What fire?

FIRE modified

Kate and Alex teach school. Between classes they surf house porn and email each other juicy new stuff. In the last seven weeks they’ve jumped into five hot sessions with other couples, but come away from each one unsatisfied. Five bidding wars. Five misses. No house.

Days ago they bid again. This time they included their wedding photo and a pleading letter. Plus $95,000 over the asking price for half a house on a tired street. And in case you think I make this stuff up, here’s how the Toronto Star described it this week:

They also enclosed an unusual personal treasure: A photo from their August wedding and a carefully crafted letter. It stressed their love of the city, their commitment to Toronto’s school system, their determination to raise a family here… She stretches her hands out, as if offering a precious gift. “Here we were saying, please take our $95,000.”

They didn’t get that house, either.

WEDDING modified

Down the street, by the way, a woman bought another semi a year ago for $525,000. She landscaped the little backyard and reno’d two bathrooms. It went on the market for $549,000, attracted 25 offers, and just sold for $717,336.

In fact in the first 14 days of March the average SFH price in 416 climbed over the $900,000 mark, as the vancouverization of Toronto takes place. Unlike Van, though, the GTA is not hemmed in by ocean and mountains, just by hormones and erections. In fact this week alone the Star and the Globe and Mail took lessons from the Calgary Herald and Vancouver Province, and heavied up on the social phenom of our times: house lust.

As explained here with deadening repetition, prices are romping higher even as sales stagnate or decline. Listings have seriously eroded as home values increase, a sign that affordability has been murdered. After all, people don’t put their houses up for sale if they think they can’t afford to buy another one – which is exactly what’s happening. Incomes are not advancing, and many families have hit a debt wall. Meanwhile, how high can home ownership levels go before every single qualified person has one?

This is what a real estate bubble looks like. Inflated prices on deflated volumes. Asset values detached from economic reality. Epic over-investment, accompanied by historic borrowing. And mania. Lots of it, coupled with serious denial.

Actually it’s that blend of public obsession and official denial which shifts the bubble into its final stages – the kind of porn-fed frenzy that would lead people to spend $140,000 more than the asking price for an old semi on a street former residents couldn’t wait to exit. And this brings us to the Conference Board of Canada’s astonishing report.

The outfit has always been pro-business and a staunch defender of the status quo, and just proved it again with a paper by real estate bull economist Robin Wiebe. No crash, it says, for two major reasons. First, housing starts numbers show there is little overbuilding. Second, cheap mortgage rates have allowed house prices to inflate while still making it possible for people to buy them.

Both points are valid, but not reassuring. Virtually no undeveloped land sits inside the big cities any longer, meaning most new builds are tear-downs priced in seven figures. That helps explain the unprecedented rush into semis and row houses, where prices have soared almost 11% in a single year. As for mortgage rates, they have bloated prices, but also debt. Thus, when rates rise and prices correct, the debt will remain. The overhang from that could last a generation.

The board says it knows rates will swell, but figures the increase will be “only a gain of 200 basis points by 2017 or 2108.” Of course two hundred points is 2%, which would tag most mortgages in the 5% range – not exactly a minor increase. However, that’s a wildly optimistic scenario, given the fact the US Fed is now suggesting rates will begin the inevitable ascent in early 2015.

In any case, where the board (and other apologists for house porn) fails is in telling people there are only two options for real estate: the status quo, or a crash. You should count on neither. The unbalanced, hyperventilated, over-leveraged and manic current market will not last. Duh. Nor should anyone expect that, as in America, prices will plunge nationally by 32%, or by 70% in the bubbliest centres. Canadians are too invested and too horny. A price decline is inevitable, but it’s the long, slow slide after that which will do the most damage.

Of course, this is all just about Toronto, Vancouver and Calgary. The rest of the country is in for far worse.

209 comments ↓

#1 TurnerNation on 03.24.14 at 5:43 pm

These semi junkers are worth 400k max. Also, factor in utilities and taxes yearly rising 5%.

#2 sam on 03.24.14 at 5:44 pm

first comment

#3 Smartalox on 03.24.14 at 5:52 pm

“People won’t list their home if they don’t think that they can afford to buy another”

This is an interesting statement. It explains why people insist that there is a ‘lack of supply’ that drives prices higher, and paints the picture of a mighty race to the bottom once the bubble bursts.

But doesn’t do much to cast light on the cause of the bubble’s burst: Will it be massive Job loss? Chronic Indebtedness? Interest rate hikes? Recession?

How close are we to the point where people HAVE to sell, and will we run out of buyers before then?

#4 American on the Sidelines on 03.24.14 at 5:58 pm

The really shocking thing to me, as an American having watched the US bubble rise and blow, is that the media behavior is much worse here than I remember during the mid-2000’s back in the old country. There is almost no critical economic commentary in the “liberal” Star or Globe, just articles by RE economists basically advocating million dollar debt purchases because “there’s no bubble” and “Toronto’s different.”

Unfortunately I arrived in Toronto in 2009 and coulnd’t sell the US home till prices recovered a bit, last year. So why would I ever invest in this city? I rent and get along great with neighbours and landlord. Would I speculate on housing and hope for a $100K rise on the next fool?

My beef with this town is that the available housing stock is among the most uninspiring in the world (if you’ve traveled anywhere at all). Houses are very small and what’s available is plain ugly. You live on streets that are wicked torn up like the worst parts of Mexico, and that’s in the good areas. Where’s the aesthetic value? Even during the US housing bubble, you could buy a lovely detached bungalow in Carmel by the Sea, Cal for 1.5 mil. Lasting value and aesthetics, but here – its just a bid to be close to downtown?

Beauty and coolness counts. We would move to the much-better priced Montreal in a heartbeat if the work would travel.

#5 Victoria - the original on 03.24.14 at 5:59 pm

and everyone told me the WHOLE WORLD WANTS to live in Victoria.

We sold our Leaside house 11 years ago. It went over asking. RE agents showed us pictures of people with babies (we had 2 ourselves and a 3rd on the way). I remember one RE agent saying please please they want a yard for their one year old. Honestly, we took the highest offer and did not give a sh*t even if they had a meth lab. I wonder what that house would sell for now.

#6 Real Talk Time on 03.24.14 at 6:00 pm

Uh-oh! El-Gartho used the b-word. That’s how you know shit’s about to get REAL. The timing is, of course, in the air. The result? Utterly predictable.

#7 Smoking Man on 03.24.14 at 6:04 pm

The machine reports what it wants, my comments yesterday affirmed it’s tactics…

Story about Ukrainian President candidate caught on phone calling to nuke all Russians in
Ukraine will not see the light of day in western MSN. Got to go to RT. Or The Iranian press. Herrtza
might covet it. Those Israelis got stones as huge as Zeppelin.

Machine will pump Real Estate till it decides not to. The herd with years of obedience training
will never question the sound of authority, sounds like a teacher it’s got to be true.

#8 Holy Crap Wheres The Tylenol on 03.24.14 at 6:06 pm

Oh, oh there are teachers in this story. Here it comes, Smoking Man to you now, you go girl!

#9 Old Man on 03.24.14 at 6:09 pm

I have a special on mortgage money for all buyers in TO, as if you put 40% down will fund you a second mortgage at 8%; no credit check or income verification needed subject to an AACI report. Now the term will be fully open subject to 3 months bonus on interest, and the term is flexible with negotiation.

#10 Roman on 03.24.14 at 6:12 pm

A photo from wedding…
Poor schmucks.
No, that’s just too funny.

#11 LB on 03.24.14 at 6:15 pm

A semi-detached was listed in North York (around the Don Mills/Steeles area) for $499,900K. It sold in a matter of days for $570K. Are people crazy? I think yes. Nearly $600K for a semi that’s not even renovated! What the heck is going on here?!?!

#12 Keith on 03.24.14 at 6:15 pm

30% nationally is believable in a stretch. I think we’d have to seem a major economic event. 70% drop in some cases? That doesn’t seem so plausible. I think you might be taking the bear case too far here.

#13 Keith on 03.24.14 at 6:19 pm

@American on sidelines

I don’t think it’s that there are no critical articles. Certainly Rob Carrick at the Globe and Mail has been critical and has repeatedly pointed out how the high housing prices have been impacting personal finances. Whether people listen is an entirely different story.

#14 Ferrari321 on 03.24.14 at 6:20 pm

These are the perfect types of people that bears want to bet against …

#15 Lanser on 03.24.14 at 6:24 pm

Sam. You’re second.

