The wall

clown1

The Flipper King, Part Deux: Yesterday this playful little blog showcased a realtor named Ryan who, in order to flog new condos in an unbuilt downtown hipster edifice, dangled a 103% return like a trophy bra. Today let’s find out why.

First, understand there are two real estate markets in big cities. Resale properties, where owners are bailing out, cashing in, or moving up by finding buyers. And newly-built homes, the bulk of which are now condos in Montreal, Toronto, Calgary and Vancouver.

In the GTA, for example, 85,700 resales changed hands last year (down 4% from 2011), At the same time, 32,824 new properties sold in 2012 (a 17% drop). That means 32,824 more properties were added to the potential resale market in that 12-month period. There are now about 53,000 more condos in various stages of sales, construction or planning for the GTA, and the entire sector is about to hit a wall. Maybe it already has.

The number of new condo launches has dropped by 70% in recent months. Of course, skylines across the country are still perforated by pointy cranes, but these largely represent developments which sold three years ago. Going forward, it’ll likely be a drastically different story.

Having said that, there’s a shocking number of new, unoccupied or unsold units languishing on the market. In Toronto alone this equals 7,247 low-rise homes and 21,028 condos. At current absorption rates, that’s a whopping 3-year supply of high-rise units – with more new condos churned out daily.

The laws of economics tell you supply has already overwhelmed demand, which means prices have only one direction in which to travel – notwithstanding realtor Ryan’s desperate attempts to pitch these empty boxes as investment vehicles. Which they decidedly are not.

Speaking of demand, it’s collapsed. Look at this chart (which I ripped off from that irritating Canadian Watchdog guy, and sexed-up a bit):

New condo sales GTA

Buyers for new condos are evaporating in the country’s largest market. So far this year sales have crashed 50% from 2011 levels, and are down 25% from last year, Overall, new housing deals last month were 18% fewer than the previous August and currently sit at the lowest point in 10 years. Meanwhile the gap between condo and low-rise prices has yawned to historic proportions as land prices, government levies and construction costs spiral out of sight.

Say the builders: “Constrained land supply has severely diminished inventory in the low-rise sector, bringing prices to a considerable increase. Another factor is the rising government fees and charges which, on average, add up to one-fifth of the cost of a new home. Affordability continues to be a challenge for everyone looking to buy a ground-related home in the GTA.”

In short, a wall. Condo sales started to leap off the balcony over a year ago when that little devil F murdered the 30-year amortization. Meanwhile low-rise prices soared to an historic high (closing in on $660,000), and now five-year mortgages cost 35% more than they did four months ago. As you know, that rate explosion also pushed a lot of pre-approved buyers into hasty buying decisions last month – which means the rest of 2013 could be nothing short of bubonic for Ryan and his flipper friends.

The housing market will not crash. I’ve said that endless times. But the fundamentals are deteriorating, and nobody should ignore what’s happened in the new-build sector. Already builders are offering serious incentives, from years of no condo fees to a free Bimmer. Clearly there are major price incentives still to come – which means the only sane buying strategy is to wait.

So my greatest fear with real estate remains. It’s the shadow no one cares to see. More tomorrow.

139 comments ↓

#1 first on 09.23.13 at 8:28 pm

Thirsty Firsty

#2 Big Sexy on 09.23.13 at 8:34 pm

Drove to Toronto for the first time since 2002 on Sunday… Still can’t believe the amount of new condo towers along the 401. Insane!

#3 Bearish on 09.23.13 at 8:35 pm

anybody buying a downtown Toronto condo in this market will be making the financial blunder of their lives

#4 FATHER on 09.23.13 at 8:36 pm

so why not a crash?

#5 visorman30 on 09.23.13 at 8:36 pm

It’s an interesting point you bring up between the current disparity between condo prices and low-rise. Clearly the fundamentals for condos in Toronto have eroded but what effect do you predict that will have on low-rise units?

A large number of people use condos until they are ready to buy a house but if those condo owners are underwater wouldn’t it have a knock on effect to low-rise prices? Or would the fact that the supply in low-rise does not outstrip demand as much mitigate any effect of less condo upgraders.

#6 Post Haste on 09.23.13 at 8:38 pm

Talking about condo mania – in Barrie, a new sales centre just opened, 3 new buildings, each 21 stories high and a short walk to the lake. Prices are starting in the $300K range which is insane considering you are 1 hour north of Toronto – but the weekend had “exclusive invitation only” those buyers were reported to have had lined up 3 hours before the doors even opened –

Love the blog Garth – and though I hate those who say it – could I be the (F%$^^#T) to write tonight – yeah, it’s petty – but I had to say it!!

#7 No Crash? on 09.23.13 at 8:43 pm

If no crash then what’s to be expected? You mentioned a correction multiple times…

#8 Steady As She Goes on 09.23.13 at 8:43 pm

‘Stoon inventory is at a 5 year high, and new listings are overwhelming sales. Prices reached an all-time high in 2012, and have since plateaued.

#9 Bob Rice on 09.23.13 at 8:45 pm

the supply/demand situation in SFH means that prices there will remain high indefinitely, I believe..maybe just a mild correction or lateral movement… unless rates move up quickly. Is that going to happen? Not anytime soon…

condos another story.

#10 No Crash? on 09.23.13 at 8:45 pm

What happened to the RE Correction you were predicting a few months ago? 5-20%

A correction is not a crash. — Garth

#11 FATHER on 09.23.13 at 8:46 pm

I think Vancouver is going to crash

#12 CrowdedElevatorfartz on 09.23.13 at 8:47 pm

Hey!
The scary guy in the clown suit!
I swear it looks like Mike Duffy released from a Senate audit………..

#13 espressobob on 09.23.13 at 8:47 pm

Not that I follow RE, I don’t! The leading indicator with regard to condo’s are in fact the pigeon’s that roost on these properties!

Thing is their bitching about “square footage” , who can blame them? All the noise from the ‘gardiner’ and the view of another building a few feet across the way! Whats a bird to do? No place to live, not even for our winged freinds?

What planet do we live on?

#14 FATHER on 09.23.13 at 8:49 pm

Vancouver has more supply than demand

#15 Smoking Man on 09.23.13 at 8:52 pm

A Wall

I hit one today.

On top of every pay check resides a risk taker, a dreamer, someone whom as made a bet.
Just below the dreamer is a sales person / below that the accountant/ below him the cheapest dogs that crumbs can buy.

The dogs facilitate and process the trade/transaction. Some pride themselves on that role, feel lucky to have someone give them a bit of a fish everyday. Never even think about fishing for themselves.

I’ve notice Canadian businessmen have flaws, they don’t like to invest in productivity They focus on getting the lowest priced, hard working dogs to do the grunt work. Some how I think they are addicted to there kingdom and need the see their worshipping subjects every day.

On a call today with someone who slipped threw our web. So close to closing the guy. I said fair enough. He could have laid-off, or re assigned 6 slaves.

Our app after we audited his current process would have saved his company approx 250k a year, and far less errors, model was based on his staff making min wage, all in staff is about 18 to 25 an hour. Our fee, a lousy 16k. 8 stations, central database, free support for 6 months.

No my staff is comfortable with what we have now. They had nothing just some dumb sheets, and quick books. I just shake my head.

I said to the guy would you be interested in our ultrafast lead generator, scans the web for new websites and companies that are in your target market. (A total lie, testing out a theory) “How much” he said, I said 30k but your first year you will probably only get you about 50k to 150k in extra sales, I just made up that number.

“Now that sounds great, when can I see it.”

My son all excited says, can you actually build one dad.

I just rolled my eyes. Grasshopper needs a bit more work I’m thinking.

Good news the young more tech savvy owners love it, I don’t think my son has sold one to anyone over 35.

To bad prospecting lists don’t list the age of the owners/ and ceo’s

Got six more killer pages done for the book, wo hoo I was on a role.

#16 Peter on 09.23.13 at 8:53 pm

Thanks for the chart.

