Happy, happy

death wish1

Getting excited by the surge in house sales and prices? A market that just keeps giving?

Well, I told you to expect those numbers. Now get ready for the consequences. Bidding wars for hipster shacks and a surge in demand as five-year loan rates balloon are exactly what experienced realtors fear. Not only are sales being pulled out of the future with pre-approvalettes scrambling to make offers, but as the house-and-credit gasbag keeps inflating, more government action looms.

And, by the way, mortgage rates are going up. Again. Here’s why:


Yup, you can clearly see why those people who come here to say interest rates will stay lower forever never met Mr. Bond Market. That’s where the banks fund home loans, and it’s clear from the chart above (Canada 5-year debt) their costs have swollen like a hot, croaked hippo. With each notch higher, houses get less affordable, new buyers qualify to borrow smaller amounts and the pressure on prices mounts.

All serious players in the biz know there’s a problem.

Mortgage brokers, for example, are now relying heavily on subprime deals because so many borrowers no longer qualify for mortgages at the banks – thanks to all the changes F and the gang brought in a year ago. An industry survey released this week shows subprime lending has increased a sobering 80% in the past year, as first-time buyers are shoved into deals with higher interest rates, lock-in features and fat penalties. Poor virgins. Nicely deflowered.

On average, brokers now rely on loans from the Bank of Guido to fund 18.6% of their loans – up sharply from 10% last year, and on its way to 20% in 2014.

As one broker told a mortgage industry publication: “I was never eager to do B-deals, and I’m still not, but it’s just because of all the changes around mortgage rules that I’ve been forced to do more B-deals.” And an increasing number of those deals are for (of course) condos, especially in Toronto.

Meanwhile at least one big bank honcho is suggesting Ottawa just jack up interest rates in general, if it truly wants to stop fools from borrowing their butts off to buy houses they can’t afford. Scotiabank CEO Rick Waugh admits, “low interest rates do cause bubbles.” And while he refuses to call the housing market a dirigible, “if you’re really concerned, and you’re a policy maker, you know what the right thing is? Raise interest rates.”

Naturally, with the bond market goosing yields, the elfin deity doesn’t need to. Five-year mortgage rates continue to inch higher, on top of the full percentage point added so far this year. And while it’s a safe bet bond prices in time will rise again and yields moderate somewhat, the feds are ready to pounce. As I’ve said already this week, real estate prices supported by debt, not income, are an economic time bomb. They will be diffused, one way or another.

So enjoy the house-humping headlines while they last.

Now, Ashlynn has a question:

You had helped me with some mortgage advice a few years ago and it worked out great in my favour.  I have my mortgage coming due for renewal in Feb 2014.  I already spoke to the bank rep. but I am hoping you can give me your advice on the best option. I have a small balance remaining of approx $26,000 at the current rate of 4.45%. I’d like to early renew and pay it off in as close to 1 year as possible

Based on some online mortgage calculators, since the principal is low the interest rate doesn’t seem to affect the payment that much.  Garth should I still be focused on paying down this debt or is the cost of borrowing so low that I should forget about “retiring the mortgage” and just take my time.

What is your opinion?  should I:

1-Take a 2yr closed at 2.59% (but penalties if paid off early)
2-Take a 5yr open variable at 3.80% (no penalties if paid off early, after the first year)
Or (the greater fool option)
3-Take the special rate for the 2yr closed at 2.59% and forget about paying it off quickly in 1 year.  Take the new lower monthly payment and enjoy the extra cash flow per month.

None of the above, Ashlynn. No mortgage for you. You’re a snowflake.

With such a small amount owing, go to the bank and arrange for a HELOC – home equity line of credit – equal to the loan balance. Because you have lots of equity in your house, you should get this approved at the prime rate – 3% – and the interest will be simple, not amortized. So a huge amount of your monthly payment will go directly to retiring the principal, rather than interest.

Plus you can basically pay whatever you wish each month – the only requirement is to hand over enough to cover the interest. There’ll never be a penalty for early repayment, and conversely you can spread the thing out over years, if you want. Finally, the interest rate will not rise until the Bank of Canada gets off the pot. Of course, going with a program like Manulife One will accomplish the same goal, rolling up your debt with your savings, and cheating bankers like Rick Waugh of his mammon.

Imagine that.


#1 TO and GTA Sales and Stats 2013-09-05 on 09.05.13 at 9:45 pm

TO and GTA Stats and Sales 2013/09/05
GTACondos: http://bit.ly/14v16Us
905SFH: http://bit.ly/14v17aW

#2 Squatter on 09.05.13 at 9:46 pm

Blog is late tonight! I had time to eat a frankfurster!

#3 Mike on 09.05.13 at 9:47 pm

Nice chart, looking forward to the next increase in mortgage rates.

#4 TurnerNation on 09.05.13 at 9:47 pm

Raccoon is nicknamed ‘Bonds’.

#5 calgaryPhantom on 09.05.13 at 9:47 pm

First time FIRSTTT! ( feeling accomplished)

#6 MarcFromOttawa on 09.05.13 at 9:47 pm

Happy NFL day Garth!

#7 Mike T on 09.05.13 at 9:58 pm

During my brief, somewhat successful forray into the business world, I oft encountered the old ‘steal from tomorrow to feed today’ mentality.

Never understood it.

I preffered sandbagging….start the next period off strong and ultimately be left alone in the meetings.

Anyways, these are the two things I learned in business, but it applies to life in general:

1) Successful people do what un-successful people don’t do.

2) The person with the most information wins (usually) the negotiation.

Thank you for the space Mr Turner.

#8 Smoking Man on 09.05.13 at 10:00 pm

MSM and the Herd.

So why is everyone shocked when MSM pumps and dumps real estate, and geo politics.

I know how the game works. They are at the mercy of clients, advertisers, politicians. They get out of line, people lose jobs. They have no choice.

Depending on your beliefs of the day, or your bets, the herd will be loving, or loathing the story of the day and it’s writer. Garth knows all about that.

But more slaves are using mouse clicks to get info then ever before, and they don’t go behind pay walls, they go to alternative media. The wild west of information, just look at this place.

As an example, lets look at this whole Syria thing.

Watching the MSM they are all in perfect unison and synchronicity using the same talking points over and over. Amazing 1000’s of outlets using:

“The Assad Regime”
“He has Chemical Weapons”
“The Free Syria Army”

It’s no accident.

Reporting is all agenda and policy driven, we all know that as we are here threw a web server, not a TV, it’s not the only blog we visit or sole source of information.

Prior to 1995 basically MSM is where 90% of the population got there info. The herd was tame. The rulers had it made.

Today things are very different. The machine with it’s head being predominately driven by old billionaires let’s call them Nemgnikoms, are completely out of touch with the pulse of their servants. This in spite of having the NSA read our brains.
But they still have faith in model MSM. It’s been working for them and controlling the herds beliefs, but is power is weakening very quickly.

So why do politicians go along with this?, Why don’t they put the foot down and do what’s right? They have no choice. Nemgnikoms can move huge sums of money under globalization, they can destroy or prop up countries in an instant in the bond market. They have real power.

On Syria, if one visits Zerohedge, Drudge Report , you can get a alternative idea of what’s going on. Then a bit of number crunching and boom, you know how to bet.

Now who is putting pressure on Obama to attack ?

It’s Qatar, Saudi Arabia, and Israel. Obama doesn’t really want do this war, it’s all over his body language. He has no choice.

Israel, naturally want Assad gone, they love real estate and the more desert they can put between them and Iran, and cut Hezbollah at the knees the better they sleep at night. Well organized with a powerful lobby AIPAC. Who basically purchases Congress every four years. Normal I would play stupid, never even acknowledge AIPAC exists, you can get labelled and attacked with the same ferocity as a child pornographer going down that road. The only reason I mention it, I’m like a canary in the coal mine I see the future, it’s a sign of things to come, sales pitch at the end of my rant.

Now Qatar Sitting on Massive natural gas deposit with no chance of pipelining it threw Syria as long as Assad is in bed with Russia wants him gone!!!

Saudi Arabia, they can buy just about anyone in the world they want, Iran believe it or not has elections. The Saudi don’t. They don’t like that. Monarchy works for it’s rulers.

Russia they just want a monopoly on the pipe line, and a place in the Mediterranean they can park a ship and sailors to have a place to sunbathe.

