Poor Jason

BACON modified

A year ago the nation’s largest real estate cartel, now fighting an anti-trust battle with the feds, said house sales in Toronto were lower than the January before, in 2012. This week, the Toronto Real Estate Board said sales last month were lower than in January of last year. In fact, this was just the worst January since the economic crisis of 2009.

This is consistent with national house numbers, which ended 2013 on a three-month decline. During this time job-creation in Canada took a substantial hit, followed by the worst performance for the dollar in forty years. Now the Bank of Canada itself says consumers are tapped out. Housing will no longer be an economic catalyst.

On Wednesday Statistics Canada reported a sharp and unexpected decline in building permits. It was the second monthly decline. And new home sales in the GTA (low-rise plus condo) finished 2013 with a 23% decline from the ten-year average. Sales fell almost 40% between 2011 and 2013.

Last month sellers retreated from the marketplace, which is typical when people have been brainwashed into believing real estate is on fire (“But honey, where would we move? We’re not gonna pay those prices!”). So, listings in the region tumbled about 17% from the previous January. That’s major. It should create a roaring seller’s market, and yet the number of days it took to market a house was virtually unchanged year/year. Tight supply created no rush (despite some high-profile bidding wars). The inescapable conclusion is that fewer buyers are chasing fewer houses. So sales dropped.

Does this sound like a booming market to you?

Hardly. It’s a marketplace struggling to defy and deny economic fundamentals. And that never ends well.

The media currently believes housing is hot because average prices have increased, and that started around the middle of 2013 after everyone was convinced a correction was inevitable. There are two explanations. First. Interest rates spiked in the summer after the Fed announced it would start tapering off its stimulus spending. Five-year mortgages jumped almost a full 1% and thousands of moist virgins panicked. Over the next three months they flooded the market before their cheapo-rate pre-approvals expired and did the locust thing. Sales and prices pumped. And then it ended.

Second, look at jobs. GTA unemployment dropped below 9% last March, and hit a low of 7.1% in August. More people qualified to borrow, so they did. Mortgage debt levels leapt to a record high. By the autumn, things were sliding and now the jobless rate is north of 10%. House sales tumble. In the last 25 years, as has been pointed out to me, the jobless rate snaked over this line only twice – during the 2008-9 financial crisis, and during the house-killing recession of the early 1990s.

As you know, job creation in Canada fell by over 60% last year and we now have a sharply higher unemployment rate than in the US. Over 70,000 jobs were shed in the final two months of 2013, and you know about the steady parade of high-profile layoff announcements since Christmas.

So what do the realtors say, and the media repeat?

GTA REALTORS Report Latest Monthly Resale Market Figures

TORONTO, February 5, 2014 — Home ownership in the Greater Toronto Area remains affordable and there are many people looking to purchase a home.
“The pace of price growth will remain strong in 2014.  Similar to last year, competition between buyers for singles, semis and town homes in the City of Toronto and surrounding regions will continue to exert upward pressure on selling prices.  At the same time, mortgage rates will remain near historic lows, so despite strong price growth, home ownership will remain affordable for the average household in the GTA,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

Poor Jason. Someday not far away he will regret having said such misleading things – predicting continued strong price surges through the year, bidding wars and yet affordable homes. What a David Lereah moment.

So why are prices up? The average GTA sale has risen 9% in a year. The average 416 SFH now sells for 14.8% more, at $888,210. And as this blog has borne witness, there are enough people who believe Jason’s buy-now-or-buy-never innuendo to throw surprising amounts of (borrowed) money at singular pieces of residential crap.

Could this be organized real estate’s finest hour?

If not, it’s close. If anything else jumped 10% in price amid falling sales, you’d pity the fools still buying. I am.

147 comments ↓

#1 Waterloo Resident on 02.05.14 at 9:00 pm

Okay, against my better judgement, my stock market indicator system tells me that the market is very close to a short-term bottom and will enjoy a bounce up over the next few weeks, so if you have cash then maybe it might be time to buy.
The S&P 500 closed at 1751. If the S&P rises to 1770 or higher tomorrow then that will be a bullish signal that it is time to buy in once again. (cont’d tomorrow).

#2 john on 02.05.14 at 9:02 pm

Realtor scum have the educational background to flip burgers. It’s baffling how anyone would believe what these high school drop outs have to say. The RE industry needs to be regulated with every realtor needing at least a collage degree which would eliminate 99.9% of today’s realtors. At least these uneducated scum should have high school which would eliminate 85% of today’s realtor scum.

#3 Smartalox on 02.05.14 at 9:06 pm

It’s like being at any auction: if yours is the winning bid, it’s because EVERYBODY ELSE thinks you’re paying too much.

#4 Betty on 02.05.14 at 9:07 pm

During the Chinese New Year the Vancouver Sun had aspect all section of news paper about a food 8 pages or so dedicated to what seemed to be explaining the chinese a new year but really it was all about how Asians will go house hunting during this season and buying a new property for te new year for good luck Sh*t … It was disgusting and they again talked about how relatives visiting here in canada during the CNY will take the opportunity to house shop too this creating the illusion of busy market … I wonder if the Asians will be the last in denial of the correction

#5 john on 02.05.14 at 9:08 pm

It should be criminal the deception from realtors. Did anyone catch hot property where al.sinclair was asked …What is more transparent a bidding war or auctions? AL asks Ann what does transparent mean? I kid you not. Another high school drop out realtor that’s not worth $10 an hour? Who would believe or use a high school drop out realtor?

#6 What about the weather on 02.05.14 at 9:10 pm

Garth,

I think it’s worth considering the negative impact that the lousy weather likely had on sales. It’s hardly the only factor, but it is worth mentioning that this is by far the worst January since 2009 in terms of snow fall.

Just something to keep in mind when analyzing the numbers.

#7 Sage on 02.05.14 at 9:14 pm

IMHO, one of the drivers of house prices is the amount of money a typical home owner puts into “upgrades”…….and HGTV.
New kitchens, bathrooms, granite, hardwood, etc., ain’t cheap!

#8 visorman30 on 02.05.14 at 9:15 pm

I had a pretty reasonable discussion with a director at work about housing and the long term prospects. Problem is, he’s an admitted gold buyer and a sooner. At least he recognized that it doesn’t pay a penny to hold it. Very smart and rationale people can make seemingly irrational decisions when motivated to do so.

#9 Government of Canada STOP realtor criminals on 02.05.14 at 9:15 pm

The government must put a stop to these useless criminal scums that are not worth $500 for a sale . Realtors are travel agents who’s time has come and are now USELESS. The Toronto Real Estate Board must know they add ZERO VALUE and are USELESS and HATE FREE MARKETS . What did Bush jr call those who HATE the FREE MARKETS? The government must open them up to the FREE MARKETS and let there TRUE value of what a realtor is worth come out. What are you afraid of realtors?

#10 nnso on 02.05.14 at 9:19 pm

Why we have the highest debt level , just to become a snob.
straight from the horse’s mouth
http://www.thestar.com/news/gta/2014/02/05/muslim_condo_complex_in_thornhill_sparks_heated_debate.html
Nitza Shamiss, who lives across the street from the mosque, said she will sell her home if the proposal is approved.
“Why would I want to be next to a refugee community?” she asked. “When you pay for a certain kind of house in a certain kind of neighbourhood, you want the real estate value to hold.”

#11 TnT on 02.05.14 at 9:19 pm

http://en.wikipedia.org/wiki/David_Lereah

David Lereah

David Lereah has been criticized for encouraging the rise of the United States housing bubble. According to a HousingPanic blog post quoted by the Chicago Tribune, “In October 2005 Lereah was busy calling the bubble believers ‘Chicken Littles.’ Many of the predictions espoused by the ‘Chicken Littles’ are fast becoming closer to reality. … David Lereah has lost credibility because of his irresponsible cheerleading.

#12 shane on 02.05.14 at 9:26 pm

Garth, the housing prices need to start coming down very soon in the GTA this is crazy? What gives?

#13 TnT on 02.05.14 at 9:27 pm

#2 john
#5 john
#9 Government of Canada STOP realtor criminals

These types of posts are scary…. sounds like you might be off your meds…

Take a few days off from this RE noise to calm down before you do something bad…

#14 Not 1st on 02.05.14 at 9:33 pm

” If anything else jumped 10% in price amid falling sales, you’d pity the fools still buying. I am.”

——

Umm Garth you might want to check that statement cause technically the stock market is up 40% in the past few years and volume has been steadily falling.

Ummm you might want to check that statement cause stock market volumes have been increasing. But you knew that. — Garth

#15 pinstripe on 02.05.14 at 9:34 pm

Interesting about the real estate agent nowadays.

A lot of the boomer retirees are taking a couple years off to do some soul searching and then becoming a realtor full time.

Full pension (indexed) + commission as realtor.

No need to depend on commission to have an excellent lifestyle.

Regardless of the situation, the boomer will figure it out.