#17 g on 09.23.13 at 8:55 pm

“those buyers were reported to have had lined up 3 hours before the doors even opened –”
The lineups are staged,people are paid to line up.http://vreaa.wordpress.com/2011/02/17/burnaby-condo-presale-lineup-more-shameless-re-promotion-presented-as-news-by-global-tv-and-cbc/
There is no accountability.

#18 HAWK on 09.23.13 at 8:56 pm

#3 Bearish on 09.23.13 at 8:35 pm

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

I would think the downtown core will hold out much better than condos in the suburbs.

At least the ones downtown are in close proximity to high paid employees, what do the suburban condos have to offer to justify their inflated prices?

#19 Sunny on 09.23.13 at 9:00 pm

I’m getting granite put into my new kitchen in my new house in the beaches LOL! Didn’t realize how desirable it was till I read this blog!

#20 Max Jones on 09.23.13 at 9:12 pm

Garth, any thoughts on upgrading to the new KIA K900 sedan. Just $70,000. I’m thinking of it as an investment rather than just recycled steel from obsolete crude carriers. After all, 30 years from now, when KIA is the only remaining car company, collectors will value it for the car which bumped the Range Rover out of drug dealer action movies.

#21 pathcontrolmonk on 09.23.13 at 9:13 pm

For comparison:

Tokyo: population 35 million, GDP $1.5 trillion, estimated 13,000 new condos coming online in 2013

GTA: population 5 million, GDP $150 million, estimated 53,000 new condos???

#22 Bottoms_Up on 09.23.13 at 9:14 pm

Got a flyer today for an Ottawa suburb $50,000 off for the next 15 buyers of low-rise units priced around $200,000.

#23 Crash vs Severe correction on 09.23.13 at 9:16 pm

Garth

The reason why your opinions are challenged using the term “crash” is because your blog is infested with some of the leeches that suffocated the RedFlagDeals forum in the Personal Finance section.
I am seeing here the same pattern, frustrated guys who are probably trapped in this bubble are attacking pro real estate correction opinions and their argument is that “there will be no crash”. Instead of attacking you on the matter the attack you on the form.
A successful and confident investor won’t waste his time here. Their presence here to challenge you, one of the very few voices against RE, shows a lot of frustration and lack of confidence in their position. The same goes for the many real estate agents who are defecating the content of their brains around here.
Why are they burning time here? You just listed the reasons above. Expect more garbage coming.

#24 ripped on 09.23.13 at 9:19 pm

I could care less about 6 million people living on top of each other.

#25 Pailebird on 09.23.13 at 9:26 pm

Smoking Man I have got to agree on your assessment of Canadian business men. They seem to need to have their ego’s stroked big time..

#26 Smoking Man on 09.23.13 at 9:27 pm

Condos are so cheap to make,

Naturally the price will drop, they are ridiculous. how many house loaded to the 9’s can you make on a condo foot print. not much yet condos are close to a small house cost.

In 416
If you got condo you’re screwed. You got grass to cut golden best days lay ahead. No land strong demand, huge job growth.

#27 45north on 09.23.13 at 9:30 pm

Post Haste: in Barrie, a new sales centre just opened, 3 new buildings, each 21 stories high and a short walk to the lake. Prices are starting in the $300K range which is insane considering you are 1 hour north of Toronto

it’s totally insane, I just looked up 30 Howard Park
http://www.theredpin.com/toronto-condos/howard-park
which starts at $328,000
30 Howard Park is not exactly downtown Toronto but it’s close

here’s David Fleming’s article on how condos are financed.

http://www.torontorealtyblog.com/archives/condominium-financing/9775

the banks have seen Watchdog’s chart – they can tighten up lending standards as tight as they want. For example 80% sold with strict scrutiny of each sale. The sales center doesn’t cost much, the salesmen are on commission. I’m saying that the developer knows his pull-the-plug costs. Like $200,000.

#28 Freedom First on 09.23.13 at 9:36 pm

It is incredibly difficult to stop people from buying any asset at its peak. Especially with Ryan helping the know-nothings. However, it is also extremely difficult to stop the same know nothings from selling any asset that has dropped a lot in price, either from panic, job loss, unaffordability from a variety of sources, eg. “rising interest rates”. Garth gives good free advice on his blog. People buy his books, have him on their radio and tv shows, and use him as their financial adviser. Ignore him at your peril. If you take the time to even read all of his posts on his free blog, it will set you on the road to financial freedom. But then again, that is extremely more difficult than simply taking Ryans advice. ………FreedomFirst.

#29 FATHER on 09.23.13 at 9:50 pm

hey Canadian watchdog no comment ?

#30 In the Valley on 09.23.13 at 9:53 pm

I don’t know if this blog is suspense or thriller but it is definitely a Garth Turner page turner.

#31 FATHER on 09.23.13 at 9:53 pm

garth it does look a bit sexier

#32 Ralph Cramdown on 09.23.13 at 10:04 pm

First, there was the bomber gap, keeping our otherwise steely cold warriors asweat in their beds. Then the missile gap had ’em changing the sheets again.

Now, we confront a new existential threat… the gap between condo and low-rise prices in the GTA has yawned to historic proportions!

But wait a minute. Even if condos and singles’ prices rise at the same rate, the “gap” between them naturally grows ever bigger. But surely BILD’s high rise members builds what they think their market wants and sells it at what their market will bear, as do the developers building single family units. Why should I be concerned that these prices are different?

Presumably if they thought there was a market for 400 square foot stacked towns packed 80 to an acre, they’d build them. I sure didn’t ask them to start building 420sqft studio apartments.

This ‘gap’ campaign is just a poorly disguised attempt to shake some greenbelt rezoning out of Queen’s Park.

#33 Chumpie le chump on 09.23.13 at 10:13 pm

@smoking man

I hear you dude. I sell tech into the bc market. Buyers here are so dumb. Give them an example of a peer company in US and how they save $1m in Opex by making a $200k capex and they give you a million reasons why it would never work for them.

#34 JimH on 09.23.13 at 10:38 pm

“Crash” as a term is both overused and misunderstood.

The great “Crash of 1929” actually took almost 3 years to fully play out and reach the bottom: from Sept. 3, 1929 through July 8, 1932.

The “Great Housing Crash” here in the USA saw prices fall over at least a 30 month period from their peaks with many markets taking longer than that! ( Las Vegas prices are still sliding lower after 48 months of decline.)

In both cases, we are looking at bubbles that built up a great deal of energy over many years. Those who think Canada is in for a rapid bursting of the bubble, quickly followed by a bonanza for the vultures are gravely mistaken. The US Markets are full of stories about those fools who rushed in way too early in the spring of 2010!

If “crashes” can take ~3 years to evolve (devolve?), with many a bounce along the way, then patience will become an even greater virtue than is currently recognized.

http://www.epips.com/djia/1930s-great-depression.html
http://vancouverpricedrop.files.wordpress.com/2013/08/graph.png

#35 Victor V on 09.23.13 at 10:42 pm

#18 HAWK – downtown condos build to last? I think not.

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

“I have always maintained that, when you’re looking at those glass towers there, you’re basically looking at the slums of the future,” insists Kesik.

“No one will want to buy them because people will look at them and say, ‘Are you crazy? I don’t want to buy something that leaks, that will cost a fortune to retrofit.’ So when they can’t get sold, they’ll get rented. And they’re not of a high quality, so they can’t get rented for a lot of money. So who do you think is going to live there? I tell people, this is where your grandchildren are going to come to buy crack.

“No one wants to talk about these things because it gets people scared,” he warns. “The guys in the condos don’t want to talk about it because they’re sitting there saying, ‘You can’t talk like that, you’re going to devalue my condo and, if you devalue my condo, I am going to sue you for having devalued my real estate investment.’

“This is how bad it has gotten. It’s that cruel a joke.”

http://www.thestar.com/news/gta/2013/03/24/growing_up_are_torontos_new_condos_built_to_last.html

#36 renters rule on 09.23.13 at 10:56 pm

@#35 Victor V

totally agree. Yaletown in Van will be a slum neighbourhood within ten years, and Coal Harbour will be within 5-10 years after that. The problem with low quality RE, is that it is still more profitable to rent it out (at low rents) than it is to rehabilitate it or tear it down. At the end of the day, rentals are commodities, and even if they are absolute crap, they can still be rented out, because some folks (students, immigrants, working poor) will always be looking for something “affordable”….. downtown Van is going to be a dump within ten years, and will stay that way for the next 25 years.

