‘You should be worried’

cheating modified modified

The plan was to dump the house on Vancouver Island and buy in Calgary. But Cam gave that one up when he learned how much money he’d already lost on the BC property. That sucked. So he made the mistaken, but common, decision to rent it.

A year and a half later, no Calgary house yet. “We’ve been actively looking to buy formonths but the pricing is crazy and seems to be getting to worse,” he says. Besides, the strong-arm realtor tactics are a total turn-off. “I wanted to write you after I just received these two email snippets from my real estate agent and mortgage broker respectively.”

“Good morning,
pls click link provided to see the listing and text me if you would like to view it.  We are getting into multiple offers in all areas of city.

It is adviseable to put your best offer on paper at first time of presenting as the seller will most likely only work with the buyer with highest offer and will not bother to counter anyone unless you have the best conditions.

Therefore you must put the highest price you are willing to pay for the house right away as we have no way of knowing if or when a competing offer will be presented. Put your best price forward from now on or you may miss out on a great home.”
——-
Let’s put all this realtor BS behind us and get you a home before you are priced out of the market.”

Pressure. Pressure. Pressure. View it today. Text me now. Expect a fight. Offer big. Right away. Buy now or never.

“I haven’t really dealt with this kind of tactic before from realtors,” says Cam, “and I think I finally have it figured out. There are approximately 5,000 realtors in Calgary, 1,500 listings at the moment and I’m told 80% of the listings are from only 20% of the realtors. With everyone on commission it’s no wonder everyone wants me to BUY, BUY, BUY! They’re starving!”

Actually there are 2,383 active listings in Cowtown at the moment, down a whopping 19.2% from last year. That’s one reason the average house price, at $467,500, is up 9.46% in the last twelve months. Of course, we also have to factor in delusions of cowboy grandeur plus realtor hyperbole. Any sane person would walk away from buying in a city with runaway real estate inflation, whose economy’s based on a wobbly commodity.

(No Keystone pipeline will ever be built. Fracking has moved the US closer to oil self-sufficiency than anyone imagined. Crude exports have tanked. Even Neil Young is on the dirty oil, anti-AB thing. And has anyone noticed how many patch engineers are newly unemployed?)

Cam’s smart to resist. There may be cracks already. Calgary is one of eight major Canadian cities (including Winnipeg, Ottawa, Quebec, Montreal, Hamilton, Halifax and Vancouver) where the Teranet-National Bank index says prices actually edged lower in recent months – suggesting a peak has passed. In Montreal values have stagnated for six months, while they’ve declined in Ottawa for four months and in Victoria for three.

Now even the bankers are sweating a little. This week TD’s boss, Ed Clark, said bankers should be worried about the overheated real estate market and the fact idiot investors (and their horses) have listened to realtors and bought big. . “If you run a bank, you should be worried about it,” he told a Toronto audience. “We’re saying ‘no’ lots of times to real estate borrowers.”

Beside him was Royal’s biggest kahuna, Gord Nixon. Consumers are tapped out, he said, at their limit for borrowing – which means the bank is gearing up for less loan business in the future. “In terms of pure consumer lending (growth), we’ll probably be operating at a much lower rate than we have been over the last few years. There’s no question that the consumer has been leveraged up.”

Hmm.

High prices. High debt. That sounds stable, doesn’t it? And there’s more to come Wednesday, when CREA releases its latest compilation of real estate board Frankenumbers, all sauced up, seasonally-adjusted and spiced for media consumption. Hard to know who to believe these days. The independent economists who spot declining price trends. The banker bosses who think undisciplined borrowers might blow up and spray brains all over their balance sheets. Or famished real estate agents.

By the way, the annual giant boat show is happening now in Toronto. This is an important leading economic indicator, of course. Nobody needs a damn boat. Or a cottage. It’s all about wants, desires, hormones, thongs, disposable income and employment security.

This is from the show’s official newsletter: “Saturday’s total attendance was 11,863, an 18% decrease from the prior year’s Saturday of 14,466. Sunday’s attendance was 9,504, a 21% decrease from the prior year’s Sunday of 12,041. After opening weekend, the show’s cumulative attendance is 8% behind the three-year average.”

Connect the dots.

215 comments ↓

#1 KG on 01.14.14 at 9:34 pm

I heard somewhere in US in a Gold show the number of booths was less than 50% as compared to last time.

#2 Tri-Guy on 01.14.14 at 9:37 pm

going to the boat show this sat. hopefully the 3 ~ 5 million dollar yachts arent sold yet. once they sell they close the exhibit.

#3 A random punter on 01.14.14 at 9:38 pm

With over 150 comments on every post, do you think Garth is predisposed to thinking of people as sheep?

#4 Paul on 01.14.14 at 9:39 pm

Connect the dots.
————————————————————
I get it
Great time to get a deal on a boat??

#5 I'm a Visitor on 01.14.14 at 9:40 pm

This blog is too depressing.
I’m going to watch a few hours of those ‘Economic Action Plan’ commercials, they’re way more positive and optimistic.

#6 tigerbaby on 01.14.14 at 9:41 pm

Hey people who don’t trust gov stats, meet the people who fill surveys with random numbers.

#7 Kenny on 01.14.14 at 9:43 pm

Awesome post as always! Am I # 1?

#8 dienekes on 01.14.14 at 9:44 pm

I agree, Keystone will never be built. Isn’t it full south of Oklahoma anyway? Where’s the northern leg going to dump it? On the ground?

#9 MunEcon on 01.14.14 at 9:45 pm

DELETED

#10 Happy Renting on 01.14.14 at 9:46 pm

No comments yet?? I dare not hope to be first.

I’ve noticed, in the past year, various businesses closing (space either sitting vacant or a chain moving in.) Wondered if I just wasn’t very observant before or if rents were increasing (but in all the neighborhoods I frequent?) Or, as you say, no one has any money to spend. Makes sense now…

#11 kilby on 01.14.14 at 9:48 pm

We had a 25 foot Mirage sailboat which we had moored in West Vancouver, moorage was $315 a month, maintenance coupled with not enough use warranted us selling it….With rising ferry fares here on the Island, 28% hydro increases and now the dollar at nearly 90 cents. Boats are easy to buy cheaply…hard to sell.

#12 Vancouver on 01.14.14 at 9:48 pm

Garth and readers,

You must watch the gem I found in You Tube. A Vancouver Housing song, simply put, the video of the year. LOL

http://www.youtube.com/watch?v=GLnhCFbOCsk&desktop_uri=%2Fwatch%3Fv%3DGLnhCFbOCsk&app=desktop

#13 Babblemaster on 01.14.14 at 9:49 pm

“The banker bosses who think undisciplined borrowers might blow up and spray brains all over their balance sheets.” – Garth

——————————————————-

Funny that the banksters (I love that word) call the borrowers undisciplined when they are the ones that enabled them in the leveraging.

Blame the dealer, or the addict? — Garth

#14 shane on 01.14.14 at 9:50 pm

Garth? What about the franchise show?

#15 Rainclouds on 01.14.14 at 9:50 pm

Gonna be an interesting spring. starting to see listings pop in false creek. 188 keefer chinatown development is STILL flogging suites (been a couple of years). lots of almost completed developments (concord pacific site) which are advertizing homes for sale on a big sign at quebec and 1st. Count 6 cranes in the air .

RE trainwreck impending in lotusland?

#16 HappyGuy on 01.14.14 at 9:52 pm

Thank you Garth for all the good work!

#17 Uh Oh Canada on 01.14.14 at 9:52 pm

“The second best day of my life was when I bought a boat. The first best day of my life was when I sold it.”

#18 bcc7 on 01.14.14 at 9:54 pm

after reading the first line I thought Cam Good is invading Calgary in a helicopter.

#19 Macrath on 01.14.14 at 9:54 pm

What! “Nobody needs a damn boat.”
HEY!
We boaters don`t bad mouth the Harley geezers deafening the neighbourhood.

#20 baddog on 01.14.14 at 9:57 pm

I think that we are all in agreement that there is some type of housing slump coming Garth but the Terenet Index goes down every year during this season. That in itself is not an indication of anything right now.

Which ‘season’ is five months long? — Garth

#21 Carpicker on 01.14.14 at 10:02 pm

@jimmy aka SM your attitude is bad for masses, your master kept one secret from you. How do you like the whip leather or plastic!!!

#22 Mark on 01.14.14 at 10:04 pm

Oil self-sufficiency in the US? Get real. They still import 7-8 million barrels per day of the stuff. And that’s with an economy that’s been decimated.

Keystone will be built. But it won’t help Calgarians unless they own energy company shares.

#23 T.O. Bubble Boy on 01.14.14 at 10:04 pm

Secret $172 million U.S. Government stimulus program discovered by watchdog:

http://www.reuters.com/article/2014/01/13/us-usa-medicare-pumps-idUSBREA0C1OW20140113

#24 Linda Mulligan on 01.14.14 at 10:06 pm

What is a realistic house price today? Is it what it actually costs to build a house (land, materials, labour) with say a 5 or 10 percent premium for profit? Is 5 or 10 percent profit realistic or reasonable? Should sellers try to sell based on what it would cost to build a new home? Previously owned homes often are priced lower than brand new homes – ok, so maybe the older home needs maintenance & I suppose the possible higher end construction/finish is offset by the potential problems if asbestos or other toxic materials were used in construction. Still, I’ve been in show homes where the finish is so bad one has to wonder what the builder would present a buyer who chose to purchase despite the obvious shoddy workmanship in the show suite. What is considered a ‘fair’ average home price in Canada?

#25 Drill Baby Drill on 01.14.14 at 10:07 pm

Oh blogged out one, thank you for mentioning newly unemployed engineers in the oil patch. It is a fact, many who have been used to long term engineering projects in the oil sands (I used to call it the tar sands but that is politically unacceptable now) are now staring squarely in the face of these same projects being pushed out many months (years ?) into the future because we are simply not building any pipelines to move the oil sands production to market. Rail cars simply cannot make up the difference. Just like realtors who fudge the books, the oil sands producers are fudging the books on their actual production numbers. They purposely lower the production numbers to show that they do not have as much production shut-in as they actually do. This means they can get a better stock price (for now). Calgary is so “you know what!!”.

#26 Paully on 01.14.14 at 10:09 pm

I spent most of my money on boats, booze and women.

…the rest, I wasted.

#27 Smartalox on 01.14.14 at 10:10 pm

I’ve seen a lot of cost conscious behavior in Vancouver lately:
– Tuesday night, there was a lineup down the block outside a KFC, home of the $1.99 Tuesday special.
– oldsters nursing their senior-price coffees at McDonalds
– A pensioner buying a loaf of Wonder bread on sale to compliment jars of baby food also on sale.
– Stores and Malls are empty not only on weekdays, but weekends as well.

People are running out of credit, so consumer spending is slowing. Sears, the Bay, Target all reporting losses and pending cuts. In a couple of months the spring sales will be juicy!

Meanwhile, cbc leads off with a thinly veiled rah-rah story about peak real estate, and how house hornies can still tap mom and dad ‘s equity to buy their dream home in Vancouver.

The Bottom Line panel on the National tonight promises insights to help consumers plan their finances for 2014. I can’t wait!

#28 Marco Polo on 01.14.14 at 10:11 pm

Garth,

No one needs a damn boat? I can buy a gently used sailboat with engine and living quarters for 50 large.

Chicks dig dudes with yachts. I’m only stuck to a coastal or riverside address, great quality of life, and if I put my stuff in storage, I don’t need a damn expensive house.

Winter shuts my dreams down, and needing to keep a 9 to 5 job is a big dealbreaker.

#29 frustrated on 01.14.14 at 10:12 pm

I’ve been renting for 2 years now because I thought we would of had a correction by now. Every time I think things will turn south, never happens. I still am looking at houses ( because the wife wants one ) I wanted to go look at a house in mississauga and I asked my agent to see it. He called me back and said 8 offers on the table already and asked if I still wanted to see it. I told him no. I sometimes wonder if this mess will ever end when people are still willing to go in a bidding war

I liked how you blame your wife. Manly. — Garth

#30 Paully on 01.14.14 at 10:12 pm

The nice weather today made it feel like the spring market is almost here. Of course, February is the new April, so only a couple more weeks to wait for the unofficial start of house and condo season.

