Canada, when will the house prices start falling?
We always play catch with Europe and USA, be it housing, or fashion, or technology, or you name it, it has been done elsewhere before….

#151 Spiltbongwater on 09.04.13 at 4:03 pm

#128 johnny d on 09.04.13 at 12:51 pm

I know Garth has never mentioned the word crash, but he was on the news last year saying that some areas of Van. could drop 40%. If that is not predicting a crash, I don’t know what it is doing.

#152 lucky luke on 09.04.13 at 4:17 pm

time to sale the house and run for the hills…

#153 Derek R on 09.04.13 at 4:20 pm

#136 Derek R’s teacher on 09.04.13 at 2:11 pm asked
did you forget a comma after your last ‘but’? Shame on you! The correct grammar/spelling would be “But, hey!”

But, hey! Who cares?

Right?

#154 TnT on 09.04.13 at 4:24 pm

This has to have an impact on the current real estate cycle that has never been measured in any previous cycle.

http://money.cnn.com/video/news/2013/08/09/n-chinese-homebuyers.cnnmoney/index.html?iid=S_Taboola

#155 Steven on 09.04.13 at 4:38 pm

I say what ever it takes to restore sanity to real estate lending practices and prices do it fast and hard and keep at it until the problem is solved and everyone cringes when they hear the term real estate for at least a couple generations. This society destroying financial insanity must end!

#156 Steven on 09.04.13 at 4:44 pm

Re: Posting #139.
If a zero was knocked off the prices listed the prices would still be high but they would be closer to being affordable.

#157 peter on 09.04.13 at 4:55 pm

Strong sales posted for the Victoria market. Better than last August. Prices and sales volumes are up. Hmmmm. Investing is all about timing wouldn’t you agree? I’ve been here 5 years & thought prices were too high then. We were both wrong.
http://www.vreb.org/mls_statistics/current_statistics.html

No price increase in a year. Don’t get too excited. — Garth

#158 john dowin on 09.04.13 at 5:11 pm

There is no public backed mortgage insurance ANYWHERE in the world except Canada (CMHC) and to much lesser extend US.

It is a burden placed on the taxpayers shoulders to offload the risks and protect the profits of the banks.

If there was a rationale for existence of mortgage insurance it would have been established and priced by the free market.

It is a pure moral hazard enterprise that is called ‘affordable housing’ resulting in delusional house prices NOT BACKED BY FUNDAMENTALS.

The fact that bozos from the banks are defending the ‘market’ prices is astonishing. Then take the risk yourselfs a..h…s, reject the mortgage insurance on all your mortgages and see what happens.

If CHMC is abolished prices will drop by 30-40 % based on that event only. Adding increasing interest rates we are looking at 50-60 % correction that is the fare market valuation of the houses in Canada, the current situations is severe distortion thanks to F’s idiocy.

Keep CMHC and kiss the economy and government benefits goodbuy in long term.

More taxes, less benefits – H’ wet dream.
The whole CPP fund is 15 % of the CMHC liabilities.

#159 Donald Trump on 09.04.13 at 5:18 pm

#135 94 on 09.04.13 at 1:52 pm

A 25 million dollar hair cut..

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

I think I will list my house 100 X’s what its worth…then have 1/2 price sale….works every time.

#160 john dowin on 09.04.13 at 5:21 pm

BTW if the fallout of CMHC is too great and the government can’t handle it they can pass some of it to the banks and the non-secured deposits that actually represent low-priority IOU’s. deposit insurance can handle very litlle hence the provisions for bail ins in the current budget.

#161 Calgary Rip Off on 09.04.13 at 5:31 pm

This blog doesnt apply to Calgary: http://www.calgaryherald.com/business/Calgary+housing+market+booming+August+with+graphic/8862396/story.html

Flood+ridiculous prices+farm land+crappy zoning laws=Worst deals ever.

Try get a rental or a shack to buy here right now.

The advice to Calgary dwellers: Wait preoccupied with bs. Wait some more. Watch and wait. When you find something that suits you you must strike with force without hesitation. That is how Calgary works, thanks to the zoning and millions of acres of wasted land surrounding the city with which maybe someone is growing hay(what a joke).

Calgary is vicious. Like Brooklyn, New York city.

#162 Ann on 09.04.13 at 5:33 pm

134 BillyBob on 09.04.13 at 1:35 pm
Best comments of the day:

-Derek R handing a Grammar Nazi his azz. Nice work!

-Old Tom getting punked to death by SM (the original or impostor, who cares). Seriously, you have been owned by the Smoker.

-Ann getting her panties in a twist because she can’t handle anyone escaping the tax slavery of Canada. I love my country, but the whole place is out of whack economically at the moment – a fact that seems clear to everyone in the world other than its citizens! One day. But for now, will keep moving metal in the Middle East and reaping the tax-free benefits. You guys get your housing correction underway and I’ll be back, cheque book in hand. But I will never pay one cent in interest again.
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Let us know when you are heading back so we can make sure the lights at the airport are on and the roads and runways are plowed and the T.T.C buses and trains are running and if you have kids the schools are in top shape and the banks are open so you can deposit all your tax free gains.

#163 Ralph Cramdown on 09.04.13 at 5:38 pm

#140 Bob

From the article: “The typical emergency fund should be equivalent to six months of one’s income, have a high level of principal stability and be easily available in a savings or investment vehicle, says the report.”