#37 Victor V on 09.23.13 at 11:07 pm

North Vancouver mansion PRICE DROP from $17,900,000 to $6,500,000

http://themashcanada.blogspot.ca/2013/09/mishmash-monday-even-though-its-sunday.html

No HAM to the rescue? :)

#38 broadway skytrain on 09.23.13 at 11:08 pm

Yaletown in Van will be a slum neighbourhood within ten years, and Coal Harbour will be within 5-10 years after that.
———————————

ha ha ha ha ha, ho ho, ha ha ha
good one. lol.

plenty of condos are bad buys, of course. sfh is the money maker, yes.

but coal hbr a slum? serious? where will the local billionaires park their yachts? or do you mean after they move stanley park and the ocean to someplace else?

#39 AgentSmith on 09.23.13 at 11:12 pm

“Buy a Condo amid the CON-d0 cRASH”
Is what the pamphlet will read. You know the one the flipper has in his hands.
The condo picture on the front of the pamphlet will look like a modern heaven full of all kinds of amenities.
“running water”
“picked over granite cupboards and toilets that self flush”
Free upgrade to “mould free”

Visit a website to see deadbeat dads or condos that will leave you without money and dignity

#40 renters rule on 09.23.13 at 11:20 pm

@broadway skytrain

you are very deluded. go down there and ACTUALLY see what is going on? the majority of the coal harbour suites are rented out, and 30% of them are empty. The local Remax office on Pender is FOR RENTALS, not sales.

Clueless idiot. That housing stock in Coal Harbour is already almost 20 years old. Sorry you are over-invested in Van condos, you are going to get burned.

#41 Smoking Man on 09.23.13 at 11:26 pm

DELETED

#42 George on 09.23.13 at 11:28 pm

What is going on with Guava.ca ?
I has not been updated since September 17.

#43 angela on 09.23.13 at 11:29 pm

Do not read this if you are currency ,monetary,treasuries illiterate ,or lack good judgement on economic fundamentals .
It is simply not rational for other nations to continue to lend the US money at less than 3 percent a year when the real rate of inflation is somewhere around 8 to 10 percent and reckless money printing by the Fed threatens to greatly accelerate the devaluation of the US currency.so logical thinking people would realize that this will not end well …Lets be real about real rate of interest .food up (check) oil (check) education (check) insurance (check).These are things we need not included in the inflation numbers .things we dont need that are included in the inflation CPI are Televisions,Cell Phones,Homes ,Cars,these items are deflationary so you have this weird imbalance which is why we have inflationist and deflationist both right at the same time but one of the items i can live without the other I cant
It isn’t that the food is costing more its the fact that your money is worth a little less today because of money printing so buys less of the food you need .AS far as TV,s and cell phones cost less is because everybody has one and the system is dilluted with these items therefore making them less valuable (supply demand) if everybody had a lamborghini I assure you they would not be worth 350K same with Houses if everybody owned one who would be a buyer??(Canada 70%ownership only 30% to go) .well money has the same inherent problem eventually it breaks ask the brits when in one swell swope overnight lost the world currency status they lost 50% of its purchase power (1946)..
Garth BTW doesn’t eat food or buy car insurance or even buy gas since 2009 so he wont be able to see the inflation like the rest of us dummies here

There is no devaluation of the US dollar occurring, and the larger threat is deflation. — Garth

#44 Smoking Man on 09.23.13 at 11:32 pm

#34 Chumpie le chump on 09.23.13 at 10:13 pm
@smoking man

I hear you dude. I sell tech into the bc market. Buyers here are so dumb. Give them an example of a peer company in US and how they save $1m in Opex by making a $200k capex and they give you a million reasons why it would never work for them.

………………………………

Dont give up that easy, if I haft to slap the next prospect to save him momey I will

#45 Victor V on 09.23.13 at 11:40 pm

http://business.financialpost.com/2013/09/23/toronto-condo-sales-hit-decade-low/

August condominium sales in the Greater Toronto area were the worst in a decade and are now 46% below the long-term average, says the Building Industry and Land Development Association.

#46 Notta Sheeple on 09.23.13 at 11:43 pm

#29 Shawn on 09.23.13 at 9:47 pm
“…. Debt is simply a formal way of sharing from those with a surplus to those without. To be against debt is to against sharing…..
=========================

What a laughably sanitized version of everything that is wrong with today’s financial world.

#47 HAWK on 09.23.13 at 11:50 pm

#36 Victor V on 09.23.13 at 10:42 pm

Agreed they are a poor investment, besides their location they have little to offer. And the new ones are so ridiculously small, you start to wonder if you’re in Hong Kong

#48 Cici on 09.24.13 at 12:05 am

A little harsh on Canadian Watchdog tonight Garth!

Hopefully, he’ll keep supplying us with the charts, even if you do have to sex them up a bit…

Besides, I’ve read comments far more irritating than his on this blog (like my own, for instance)…Did I miss something?

#49 SofaKing on 09.24.13 at 12:16 am

There will be no crash till every nay-sayer has capitulated, thrown in the towel and took the plunge.Remember the dot come year of 2000?

#50 Cici on 09.24.13 at 12:28 am

#19 Sunny

You sure are a greater fool…granite is so passée! Caesar stone where it’s at now.
Had you tuned in to this blog a little earlier, you would have been on to that little tidbit.
Your home’s resale value is now at stake!! Better hold onto it for at least 25 years, given that it’s already outdated.

#51 Dean Mason on 09.24.13 at 12:45 am

Big Ben talks and down goes stocks. Big Ben pulls a fast one and does not taper and bonds are again in favor. Garth, yields are going to fall at least another 40 to 50 basis points over the next 3 to 4 months.

This means that 10 year U.S. and Canada bonds will be about 2.15% to 2.20% yields. This is still peanuts yields. The 30 year U.S. ,Canada bonds will be lucky to stay at 3.15%, 2.68% respectively.

In 2000, 30 year U.S. bonds were 6.74% and most Canadian and provincial 25-30 year bonds were 6.15% to 6.60% yields range.

We are in a peanuts economy. Just face it everyone.

#52 JP on 09.24.13 at 1:34 am

Look at the variance on that curve since 2008. You gotta love it.

You could design a rollercoaster on that thing.

Where do I line up?

#53 JP on 09.24.13 at 1:39 am

Hey can you post the graph with that date predicted by dude’s equation. You know what I mean. Not a question.

#54 Buy? Curious? on 09.24.13 at 2:07 am

Hey Garth! After 5 1/2 years of reading this blog, I finally get it. Well, most of it. Allow me to explain. This blog isn’t about calling the market or being smug about about wealth. It’s about figuring out a plan that works for you within the law to make your money work for you. I’ve gotten two great tips from this blog that have saved me thousands over the course of 18 months (about the time I started taking your free advice serious, the shit works!). And next March 2014, I’m buying a few ounces of gold (very small % of my portfolio). However, the part of this blog that I still don’t understand is, why do you do it? You’re obviously wealthy, you’ve got your health and have accomplished so much more than anyone who posts on this blog ever has. If it’s for street cred, you’ve got it or cash, why? And trust me, if there was a way to monetize street cred, I’d be a gawddamn gazllionaire!

All I’m saying is, don’t get frustrated with stupid people making stupid mistakes that put at least 2 generations into poverty. It’s all those people that allow a small group of us to prosper.

http://www.youtube.com/watch?v=SpKKmXC5cSQ

#55 VanPerfecto on 09.24.13 at 2:31 am

If there’s no crash then what the heck is the big deal? Find a home you can afford and get it done. Need a home? Get a home? Don’t need one then rent and IF you can, invest the difference. It’s not rocket science.