#16 Michael on 02.05.14 at 9:43 pm

Occam’s Razor-

I’m onboard with you regarding the
Inevitable beating Canada is in store for this year or next
year but housing sales in Canada for January…

We may want to consider a simple reason for that being the consistent
-30 weather since December. That’s gonna impact sales.

March and April numbers will bring a clearer
picture of where we are. But considering
that shit hole that recently sold for $800k in TO….

Weather notwithstanding…. People are nuts.

#17 Smoking Man on 02.05.14 at 9:45 pm

#2 john on 02.05.14 at 9:02 pmRealtor scum have the educational background to flip burgers. It’s baffling how anyone would believe what these high school drop outs have to say. The RE industry needs to be regulated with every realtor needing at least a collage degree which would eliminate 99.9% of today’s realtors. At least these uneducated scum should have high school which would eliminate 85% of today’s realtor scum.
…………

You’re a complete idiot. Equating University eduction with brains. Seams to me the young virgins buy little over supplied boxes in the ski have University.

Brains is the art of lying, acting and taking loot from the nieve. Don’t matter if your pray are schooled or un schooled. So long as they are happy with the outcome.

When you can master this, a yellow belt smoking man designated…

Stop whining and learn to smoke..

#18 Notta Sheeple on 02.05.14 at 9:47 pm

“……The media currently believes housing is hot because average prices have increased……
=========================

Difficult to acknowledge the truth, when you’re a CREA prostitute addicted to CREA press releases.

Which brings us to another addicted liar with an equally huge uninformed following, but…I digress…

#19 Smoking Man on 02.05.14 at 9:49 pm

I think John is laughingcon. Let’s hope he don’t turn out to be….

RED JOHN…..

#20 Sydneysider on 02.05.14 at 9:52 pm

Here in Sydney, those who rent feel a great sense of shame. Those who do suffer that misfortune can at least redeem themselves in the eyes of decent people by showing that they are making an honest effort to buy a house.

I eavesdropped on a conversation at Kmart (Sydney) this morning. A woman was telling her friend who works there about a house bidding war she was involved in (amounting to about $850K). After airily describing the various bids and counter-bids (now down to $1000 increments), she expressed the view that her next increment should be $5000, in order to frighten the other bidders off. She mentioned that her husband did not approve of this approach.

As I idly pretended interest in a stack of $5 T-shirts, I was tempted to tell her that the other bidder does not exist, and to walk away, but I held my peace.

#21 Smoking Man on 02.05.14 at 9:58 pm

#12 shane on 02.05.14 at 9:26 pmGarth, the housing prices need to start coming down very soon in the GTA this is crazy? What gives?
……

A=Supply
B=Demand

If A>B then prices go down zee.
If B>A then prices go uppity.

Look at your hood on the mls, if there are more red dots than your fingers down zee…

My hood. Zero. Nada, zilch.. Red dots…..

How hard was that…….

#22 Relocated Aussie on 02.05.14 at 9:58 pm

Talking to some realtors in Abbotsford recently and most raved about sales volumes being up and prices moving up. Met a couple of honest ones who said that sales are down and prices are coming down. Where are the stats about Fraser Valley prices? I have found the perfect house when my realtor was showing me properties as it was next door to a tear down, which was listed for 114K over assessed value. The owner has not yet listed and I offered to do a private sale, which would save him a commission.

#23 Daisy Mae on 02.05.14 at 10:08 pm

‘On Wednesday Statistics Canada reported a sharp and unexpected decline in building permits. It was the second monthly decline.”

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

“Sharp and unexpected”. When do you suppose the government will get their collective heads out of the sand?

#24 Pete on 02.05.14 at 10:10 pm

#2 John

I assume you don’t have a “collage” degree…

#25 prairie person on 02.05.14 at 10:12 pm

http://business.financialpost.com/2014/02/05/tom-demark-the-next-two-to-3-days-are-extremely-critical-for-the-stock-market-it-may-crash-40/

So, who is right? a 40% drop in the mkt? or is Waterloo Resident right? Time to buy? In 2008 there was one person who got it right. Told everyone exactly what was going to happen. Said sell everything. Go to cash. Wait it out. Don’t even remember his name. He lives in Hawaii. No word from him in the papers. And even the perpetually depressed Roubini isn’t claiming that 40% of our pensions is going to disappear in a the next few days. There is so much advice out there, so much of it is really, really bad. After awhile it all becomes noise.

Of course no 40% drop is likely. Worry about the weather. — Garth

#26 Early Spring on 02.05.14 at 10:13 pm

SASKATOON!!!!
I started a new position in stoon fresh in the new year and holy smokes you people would not believe the stunned looks on people’s place when I explain to them that I am throwing my money out the window renting when I could get a mortgage and pay of an asset that will only go up. It gets annoying to when everyone wants to know where I am living/what I bought and then I reply just renting and plan to for years to come yet.

One co-worker who is 24 just took out a $500,000 mortgage with 5% down on a new house that sold for around $480,000 but took close to five to furnish the place and do the lawn and fence in the summer. Does this make sense to anyone here????

Can’t say it surprises me because I am in my mid 20’s and right in the prime of the real estate pornography industries most foolish age group but this is nuts.

If somebody can explain to me how and why I should pull my TFSA and take the homeowners program out of my RSP(I believe it is $25,000 max) and put it into real estate in Saskatoon Backed with numbers give it a try. But that won’t happen.

I will continue to read this blog and other material and try to continue steady growth of my net worth, thanks blog dogs and GT, I have learnt a lot reading here.

Best luck to all this year!!!

BLOGGERS GIVE ME YOUR THOUGHTS

#27 Paolo on 02.05.14 at 10:15 pm

#5 john

re: al.sinclair

Classic. I would watch ‘Hot Property’ just to watch him BS the whole time. Sometimes his body language gave away his unease. He is a classic scumbag…

Has an impressive business in Toronto’s Beach but then again there are many ‘Greater Fools’ still out there…

#28 Smoking Man on 02.05.14 at 10:16 pm

People like Red John crack me up.

Your only smart cause you are good at following orders, assignments in on time, memorize then regurgitate.

A schooled in bedded belief that is so retarded for anyone with a smidgen of Grey matter.

Schooled become more successful not because of a skill. It’s because the school gives them a conceded confidence, a felling of Dominion over the Un
Schooled. A protection of alpha.

All you need for that is a mirror, while chanting daily I’m superior.

That’s all you need, save your 80gs to start a business and smoke people…..

Tomorrow is my first day of University, will be reporting live… On this bat channel… Can’t wait..

#29 Ford Prefect on 02.05.14 at 10:19 pm

The Comox Valley saw real estate sales and building permits peak around 2005 – 2006. Permits are now down around 50 – 60% below peak. Yet the real estate cartel reports that sales this past January are well above January 2013 and prices are also up.

At the same time I noticed in today’s local paper numerous listings for approved but unbuilt subdivisions, something I have not seen at any time in the past decade. There also appear to be at least 100 listings for resort dwellings on Mount Washington, the local ski hill. This is an enormous number in this relatively small market. Yet asking prices remain high – up to $900k.

Sometimes it really does appear as if it would take a nuclear holocaust to bring down housing prices.

#30 live within your means on 02.05.14 at 10:25 pm

#18 Notta Sheeple on 02.05.14 at 9:47 pm

Difficult to acknowledge the truth, when you’re a CREA prostitute addicted to CREA press releases.

Which brings us to another addicted liar with an equally huge uninformed following, but…I digress…
……………………..

Would his initials be SJH. :-}

#31 mark handel on 02.05.14 at 10:27 pm

There is not a home in Toronto worth more than $200,000, this is crazy.

#32 45north on 02.05.14 at 10:31 pm

In fact, this was just the worst January since the economic crisis of 2009.

if followed by the worst February, March, April and May then we would be into panic. Full on panic. The government has obviously decided to allow the Canadian dollar to fall rather than raise interest rates.

#33 Daisy Mae on 02.05.14 at 10:34 pm

#2 John: “The RE industry needs to be regulated….”

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

I’m sure this will happen in light of their recent — and, let’s face it — long term shenanigans. They may not need a college degree but they need to have instilled in them, honesty and integrity. As it is, they command zero respect.

#34 Smoking Man on 02.05.14 at 10:39 pm

#25 prairie person on 02.05.14 at 10:12 pm

Don’t mean to disrespect your contribution, but like many folks on here, we start off with an opinion, a bias for an outcome, then find links that really enforce that bias.

Clear your mind, open your eyes, do some basic deductive reasoning, and write about, then you can become as famous as me. And your calls will be near perfect everytime.

#35 Piccaso on 02.05.14 at 10:43 pm

ha ha… “moist virgins”

yesterday it was “house humpers”

Keep it up!