Today I saw a clip of the Free Syria Army(ak Al kida) execute Syrian Soldiers while they were lying face down in the dirt, at the same time listing to Kerry tell the world Al kida is not in Syria, A straight faced bold lie that anyone who owns a mouse does not believe.

He wants to be president, his audience is not the Herd it’s the Nemgnikoms who will fund him.

Too Big Baird, Harpo, world, and Obama it doesn’t matter that the rebels actually launched the gas attacks. Just the fact that Gas was used is good enough to attack.
90% of the US forces do not want to be Al Kidas Airforce.

My point is this, MSM and Politicians are morally bankrupt of all credibility, yes they have the rapidly deprecating influence of MSM in there corner, but after the attack they lose it all. People will watch the news for comedy relief.

One cruse missile goes astray, or Assad false flags an orphanage and blows it up and blames the cruse missile, the current model of control over the North American herd will be damaged for ever. Everyone I know has seen the clips of Rebels doing gas attacks.

If their are any Nemgnikoms out there that are not over 90, I can show you for a small, no, make that a moderate fee how you can achieve your goals and have everyone love you at the same time. 10 dimensional world champion chess player here.

Let’s face it, I’m the smartest man in the world.

It’s your last chance Nemgnikoms before you really screw things up for good.

Without Prejudice.

I am!!! The Drunken Smoking Man!!!!…………………….

#9 Nemesis on 09.05.13 at 10:04 pm

“They will be diffused”…

TeeHee! [Gotcha!]

Hint: See HurtLocker for editorial guidance.

#10 X on 09.05.13 at 10:04 pm

Keep rates low for the sake of the economy. Thank the bond market for raising mortgage rates. Eliminate 30 mortgages once and for all. Increase the minimum downpayment for a home back up to 10%, people need more skin in the game to protect themselves from a downturn – although it is probably too late to accomplish that.


#11 bond bust on 09.05.13 at 10:05 pm

Folks, forget about inflation, growth, and their influence on the rates.

What you are wittnessing is the first inning of the bursting of the biggest bubble – Bond Bubble! Bigger than tech bubble, bigger than the real estate bubble. This is the mother of all bubbles in the human history! Period!

Act accordingly.

#12 rosie "moving forward" in the knowledge that, "this won't end well" on 09.05.13 at 10:10 pm

Any guesses as to where the Canadian market is, time wise. I pick 2007. http://qzprod.files.wordpress.com/2013/02/screen-shot-2013-02-25-at-2-31-44-pm.png?w=1024&h=646

#13 Gor Gon Lin on 09.05.13 at 10:11 pm

That advice just saved Ashlynn a nice little sum of money…

#14 Franco on 09.05.13 at 10:13 pm

So far the real estate market in the GTA has been red hot for quite a few years now with no end in site. The marked will continue to grow. I have not been wrong yet and Garth Turner has yet to be right.

#15 Brian Ripley on 09.05.13 at 10:14 pm

The move up in rates is sobering as the CAD 5 Year Bond chart that Garth posted above illustrates with a 100 bps increase in just 4 months. I will be updating my CAD 10 Year Bond “REAL” yield chart by this weekend, but the data shows that it has jumped nearly 200 beeps in 6 months. The update will be published here: http://www.chpc.biz/real_10yr_chart.html

The other fundamental to watch is earnings which I have updated with the most recent data now: http://www.chpc.biz/earnings.html
… Alberta continues to outperform; 21% above the national Canadian average, 19% above Ontario, 27% above BC and 32% above Quebec.

#16 Canadian Watchdog on 09.05.13 at 10:15 pm

First Madini, now CAAMP's CEO Jim Murphy finally catches on to what's been posted on this blog (post #139, wink* wink*) many many months ago.

Jim Tweets 2h ago: "@caampceo What the analysts + media miss when commenting on higher resale numbers in certain markets are record low new home sales in the same cities"

#17 Chris L. on 09.05.13 at 10:20 pm

Garth is correct. Now do this. Deposit your earnings directly into your HELOC each month ASAP. Have cheques made out in this account (they are free by the way with most banks). Now use your HELOC like a regular bank account and pay your bills online and do regular withdrawls. If you’re like me, you’ll keep borrowing as low as possible to keep your debt down and pay the sucker off by paying the least amount of interest possible. It’s liek an all in one account but better. If you have change in your house deposit it into your HELOC and pay it down even faster. Just remember to allows deposit more than you withdraw and your debt will decrease – duh. Everyone should do this, but of course, some people let their emotions get in the way and they spend their way into oblivion.

#18 Retired Boomer - WI on 09.05.13 at 10:21 pm

Lots of bond holders around the world selling bonds. Bond prices fall = rising bond rates.

Frankly, it is time to Taper -seriously taper- to juice up these low Bond rates. As a senior with now about 22% in bonds I would not mind being able more to that allocation when rates are more “normal” 4-5% on 10 yr bonds.

Hey, we’re at nearly 3% now only 1-2% further (yes need to watch inflation currently underreported in my opinion).

Stock market will pause when rates normalize, so what it is due for mean reversion anyhow.

Hope everybody had a decent “Thirsty Thursday” a midwest tradition. Know SMOKING MAN will understand that reference.

#19 Jiminy on 09.05.13 at 10:23 pm


How many mortgages can I get with CMHC?


#20 Ex Victoria on 09.05.13 at 10:31 pm

#8 Smoking Man

You sir, can handle the truth

#21 Steven on 09.05.13 at 10:32 pm

I would say that the problem is that the real estate market is a mass movement and a cult that too many people have blind faith in and that explains its stubborn resistance to correction and I do mean real correction and not some slap on the wrist 25% drop that some people talk about. Unfortunately it might take a combination of ice age, nuclear war and may be an extinction level event before real estate cultists admit that they went too far. Then again it could be their own personal bankruptcy that gives them a reality check.
What ever it is it won’t be fun.

#22 will on 09.05.13 at 10:37 pm

Thanks Garth. Now I understand the proper use of a HELOC.

Also, I agree with everything Smoking Man says today.

#23 Suede on 09.05.13 at 10:43 pm


You must get your info from the same sources I do lol. Russia wants the only pipeline in town and you’re right – Saudi’s and Qatari’s want their own but it’s been kayboshed by As sad every time.

This thing isn’t about oil. It’s Gas this time.

Putin is showing the world that he’s the alpha male here and is at the controls. The rest of the world’s newspapers are chalk (or chock?) full of how braindead those in charge below the 49th parallel are and out of touch with public opinion.

Go read Putin’s Masters thesis from University. The guy sees Russia as the energy monster of the world.

“I must break you”
-Ivan Drago

ps. CDN long term bond at a 52 week high and broke through resistance.

pps. My mother in law still thinks Obama is the second coming and can do no wrong. Some people still love the MSM and there’s nothing we can do to change them!

#24 Suede on 09.05.13 at 10:44 pm

wow my thoughts are random and acute today. next time, more obtuse and cohesive.

#25 Ralph Cramdown on 09.05.13 at 10:45 pm

Ah, Smoking Man, you’re about an election cycle behind the times. The British Parliament — with a Conservative majority — voted against war. Obama’s called for congress to vote him a war mandate. In the old days, they’d have flown back early from their recess and given it to him in 24 hours, but we will now spend a leisurely September watching Speaker Böner attempt to juggle cats. “Party of Business” indeed.

Remember the two eternal truths: Foreign wars are God’s way of teaching Americans geography. And never get involved in a land war in Asia.

#26 young & foolish on 09.05.13 at 10:46 pm

Smoking Man is smokin’ ……….

#27 Ahead of the Curve on 09.05.13 at 10:52 pm

Great advice for Ashlynn, Garth. What about this: taking as much as possible in the HELOC and investing in a liquid balanced portfolio? If prime rate goes up, to more than what the portfolio is generating then it can easily be paid off, plus the advantage of tax liability on investing from borrowed money!

#28 Smoking Man on 09.05.13 at 10:59 pm

#20 Ex Victoria on 09.05.13 at 10:31 pm
#8 Smoking Man

You sir, can handle the truth

The whole key to investing is investigation, truth is liquid, it changes it’s form rapidly. Truth and reality is what the herd believes.