#56 Brian Ripley on 09.24.13 at 2:54 am

I have added to my recent chart on “Canadian Reliance on Construction” with an update on Canadian vs U.S. Labour Force Participation rates and although there is a big spread, the Canadian trend is clearly following the U.S. down and that means it’s time for Labour to start retraining or to start lobbying the government into spending on construction projects because the private sector is at a pivot point.

Updated Chart here: http://www.chpc.biz/2/post/2013/09/labour-force-participation.html

#57 JUNO on 09.24.13 at 2:56 am

Now that we know the Feds couldn’t let interest rates rise and by easing QE-and beyond. We know there was no recovery and its all fabricated BS.

We should have a pool on the next budget when the US has to pay its bill. I can hear it now.

– We have to raise interest rates otherwise the US cannot pay its bill. To add some icing onto the BS-CAKE the feds should give themselves a nice raise and pat themselves on their back on the great job they are doing.

#58 JUNO on 09.24.13 at 2:57 am

I ment we have to raise the debt ceiling and add some more to QE cause its not enough.

#59 cynically on 09.24.13 at 3:07 am

Thanks Victor V for the short movie showing that monstrosity of a house in Deep Cove. The person responsible is a complete a-hole and should have built it far back in the forest behind the house where it would be more suitable for Ewoks. However I don’t think they would be spending that amount of money even at the reduced price nor will HAM, as you say. They like the the wealthy districts on the Vancouver side of the water and I don’t see them being as pretentious as the guy who built the place. I hope he loses his shirt on this one.

#60 Anthony on 09.24.13 at 3:13 am

Another good article on the housing bubble: http://www.postcity.com/Eat-Shop-Do/Do/April-2013/A-bleak-market-shift/

#61 Fed-up on 09.24.13 at 3:48 am

Hey smoking man, I thought Garth’s Post tonight was going to be about Pink Floyd’s double album Classic from 1979 ;)

#62 Another RE agent confirms Ross Kay's findings on 09.24.13 at 7:02 am

http://forums.redflagdeals.com/canadian-real-estate-boom-defying-naysayers-1351104/96/#post17477425

This is a rare case when this individual says something bad (this bad) about his kin.
She is a strong believer that we “the uninitiated” don’t know what we are talking about and only a RE agent knows what is going on when it comes to Real Estate. On these grounds she always tried to demonstrate the we, “the others” are crazy when we talk about fake numbers coming from RE agents and RE boards. In her view we are crazy and big fans of the conspiracy theory.

PS: she pretends to be a prominent RE agent

#63 The Big M on 09.24.13 at 7:41 am

Garth, I see your point on real estate agents that flog small condos and promise unrealistic returns but what are your thoughts on those that predict the demise of Canadian Real Estate year after year?

They are obviously mistaken. The market will not perish. But the ignorant might. — Garth

#64 tonyw on 09.24.13 at 8:09 am

Remember that the “new” condo market caters to investors with a 4 year time horizon – skittish investors = fewer new openings. This is the current situation in TO.

“Resale” condos usually close in 90 to 120 days and are generally bought by “end users” who touch and feel and want to move in now. Prices tend to be lower than new and are driven by the supply and demand in the marketplace.

2 very different markets.

One thing is for sure: 1st time buyer/property virgins tend NOT to buy new condos for closing 4 years’ away (unless they happen to be amateur speculators).

#65 jaguar on 09.24.13 at 8:13 am

Where is Daystar? Come back. Yours were the more interesting comments…..

#66 jerry on 09.24.13 at 8:21 am

Deflation!

Yes I agree. Looking for past history examples. Going forward in a low or deflation environment, wondering if 2%-3% return on investments is actually a good new normal benchmark?

U shape recovery maybe?

Wondering what governments do in situations like this to prevent deflation.

#67 John on 09.24.13 at 8:27 am

I understand the reluctance to refer to a RE meltdown as a crash but that is exactly what is coming. The “investor” condo market was a clever Ponzi scheme which has now run out. No different than Bernie Madoff except that no one is going to prison, yet.

Trump investor lawsuits are just a sampling of what is coming IMHO.

RE Broker colluded with developer by providing a revolving list of mass investors with early deposits to meet bank finance and build criteria. Those investors were at the top of the pyramid. Broker then signals investors to flip or assign to greater fools who “missed out” and they now willingly pay a premium for fear of missing out yet again…these are the mid pyramid.

Original investors book profit from artificially inflated price hyping and Broker takes the same “investor group of names” to the next developer to repeat process.

Mid pyramid owners try to sell but greater fools are suddenly fewer….bottom of pyramid collapses, and with it prices CRASH. Trump tower condo valued at 1.6 million fetches bid of 550K….that qualifies as crash.

The above process can only work with condo development and new build neighbourhoods because the collusion requires several willing participants. RE Broker, Developer/builder, early investor, mortgage lender. Yup, all in cahoots.

Nothing but a well orchestrated Ponzi scheme….but they always end the same.

#68 CrowdedElevatorfartz on 09.24.13 at 8:46 am

@#38 VictorV
“North Vancouver mansion PRICE DROP from $17,900,000 to $6,500,000…….”
++++++++++++++++++++++++++++++++++++

Ive been watching this one go down on Vancouver Price Drop blog for months now…..Its quite amusing.
Whats the “desperation score” score on that one? 65%?

…..and even if HAM were buying everything in site. HAM like busy, bustling, populated neighbourhoods…..not the middle of the woods….aka Deep Cove.

#69 Penny Henny on 09.24.13 at 8:54 am

Good news the young more tech savvy owners love it, I don’t think my son has sold one to anyone over 35.—Smoking Man

To smoking man. You are not thinking right.
Picture this, an upper management decision maker, maybe 55 yrs old, been around the block a few times, been approached by literally hundreds of guys trying to flog theirs wares. So this guy has his back up. You try sending in a 24 yr old, wet behind the ears, sales rep and you’re done before you started.
This guy expects to see someone of his own stature, real or make believe.
Let you son stick to the young exec’s.

Take it from someone who’s been on both sides.

#70 Condochris on 09.24.13 at 8:55 am

The Condo market is rocking right now. Don’t believe me? Try to rent or buy one.

No shortage of listings on your site. — Garth

#71 Fan of the Bearded Mystic Oracle on 09.24.13 at 9:03 am

#56 Buy? Curious?

“However, the part of this blog that I still don’t understand is, why do you do it? ”

You see Curious, the bearded mystic oracle, all knowing, all seeing, sagacious soothsayer who runs this blog is the lone voice of reason crying out in the financial wilderness of Canada in the hopes of saving the masses from their destructive financial ways. He is also the former minister of national revenues, denouncer of parliamentarian peckerheads and peckerettes, Harley riding badass, Amazonian accompanied and bathed, NYTimes bestselling author and last but not least and all round jolly good fellow!

#72 MiniMe on 09.24.13 at 9:37 am

The Condo market is rocking right now. Don’t believe me? Try to rent or buy one.

No shortage of listings on your site. — Garth

Garth, like I said, expect more excretion acts like above.
The SFH might look ok but by your stats posted yesterday it looks like the condo market is going down this winter taking all the CondoIdiots with it :-)

#73 Buy? Curious? on 09.24.13 at 9:38 am

#73 Fan of the Bearded Mystic Oracle on 09.24.13 at 9:03 am

I hear ya and totally agree with everything you’ve said and if I wasn’t preparing dinner in my slow cooker, I’d add a few descriptions myself (though not as eloquent). What I want to know is, why is he doing all this work, at this stage of life, to try and save the millions and millions of stupid people and get so little in return? I know he sells a few books now and again, picks up some clients on the way, but if he wanted to do more, help more, could he try to reach more? Personally, I think it’s a flaw that only Canadians posses but man, if I was in his size 8 wing tip shoes, with his talents, I’d make Carlos Slim look like a telephone repair man.

http://www.youtube.com/watch?v=jIZUHT5hyTQ

#74 Nick on 09.24.13 at 9:42 am

If it comes close to a dip the government will just open the doors to another 250,000 immigrants with 200,000 in the bank and presto chango no more crash.
Dont they already have to sign something saying they will buy a home?