#36 raisemyrent on 02.05.14 at 10:45 pm

#26 early spring

chill, man. you’re right. you won’t know till the game is over.

you reminded me I was there once. 23-24 as it happens. I got an in with this realtor who “doesn’t normally work with first-time buyers”. gee thank, your highness. anyways, I got that weird feeling (kinda like kissing the wrong girl) when I saw the crap he found in my pre-approved range (CIBC pre-approved me and told me to shop with confidence without checking if I was a resident or Canadian yet which would’ve automatically cancelled the application lol but I digress).
what was I on about? ah yes, old buildings in Edmonton, but hey, made of concrete, with potential value to be added (by work I would’ve never competed). 5 years later it was 2013 or so I’d be leveraged out of my (eye) balls and renewing at a higher rate having paid god knows hoy much interest (it was 0% down 40 years kind of idea) and did I mention I WOULD STILL BE IN EDMONTON.
hopefully that will do the trick for you, mate. as I said, chill.

#37 Smoking Man on 02.05.14 at 10:55 pm

#33 Daisy Mae on 02.05.14 at 10:34 pmI’m sure this will happen in light of their recent — and, let’s face it — long term shenanigans. They may not need a college degree but they need to have instilled in them, honesty and integrity. As it is, they command zero respect.
………

Daisy everyone lies, most do it 10 times a day… It’s what humans do. It’s as natural as going wee wee.

Now if your going to do it, why not do it profitably is all I’m saying.

Those of us who recognized this, refind and perfected the art, well we never need to worry about money.

Remember, integrity, honesty, virtue are characteristics instilled into your psyche by people training you to be slaves.

Not owners.

#38 X on 02.05.14 at 11:00 pm

Will the RE boards ever be held liable for the propaganda they spit out to the media?

It really is disgusting.

#39 Hicksville Alberta on 02.05.14 at 11:02 pm

An interesting fundamental macro economic read on how we are pooched and that the pooching may be about to get considerably worse as the global liquidity continues to contract: http://www/alt-market.com/articles/1977-the-final-swindle-of-private-american-wealth-has-begun

I used to think this kind of stuff came from the Dark Side of the media but seeing what passes now as the mainstream Fourth Estate in aggregate today, i think more and more that in order to survive and plan these days one really needs to seriously explore more avenues for information as many of these have much less vested interest in the “Old Order” of things that need to be changed and remedied.

I don’t trade anything including the stock market and real estate so i have nothing to sell. My only interest is in the future of my children and grandchildren and others going forward and what we have now is a super shitshow that can’t and won’t be able to continue forever.

#40 Terry on 02.05.14 at 11:05 pm

It’s a 1990’s real estate Market again sounds about right. Back in March of 1990 a Real Estate Broker friend of mine from Oakville was telling me that “the phones just stopped ringing.” Now I hear from other Brokers those same words again. This is the pivot point and change can happen as quickly as birds can change their flight direction. If you really read the many articles out there, and read between the lines, you can almost feel the collective shift in herd buying behavior. Caveat Emptor……blog dogs.

#41 recharts on 02.05.14 at 11:06 pm

#146 Aggregator on 02.05.14 at 4:07 pm
#137 Muslim only Condos?

This should be interesting surrounded by Italians and Jews…

Yep. And the next you know, you’ll have a cluster of extremists telling locals to burn in hell, like in the UK (must watch), Norway, Sweden, Singapore and everywhere else where mass immigration is rampant.

There’s a reason why Angela Merkel said multiculturalism has ‘utterly failed’, because no one country can meet the needs of a society amalgamated with so many different (and opposing) cultures and religions. From studies I’ve researched, the biggest issue with mass immigration is adaptability.

But, it appears our taxpayer funded institutions are willing to accommodate new Canadians in order to help them adapt, like this story a few weeks ago about a student from York University whose professor was ‘ordered’ by the faculty dean and internal human rights centre to comply with the students request to not participate in a group study with woman because his religion forbids him to. I don’t recall any special religious pardons back when I was in school.

So know what? A person whose tax dollars goes towards funding the Green Belt myth and subsidizing developers has limited access to a location of interest because they are not Muslim? This is still Canada right?

You fail to understand the real reason why multiculturalism failed. Here is a point of view from inside. The study you quoted says adaptability is the main problem. The immigrants have no problems to adapt. The problems comes from a different meaning that this term has for the immigrants and for the native of the country where they land.
The main barrier is the culture.
While you as Canadian born expect the immigrant to adapt and to follow the rules of the new society where he/she landed for the immigrant to adapt means to find a compromise between the way he used to live and the way the host culture expects him to live. This is why you see so many attempts to change the things in Canada to make them look like back home. Some cultures have more visible ways of doing that, others are more chameleonic, you believe they adapted but that is just mimicking not real adaptation.
Canada will continue to accept more immigrants and will continue to use ethnicity as main criteria when decides what percentage of immigrants is accepted from each ethnic group. By doing so it will import a proportional amount of problems ..so why is the above a surprise? Bidding like nuts on houses, speculating on stock market or house market is also a cultural thing. HAM is clearly a term with cultural/ethnic connotations. You got what you wanted. When you grab a stick you get both end of the stick

#42 -=jwk=- on 02.05.14 at 11:08 pm

……

A=Supply
B=Demand

If A>B then prices go down zee.
If B>A then prices go uppity
……

Your model assumes an infinite amount of capital available to an infinite number of buyers. The US market crashed when the capital ran out, not because the demand for houses lessened.

#43 Bobby on 02.05.14 at 11:09 pm

Laughed at the comments about Mount Washington above. No snow and the resort itself is for sale yet some sellers think the market is still hot.

By the way who believes what a realtor says anyways. I know I don’t.

#44 Entrepreneur on 02.05.14 at 11:17 pm

#2 John, I agree

Positions of Power should not be abused as this creates self-interest which leads to greed. Bidding wars, fudged figures, better then renting, before interest rates go up…you name they know the angles. This whole deception will only bite them in the end as this is not how you treat people. Would they sell these high-priced places to they kids; I don’t think so.

#45 Willdaman on 02.05.14 at 11:18 pm

Garth, any chance you can do a deep dive analysis/projection for SFH in Toronto??

#46 John Mc on 02.05.14 at 11:21 pm

John #2 & #5

You are such a tool. People decide they want to pay x amount of money for a house / condo and it’s the realtors fault? Sounds like you are just another dumb ass that has to blame someone for your stupidity…

#47 Infused with Opiates on 02.05.14 at 11:29 pm

29 Ford – a wee bit chilly on the island n’est ce pas?

A sale of an existing house wont show up in the permit stat.

Mt Washington listings dont surprise because the turnover is very high even in better times. And with no snow, who needs it?

Now the approved but unbuilt subdivisions is interesting. If they are not built, they have not receieved the final approval required for registration. So they may only have “preliminary approval”. If they get enough interested buyers they may proceed with the development (I am not sure of the exact rules). When times are good and the product flies off the shelves they would likely just proceed.

#48 Smoking Man on 02.05.14 at 11:30 pm

Just booked Vegas for March, wife wants to stay at chasers. No damn way, I love the tackiness of the Flamingo..

20 bucks for a bucket of 5 beers, go go dancers and DE Jay
spinning tunes..

Last time I was there, I’m by the pool, nature called, number 2
was due.

After the business was complete, a gentle men, dripping with pool
drops, nearly knocked me over, he had like seconds to plant it on the launch pad.

Amazingly he had one of those toilet seat tissues that you put on the seat to prevent any unauthorized koodies to make contact with your understanding tanned flush.

I nearly died laughing.. I did the math, 200 people in the pool, 200 people drinking multiple buckets of beer and never leaving the pool for hours.

Why an I the only one not oblivious to the obvious.

#49 Kim on 02.05.14 at 11:38 pm

X on 02.05.14 at 11:00 pm
Will the RE boards ever be held liable for the propaganda they spit out to the media?

It really is disgusting.
—————————————————————–

The Government has to do something that puts RE boards/agents on the same level as financial/investment advisors . The claims that these RE criminals make would put bankers in jail if they made similar claims and we all know bankers are not looked at in a positive light. Will the gutless conservative so something to protect Canadians?

#50 Bob Rice on 02.05.14 at 11:39 pm

Weather has been brutal since November in the GTA. Worst winter I can remember in at least 15 years… maybe more… I think that’s what explains the drop… My guess is we are going to have an incredibly busy market in the spring once it warms up…

Folks, I talk to people all the time who haven’t a clue about what we’re talking about… and they think housing will just continue… and they seem to be still qualifying for mortgages… I don’t think this will end as bad as may of us think… I still wouldn’t touch a property now as I rent, but there are a few reasons why I am doing so..

Anyhow, now that QE is being scaled back should we be seeing rates go up? Lat year they went up 1% b/c markets were anticipating a rise… now that it’s finally happening, why are rates stuck? They are even going down!

#51 Cory on 02.05.14 at 11:42 pm

I am in shock as to why this is allowed to continue. Politicians with no backbone and only a focus on the next election. Even TD is writing about our overpriced housing market now. They write mortgages, but of course we know they only continue because of CMHC.

Almost everyday when I goto the coffee shop, there are realtors suckering in the yuppie folk (literally). Making them think they’re geniuses for borrowing more than they can afford to buy something that produces no returns.

We are on the world radar for our credit and housing bubble, yet nothing is done about the madness. All while we watch Canada become less productive and competitive in the world economy. (Heinz, Kellogg’s anyone?)