#16 mitzerboy on 03.24.14 at 6:26 pm

but but but ….
russia wants our potash here in saskatchewan…….we are different out here ..(in a lot of ways) teeheeheehee

#17 hohoho on 03.24.14 at 6:28 pm

> … Nor should anyone expect that, as in America, prices will plunge nationally by 32% …

didn’t that happen over multiple years as well? it’s only called a “plunge” in hindsight, during the process it’s called a “slow slide”

#18 Question on 03.24.14 at 6:34 pm

Why shouldn’t Toronto SFD prices be on par with Vancouver’s?

They will get there in a year or so. Mark my words. How many years have people here been waiting for an imaginary crash?

In Vancouver and Toronto, living in a detached home will be a privilege and not a right. Just like driving a new Mercedes. Immigration will Power the population increase while land use restrictions will dwindle the relative supply of detached homes.

#19 airhead princess on 03.24.14 at 6:35 pm

OK….lets break this down…….’Kate and Alex teach school’…….they’re convinced interest rates will stay low forever…why not…the government has spoon fed them the mantra that they are a class above the rest by entitling them by decades of knuckling under to greedy union demands….while it has itself gorged on the self-money they know they can never pay back to the taxpayer and we know they will never raise rates without a fight. ( trust me…taxes will be 100% before the elite back down) ……..this equals….entitlement thinking by the elites among us who have no fear of ever being jobless or having to save for retirement.

#20 T.O. Bubble Boy on 03.24.14 at 6:36 pm

It does seem completely absurd that skinny semis and row houses in dumpy parts of town are now selling in the $800’s and $900’s.

Any house that starts with in the $600’s seems to spark a bidding war (this isn’t just a media myth – I’ve known a few people bidding in these house-buying tournaments).

This will not end well.

#21 Question on 03.24.14 at 6:36 pm

And seriously guys…listings dropping??

A year ago it was listings growing…

So when do prices rise and what conditions do they drop?

#22 Mike S on 03.24.14 at 6:37 pm

Err

didn’t you say it is just going to correct by 15%?

#23 Bobby on 03.24.14 at 6:41 pm

Sadly, when this all goes pear shaped, and it will, all these buyers are going to be looking for someone to blame. But who, your realtor? No, because they will the first out of work. Besides they will be the first to say that it was the buyer’s final decision.
It is so Canadian to blame the government and it will undoubtedly become an election issue. What makes it even more Canadian is we tend to continue to help those that make poor decisions.
Let them fail, at least it will be a wake up call going forward.
Only an idiot would bid up the price of a rundown shack on a questionable street in Toronto or here on the west coast.
I saw this all before in the run up in prices in the early nineties. It was supposedly different then too. But it crashed.

#24 juno on 03.24.14 at 6:44 pm

In case the people who lives in its private little bubble hasn’t noticed. China is starting to hit Crisis levels, many of the investment homes in HK are being sold, so they can cater to the huge debt they have borrowed to get that property.

That means take the rich chinese with their bagfully of (BORRROW DEBT) out of the equation.

With 82% of people already owning homes in canada, add 7% un-employed, add 5% under employed. (that 94% who are not interested in housing or too full of debt to obtain more). That leaves 6% who can buy. Of that 6%, their either to broke to buy or are not interested. Even if they can, That not too many buyer left who can buy your housing.

Sure it can go up for a bit longer, but how much further before they run out of buyers.

#25 Timmy on 03.24.14 at 6:52 pm

You have been saying that for five years yet prices keep increasing. This is the first time you have admitted the lack of new land in big cities is causing prices to swell, yet you have never mentioned this before even though it has been the case for many years

#26 Thought on 03.24.14 at 6:53 pm

According to the radio ad brougt to you by the Canadian government the tfsa purposes is there to help you save for home renovations …. Ahhhhmazing!

#27 Paul on 03.24.14 at 6:55 pm

Boomers that are waiting for the folks to sell may be in for a long wait. A client of mine wants the Mom to move in with them, or a rental Condo or a Apartment as she is getting up there and needs to slide down the stairs to do laundry but God bless her she will not consider moving until she “needs” to oh the lady is 93. Great Canadian hang on to the house damn the torpedoes!!

#28 Jean from Quebec on 03.24.14 at 7:00 pm

First, I’d like to thank you Garth! I’ve been following your blog for a few months now and I’ve learned much about finance and real estates thanks to you. (I’m still an ignorant idiot though)

Could you clarify (maybe in another post?) your last sentence ” The rest of the country is in for far worse.”. I live in Quebec city. While our market here isn’t as retarded as, let’s say, Vancouver, houses are still affordable even if expensive for what you get.

Like Ottawa, lots of jobs come from the public sector here. We’re probably #2 in the country for that! Still, do you think that our market could still crash despite that fact? I was hoping for a correction around 5-10 %… I could use a crash (first time buyer here). I’m pilling my money meanwhile.. and yeah, I rent!

#29 Marrige Counsler on 03.24.14 at 7:01 pm

Careful what you wish for Kate and Alex. Once you score that great house at over asking and then start adding more debt for those must have renos. Money starts to get tight and couples begin to fight (most fights are over money even when the topic is leaving the toilet seat up), eventually they don’t want to fight anymore so they split up. One can’t afford the house on their own so it must be sold, problem is no one will give you anywhere neaar what you paid a few years ago. What do you do then? Do you still think you need that overpriced old house so badly?

#30 Happy Renting on 03.24.14 at 7:09 pm

The wedding photo/letter approach is not new and is hardly newsworthy. Newspaper readers and house sellers might see it and think, “aw, too bad they’re having a hard time buying a house, they seem like nice people”, but in the end, sellers want the big windfall. No one is going to forego any significant money for a sob story. It’s exactly as Victoria (#5) says: highest bid wins.

I guess if you’ve lost five bidding wars you’re probably feeling pretty downtrodden and desperate, so pimping out your wedding photo is no biggie. Really, what they need to do is submit an offer on a house they can afford (or if their limit is what they want to spend, not what they can spend, figure out what their budget can buy because from their failed bids they clearly aren’t looking at modest enough properties.)

I feel richer, already, not partaking in any of this house hormones.

#31 Chopper on 03.24.14 at 7:16 pm

Garth house lust is not curable it is stronger than the human will.

My brother-in-law just bought a house in less than 48hrs after he got a flyer in the mail. He did not even bother to get a real estate agent to do due diligence on the house, but he signed the paper. $600k in the Brampton area and he makes about 25/hr.

I was shocked when he told me because if he had asked me I would have told him don’t do it as I know he will be in for a hard life moving forward.

More debt, getting older, he is 48 and two small children with a brand new mini van he financed. This guy is in for a rough ride, but does he care?, no. He said it is a nice house with jaccusi, 4 baths etc.

House lust Garth is something that keeps Real Estate Agents in business and they know it.

I think I will get my Real Estate Licence and start selling houses to some fools, there are lots of them them in my neck of the woods.

#32 Steve on 03.24.14 at 7:19 pm

The effect of this should be entirely weird in kelowna. It’s a wacky place. Way above its breeding. Needs a black eye. I wonder what will happen?

#33 Nemesis on 03.24.14 at 7:33 pm

Congrats, Alex – you NerdyGuy OverAchiever, you – Kate is, ahem, scrumptious… to say the very least.

Before you commit to HogTown, however… Have you considered the hinterlands – e.g. Windsor?

More to the point, before engaging in yet another bidding war for an utterly depressing over-priced Toronto shack… you really ought to talk to some teachers in Michigan first for a little perspective on how this all plays out…

Hint:

[BridgeMagazine] – Disinvestment, structural flaws driving school funding crisis

…”A recent analysis conducted by researchers at Michigan State University’s Education Policy Center, on behalf of the Board, describes a near “perfect storm” of long-term disinvestment, demographic shifts, and structural flaws in school organization that now combine to send 55 school districts into deficit, and force many more to cut teachers, gut programs, and in some cases close schools.”…

http://bridgemi.com/2013/10/disinvestment-structural-flaws-driving-school-funding-crisis/

#34 Smoking Man on 03.24.14 at 7:36 pm

#8 Holy Crap Wheres The Tylenol on 03.24.14 at 6:06 pm

I don’t personally despise Teachers, they just annoy me.

They come across with that confident calm know it all disposition, yet they fail to see they are not educating, there slave training.

You dumb to see it.

They frown and attempt to nutriluze narcissistic characteristic qualities, they key engine to entrepreneurship.

Oh, Kevin O Leary just said, he’s done the math, no correction on a real estate..

Talk about a flip flop.

Copy Cat…..

#35 Timmy on 03.24.14 at 7:37 pm

Re no 4
You are from America and you’re complaining about the infrastructure in Canada? Lol. I agree the housing options are uninspiring but have you ever been to Houston? Lol

#36 Macrath on 03.24.14 at 7:37 pm

#165 espressobob on 03.24.14 at 6:25 pm

#161 Macrath
Your research is all well and good, but how will that help you as an investor?
——————————————————————

Have you heard the saying: Never invest in something you don`t understand ( W. Buffet )

Now I understand that pref-shares have little to no protection from rising rates and little benefit from falling rates. Thus, you have asymmetric risk.