The misconceptions surrounding immigration are truly surprising. — Garth

#75 Holy Crap Wheres The Tylenol on 09.24.13 at 9:50 am

#15 Smoking Man on 09.23.13 at 8:52 pm
#71 Penny Henny on 09.24.13 at 8:54 am
Good news the young more tech savvy owners love it, I don’t think my son has sold one to anyone over 35.—Smoking Man

To smoking man. You are not thinking right.
Picture this, an upper management decision maker, maybe 55 yrs old, been around the block a few times, been approached by literally hundreds of guys trying to flog theirs wares. So this guy has his back up. You try sending in a 24 yr old, wet behind the ears, sales rep and you’re done before you started.
This guy expects to see someone of his own stature, real or make believe.
Let you son stick to the young exec’s.
Take it from someone who’s been on both sides.
_____________________________________________

Smoking Man Penny is correct. I am well lets just say a person whom was in university in the 60’s so therefore do the math. Anyway I don’t relate well to a young salesperson walking into my office trying to sell me something that they may or may not have a tremendous amount of real life experience in. I am a very Tech Savvy Person as I create complicated electronics that utilizes machine language, HEXADECIMAL, interfacing with HMI’s that communicate via Ethernet IP. It takes years to understand business. Get an old guy with some crust on his skin to sell. We use a productivity program at my company called Opex. Probably similar to what you are trying to sell. Good luck with your business venture.

http://www.opex.com/

#76 Musty Basement Dweller on 09.24.13 at 9:51 am

#35 JimH on 09.23.13 at 10:38 pm
“Crash” as a term is both overused and misunderstood.

The great “Crash of 1929″ actually took almost 3 years to fully play out and reach the bottom: from Sept. 3, 1929 through July 8, 1932.

The “Great Housing Crash” here in the USA saw prices fall over at least a 30 month period from their peaks with many markets taking longer than that! ( Las Vegas prices are still sliding lower after 48 months of decline.)

In both cases, we are looking at bubbles that built up a great deal of energy over many years. Those who think Canada is in for a rapid bursting of the bubble, quickly followed by a bonanza for the vultures are gravely mistaken. The US Markets are full of stories about those fools who rushed in way too early in the spring of 2010!

If “crashes” can take ~3 years to evolve (devolve?), with many a bounce along the way, then patience will become an even greater virtue than is currently recognized.

http://www.epips.com/djia/1930s-great-depression.html
http://vancouverpricedrop.files.wordpress.com/2013/08/graph.png
======================
Interesting info, thanks.

It all makes sense in terms of the time that real estate market corrections take, when you think of the dynamics involved.

And on top of that, in Canada, when you have various bozos in government and central bank positions who will be doing some diddling along the way in attempt to accomplish something (perhaps further delay of the inevitable market force actions) will probably slow down the process some more.

#77 robert james on 09.24.13 at 9:56 am

Got to love that TD bank !!! Very creative,I should think.. http://www.cbc.ca/m/touch/business/story/1.1865090

#78 Fan of the Bearded Mystic Oracle on 09.24.13 at 10:17 am

#75 Buy, Curious

” What I want to know is, why is he doing all this work, at this stage of life, to try and save the millions and millions of stupid people and get so little in return? ”

You see Curious, this is not a mission about personal gain for the all knowing, all wise bearded mystic oracle who runs this blog. It is, in true prophetic fashion, a mission of truth. Given the royal boot from parliamentarian peckerheads and peckerettes after he denounced and exposed them one too many times, our fearless, intrepid and sagacious leader has now devoted himself to helping the floundering financially illiterate masses. He has all the wealth he needs and has no desire to be the next Carlos Slim. In his vaulted mansion, secretly tucked away in the Caledon Hills, the sage gazes out upon the land in the early morning dawn and says, “for this was I placed on this earth.”

#79 Ralph Cramdown on 09.24.13 at 10:39 am

Ooh, I LOVE that Condochris guy’s website. It says a lot. When you’re trying to sell something to people with money, you can, depending on your audience, go with the suit and tie or the polo shirt and pressed chinos. This guy dresses like the repo man who’s eventually going to come for his BMW, or someone who deals in weed and hot car stereos. His target audience is pretty obviously people who haven’t earned their own money — young people with either credit but little cash, or daddy’s cash.

#80 TS on 09.24.13 at 10:47 am

There is no devaluation of the US dollar occurring, and the larger threat is deflation. — Garth

So, what about the rate? up or down?

#81 The Gospel of Garth on 09.24.13 at 11:28 am

Garth 3:1 “And it came to pass that the bearded mystic sage entered the nation’s capital, Ottawa.
verse 2: The crowds were great and the leaders were nervous as the sage prepared to address them.
verse 3: Silence fell upon the capital as the bearded sage began his oratory upon Parliament Hill.
verse 4: Blessed are those who have not mortgaged their lives away buying overpriced real estate, you will soon be rewarded.
verse 5: Blessed are those who have not swallowed the real estate kool aid of the realtors, you will soon be refreshed.
verse 6: Blessed are those who have not plunged into the bloated GTA condo market, you will soon be comforted.
verse 7: Blessed are those who understand my financial advice and have invested in financial assets, you will be greatly rewarded.
verse 8: Woe unto the leaders of this great land for turning it into a nation of indebted zombies with loose credit, you shall be judged.
verse 8: The bearded sage finished and gazed out upon the large crowd with a piercing stare.
verse 9: The sky darkened, lightning flashed and thunder roared.
verse 10: The audience then went wild, screaming and clapping.
verse 11: “Truly a prophet is among us”, yelled someone in the audience.

This is now beyond weird. — Garth

#82 happity on 09.24.13 at 11:40 am

The Richmond Federal Reserve’s manufacturing index collapsed to zero.

And more signs of the proclaimed USA economic renaissance that never was, just fools paroting main stream media.

#83 Luc on 09.24.13 at 11:40 am

Is India’s Rajan sending a message to the world…
http://qz.com/126875/the-economist-who-predicted-the-financial-crisis-just-sounded-another-alarm-it-would-be-wise-to-listen-this-time/

#84 Ralph Cramdown on 09.24.13 at 11:47 am

#44 angela — “It is simply not rational for other nations to continue to lend the US money at less than 3 percent a year when the real rate of inflation is somewhere around 8 to 10 percent and reckless money printing by the Fed threatens to greatly accelerate the devaluation of the US currency.”

Probably the worst thing you could do here is conclude that you’re smarter than the global bond market and the world’s central bankers. Either your assumptions are wrong, or central banks are buying treasuries for reasons other than earning an above-inflation rate of return on all the greenbacks that their economies, which sell stuff to the US and get paid dollars for, keep bringing in to banks and exchanging for yen/euros/pilasters.

There’s a number of people who have thought similar thoughts in the past…
https://www.google.com/search?q=widowmaker+trade

#85 johnnny on 09.24.13 at 12:06 pm

#17-G – and others who have described news leaning towards advertising.(not just real estate).
If you have the time, listen to this cbc radio show talking about advertising creeping into msn. The people responsible for this make no apology for this at all.
Matter of fact ,they seem to think there is no problem at all with what they’re doing.
http://www.cbc.ca/player/Radio/The+Sunday+Edition/ID/2406139657/

#86 father on 09.24.13 at 12:11 pm

@Luc rajan sounds like the smartest central banker I’ve heard. What do you think garth?

#87 JimH on 09.24.13 at 12:13 pm

#86 Ralph Cramdown (posting in response to #44 angela)

My hat is off to you, sir!
What a kind, gentle, compassionate and yet instructive response!

#88 Canadian Watchdog on 09.24.13 at 12:18 pm

#50 Cici

Meh.. he still doesn't get my better charts.

#89 backwardsevolution on 09.24.13 at 12:24 pm

“…which I ripped off from that irritating Canadian Watchdog guy, and sexed-up a bit.”

Garth is paying him a backwards compliment, showing his appreciation the only way he knows how, sarcastically.

Canadian Watchdog, you add tremendously to this blog. Your insight into what’s really going on is invaluable.

Garth knows that Canadian Watchdog is not trying to one-up him, but merely trying to point out things that don’t readily come to our attention because of our bought-and-paid-for media.