Simply amazing.

#52 Bob Rice on 02.05.14 at 11:45 pm

#31 – “There is not a home in Toronto worth more than $200,000, this is crazy.”

??? Are you on crack? This is a silly comment… Garth, you gotta regulate some of these comments a little more stringently…

#53 Obvious Truth on 02.05.14 at 11:46 pm

We don’t need Jason to carry the bacon.

I’m no chartist but I’ve seen a few and a picture is worth a thousand words.

Bank earnings on tap soon enough.

#54 Freedom First on 02.06.14 at 12:11 am

Jason Mercer: TREB Senior Manager of Market Analysis.

Garth. Thank you for adding another RE pumper’s name and position to “The Greater Fool’s” growing list of “questionable characters” to be extremely wary of regarding anything coming out of their RE biased brains, as anything they say could quite possibly be merely self serving nonsense.

It is simply delightful to see a man kick somebody’s a$$ from a wheelchair. Be well Garth.

#55 World According To Garth on 02.06.14 at 12:16 am

I used to live in that area and people think their shit don’t stink including the owners of Mt Washington and how they charge 80% of what Whistler does for a ski “hill” ticket that is 1/10th the size. You reap what you sow.

#29 Ford Prefect on 02.05.14 at 10:19 pm
The Comox Valley saw real estate sales and building permits peak around 2005 – 2006. Permits are now down around 50 – 60% below peak. Yet the real estate cartel reports that sales this past January are well above January 2013 and prices are also up.

At the same time I noticed in today’s local paper numerous listings for approved but unbuilt subdivisions, something I have not seen at any time in the past decade. There also appear to be at least 100 listings for resort dwellings on Mount Washington, the local ski hill. This is an enormous number in this relatively small market. Yet asking prices remain high – up to $900k.

Sometimes it really does appear as if it would take a nuclear holocaust to bring down housing prices.

#56 Uh Oh Canada on 02.06.14 at 12:19 am

It never ceases to amaze me how most people view renters as low class citizens living in squalor. I’m sure this view is pushed by the media-HGTV-herd class who are all expert ‘designers.’ If there is one thing that Galley house should teach us, is that homeownership doesn’t mean a higher standard of living. In fact, whenever I stop to look at some listings on realtor.ca, I find myself shocked that some homeowners can live in such conditions. Again, there is nothing wrong with owning a house. It’s only wrong when you are using pure debt to pay for it.

#57 West Vanner on 02.06.14 at 12:24 am

My god, smoking man is sober, so far, maybe he really is going to university t’morrer…….

So now you have us blog readers (I am not a dog) convinced that we shouldn’t buy property, how about some hints about what we should “invest” in?

#58 james on 02.06.14 at 12:24 am

Canadians are chicken little investors. But buying a house is a proven way to force savings. There is no time in history where house price is less than the purchase price IF HELD on to it for more than 25 years.

Hence nobody cares if there is 5%, 10,%, or 15% correction. You don’t sell you will get a good chunk of money in the end. Could they have done better financially without owning a house? Probably. The reality is that this strategy works. Why fix when it ain’t broke.

#59 Retired Boomer - WI on 02.06.14 at 12:37 am

# 26 EARLY SPRING

Let me see, he’s in his mid-twenties living in a new town. has a new job, WHY would this guy want to tied down with a RE purchase?

RENT is the price of Freedom & Flexibility in an overheated RE market.

Let’s say true boss “likes” your work, and offers you a better position in another location 400 miles away? -OR- a competitor makes you a better offer 400 miles distant?

You have the FREEDOM to save in your TFSA as well as an RRSP, to buy you need to lose that flexibility.

You are one of the “newer” employees, the firm 8 months from now hits hard times, you get shown the door, but 4 days later get an offer you like but, its 400 miles away.

Freedom comes with renting for now. WHY give it up??
My opinion. Better to rent, than buy and regret it later.

#60 prairie person on 02.06.14 at 12:41 am

All the advice, add it up on any given day, is filled with contradictions. Experts, or so they claim, who turn out not to know anything. A friend of mine in Iceland went to see her broker before the crash (kreppa) and said sell everything, trouble is coming. Her broker waxed eloquent, talked her out of it. She got home and thought I didn’t go there to be talked out of my decision. She went back and said sell everything. Those are my instructions. Now. The crash came a week later. She went in to see her broker and he said, you’re okay, you sold everything. Not thanks to you, I’m not, she replied. In my case, so called experts have advised me not to buy a stock. Turned out it did very well. My point is that the “expertise” we pay for in the investing area is not always good, sometimes it is downright awful. One doesn’t have to have a buy or sell bias, just experience of having got both good and bad advice. The so called experts often have a buy or sell bias of their own. And, of course, there are a lot of brokers who have to put lipstick on a pig and sell it as an angel.

#61 Vamanos Pest on 02.06.14 at 12:50 am

#26 Early Spring
Rent.
You’re doing the right thing. I moved to the Prairies about 5 years ago on short notice, so started renting. Since then I’ve enjoyed a detached home worth about 500K in today’s market for way less then the mortgage payment on the same home would be. (It’s actually comparable to what interest on that loan would be). No property tax, no maintenance costs, no worries. I’ve done the calculation many times, and I think I’m about $1000 better off every month for renting LIVING IN THE SAME HOUSE!
The BEST part is what Garth calls “opportunity cost”. That is, the lost earning potential of money that would be tied up in the house if you buy. In the last 5 years my portfolio is up about 150%. If I’d bought, I wouldn’t have a portfolio at all, as it would all be tied up in the house.
Yes, everybody thinks I’m weird, struggles to figure out why someone that could afford to buy the house they live in would choose to rent it. For me, it’s just so obvious that renting is the better deal.
I may or may not own a home one day. But I WILL have a balanced portfolio throwing off plenty of cash flow to cover a nice lifestyle, including rent if necessary.
From someone who’s actually had to make the decision you’re making, I’m telling you it’s a no brainer.

#62 Steve French on 02.06.14 at 1:10 am

I’m now in training…

.. to become a Yellow Belt Smoking Man.

#63 george cremy on 02.06.14 at 1:14 am

Oh Garth when you gonna let the air out of the windbag that you are .. Don,t you understand that as long as interest stay low realestate will just keep going up and there is no way interest rates will go up!

#64 HDJ on 02.06.14 at 1:16 am

#37 Smoking Man – “Daisy everyone lies, most do it 10 times a day… It’s what humans do. It’s as natural as going wee wee. Now if your going to do it, why not do it profitably is all I’m saying. Those of us who recognized this, refind and perfected the art, well we never need to worry about money. Remember, integrity, honesty, virtue are characteristics instilled into your psyche by people training you to be slaves.”

What a sad outlook on life.

#65 Freebird on 02.06.14 at 1:54 am

@#7 Sage IMHO, one of the drivers of house prices is the amount of money a typical home owner puts into “upgrades”…….and HGTV.
New kitchens, bathrooms, granite, hardwood, etc., ain’t cheap!
———

True they can be expensive depending on the quality you’re buying and the source but millions of home owners in the U.S. spent thousands on similar ‘upgrades’ before the 2008 crash and still wound losing money (or the house). I support the belief that any asset is only worth as much as someone is willing to pay for it when you sell it. Period. If you don’t accept that and choose not to sell that’s a choice but not a determining factor of market price or value. Sucks I know. This is partly why I think Garth cautions people about putting all their financial eggs in one basket – like real estate. My partner and I have been very careful about where and how we put money into our house while friends have gone crazy with low rate HELOCS.

#66 kilby on 02.06.14 at 1:59 am

#2 john on 02.05.14 at 9:02 pm
Realtor scum have the educational background to flip burgers. It’s baffling how anyone would believe what these high school drop outs have to say. The RE industry needs to be regulated with every realtor needing at least a collage degree which would eliminate 99.9% of today’s realtors. At least these uneducated scum should have high school which would eliminate 85% of today’s realtor scum.
_____________________________________________
To be a realtor in BC you have to complete a course from the Sauder School of Business at the University of British Columbia. About $2,000 for the 1 year course (max) then about another $2,000 for licensing. The other requirement would be knowing how to spell “college” Stop embarrassing yourself.

#67 UTSBLUE on 02.06.14 at 2:23 am

Add to the unemployed the unlucky people who work(ed) at Heenan Blaikie… lawyers, paralegals, support staff, students. Probably several hundred of them…

#68 Woke To The Sounds Of Horking on 02.06.14 at 2:38 am

#26 Early Spring —

First piece of advice is to get the hell out of S’toon. I did.

#69 Andrew Woburn on 02.06.14 at 3:04 am

#105 Ralph Cramdown on 02.05.14 at 10:21 am

How does your favourite guru stack up? Is he right more often than wrong? Statistically no better than flipping a coin (Cramer!)? Or would you make money doing the opposite of what he recommends (Richard Russell)? Check it out for yourself:
http://www.cxoadvisory.com/gurus/

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

Thanks for this, Ralph. It is particularly interesting that several of the “guru’s” that score below coin-toss accuracy are regularly featured on the sites that sell imminent currency collapse and salvation in the form of gold.