#31 John on 01.14.14 at 10:13 pm

How ironic.. Ed Clark is retiring from TD, time to warn others. Just as Mr. Carney warned Canadians about dangers of debt just before heading to UK.

#32 Ben on 01.14.14 at 10:19 pm

Hey Garth, maybe you did look into the UK? Lower volumes mean higher prices. Most people are clueless about this, see the headline “prices rise” and call their bank.

Want to know what’s next? FX drop, rate cuts, tax cuts, unemployment, QE and then direct state lending – if you go down the UK path. I can’t imagine Canada will be that bad but you never know – if they don’t take their medicine and trash housing they will…

#33 Ben on 01.14.14 at 10:19 pm

sorry not tax cuts – tax receipt drops!

#34 Goldie on 01.14.14 at 10:22 pm

Article in bloomberg today about how Scandinavian banks are expressing the same fears regarding their overborrowed populations.

When Ireland hit the wall a few years back, their banks suffered, mortgage lending dropped by nearly ninety percent, the country needed a bailout and housing prices dropped fifty percent. They are finally starting to recover now, years later.

#35 Goldie on 01.14.14 at 10:30 pm

#21:

exactly. Several estimates state that even when fracking in the US hits its peak, they will still have to import a couple million barrels per day. It’s obvioulsy difficult to accurately predict peak output, but if they do need to import, Canada can compete for that business.

#36 John Prine on 01.14.14 at 10:36 pm

Macrath on 01.14.14 at 9:54 pm
What! “Nobody needs a damn boat.”
HEY!
We boaters don`t bad mouth the Harley geezers deafening the neighbourhood.

No No! Not Geezers…Outlaws with running shoes and skull bandanas. The noise is to alert cagers not to hit them after they have gone by. You have reminded me that the “Outlaw” season is just a few months away. I tell my Harley friends that I have “Whispering Pines” exhaust on my bike.

#37 Bottoms_Up on 01.14.14 at 10:40 pm

Even Home Depot knows we’re tapped out. homedepot.com offering 7.99% APR financing. homedepot.ca? 0% for 18 months.

#38 Bob Rice on 01.14.14 at 10:41 pm

Geez, every post lately has mentioned how bad the real estate market is out west… wish we had that problem here in the GTA… Prices just keep going up… no one I know is losing money on RE (condos notwithstanding…)

Don’t get out much, do you? — Garth

#39 Cici on 01.14.14 at 10:43 pm

Today’s topic of debt-ridden overspenders, giant boats and boat shows, and of course, realtor-sucking msm brought on a full-scale ADD episode that left me surfing the Web for small sailboats, until I eventually got shipwrecked on this fine read:

BY PHILLIP REID
Sailing magazines aren’t the only ones. Go to the newsstand, pick up a random handful of enthusiast publications, flip through them, and you’ll get the distinct impression that, regardless of the particular enthusiasm a given magazine purports to celebrate — kayaking, listening to records, raising children — all of them actually celebrate the same underlying pursuit — The Acquisition of Stuff.

There’s a slight variation when you have an enthusiasm that just doesn’t involve much Stuff — surfing is a good example. In these cases, the magazines will try to convince you that if you acquire the “right” Stuff for that pursuit, limited though it may be, you will also, as a significant bonus, acquire bimbos. Boating magazines (and not exclusively those devoted to powerboating) do this too — actually, they take it all the way: “Acquire more Stuff that you don’t even know what it does, for more money than it’d take to buy a major league baseball team, and you’ll also get — bimbos!”

This paragraph is going to be the tangential digression about boat (and charter company) ads with bimbos. There aren’t many varieties. Basically, you have Bimbo Lying Uselessly on Deck, Bimbo Standing Uselessly in Cockpit, Bimbo Standing Uselessly at Bow, and Bimbo Sitting Uselessly Next to Helmsman…..

For anyone else that loathes obsessive overconsumption, bimbos, mainstream media, yet loves sailing or wants to, the rest of the article is here:

http://www.goodoldboat.com/newsletter/08_augnews61.php

#40 Chickenlittle on 01.14.14 at 10:45 pm

#23 Linda Mulligan

“What is considered a ‘fair’ average home price in Canada?”

Good question, and one that really hasn’t been answered here to my memory.

The fair price of a new build home is a tough question. They differ in price depending on where you look, even though they all use pretty much the same materials. Why one in Windsor can cost half of what one costs here in Milton is beyond me! They’re built out of the same garbage.

I think a fair price for a home, whether new or old, is one that is compatible with income. One where a couple can have a child or two and not worry about the loss of an income for a time.

I don’t think most people even know what a fair price is anymore! As Oscar Wilde put it, “Nowadays people know the price of everything and the value of nothing.”

I hear so many of my friends justifying the price of their homes as “it’s just the way it is now” it makes me sick!!

So because it’s near the subway it’s worth almost $1 million…

So because it’s near the mountains and it rains most of the time (you can have your very own house in fishbowl-like environment!), its worth $2.5 million…

It’ll be interesting to hear some other opinions on this… :)

#41 Calgary Conditional Owner on 01.14.14 at 10:45 pm

Keystone XL is one of three major pipeline projects to move Oil out of Alberta. The other two do not need approval from other countries, and will be highly beneficial to Canadian economy. The hurdles are the provincial governments, environmentalists and damn Neil Young, not easy ones to overcome, but overall, I believe these two projects will pass. I honestly don’t see Calgary slowing down in the near future!

#42 Marco Polo on 01.14.14 at 10:47 pm

To answer Linda, #23’s question,

Her statements in the questions make it seem like its just honest workmanship or fixed material costs that make a house expensive.

This simply isn’t true.

The structure, if a new SFH, is fairly reasonable.

What’s expensive, here in Edmonton, but more in Vancouver or Toronto, is the overpriced speculated land. Here only a decade or two ago, a quarter section near the city may have been $1000 per acre. This had been sold to a developer, and then again sold in the completed home as a land price today. The land price per acre would be two large lots, now over 200K per acre! These land prices under the home are due to fall in any downturn. The cost of replacement would dwindle in a poor economy.

#43 T.O. Bubble Boy on 01.14.14 at 10:50 pm

@ #30 John on 01.14.14 at 10:13 pm
How ironic.. Ed Clark is retiring from TD, time to warn others. Just as Mr. Carney warned Canadians about dangers of debt just before heading to UK.
————————————–

Speaking of CEOs as smoking guns, should this “yoga pants palace” have been an indicator that Lululemon was nearing a decline?
http://ca.finance.yahoo.com/news/lululemon-39-founder-chip-wilson-39-home-b-005840606.html

#44 Shawn on 01.14.14 at 10:51 pm

Which ‘season’ is five months long? — Garth

… that would be “winter”, we are just at the halfway point of the November through March winter here in Edmonton.

No one moves here for the climate…

Gotta love over 16 hours of darkness around Christmas…

#45 Shawn on 01.14.14 at 10:53 pm

And of course I know Garth referred to August through December price declines. But just saying yeah winter is at least five month in these parts.

So move. — Garth

#46 FTP - First Time Poster on 01.14.14 at 10:58 pm

“No Keystone pipeline will ever be built. Fracking has moved the US closer to oil self-sufficiency than anyone imagined. Crude exports have tanked.”

Bah ha ha ha – oil self sufficiency! I love it Garth! Were you aware that the US Dept of Energy was established ONLY to get the states to become energy self sufficient? That was back in the 40’s I believe. So 70 years later all the sudden shale oil is the answer even though they’ve known about it since the late 60’s? Somehow, I doubt that. http://www.theoildrum.com/node/7499

Not only that, but Keystone really doesn’t matter. Once XL is built to the West Coast and shipped to Asia, the bottleneck currently in place will be removed. Besides, a few more severe rail incidents like we’ve had the last 18mos and arguments over pipelines will be all but forgotten.

#47 AM on 01.14.14 at 10:59 pm

Same old RE industry crap. Grab some popcorn and enjoy the movie.
http://video.theloop.ca/news/consumer-news/watch/housing-prices-going-up-in-2014/3033614527001#.UtX3k02A3b1

#48 Mr. Monday Night on 01.14.14 at 10:59 pm

My poor buddy could have sold his house in Nova Scotia six months ago for what he paid for it, but he got stubborn and held on with the advice of friends that the market would pick up again and he’d make money.

Six months later, living in a different province, he has it listed for $50,000 less than break-even with no bites, and he can’t even get a renter in, so suffers the monthly loss of a mortgage payment along with renting in Ontario on a steady diet of ketchup sandwiches.

One of many sad stories coming up the pipe I’m sure.

#49 Porsche on 01.14.14 at 11:00 pm

Nothing matters anyways.

The doomsday clock is tonight at 5min to midnight.

#50 RayofLight on 01.14.14 at 11:01 pm

I spend the winter in Arizona. We have a small 1BdRm Condo , and we were thinking of upgrading to a 2BdRm. I went on Zillow.com and was amazed at the information that can be obtained online about a property. It will give up last selling price and the date last sold, estimates of all neighbouring properties,taxes,HOA fees and a link to view in Google Earth. The buyer was in the advantage with this much information. And then I wondered why our Federal Govt, was squandering this majority opportunity. Why should Canada’s real estate cartel be allowed to act so punitively against the consumers ? The opaque information flow is managed solely for the betterment of the Real estate industry, not for anyone else. Canadian’s may like to snipe at the US , but they are the fools here, and this Fed govt is complicit because they refuse to correct it.

#51 Devore on 01.14.14 at 11:04 pm

#12 Babblemaster

Funny that the banksters (I love that word) call the borrowers undisciplined when they are the ones that enabled them in the leveraging.

It’s just business. The the business was good. All those tasty loans and mortgages that will be paying interest for years to come. Well, damn, interest on my preferred shares has to come from somewhere.

#52 Steven on 01.14.14 at 11:07 pm

Moving to a hot real estate market is not a good idea!
Strictly speaking they are probably all too expensive relative to income in absolute terms however there are some real estate markets that are absolutely worth avoiding like the plague.

#53 Devore on 01.14.14 at 11:09 pm

#21 Mark

Keystone will be built. But it won’t help Calgarians unless they own energy company shares.

Ultimately all reserves known today will be extracted.

But Canadians would rather buy houses, and bitch about how government is selling out “our” resources to foreigners. They’re willing to put their money to work and bring them to market, god knows Canadians will not.

#54 not 1st on 01.14.14 at 11:10 pm

Garth, a typically balanced market in Calgary is about 10,000 listings. There is serious upward pressure if the active listings are only few thousand right now. What a wonderful gift the market has given anyone who needs to sell.

#55 Frustrated Kiwi on 01.14.14 at 11:11 pm

“So he made the mistaken, but common, decision to rent it.”
Made that mistake myself when selling our place in Saint Louis four years ago. We got lucky because someone who had seen it when it was on the market contacted me asking if we were still interested in selling – sensibly said yes. If you’ve never seen a true real estate downturn before, it’s a very easy mistake to make (IMHO). Pity the poor Japanese person who made that mistake and is still waiting for the market to come back after 20 years – there must be some.

#56 not 1st on 01.14.14 at 11:13 pm

Garth, that leg of Keystone isn’t for the U.S. anyway. its the quickest way for our crude to get offshore given the delays in other pipeline projects.

The oil companies will find a way to get it to the gulf coast even if they have to route it through 10 other pipelines first or rail it or truck it there.

#57 Stupesing in Cabbagetown on 01.14.14 at 11:13 pm

The headlines are getting scarier. From the Wall Street Journal: Canada’s Skidding.

#58 quebec economist on 01.14.14 at 11:15 pm

Challenge for you Garth…try to write an optimistic post, its healthier (like being vegan!) Like your Xmas miracle post!

#59 Berniebee on 01.14.14 at 11:15 pm

#21, #34,

Nobody said the USA will “reach ” self sufficiency. The point is that the USA is going to import less and less oil for the near and medium future. Surely you can see that less demand for oil translates to downward pressure on prices? And with tar sands production costs being pretty high…well the layoffs are already happening.

#60 Smoking Man on 01.14.14 at 11:20 pm

#20 Carpicker on 01.14.14 at 10:02 pm

Wet Leather works for me.