Truth is often messy and needs to be fought over.

#90 Ralph Cramdown on 09.24.13 at 12:24 pm

#84 happity — “The Richmond Federal Reserve’s manufacturing index collapsed to zero.”

Maybe read the actual report?

Expectations
The overall outlook of producers for the next six months was for stronger business conditions. The gauge for expected shipments added three points to end at 39, and the index for the volume of new orders rose two points to 35 this month. Manufacturers looked for slower vendor lead-times, bringing that index to 6 from last month’s reading of 10. Finally, capacity utilization was projected to rise, with the index picking up five points in September to finish at 29. Manufacturers expected to increase capital spending during the next six months; the index rose to 31 from 15.

Manufacturing employment in the six months ahead was expected to be stronger, bringing the average workweek down somewhat. The index for the projected number of employees rose to 17 from last month’s reading of 9. The indicator for the expected average workweek trimmed two points to end the survey period at 8. Expected wages continued to rise briskly, with the index at 26 compared to last month’s reading of 28.”

https://www.richmondfed.org/research/regional_economy/surveys_of_business_conditions/manufacturing/2013/mfg_09_24_13.cfm

The drumbeat of horrible news continues!

#91 dosouth on 09.24.13 at 12:28 pm

BREAKING NEWS CREA CONFIRMS their Data is NOT Accurate!

http://www.rosskay.com

…“probably correct” in his claim that houses are being double- and triple-counted.”

#92 The Gospel of Garth on 09.24.13 at 12:30 pm

“This is now beyond weird. — Garth”

Not weird enough to delete though…:)

Try it again… — Garth

#93 Condo Chris = Another Crea Licensing Failure on 09.24.13 at 12:46 pm

Hes a perfect example of why realtors look like complete idiots most of the time…. Does this guy hang out with that other goofball Ryan Coyle?

What a disgrace this industry has become….

#94 Canadian Watchdog on 09.24.13 at 12:49 pm

Excerpt from a 2008 working paper: Pricing of Presale Properties with Asymmetric Information

1.2 Asymmetric Information in Forward Property Markets

Asymmetric information occurs when there is a difference in the possession of information among the parties involved in a trade.  In forward property markets, once a forward contract is executed, the buyer becomes the principal of the uncompleted property and has to rely on the developer, i.e. the agent, to finish the construction work in accordance with the terms stated in the forward contract. But this principal-agent relationship, in which the developer possesses more information than the buyer in regard to the construction work, has created a “moral hazard” problem for the buyer. Because of the lack of knowledge and technical expertise, the buyer cannot be sure whether his best interests are served by the developer and whether the quality of the work will be maintained after the developer has collected the proceeds.

Sure enough…

Condo residents complain about vents, stinky air

Residents in a newly built condominium in the city's west end are complaining about the ventilation system in their units, saying that air from the bathroom is being recirculated back into their living spaces.

Who protects new home buyers in Ontario?

If you said “the Ontario government,” you would be wrong. No, when Ontarians make the largest purchase of their lives, their consumer rights are protected by a private corporation called Tarion, which administers the Ontario New Homes Warranties Act. If your new home has a cracked foundation, leaky plumbing or an uneven floor, it is Tarion’s job to hold the developer accountable.

There’s just one problem: Tarion is run by the same development industry it is supposed to regulate.

Starting to get a sense of what's really going on behind the scenes? Once you do, you'll know why this market is heading for a disaster and, in many cases, to the courts. Remember many new units being completed today are from presales sold in 2009-2011. The worst is yet to come.

#95 omg on 09.24.13 at 1:01 pm

#4 JimH – you got it right. We are in for a long hard grind down. In some ways it may be better as it gives contractors a chance to transition into other industries – wishful thinking maybe.

I know here in Victoria that as soon as properties fall by 10% we will see a raft of buyers snapping up bargains – which will give us the “dead cat bounce”. After all since most buyers think that RE only appreciates, a 10% discount has got to be a great thing to buy into.

#96 omg on 09.24.13 at 1:18 pm

#44 Angela – wow, Angela where are you getting the 8-10% number!

Assuming we as Canadians are exposed to the same price pressures on world commodities of food, energy, etc, I sure do not see an 8-10% increase in anything except the price of oil products, which makes up maybe 10% of my monthly expenditures.

As for why the rest of the world is buying US assets – they are doing so because they know that history has demonstrated time and again that the US will recover and move forward.

Seriously, people are myopic and cannot believe anyone has seen it worse than what we are seeing now. Is the current state of the US worse now than it was during the 1930s, during WWII, during the era of 10-12% inflation in the 1970s. NOPE. Did the US overcome these and have monster growth after these time. YEP.

#97 Smoking Man on 09.24.13 at 1:23 pm

#77 Holy Crap Wheres The Tylenol on 09.24.13 at 9:50 am

Thanks for the insite, let’s call a spade a spade, age had nothing to do with it.

Our shtick sucks, got to go back to basics.

The product is amazing, but we need to inflate the cost of extras, then throw then into the deal free, on conditions that we do a deal now, everyone likes it.

Just our close sucks, going to take a weekend off of gambling, design the shtick have have grasshopper practice till he gets it right.

#98 Nemesis on 09.24.13 at 1:26 pm

Although it hardly qualifies as authentic ‘Zen’, the following may well prove of interest to QuantitativeSaltyDogs… on the BrighterSide, we do at least get a tasty Quote’OTheDay:

“It’s a pretty substantial non-response rate… There are also questions about whether people have honestly responded.” – Jerry Situ, Senior Housing Analyst, STATCAN

[TYEE] – Are Stats Glossing over Vancouver’s Housing Crisis?

…”When you zoom in on the actual City of Vancouver itself, the numbers are less surprising: The majority of us (51.5 per cent) are indeed renters. The only major Canadian city with fewer homeowners per capita is Montreal — and the average rent there is massively more affordable. Tenants here fork over an average of $1,089 in rent every month, almost 50 per cent more than the fortunate renters of la belle ville.

In Vancouver, nearly half of us (46 per cent) are paying more for lodging than we can afford, at least according to the official definition. But some analysts warn that even these numbers could be understating the problem.

The National Housing Survey provides the first nation-wide, official data to emerge since Prime Minister Stephen Harper axed the mandatory long-form census in Aug. 2010, to the chagrin of statisticians.”…

http://www.thetyee.ca/News/2013/09/24/Vancouver-Housing-Crisis-Stats/

#99 Network Admin on 09.24.13 at 1:53 pm

#98 increase in anything except the price of oil products, which makes up maybe 10% of my monthly expenditures.

Even if you never drive or use the bus, the price of oil products indirectly affects the price of everything including food.

#100 BC Bob on 09.24.13 at 2:00 pm

Hi Garth,

10 year CAD Bond rates are now falling, 10 yr at 2.58.
As rates rose, you wrote a series of articles with the gist being “rates are rising, and its just the beginning.” If the fall in rates continues, will you be writing a series of retractions, to counter this false alarm?

Ten-year bonds are less cosequential than 5-year instruments, where rates have declined only marginally. As a result, mortgages remain at elevated levels. How was this a false alarm? — Garth

#101 pbrasseur on 09.24.13 at 2:03 pm

So no crash he, after all this is Canada and we are civilized!

We don’t crash, we descend….

But I still think some markets will crash, parts of BC, GTA condo market come to mind.

#102 Rational Optimist on 09.24.13 at 2:11 pm

A “correction” in markets is a short-term decline of 20%. 20% loss of the value of your home isn’t technically a crash, but I bet to a lot of people it will sure feel like one.

5-year bond yield is down to 1.90, are we going to see some lenders reduce their mortgage rates a bit?

#103 Donald Trump on 09.24.13 at 2:15 pm

#83 The Gospel of Garth on 09.24.13 at 11:28 am

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

I read that, then my hair parted, my condos are selling like hotcakes, Miley Cyrus is giving up show biz, and Justin Bieber has laryngitis.

I mean, is this a sign?