Every story has a story behind it, figure out the sub plot, gamble a bit, you make zillions.

It’s what I do, I don’t take sides, I look for weakness and opportunities. I bet, I win.

#29 Ben on 09.05.13 at 11:01 pm

Did you see the 2 yr gilt rate for the UK today Garth? Apparently it’s because the markets are convinced the UK is about to boom! Just like they were convinced Argentina was going go boom when their borrowing costs rose, eh?

#30 45north on 09.05.13 at 11:05 pm

All serious players in the biz know there’s a problem.

Canada 5 year bond yield – from 1.2 to 2.2 in 5 months!

Brian Ripley: The move up in rates is sobering

last week or so I posted a Stats Can chart saying that foreigners were selling Canadian Bonds. I thought that they can sell their bonds faster than Canadians can sell their houses. If the trend continues then the 5-year Canada bond rate will be 3.2 in 5 months time.

let’s put it another way the 1.00 increase is all the housing market can take!

#31 Obvious Truth on 09.05.13 at 11:14 pm

Smoking man is a serial rebalancer named Rose.

Has always been after Garth’s heart?

#32 connie on 09.05.13 at 11:15 pm

I was not aware that you can use the HELOC as mentioned by Chris L as a chequing account. It makes sense how how to bring the balance down

That is the principal behind the ManOne program. It works well. — Garth

#33 Carpe Diem on 09.05.13 at 11:17 pm

#8 Smoking Man

How about this …. The USA sends billions to the Egyptian military every year but with clauses around not having coups.

The coups happens but everyone says … it is not a coupe d’etat!

Smart people get it. The mass doesn’t.

So the world order just has to wave their finger to some other “bigger” evil and that’s the Syrian regime.

I know friends that are Syrian Sunnis that think all this is great that their families may be saved. I also have Syrian Christian friends that hope the terrorist supported by the Syrian Sunnis don’t win since Syria will become a Islamist State.

The middle East is so complicated. There is no white or black. There is multicolor in terms of religion and cultures.

Until everyone understand government should not include religion, this crap will happen.

Back to Syria … The world order need to distract everyone from what happened and is happening in Egypt. For the world order needs Egypt on-sided.

What would be interesting is North Korea becoming very belligerent with South Korea and China taking aim at Taiwan just about now.

It’s interesting everything happens seperately and nothing at the same time. It’s like everything is scripted and in orderly cycles.


#34 Smoking Man on 09.05.13 at 11:19 pm

#30 45north on 09.05.13 at 11:05 pm
All serious players in the biz know there’s a problem.

Canada 5 year bond yield – from 1.2 to 2.2 in 5 months!

Brian Ripley: The move up in rates is sobering

last week or so I posted a Stats Can chart saying that foreigners were selling Canadian Bonds. I thought that they can sell their bonds faster than Canadians can sell their houses. If the trend continues then the 5-year Canada bond rate will be 3.2 in 5 months time.

let’s put it another way the 1.00 increase is all the housing market can take!


With the over night rate going no where, the emasculated husband, to keep wifee happy and bobbing for apples on his birthday will gamble and go with the VRM

It’s not moving for a long time, the virgins will photo shop there notice of assessments add a zero so hunny bunny gets the concrete box in the sky, lets face what man don’t like apples.

#35 aprilNewwest on 09.05.13 at 11:25 pm

Online: Whispers from the edge of the Rainforest. Vancouver Real Estate agent dismisses August numbers as “meaningless information”

#36 Ralph Cramdown on 09.05.13 at 11:29 pm

#14 Franco — “So far the real estate market in the GTA has been red hot for quite a few years now with no end in site. The marked will continue to grow.”

Some places have a real estate market that isn’t built on fantasy. Like this:


100,000 square feet of Class A for $210/sqft in 2009


$110/sqft (including improvements) in 2013


…and rents for $15/sqft and up, looks to be 1/3 or more vacant

There’s going to be expenses, but if he can lease at those rates, it’s a cap rate of well over 10%. THAT’S a real estate play. Can’t swing the financing even with the ‘rents cosigning? Buy a REIT. And when somebody says the market “has been red hot for quite a few years now with no end in site,” count on a 1/2 off sale. Whom the gods would destroy, they first give wives who demand pretty homes with granite and stainless.

#37 Asif on 09.05.13 at 11:34 pm

Debt is a big killer. European economy is washed because of Debt. So if that is the biggest cause of these big economies wiped out Debt will definitely kill small households.

Rate of interest in Canada is bound to rise. In the last 2-3 months the rate has already risen. People will argue that the Prime Lending Rate or the PLR in Canada is not changed. But that is no argument. How can you think that the fed’s here in Canada would have increased the PLR in such circumstances. The economy would have gone back into severe recession. But the fixed mortgage rates have already gone up because they go with the Bond Rates.

But, But the biggest problem here in Canada is the soaring prices of Real Estate. The Fed’s have tried smart measures but they were not able to contain the Real Estate prices. The Real Estate prices have been all time high this year. So now how to contain this from becoming an economic bubble. The only way is to increase the rate of interest. If the rate of interest goes up by 1% the real estate prices will fall severely. But now is the time that starting 2014 they will have to increase the rate of interest and I could see them going up to 4.5 to 5% in the coming 2 years. (The PLR may go up to 4.5 – 5%, which is now static on 3% for a very long time).


#38 Asif on 09.05.13 at 11:37 pm

The above posted contents are from a newsletter I received …

#39 MEANWHILE IN EUROPA on 09.05.13 at 11:39 pm

That was great advise on the HELOC.
Now it’s time to look at prices elsewhere again, to see how expensive Canada has gotten:





#40 Cory on 09.05.13 at 11:43 pm

This whole thing is just stupid. The govt and regulators are stupid and all involved in the real estate biz are stupid. Carney is the only smart one because he created the bubble along with Flaherty but at least carney was smart enough to appear to go out on top.

Too bad these politicos are too self serving to stop this stupidity all to “appear” like Canada is the picture of fiscal prudence all around.

This “Canadian real estate is great/in a bubble debate is absolutely ridiculous. Cheap money and easy credit (and devastating floods) are all things realtors cheer about to make their oversized commissions. A grade three student would be a better candidate for a realtor job…at least they can spell.

Get some balls Flaherty and end it right now.

#41 Vamanos Pest on 09.05.13 at 11:44 pm

#14 Franco
All (as in 100%) of you naysayers have the same argument:
First, you all claim that formation of the bubble is evidence that the bubble doesn’t exist (“so far real estate market in the GTA has been red hot for quite a few years”). Second, you cite the fact that the bubble hasn’t burst as evidence it doesn’t exist (“The marke(t) will continue to grow.) It is the absolute definition of recency. Congratulations, you are the greater fool.

#42 dienekes on 09.05.13 at 11:46 pm

No such thing as religious wars, all wars a nationalistic. They are just veiled in religion.
Nationalism, the bread fools eat.

#43 Vamanos Pest on 09.05.13 at 11:49 pm

Hey Garth, a few months ago you quoted a guy with a magic stat that predicted market sentiment 60-90 days in advance, the post was called “the day it died”. Could we get some follow up from that guy, what are his numbers saying now?

#44 Nosty the Vladmaylion on 09.05.13 at 11:50 pm

#8 Smoking Man — “. . . and a place in the Mediterranean they can park a ship and sailors to have a place to sunbathe.” — Hello sailor! And welcome to the Chinese, because they’re sending a couple of wagons there as well.

Here’s something else for pudding here.

#45 Sgip on 09.06.13 at 12:15 am


#46 MrHulot on 09.06.13 at 12:29 am

I see most of the bearish Vancouver Real Estate blogs calling it quits. At least they were honest enough to admit that this market isn’t quite dead yet – as irrational as it is. How about you Garth? Still trying to hang on?