#61 Julia on 01.14.14 at 11:27 pm

Blame the dealer, or the addict? — Garth

Well, typically we jail the dealer and treat the addict. I guess you’re the therapist, Garth.

#62 Porsche on 01.14.14 at 11:28 pm

#56 Stupesing in Cabbagetown

Funny how the rest of the world can see it but we can’t.

#63 Victoria on 01.14.14 at 11:29 pm

Why is it that when realtors report price gains, this blog happens to dispute the numbers, but when they report losses it is all too happy to accept everything they say?

I quoted no realtors describing losses. — Garth

#64 T.O. Bubble Boy on 01.14.14 at 11:30 pm

This surprised me a bit… but I guess it makes sense when you take a 30-year view…
Why One in Six Canadians Will Eventually Go Bankrupt

(key word: eventually)

#65 Victor V on 01.14.14 at 11:32 pm

http://www.theglobeandmail.com/report-on-business/bank-ceos-should-be-worried-about-real-estate-tds-clark/article16330596/

Ed Clark, Toronto-Dominion Bank’s outspoken chief executive officer, is playing the contrarian card one more time, publicly arguing that he and his fellow bank CEOs should be cautious about the country’s heated real estate market.

While he isn’t worried about a full-blown bust, Mr. Clark believes chief executives simply can’t ignore warning signs in the market – particularly the sudden run up in prices for real estate of all stripes. “If you run a bank, you should be worried about it,” he told the audience at a bank conference in Toronto…

…Mr. Clark’s comments Tuesday weren’t the first he’s made on the topic, but this time he went into more detail on how his bank is changing its behaviour.

“We’re saying ‘no’ lots of times” to potential real estate borrowers, he said, some of whom are big, lucrative clients. Mr. Clark wouldn’t name names, but he noted that in one instance, Tim Hockey, the bank’s head of Canadian retail and commercial banking, was “virtually in tears” for having to turn the client down.

#66 Victor V on 01.14.14 at 11:35 pm

http://business.financialpost.com/2014/01/14/rbc-scotiabank-td-banks-borrowing/

Nixon said he expects consumer lending growth to remain tight, rising by mid single-digit levels, for “an extended period of time” after several years of double-digit increases.

“What would be the most healthy outcome for the marketplace is for there to be a steady, orderly increase in interest rates to a reasonable level,” he said.

#67 Fleabitten Monkey on 01.14.14 at 11:36 pm

Hi Garth,
What do you make of Avery Shenfeld’s take on the tsx outperforming us markets in 2014?
Would be very interested in your point of view.

No stretch. US equities are expensive and Cdn stocks are relatively cheap. — Garth

#68 Van Isle Renter on 01.14.14 at 11:43 pm

Don’t own a house, but we own a sailboat. It’s kind of like waterfront property without the tax bill.

You can sleep in your boat, but you can’t sail your house.

#69 DR on 01.14.14 at 11:43 pm

#28 frustrated on 01.14.14 at 10:12 pm

I liked how you blame your wife. Manly. — Garth

Happy wife, happy…

#70 Smoking Man on 01.14.14 at 11:45 pm

What’s amazing, my big market calls picking tops and bottoms has been quite accurate.

My larger than life ego, upsets most.

Had I started blogging and posting with a name like :

Blithe Barrington, Ive league, perfect grammar and spelling, politicaly correct.

Humble, appreciative.

The people that hate me now, would love Barrington, and my 26 fans would hate me.

But it’s OK, Barrington is a character in the worsed book ever being written.

Writers bloc is gone. I will never come close to Hunter S. But neither will anyone else.

Once I got cool with second place, the brain exploded with ideas.

You guys all should do a book, it’s so much fun.

#71 RayofLight on 01.14.14 at 11:45 pm

I don’t think Obama will approve, or cancel the XL Pipeline. On his lecture tours after he is out, he will say to the eco groups” I did not Approve the XL Pipeline”,and to the blue collar groups “I did not cancel the XL Pipeline”. In reality, the Eco Demonstrations against the pipeline are really just White House sanctioned form of trade protectionism. Go with EOG.N,TRN.N,CNR.T. President Christy will approve the pipeline in about two years.

#72 the jaguar on 01.14.14 at 11:46 pm

Garth: the puppy in the previous post is beyond cute. I want to steal him from the police bodyguard….arrange this please…

Regarding tonights post…..

Wake up people. All these rail car explosions….connect the dots.
Doesn’t it make you realize that capacity in pipelines south of the border have been squeezed off due to the Bakken Oil fields? They(THE AMERICANS) get first dibs on capacity, don’t you know? The Keystone XL has been dragging on for some time…ask yourselves for what good reason?
A political timebomb, that’s what. Just admit it’s dirty oil. The world needs oil. Nothing changing on this front in the near future. But North America does not need that dirty, dirty stuff in Ft. Mac. Now that Saudi America has its own supply they won’t need ours. Keystone XL was always about transmission of the oil to Houston to ship offshore to other countries. Can the crap about Canada being a “SAFE”supplier to the US cease and desist?? Like they need our help or protection or ever have or ever would rely on a country they consider to be just a little too socialistic. Propoganda.
Like everything else in this world that smells a little “off”, follow the money….follow the money and therein the truth lies…… fasten your seatbelts, Calgary.
You are not invincible. It really isn’t “different here..”\
Those strong winds that blew through the city yesterday are the winds of change. Fasten your seatbelts.

#73 Van on 01.14.14 at 11:46 pm

Check out the video of the year, Vancouver housing crash song.

http://www.youtube.com/watch?v=GLnhCFbOCsk&desktop_uri=%2Fwatch%3Fv%3DGLnhCFbOCsk&app=desktop

#74 CD on 01.14.14 at 11:51 pm

semi-related unofficial US metric… this weekend the detroit autoshow starts. I know you can’t really compare cars and boats but most people believe that its going to be bigger/better than last year. So unofficially the US economy is moving forward since even the lowest of the low are moving on up.

#75 Derek R on 01.14.14 at 11:54 pm

#41 Marco Polo on 01.14.14 at 10:47 pm wrote:
The structure of a new SFH, is fairly reasonable.

What’s expensive, here in Edmonton, but more in Vancouver or Toronto, is the overpriced speculated land.

That gets to the heart of the problem. It costs much the same to build a 3 bdrm SFH in any part of Canada between Vancouver and Halifax. A bit more perhaps to build in the North because of transport costs for the components. But what makes the really big difference is the cost of the vacant lot to build it on. We can build new houses if we need more but we can’t build new land to put them on.

We can ship in BC lumber to build Toronto houses if we need to but we can’t ship in BC land. So the supply and demand equation for land is very different from the supply and demand equation for lumber.

#76 Joe Calgary on 01.14.14 at 11:56 pm

So basically Calgary is where Vancouver was 2 years ago, shortage of listings and bidding wars. Brace yourselves brave souls, for the dillusion will continue.

#77 Notta Sheeple on 01.15.14 at 12:02 am

“…..Beside him was Royal’s biggest kahuna, Gord Nixon. Consumers are tapped out, he said, at their limit for borrowing…..”
=========================

Temporary Foreign Workers. I guess you did your part in crushing Canadian disposable income, eh Gordy? How does that saying go about choking the golden goose?

Then again, in the theme of yesterday’s blog “disconnect”, what would you expect from a CEO who pocketed $16 million last year, and still hasn’t been able to spend the previous year’s $12 million.

#78 Spectacle on 01.15.14 at 12:12 am

Winston Churchill once said,

“Let our advance worrying become advance thinking and planning.”

Trust this is worth reflecting on our personal economic research, & Garth’s Blog . Plan your work & work your plan!

Thank you Garth

#79 FunnyMetric on 01.15.14 at 12:13 am

We’re using boat show attendance as a metric now? Boy RE bears are a sad bunch of losers.

#80 Carpicker on 01.15.14 at 12:14 am

How to make a bridge….. width or length of the river. Not a bull but its time to buy some more gold, ill try to kill to birds with one bullet, protect myself against CND and hope bullion goes up. Either way can’t lose. Waiter…. I’ll get a wet copy of SM book…..on ice plz.

#81 No more psyops, please on 01.15.14 at 12:16 am

No Pipeline?? Even after Lac-Mégantic? They’ll need better actors for the next psyop. Harper’s delivery at the fake funeral was a lackluster performance, worse than Gene Rosen

‘It was so emotional.. so emotional’

#82 Snowboid on 01.15.14 at 12:24 am

#49 RayofLight on 01.14.14 at 11:01 pm…

I agree 100%, when we purchased we already had 10 times as much information on properties than available in Canada before we even talked to an agent.

In AZ, no lawyers needed, under $ 300 in closing fees, and all but one part of the RE transaction can be done electronically.

Of course it’s tough dealing with 24-25C days in January – you must admit!

One good thing, prices in the Okanagan are almost down to the level where we can get a starter 1 bed/bath condo for what we paid in late 2010 for our spanish-style rancher on a 1/4 acre lot in Phoenix.

#83 Andrew Woburn on 01.15.14 at 12:33 am

#38 Cici on 01.14.14 at 10:43 pm
Today’s topic of debt-ridden overspenders, giant boats and boat shows,

Basically, you have Bimbo Lying Uselessly on Deck, Bimbo Standing Uselessly in Cockpit, Bimbo Standing Uselessly at Bow, and Bimbo Sitting Uselessly Next to Helmsman…..
============================

Do young men mortgage their souls to buy Porches because they really like driving? Google “codpieces” and “bower birds”.

#84 Lurker on 01.15.14 at 12:34 am

A friend of mine recently bought a house on Hornby island as a vacation property. He went in with his common law spouse and they are quarter owners each with the other half being owned by the wifes sister and hubby who live in Europe. It takes two overpriced ferries and many hours to get there from Vancouver. They have no tenant and guess who has to rebuild the rotten deck? Hint: not the European folks. Did I mention he is in his early 50s and recently outsourced? No job, no pension for several years, and now has a cow of a house to deal with. I am not making this up.

#85 Young & Foolish on 01.15.14 at 12:54 am

Remember …. God loves renters!

#86 Basil Fawlty on 01.15.14 at 1:02 am

Why not build a refinery in Alberta and refine the crude in Canada? That way we don’t have to worry about spills, since gasoline evaporates.
The XL pipeline is just going to send our crude to
refineries in the Southern USA. We would create excellent jobs and a value added product.
Why is there no discussion of more Canadian refineries?

#87 Rexx Rock on 01.15.14 at 1:02 am

Calgary rocks,great investment for real estate for huge profits.Real estate over the last 10 years have created great wealth for the average Canadian.The gravey money train for flipping houses may be coming to a end

#88 Alberta Ed on 01.15.14 at 1:19 am

(Expletive deleted) $467,500 for a ticky-tacky vinyl and pressed-cornflakes Calgary house (near-identical to every other one in the subdivision)? Let us all hoist a toast to the death of Common Sense.

#89 Booby on 01.15.14 at 1:25 am

Like I have said earlier, who actually believes what a realtor says anyways?

#90 Cici on 01.15.14 at 1:43 am

Thanks Andrew, I’m aware of the chic magnet factor, but actually thought you guys really did get off on the big motors and flashy car parts too. Not a bimbo, but slightly naive.

So now I know for next time: If I bring up diamonds, and he changes the conversation to BMWs, I shall kick that bowerbird in his codpiece ;-)

#91 blase on 01.15.14 at 1:49 am

After all the Windsor, Ontario talk yesterday I went to MLS.ca to have a look at what houses can be bought in the city with a lower unemployment rate than Toronto, and with better weather. Found this one on a nice street with a school in the top 10% provincially in Fraser rankings. https://www.listmenow.ca/basic-info.php?id=X2698535

Anyone who knows about Windsor, what is your take?

#92 calgaryPhantom on 01.15.14 at 1:51 am

Here in Calgary, there is another myth. “Rentals are scarce”. BS. Looking for rentals, and plenty of options. Landlords (mortgage lords) are calling back to see if I will be making in time for the appointment. I can also bargain on the rental amount.

#93 Gainsaywhodare on 01.15.14 at 2:02 am

“No Keystone pipeline will ever be built.”

That is yet to be seen, Garth. Never say not ever. The reason behind Keystone XL go/no-go is very much political. And we all know how the political game goes.