#104 Canadian Watchdog on 09.24.13 at 2:16 pm

Addition to post #96

(July 2012) Posted in Toronto Life – FAULTY TOWERS  The rush to build Toronto's new condos has resulted in falling glass, disgruntled buyers and multi-million-dollar lawsuits. An investigation into who's to blame. PDF

"Every condo building in Toronto has a secret. The only thing that separates crappy balconies from crappy soundproofing, plumbing, drainage, elevators, heating, air conditioning and mechanical equipment is that anybody can see the balconies falling apart. The rest is hidden from public view, as are the boardroom confrontations and the quietly launched civil lawsuits that follow, when condo owners with no other recourse take their developers to court."

"There are 82,976 condominium units within the boundaries of old Toronto, and by and large, the people who live in them—or at least the many I spoke with—are singing the same tune, which goes like this: “Don’t identify me, my building or my developer in your article.” They all believe that if anyone learns the truth about the construction flaws and ongoing developer disputes in their building, they’ll never be able to sell. They also fear retribution. “Developers can get away with just about anything,” says Charles Hanes, “because they know that even the people [realtors/brokers/presale owners] who buy from them won’t rat them out.”

Draw your own conculsion to how this ends when resale buyers figure out how Toronto's presale market has just become a grand game of hot rotted patatos.

#105 LOL on 09.24.13 at 2:17 pm

#83 The Gospel of Garth

LOL, HILARIOUS!

#106 Donald Trump on 09.24.13 at 2:24 pm

Intriguing here in HAMVille.

Lots of Multi family units(condos and apartments) in the 30-40 year old range built in 1960’s -1970’s are getting the old building envelope restoration.

It used to be just the newer ones ,say post 1980’s.

Coincidence or something else going on?

#107 Ralph Cramdown on 09.24.13 at 3:02 pm

Residents in a newly built condominium in the city’s west end are complaining about the ventilation system in their units, saying that air from the bathroom is being recirculated back into their living spaces.

Just goes to show that during a boom, subtrades get lazy and/or incompetent. If they’d vented each suite’s bathroom into the ADJOINING unit, it would’ve taken residents a lot longer to figure out what was wrong, and they might have run out Tarion’s warranty period.

#108 john beach on 09.24.13 at 3:04 pm

What an absolute total and utter D Bag Condo Chris is

#109 BC Bob on 09.24.13 at 3:10 pm

Garth: As a result, mortgages remain at elevated levels. How was this a false alarm? — Garth

===

Well, because mortgage rates ** aren’t ** at elevated levels. If you look at objective data, from CMHC, the conventional 5 year mortgage rate is now 4.14%, and bottomed out at 4% in the spring. Hardly a cause for alarm.

Source: CMHC ( 5 year rates charted for the last 5 years)

http://ycharts.com/indicators/canada_5year_conventional_mortgage_lending_rate

Fixed rates are 35% higher than four months ago. That matters to some people. — Garth

#110 T on 09.24.13 at 3:24 pm

Why no graphs of the 5 year Canada Bond Garth? Why not post the graph for the last month?

Oh that’s right, because it really only matters when rates are going up….

Forgot.

Google it yourself. Rates have not substantially changed. I’ll let you know when they do. — Garth

#111 :):( Ying Yang on 09.24.13 at 3:40 pm

#99 Smoking Man on 09.24.13 at 1:23 pm
#77 Holy Crap Wheres The Tylenol on 09.24.13 at 9:50 am
Thanks for the insite, let’s call a spade a spade, age had nothing to do with it.
Our shtick sucks, got to go back to basics.
The product is amazing, but we need to inflate the cost of extras, then throw then into the deal free, on conditions that we do a deal now, everyone likes it.
Just our close sucks, going to take a weekend off of gambling, design the shtick have have grasshopper practice till he gets it right.

Smoking Man my girlfriend wants to drag me off to Seneca Casino this weekend. She likes table games with my money. What can I say I am young and make great sums of cash. Can always afford to spend a few thousand here or there. Drink is still on me at the bar if you are there.
P.S. My brother looked you up and said your “Fast Track” software appears to offer many things but provides no concrete evidence other than some client testimonial. He said you need visual samples to provide customers. Fast Track is a customization friendly and flexible application built with Excel and Jet.OLEDB Database. He is watching for its release in Hong Kong.

#112 Canadian Watchdog should be allowed guest posts on this blog on 09.24.13 at 3:52 pm

Garth…would you consider this idea?
Also how about a discussion forum connected with this blog? You post the content here and this will be automatically posted as a new thread on the discussion board.
This will allow a more fluid conversation and easier reading since you do not have to scroll up to see who replied to what…
just an idea. Probably I could help with the forum

Reader comments on this idea? — Garth

#113 Donald Trump on 09.24.13 at 4:31 pm

(July 2012) Posted in Toronto Life – FAULTY TOWERS The rush to build Toronto’s new condos has resulted in falling glass, disgruntled buyers and multi-million-dollar lawsuits. An investigation into who’s to blame.

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

At least “Foreign Brides” . com and arranged marriages have more integrity than a pre – sale, you at least can check out the goods a bit before commit.

#114 rosie "moving forward" in the knowledge that, "this won't end well" on 09.24.13 at 4:41 pm

#114

I stopped reading the housing bubble blog, from the States, because it is over run by repeat posters and right wing rants. The threads are endless and frequently veer off topic. It’s your blog Garth, this isn’t a democracy here.

#115 Musty Basement Dweller on 09.24.13 at 4:51 pm

#114 Canadian Watchdog should be allowed guest posts on this blog on 09.24.13 at 3:52 pm
Garth…would you consider this idea?
Also how about a discussion forum connected with this blog? You post the content here and this will be automatically posted as a new thread on the discussion board.
This will allow a more fluid conversation and easier reading since you do not have to scroll up to see who replied to what…
just an idea. Probably I could help with the forum

Reader comments on this idea? — Garth
==========================
I hate to be a party pooper but I say naww.

Things work pretty well with this cheap and dirty approach. Pun intended.

I think we debated this kind of upgrade a while ago and it was shot down in flames. That debate convinced me it’s best as is.
There’s my two bits.

#116 father on 09.24.13 at 5:10 pm

even though canadian watchdog is an asset I would rather stick to the original format because us old dogs don’t like change

#117 Smoking Man on 09.24.13 at 5:12 pm

#113 :):( Ying Yang on 09.24.13 at 3:40 pm

Booked Sat night, see you then. Son is getting the hang of it, He closed one more today. :)

This is really slowing down my writing. But I can’t let the wind out of his sail. Momentum is everything at this stage of starting a business.

I Love to see young people, my kids or others chasing a dream, believing in a better future,taking control and some risk.

Can’t stand gloom and doomers. They’re like a rainy day on a long weekend.

I don’t know why its so important for you to try and out me here. You want my seat at the tax farm?

You can have it. :)

#118 Ralph Cramdown on 09.24.13 at 5:17 pm

(Toronto Life – FAULTY TOWERS..) Really Toronto Life, really? “[T]he logarithmic bustle of human energy that comes from high-density, high-rise living”????

I just happen to be reading an early Pynchon novel just now. He’s a master of the oblique math reference. Your writers aren’t erudite enough, apparently, to attempt this, nor are your copyeditors animated enough to stop it. Stop it.

Sorry, had to rant.

P.S. Canadian Watchdog: Thanks for continuing to fight the good fight.

#119 Donald Trump on 09.24.13 at 5:35 pm

Reader comments on this idea? — Garth

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

Yes…and I like the pre- spell checker feature which will ,de -facto , block the usual suspects.

PS Mind you, then they will post here even more from their Insaneca casino.

#120 Smoking Man on 09.24.13 at 5:36 pm

Ten-year bonds are less cosequential than 5-year instruments, where rates have declined only marginally. As a result, mortgages remain at elevated levels. How was this a false alarm? — Garth
……………………………………………..

Everyone is good at reporting the present, not everyone can call the future.