Hanging quite nicely, thank you. — Garth

#47 FATHER on 09.06.13 at 12:30 am

I was watching our conservatives going to the g20 and they look like dorks moe curly and whatever the other guy is called such morons they have no brain or personalities. I am gonna vote for the federal libs next election hopefully garth you run

#48 Yes? on 09.06.13 at 12:38 am

1. Read Garth’s post for the day.
2. Begin to read the comments.
3. See the first “first” comment(4th today because they rarely are actually first).
4. Close the page in disgust without reading anything more

#49 Albert on 09.06.13 at 12:41 am

Im happy

#50 JOBS JOBS JOBS going bye bye on 09.06.13 at 12:42 am

The lost job situation is growing so bad in the GTA and across Canada that now you are getting ads telling you to call before you sign. One lawyer had an ad teling you to go here lostjobs.ca . The RE bubble is going to cause a world of hurt as more and more people lose their jobs since Canadians can not compete with 50% less wages USA. Why? Because not only are Canadians some of the dumbest and most gullible to realtor propaganda but we have spend spend spend CONservatives who have lent out $600,000,000,000.00 of sub-prime mortgages. Look out below it’s going to get nasty out there. Thanks CONs for spending hundreds of billions of dollars on a house of cards.

#51 JOBS JOBS JOBS going bye bye on 09.06.13 at 12:43 am

Here is the website for those who may need it. http://lostjob.ca/

#52 john dowin on 09.06.13 at 1:00 am

Very interesting times indeed.

The story of the day:

50 more basis point increase and….


#53 John in Mtl on 09.06.13 at 1:05 am

I’m not sure that mortgages at 5% will crash the market, even now. I bought a condo in 2007 and the best deal I could get was a 5 year 5.10%; and the market was very crazy busy that year here in Montreal anyways. Tons of buyers, record sales according to the notary. It might take a lot more than 5-6% to stop this thing.

I’m sure glad I sold it last year. I don’t care that I didn’t make any profit but I got rid of the biggest headahe I could ever get in my life!

#54 John in Mtl on 09.06.13 at 1:06 am

@ #21 Steven on 09.05.13 at 10:32 pm
“Then again it could be their own personal bankruptcy that gives them a reality check.”

… and maybe not because in a bankruptcy, which is a joke these days, you can sometimes get to keep the house; and your car, and your furniture, and lots of other stuff.

#55 Worried realtors on Greaterfool on 09.06.13 at 1:07 am

Why would realtors come on greater fool if they were busy selling houses? Sales are slow and many out of work realtor are hurting bad. The sad fact is many with mortgages are struggling to make payments and have stopped going out to spend money. This has resulted in companies reducing hours and or laying people off. The Canadian economy faces an economic storm which is getting worse as the bubble grows. The government better do something (already to late)before they lose total control of the situation.

#56 john dowin on 09.06.13 at 1:16 am

# 34 Smoking Man,

Overnight rates are NOT determining the mortgage rates. Mid term Bond rates are. And they are rising fast. It is driven by inflation, not by improvements in the economy.

One big problem is the derivatives dependency on the interest rates. It is expected that 10 years US treasuries over 3.5 % (over 4 % for sure will) will trigger tsunami in the financial world.

At some point in time (very soon) central banks will be faced with a dilemma: Either monetize most of the new deficits or face the music (hence the provisions for bail in). It cold be combination of both based on how things turn out.

We are in for very interesting 1-2 years ahead. Pass the popcorn.

Housing is screwed big time. I would not exclude interest rates in the double digits and very, very significant inflation.

The age of cheap money is OVER.

#57 john dowin on 09.06.13 at 1:22 am

And all the retirements savings in low interest bonds?….
(most of the retirement pension funds)

Kiss that equity goodbye… Retirees with their money in housing and bonds have seen nothing yet.

It seems dividend paying stocks that Garth advocates for are the only game in town (and maybe commodities)

#58 Infused with Opiates on 09.06.13 at 1:23 am

April 127 from last blog – they have shown enough downside and have been consistent when you review past sales numbers for me to give them the benefit of a
doubt. Are you on VI? Do you understand this market or
have other info?

#59 DreanmingInTechniColour on 09.06.13 at 1:24 am

I am no economist, but mmmmhhh ?

1. year after of cheap mortgage money being made available to everyone with a heartbeat at the time the printing and coin presses are spewing out $$ millions of new Canadian funds..

2. Housing prices take off because monthly payments are so low due to extra long amortizations and low interest rates..

3. Lenders of insured mortgages fully protected by the CMHC (taxpayers)..

4. housing prices start dropping – then all the extra money the Gov’t printed – then starts disappearing..


#60 T.O. Bubble Boy on 09.06.13 at 2:02 am

ummm…. is it normal for mortgage debt to double in 4 years?

According to data released last month by the Bank of Canada, the total amount mortgage debt held by Canada’s chartered just about doubled in the past four years, to $879 billion in June, 2013, from $436.6 billion in June, 2009.


And, there you have the real “Economic Action Plan”, not the smoke & mirrors advertised endlessly by F and Harper with your tax dollars.

Oh, and does anyone think that this will be able to double again in the next 4 years? No? So, where will “economic growth” come from?

#61 dosouth on 09.06.13 at 2:37 am

Ontario wins again with the highest ration of 20-29 year olds living in the basement. Some areas around 70% + Even in the Artic it’s around 48%

Now the older employees (over 30) are taking jobs at McD’s just to make ends meet. Poor 15-18 year olds just are making the cut.

The irony. Having to take on 2 and 3 jobs to keep your unemployed in your basement. It’s all our fault for working so hard to pay the bills…isn’t it?

Interactive map for under employed Canadians living off the parents

#62 Happy, happy | The Affluent Boomer™ on 09.06.13 at 4:46 am

[…] Happy, happy […]

#63 Rabbit One on 09.06.13 at 5:38 am

Use HELOC as chequing account, yes it works well.
You don’t pay account fees (saves hundreds of dollars per year), free personal cheques, it is as if comes with ODP (Over draft Protection) free of charge, free, unlimited debit (can connect HELOC account to bank card) etc

But, one thing for sure, you must be desciplined.

#64 Adam on 09.06.13 at 6:39 am

Unfortunately, at this point in the political cycle, this is what’s going to unfold (bet on it):

F tried to contain the problem and failed.
He’s too close to an election now to do anything drastic (Harper wont let him)
Instead, he’ll choose to do nothing by finger wag until a few months before the election at which point he’ll “retire”

He should’ve gotten out when Carney did, he would’ve looked like a genius for “steering is through the global financial crisis” virtually unscathed.

#65 ILoveCharts on 09.06.13 at 6:42 am

Re# 61 dosouth:

From that link:
“Census division: Greater Vancouver
Population aged 20 to 29, living in the parental home in 2011:

Isn’t this actually an argument that prices won’t correct by very much?

It proves that there is a large group of people that are waiting to enter the market (even if there was no immigration.) This growing pent-up demand will reduce the chance of a significant pricing correction.

And a closely related point:
We often hear that “more than 70% of households now own their own home” and it’s argued that this is number is too high to be sustainable.

Perhaps the real reason that this number is rising has nothing to do with the amount of people that are buying homes and more to do with a tight rental market and changing cultural norms.
I assume that if a young man continues to live with his parents, then he is considered a part of their household and that household is a part of the 70%.
If that young man moves out and rents, then he is a part of the 30%.
He didn’t buy a house in either situation but he still had an impact on the statistic. In other words, if more kids are living at home instead of renting, it makes it look like a higher proportion of Canadians are buying a house.

Here is another similar situation:
Today it is not uncommon for professional adults to rent with roommates in Vancouver. I wouldn’t be surprised if this is happening with increasing frequency (compared to historical norms,) because the internet makes it easier to facilitate these arrangements.

Do the stats treat the group of roommates as a single household? If so, the math isn’t entirely fair. If there are three roommates then they count as one household when they are renting but three households when they buy (since they would each buy their own place.)

#66 bigrider on 09.06.13 at 7:03 am

I’m still waiting for the RE bubble to burst here in the GTA.

All my Italian friends have been right about prices quote “she’sa going ‘upaUpaUPPA” !! . No ‘edumacion’ (education) like our blog host, but right nevertheless.

Garth, if RE prices are 50% or so higher by 2017, I think you should agree to “stop the madness” in your writing and blog , as Kevin O’Leary would say.

I’ve thrown in the towel. The GTA really is different.

#67 Steven on 09.06.13 at 7:17 am

If you are correct it points to a systemic tendency to cheat creditors rather than making the debtor pay until he can’t or until the debt is discharged. In other words lying, cheating and stealing is protected if you are part of a certain group. The other three things that would force a reality check 2 are enevitable and one is optional. Thinking they won’t make a difference is wishfull thinking. Houses buried under ice sheets are worth nothing, houses contaminated or burned up in a nuclear war are worth nothing and extinct people are worth nothing. Extinct humans don’t give a damned about real estate values.
It is a hell of a thing if that is what it takes to bring people to their senses when it comes to real estate.