I`m a risk averse wuss. Garth will confirm that.

#37 Drill Baby Drill on 03.24.14 at 7:38 pm

Dear Pathetic Blog : your statement struck a cord with me. “prices are romping higher even as sales stagnate or decline”. It will be very interesting to see at which price point in the 416 that Joe Average will reach the un-affordable level as in cant’ get pre-qualified. Am I naive but it seems to me the couple mentioned above who are both young teachers cannot afford the +600K mortgage. They are definetely from the “I am special generation” by the letter they sent with their bid.

#38 MrHulot on 03.24.14 at 7:42 pm

Hi Garth,

Barry Ritholtz of Bloomberg must have had you in mind when he wrote this today in his column.

“Coming Market Crash: If you say a crash is coming every day for five years, when it finally comes, you get precisely zero credit for it. And if any of you doom mongers do try to take credit for calling the crash after getting it so wrong for so long, I promise the following: I will hunt you down, tie you in front of a 3D television, and run a 24/7 loop of squabbling billionaires on financial TV, CNN coverage of missing Malaysian aircraft, March Madness bracket color commentary and talking-head debates and, just for giggles, “Keeping Up With the Kardashians.”

I doubt there is a judge in America that would convict me of anything worse than cruelty to animals.

#39 Ripped on 03.24.14 at 7:44 pm

#124 Snowboid on 03.24.14 at 12:55 pm
#88 Ripped on 03.24.14 at 5:03 am…

What’s with all the tech people on this blog who worked in Texas for AT&T at $ 50 an hour?

Picasso, Ben, Truth Hammer, Airhead Princess, Ripped?

I bet you all rented in the same ‘extended-stay’ hotel too!
………………………………………………………………………

I’m also Piccaso, but I don’t know the other handles.

… and that Extended Stay in Dallas just in case you forgot or can’t find my post was $750 a month.

Yup… $750 a month and came with Cable TV , Internet and Swimming Pool for those 100F days.

Try and rent something in Alberta for $750 a month on that great $25 an hour wage.

It’s a total joke up here and I’m a born and bred Loonie.

It’s just I’ve had a chance to live and work on the other side of the fence. And the grass is a lot greener on the other side.

Trust me !!

#40 AfterTheHouseSold on 03.24.14 at 7:45 pm

#12 Keith
#22 Mike S

“Nor should anyone expect that…” Garth

Read the post again.

#41 Ralph CramdownBathurts on 03.24.14 at 7:47 pm

The Rhodes Avenue mantra in Toronto is “hey, at least we’re not Craven!”

#42 Observer on 03.24.14 at 7:49 pm

TO…..T-Owe….it’s off to work they go!

People fighting each other for the “privilege” of going
into more debt. Reminds me of those Boxing Day brawls.

#43 DreamingInTechniColour on 03.24.14 at 7:56 pm

Thank heaven for those who do not realize it is less expensive to tear a house down to get to a bare lot to build their new house on than to duke it out in a bidding war and pay way more than a property is worth.

#44 Smoking Man on 03.24.14 at 7:57 pm

I’ve have had enough of this winter. Not taking any chances May 24..weekend.

Just Book Vegas again…..

Weather is making me mental. Will we be dodging ice burges in July.

I’ve had enough….

#45 lawboy on 03.24.14 at 8:03 pm

I read that Star article. The amazing thing about almost all of the 10 house horny couples going batty for the ‘family oriented’ neighbourhood…they didn’t actually have any kids!

And other than the pair of teachers, I don’t like their chances of every having “children”. They might be able to afford one, but no more. Or even none. Not if they pay these house prices.

#46 mark on 03.24.14 at 8:06 pm

That Sun article is like one big Century 21 horror movie

https://www.youtube.com/watch?v=20n-cD8ERgs

#47 mark on 03.24.14 at 8:07 pm

Or Star, sorry http://projects.thestar.com/race-to-rhodes-ave/

#48 Ralph Cramdown on 03.24.14 at 8:08 pm

#42 DreamingInTechniColour — “Thank heaven for those who do not realize it is less expensive to tear a house down to get to a bare lot to build their new house on than to duke it out in a bidding war and pay way more than a property is worth.”

But if you’ve only got 5 or 10% to put down, surely nobody is going to give you a construction loan? And these bidders don’t strike me as able to carry two properties (or the lot + rent) while their house is being built.

#49 jan on 03.24.14 at 8:16 pm

#25 Timmy on 03.24.14 at 6:52 pm
You have been saying that for five years yet prices keep increasing. This is the first time you have admitted the lack of new land in big cities is causing prices to swell, yet you have never mentioned this before even though it has been the case for many years

Me thinks Garth is giving up on this whole crazy bubble theory,I sure have.
Also,Kevin O’leary today has also given up by saying:ITS JUST AMAZING,OVER 20 YEARS OF THIS BULL MARKET AND NO CORRECTION IN SITE,its just AMAZING.

#50 Nemesis on 03.24.14 at 8:17 pm

#MondayNightMadness #SpeculativeFiction #BadTeachers

Well, SaltyDogz I think it ‘s HighTime we encouraged SmokingMan’s WorstInstincts in the interests of ComicRelief…

Beginning with a lesson in SpeculativeFiction. Hint: The best stories always begin with a well thought out, “What if…?” – e.g. “What if SmokingMan were a teacher?”…

http://youtu.be/VihlsPKMh4U

Alternatively, from a NonFiction perspective, SmokingMan could well have written this [has he secretly taken to GhostWriting!?]:

[DissidentVoice] – Hoodwinked — Hook-Line-and-Sinker the School is Drowning

…”Someone like me, railing, rallying and reintroducing some sense of revolution and anarchy into the bones of youth, well, it is my death, my own obsolescence, since I fail to obey the masters of the mundane.

Young people today are clueless, and frightened, no gathering storm but a compliant flickering flame.”…

http://dissidentvoice.org/2014/03/hoodwinked-hook-line-and-sinker-the-school-is-drowning/

[NoteToSaltierDogz: Whatever you do, just don’t enter the SearchSequence: “Cameron Diaz, Bad Teacher (2011) *HD 1080p* ” into YouTube’s engine… Unless, of course, you have an IronConstitution and a very large HD monitor.]

#51 Pounding sand in Peachland on 03.24.14 at 8:24 pm

Come on Garth you’re the author……. #4 American on the Sidelines

#52 TrumpVu on 03.24.14 at 8:24 pm

Best advice my dad ever gave me was – keep your f’in mouth shut.

http://www.youtube.com/watch?v=hXmRJ7VrNss

Are you a Debbie Downer?

#53 LaLa on 03.24.14 at 8:31 pm

Buying a house it will not make them happy, that how it’s start, you blame everything around but change none. No wonder ppl like cheap alcohol, they drink to get drunk, lalalalalala, I wish I knew less

#54 sideline sitter on 03.24.14 at 8:34 pm

A wedding photo? God that’s pathetic.
I bought a commercial space with residential upstairs for $200-$300k less than a similar sized house, and will I don’t plan to live there, I could, and we’d be so far ahead of these indebted losers.

I’d rather rent than blow all my $$$ on a single asset, but I’m preaching to the choir…

#55 jan on 03.24.14 at 8:36 pm

After having lived 20+ years in this northern country I have come realize that this is a country divided.
Divided in every way shape and form.
Incomes,perceptions,opinions, ideals,cultures,backgrounds and so forth and so on.
Stats here are going to be meaningless forever as there is no unity or similarity among peoples of any kind in Canada.

#56 Ripped on 03.24.14 at 8:37 pm

#4 American on the Sidelines

Yup… up here they wait in line to throw 750K at half worn out 2 story house on a lot no wider then a sidewalk.

In Texas they were 1800 – 2200 sq ft bungalows stretched across acre size lots and going for $140K

#57 Daisy Mae on 03.24.14 at 8:37 pm

“The outfit has always been pro-business and a staunch defender of the status quo, and just proved it again with a paper by real estate bull economist Robert Wiebe.”

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

I wondered. Now I know. The article was penned by a realtor…who else?

#58 Vangrrl on 03.24.14 at 8:40 pm

Now that’s just cringe-worthy. What is the mentality of these people? ‘Look we are married so we deserve/ are entitled/ are more special’ than those who aren’t married? Completely pathetic.

#59 Ronaldo on 03.24.14 at 8:43 pm

#42 DreamingInTechniColour — “Thank heaven for those who do not realize it is less expensive to tear a house down to get to a bare lot to build their new house on than to duke it out in a bidding war and pay way more than a property is worth.”