#70 Bdy busted sktrn on 02.06.14 at 3:55 am

Ummm you might want to check that statement cause stock market volumes have been increasing. But you knew that. — Garth
________________________
Really?
http://money.cnn.com/2013/09/03/investing/stocks-trading-volume/?

Wall Street is asleep: Volume at 5-year low – sept 2013

Slight uptick since 2014

6yrs down, 30 day slightly up (corresponding with 5% drop in price )

#71 Mark on 02.06.14 at 4:31 am

If you drill into the data, it is fairly obvious that prices have not been rising (certainly not by 10%!!), and that the only way that the averages may have risen is through a dramatic change in the sales mix. The Flaherty changes in an effort to avoid breaking the CMHC limit were lethal to the entry-level market. The Realtors are working full-time trying to deny this, but notably they seem to have a lot of time on their hands to spam the message boards with bizarre and untrue claims of price appreciation in the GTA and Calgary. In Vancouver, Regina, etc., they can’t even cover it up any more with statistical gimmickry.

#72 Questions on 02.06.14 at 4:50 am

To everyone here who thinks the Canadian housing market is in for a crash soon. Ever try to rationalize the opposite, maybe just for the sake of a lil change in the bedroom? Might be healthy to think a bit like the “winning side” for a moment, even if you’ll go back to fundamentals in the morning.

Wanna get really dirty? Imagine prices stalling and more or less following inflation for a decade. Right before you drop the safety word, imagine it dipping to only 2011-2012 levels (inflation adjusted) before sailing past your buy price.

Don’t plan for a bust.

#73 Questions on 02.06.14 at 5:03 am

Ed Clark called it quite well. Yes the cdn is being devalued on purpose. It’s effective, favors the leveraged debtor. It can’t go on forever, but certainly long enough to make the staunchest savers give in or fail by not joining the debtors. Next to forcing lenders to favor business/entrepreneurship over housing, it’s the wisest course of action to keep the party alive until canada can latch onto the us and eu and rebalance.

What confuses me during this remarkable bull market is how canadian smb can’t seem to prove their viability and worth over a below-average resident with 5% down. The latter can get multiples of their worth and potential while the former can barely get fractions. I might be off, it’s just an impression. Haven’t tried going to the bank for a hefty business loan yet.

#74 Munch on 02.06.14 at 5:03 am

Munch says … realtors (estate agents) will soon phased out, and replaced with professionals who advise buyers and sellers. Likewise, will politicians be passed out and replaced with competent managers and leaders who understand that we all want the same things, it’s got nothing to do with party ideals, really

In other words, death to all politicians, death!

Thanks for listening

Munch

#75 Tony on 02.06.14 at 5:18 am

Re: #25 prairie person on 02.05.14 at 10:12 pm

It could drop 40 percent in one day as the market is still about 70 percent overvalued. We’re still in a long-term bear market from the dot-com era. Bear markets usually end with a long sideways motion for at least 6 months minimum. If America lies about the January jobs report then April should be the month the bottom falls out of the market. If they don’t lie then you’ll see the 200 day moving average taken out at the open and at the very least a thousand plus down day on the DOW for a start.

What a comedian. — Garth

#76 Buy? Curious? on 02.06.14 at 5:21 am

“Poor Jason. Someday not far away he will regret having said such misleading things – predicting continued strong price surges through the year, bidding wars and yet affordable homes. What a David Lereah moment.”

Really? Jason won’t be allowed to play in any reindeer games? Please. This guy won’t show a bit of remorse nor will he face any form of punishment.

Anyone hear from Sherry Cooper?

http://www.youtube.com/watch

#77 Buy? Curious? on 02.06.14 at 5:31 am

Whoopsie! Wrong link! Please disregard the first link. I was, um, er, doing something else. Don’t look at the link. This is the link I wanted to post.

http://www.youtube.com/watch?v=Y40VEdACktI

#78 axxman on 02.06.14 at 8:26 am

I don’t believe the listing drop – also manipulated by TREB. I’ve seen several homes that disappeared from MLS this month but still have a for sale sign on the lawn and no SOLD sticker. They may be trying to manufacture a tight supply scenario.

Governments rightly spend a great deal of time on LIBOR and CDOR manipulation but why do they turn a blind eye to the obvious manipulation in RE? While transparency and disclosure are all the rage in financial market, RE agents are allowed to call what they do “an accepted way of doing business”. The systemic implications are a thousand times greater than other “files” the governmnent is focused on. Who is the Minister that should be worried about his/her job?

#79 Smoking Man on 02.06.14 at 8:58 am

@axxman

Governments rightly spend a great deal of time on LIBOR and CDOR manipulation but why do they turn a blind eye to the obvious manipulation in RE? 
………

Again a perfect example of oblivious to the obvious…

The guys in government are all home owners…

Silly…..

#80 pbrasseur on 02.06.14 at 9:00 am

Questions #72

“Imagine prices stalling and more or less following inflation for a decade.”

I think this scenario is quite unlikely. Prices “stalling” mean they would have to stay very high for a long time, which means buyers would need to keep on buying at those current very high prices.

From there there are two possibilities, if sales volumes stay high, already absurd debt levels will fly off the chart, we all know what that means in the end, no soft landing there. If volumes shrink employment will be hit hard in our FIRE sector of the economy ( http://en.wikipedia.org/wiki/FIRE_economy ) which after years of bubble now occupies a disproportionate part of activities, not to mention consumption which depends on it in so many ways. We also know what that means. On top of that you have to consider population ageing which is entering its most critical phase.

There is no middle ground here, no easy way out, either we get deeper in debt or we lose jobs, it’s one or the other, or both. Cleary that is not consistent with a stagnation or slow deflation scenario.

#81 TurnerNation on 02.06.14 at 9:16 am

Today’s millionaire report is instructive. For a laff.

1m+ gets you: a Leaside bung, or a large and probably haunted Boomer manse, or a semi.
My bet is HAM (Hot Anglo Money) on all.

http://www.torontomls.net/PublicWeb/CL_CF.asp?link_no=51902240.206100&t=l&

#82 pbrasseur on 02.06.14 at 9:16 am

In Quebec sales are tanking, faster than in other provinces apparently.

No big movement in prices yet, but the difference, listings here are exploding! This is consistent with the idea that when houses are difficult to sell they accumulate on the market.

However Garth seems to think that fewer GTA listings indicate denial from sellers, that for that reason it’s a negative.

To me it seems logical that the higher seller/buyers ratio in Quebec is a negative. But the conclusion in Ontario is not so obvious.

Does this mean that these markets are in different phases? My feeling is this is the case but I would appreciate to read other’s opinions on this.

Tx.

#83 TOS Guru - Dont Rent Money to buy house on 02.06.14 at 9:18 am

==========> # 26 Saskatoon guy

Relax Brother, i am getting those insults every day !

Garth is on the other hand “obsolete” thinker and old fashion guy, who believes in being mentally healthy
in today’s world, where my colleagues drink 3 Starbucks coffees of $4++ each a day –
and then bring kolbasa sandwiches in dollarama zip-lock bags and dream of paying off mortgage on half bedroom condo…( without window in that bedroom)

It is all in your head how you feel!
Are you strong enough to focus on your dream , or target where you want to be?

#84 TurnerNation on 02.06.14 at 9:20 am

^ Lol those areas just scream Starbucks, SUV strollers and hyphenated last names. Brooke-Webb.
Sloane-Barrington. The usual affects.

#85 Waterloo Resident on 02.06.14 at 9:46 am

Wow, now here’s some NEWS you can really use (or NOT):

“Antarctica base gets 16,500 condoms before darkness”

http://www.reuters.com/article/2008/06/09/us-condoms-idUSN0943167020080609

Lets see; 125 scientists and staff, and 16,500 condoms. What are those people going to be doing for those 4 months of darkness anyways, going non-stop or something????? ( What-The-F ? )

#86 Smoking Man on 02.06.14 at 9:48 am

Merchandise Trade Balance…. Dec Numbers out.

Survey – 0.65B
Actual – 1.66B

= BOC rate cut talk next meeting.

Bet accordingly……

#87 GBayBoater on 02.06.14 at 10:02 am

#40 Terry on 02.05.14 at 11:05 pm

It’s a 1990′s real estate Market again sounds about right. Back in March of 1990 a Real Estate Broker friend of mine from Oakville was telling me that “the phones just stopped ringing.” Now I hear from other Brokers those same words again. This is the pivot point and change can happen as quickly as birds can change their flight direction. If you really read the many articles out there, and read between the lines, you can almost feel the collective shift in herd buying behavior. Caveat Emptor……blog dogs.
************************
Interesting observation. In the past week I have had “cold calls” from two RE agents looking for listings “after a home just sold on our street.”
They may be getting desperate out there. I haven’t had similar calls for many years despite numerous sales on our street.
I was pleasant with them, but I could sense the “hunger” in their voices.