#68 The real Kip on 09.06.13 at 7:58 am

“So enjoy the house-humping headlines while they last.”

It’s lasted since 1996 so far. Do you really think the government will change much with a federal election drawing ever closer? Fat chance!

#69 TurnerNation on 09.06.13 at 8:07 am

Shall see if TLT.US double-bottoms here or attains double digits.

I bet ‘Blog dog Prozac’ did receive a specific warning by his predecessor to ‘stay away from that pathetic weblog’.

#70 Pr on 09.06.13 at 8:19 am

… and you’re a policy maker, you know what the right thing is? Raise interest rates.”…

Exactly! The one’s involves engineering all this, know when and what to do.

To bad the public don’t get it.

#71 Smoking Man on 09.06.13 at 8:22 am

#57 john dowin on 09.06.13 at 1:16 am

Thank john

So what you’re saying is fixed rate mortgages are driven by bond prices.

And the variable rate mortgage VRM is tide to the BOC rate.

Who would have known.

Um, are you new hear?

#72 TurnerNation on 09.06.13 at 8:22 am

TD’s laying off 10 from equities. I haven’t heard which desk.


TD Securities cuts staff on equities desk

#73 Smoking Man on 09.06.13 at 8:24 am

Vladimir as always very cool links.
How do you find the stuff, well done

#74 pbrasseur on 09.06.13 at 8:28 am

As Greenspan explains in his bio (no he’s not wrong about everything…) the era of cheap money and low inflation began with globalization as millions of new workers entered the market at low cost. Large surplus made in China and elsewhere had to be invested somewhere and that drove interest rates down in developped countries. This unbalance – consumers vs producers – is where this era of cheap money was born.

This is the rational , after that of cource politicians, central bankers and human behavior joined the bandwagon and made it all worse, sometimes bubbly.

In the end it lead to the great financial crisis, which actually signals the end of this cycle.

Now production costs are rising in China and other emerging nations while they are shrinking in the US and parts of Europe. Consumption is up in emerging countries while in the west household balanced sheets are improving. In short the unbalances between producer ans consumer nations is being repaired.

This has many implication, for example it means that inflation and interest rates will normalize (thius has started). Ours economies will have to adapt, we will have to become productive again because we won’t be able to rely solely on consumption (and credit) to drive growth.

This is a big painful change, the US has and is still going through it (remarkably fast IMO), Canada unfortunately, mainly because of government intervention, has not even begun to change. We are still relying heavily on debt and consumption, productivity is not improving, gorvernments are still fat and irresponsible, etc…

If you understand all this then you know why Canada is in such a tough place right now.

#75 TurnerNation on 09.06.13 at 8:29 am

More socialism. This money, if actually used on the ground, will soon be destroyed by US bombs.

BTW there is some evidence international ‘charities’ are used to fund weapons, armies, or at least siphoned off to corruption and corps. Quite likely. Has our money ever made a difference? Doubt it.

Why not, even larger homegrown ‘charities’ were proved to be scams: http://www.tampabay.com/americas-worst-charities/

“Prime Minister Stephen Harper announced today in a statement that the government would contribute $45 million in further help for Syria. The money will go to organizations that provide food, clean water, sanitation, shelter and protection to civilians, as well as Syrians who have fled the country. Canada has contributed a total of $203.5 million since last January.”.
As Ozzy and crew once sung:

“Generals gathered in their masses
Just like witches at black masses
Evil minds that plot destruction
Sorcerers of death’s construction”

#76 fancy_pants on 09.06.13 at 9:06 am

As long as the B of C rate remains low, isn’t it simply make variable mortgages more attractive? And b/c that remains artificially suppressed, won’t people still feast at the RE trough taking out variable rate mortgages? Or are the banks financially raping people there too?

I addressed this in a blog post last week. — Garth

#77 bigrider on 09.06.13 at 9:16 am

#76 TurnerNation

“In the fields ,the bodies burnin”
“As the war machine keeps turnin”
“death and hatred to mankind”
“poisoning their brainwashed minds”

Oh ya…

Love the song ! What a rift !!

#78 Canadian Watchdog on 09.06.13 at 9:21 am

BREAKING: U.S. added 169,000 jobs in August, unemployment rate falls to 7.3%

BREAKING: Participation rate in U,S, falls to lowest since August 1978

Too bad unemployment just rose to about 11.4% from 11.2% according to ZH, and if you don't believe conspiracy theorists' calculations, then read what the former BLS commissioner, Kieth Hall, had to say about the unemployment rate. It's all BS.

If you want to know where the real economy is heading ahead of the herd, then stop believing Goebbels quality-grade statistics spewed out by the government every month and start researching private statistics. There is plenty.

Intuit Small Business Revenue
PriceStats CPI

Bye bye bond taper. Hello QE5.

#79 Penny Henny on 09.06.13 at 9:25 am

#66 ILoveCharts on 09.06.13 at 6:42 am
you so smart

#80 :):( Ying Yang on 09.06.13 at 9:33 am

#8 Smoking Man on 09.05.13 at 10:00 pm

Wow Smoking Man got spell check on his computer. The
universal consciousness consolidator must have told him to make his sentences clear and concise as well as spelled correctly. My brother in Hong Kong emailed me to ask if this is the same guy.

Are you sure you are Smoking Man?

#81 Holy Crap Wheres The Tylenol on 09.06.13 at 9:36 am

#78 bigrider on 09.06.13 at 9:16 am

#76 TurnerNation

“In the fields ,the bodies burnin”
“As the war machine keeps turnin”
“death and hatred to mankind”
“poisoning their brainwashed minds”

Oh ya…

Love the song ! What a rift !!

Its coming Big Rider!!!!

Now in darkness world stops turning
Ashes where the bodies burning
No more war pigs have the power
Hand of God has struck the hour
Day of judgement, God is calling
On their knees the war pig’s crawling
Begging mercy for their sins
Satan laughing spreads his wings
Oh lord yeah!

#82 BR E19 ELok on 09.06.13 at 9:36 am

#79 Canadian Watchdog –

‘Bye bye bond taper. Hello QE5’

Could not have said it better myself!

#83 Rational Optimist on 09.06.13 at 9:45 am

#75 pbrasseur on 09.06.13 at 8:28 am

You and Ralph Cramdown are the best commenters on here, by miles. If you have any book recommendations, please fire them our way.

The explanation you provided is so straightforward and logical, of course most people won’t be able to accept it. Canadians especially don’t like the idea of having to buckle down and improve productivity. We’ve forgotten that being productive is the only way to stay rich. We still believe you can cheat your way around that. And it’s a lot more fun to talk about how conservative you are than to actually fix your balance sheets.

I’m in Ontario, but I’m still optimistic, somehow. Look at how fast the Americans are turning it around- you’re right, it IS remarkable! We still have the biggest advantage any country has ever had- being right next door to them. We’ll have to go through some pain, and it will be greater every quarter that we delay starting it. But we’ll come through it, eventually. The Canadian dollar will fall, which is bad because it means we’re poorer, but good because we look more competitive even though we’re not. Governments will hit a brick wall and cut the waste, as in America.

It’ll be tough, but we’ll get there. It’ll seem bad while we’re doing it, but we’ll be glad we did when we look at it from the other side.

#84 sciencemonkey on 09.06.13 at 9:45 am

@67 bigarider
There is no bubble in Toronto. You don’t have a house because a) you are not an elite wage earner, successful entrepreneur, or wealthy immigrant and b) unlike the rest of your familia, you were too thoughtful and careful to jump in earlier. I don’t think we need to designate Toronto as world-class for the above to apply. It is what it is.

From my own experience, I know that you will feel a lot better once you truly understand that you will never own a place in Toronto. You just need to get over that psychological hump; banish the hope, and the thought, that you are the type of person who lives in a house. The social contract has changed. Mid-level peons can no longer compete. (Like Garth says, no one deserves a house, or any protection against hot asian money when competing for one.) Like me, for the next few decades you will be paying off the mortgage of your Portuguese landlord’s 10th low-rise apartment building. You will still have a decent retirement if you can sock away savings every month.