When you pay 1.2 million for a tear down as some people are doing in Vancouver and rebuilding when they could buy one 3 doors down, newer model, already totally renovated for just over 900 thousand, guess who is making a better deal. Guess who will lose their shirt. If a plan is to buy to tear down and rebuild, you had better be getting one heck of a deal on the place you are buying. Those deals are few and far between in the likes of Vancouver and Toronto.

#60 dutch4505 on 03.24.14 at 8:44 pm

live on the us side and watch what is happening in the lower mainland of BC. my CDN brother in law was working some landscaping on a 4.8 million dollar house in Surrey that has been up for sale for over a year. was asked by the owner if he could cash the $500 check till next week. OMG….4.8 million dollar house and he is asking the help to hold a $500 check for a week! only one story but I have a feeling there are many more like this.

#61 TurnerNation on 03.24.14 at 8:51 pm

Today’s picture: I never trust anyone with black fingernails.

#62 jan on 03.24.14 at 8:57 pm

#57 Vangrrl on 03.24.14 at 8:40 pm
Now that’s just cringe-worthy. What is the mentality of these people? ‘Look we are married so we deserve/ are entitled/ are more special’ than those who aren’t married? Completely pathetic.

Exactly.
Evolution in motion.
That is, evolution of begging in motion.

#63 VanDammeCouver on 03.24.14 at 8:58 pm

Garth, why did you say the rest of the country is in for a far worse? Can you clarify?

#64 Roman on 03.24.14 at 9:00 pm

#18 Hopefully they won’t put restrictions on Mercedes, I do not want to loose my privilege.

#65 sheane wallace on 03.24.14 at 9:12 pm

The real fire will be at the G 20 summit starting on April 2 in London where China backed by Russia and BRICS will propose replacement of USD as reserve currency by IMF SRDs backed only partially by euro and dollar but also by Yuans, Rubbles, and commodities.

If SDRs backed by 25 % US dollar become the new reserve currency instead of the 64 % dollars as reserves in the world US is done.

Canada will survive exporting to Asia.

This is why we see the escalations in Urkaine, US is trying to scare Russia but in fact is digging it’s own grave.
Russia will not back up and the USD could be done.

I am really hoping they are smart enough to strike a deal.

http://www.thestandard.com.hk/breaking_news_detail.asp?id=13332

#66 Happy Renting on 03.24.14 at 9:13 pm

Just read the Star article. Says Kate and Alex bought a place but doesn’t disclose the amount of the bully bid. As long as they’re a few years into full-time work as public school teachers, they’re better set than most to make the payments on their expensive house.

The 639/689 Rhodes Ave houses looked ugly on the outside. The interior that was staged was quite lovely, but staging is just make-believe, unless there’s a chance you can buy some of the gorgeous furnishings.

#28 – I wonder if in 5-10 years the trendy news story will be about a generation of marriages ruined/families not formed because of financial stress from the stagnating economy, underemployment, unaffordable daycare, and monster home costs.

#67 Offers now including desperate couple photos?! on 03.24.14 at 9:17 pm

Wow. Just wow. Please seller, give us this house cause we love toronto so much and we’re including a lame pic of ourselves…. Hahaha!

Hilarious! And pathetic…..

#68 sheane wallace on 03.24.14 at 9:17 pm

run that through technical analysis,

#69 DocInWaitingRoom on 03.24.14 at 9:20 pm

Garth if they need to really have “it” let them pay for it.
With 40 year slavery and debt passed on to their kids too..

The amount of high end new gas guzzling suvs I see, and couples or single people with large lavish over done granite homes making 50k I have never seen since my birth here yet I only hear of people over extended with their benefits cut.

This will not wnd well

#70 TheCatFoodLady on 03.24.14 at 9:22 pm

Lordie… I’m trying to imagine myself walking into a car dealership frantically clutching a baby photo or some ‘action oriented’ shot of me to prove I ‘deserve’ the car. Or a ‘hawt shot’ of me in my wild youth to justify a snotty clerk selling me a dress.

House hornies, people… this is a THING you’re buying. You’re not trying to sell your lifestyle to adopt a puppy or a child. And several here are right – if I were one of the lucky sellers, I’d instruct my agent to take the highest offer – period. Unless it had bizarre conditions.

House hornies again – please listen before signing the certified cheque. You’re buying a thing – a collection of components which will require regular infusions of filthy lucre to keep it in decent shape. If you have the money, enjoy doing that kind of work yourself or enjoy dealing with contractors – fill your boots. Been there, done that & it CAN be fun… IF you have the funds.

Don’t buy if buying means you’re stuck at home staring at wall to wall hardwood, spit shining granite & envying those who can travel, add to investment portfolios or do other things. Is a house worth it if it prevents you from doing other things? For ME… no. Your mileage may vary.

As to bank products… sure they advertise most enticingly. Between the ad Garth showed yesterday & the way he wrote it up, I was almost ready to rip off my bodice, open & shake out my wallet & breathily gush: “Take it, take it ALL!” Banks are businesses like any other & they’ll as happily separate you from your money as will the nearest KIA dealer.

In Canada, we tend to ‘listen to authority’ a little too easily for our own good. It’s not rude to question, it’s smart. [email protected] probably has high school. She has several weeks of on the job training where the emphasis is pushing bank product. He/she does not have a fount of financial wisdom. Often, you’ll find they know less about certain investment strategies & products than do you. You must be your own fiduciary.

Learning isn’t that hard. The basic principles may not be sexy but they work.

At the end of the day, if you’re going to bed with fiscal fear & waking up with it – you’re doing something wrong. Listen to that ‘small inner voice’ – it’s your pile of loonies with a serious message.

#71 jan on 03.24.14 at 9:24 pm

Another scandal in Vancouver involving big severance pay for those crooks making $170,000 a year who were suppose to help the poor.
GOD.
I guess its fair to say I am now starting to hate this country.

https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CC0QqQIwAA&url=http%3A%2F%2Ffullcomment.nationalpost.com%2F2014%2F03%2F21%2Fbrian-hutchinson-scandal-that-left-b-c-ndp-mla-in-tears-and-repaying-34992-27-hasnt-played-itself-out-yet%2F&ei=udowU_7VFcruyQG5n4HIBg&usg=AFQjCNGSheSvOM7yHebiOtG409Wruc6Lbw&sig2=MXpqMzjyCEOfUc_Rpg7ppg&bvm=bv.63587204,d.aWM

#72 Nemesis on 03.24.14 at 9:24 pm

Alternatively, GoodTeachers can frequently accomplish miracles… and thereby alter the course of history:

http://youtu.be/nrOYmj3s57Q

[NoteToSideLineSitter/#53: Illustrated ‘BeggingLetters’ featuring wholesome narratives from young AspirantHomeOwners were a staple commodity in the arsenal of the American buyers’ {redacted}™ in the frenzy immediately preceding AmericanHousing’s ApexBigBust. Particularly in Seattle. No s**t. #StrangerThanFiction.]

#73 Andrew Woburn on 03.24.14 at 9:24 pm

George Soros,

from a speech he delivered in June 2010:

“I have developed a rudimentary theory of bubbles along these lines. Every bubble has two components: an underlying trend that prevails in reality and a misconception relating to that trend. When a positive feedback develops between the trend and the misconception, a boom-bust process is set in motion. The process is liable to be tested by negative feedback along the way, and if it is strong enough to survive these tests, both the trend and the misconception will be reinforced.”

#74 Doug, on my way back to London on 03.24.14 at 9:34 pm

So what’s going on with this bidding war frenzy? It looks to me like some smart people are cashing in by selling their house and taking generous profits while they still can. In the past I’ve asked why markets don’t act like an engine governor. This time they are. Imagine a fully loaded 4 trailer road train going down a steep 10% grade in low gear. Gravity forces the engine to go far above the speed where it redlines, so the driver makes full use of engine braking. The engine produces NO POWER AT ALL, but instead is frantically using compression and drag to absorb as much power as possible to prevent runaway speed. Similarly I figure with all these people frantically trying to take their profits in housing they, like the engine braking, will eventually clamp the price or even cause it to fall. I’m surprised that hasn’t happened yet. Did I hear someone say that truth is stranger than fiction?

#75 sheane wallace on 03.24.14 at 9:35 pm

I will support the US markets but the chances are slim.

#76 Freedom First on 03.24.14 at 9:35 pm

Garth, what an ominous ending to an ominous post today. Most unfortunate for many Bulls soon to be Steers it is the truth.

However, that is a lovely wedding picture of Mr. & Mrs. Bentover.

#77 sheane wallace on 03.24.14 at 9:39 pm

Now we understand why Strauss-Khan was frames.