#73 Smoking Man on 09.15.13 at 9:07 pm
Re Canada benchmark bonds. and my bondomitor

2Y Slightly over sold
5Y Massively over sold
10Y Just about right
30Y Under Sold

Bet accordingly.
””””””””””””””””””””””””””””””””””

http://www.greaterfool.ca/2013/09/15/the-changeup/#comment-261667
……………………………………………
See

http://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/

#121 Canadian Watchdog on 09.24.13 at 5:48 pm

@#114

I don't have much to say other then my fundamental views on what's driving this market are still intact: that is  misinformation, non-disclosure, fraud, predatory lending and a lack of legislative protections for Canadian consumers. (since it was removed from OSFI's mandate many years ago)

World Bank blacklist over graft soars

"The number of companies and people banned by the World Bank for corruption or fraud has soared this year, and the lender warns it will step up its actions against firms for such wrong doings. The biggest culprits were firms in Canada and the United States, while China accounted for a much smaller share of the guilty companies."

"Of the 250 banned entities this year, Canada had nearly half: 119. It was followed by the US with 46, Indonesia third with 43 and Britain, 40. North America accounted for 29 per cent of the banned entities, Latin America and the Caribbean for 21 per cent, and Europe and Central Asia for 19 per cent. East Asia and the Pacific, including China, accounted for 16 per cent."

World Bank Fraud and Corruption List

Wait until Vancouver and Toronto gets exposed; especially city council members working for developers. Did anyone really believe our housing market was legit? He he he

#122 Pr on 09.24.13 at 5:56 pm

….The housing market will not crash…

Only if interest rate stay low. Interest rate higher, crash harder!

#123 calgaryPhantom on 09.24.13 at 6:06 pm

Reader comments on this idea? — Garth

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

Allow commenting on comments and also throw in ratings(likes) option for comments.

After that is done, just allow us to filter replies based on “Most popular” and “Most liked”.

#124 Screwed on 09.24.13 at 6:11 pm

That chart would indicate the condo market bottomed 2x in the last 5 yrs and is due for another rebound.

Either that or it’s going down into the abyss as massive inventory is chasing every potential buyer with a heart beat.

Condos are a prime example of cheap capital misallocation. There is never a good reason to own a condo unless you buy them cheap and rent them out. Current prices are b.s.

Buy when the developer and the banks are ready to take haircuts of 50% or more. Empty condos are like empty undeveloped subdivided city lots. The kiss of death to any developer’s cash flow.

#125 Rain bird on 09.24.13 at 6:15 pm

I agree with #114.

We should be able to read threads on one topic – easily and quickly and ignore the rest.

This way it takes way too long to through the comments.

#126 jess on 09.24.13 at 6:16 pm

Francois Cloutier, QMI Agency
Sep 24, 2013
, Last Updated: 5:22 AM ET

The Canada Revenue Agency (CRA) is chasing six Canadian families, well-known in the business world, for $1 billion allegedly hidden in Caribbean tax havens.
http://cnews.canoe.ca/CNEWS/Canada/2013/09/24/21145761.html

#127 More Cuts on 09.24.13 at 6:46 pm

Long-feared mortgage meltdown is here

http://www.cnbc.com/id/101055006

#128 :):( Ying Yang on 09.24.13 at 6:55 pm

Smoking Man your comments to my brother in Hong Kong presented a challenge to him. He is a different type of person than me. He is a code monkey. Hacker programmer. Everything has to be broken to him. It’s his personality. Me I just say live and let live.

#129 Mike T. on 09.24.13 at 7:30 pm

RE: discussion board

I think it may be useful to move some of the conversation that occurs through the comments section over to a discussion board.

Although one should at least be concerned and aware of excesss trolling that may ensue.

People are extremely emotional and defensive when someone does not agree with them.

I don’t even want to get into the Kelowna creation vs evolution debate…..it loses meaning and becomes a shouting match….that is what I would worry about.

#130 Devore on 09.24.13 at 7:33 pm

#77 Holy Crap Wheres The Tylenol

I am a very Tech Savvy Person as I create complicated electronics that utilizes machine language, HEXADECIMAL, interfacing with HMI’s that communicate via Ethernet IP.

Then surely you know that all electronics use “machine language” and there is no such thing as “ethernet IP”.

So maybe you don’t know what you’re talking about after all.

Leave the buzzwords for your resume to a big company, where it will be filtered based on keywords and shortlisted for interview by a manager who wouldn’t know ethernet if it was staring him in the face.

#131 Daisy Mae on 09.24.13 at 7:59 pm

#72 Condochris: “The Condo market is rocking right now. Don’t believe me? Try to rent or buy one.”

No shortage of listings on your site. — Garth

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

A damn realtor! Wouldn’t you know it! LOL

#132 Canadian Watchdog on 09.24.13 at 8:09 pm

#131 Shawn

Even with CMHC coverage banks are not in the business of handing out loans to deadbeats.

Well that pretty much explains how much you know about lending and securitization.

#133 Nemesis on 09.24.13 at 8:15 pm

@WatchDog/#123

I Heartily’Ditto’, RalphsCramDown…

Thanks for FightingGoodFight, you SaltyDog.

As to: “Wait until Vancouver and Toronto gets exposed; especially city council members working for developers.”

Funny you should say that… accordingly, here’s a little ‘LightReading’ for you, to augment your superlative quantitative work… Hint: They’re not always working for ‘Developers’… albeit, some of their patrons are truly Masters’OBusinessDevelopment. So to speak.

Examining the Links Between Organized Crime & Corruption [EU/CSD]

http://ec.europa.eu/dgs/home-affairs/doc_centre/crime/docs/study_on_links_between_organised_crime_and_corruption_en.pdf

… see also …

Hiding in the Shadows: The Growth of the Underground Economy [IMF]

http://www.imf.org/external/pubs/ft/issues/issues30/index.htm

PS – Don’t tell anyone, WatchDog… but, just between the two of us, Prof. Vincenzo Ruggiero was one of Nemesis’ formative influences.

#134 Daisy Mae on 09.24.13 at 9:01 pm

#114 Canadian Watchdog: “Garth…would you consider this idea?
Probably I could help with the forum…”

Reader comments on this idea? — Garth

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

We’re doing fine just as we are. What’s so special about ‘Canadian Watchdog’?

#135 TurnerNation on 09.24.13 at 10:25 pm

Known or suspected Gold Nuts have no place on this blog.
I’d trust commentary only from our forum host and Blog Dog Scott.

#136 TurnerNation on 09.24.13 at 10:29 pm

Speaking of fixing income, post close a large, crossed trade printed for CPD.TO on an ATS. Slightly under-radar.

Over 1.8 million at $16.2989 crossed, 16:05:37.
X marks the spot.

#137 expat 2 on 09.25.13 at 12:55 am

Despite some of the comments , it is not possible to live “well” in Cambodia, Thailand , Philippines , Laos etc., for CDN 1,000 per month. In Cambodia, for example, a decent apartment starts at CDN 650. You could run a motorbike and buy basic food for CDN350 but it would not be what most of us would call living well . In PH, unless you want to live in the provinces i.e , far from a decent size city with conveniences, I wouldn’t try it on less than CDN 3,000. Nice apartments here in the city are CDN 1500 plus. On the beach? A decent house in an are with no rebels or insurgents? CDN 2,000 per month. You can’t buy. Not allowed as a foriegner. Thailand is higher . Laos is reasonably inexpensive but CDN 1,000 wouldnt get you far. Trust me ( or not, I don’t really give a fig) I have been here for 15 years. I love it, but I wouldnt love it ” on the cheap “

#138 Screwed on 09.25.13 at 1:20 am

#131 Shawn

Even with CMHC coverage banks are not in the business of handing out loans to deadbeats.

Well that pretty much explains how much you know about lending and securitization. – Canadian Watchdog

don’t blame him/her …that knowledge is privilege to a handful Canadians for obvious reasons.

#139 jess on 09.25.13 at 1:51 pm

reputational risk ? after the fact

Swiss village gives extra tax from GlencoreXstrata to affected countriesHedingen donates some of its ‘commodity million’ from Glencore back to countries where the company is accused of exploiting people and resources for mining

http://www.theguardian.com/business/2013/sep/23/hedingen-village-donates-tax-glencorexstrata-affected-countries?CMP=twt_gu

http://taxjustice.blogspot.ca/