#88 Daisy Mae on 02.06.14 at 10:27 am

#37 Smoking Man: “Daisy everyone lies, most do it 10 times a day… It’s what humans do. It’s as natural as going wee wee….”

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

Yeah, we’ve all learned to take everything we hear with a grain of salt…but it’s not right. And it’s not impressive.

#89 liquidincalgary on 02.06.14 at 10:39 am

@ 49 Kim

that’s it? cradle to grave gov’t?

the free market is cruel but swift. the sentient will be left standing

#90 I'm stupid on 02.06.14 at 10:41 am

Smoking man, you posted about not having any red dots in your hood. Drive the neighbourhood I can guarantee that there are homes for sale. I noticed it the other day. I saw a home for sale and was curious about the price so I tried to find it on mls but it wasn’t listed. I’m just wondering how many of these there are and if it’s a strategy to make it seem like there is no supply.

#91 Aggregator on 02.06.14 at 10:54 am

Montreal-based law firm Heenan Blaikie closing down

Heenan Blaikie, one of the most prestigious law firms in Canada, is closing down.

The firm, whose lawyers have included former prime ministers Pierre Elliott Trudeau and Jean Chretien, will go out of business over the next few months.

The Montreal-based company said it would conduct an orderly wind-up after a vote was held Wednesday evening.

Those ain't no burger-flipping jobs and you can bet there will be a little more $600-800k condos listed on MLS this spring.

#92 Tony on 02.06.14 at 11:09 am

Re: #1 Waterloo Resident on 02.05.14 at 9:00 pm

Looks like you were right, I don’t even need to see what happens this afternoon. Gold straight down at the open that’s good enough for me. I guess XIV is what to buy if you have an account with American currency in it today.

#93 DR on 02.06.14 at 11:10 am

89 I’m stupid on 02.06.14 at 10:41 am Smoking man, you posted about not having any red dots in your hood. Drive the neighbourhood I can guarantee that there are homes for sale. I noticed it the other day. I saw a home for sale and was curious about the price so I tried to find it on mls but it wasn’t listed. I’m just wondering how many of these there are and if it’s a strategy to make it seem like there is no supply.


Happened to me too twice last week. but it was not listed yet, the sign had gone up a couple days early

#94 Ralph Cramdown on 02.06.14 at 11:24 am

#39 Hicksville Alberta — “An interesting fundamental macro economic read on how we are pooched and that the pooching may be about to get considerably worse […] I used to think this kind of stuff came from the Dark Side of the media but seeing what passes now as the mainstream Fourth Estate in aggregate today, i think more and more that in order to survive and plan these days one really needs to seriously explore more avenues for information as many of these have much less vested interest in the “Old Order” of things that need to be changed and remedied.”

Hicksville, you have to look at the banner ads on that site. That’s what’s being sold, and they’ll buy or commission whatever crap articles will drive the sale of seed packs, stirling generator kits, precious metals and solar panels. Of course they have to talk about money and wealth preservation, because they want to attract an audience with the money to buy this crap.

This article is a bit far-left and a bit long, but is still one of the most interesting things I’ve read this week:
http://www.thebaffler.com/past/the_long_con/

Once you’ve digested that, look at the article titles from the site your article was from:
http://www.alt-market.com/

Mostly right wing fear mongering intended to sell the survivalist equipment and prepper info that the site’s sponsors pump.

#95 Enthalpy on 02.06.14 at 11:46 am

real estate will be boring again. Dont worry. Its right around the corner.

Ive been bored of it for a little while and Im usually ahead of the curve anyways ;)

#96 Barold on 02.06.14 at 11:48 am

I have a hypothesis – (don’t have any masters students who will help me prove/disprove this)
But consistently listing houses below what should be their market value has trained the people who closely watch those selling prices (those trying to buy) that the market is hot; and therefore everything should be selling for at least 10% over ask (I am in the Toronto market)
I have been watching for some time and though all the points about affordability and average incomes ring true, the two opportunistic properties I have bid on in the last year or so I have been outbid massively by investors/flippers. Which tells me prices have little connection to ANY fundamental anymore (be it income, or the actual asset itself). These flippers are well capitalized (either their own or private financing) and will continue to do so until the tap runs dry.
That being said, an old boss told me a great adage about shorting anything:

“People will stay stupid much longer than you can stay solvent.”

#97 Obvious Truth on 02.06.14 at 11:55 am

My friend Frances on BNN just said the magic market words.

‘Resumption of yen carry’ – nice spike.

Can we cue up a vix crater? Or are we hanging on to jobs Friday? Gotta love market excitement. Way more fun than renovating.

Time for a walk. Sun is shining. February is the best month of the year in Ontario.

#98 Optimist on 02.06.14 at 12:07 pm

Sounds like a lot of people still waiting on the sidelines to buy a house. There will be plenty of future demand to soak up the supply. What housing crisis?

#99 45north on 02.06.14 at 12:07 pm

Questions Imagine prices stalling and more or less following inflation for a decade.

followed by

pbrasseur if sales volumes stay high, already absurd debt levels will fly off the chart, we all know what that means in the end, no soft landing there. If volumes shrink employment will be hit hard

good reply pbrasseur

Garth seems to think that fewer GTA listings indicate denial from sellers

that’s what I think. Experience in California showed that low-end markets caved first, followed a year later by up-scale markets. GTA is different because of the huge condo market – my guess is that it’s going to pull everything down. Hard.

#100 Paul on 02.06.14 at 12:11 pm

#89 I’m stupid on 02.06.14 at 10:41 am

Yes you are

#101 ozy - come on -we heard same story same economic comparison last spring and houses are 15% higher on 02.06.14 at 12:13 pm

come on Garth -we heard same story same economic comparison last spring and houses are now SFH are 10-15% higher…

for a change, why don’t we let the markets to “analyze” themselves ???

sure -a decline will come – but who takes responsibility for crying WOLF when it was not there past 1,2,3,4,5 years….

what if prices jump 15% this spring…eh? no listings, and sellers CHOOSE their price. What good is your economic analysis then?

sure, historically, years from now, when a decline will come….we can look back and say Garth Told Us…

pathetic…

I’ve said it and repeat it – because of your blog, the downturn is postponed because many hold buying and the bubble we need 50% growth in a year cannot happen, so the crash cannot be fuelled. Reflect and REPENT.

#102 bentoverpayingtaxes on 02.06.14 at 12:50 pm

While F has been trying to adjust the RE market with farcical suasion and tepid regulation he might have just succeeded with the help of his hand puppet …the BOC GOV throwing the $C under the bus. If F hoped to wreck the CDN economy he just found a way. Our cost of imports has skyrocketed…now tripling the trade deficit from 700 million to over 2 billion at last count. Forget about a jobs recovery…..who can afford to hire…AND….buy machinery to stay current? Canada will fall quickly into recession at this rate….hooray!!!!

Gas, oil, food….and everything else we use has gone ballistic …..stripping dollars out of consumers pockets and sending them overseas. Way to go F……you have done what you set out to do. The doubling of cost inflation ( that you will insist doesn’t exist because it is volatile food and energy) will beggar Canadians and force them to choose between food and a mortgage payment.

#103 Ralph Cramdown on 02.06.14 at 12:50 pm

80% LTV limit on equity take out refis? Debt will find a way:

“Refinances may be down due to tightened lending guidelines, but brokers are turning to another dependable method for helping clients take equity out of their home […] a tremendous surge in second mortgages”

http://www.mortgagebrokernews.ca/news/brokers-making-up-for-drop-in-refi-business-176387.aspx

For you kiddies too young to remember, a second mortgage is when your first lender won’t lend you enough money, so you get a smaller second loan from a different lender (at a considerably higher interest rate to compensate for his increased risk, as he ranks behind the first loan). Works fine as long as you can keep paying both loans. If not, sometimes the second lender has to start making your payments to the first to keep the first from foreclosing, and of course their interests are usually opposed in the event of default, making any sort of workout or restructuring very difficult indeed.

#104 my thoughts on 02.06.14 at 12:58 pm

I have voice mails left from agents stating there is no supply and would i be interested in listing my home for sale. I have a number of agents from open houses etc. contacting me to see if I’ve found a home yet.

#105 David McDonald on 02.06.14 at 1:20 pm

Canadian real estate porn is alive and well in Spain! On channel 7 around 6pm in Valencia you can watch “Love it or List it-Vancouver”, . It is dubbed into Spanish (tu casa a jucio) but still maintains the buy now or buy never flavour of the original.

In spite of the real estate crash in Spain the show is very popular. The million dollar prices do astonish the Spanish and based on my small sample they think Canada will crash like Spain. It’s not different in Canada; we are only 5 years behind.

#106 Josh in Calgary on 02.06.14 at 1:24 pm

#26 Early Spring,
You’ve come to the wrong place if you’re looking for people to tell you that what you’re doing is wrong. People can throw all the numbers they want at you, it doesn’t matter because they all contain made up assumptions about the future. It’s the intangibles that you have to consider.