#78 sheane wallace on 03.24.14 at 9:39 pm

framed

#79 Gab on 03.24.14 at 9:41 pm

I wanted to comment on “#4 American on the Sidelines” it was so well said and not enough people are saying it. I completely agree with his comment on the media and our low standards for beautiful houses. My beef is with the media and how they flip flop with their stories. One day they warn us of how much debt we have, and how slow our economy is growing, then they turnaround to announce studies from CREA on how prices are rising just to heat up the market. Personally I don’t go around bragging that I paid 20K more for a used car that needs bodywork. So why is a house any different? The inventory out there is horrendous and that includes condos. I too look outside the country to get a better perspective on what is going on and just like diseases we are not immune. I recall in 2009 the PM kept telling Canadians that the US is an isolated incident. We all know he was just telling us what we wanted to hear. The media also failed to report and worn us on what was going on in the US. Basically they missed it completely so be skeptical because the truth sometimes hurts.

#80 Mrs Riverview on 03.24.14 at 9:42 pm

So agree with #5, Victoria.

We are selling in May. Already hubby is getting phone calls and emails with sob stories, nice families who want us to sell below market because they are nice people.

Makes me so angry – I am a nice person – I give to charities and volunteer. BUT some negotiations are all about MONEY and the sob stories are just an irritant. Would these families donate even $1,000 to a food bank? Doubt it.

#81 shawn on 03.24.14 at 9:47 pm

What is Average?

Jan at 54 said:

Stats here are going to be meaningless forever as there is no unity or similarity among peoples of any kind in Canada.

******************************************
Correct, there are plenty of differences across people in Canada and also in the U.S. and most places.

The concept of an average income, an average house, average wealth, average intelligence, average Canadian values, average height and average weight are also pretty much useless.

Take a normal distribution curve of any population. Guess what the probability is of anyone (not just of you, but of ANYONE) being PRECISELY at the mean average value?

If you said zero, that is correct. (The area under a single point on a curve is zero, a line has no area)

So conclusions based on average are bunkum.

Also as we all know, 100% of people consider themselves above average in most regards…

Forget average, aim to actually be in the top 10%, or top 1% or top 0.1%…

#82 ole Doberman on 03.24.14 at 9:56 pm

Garth why cant we get records of who is buying these homes. I bet its all foreign wealth from Europe and Asia.

#83 Ret on 03.24.14 at 9:58 pm

Pre-approved by the bank for a huge mortgage loan backed by CMHC insurance no doubt.

They won’t own a house. A mortgage will own them.

When they get old and are poor because of the lifetime of servitude to the money lenders, the bank will offer them a reverse mortgage. At the end of their days, the bank will have both all of their money and their house.

Party on Canada!

#84 Waterloo Resident on 03.24.14 at 10:04 pm

People are stupid cattle even if there was a 20% crash in house prices next month, the Real Estate industry would come out with some statements saying that prices have gone UP 5%, and people would be happy once again and dancing in the streets. You see, people are too stupid and to loaded down with work to be able to think for themselves, that’s what you see these days.

Meanwhile the Chinese economy is slowing down rather quickly. There is going to be more and more defaults in China next month, all of which you will never here on the local press here.

#85 JL on 03.24.14 at 10:05 pm

Anyone thinking of moving to Calgary better plan on a fight on their hands to rent a place.

Our company just listed a modest 2+1 (2 up 1 down) bedroom home in a NW community, fairly close to downtown, nice area, a lot of new semi in-fills going in. House is nothing special, but its in fine condition and is well maintained. 1960 bungalow, original hardwood, small kitchen, small bedrooms.

We had been renting it for $1500 per month, tenants just gave notice they’re moving so I figured we would test out $1800. Literally have 8 emails so far (no idea how many calls yet, we’ll see in the morning when I’m in the office). People offering to send me email transfers to hold the property for them – sight unseen.

Garth argues that when this happens with buyers its irrational exuberance fuelled by unsustainably low rates and loose lending practices… So what’s the reason for rentals to be like this? Especially when I increased the rent 20% from last year and it looks like I could have increased 30%

When the pro housing crowd argues purchase prices are increasing because of fundamental factors and supply and demand they are derided. Well it looks like that is exactly what’s happening with rentals.

I don’t forecast prices, that’s Garth’s job, and he’s done it so well that he needs no competition. I just comment on what I see on the ground.

#86 saskatoon on 03.24.14 at 10:06 pm

the teacher couple plea is more akin to the great depression.

#87 stan collimore on 03.24.14 at 10:14 pm

#4 American on the Sidelines
#54 jan
………………………………
Agree with the comments, but it is not country divided but rather country brainwashed and brain-frozen.
Just look outside, it is -12 and is the third day of spring.

#88 Nemesis on 03.24.14 at 10:26 pm

@Ralph/#40

Once upon a time, in LotusLand, we used to say, “WhiteRock is never having to say you’re Surrey.”

It sho’nuff weren’t VeniceBeach…
But it was vastly superior to “Sorry”.

The other WhiteRock aphorism?

“WhiteRock? Home of the NewlyWed & the NearlyDead*.”

[*NoteToSaltyDogz: all to frequently the same thing.]

#89 Ralph Cramdown on 03.24.14 at 10:35 pm

#25 Timmy — “This is the first time you have admitted the lack of new land in big cities is causing prices to swell, yet you have never mentioned this before even though it has been the case for many years”

I’ve talked about it here. I especially like Paul Krugman’s thoughts on “Flatland and the Zoned Zone:”
http://www.nytimes.com/2005/08/08/opinion/08krugman.html

Price to income and price to rent ratios both take into account the scarcity of land. Why haven’t rents increased as much as sale prices? Why are people willing to pay a greater multiple of their income for houses?

There’s two big issues: Low current interest rates and Canada’s typical 5 year mortgage terms means people are buying on carrying costs in the first 5 years, where Americans typically lock in for 15 or 30; the whole amortization. Also, money illusion: People look at changes in nominal prices and ignore inflation. If you’re house poor but getting a 4% wage increase every year, you’ll soon grow out of it. At 2% increases, not so much.

#90 Popeye the Sailor Man on 03.24.14 at 10:38 pm

“Nor should anyone expect that, as in America, prices will plunge nationally by 32%, or by 70% in the bubbliest centres. Canadians are too invested and too horny. A price decline is inevitable, but it’s the long, slow slide after that which will do the most damage.”; Garth

Please Clarify Garth, I think I’m reading this wrong!

#91 Vanpuddle on 03.24.14 at 10:42 pm

So having lived in both T.O. and Van and presently not owning….I am thinking that the Vancouver smallest lot size for a SFH is 33 x 120 (Vancouver proper)…which is bigger than an average Toronto slice of pie. Both are expensive….but it’s the land you are after, not the POS house that needs $100,000 grand of renovations.

#92 Babblemaster on 03.24.14 at 10:53 pm

Garth, call it a RE bubble. Call it whatever. Regardless, your predictions of a price rollback the last several years have been wrong. Or, at least, very premature. Those that have listened to your seemingly prudent advice have missed out. I have also gave the same advice to stay away from the insanity. Many times I quoted you. I realize I look like an idiot for having predicted a TO RE correction. The fact is, it’s difficult to predict anything using logic when human beings are involved and I’ve learned my lesson. No more predictions for me.

#93 High Plains Drifter on 03.24.14 at 10:54 pm

I used to ask myself why are all these years of education being given free when if you were hungry, you would be made to sing for your supper. Well of course we were told it was pure altruism but one Physics teacher told us we would have spotters the rest of our lives winnowing the good and bad until way past 1984. Odd, he’s the only teach with a face left in my mind. It is a great day, on a late in life winnowing day meant to demolish you, you go to the bank with a fat real estate sale at 150% profit over 8 yrs. The scamsters have taken over, so practice spotting them.

#94 Snowboid on 03.24.14 at 10:54 pm

#32 Nemesis on 03.24.14 at 7:33 pm…

Meanwhile in the Valley of the Sun, AZ school administrators are fighting back against a powerful lobby intent on privatizing all schools in the state.

http://tinyurl.com/AZ-Private-Schools

#95 Ralph Cramdown on 03.24.14 at 10:55 pm

#64 sheane wallace — “The real fire will be at the G 20 summit starting on April 2 in London where China backed by Russia and BRICS will propose replacement of USD as reserve currency by IMF SRDs backed only partially by euro and dollar but also by Yuans, Rubbles, and commodities.”

Nope.

The US dollar’s status as the “global reserve currency” is strictly a de facto thing. Every central bank decides how much reserves to hold, and in what form. Here’s Canada’s:
http://www.bankofcanada.ca/rates/related/international-reserves/
To the extent that Canada thinks Yuan or “Rubbles” are a good reserve currency, it already holds them. Likewise with all other central banks, except those whose currencies are pegged. Hong Kong’s central bank reserves consist, I believe, entirely of US dollars.