I do empathize that this change in outlook may be harder for you to affect, because you have 300 cousins and uncles at the banquet hall constantly reminding you about their real estata. There is the option of leaving the GTA, but you have choose between whatever attractions the GTA has (familia (?)) and the prospect of a better life in a smaller city.

#85 Holy Crap Wheres The Tylenol on 09.06.13 at 9:58 am

After more than 100,000 people have died since the uprising against President Assad began in March 2011 now the UN refugee agency says more than two million Syrians were now registered as refugees. A further 4.25 million have been displaced within Syria. This reminds me of 20 years ago when the Rwanda genocide occurred and what did the world do? Nothing? Now the United States World Police Force wants to go and do something? While the UN Secretary General Ban Ki-moon, who is even designated as “UN Clown” by some of his staff, has yet again warned against the dire consequences of a possible US-led military attack on Syria and stated that the consequences of a US strike on Damascus will be extremely grave, the Russians have sent another landing ship toward Syria and this is possible a sign for the stance of Moscow in terms of the plans by the United States to launch a military intervention, actually a full-scale war, against the Arab country. The Russian Foreign Ministry has recently warned about the possibility of a nuclear disaster in case American warheads would hit the nuclear reactors near the Syrian capital of Damascus, the Iranian rhetoric seems to imply more and more that the administration in Tehran will not only watch when Washington really attacks Damascus but is ready to make a move. So to sum it all up people in a short sentence “war profiteers love conflict.” Invest in munitions makers, weapons corporations and military suppliers that’s where the money is going in the next era!

#86 Penny Henny on 09.06.13 at 10:07 am

U.S.A. data
-Not only did hiring miss expectations last month, the job count for June and July was revised to show 74,000 fewer positions added than previously reported.

so does that mean those other great job numbers aren’t really that great. this is a reoccurring theme with the US job numbers, they are always revised DOWN.

-In addition, the participation rate – the share of working-age Americans who either have a job or are looking for one – dropped to its lowest level since August 1978.

My, my. this is not your fathers typical recovery. Any tapering will be just for show, then it’s back to the new normal. QE FOREVER!!

like it or not.

#87 bdwy sktn on 09.06.13 at 10:08 am

#66 ILoveCharts

Its often quoted that over 50% of vancouver Residents. Rent

#88 jess on 09.06.13 at 10:20 am

79 Canadian Watchdog
regarding future easing

Banks Don’t Lend Reserves! Who Knew? MMT, That’s Who!
Author: L. Randall Wray · August 15th, 2013 ·
“OK so it took almost four decades but finally the mainstream is waking up to the fact that banks do not “lend out” reserves (except to one another in the fed funds market). The whole “deposit multiplier” story that was taught in every American money and banking textbook is wrong. Always has been wrong.”


6 September 2013
The G20 Leaders Declaration has been published

‘crack down’ on letterbox companies

Netherlands …why stop at 23?
treaties with over 90 countries makes it a nexus for tax avoidance, allowing multinationals to reroute their profits through Dutch “letterbox companies” that do no real business in the Netherlands and exist largely for tax purposes.”

#89 bigrider on 09.06.13 at 10:25 am

#85 Sciencemonkey.

Well, you are definitely new here.

Why don’t you go way back ,say 2008 ish or so and forward .Look at some of my previous posts. Been here since the beginning.

I own my home, mortgage free with substantially more in financial assets FYI. I have followed Garths age rule on RE exposure, from day 1 ,without the need for his advice.

Perhaps you should remove science from your moniker and just go with monkey..LOL

#90 bigrider on 09.06.13 at 10:29 am

Actually sciencemonkey not sure if you were being critical, condescending or observational so, I will withdraw my somewhat harsh previous comment on the assumption that I may have misread the intent of your post.

#91 rosie "moving forward" in the knowledge that, "this won't end well" on 09.06.13 at 10:40 am

I blame the Skippy boomers. http://www.brisbanetimes.com.au/queensland/brisbanes-35year-1645-per-cent-property-boom-20130821-2sbn7.html

#92 Big Brother on 09.06.13 at 10:44 am

For Smoking Man regarding the NSA.

MKULTRA has some info for you.


#93 pbrasseur on 09.06.13 at 10:50 am

@Rational Optimist #84

Thanks for the kind words!

Yes of course Canada will get through it, it is still by far one of the best country in the world to live in and I have no doubt it will remain that way.

But don’t underestimate the task at hand, just look at the US, although they touched bottom and are now rising again, employment levels are still extremely low, at levels not seen in decades, they are five years in this crisis and it still hurts. That’s what changing from a consumer to a producer model does.

I’m not scared for myself, I’m well prepared (I read The Intelligent Investor from Ben Graham more than once :-)

But some part of this country are already weak and have no margin to react, beginning with by my own province of Quebec. Frankly I have no idea how this is going to unfold in Canada, it could take some time (and somehow will seem less dramatic than the US), but it is scary because the bottom appears to be so far down…

#94 Westcdn on 09.06.13 at 11:24 am

An elegant solution to the Syrian civil war. Political representatives as boots on the ground and walking the talk. I like the concept even more if they could bring their favourite bureaucrat with them. http://www.theonion.com/articles/poll-majority-of-americans-approve-of-sending-cong,33752/
Change can as good as a vacation to open the mind.

#95 QE5 on 09.06.13 at 11:36 am

Time to taper the talk of tapering?

downward revision in July jobs from 162,000 to 104,000,


#96 Ralph Cramdown on 09.06.13 at 11:36 am

#86 Penny Henny — “My, my. this is not your fathers typical recovery.”

Exactly! Because it wasn’t your father’s typical recession. Today’s reading is Krugman (note the date) via a blogger who disagrees with him, usually. I provide the blogger’s URL for two reasons; so people who can’t leap NYT’s paywall can read the original, and to point out a goldbug’s fantasy world…

No meddling central bankers, no soft-dollar fiatsymps at Treasury. Men were hard, and so was the money! “There were 15 major downturns between 1855 and 1900 compared with only 8 between 1955 and 2000. On average, in the last half of the 19th century a major decline in output occurred once every three years: when did they find time to grow! Output fell an average of 17 percent in each of these episodes.”

Gee, why doesn’t everybody want to go back to those halcyon days?


#97 sciencemonkey on 09.06.13 at 11:42 am

@ bigarider
Sorry, I hadn’t seen your earlier posts. I think I’ve been here for a year give or take.

I assumed you were a late millenial like me. The intent of my post was equal parts commiseration, anger at the current situation, and an attempt to resign myself to the new reality. I spent a lot of time in school to come out (luckily) with a job and some savings, but (unluckily) with no prospect of a comfortable life in the GTA. I only blame myself for picking the wrong field to study.

WRT my nickname, the fact that it’s a monkey cancels the idea of doing good science. It came about because during grad school, some people always ran around trying lots of experiments without thinking. In industry, I also enjoy how it relates to managers showing guests around, so they can see the sciencemonkeys working in their lab (cage).

Anyway, I enjoy your Italian shtick, keep it up.

#98 Suede on 09.06.13 at 11:52 am

People are so creative.

This is the Realtor Hunger Index for the rest of us blog dwellers to check out and add to your toolbox. Little number plucking going on, but consistent nevertheless.


Realtors got really hungry last fall. Which means resorting to guerilla tactics to make sales. Maybe a repeat this fall.

#99 Fed-up on 09.06.13 at 12:05 pm

“Bank of Guido” eh Garth?

As a Sicilian-Canadian I resemble…errr I mean resent that remark. ;)

#100 karl hungus on 09.06.13 at 12:06 pm

no crash in edmonton

#101 Nonno Nicola on 09.06.13 at 12:11 pm

Numero 67 Bigga Ridero

“I’ve thrown in the towel. The GTA really is different.”

Hya Bigga Ridero! Dis is Nonno Nicola, youra gooda advisor. Now I gonna teacha you anoda lezione young fella wid da universita educazione. In 2005, da governmento di Ontario, dey putta a greena belta, da biggest in da world around da GTA. 7500 sq kms to be preciso. You can growa alota pomadoras on dat much land Bigga Rider. So the GTA is really different as youa saya. When you restricta da terra, the prica of da real estate go uppa, uppa, uppa. Just looka at Londra, England which putta da green belta around da citta in 1935. Now you learna someting new from Nonna Nicola and remember Bigga Boya, I only gotta a grada 5 educazion!