#94 Infused with Opiates on 01.15.14 at 2:07 am

121 Dual citizen from last blog – percent of homeowners with no mortage courtesy statscan

2000 44%
2005 42%
2008 43%

Average age of mortgage-free owner in 2008 was 62.

#95 devore on 01.15.14 at 2:08 am

#78 FunnyMetric

We’re using boat show attendance as a metric now? Boy RE bears are a sad bunch of losers.

Toys are always the first to go. Pay attention.

#96 Math Check on 01.15.14 at 2:08 am

Vancouver doesn’t really belong in the list of cities with declining Teranet index so far as I can see. The monthly change has been positive from May and the yearly change positive from September. The most recent couple of values have exceeded the peak reached in June 2012, and the index is up 3.9% over the last six months.

By contrast the REBGV HPI for Greater Vancouver has been essentially flat for the last six months, for what that’s worth (up 0.25%). I’m not suggesting the Teranet index implies that the Vancouver real estate market is in rude good health, just pointing out that this particular measure isn’t showing a retreat at the moment.

#97 Nick on 01.15.14 at 2:19 am

I have a hard time looking at the ‘news’ all the time and even this blog..
Two weeks ago everything was going great.. Buy low, sell high..
Now this week we’re all doomed..
Shouldn’t we be buying because of this little recession?
Why is the dollar so low right now anyway? I know it’s a fairly artificial process but what was the point of doing that? Stimulate job creation in Ontario?
We still can’t compete with the Chinese..
Maybe these super tankers bringing shit over from china should have tougher emission laws.. Then at least it would cost more to bring shit over here and make manufacturing in North America a thing again..

#98 Crash Callaway on 01.15.14 at 2:22 am

#23 Linda Mulligan

“What is considered a ‘fair’ average home price in Canada?”

What is considered a “fair” average home price in Canada is what the next “Greater Fool” is willing to pay.
Building materials, location and all other common sense items simply are not in the equation.
See what happens when a country gets the C1Buy1 Virus

#99 Christopher Lackey on 01.15.14 at 2:24 am

Jesus this blog is depressing.

I can’t think of anything to add to today’s grimness, but I will say to all those people yesterday who wonder why Windsor is so cheap with a lower unemployment rate than Toronto – go see it for yourself. It’s very polluted – air quality is terrible with 50,000 diesel trucks a day crossing the ambassador bridge.

Far more on the 401. — Garth

#100 ted cruise on 01.15.14 at 2:28 am

When will this realestate market ever crash ..? NEVER GARTH no matter how you dump on it !

#101 Ronaldo on 01.15.14 at 2:37 am

#39 Chickenlittle on 01.14.14 at 10:45 pm
#23 Linda Mulligan

“What is considered a ‘fair’ average home price in Canada?”

This link may help you in this regard. I have built two homes my self but that is a few years ago but I would hazard a guess that today a basic house would probably run about $150 s.f. not counting the land costs. The finishing is the expensive part and it all depends on your budget. The sky is the limit there. Land prices vary all over the country as it depending on the cost to develop, the location, etc.

Consider that a tear down in Vancouver has basically no value so that 1.2 million is basically the price of the lot. (at the moment anyway)

http://forum.canadianwoodworking.com/showthread.php?33873-House-construction-cost-per-square-foot

#102 Freedom First on 01.15.14 at 2:40 am

#57 Quebec Economist

If you would like to read optimistic postings, I suggest you stick to the msm. Here, we bring out the truth, and nothing but the truth. Also, while I find msm posts ridiculously funny in their own non-REality way, Garths humour cannot be beat.

#103 crackers on 01.15.14 at 2:44 am

building boom in richmond whats up garth? hammmerd.

#104 aprilNewwest on 01.15.14 at 2:54 am

i think the slow melt that Garth has often written about has been happening across Canada for a couple of yrs now but some people can’t or don’t want to see it.
I miss Junius and The American. They used to post fairly regularly.

#105 Mark on 01.15.14 at 3:24 am

“They purposely lower the production numbers to show that they do not have as much production shut-in as they actually do.”

That’s a pretty serious allegation, of widespread securities fraud, and, by implication, auditor malfeasance. Care to share even a shred of evidence in support of such allegation?

#106 Tony on 01.15.14 at 3:45 am

Re: #40 Calgary Conditional Owner on 01.14.14 at 10:45 pm

Funny all I see on mls is foreclosures in both Calgary and Edmonton. We’ve seen a slight dip in oil prices this year but there’s much more to come. We should easily see at least a fifty percent price chop as the world economy weakens and commodity prices tank. All this means is Calgary will be flattened with worthless oil just sitting there for decades with no buyers.

#107 Jane24 on 01.15.14 at 4:11 am

The last two RE deals I did here in England were with specialist conveyancing companies, which means they do RE deals only. Their front offices were in England and their back offices were in India. Meant each legal fee in total outside of disbursements was about $500 Canadian, including farting around with mortgages on and off too. Had British sounding names though I noticed.

I have just listed a house for sale with an Internet RE company and I note that they have just hammered the sign into our front lawn. Cost was $907 Canadian complete from photography session to close, worth a try guys.

Waves of the future. Will let you know what happens.

#108 Randman on 01.15.14 at 4:56 am

Pension expectant?=screwed!

http://globaleconomicanalysis.blogspot.com/2014/01/retirement-sunset-math-number-of.html

“As we face retirement sunset demographics, inquiring minds might be wondering how many people are left to foot the bill for retiree Medicare, health care, public union pensions, and Social Security promises vs. the number of people collecting benefits.”

#109 Mediabuff on 01.15.14 at 5:25 am

The boat traffic volume in the Muskoka Landing Channel in Georgian Bay is a pretty good predictor of economic growth in the GTA.

Traffic was down quite a bit in 2013. But not as much as the drop in 1989.

#110 Onthesidelines on 01.15.14 at 5:40 am

” Nobody needs a damn boat. ” – Garth

Blasphamy! I’d say nobody needs a harley or a hummer or a porche, but a boat, that’s entirely different, especially if you’re talking about an offshore cruiser…. grin. For those who don’t believe me, pack in your job and take the wife ( and kids) on a romp around the world on a sailboat for a few years. The experience is priceless and lifechanging. Can a harley or a cottage do that?

As for boat sales being some kind of economic indicator, I think not so much. Boating, especially sailing, is suffering from changed consumer tastes ( why go out to get wet and sore when you can play a video game at home) as well as the exorbitant hike in all costs associated with boat ownership.

Boat ownership has been too costly for the middle class probably for a couple decades now. After all, who can afford to keep a modest 32 foot sloop at Burrard Civic Marina in Vancouver at an annual cost of close to 5K… and that’s not even counting insurance and maintenance. Boating’s slow death has been ongoing for a while and is mostly self inflicted.

#111 avenirv on 01.15.14 at 7:20 am

#24 Linda Mulligan

there is one price only: the market price.
“realistic” / “fair” / “correct”… prices exist in North Correa.

#112 Smoking Man on 01.15.14 at 8:00 am

 benefits.”

 Mediabuff on 01.15.14 at 5:25 amThe boat traffic volume in the Muskoka Landing Channel in Georgian Bay is a pretty good predictor of economic growth in the GTA.
…………

So wrong, traffic was down cause of a crap weather, last summer was cold.

I only had mine out 15 times. A record low.

But it was all weather.

#113 Vancity Transplant on 01.15.14 at 8:42 am

Garth – do you recommend still sitting on bank shares? I’ve seen healthy gains and been reaping dividends even from common shares. Your books and blog have been life savers!

I never did recommend holding individual bank shares, unless you have a very large portfolio. Smart people harvest capital gains. — Garth

#114 Victor V on 01.15.14 at 9:08 am

POLL: Does it make more sense to buy or rent a condo?

BUY: 36%
1676
votes

RENT: 64%
2924
votes

———————————

If you want to chime in and vote in this unscientific yet interesting poll, go to http://www.globeandmail.com (you’ll find the poll on the right side of the website if your scroll down the page)

#115 TurnerNation on 01.15.14 at 9:38 am

Thought I saw Blithe Barrington in the GF reading room. (Where things go harrumph in the night.)

#116 ☢ ☢ ☢ recharts - I am still waiting for the day when stock market will reach this level of return ! on 01.15.14 at 9:42 am

This is for SFH in TO

21 Woodmount Ave Toronto (Danforth area)
480000 sold 2013-03-19
looked like this: http://tinyurl.com/m2adwxt
renovated
689000 sold these days
looks like this: http://tinyurl.com/mbt2j2n

—————————
Todays numbers:
Sold under:16
Sold over:4
Sold for asking:2

Avg price 975705
Most of the sales in the central areas, Many unde the asking price. Some fabricated “X percent” over asking price by listing well under the price of the area.
—————————

On the losers side:
http://www.tobiahomes.com/idx/C2795283/Toronto/7-yorkview-dr.html
W2804579
Initial asking 2249000
Reduced to 1995000
Sold for 1800000
80% of asking after 212 days on the market.

I am just wondering how the first property was bought for just 480K. However to pay 689K for a semi detached is insane, one must be a real idiot and really in love with Downtown to pay that money for a semi.

#117 ☢ ☢ ☢ recharts on 01.15.14 at 10:07 am

GTA: other repeated sales (lame deals) of deals that did not go through

30 Main St 365200 Sold: 2013-04-18 Posted: 2013-04-18
Initial Asking price: 379900
Last asking price: 379900
Sold recently for: 356500

———————
223 Lennox Ave 689800 Contract: 2013-08-08 Sold: 2013-08-08 Posted: 2013-08-08
Initial Asking price: 739000
Last asking price: 739000

Not sure about this last one, was it a resale (then it is lame) or a deal that was not approved by the bank and the seller made more money 4 moths later…

#118 Holy Crap Wheres The Tylenol on 01.15.14 at 10:11 am

#112 Smoking Man on 01.15.14 at 8:00 am
benefits.”
Mediabuff on 01.15.14 at 5:25 amThe boat traffic volume in the Muskoka Landing Channel in Georgian Bay is a pretty good predictor of economic growth in the GTA.
…………
So wrong, traffic was down cause of a crap weather, last summer was cold.
I only had mine out 15 times. A record low.
But it was all weather.

………………………………………………..

Have to agree not a good indicator of the economic growth in the GTA. Boat traffic down in Oakville as well. I took the sailboat out perhaps a dozen times. This year I have to make the migration up to Lake Erie for a meet up with an old buddy from Buffalo. He comes every year for the boat show and he reminded me its my turn to visit him. Crap this is a two and a half day trip minimum in a boat. My buddy comes to the boat show every year to look only, boats are too expensive here in Canada. BTW the boat show was fairly busy, go figure.

#119 T.O. Bubble Boy on 01.15.14 at 10:14 am

@ #77 Notta Sheeple on 01.15.14 at 12:02 am
“…..Beside him was Royal’s biggest kahuna, Gord Nixon. Consumers are tapped out, he said, at their limit for borrowing…..”
=========================

Temporary Foreign Workers. I guess you did your part in crushing Canadian disposable income, eh Gordy? How does that saying go about choking the golden goose?

———————————————–

So, if we follow the money trail… I guess we should all be investing in iGATE then? (the outsourcing company used by many of the big banks for temporary foreign workers)

https://www.google.com/finance?q=NASDAQ%3AIGTE

Would have been a great buy last year! Up almost 150% over the past 12 months.

#120 NoName on 01.15.14 at 10:18 am

http://m.huffpost.com/ca/entry/4589688

if you are riding an elevator with six random Canadians, it’s likely that one of those people has or will declare bankruptcy at some point in their lives.

#121 Blithe Barrington on 01.15.14 at 10:22 am

Felicitations Smoking Man

Your Essentialism on the world fetishizes the unchanging “essence” of all things. You report with dynamism a  paradoxical mosaic and cryptology masked and camouflaged as the village schlemiel bathing in a puddle insignificance.

The assemblage of minds you are striving to impregnate with Parmenides vision will result in flummox.

It will be a pleasure being characterized in your novel.

 

#122 Franco on 01.15.14 at 10:47 am

@#47 —– It may be same old industry crap, but they have so far been right and if anyone had listened to them, including myself on buying a house would have been a lot further ahead.