So central bankers vote on their desired reserves every day, and the Yuan is already held in proportion to its esteem. Should you wish to tally how a formal vote on SDRs at the IMF would turn out, here’s some help:

http://en.wikipedia.org/wiki/International_Monetary_Fund#Voting_power

Get back to me when the Yuan starts going up relative to other currencies during times of crisis, as the US dollar now does. That’s the ultimate market expression of a reserve currency.

How much of YOUR wealth is in Yuan, or in investments denominated in Yuan?

#96 Snowboid on 03.24.14 at 10:55 pm

#38 Ripped on 03.24.14 at 7:44 pm…

Okay, maybe you aren’t TH/AP, but unless clones are a reality, methinks Ben rings a bell.

BTW, what brought you back? For $ 50 an hour AT&T couldn’t have sucked that bad!

#97 A Yank in BC on 03.24.14 at 11:04 pm

“The rest of the country is in for far worse.”

Yikes! I hope you will expand on what you meant by this tomorrow night.

#98 Ralph Cramdown on 03.24.14 at 11:06 pm

Incidentally, the idea of a global reserve currency backed by a basket of commodities was championed by none other than Benjamin Graham, Warren Buffett’s idol. The idea hasn’t gone anywhere, though.

#99 Kurt on 03.24.14 at 11:10 pm

#83 JL
It’s hang-over from the floods. Give it a couple of years, it’ll dissipate.

#100 Snowboid on 03.24.14 at 11:11 pm

#38 Ripped on 03.24.14 at 7:44 pm…

Spending the winters in Phoenix, I certainly agree there is a disconnect between Canadian wages and the cost-of-living.

We get a fair number of visiting relatives each winter, and the first-timers are blown away by low prices when we go shopping.

Sadly we are winding down to our last couple of weeks here, and will soon be back in the Okanagan – maybe this will be the year to swoop in like vultures on some RE carrion.

#101 MarkyMarksFunkyBunch on 03.24.14 at 11:22 pm

#83 JL

That’s brutal. Sorry to hear that renters are getting reamed. It’s been happening for years. From both ends.

#102 Cici on 03.24.14 at 11:24 pm

#4 American on the Sidelines
#78 Gab

I’m 100% with you guys on that one.

I’ll buy when they tear down those ugly 70s bungalows (granite lipstick and all, LOL). But the new homes aren’t any better, shoddy construction and tacky aesthetics.

I love all the heritage homes in the States. I’d love to run away to Maine, New Hampshire or Vermont…one day…soon ;-)

#103 AfterTheHouseSold on 03.24.14 at 11:27 pm

#5 Victoria
#79 Mrs Riverview
re: sob stories

Flashback to 1989 on cusp of great downturn of 1990:
Wow! Completely forgot that we had the same thing happen to us when we sold our place at the peak in 1989. Young couple, wife in tears, asked us to sell for $10,000 less. Market tanked 1 month later.

#104 Trojan House on 03.24.14 at 11:34 pm

Probably was their real estate agent’s idea for the SOB story. I’ve seen it where two offers were essentially the same and the offer went to the couple who had young kids or dogs or cats – something that the owners identified with. Seems greed and foolishness has taken over.

#105 West Vancouver on 03.24.14 at 11:35 pm

Billionaires don’t think it will end badly..

If ever in West Vancouver, check out the 2 newly built houses on the mountainside just west of the British Properties.

End of streets Langton Pl. and Marlowe Pl.

HAM like you’ve never seen it.

One house is 275 foot long….imported stone….

At least $50 Million….

Damn those interest rates and CMHC…lol

#106 Happity on 03.24.14 at 11:36 pm

Hey hey hey that usa economic renaissance is for real, productivity and profitability are so off the charts that daily US retail sales of gasoline are down from 60,000 in 2007 to 20,000 today.

#107 Financial Poodle on 03.24.14 at 11:36 pm

Thank GAWD you talked about the Conference Board report on this blog. I *just* read it prior to flipping over to your current blog, intending to quote some of the (obvious even to ME) patently false statements. I’m no financial guru, hence my nic, but even I can spot where they are stuck in the weeds with their thinking.
Perhaps you should reach out to them and offer some advice on their findings? Just sayin’.
Keep up the good work! I hope you are fully on the mend.

#108 betamax on 03.24.14 at 11:38 pm

#30 Chopper: “$600k in the Brampton area and he makes about 25/hr”

OMFG. At 48 with 2 kids and a financed minivan no less. If he’s lucky, he’ll be working till he’s 80. If not, his retirement will be toast. Hope he enjoys the 4 baths.

It seems most vehicles are financed these days. When I shop at Walmart, I see shoppers who mostly dress like they buy their clothes at Walmart: i.e. dressed down, because the clothes reflect their income. But the parking lot is full of vehicles that are incongruously average or better, because they’re mostly financed.

Everybody’s riding the debt pig to the retirement and no one wants to get off. Eventually, there’ll be an awful accounting.

#109 worried realtor on 03.24.14 at 11:44 pm

JL#83 that’s not what I am hearing from BIL who is a realtor in Calgary. Empty rentals and stalled sales hitting hard. It’s realtors like you who give the industry a bad name. Thankfully the population doesn’t know the extent of how shady and dishonest some people in the industry have become. You give honest realtors a bad name and many realtors are good hard working people. The realtors who post daily here are true garbage.

#110 wallflower on 03.24.14 at 11:45 pm

#4 American on the Sidelines on 03.24.14 at 5:58 pm
…beef…
Agree. Lived in Toronto 1960 through 1998. Then periphery. Traversing the border is like going from healthy to unhealthy. Infrastructure Toronto is a DISASTER. Everywhere.

#43 Smoking Man on 03.24.14 at 7:57 pm
Agree. I wanna slap this weather into summer. Pronto. Forget spring.

#111 Sam on 03.25.14 at 12:04 am

has anyone see the heading on torstar today ?

Housing war heats up in east end Toronto: Special report

#112 Andrew Woburn on 03.25.14 at 12:10 am

#69 TheCatFoodLady on 03.24.14 at 9:22 pm
You’re buying a thing – a collection of components which will require regular infusions of filthy lucre to keep it in decent shape.
=========================

It is unwise to argue with the wisdom of TheCatFoodLady, but I would differ with her to this extent. The hornies are not buying a thing or an investment. They are buying an identity. At the very least they will not be seen by their peers as low life “renters”.

Logic has no place here. Any woman who has thrashed her plastic to buy unwearable six-inch Manolo Blahnik heels that may well kill her one day will understand this.

#113 Nemesis on 03.25.14 at 12:14 am

@CatFoodLady/#[ahem]69….

“I was almost ready to rip off my bodice, open & shake out my… & breathily gush: “Take it, take it ALL!” .”…

You really must stop writing like that.

If it fuels my overactive ribald imagination… Just picture the CarnalFantasies [OrWorse!] you have awakened/engendered in SmokingMan!… Oh, the shame!

Time for a thematically apropos RetroMusicalInterlude:

http://youtu.be/iS0wuN_6wyw

#114 Basil Fawlty on 03.25.14 at 12:18 am

“First, housing starts numbers show there is little overbuilding. Second, cheap mortgage rates have allowed house prices to inflate while still making it possible for people to buy them.”

Little overbuilding? The bananas that wrote the above conveniently forget that interest rates are near or below the real rate of inflation and that CMHC has increased their loan book by $450B, on Harpers orders. There is no possible way that construction would be this high without these historically unique incentives. This is a massive misallocation of capital that should even be obvious to a realtor school dropout.

#115 joblo on 03.25.14 at 12:23 am

Wonder about the GDXJ?

Oh well Politics

#116 mystiqe on 03.25.14 at 12:42 am

After reading today’s blog, I can only say some of these sellers must be smiling all the way to the bank. Imagine getting 30% ($168,000) more over the asking price must feel like winning the lottery. It is hard to believe that some people are that stupid.

#117 NVrrr on 03.25.14 at 12:44 am

So, we are boomers, and have sold the SFH and moved into a condo. We’re feeling smug! Only expense is a small maintenance fee, and land taxes. Travelling is easy: lock the door and take skytrain to the airport.
No repairs, no lawn to cut, we watch the full time gardeners; no need to upgrade furniture or décor. We can walk to the beach, hike the north shore trails, golf, ski or sunbathe in Mexico. At one time we missed our home in the north and thought about replacing it. BUT who wants the drudgery of upkeep? Who wants the debt of mortgage payments. Interestingly there are several young families within this BIG complex too. I think some young ones are getting smart, beginning to live like Europeans or Asians. Forget the house and have a life.