#102 Mr. BigStuff on 09.06.13 at 12:16 pm

“When I die I want to come back as the Bond Market”
– James Carville

#103 aprilNewwest on 09.06.13 at 12:22 pm

#59 – “they” and “them”? I had to bring up my previous comments to be able to answer yours’. Your first sentence is not very clear. “.. the benefit of the doubt”? What does “VI” stand for? I don’t know the market except for what I see in my area and read about for the rest of the Lowermainland and Canada. As well as Garths’ blog I read Whispers from the Edge of the Rainforest, Vancouverpricedrop [seems to be off-line for the summer] Capital Economics on Canadian RE, Vancouver flippers in Trouble………………

#104 realist on 09.06.13 at 12:43 pm

lol this blog is so backwards. The US is screwed, Canada is strong. Houses in places like Calgary are strong because the economy is strong and people are making a lot of money. In the US you had people making $5/ hour buying $500,000 homes. This does not happen in Canada. Housing will not crash here. The government has taken steps to cool off the housing market. Higher rates, lower amortization periods, no CMHC for over 1 million. None of this has “crashed” the market. It’s cooling it off and we’ll have a soft landing in places like Vancouver and Toronto. Calgary is not even close to topping out yet. Given the strength of the economy and being ranked one of the best places to live in the world, it has a long way to run up yet. This is reality. Garth has called for a crash for how many years now? Eventually you’ll be right, but a prediction is only valuable if you give a time frame. If you say “in the next 1000 years the market will crash” well DUH. Thanks for useless info.

I thank you right back, cowboy. — Garth

#105 BBC on 09.06.13 at 12:48 pm

Garth, can you tell me where to get a HELOC at 3%? When I search online all I see is 3.5%.


#106 Nemesis on 09.06.13 at 1:07 pm

@Ralph/#25… “Never get involved in a land war in Asia.”

WilliamGoldman had a very good take on that… works quite well as a quick primer on HegelianDialectics or InternationalRelationsTheory [and TheFineArt of SicilianBaiting too, for that matter].


#107 TorontoBull on 09.06.13 at 1:07 pm

@102: I spilled my coffee! thanks for the laughs :)

#108 dosouth on 09.06.13 at 1:32 pm

#66 ILoveCharts –


Too much analysis. Blue collar Nanaimo BC has a 33% basement dweller factor. Lots of mixed culture and colleges there too.

It is time to kick ass and get them to grow a pair and move on. Plain and simple, no analysis or friends in the basement theories necessary.

Reality sucks doesn’t it.

#109 Nemesis on 09.06.13 at 1:33 pm

Egads! I almost forgot the SaltyDogs’ Quote’OTheDay:

“I do think we live in most extraordinary period of history. The fact that we feel becalmed is the element that is most terrifying, the second-rate quality of leadership, the third-rate quality of parliamentary behaviour.” – David Cornwell [aka John le Carré]

[FT] – Conversations with John le Carré


#110 DM in C on 09.06.13 at 1:40 pm

Hahahahah #107 ….. Nemesis, I thought the same thing.

#111 T.O. Bubble Boy on 09.06.13 at 1:43 pm

Apparently we’re running out of greater fools!

I highlighted a flip in midtown Toronto a few months ago:


96 Chaplin Crescrent.

Sold in 2008 for around $1,000,000 (was listed twice in April 2008, once at $999k and once at $1,049,000).

Then, 4 years later, listed in April 2012 for $1,080,000
(virtually no gains in 4 years)

Then, one year later, it was again listed April 2, 2013 @ $1,850,000, and re-priced down to $1,750,000 one week later… with a bunch of useless renos that haven’t fundamentally changed the house in any way (all superficial from what I could tell).

Now, it was re-listed again @ $1,624,900:

Will be interesting to see who buys this sucker.

#112 coastal on 09.06.13 at 2:06 pm

Biggest sales in Victoria in four years touts the VIREB prez, but prices remain stagnant at peak selling time of the year. If you can’t get prices to budge up when homes are flying off the shelf then you know it’s the last hurrah.

Meanwhile the agents are dressing up as clown actors with stupid signs to attract business. I guess the old adage of 20% of the agents get 80% of the business holds true when you have to resort to that level. Desperate times in V-town.

#113 Donal Trump on 09.06.13 at 2:18 pm

Re GreenBelt Golden Horsehoe in GTA:

I had hear about it…but wow…
Smacks of BC’s Agricultural Land Reserve (ALR).

Simply greenwashing another agenda. They are creating a land use freeze to satisfy a communistic Agenda 21 …..expropriation without compensation .

In addition, it simply creates a land shortage that drives other lands prices up.

Nothing to do with anything green other than creating larger urban prisons.

#114 calgaryPhantom on 09.06.13 at 2:41 pm

Allocated more to my bond portion today. I am reaching my bond limit in my portfolio quickly. I intend to allocate 25% and am already at 13 %.

If bond prices keep falling at this rate, i might hit my “bond buying ceiling” in a couple of months.

#115 calgaryPhantom on 09.06.13 at 2:44 pm


% allocation to REITs and PReffs, in my portfolio, have already reached their respective weightage.

Equities now show us some love, so that your allocation can start

#116 Old Man on 09.06.13 at 2:45 pm

Old Man has one last warning with those that are buying Real Estate, as you are entering the world of insanity to buy the bubble. I know as you rushed in with fear that the mortgage rates might go higher, so at the casino it was all in because you did not want to miss a capital gain in life; you rolled the dice.

The medium is the message and you had a panic attack to rush in to buy your pie in the sky, as the media says sales are up, and she is going higher, but history in Canada has had busts before, and all crashed with a small bubble, but you believe it will be different this time with a huge bubble – insanity! Mr. Turner has it right, and will once again leave you with a realistic quote to rock your boat.

” Insanity is doing the same thing over and over again expecting different results. ” – Albert Einstein. Now for you greater fools that bought into this debt trap wish you the best of luck.

#117 Ralph Cramdown on 09.06.13 at 3:12 pm

#89 jess — Banks Don’t Lend Reserves! Who Knew? MMT, That’s Who!

But read the page from the Cleveland Fed posted by a commenter on the page you linked…

“While banks cannot control the overall level of excess reserves, there are a several ways they can reduce the level of excess reserves on their own individual balance sheets. They can lend excess reserves to other banks in the federal funds market, they can lend them to consumers or businesses, or they can purchase securities. […] In October of 2008, the Federal Reserve began paying interest of 25 basis points on excess reserves. Before that time, banks sought to minimize their holdings of excess reserves […]”

#118 GsAmazon on 09.06.13 at 3:15 pm

Nothing excites a red-blooded Amazon more than when Mr. Bond Market winks and snaps his suspenders! *sigh. whatta man.

Hope this doesn’t make Kip the crane man lose his erection…;p

#119 jess on 09.06.13 at 3:16 pm

Ralph Cramdown

the invention of capitalism

#120 GodaFathera on 09.06.13 at 3:28 pm

#102 Nonno Nicola:
The Greena Belta is all arounda my landa.
But the ona whose gonna includa my landa in the Greena Belta is bettera watch outa.

#121 HD on 09.06.13 at 3:29 pm

Not sure if it was posted here already but I thought it was interesting.




#122 John Dowin on 09.06.13 at 3:42 pm

Soon coming to a … near you.

On Wednesday Polish Prime Minister Donald Tusk said private funds within the state-guaranteed system would have their bond holdings transferred to a state pension vehicle, but keep their equity holdings. The funds would effectively be left with only the equities portions of their assets, even this would be depleted, and there will be uncertainty about the number of new savers joining.

Having bonds? Thought so…

What a bizarre comment. — Garth

#123 Calgary Rip Off on 09.06.13 at 3:44 pm

#105 Realist needs further information regarding real estate in Calgary. Given that incomes are high here, so are house prices, so you really dont get to enjoy that higher income, it evens out. Additionally, because of these high wages the real estate timing is totally bizarre. Things move very slowly but you must act quickly if there is something that you are buying, a generally once in a lifetime purchase, that of a house.