#123 Rusty Venture on 01.15.14 at 10:52 am

I won’t predict if Keystone will be built or not, but I will comment that producing ‘tight’ oil plays (ie fracking) is like the Red Queen’s race – drilling has to increase significantly just to keep production steady…

#124 AfterTheHouseSold on 01.15.14 at 10:56 am

Doctor Garth,

I have come down with a severe case of bondneurosis after reading your Jan 12th post “The road ahead”. Since then, I too have been feeling “the bond chill” and have spent much time at the university of google trying to self diagnose to no avail. If anything, my understanding of how bonds work and why the chill is spreading, has worsened. My symptoms now include:
nonsensicalitis and inoneearandouttheother.

If you could please explain this in something other than technical jargon; perhaps a fable or metaphor, would be most helpful and much appreciated.

#125 Infused with Opiates on 01.15.14 at 11:05 am

82 Snowboid – BC’s system is also electronic now, but from the LTSA website:

“Real estate is the most important asset many British
Columbians own, and the LTSA recommends that land title holders seek a legal professional’s assistance when making changes to a title. Any change to a title, even changes that seem minor, may have major legal repercussions and other consequences.”

And as far as I know, AZ does not have a Torrens system (please correct me if I am wrong).

I would purchase lots of title insurance.

#126 Penny Henny on 01.15.14 at 11:08 am

Boat sales may be down but RV sales have been trending up the last few years.

#127 TS on 01.15.14 at 11:14 am

. “If you run a bank, you should be worried about it,” he told a Toronto audience. “We’re saying ‘no’ lots of times to real estate borrowers.”

Since bank can do this, there is no reason to worry about the market is out of control.

Everything is fine now, low rate, no hard landing, stable market after many years fast growing. In couple of years, market will be up again. It is time to prepare.

#128 andrew on 01.15.14 at 11:24 am

That realtor email looks strangley familiar.

Garth – Did you post a similar email a coiple months ago that GTA realtors were sending to their clients?

Seems scripted and a new selling technique. Fear selling.

Anyway i call BS on that realtor. So many listings in south calgary on MLS.ca that held open houses in November. They still sit, same price, not even an update to the description so us everyday folk now how long the listings have been up. No multiple offers here

#129 45north on 01.15.14 at 11:24 am

Lurker: A friend of mine recently bought a house on Hornby island as a vacation property. He went in with his common law spouse and they are quarter owners each with the other half being owned by the wife’s sister and hubby who live in Europe.

the good thing about the depression in the 1930’s was that people knew there was a depression. wives supported their husbands, families knew they couldn’t piss away money

Crash Calloway: C1Buy1 Virus good one

#130 Spiltbongwater on 01.15.14 at 11:28 am

When the banks say no, Capital Direct says yes. People can still tap their home equity with a simple phone call.

#131 Energy Dude on 01.15.14 at 11:34 am

I wondering how many people spend an extra $10-$20 per month because they are heating the entire street. Energy bills keep going sky high: http://tinyurl.com/saveEnergyHome

#132 Buy? Curious? on 01.15.14 at 11:37 am

Yo! Garth! Canary in the coal mine stories from some friends of mine. Dude in Canmore AB, is packing it in and moving back to Toronto because work has dried up. A MILF who moved out to Calgary for some graphics work (freelance) is having trouble renting out her condo to cover the carrying costs. She’ll have to pay a few hundred per month to cover the shortage. AND, one of my other Milf actually cried when she discovered your blog! No lie! Her townhouse that she bought in September is closing today! She never heard of this blog before in her life! I’m going to go over there on the weekend and “console” her but things are about to get real for some people. Reality is going to come crashing down like a bag of hammers!

http://www.youtube.com/watch?v=kXf3wx5nPXU

Rob Ford 2014

#133 Daisy Mae on 01.15.14 at 11:42 am

#58 quebec economist: “Challenge for you Garth…try to write an optimistic post….”

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

It’s not helpful.

#134 Stickler on 01.15.14 at 12:00 pm

@ #86 Basil Fawlty on 01.15.14 at 1:02 am

Why not build a refinery in Alberta and refine the crude in Canada? That way we don’t have to worry about spills, since gasoline evaporates.
The XL pipeline is just going to send our crude to
refineries in the Southern USA. We would create excellent jobs and a value added product.
Why is there no discussion of more Canadian refineries?

——————

I am a fan of that idea too. Im sure some Canada infrastructure bonds could be issued to help finance it.

Canada / Alberta is missing a lot of $ due to lower export volumes.

Canada should move away from exporting raw stuff, and add some value here.

#135 ozy - can we stop postings until actually those prices DROP? on 01.15.14 at 12:01 pm

can we stop postings until actually those prices DROP?

its just so repetitive, and in contrast with what’s in real life….

show me that house at 2008, 2010 or even 2012 prices – I want to eat it

hungry
ozy

#136 Renting in Edmonton on 01.15.14 at 12:02 pm

#92
You’re right, there are enough rentals to choose from here in Edmonton too. The ones who are claiming the rental situation is so bad, is same group that is supported by the real estate cartel.

#137 TEMPLE on 01.15.14 at 12:08 pm

No stretch. US equities are expensive and Cdn stocks are relatively cheap. — Garth

It is a bit of a stretch. On what basis are you calling US stocks expensive? Price to earnings?

On the surface, the PE of the S&P500 is slightly higher than its long-term average, but there are an awful lot of cheap stocks hiding under that number. Also, the PE of the S&P500 is artificially higher than it should be because bank earnings are not even close to being fully recovered. Since the S&P500 is cap-weighted, this has a significant effect in inflating the PE.

The other side of the coin is that Canadian stocks still have inflated earnings, making those stocks look cheaper than they actually are. PE is a bad indicator on its own.

Don’t bother with Schiller’s stupid CAPE either, it suffers from the same problem, only even slower.

TEMPLE

S&P P/E is 15.5, compared with 14.1 five-year average. Expensive by 10.5%. — Garth

#138 sheane wallace on 01.15.14 at 12:11 pm

Wall Street Journal:

Canadian house prices are very clearly bubbly.
Various estimates have Canadian house prices at between a third and two-thirds over-valued.
(ouch, no soft landing)

Canada’s household debt stood at 164% of incomes in the second quarter of 2013–double where it was two decades ago–and significantly higher than the U.S.’s 130% at the peak of its housing bubble.

Meanwhile, some 7.5% of the Canadian labor force is employed in construction, the most of any time for at least 40 years. Residential construction makes up 7% of the economy.

All of these numbers point to the economy’s deeply unhealthy dependence on property. And anyone who still doubts only needs to count cranes and condo towers across Toronto’s skyline.

Maybe the Bank of Canada will be able to repeat its trick of opening the monetary spigot again. But with its base rate at 1%, it has fairly limited room for manoeuvre. At the same time, the Canadian dollar is vulnerable to correction. A currency rout would tie the central bank’s hands.

Whatever happens, the adjustment is unlikely to be a smooth or painless.

http://stream.wsj.com/story/latest-headlines/SS-2-63399/SS-2-426771/

#139 Axman on 01.15.14 at 12:18 pm

Call their bluff – 2 months ago we gave an offer to our agent on a house in Mineola that had been on market a couple of months. My agent made a call to the sellers agent to make an appointment to present the offer…their agent says “I have been instructed by a buyer to prepare an offer” (this is called a “pocket buyer” – google the term – its how would-be Reno czars lock up properties without forking over any cash, and how agents maximize potential for double commission)….anyway, my agent calls and says “we have to do something” – I answered “yes we do…. Pull the offer”. Two months later – house is still for sale and seller probably doesn’t even know that his agents greed for a possible double commission f’ed up the deal we were willing to make.

#140 Daisy Mae on 01.15.14 at 12:19 pm

#110 OnTheSidelines: “….and take the wife ( and kids) on a romp around the world on a sailboat for a few years. The experience is priceless and life changing. Can a harley or a cottage do that?”

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

Maybe not. But spending time on the rolling high seas in a sailboat? I think not… ;-)

#141 rosie "moving forward" in the knowledge that, "this won't end well" on 01.15.14 at 12:20 pm

A very interesting read. 70 Cent dollar?

http://www.bloomberg.com/news/2014-01-15/blackberry-deficit-draws-amundi-bet-poloz-on-hold-currencies.html

#142 Stop me if you've heard this one before on 01.15.14 at 12:39 pm

#131 Energy Dude on 01.15.14 at 11:34 am

Energy bills keep going sky high

—-

In Toronto if you have a vacant house, and use zero hydro, ie turn off the main breaker at the panel, you get a bill for 20 bucks a month, it’s called ‘delivery’, that’s right, it’s delivery of nothing, and of course our rulers take their HST skim on top of that, that’s right a tax on the usage of absolutely nothing. Of course if people have no money the Government gives ‘rebates’, ensuring the need for more government. When they send our jobs to Mechindia there is no payroll to deduct anything from. So they have to get revenue from energy and consumption taxes.
HST on home heating and electricity is a war on the Canadian family, I don’t know how Harper can sleep at night.

#143 Enthalpy on 01.15.14 at 1:03 pm

Renting for 2 years? Thats not that long. Tell your wife to cool her jets.
Check out the new york times calculator to make a case for renting longer. Quick and dirty calcs of what it would cost to buy your place now divided by your rent(x12). The ratio will let you know how you are doing. Ive been north of 21 for quite some time. No plans to change anything right now.
Buying a property today/right now is not a bright idea imho. If you wanted in earlier, you missed the boat.

#144 james on 01.15.14 at 1:04 pm

Guys, why fret over RE prices that may go up or down 5-10%. How much does that really affect your life ove the course of 25 years…Really.

#145 aprilNewwest on 01.15.14 at 1:06 pm

#114 – cant’ find it..

#146 jess on 01.15.14 at 1:06 pm

list of companies tax benefits from research credit in millions from 2008 -2011
http://www.ctj.org/taxjusticedigest/archive/2014/01/should_it_bother_us_that_boein.php#.UtQ9hGRdUt0

#147 drydock on 01.15.14 at 1:08 pm

The Status Quo system is failing. Its collapse will be messy.
http://www.maxkeiser.com/2014/01/resolution-1-lets-call-things-what-they-really-are-in-2014/#fssjvKJ809mfWPh8.99

#148 veej on 01.15.14 at 1:17 pm

How long have you been telling people not to buy?

Average Canadian house price up 10% to $389,119

The average price of a Canadian home increased 10 per cent to $389,119 in December, compared to the same month in 2012.

People can buy when they want. But having the bulk of net worth in a home at this time is the definition of risk. I can assure you houses in Halifax or Montreal or Victoria did not rise by 10%, so your statement is hollow. — Garth

#149 chickenlittle on 01.15.14 at 1:35 pm

#81: no more pysops (sp?), please:

There won’t be a pipe line because Lac-M is in Canada, it’s a small town, and no American cares about a small Canadian town, let alone a french one.

I think it was very sad, but tell that to the guy sitting in a bar in Manhattan. If its not in an american city that people have heard of, nothing is going to happen. Americans don’t care about anything that happens outside of the US (with apologies to Retired Boomer- WI).

#150 Fed-up on 01.15.14 at 1:40 pm

@ #144 james on 01.15.14 at 1:04 pm
Guys, why fret over RE prices that may go up or down 5-10%. How much does that really affect your life ove the course of 25 years…Really.

——————————————————————————–

Lol, is that what you expect this inevitable and delayed correction by Harper intervention to be, 5 or 10%? Dream on.

And hey, with that line of thinking, why not just pay extra 5 or 10% since that won’t mean much over the next 25 years…Really.

#151 TEMPLE on 01.15.14 at 1:41 pm

S&P P/E is 15.5, compared with 14.1 five-year average. Expensive by 10.5%. — Garth

You missed my point. The E part of the PE is problematic for both US and Canadian stocks making the PE a poor indicator (as usual). I’d argue (and I am) that US stocks aren’t actually as expensive as they appear and that Canadian stocks aren’t as cheap as they seem to be.

Notwithstanding the huge difficulty in painting all stocks with a broad PE brush, earnings are trending up in the US, thereby lowering the PE. Can we say the same about the earnings trend in Canada right now? I’d say your last few blogs (at least) suggest that we can’t.