1) This is the biggest one by far. You’re young and in a new town and a new job. Buying real estate almost NEVER makes sense unless you plan to be in the same place for at least 5 years. Flexibility and mobility are both luxuries and should not easily be cashed in. But you knew that.

2) I can gaurantee that the numbers will favour renting even if you think the market is going to go up with inflation (which is exactly what it does over the long term). You have to of course include maintenance, renos, property tax, insurance and the dreaded unforseen expenses on the ownership side.

3) Buying a house gives you the luxury of control. You can renovate. You can’t be kicked out. You don’t have to deal with A hole land lords. And depending on the market you can usually get something nicer by buying than renting. None of these trump #1 when you’re young, but they’re worth noting.

4) #3 flies right out the window if you buy more than you can ACTUALLY afford since you will not have control for very long.

I actually did not follow this advice to a T when I was younger (because I didn’t know better at the time). Fortunately it worked out for me (through luck rather than good planning) as I bought right before the credit bubble and mortgage rules being relaxed. At that time you could actually buy a modest house for the same or less than renting (mortgage vs rent) and I had space for 2 room mates instead of just 1. So I wasn’t being completely foolish. The economics have changed since then.

#107 Paul on 02.06.14 at 1:24 pm

What are some people thinking here! Agents work on commission they get paid on what sales they make that’s it. No paid sick days, Vacations, Statutory Holidays, Overtime, Paid lunches, come in late/leave early. So if anyone thinks that agents would ‘hold back or hide listings is a greater fool that would be like Walmart not stocking their shelves and hiding the inventory in the back to drive up prices. All agents have to sell are LISTED properties 35000 agents 8000 sales thru T.R.E.B. a month do the math the agents are hiding the listing it’s a conspiracy I tell you lol!

#108 bdy sktrn on 02.06.14 at 1:26 pm

record cold at yvr now

when the heck is this global warming going to hit?

we are paying big time taxes for ‘carbon’ here in bc

it’s about time ‘carbon’ got to work and warmed things up a little.

#109 SRV on 02.06.14 at 2:06 pm

Patience Grasshopper… those employment figures will miraculously recover (as they have in the US where dumping 1.3 million off extended benefits reduced the rate by almost a full percentage point… a 15% drop with the stroke of a pen) once enough of those cast aside in the name of corporate profit run out of EI (does King Harper have it down to 3 1/2 weeks yet) and they’re officially “out of the work force!”

Kleptocratic magic…

#110 OttawaMike on 02.06.14 at 2:15 pm

Smokey,
I am unclear if the yellow smoking man belt is stained with Nicotine or from the LV resort swimming pool ?

What is an easy strategy to profit from a rate drop?

#111 Happy Renting on 02.06.14 at 2:30 pm

#26 Early Spring on 02.05.14 at 10:13 pm

Not everyone needs to know your business or what you’re really thinking.

Some socially-acceptable answers regarding why you are renting:

“I’m still on probation at work, waiting for a little stability before taking the plunge.”

“I’m saving up a down payment.”

“(If you’re single) I’m hoping to meet someone so we can combine our down payments to afford a bigger place.”

If you’re speaking to someone who actually knows anything about investing, “unleveraged, liquid, diversified portfolio” might be answer enough.

If the comments/questioning is getting to you, cultivate your sense of self-satisfied smugness for being a contrarian. (I’m only half kidding.) Just as the house horny get their pats on the back for making a “smart” decision, give yourself credit for not blindly following the herd.

#112 Steven on 02.06.14 at 2:45 pm

Could this be organized real estate’s finest hour?

If not, it’s close. If anything else jumped 10% in price amid falling sales, you’d pity the fools still buying. I am.

Garth I think that by now all the fools ought to know better and having pity for them might be a little too generous. They have all been duly educated and warned.

#113 Finally on 02.06.14 at 3:00 pm

Live in yvr. Sold now Rent. Second baby on the way. Looking to buy, but patiently waiting for the correction. Need and think at least 20% down before jumping in. Who agrees?

#114 Smoking Man on 02.06.14 at 3:01 pm

#109 OttawaMike on 02.06.14 at 2:15 pmI am unclear if the yellow smoking man belt is stained with Nicotine or from the LV resort swimming pool ?

What is an easy strategy to profit from a rate drop?
………….

Hell man I only call it, lol
Not much to be made, obviously swaps are to complex for most mortals.

If you bought bonds back in September,as I told everyone you would have killed it and super killed it provide you also went long on USDCAD

#115 RockStar on 02.06.14 at 3:06 pm

Same stories, different day. And the beat goes on. Zzz

#116 eviee1973 on 02.06.14 at 3:30 pm

In todays junk mail, and in The Metro newspaper, Brad Lamb is having a condo sale, up to $60,000 off due to sales center closing for construction on his 6th and Tenth development. Still staring from $238,188 though. Wonder why he is not 100% presold, is claiming 60% though.

#117 Donn on 02.06.14 at 3:48 pm

Hi, here is a chance to vote Garth’s blog the top finance blog in Canada

http://www.modestmoney.com/top-canadian-finance-blogs-poll-2014/

#118 rosie "moving forward" in the knowledge that, "this won't end well" on 02.06.14 at 3:55 pm

Remember, $1=$1.11 Cdn.

http://ca.reuters.com/article/businessNews/idCABREA121F120140206

#119 jess on 02.06.14 at 3:59 pm

cra : irs
http://www.cbc.ca/news/politics/fatca-tax-deal-with-u-s-takes-some-heat-off-canadian-banks-1.2524444

June 11, 2013
IRS Management Culture Must Be Fixed
by David Cay Johnston

http://www.taxanalysts.com/www/features.nsf/Articles/D7C67CAB192EF00685257B8700498639?OpenDocument
— having neither tax lawyers nor tax administrators run the agency since 1997, when a high-tech industry executive, Charles O. Rossotti, became commissioner. The IRS needs a commissioner steeped in the principles of tax and deeply experienced in tax law administration, including enforcement.

Gerakos, Joseph and Syverson, Chad, Competition in the Audit Market: Policy Implications (January 23, 2014). Chicago Booth Research Paper No. 13-63. Available at SSRN: http://ssrn.com/abstract=2294508 or http://dx.doi.org/10.2139/ssrn.2294508

The Problem Of An Audit Firm Market Exit: New Research From University of Chicago Booth School of Business
By Francine • Jul 29th, 2013
A post at University of Chicago Booth School of Business Capital Ideas blog discusses new research from Joseph Gerakos and Chad Syversen on the dangers of industry concentration in the event of a market exit by one of the large audit firms.

#120 jess on 02.06.14 at 4:04 pm

breaking the buck
Fund once held $62 billion

http://www.primary-yieldplus-inliquidation.com/fundupdate.html

http://www.investopedia.com/terms/b/broke-the-buck.asp

Bruce R. Bent invented the world’s first money fund, The Reserve Fund, with Henry B. R. Brown in 1970
http://www.primary-yieldplus-inliquidation.com/pdf/FundUpdate-July2011.pdf

Breaking Buck Was Ironic for Trumpeter of ‘Safe’ Fund
http://www.investopedia.com/terms/b/broke-the-buck.asp
http://en.wikipedia.org/wiki/Bruce_R._Bent
Bruce R. Bent invented the world’s first money fund, The Reserve Fund, with Henry B. R. Brown in 1970
http://www.primary-yieldplus-inliquidation.com/pdf/FundUpdate-July2011.pdf

In Nov. 12, 2012 9:18 p.m. ETA federal jury cleared two former money-market mutual-fund managers of fraud charges

#121 Homehung on 02.06.14 at 4:04 pm

#92 DR on 02.06.14 at 11:10 am
89 I’m stupid on 02.06.14 at 10:41 am Smoking man, you posted about not having any red dots in your hood. Drive the neighbourhood I can guarantee that there are homes for sale. I noticed it the other day. I saw a home for sale and was curious about the price so I tried to find it on mls but it wasn’t listed. I’m just wondering how many of these there are and if it’s a strategy to make it seem like there is no supply.

Happened to me too twice last week. but it was not listed yet, the sign had gone up a couple days early

There are lots of homes for sale in this negbourhood. And you are right not a lot of them on MLS. Not a lot of Red Dots. Some are great deals but small as shit. You have to drive around and find them. For some reason lots of them were for sale by owner. Looked at five last summer alone. Almost bought a little two story dump at 11 James Street. Got a look inside and just about crapped my pants. Roof problems, old block foundation, leaky musty basement smell. Couldn’t move around without bumping into myself. Found out the square footage only 780. Shit I could buy a condo larger than that. I wanted some grass and a place to park my Hog where I could keep an eye on it. All the little houses in that area suck, blow em up and re-build is all you can do with them. It doesnt seem anybody is willing to do that though! Just row after row of tiny homes. Go up to Burnhamthorpe & Shaver and see what they have done with their crappy little homes. Ended up in nicer area (Alderwood) with bigger home and moocho parking.