What fits that description? T Bills, money market funds, GICs and savings accounts. For the less sophisticated clientele this article is aimed at, it would be the latter two. Wasn’t that clear?

#164 Bob Rice on 09.04.13 at 5:43 pm

“House horny does not adequately describe my wife’s instinctual desire to own a house. She implacably rolled over all my objections because she had her dream condo in mind. She humoured my idea of renting for a while but found fault with every listing even when the rent was less than the condo fees plus taxes on her dream condo. It makes no economic sense but then economic logic doesn’t always prevail.

This may be the story on the macro level as well. Canada is a nation of immigrants coming from countries where nobody trusts the government or markets. The only sure thing in such circumstances is owning property. This bedrock instinct to own your own home may continue to prop up our crazy RE market.”

Um, I think the US gets those kinds of immigrants too…

#165 Canadian Watchdog on 09.04.13 at 6:00 pm

#148 Doug in London

Personally, I wonder why anyone keep their money in demand or term deposits or government bonds, and earn 2% or less.

Because the average person looks at his or her bank account in nominal terms and assumes $50,000 in the bank is savings preserved, not realizing their purchasing power is eroding away. Historical, before any currency implodes, cash is hoarded by the masses as they try to save more to pay for rising costs. This is what central banks are trying to fight by printing money — forcing those holding cash into riskier assets, like stocks.

But unfortunately for central banks, mom and dad investors are not coming back into stocks in droves after so many crashes over the last few decades and with today's headlines reading like this. They want stability, not gambling. Even if it only seems like stability while inflation diminishes their purchasing power.

You can tell and show them results about any trade or rebalancing strategy you want, they won't trust it.

#166 johnny d on 09.04.13 at 6:41 pm

#154 Spiltbongwater on 09.04.13 at 4:03 pm
#128 johnny d on 09.04.13 at 12:51 pm

I know Garth has never mentioned the word crash, but he was on the news last year saying that some areas of Van. could drop 40%. If that is not predicting a crash, I don’t know what it is doing.

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No bongwater, ‘some areas in Van’ Having a large correction don’t count as a full scale RE crash. A couple neighborhoods don’t constitute Canada’s entire RE supply. Forget what happened in the US already? Seriously, don’t drink the bongwater.

#167 Michael on 09.04.13 at 7:08 pm

Quoting our clairvoyant blogger, Garth Turner, from his 2008, Ottawa Citizen Special. “How different is the Canadian experience from the conditions that caused the US housing meltdown? Not enough.”

“Most of all, won’t those who understand what’s clearly coming, and sell now, rejoice that they found a greater fool?”

And now here at the end of 2013, with nearly six years having passed, what have we seen? Those of us that have ignored Garth’s foolish advice having fared quite well in Vancouver and in Toronto.

It seems that about the only thing that Garth is good at is crying, “Wolf!” and attracting all sorts of bitter renters that are wringing their hands and salivating as they hope for the downfall of home owners and their happiness.

Pathetic.

House prices may fall 10, 20, maybe even 30% in Vancouver and Toronto, but either way you can never make up for the loss of not having bought your home ten years ago in either of these cities.

Actually if you’d followed my advice and invested an equal amount in liquid assets following the crash of 2008 (when I wrote the eloquent words quoted above), your gains would be substantially more than in real estate. Furthermore, you would have liquidity and flexibility – qualities we will all soon cherish. However, as I also wrote, the point is not to own houses or financial assets in mutual exclusion. Success is all about balance. — Garth

#168 renting sucks! on 09.04.13 at 7:51 pm

Boy you guys must be soooo bored to come here and just talk about crap. The same crap over and over. Housing market: Hard landing or soft landing? Guess what brainers the news is now saying that there will never be a housing crash. All will be fine and house prices continue to rise. Keep on waiting for prices to drop. You’ll be old and grey b4 that happens. Yay for renting doesn’t it feel great dishing out $1500 month on rent every month and oh remember rent goes up every year. That’s it keep on renting. Good work brainers.

#169 TurnerNation on 09.04.13 at 7:56 pm

Equity markets will end at their highs this year, sorry to say it. Yuus been had.

Stealth blog dog long pick: X.TO to $54

#170 Donald Trump on 09.04.13 at 8:06 pm

Love it when Old Farts have p*ssing matches

..even if it involves “DEPENDS ” and catheters.

#171 Doug in London on 09.04.13 at 11:04 pm

@Canadian Watchdog, post #168:
I guess a lot of people don’t know a good thing when they see one. I thought with these bargain prices for the investments I mentioned that the automated stock trading system would shut down because it was overwhelmed with a least 1000 buy orders for each dirt cheap sell order. Aren’t Canadians supposed to be thrifty bargain hunters?

#172 Fed-up on 09.05.13 at 12:55 am

@Ann #129

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Yep “we Canadians”. Born, raised, educated and paid every dime of my tax dollars here.

I didn’t know that refusing to be crushed by greed and stupidity made me “un-Canadian”.

#173 Willy2 on 09.05.13 at 6:26 am

Rates are going to rise much more. But contrary to common belief that’s very Deflationary (Robert Prechter, Harry Dent). Because then bond prices will fall.