#118 Happy Renting on 03.25.14 at 12:45 am

#69 TheCatFoodLady on 03.24.14 at 9:22 pm
Or a ‘hawt shot’ of me in my wild youth to justify a snotty clerk selling me a dress.
=======================
Stories of your wild youth, please! ;-)

—————-

#79 Mrs Riverview on 03.24.14 at 9:42 pm

Is there any way to prevent people from contacting you or your hubby directly? That sounds incredibly obnoxious. Maybe your agent could screen them out? The teacher couple in the blog post bid about $73k below the winning bid (the list price is just bait, they should know the $95k over list they offered isn’t some kind of gift from them to the seller.) For $73k difference couples had better have one hell of a wedding photo and letter if it’s going to win the day for them.

Hope your house sale goes well. Any comments on your experience that you share with us blog dogs would be interesting to hear.

#119 DON J on 03.25.14 at 12:58 am

#84 saskatoon on 03.24.14 at 10:06 pm the teacher couple plea is more akin to the great depression.

Yup… just days before the big drop in the market – when the shoe shine boy is giving stock advice from what he has heard on the street.

Lots of stay vacations in Victoria BC lately…’a small and seemingly insignificant factor/event’ TIPPING POINT – can’t you sense it folks.

#120 TakingResponsibility on 03.25.14 at 1:13 am

Emotion gone wild – that’s the market driver.

I don’t know what’s going on in Edmonton that there are bidding wars. Our neighbour’s house was active for two days and sold above asking. It’s as if there’s a booming economy but there really isn’t – nothing new.

I have to admit that I feel nonplussed as well as embarrassed about my reasonable – only sometimes dire – warnings to kids, friends, and coworkers.

#121 E in Cgy on 03.25.14 at 1:21 am

#83 JL on 03.24.14 at 10:05 pm
Calgary is crazy right now…

I’m currently renting in the Calgary market and we’ve been looking for a house to rent or buy since January. Detached homes in the NW are very expensive to rent. We pay $1750 (up from $1500 last year) and can’t find anything comparable for under $2000. Lots of ‘executive’ houses in the $2500-$3500 range, though.

We’ve also looked at buying in the $400k-$450 range and have witnessed several bidding wars (participated in 2). Most are going for $50k-$100k over asking. Some of these houses are absolutely disgusting and would require a full gutting. We won’t even consider bidding more than $10k over and have been shutout of everything that is half-decent.

My theory is that anyone who wants to rent a detached family house /w garage is going to spent $1800-$2800 per month. At that rate, you can easily afford the payments on a $450k – $600k house, so what’s the big deal to overpay by $50k-$100k.

We’ve been saving diligently for 8 years and now have our 20% down payment + a decent investment portfolio. Just recently, our landlord decided to roll the dice and let us renew for another year. We will likely keep saving and wait for things to calm down next year.

#122 Oceanside on 03.25.14 at 1:34 am

I can’t believe the Conference Board coming out with what they did today, one would think they should be looking at the fundamentals. Maybe we are getting ready for the 99 year, multi generational mortgages, so much fun, make $20 an hour and qualify for a 2 million dollar mortgage. Can’t see anything but a muddy slide downwards for housing in Canada. Here on Vancouver Island houses in the $400K range sell if they are any good but there are hardly any listings….

#123 Count Flipalot on 03.25.14 at 1:40 am

Imagine if Canadians could cash in their CPP, what would be the outcome ?………well just look across the pond.

From the Daily Mail : UK House prices set to soar by 30 per cent as savers raid pension funds to invest in property

http://www.dailymail.co.uk/news/article-2586692/House-prices-set-soar-30-savers-raid-pension-funds-invest-property.html

#124 straight six on 03.25.14 at 1:40 am

There is a fifth dimension beyond that which is known to man. It is a dimension as vast as space and as timeless as insanity. It is the middle ground between light and shadow, between science and superstition, and it lies between the pit of man’s fears and the summit of his knowledge. This is the dimension of imagination. It is an area which we call 416.

#125 Bilbo Bloggins on 03.25.14 at 3:10 am

If these are the people teaching our kids, God help us all.

#126 Jane24 on 03.25.14 at 3:34 am

It is just unbelievable now. The govt have left it too close to the election to rein anything back now. They will just have to let it run till next year.

What about the next generation, where will they live?

What a life paying back all that debt.

What happens when life happens, the baby, the lost job, the interest increase?

How do such folk sleep at night?

Life in Canada is expensive anyway. Either everyone makes $200,000 a year or they are only looking at the monthly and looking at it as some kind of investment rather than future debt.

I teach marketing at university and this will go down in my future text books as the ultimate bubble.

#127 World According To Garth on 03.25.14 at 4:19 am

Most excellent work as usual Garth.

Thank you for confirming what many of us private sector workers already know. Much of this house horniness is being held up by the taxpayer and the govt workers they employ as well as their ever increasing salaries and cola increases as well.

Meanwhile Grandma works at Chinamart till she dies and the private sector has not had an increase in wages (or cola) in 15 years.

FAIL

#128 bigM on 03.25.14 at 4:36 am

I just finished reading the Star article, can’t get my jaw off the floor.
How can people be this dumb ?

#129 World According To Garth on 03.25.14 at 4:47 am

It’s about taxes to keep govt big and powerful. Can’t say I didn’t tell you so.

http://armstrongeconomics.com/2014/03/24/the-real-conspiracy-the-imf-tax-agenda/

#130 housedoc on 03.25.14 at 7:18 am

CBC

Kevin OMF’ Leary returns to LOL from Shark Tank to say the numbers show the Toronto condo market is “rock solid”, without giving any numbers. We all know which numbers matter to O’Money.

And let’s not forget that Russia is a lawless wasteland and every single Canadian stands behind our own Dear Leader in dismissing will of the voters in Crimea, and his unquestioned support of the unelected Ukranian guy.

WTF?!

#131 T.O. Bubble Boy on 03.25.14 at 7:48 am

Meet the Jones… apparently they aren’t keeping up with anyone…

Now called the “HENRYs” (High Earners Not Yet Rich), “Faux Riche”, “High-Beta Rich”, or “hand-to-mouth” wealthy.

http://www.cnbc.com/id/101518918

A research paper says that there are 70 million “faux riche” households in the U.S… these families often own homes, cars, and boats, but spend virtually all of their paychecks.

I would just call them “upper-middle class”.

Difference is, the upper class is now the UPPER-UPPER class, and is way ahead of the tier below them.

#132 Smoking Man on 03.25.14 at 8:11 am

More MSM manipulation, you all remember those Iranians, fake passports on MH730…

And now no one on MSM talking about them.

Look at their legs and shoes…

I smell a rat. How convenient, not one rivet discovered, search called off, weather of course.

My prediction, due to storm, strong winds and currents we may never find the wreckage.

I know what happened. And will write a thesis on it..

And you basement dwellers think MSM will expose the CREA Number fudging…

Ha… Just buy a property

http://www.mirror.co.uk/news/world-news/missing-plane-search-cctv-footage-3274135

#133 crowdedelevatorfartz on 03.25.14 at 8:15 am

Hmmmmm, apparently “educated” people are just as stupid as the rest of us plebes……

#134 Steven on 03.25.14 at 8:45 am

I think we are also in the age of qualified renters as well as qualified home buyers.

Hello Steven and thank you for your inquiry.
This home is located at 48 Porritt Street. I am hoping to set up viewings in the next day or so.

If you could be so kind as to just answer the following prior to coming to view the home.

These questions give me more information about the suitability of this unit for you.

1. number of people needed accommodation and ages

2. type of employment and hours of work and length of employment with current employer

3. pets if any

4. number of and make/models of vehicles

5. smokers?
6. Length of time at present accommodations and
Reason for vacating present accommodations?
7. Date required for move in?

Thanks !

Bill, Sales Representative
Re/Max Realty Inc, Brokerage
Member of the Re/Max Hall of Fame

#135 Shawn on 03.25.14 at 9:07 am

A Few Bad Apples?

Apparently, 97% of Realtors are giving the whole group a bad name.

#136 Life's a supermartingale on 03.25.14 at 9:16 am

The problem with all these studies from the Conference Board of Canada, is that they are done largely by people with an MA and not a PhD. Robin Wiebe (who I believe you quoted as Robert Wiebe), the senior economist quoted in the press is case in point – he just has a Master’s degree.

There is a huge difference between a PhD in economics and a Master’s degree. PhDs care about the truth, usually in an academic setting, while the MAs become marketers for banks and think tanks.

As someone who works in asset pricing, let me explain what we can expect with Canadian house prices. First no one can predict a crash. It might happen, it might not. Second, there is no such thing as a bubble – as economists, we don’t even know how to define a “bubble”. What we do know is how time varying expected returns match to asset prices. There is a relationship between the long term dividend-price ratios and returns. In the case of houses, the relationship is between the rent-price ratio and returns. It is actually a very technical to establish this relationship – it holds across all asset classes.