TEMPLE

Goldman Sachs says: The current valuation of the S&P 500 is lofty by almost any measure, both for the aggregate market as well as the median stock: (1) The P/E ratio; (2) the current P/E expansion cycle; (3) EV/Sales; (4) EV/EBITDA; (5) Free Cash Flow yield; (6) Price/Book as well as the ROE and P/B relationship; and compared with the levels of (6) inflation; (7) nominal 10-year Treasury yields; and (8) real interest rates. Furthermore, the cyclically-adjusted P/E ratio suggests the S&P 500 is currently 30% overvalued in terms of (9) Operating EPS and (10) about 45% overvalued using As Reported earnings. Reflecting on our recent client visits and conversations, the biggest surprise is how many investors expect the forward P/E multiple to expand to 17x or 18x. For some reason, many market participants believe the P/E multiple has a long-term average of 15x and therefore expansion to 17-18x seems reasonable. But the common perception is wrong. The forward P/E ratio for the S&P 500 during the past 5-year, 10-year, and 35- year periods has averaged 13.2x, 14.1x, and 13.0x, respectively. At 15.9x, the current aggregate forward P/E multiple is high by historical standards. Most investors are surprised to learn that since 1976 the S&P 500 P/E multiple has only exceeded 17x during the 1997-2000 Tech Bubble and a brief four-month period in 2003-04. Other than those two episodes, the US stock market has never traded at a P/E of 17x or above.
— Garth

#152 what bubble? on 01.15.14 at 2:11 pm

“Canada’s Housing Market Expected to Moderate in 2014” posted on Wall Street Jornal 1h ago:

http://stream.wsj.com/story/latest-headlines/SS-2-63399/

#153 Stoopid Idiot on 01.15.14 at 2:14 pm

By Greg Hunter’s USAWatchdog.com

Forget what you are hearing about stiffer mortgage lending requirements. It’s not true. Real estate expert Fabian Calvo says, “If you can fog up a mirror or you have a pulse, they will give you a home loan. That’s what they have done with the car loans, and that’s what they are doing with housing loans.” The so-called new rules do not have any down payment credit score requirement. Zero percent down loans are going to make a very big comeback. According to Calvo, “After the mid-term election, you’re going to see no-money-down loans just really roar back. It’s all part of the pump and dump I’ve been telling you about for well over a year.” So, are the housing market problems behind us? Calvo, whose company buys and sells $100 million in distressed real estate debt annually, says, “Bottom line is we are still in a situation where half of every mortgaged home in America is completely underwater, and the Fed is going to have to print money for a very long time before those values return. It’s just a matter of fact.” Calvo goes on to say, “Now, worst of all, they are beginning to securitize so they can bring in even more capital. A third of all real estate in America is rental properties. You are going to have Wall Street being the biggest landlord in America. It’s subprime 2.0.”
According to the Director of the Consumer Financial Bureau, Richard Cordray, new mortgage lending rules are supposed to make sure “the great mortgage meltdown never happens again.” So, is the housing market more resilient to another downturn? No way, says Calvo, “They’ve securitized the rental properties, which are now making the net effect of a collapse in values in the market much more devastating for the economy.” Calvo predicts, “The next leg down in the real estate market will be much, much larger . . . Homeowners, who may have a little bit of equity in their home, should be very cautious right now.” Still, Calvo says don’t expect a crash in 2014, and he says, “We’ll pretty much see a repeat of 2013.” Calvo says to watch when hedge funds start selling their real estate holdings. He says, “I think that will be around 2015. That will be the handwriting on the wall that the collapse in housing prices will be coming.” Calvo thinks the next real estate collapse will be caused by forces outside of the housing market. Calvo says, “I think the next leg down in the real estate market won’t be centered around the housing collapse. It will be centered around the multi-bubble collapse of the dollar, the bonds, the government debt, all collapsing simultaneously. . . . This next collapse will make 2008 look like a dress rehearsal for the really big multi-bubble collapse we will be seeing.”
So, how are the rich going to protect themselves? Calvo, who does business with millionaires and billion dollar hedge funds, says, “A year ago, a third of the room would say buying gold and silver was just kind of crazy. Today, you have half of the room investing much more than 10 or 15% of their portfolio into physical gold and silver. To me, that is a big signal.”
Is there any good news? Yes! Calvo says, “There’s going to be spectacular sales, spectacular deals, way more than you saw back in 2008.”

http://www.youtube.com/watch?v=iegX-ZGtQ5U

#154 baddog on 01.15.14 at 2:17 pm

Which ‘season’ is five months long? — Garth

Winter. – Baddog

It doesn’t start in August. Except in Edmonton. — Garth

#155 Calgary Conditional Owner on 01.15.14 at 2:18 pm

#106 Tony on 01.15.14 at 3:45 am

Sounds like you would see Alberta fall with great pleasure, but think about it: Gateway into BC will make the Oil Sands much more competitive, since it opens up the Asian market. It won’t be long before the general public demands that Pipelines are built to transmit Oil, as opposed to move it around in trains, which has generated terrible tragedies, and , and this will play an important role in the Albertan economy. BTW, that means good news for the rest of Canada too.

Funny all I see on mls is foreclosures in both Calgary and Edmonton. We’ve seen a slight dip in oil prices this year but there’s much more to come. We should easily see at least a fifty percent price chop as the world economy weakens and commodity prices tank. All this means is Calgary will be flattened with worthless oil just sitting there for decades with no buyers.

#156 Montellino on 01.15.14 at 2:44 pm

rbc report <1hr ago

As the rate of property appreciation accelerates further above personal income growth (which averaged a little more than 4% in the past two years), the risk of deterioration in housing affordability will rise. We expect, however, that upward pressure on prices will ease in the period ahead as the earlier strength in homebuyer demand continues to partly unwind and supply of homes (consisting increasingly of condos) available for sale resumes an upward trajectory.

#157 James on 01.15.14 at 2:49 pm

#150 Fed-up on 01.15.14 at 1:40 pm

And hey, with that line of thinking, why not just pay extra 5 or 10% since that won’t mean much over the next 25 years…Really.

Now you are taking. Trend is your friend. Why worry about a few bumps.

#158 screwed on 01.15.14 at 2:50 pm

So the banker is warning other bankers about the debt levels. That’s rich. Its like the candyman warning the candymakers that candy is bad for their customers.

When smoking was in, the doctors would pose as model smokers for the tobacco ads.

This is all laughable but the problems, the banks have created for themselves and for the country as a whole will have consequences. Follow the money. The banks are making bigger and better profits every year when the real economy has stalled long ago.

Profits coming out of the economy, from every Canadian who participates and has no choice but to live here and play by their rules. The money flows to the top. Always has and always will.

Now they’re “concerned”.

Screw them. They’re all saturated with paper and just collecting every time they pass “Go”.

Time to trim their fat and they can skip a few meals as well. Let ’em eat their own paper. The paper that turned much of Canada and many Canadians into serfs and slaves.

Please tell me that you didn’t think they would get off scott free, did you?

Don’t borrow from those guys. Own them. Bank preferreds pay 5.5% with dividend tax credit. — Garth

#159 gladiator on 01.15.14 at 2:54 pm

@142 Stop me…
My Toronto Hydro bill used to have this little amount called “debt retirement charge” of a couple of bucks bi-monthly. I called and asked about it and was told to shut up and pay it and even if this is not for a debt that I incurred – I still have to pay it. Of course, it was phrased a bit better than I wrote here, but the idea was exactly this. Well, since I had to bend over and take it, like all my fellow torontonians (as spineless as we are) and since it was a small amount I just shut up and kept paying it.
Lo and behold, in my latest bill this charge is over 7 dollars!!! And, of course, I also pay a nice 13% HST on it as well.
So, I am charged an amount for nothing, and my wise and visionary government carefully skims its 13% on top of it.
Now, if you’ll excuse me, I’ll go replenish my stock of grease.

#160 Refining in Canada on 01.15.14 at 3:33 pm

@86, basil

The refining business is tricky. Each jurisdiction and each customer has different requirements for additives, purity and end product etc. They make more then just gasoline from crude oil.
Basically, refineries are expensive, complex, and take time and expertise to build. Once you make it, you need to fine tune the end product for each use and each market. Again, expensive, complex and time consuming. You need big markets, labour pools and volume to make it competitive.
But, if you ship the crude to Japan they already have refining capacity and make it into gas for all the markets in Asia. Ditto for the gulf, they have excess refining capacity to make gas/refined products for global markets. If AB tried to do this it would mean basically building the whole industry from scratch, building refining overcapacity (because the USA already has it), and years of fine tuning the end product all the while undercutting a major trade partner and siphoning tight labour off the extraction industry. This same dynamic works in many secondary industries. The USA can support a refining industry on its own (with imported raw materials of course.) CA needs export markets to support an industry of that size/complexity.
It is why CA’ians are the hewers of wood and carriers of water. It is our place in the world to extract and deal in primary industries. We can’t compete in secondary (refining and manufacturing) and just compete in tertiary (services, research and tech.)
Basically, why spend billions and years of development building refineries in a mature industry just to race the USA and Japan to the bottom (and probably lose)?

#161 House Prices on 01.15.14 at 3:37 pm

#40 Chickenlittle on 01.14.14 at 10:45 pm

Chic’:
While the price of a house is what someone is prepared to pay for it, I’d suggest there are 3 ways prices are calculated for houses –

1. Building cost + ‘reasonable profit’;
2. The price in the area for similar properties;
3. The Marketing price, (esp. for new developments) which is some mix of 1 and 2 above.

In other words, Prices 1. and 3. can be any amount you like, almost.

Alwyn

#162 Big Brother on 01.15.14 at 3:42 pm

#121 Blithe Barrington on 01.15.14 at 10:22 am
Felicitations Smoking Man

Your Essentialism on the world fetishizes the unchanging “essence” of all things. You report with dynamism a paradoxical mosaic and cryptology masked and camouflaged as the village schlemiel bathing in puddle insignificance.
The assemblage of minds you are striving to impregnate with Parmenides vision will result in flummox.

It will be a pleasure being characterized in your novel.

…………………………………………………………………………………………….

MKULTRA says Smoking Man was lost at “Felicitations.” He would have to Goggle it!
We programmed him but we did not give him the mind of a great “Greek Scholar.” We accidentally gave him the mind of a “Geek Schooner.”

#163 Better off than you think on 01.15.14 at 4:10 pm

We are better off today despite what we may think.

For example, 20 years ago in 1994 –

No (commercially available) Internet or VOIP;
No smart phones and apps;
Houses were usually smaller;
Interest rates were higher;
Unemployment was higher; and,
Autos were less reliable;
We had few choices of cheaper goods from China.
Many helpful medical and drug treatments were not yet available …

… you get the message.

Alwyn

#164 Ripped on 01.15.14 at 4:11 pm

#152
“Canada’s Housing Market Expected to Moderate in 2014″
………………………………………………………………………

It’s funny to see these types of articles one has to read outside of Canada. Here at home you can only read UP UP UP

#165 New Oil Refinery in Alberta on 01.15.14 at 4:26 pm

#86 Basil Fawlty on 01.15.14 at 1:02 am

Mr. Clees:

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/canadas-first-new-refinery-in-decades-breaks-ground/article14426102/

Cheers, Alwyn

#166 not 1st on 01.15.14 at 4:29 pm

Wall Street’s Brightest Minds Reveal Their Best Investment Ideas For The Next Decade

http://www.businessinsider.com/best-investment-ideas-for-the-next-decade-2014-1

#167 Bargains everywhere on 01.15.14 at 4:47 pm

#106 Tony on 01.15.14 at 3:45 am

Funny all I see on mls is foreclosures in both Calgary and Edmonton. We’ve seen a slight dip in oil prices this year but there’s much more to come. We should easily see at least a fifty percent price chop as the world economy weakens and commodity prices tank. All this means is Calgary will be flattened with worthless oil just sitting there for decades with no buyers.

___

Tony – you are always such a ray of sunshine. I bet your coworkers just love working with you.

#168 Tony on 01.15.14 at 4:54 pm

Re: #167 Bargains everywhere on 01.15.14 at 4:47 pm

What do you know the very first listing is a foreclosure, hey there’s another one at Country Crud.

http://www.realtor.ca/PropertyResults.aspx?Page=1&Mode=0&vs=Residential&ret=300&sts=0-0&beds=0-0&baths=0-0&aid=6649&MapURL=?AreaID=6398&mp=0-0-0&mrt=0-0-4&trt=2&of=1&ps=10&o=A

#169 FortToFort on 01.15.14 at 5:00 pm

Goldman Sachs says: The current valuation of the S&P 500 is lofty by almost any measure, both for the aggregate market as well as the median stock:
Why would GS broadcast that to the muppets?