#122 IgnoranceIsBliss on 02.06.14 at 4:09 pm

Avg SFH above $800,000 and my in-laws (whom do not live in Toronto) still think we can purchase a home in “Toronto” for $250,000 because they saw several “House Hunters” shows on HGTV. “Reality” TV at it’s finest and Canadians just suck it in like it’s real. These same in-laws have almost 100% stuck in several properties that are expecting a “pay-back on their investment” in 30 years when all the mortgages are paid off and they can live off the rental income… until then, they are loosing money and have zero liquidity.

#123 jess on 02.06.14 at 4:15 pm

monitoring-fees-as-disguised-dividends

Professor Gregg Polsky, professor of tax at UNC Law School and former IRS Professor in Residence, contends that PE firms enter into sham fee-for-service contracts with their portfolio companies in order get a business expense tax deduction for the companies and to hide the reality that the payments are actually dividends. According to Polsky, this scam costs the U.S. Treasury hundreds of millions of dollars annually.

http://www.nakedcapitalism.com/2014/02/wall-street-journal-exposes-entirely-new-private-equity-tax-scam.html

#124 espressobob on 02.06.14 at 4:26 pm

Tony @ 74

I’m hoping many others like you, think that way! Thats why some of us make great returns! Keep up the good work!

#125 Son of Ponzi on 02.06.14 at 4:36 pm

#113
How to profit from a rate drop?
————-
Borrow more money and invest in Turkish bonds.

#126 jess on 02.06.14 at 4:43 pm

“pro rata allocation is the hallmark of disguised dividends.”

Wall Street Journal reports that Polsky represents a whistleblower who has turned all of these agreements, and hundreds more, in to the IRS

=========

#127 saskatoon on 02.06.14 at 5:24 pm

watchdog!!?!?

we need ya!!!

#128 Pete on 02.06.14 at 5:58 pm

Just got the list of houses sold > $1M in Oakville / Burlington. 22 houses sold in January alone, in spite of the brutal weather. A lot of stuff that has been sitting around for months suddenly seems to have sold (some with reasonably steep discounts, some not). Seems to be more sold in January that the whole of last qtr. 2013.

Before anyone accuse me of being a realtor, I am not – I fully expected the market to go the other way. Amazing…

#129 aprilNewwest on 02.06.14 at 6:10 pm

# 103- lots of houses for sale but too many agents ……….

#130 LP on 02.06.14 at 6:10 pm

#110 Happy Renting on 02.06.14 at 2:30 pm
Not everyone needs to know your business or what you’re really thinking.
Some socially-acceptable answers regarding why you are renting:

How about my personal all-purpose favourite? As in,
“The very first instant I think it’s any of your business, I’ll be sure to call.”

#131 jess on 02.06.14 at 6:17 pm

SAMANTHA RETROSI: 2006 Games luge

Why the Olympics Are a Lot Like ‘The Hunger Games’

The socialization of my allegiance to Verizon began the moment I was selected—as an 11-year-old—for the US development team….

Why the Olympics Are a Lot Like ‘The Hunger Games’
http://www.thenation.com/article/178048/why-olympics-are-lot-hunger-games

#132 Smoking Man on 02.06.14 at 6:20 pm

#120 Homehung on 02.06.14 at 4:04 pm

Dude anything South of lakeshore will be gold in 5 years.

Inside scoop, can’t share.

How many times have I been wrong..

#133 Smoking Man on 02.06.14 at 6:25 pm

#120 Homehung on 02.06.14 at 4:04 pm

Oh that little dump on 11 James Street, now sits two new singles that will get snatched up in the spring for 850..

Best hood in the world, rich, poor, sain, and the insane.

Best transportation hub in the city for Trains, planes and automobiles.

#134 Hillbilly on 02.06.14 at 6:32 pm

People are puzzled by the housing mania in Canada.

Pretty simple really.

1) Home “owners” represent 70 % of the voting public.
Government policy ( CMHC and lax lending) has been to cater to that group to be re-elected (Harper government re-elected) by pumping up house prices.

2) Increased house prices creates a virtuous cylce that creates jobs as more people can qualify to buy houses and do so. Employment in the entire FIRE complex and other businesses related to housing is increased thereby, not to mention the knock-on effects in the economy at large.

3) People feel more prosperous as a result of this economic activity and continue to vote for the people that made them feel this way.

4) To continue being re-elected, the party in power continues these policies.

The record debt that has been taken on by Canadians does not concern the citizenry, who in their daft ignorance are only concerned with servicing that debt, not the actual amount of it.

To think that this housing market bubble has not been engineered is to be naive.

From interest rate suppression, to allowing the CREA monopoly on MLS data, to instructing CMHC to lend indiscriminately, to warning the public about debt levels and yet providing the credit to them to incur that debt, to opposition parties not pointing out the perils of government policies are all proof positive of that engineering.

If there was an interest in curtailing the rise of both house prices and debt accumulation, many prudent steps could have been taken to reign in both – and a long time ago.

Most Canadians don’t get it – high priced housing works AGAINST the mid and long term economic interests of the country – but I suspect they will in time.

For the record, I believe that this government or the next one elected will do everything in their respective powers to try to maintain the status quo of high house pricing in Canada.

As the FIRE and related businesses have been the prime driver of economic activity in the country for so long, how can government policies not be enacted to ensure its robust health. Too much riding on this one horse to let it fall ill.

Market forces may force a different outcome, but they will fight it EVERY step of the way (and of course make it a worse outcome).

So, don’t look for a meaningful correction in house pricing in Canada anytime soon.

Anybody on this blog disagree?

Let’s hear your arguments.

#135 Stoopid Idiot on 02.06.14 at 6:57 pm

#2 john

#5 john

#9 Government of Canada STOP realtor criminals

These types of posts are scary…. sounds like you might be off your meds…

Take a few days off from this RE noise to calm down before you do something bad…

You need a bigger Hero John….. or a better example

http://www.liveleak.com/view?i=8f8_1221846224

#136 docteurfolamour on 02.06.14 at 7:04 pm

2014, the year of the end. Run for the hills…

#137 Homehung on 02.06.14 at 7:27 pm

Smoker guy I don’t know you from Adam but stand by my words the area sucked. Saw way to many quads with crackheads hangin out, a lot of drunks just south of Southside Johnny bar area. I got two kids 13, 15 they seen enough garbage in the city already. Maybe the area will be ok in 5-10 years. Couldn’t wait that long to find out! Needed large lot as well.

#138 Realtor # 1 on 02.06.14 at 8:06 pm

Big difference from 2009 and 2014. Can’t compare there more home being sold I’m the million today than 2009. We didn’t have GFC. And we didn’t have 32 offers for a home

#139 Daisy Mae on 02.06.14 at 8:28 pm

#100 Ozy: “…because of your blog, the downturn is postponed because many hold buying…”

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

LOL I think you’re giving Garth too much credit.

#140 Kilby on 02.06.14 at 8:51 pm

#94 Enthalpy on 02.06.14 at 11:46 am
real estate will be boring again. Dont worry. Its right around the corner.
*********************************************
The way it should be….Well said!

#141 blase on 02.06.14 at 9:09 pm

Exactly right, 100%.

The general populous won’t rebel until they feel it unless their monthly payments rise (interest rate hike). So this could take a few more years. Unbelievable but most people worry anything but economics.

#142 Tony on 02.06.14 at 9:21 pm

Re: #74 Tony on 02.06.14 at 5:18 am

Update: 215 thousand jobs about spot on would be about right. The DOW will close exactly at 16,000 on the button tomorrow. They just wouldn’t let the market collapse as it was too close to the 200 day moving average. I hope someone can explain the 215 thousand jobs in America for January… shakes head. Not comedy just the facts for tomorrow.

#143 Observer on 02.06.14 at 9:32 pm

There must be an unwritten rule in the shadowy world of central banking that demands that dangerous, society-threatening economic bubbles must be denied and covered up at all costs.

http://www.forbes.com/sites/jessecolombo/2014/01/16/its-not-a-bubble-until-its-officially-denied-singapore-edition/

#144 Daisy Mae on 02.06.14 at 9:55 pm

#133 Hillbilly: “Anybody on this blog disagree?
Let’s hear your arguments.”

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

Nope.

#145 Jose on 02.06.14 at 10:29 pm

Hate your picture on this post. Cruel and its not even funny.

Cruel how? — Garth

#146 greg on 02.07.14 at 12:08 am

Not in kelowna garth this years january median sale price is up 10% over last jan according to kelowna realtors.

#147 bdy sktrn on 02.07.14 at 1:00 am

#144 Jose on 02.06.14 at 10:29 pm
Hate your picture on this post. Cruel and its not even funny.

Cruel how? — Garth
————————–

yeah , garth you dirty rotten [email protected]! easy to see you never had any kids….i hope you rot in h……

but seriously folks, most kids like hanging upside down for the first 15 or so years, so it’s prob jose who is childless.

all i could think when i saw the pic was WHY DIDN”T I DO THAT WHEN I STILL COULD??? (i would have held a pistol in the other hand) :) . mine is now 95 lbs so a bit heavy to hold out w one hand!