The information on this blog is not especially relevant to Calgary because most of the people selling houses bought pre 2004 and through no work of their own now get to sell for at least double what they paid. Nowhere else in the world are things this backwards where something older and crappier is worth more. But that is “real” estate.

The best advice for anyone thinking about Calgary is the work/play tradeoff. If your job can be had elsewhere, dont come here because you will get ripped off for a rental or a mortgage. Not to mention the majority of houses are 5 feet away from your neighbour, the kitchens generally suck, and the traffic is horrible due to the poor planning of how many lanes were needed for traffic back in 1700 AD.

The precise reason why the Calgary market has not crashed is largely due to 1)no rent controls(landlord ripoffs), 2)mortgages the same as rent, 3) many have jobs here they cannot get anywhere else. So this glorious picture that Realist painted is anything but rosy. It is more akin to schmeared drying turds on the side of a white drywall.

Keep these things in mind before considering moving to the hole in the wall known as Calgary with a crappy real estate market/values, a King who rules as mayor, a crappy political party, lousy traffic, and 2 good months out of the year.

#124 bigtown on 09.06.13 at 4:17 pm

Now that many of the major Canadian newspapers charge for their online version or digital version it has left most of us to go to the mainstream American sites like CNN and USA TODAY to get the ordinary everyday news we would have visited on our CANADIAN papers.

This will have a major effect on the Canadian views of America forever and bringing us onto the same page on many issues and there will be less difference and more sameness in views ….

#125 :):( Ying Yang on 09.06.13 at 4:22 pm

Smoking Man taking my girlfriend to Seneca Casino tonight, she loves to play poker. With my money. I will be at the bar around 8:00 waiting for friends if you are their I am the 180 cm tall Asia guy with a green shirt. Will trade gambling and trade secrets over a beer!

#126 TurnerNation on 09.06.13 at 4:25 pm

Hmm, today metals, bonds, oil might be telegraphing a
ka-ka scenario for Monday. The pigs of war.

Also I watch D.UN, as a carney in the mineshaft…

#127 bigrider on 09.06.13 at 4:34 pm

Nonno Nicola at #102.

You compare Toronto with ‘londra’ England. I assume you mean London England.

I think you stick too much basil up your nose over the years Nonno.

#128 -=jwk=- on 09.06.13 at 4:38 pm

@ #44 the realtor with the Day it Died is Ross Kay.
site is http://www.rosskay.com/index.html

He is due to report august numbers next week…should be a good one

#129 bigrider on 09.06.13 at 4:39 pm

Nonno Nicola, one more thing.

I think you need to convince our blog host of your viewpoint. Explain to him the significance of the greenbelt restriction.

After all, he is the advisor with the university education.

Explain to him , why the rest of the world looking at our RE bubble here in Canada ,is wasting their time.

I have thrown in the towel waiting, remember ?

#130 Old Man on 09.06.13 at 5:04 pm

#126 Ying Yang – I have class as take my women on the Canadian side to gamble at Fallsview Casino, and if they are lucky will book a room at the Embassy Suites for a weekend with a massive suite that costs peanuts, and get a free buffet breakfast; the best view of the falls, and at night will play cards called cribbage or watch TV, and then we do the other stuff.

#131 Mark on 09.06.13 at 5:14 pm

Hey Garth, thought you might find this one funny.

I live in a densifying neighbourhood in Kitsilano. About 1/3 of houses in my area have been sold (for millions), gutted, cheaply re-finished (with coach house) and sold as 3-5 unit multi-plexes for a million dollars or more a unit (usually in the 1,000 sqft range).

Anyhow, a little over a year back the house right next to us sold after undergoing such treatment. The basement suite went to a young Chinese couple for just under a million.

Normal Vancouver news there, dog bites man, you’re thinking, right?

Well here’s the kicker. Last week we had a massive thunderstorm, rain sheeting down. A real monsoon.

My wife and I had put out the recycling earlier (including returnable bottles routinely collected by the needy around here) and we were looking out the windows, enjoying the storm, when our neighbours came home in their shiny new Audi.

The wife managed to get her umbrella open with the car door slightly ajar and made the mad dash to their front door, but the husband, seeing the fresh pile of recycling, made the detour to our recycling bins and in the middle of one of the harshest downpours I’ve ever seen in Vancouver, in a simple suit-jacket, proceeded to spend five minutes rooting around our recycling for a few dollars worth of bottles!

Make of that what you will. I’ve seen a lot of seemingly well off, well dressed Chinese in the neighbourhood rooting through recycling bins for bottles and cans, but I never expected it from the guy with the million dollar house and a shiny new Audi.

#132 young & foolish on 09.06.13 at 5:18 pm

In reading so many of the comments, we are struck with how many come here hoping RE prices decline so they can BUY!

You can live without a car (as more young people are discovering), but not without a place to live. As it has frequently been mentioned here, most people move every 5-6 years. Not likely a long enough horizon to favour buying even in decent market conditions.

Owning now is like leasing a car … cover the monthly payments and hope to get out without losing the shirt off your back.

#133 Smoking Man on 09.06.13 at 5:27 pm

#126 :):( Ying Yang on 09.06.13 at 4:22 pm
Smoking Man taking my girlfriend to Seneca Casino tonight, she loves to play poker. With my money. I will be at the bar around 8:00 waiting for friends if you are their I am the 180 cm tall Asia guy with a green shirt. Will trade gambling and trade secrets over a beer!

I was just there 2 hours ago, at airport in Buffalo, on my way to Vegas again, got hammered last night and booked.

Another time for sure. Take you into charmains club, or as I call it losers lounge

GARTH delete button.. Ready

#134 Smoking Man on 09.06.13 at 5:39 pm

#93 Big Brother on 09.06.13 at 10:44 am

For Smoking Man regarding the NSA.MKULTRA has some info for you.http://www.nytimes.com/2013/09/06/us/nsa-foils-much-internet-encryption.html?src=me&ref=general

They don’t have mine, new version never been transmitted over the Web. Only keys, my coding unconventional just like me, they will never crack it

#135 Beach Bum on 09.06.13 at 5:52 pm

@136 SM

I’ve been in the biz a long time:


#136 Herb on 09.06.13 at 5:56 pm

#110 Nemesis,

thanks for the link. Enjoyed it.

#137 Old Man on 09.06.13 at 5:58 pm

#135 Smoking Man – will never forget the time that early in the morning was on my way to Florida with a hot babe from the Toronto airport on a jumbo jet, and our first stop was up in the air and down in Buffalo that took a few minutes. Then off we went with a direct flight to Atlanta, and there was a train of planes lined up, one after the other, and the gal in question was freaking out on me, as said hang in there as we are going to Florida for a couple weeks to enjoy the good life.

#138 Nonno Nicola on 09.06.13 at 6:36 pm

#130 Bigga Ridero

Ah you younga fella, you hava lotsa to learn yet. Let me tella you another secreto young fella. When a marcato is supposed to go down according to all da so calla expertos and she no go a downa, dat marcato is very stronga. Da expertos who keepa saying dat da Toronto marcato is going downa are wronga. The greenbelta is da biggest in da world. You restricta da landa available for developmento and voila, you hava da real estata keep going uppa, uppa, uppa. Nonno owna lots of real estata in Toronto and I betta you lotsa moneta Bigga Rider dat she no go down in any significato waya. Any city wid a greenbelt is very, very gooda for da real estata. Gartho Turnero he no see dis and I don’t cara to convinco him. He saya da real estata go down for 5 years and vat do you see Big Ridero? Da real estata only keep going uppa. You capice now Bigga Rider?

#139 Bigrider on 09.06.13 at 9:15 pm

# 140 nonno

Your explanation conveniently overlooks the greatest decline in interest rates and the largest increase in personal debt levels this country has ever seen.

I’m afraid Nonno it is you that has a lot to learn

#140 maxx on 09.07.13 at 12:59 pm

#98 sciencemonkey on 09.06.13 at 11:42 am

@ bigarider
Sorry, I hadn’t seen your earlier posts. I think I’ve been here for a year give or take.

Wow. You both have accomplished more in this exchange vis-a-vis diplomacy than most politicos ever will. Bravo!

#141 bill on 09.09.13 at 1:22 am

#8 Smoking Man on 09.05.13 at 10:00 pm

The hosts combine to offer sacrifice…
To feed the crow….