Acknowledgment of irrefutable fact after the fact (and therefore VOT? (Vaste of time). Or another attempt to deke out money on the sidelines so institutionals sell before more QE from Yellen causes further outrageous market gains?

#170 brainsail on 01.15.14 at 5:04 pm

#160 Refining in Canada on 01.15.14 at 3:33 pm

“Canada exports about two-thirds of its oil to the United States— while half of the oil used in Canada is imported from other countries.”

http://www.cbc.ca/news/politics/canada-imports-oil-while-battling-over-pipeline-exports-1.1137804

Why doesn’t Canada refine its own surplus crude oil for domestic use and become self-sufficient?

#171 Second Hand Smoke on 01.15.14 at 5:05 pm

Re #166 not 1st

My long-term trends:

i) trend toward a cashless society (hard to pick a winner particularly among the upstarts such as Square if and when it IPOs but for now I would say Visa and ebay are well positioned)

ii) Asian consumers (Macau is now 7x Vegas in revenue, and growing at 20%, so Las Vegas Sands is an idea)

iii) strong brands with international appeal and expansion (Starbucks for example)

iv) entertainment content (think Disney, which has ESPN doing well since people still want to watch sports live and have to endure commercials)

v) America (Berkshire Hathaway)

Do your own due diligence. These investments may not be right for your situation, and now may not be an ideal time to buy.

#172 Steven on 01.15.14 at 5:13 pm

High prices. High debt. That sounds stable, doesn’t it?

No! It is absolutely dangerous financial insanity and fiscal irresponsibility! Avoid it like the plague!

#173 Suede on 01.15.14 at 5:22 pm

#151 Temple

P/E is but one factor in valuing a broad index.

What about the factor where wealth 1%ers in France are parking their money in the S&P and DJIA? Capital is looking for safety.

Similar to the minor immigrants from Hong Kong demographics moving into Vancouver RE in the late 90’s. Capital does shift, and when it escapes calamity and looks for safety, extraordinary highs can and will happen.

The S&P 500 is still below it’s all time high when denominated in Euros and some other currencies (just haven’t looked them all up). Lots of Europeans buying Amercian indices, it’s cheap for them – but looks expensive for us!

Just like how US houses were cheap for us 1.5yrs ago, same principle

http://fxtrade.oanda.ca/analysis/economic-indicators/united-states/stocks/sandp-500-index-in-euro

#174 jess on 01.15.14 at 5:24 pm

Sleuths Hunt for Kazakh Bank’s Missing $6 Billion Bloomberg
…when the nameless shells companies money trail ends the people trail begins when searching for 6b. dollars.

Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASEMonday, January 13, 2014Court Rejects Banking Associations’ Challenge to Regulations Addressing Offshore Tax Avoidance
Today the District Court in the District of Columbia dismissed a challenge filed by the Florida Bankers Association and Texas Bankers Association challenging 2012 amendments to the Department of the Treasury’s interest-reporting regulations. The regulations require U.S. banks to report to the Internal Revenue Service (IRS) information about accounts earning more than $10 of interest beginning in 2013 that are held by nonresident aliens of all countries with which the United States has a tax treaty or other information exchange agreement. These new reporting requirements help the United States’ ability to comply with requests from its treaty and exchange partners and implement the Foreign Account Tax Compliance Act….
http://www.justice.gov/opa/pr/2014/January/14-tax-042.html

#175 screwed on 01.15.14 at 5:26 pm

Don’t borrow from those guys. Own them. Bank preferreds pay 5.5% with dividend tax credit. — Garth

I would if my wife wasn’t so house horny. Maybe this Spring I got her convinced to sell, then take the 400k equity and live rent free on the interest.

No, not interest. Dividends and capital gains. — Garth

#176 FortToFort on 01.15.14 at 5:35 pm

#165 New Oil Refinery in Alberta

Regional consumption of diesel will continue unabated in our lifetimes; it’s just too useful and ubiquitous. Demand will even increase if only just to maintain operations and support day-to-day activities of regional society as it’s simpler and cheaper to make than gasoline. The NWU is a stabilizing factor for other primary extractors/producers in Alberta, a way to reduce price pressure & inflation on the general public, and a way to improve support and ‘add-on’ industries and professional employment. A win-win situation all around.

Best to disregard the babblings of it’s demise due to natural-gas ‘conversion’ of vehicles. We’ve already seen the debacle of propane conversion decades ago, and natural gas is even lower in energy content and harder to handle than propane. The huge amounts of steel containment and conversion instrumentation and labour alone so people can schlep around methane gas is insane. Ever do a calculation how much energy is needed to mine, transport, mill, form, coat, pressure-test, install, then dispose of a ton of steel? Exotic artificial fiber vessels, or worse yet aluminum alloy vessels, aren’t much better than way.

If you want to use natural gas for propulsion, and reduce environmental impact by bypassing oilsands hydrocarbon extraction or growing alcohol just for pushing vehicles around, use a Fischer-Troff process on a huge scale to make ultra-high grade diesel with.

The present cheapness of methane should compel industry to make diesel directly, instead of using it just to boil water to wash sand and hydrotreat coked bitumen off-gas with.

#177 Smoking Man on 01.15.14 at 5:36 pm

#162 Big Brother on 01.15.14 at 3:42 pm

Ha mkultra did you not notice the mistake in Blithe Barrington’s post.

Should have had an (of) between puddle and insignificance.

I clearly saw that.

Welcome to Garths blog, and my book Blithe.

#178 Bill Gable on 01.15.14 at 5:38 pm

Re: Boats.

In Vancouver, the number of boats for sale is staggering. Craigslist could start their own Marina.

I have a friend that runs a Family Pawn Shop (Third generation) and he says that people are bringing in everything from jewellery to snowboards, for cash. They have never seen anything like it**

One last anecdote: Mr. Turner has recently alluded to huge job losses in Newspapers, magazines, and Television. Add Radio to the list. 4500 jobs in 5 years, and the few new jobs are part time and no benefits. This is basically ripping the soul out of a business.
It’s so bad that two of the big 6, cut 2% of their entire workforce last quarter, just to make their numbers. It is not any better, it’s worse.

Dots connected. It is a large PIG and it’s spelled DEBT.

#179 TEMPLE on 01.15.14 at 5:39 pm

Goldman Sachs says:…For some reason, many market participants believe the P/E multiple has a long-term average of 15x…Most investors are surprised to learn that since 1976 the S&P 500 P/E multiple has only exceeded 17x during the 1997-2000 Tech Bubble and a brief four-month period in 2003-04. Other than those two episodes, the US stock market has never traded at a P/E of 17x or above.
– Garth

Without being pedantic, I am not sure where GS’s numbers are coming from, but the S&P500 has traded above 17x more than twice. Here is a good chart: http://www.multpl.com

I also note there is good reason to think the long term market average is 15x, or thereabouts- because it is.

As for price to book, GS’s number seem wrong, too. Another good chart:
http://www.multpl.com/s-p-500-price-to-book

I can’t comment on the other ratios right now, but the PE of the S&P500 isn’t overly far out of whack with historical values and the PB is right around the mean…I am not saying the S&P500 is cheap, but I am not convinced that it is expensive, either.

TEMPLE

#180 economictsunami on 01.15.14 at 5:39 pm

As in many advanced heavily export dependent/ commodity based economies who thought 2008 was a mere hiccup, you continue to get fed RE industry MSM regurgitated baloney, heavily laden with additives.

A clear example of more is not necessarily better…

From the land of OZ:

Beware the illusion of housing affordability:

http://www.macrobusiness.com.au/2014/01/beware-the-illusion-of-housing-affordability/

#181 DM in C on 01.15.14 at 5:42 pm

This is a time when I’m glad to be no where near O&G in YYC. I’m in B2B software with a global customer base, primarily US. Software is good — security, which is very imp these days.

We’re hunkering down, paying off debt and putting $ away for a rainy day, while chiseling at our 2.99% mortgage. No toys & trucks for this family.

#182 Debtfree on 01.15.14 at 6:07 pm

John Andrews real estate professor ? Only on cbc lol.

#183 Kilby on 01.15.14 at 6:14 pm

#86 Basil Fawlty on 01.15.14 at 1:02 am
Why not build a refinery in Alberta and refine the crude in Canada? That way we don’t have to worry about spills, since gasoline evaporates.
The XL pipeline is just going to send our crude to
refineries in the Southern USA. We would create excellent jobs and a value added product.
Why is there no discussion of more Canadian refineries?

Good point, whenever I try and find anything on this…Nothing, like shipping raw logs to China instead if milling them here . If anybody knows why this can’t be done?

#184 Kilby on 01.15.14 at 6:16 pm

9 Booby on 01.15.14 at 1:25 am
Like I have said earlier, who actually believes what a realtor says anyways?

People that have the good sense to find a decent realtor, there are far more honest realtors than not, you just hear about the bad ones.

#185 Kilby on 01.15.14 at 6:25 pm

#131 Energy Dude on 01.15.14 at 11:34 am
I wondering how many people spend an extra $10-$20 per month because they are heating the entire street. Energy bills keep going sky high: http://tinyurl.com/saveEnergyHome
____________________________________________

This is a private ad…..

#186 Smartalox on 01.15.14 at 6:36 pm

@no. 13:

Blame the buyer? Blame the seller? No! Blame the PUSHER!

Steppenwolf had it right.

#187 Hicksville Alberta on 01.15.14 at 7:03 pm

Sears Canada another 1,600

See http://www.dailyjobcuts.com

#188 My thoughts on 01.15.14 at 7:24 pm

Axman : I like what you did. Been there done that. I hate those games

#189 Herb on 01.15.14 at 7:27 pm

#183 Kilby, #86 Basil Fawlty, #134 Stickler

a year or two ago I saw a discussion on TV on the question of why no one was considering building refinery capacity at the source instead of shipping the raw resource out for processing.

Two points stuck in my mind. 1.) It would take forever to get environmental approval for such a project in Canada. 2.) It would take a long time and a lot of money to build the required refinery capacity.

I would add you’d still need to get the refined product to market in the States or Canada, while shipping the raw resource to the Gulf would use existing refinery capacity and put the product right into the middle of a major market, as well as allow distribution by tanker to the world. Refining it in Alberta would not solve the distribution problem.

Would it be possible to overcome these problems and refine here? Personally, I think so, but it’s all in the capable hands of the oil industry, and the branch-plant economy will play its part. Where is a National Energy Policy when you need one? (No slur intended.)

#190 Big Brother on 01.15.14 at 7:29 pm

#177 Smoking Man on 01.15.14 at 5:36 pm
#162 Big Brother on 01.15.14 at 3:42 pm

Ha mkultra did you not notice the mistake in Blithe Barrington’s post.

Should have had an (of) between puddle and insignificance.

I clearly saw that.

Welcome to Garths blog, and my book Blithe.

……………………………….,..,,….

Did you How we intentionally misspelled Google?
Didn’t pick that did you?

#191 bdy sktrn on 01.15.14 at 7:30 pm

#177 Smoking Man on 01.15.14 at 5:36 pm
#162 Big Brother on 01.15.14 at 3:42 pm

Ha mkultra did you not notice the mistake in Blithe Barrington’s post.

Should have had an (of) between puddle and insignificance.

I clearly saw that.
——————————————

look again smokey there are 2 typos

“a” puddle “of” insignificance

see the forest, young jedi.

#192 Ralph Cramdown on 01.15.14 at 7:42 pm

#173 Suede — “The S&P 500 is still below it’s all time high when denominated in Euros and some other currencies (just haven’t looked them all up). Lots of Europeans buying Amercian indices, it’s cheap for them”

Priced in terms of P/E, price:book, EV/EBITDA or any other reasonable measure, the S&P 500 is exactly as cheap/dear in Euros as it is in dollars.

I suppose there are some technicians who actually DO chart SPY in Euros and trade on it, but it’d be a pretty weird way to trade. The whole theory of technical analysis is that some who’ve lost people won’t sell until they get back to even, and some who regret not buying will step in when the line retraces back to the spot they regretted not buying at. I believe that there’s some merit to this theory, and even if it isn’t true, I believe that there’s enough people who believe it to make it a self-fulfilling prophecy. Since the majority of SPY traders think in US dollars (he asserted, blithely) there’s no point looking at an SPY in Euros chart.

#193 TurnerNation on 01.15.14 at 7:46 pm

Still LMAO at the idea of a ‘Blithe Barrington’ blithely dispensing upper crust prognostications, with affect, to curious blog dogs.

Monty Python sketch:
http://www.youtube.com/watch?v=imWlSMgMFGE

#194 DR on 01.15.14 at 7:52 pm

89 Booby on 01.15.14 at 1:25 am Like I have said earlier, who actually believes what a realtor says anyways?

Noone, so that’s why I don’t know how people claim they are the ones to blame.

#195 economictsunami on 01.15.14 at 7:53 pm

As we over produce energy, just as advanced economies demand is softening, the detriment to long term management strategies suffers at the hands of poorly conceived present policy.

TBTF banks will be more then ‘helpful’ in creating speculative demand much as they do with shadow inventory of aluminum and copper.

For a mere ‘nominal’ return…

Ambrose-Evans: Coming ‘oil glut’ may push global economy into deflation:

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/10575292/Coming-oil-glut-may-push-global-economy-into-deflation.html

#196 TurnerNation on 01.15.14 at 8:00 pm

Famous Wall St movies, marking market tops/bottoms:

http://imgur.com/o4YTwxr

#197 Smoking Man on 01.15.14 at 8:02 pm

#191 bdy sktrn on 01.15.14 at 7:30 pm

Yoga?

#198 TurnerNation on 01.15.14 at 8:04 pm

…and Trading Places movie marked the early 80s bull run, in 1982.

#199 DR on 01.15.14 at 8:08 pm

#116 ☢ ☢ ☢ recharts – I am still waiting for the day when stock market will reach this level of return ! on 01.15.14 at 9:42 am This is for SFH in TO

21 Woodmount Ave Toronto (Danforth area)
480000 sold 2013-03-19
looked like this: http://tinyurl.com/m2adwxt
renovated
689000 sold these days
looks like this: http://tinyurl.com/mbt2j2n

I am just wondering how the first property was bought for just 480K. However to pay 689K for a semi detached is insane, one must be a real idiot and really in love with Downtown to pay that money for a semi.

Sold 682,000 today.

Some have sold for more. Yes they were only 350-400 in 2009

#200 [email protected] on 01.15.14 at 8:28 pm

http://www.thestar.com/business/real_estate/2014/01/15/mississauga_mansion_to_be_auctioned_at_a_discount.html#

Mississauga mansion to be auctioned at a discount
Saxony Manor once listed for $11 million expected to fetch just $5.5 million

#201 FortToFort on 01.15.14 at 8:38 pm

#183 Kilby
Why is there no discussion of more Canadian refineries?

Good point, whenever I try and find anything on this…Nothing, like shipping raw logs to China instead if milling them here . If anybody knows why this can’t be done?

It can be done, but boils down to national & corporate vested interests, and ignorant disinterest of the general [regional] population.

If people realized that [regional] self-sufficiency was as important as it is, the offshoring and commoditisation of north american industries over the last quarter century would never have happened. Many important oil/gas-related industries in Alberta have been allowed to lapse, after having been set up decades ago by clever visionaries to take advantage of local conditions to grow and prosper (i.e. Buffet’s “moats”).

Examples include the Nova Chem polyethylene plant near Red Deer which nearly imploded just a few years ago after being sold off to distant U.S. interests and mismanaged, until being rescued by Abu Dhabi interests in the nick of time.

Consider also, the Swiss during WWII actually brought in dirt to cover over the open areas in front of their legislature buildings to grow vegetables in, so the people of Bern had a more secure food supply during the war. (Good regional protection of important resources.)

The U.S. (and Ontario) would much rather prefer to keep as much control of the ‘value-added’ refining as possible, and deter Alberta from growing it’s industry. It’s not just pure economics – which are in any case twisted and spun to support viewpoints.

After U.S. involvement in a massive war since 1991 in the middle east to retain control of Iraqi and Iranian oil reserves, and an Ontario-based NEP which destroyed Alberta industry in 1981, do you really think they’d just give Albertans a critical revenue resource on a silver platter because we’re nice guys?

#202 Garth is not God on 01.15.14 at 8:45 pm

@#183
Same reason why middle east crude is not refined there

#203 Dual Citizen in Canada on 01.15.14 at 8:49 pm

IMHO, having immigrants come to Canada to follow their dreams just to have our supposedly, “superior”, banking system take advantage of them amounts to this:
http://equalmoneyworld.wordpress.com/2011/11/06/economic-slavery-survival-of-the-richest/

#204 FortToFort on 01.15.14 at 8:59 pm

#189 Herb

Two points stuck in my mind. 1.) It would take forever to get environmental approval for such a project in Canada. 2.) It would take a long time and a lot of money to build the required refinery capacity.

I would add you’d still need to get the refined product to market in the States or Canada, …

The capex argument wears thin after you look a little more closely at plant operations.

Plants are designed and built with the processes, equipment and instrumentation which is current and relevant for the economics at that point in time. The lifespan of the plant is pre-determined, say 35 years, and any production which can be squeezed out at the end is gravy. (If it can be sufficiently maintained without catastrophic wear and collapse occuring).

But processes get obsolete (e.g. diesel needs more processing now to get rid of sulphur before it can be sold. And chemical process research/discoveries advance over time too.) And vessels and instrumentation and control systems get severely worn out and obsoleted. Unsupportable in many cases.

In many cases it is cheaper to build a plant completely from scratch (green-field) using the newest processes and equipment, than having to painstakingly disassemble old junk sector by sector and try to plug in new modules into old infrastructure (brown-field).

Plus, older plants were not meant to be adjusted as often to newer specs. But with so many different markets and government policies, plants have to be capable of reconfiguration more often and more extensively. Retrofitting some creaking old plant to do that is a pain in the ass.

Finally, transport and distribution consideration/discussions are filled with fallacies. Most notably, people don’t understand that sending out non-upgraded bitumen means it has to be dissolved in diluent, usually light liquids (naptha, etc) from raw natural gas well production. Then, after that stuff gets pumped all the way across the continent, the bitumen has to be extracted in big expensive plants, and the diluent pumped all the way back thousands of miles across the continent in duplicate pipelines for another cycle.

The amount of shipping and extraction expense is huge. Finished product (diesel, kerosene, even gasoline) is much more compact per unit of revenue and cost. So it can be distributed much more efficiently, with smaller pipelines, and even using rail because of the smaller resulting volumes.

#205 bentoverpayingtaxes on 01.15.14 at 9:00 pm

Keystone XL will most likely be OK’d within the next 120 days…..in time for the weakened democratic senators in job sensitive states that will profit from the pipeline to have an issue to confront the opposition. Obamacare has made these state citizens angry as a nest of hornets. To lose the senate Obama would see his namesake policy repealed otherwise. It has nothing to do with the environment…it will play out as a ballot issue.

If you haven’t wondered why the eo crazies have been on the stump recently with their hair on fire it is because they see the writing on the wall and are attemping to turn the protest bus around after it has already plunged off the cliff. The rhetoric and fear tactics haven’t worked…the polls suggest the Keystone issue is popular….it will happen and Neil Young will go back to his bong in California with millions of concert dollars in his pocket. Next time the greens want a spokesperson I’d suggest big breasts….much more appealing.

http://business.financialpost.com/2014/01/15/why-the-odds-are-increasing-for-keystone-xl-pipeline-approval/?__lsa=c42c-8df8

#206 Canadian Watchdog on 01.15.14 at 9:18 pm

#192 Ralph Cramdown

I suppose there are some technicians who actually DO chart SPY in Euros and trade on it

(Corrected) All institutional traders/investors look at assets denominated in major currencies (and gold) because value can only make sense when prices are normalized relative to one another. Why should it matter to you if your accounts are in USD or CAD? Because you're invested in companies that have major foreign shareholders, who will, when the time comes, hit the sell button even faster if the currency that a stock is denominated in depreciate.

Early last year when RioCan stated 30% of its shareholders were foreigners, I hit the sell button shortly after (stated on this blog) knowing that the CAD moving lower and rising rates would drive them out quickly. And sure enough, it happened.

#207 Joe on 01.15.14 at 9:36 pm

Anyone been to Whole Foods in West Van lately.
Today all of the cashiers were from other parts of the world, India, China, Iran loads of Phillipinos.
Most are new citizens re a manager there.
Why?
Many are good hard workers, many learning English on the job.

Take a look at the seawall or go to Park Royal one day.
It’s 80-90% foriegn speaking immigrants.

Loads of money and lawyers to fast track immigration.

I don’t blame people for wanting to come here, but unfortunately the byproduct is a market that the average Canadian can’t afford to enter.
Again it’s the golden rule, he who has the gold rules.

#208 brainsail on 01.15.14 at 9:47 pm

Keystone Pipeline

To the best of my knowledge and I stand to be corrected, the proposed Keystone pipeline will be used solely to transport oil sands oil or bitumen oil from Alberta to special refineries on the Gulf, refined into petro products and then distributed to other countries. None will be for U.S. consumption.

The Gulf refineries are much different than regular refineries as they were originally designed to process Venezuela oil which is similar to the oil from the oil sands. It is a much more energy consuming and polluting process than what regular crude oil refining requires. With the recent unknown political changes in Venezuela, their bitumen oil maybe shipped directly to Asia leaving the Gulf refineries under utilized.

Obama has had the Keystone pipeline on the back burner for almost 5 years now. I give it a less than a 50% approval. It is a very complex and controversial subject. I am far from being an expert.

#209 Daisy Mae on 01.15.14 at 9:51 pm

#135 ozy – “Can we stop postings until actually those prices DROP? its just so repetitive, and in contrast with what’s in real life….”

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

No. Because it IS real life. And a large number of Canadians can’t seem to get it thru their thick heads.

#210 Daisy Mae on 01.15.14 at 10:08 pm

GARTH: “Goldman Sachs says: The current valuation of the S&P 500 is lofty by almost any measure, both for the aggregate market as well as the median stock….”

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

Priceless! LOL

#211 Daisy Mae on 01.15.14 at 10:13 pm

Fantastic comeback. I’m amazed at your level of patience. And fully realize how much I need you! LOL

#212 Van City Transplant on 01.16.14 at 3:35 am

—Quote for #113
Garth – do you recommend still sitting on bank shares? I’ve seen healthy gains and been reaping dividends even from common shares. Your books and blog have been life savers!

I never did recommend holding individual bank shares, unless you have a very large portfolio. Smart people harvest capital gains. — Garth

—-

Ok so my smarts failed me how big is big? $1M+? Or was that a indirect nod to sell to keep the gains? I’m an engineer not a finance guy so bear with my brain. Thanks!

#213 don johnson on 01.16.14 at 5:14 pm

It seems some people are stupid…. NOT:

China Expands Gold Reserves, Surges Past Italy & France in Ranking (up to 2710 tons)

http://www.metal.com/newscontent/56715_china-expands-gold-reserves-surged-past-italy–france-in-ranking

#214 Snowboid on 01.16.14 at 10:17 pm

#125 Infused with Opiates on 01.15.14 at 11:05 am…

I didn’t know you could purchase RE electronically in BC now – is that with DocuSign? That’s what I meant – we did all the offers/counters, subject tos and signoffs using DocuSign.

Actually, title insurance is pretty standard here, with the seller covering the costs.

We are fully insured, but did have to pay $ 200 for the title search and paperwork. The seller paid $ 880 for the insurance.

Torrens wasn’t implemented by AZ because of claims by title insurance companies that it was open to fraud (or could it have been the lost revenue?).

#215 Snowboid on 01.16.14 at 10:41 pm

#125 Infused with Opiates on 01.15.14 at 11:05 am…

We did consult a RE lawyer here in Phoenix, he was the one that reviewed our plan and advised we didn’t need his services.

He didn’t charge us for the near half-hour he spent with us either (he was 10 minutes late for our appt).