What we find in Canada is that housing will see low total returns over the next decade or longer. That doesn’t mean a crash, although a crash does give low returns, it could just mean anaemic growth. It would be nice if economics had a crash-meter, but we don’t.

Asset prices are nearly impossible to predict. There is evidence in the data for return predictability over longer horizons (5+ years), but only in that is matches to dividend/rent-price ratios. Research suggests that this effect is connected to a time varying economy-wide risk premium, but research continues. MAs don’t have a clue how to understand or apply this research.

#137 Dupcheck on 03.25.14 at 9:21 am

Cardboard homes waiting to absorb mould like a stagnant sponge should not cost even 400K. Do you know how hard is to save that type of money? Ridiculous ….. you could live like royalty with that much money in a lot of parts of the world.

#138 Holy Crap Wheres the Tylenol on 03.25.14 at 9:29 am

#108 wallflower on 03.24.14 at 11:45 pm
#4 American on the Sidelines on 03.24.14 at 5:58 pm
…beef…
Agree. Lived in Toronto 1960 through 1998. Then periphery. Traversing the border is like going from healthy to unhealthy. Infrastructure Toronto is a DISASTER. Everywhere.
#43 Smoking Man on 03.24.14 at 7:57 pm
Agree. I wanna slap this weather into summer. Pronto. Forget spring.

____________________________________________

Agreed when you drive across the demarcation line from Mississauga to Etobicoke its like crossing the San Diego Tijuana border. Infrastructure is in disarray in this city. Councilors are more focused on fixing the downtown streets and planting trees to beautify the city. You can put a coat of paint on the house but if its got rot underneath sooner or later its going to collapse. Just waiting to see how they handle the rotating brownouts in the future when the old electrical grid crashes with all of the trendy 50 story highrise condos going in downtown. Hope a lot of these people can walk stairs!

#139 Smoking Man on 03.25.14 at 9:35 am

#128 housedoc on 03.25.14 at 7:18 amKevin OMF’ Leary returns to LOL from Shark Tank to say the numbers show the Toronto condo market is “rock solid”, without giving any numbers. We all know which numbers matter to O’Money.

And let’s not forget that Russia is a lawless wasteland and every single Canadian stands behind our own Dear Leader in dismissing will of the voters in Crimea, and his unquestioned support of the unelected Ukranian guy.

WTF?!

……….

Read between the lines….. O Leary has Canadian energy in his find… Now that Harpo has all but eliminated his competition to Alberta , that being Russia. And he’s almost got a free trade deal with Europe…

Cha Ching for the tar sands, Harpo, OLeary and Smoking Man.

Think like a conspiracy theorist, bet like one two.

#140 Holy Crap Wheres the Tylenol on 03.25.14 at 9:38 am

#43 Smoking Man on 03.24.14 at 7:57 pm
I’ve have had enough of this winter. Not taking any chances May 24..weekend.
Just Book Vegas again…..
Weather is making me mental. Will we be dodging ice burges in July.
I’ve had enough….
_____________________________________________

A rather astute observation Smoking Man, I would be willing to bet you are not alone. Anywhere hot or hotter than here will do. Have fun in Vegas, for me my wife wanted to go and see her homeland so were off to Ireland same weekend. You will be pulling slots and I will be sipping Irish Whiskey in a pub. Ta’ ‘Eire flora’lainn.

http://www.bbc.com/travel/feature/20130919-what-las-vegas-casinos-wont-tell-you-about-gambling

#141 Stevenson on 03.25.14 at 9:40 am

Prices keep inflating? I don’t understand why we are surprised. Was this not forecast by some of us already? But it doesn’t matter because it makes sense to rent financially.

Home prices in key areas of the cities will continue to inflate while it may or may not make sense to own.

This is a simple demand vs supply situation where regardless of how the home looks or condition its in the dirt value is the most important.

The ownership to build a detach home in the city is whats valuable not the actual house.

#142 Daisy Mae on 03.25.14 at 9:50 am

#12 Keith: “…70% drop in some cases? That doesn’t seem so plausible. I think you might be taking the bear case too far here.”

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

Maybe not. Was it ever realistic for crack houses in Vancouver to be asking $1.5 million?

#143 Holy Crap Wheres the Tylenol on 03.25.14 at 9:51 am

#137 Smoking Man on 03.25.14 at 9:35 am
#128 housedoc on 03.25.14 at 7:18 amKevin OMF’ Leary returns to LOL from Shark Tank to say the numbers show the Toronto condo market is “rock solid”, without giving any numbers. We all know which numbers matter to O’Money.

And let’s not forget that Russia is a lawless wasteland and every single Canadian stands behind our own Dear Leader in dismissing will of the voters in Crimea, and his unquestioned support of the unelected Ukranian guy.
WTF?!
……….
Read between the lines….. O Leary has Canadian energy in his find… Now that Harpo has all but eliminated his competition to Alberta , that being Russia. And he’s almost got a free trade deal with Europe…
Cha Ching for the tar sands, Harpo, OLeary and Smoking Man.
Think like a conspiracy theorist, bet like one two.

_____________________________________________

And why not eliminate your competition? Russia goes, everybody gets pissed at them, they get pissed back at the west, Russia says well screw you Europe were turning off your gas, oil and vodka. Ta da in steps Canada, well save your European asses again! Not only do we have wood, gold, diamonds, oil, gas, we make pretty good vodka as well. Now piss off Russia, keep your oil and gas, were back in charge and were going to start killing baby seals again too!
Canada needs to get some balls and build a dam pipeline with enough capacity out to the east coast. Just think how many jobs that will create?

http://www.capp.ca/canadaIndustry/oil/Pages/PipelineMap.aspx

#144 Holy Crap Wheres the Tylenol on 03.25.14 at 10:01 am

Kevin O’Learys mantra! I dont see the problem with this?

In January 2014, O’Leary remarked on his television show The Lang and O’Leary Exchange that the news that the world’s richest 85 people owned as much wealth as the bottom half of the global population was “fantastic news.”
It’s fantastic and this is a great thing because it inspires everybody, gets them motivation to look up to the one percent and say, ‘I want to become one of those people, I’m going to fight hard to get up to the top.’ This is fantastic news and of course I applaud it. What can be wrong with this? I celebrate capitalism. Don’t tell me that you want to redistribute wealth again, that’s never gonna happen … it’s a celebratory stat. … If you work hard, you might be stinking rich one day

#145 Penny Henny on 03.25.14 at 10:06 am

#138 Holy Crap Wheres the Tylenol on 03.25.14 at 9:29 am
#108 wallflower on 03.24.14 at 11:45 pm
#4 American on the Sidelines on 03.24.14 at 5:58 pm
…beef…
Agree. Lived in Toronto 1960 through 1998. Then periphery. Traversing the border is like going from healthy to unhealthy. Infrastructure Toronto is a DISASTER. Everywhere.
————————————————–
Agreed but it doesn’t stop at the city of Toronto borders. The whole GTA is becoming a hell hole.

#146 chris on 03.25.14 at 10:22 am

I don’t understand the draw to Toronto. It’s crazy. Why not get a nice place in Cambridge or Owen Sound if you want to be near the water. It makes no sense. What’s next bidding wars on used cars?

#147 Holy Crap Wheres the Tylenol on 03.25.14 at 10:25 am

#133 crowdedelevatorfartz on 03.25.14 at 8:15 am

Hmmmmm, apparently “educated” people are just as stupid as the rest of us plebes……

______________________________________________
Yes even though I have a degree and so do most of my family, friends and associates every once in a while I run into someone who is just stupid. I digress, perhaps I should say “not street smart” Have a associate who is a lawyer, very good at her job “corporate law” but can not fathom anything economically or make sound business decisions on investing. She literally is keeping money in her home, yes just sitting there stored away. In some ways you can educate brilliant people and empower them to be a impressive and intellectual as possible but regrettably you cannot educate, teach, or street smarts or common sense! It’s either in you or not!

#148 Happy Renting on 03.25.14 at 10:28 am

#122 straight six on 03.25.14 at 1:40 am

That was poetic, LOL.

#149 Grantmi on 03.25.14 at 10:34 am

New Home sales drops to new 5 month low in USA… oh oh!!

Sales of New U.S. Homes Fell in February to Five-Month Low – Bloomberg http://bloom.bg/1l0NB8S

#150 Daisy Mae on 03.25.14 at 10:42 am

#25 Timmy & #49 Jan:

WIKIPEDIA: A real estate bubble or property bubble (or housing bubble for residential markets) is a type of economic bubble that occurs periodically in local or global real estate markets. It can be identified through rapid increases in valuations of real property such as housing until they reach unsustainable levels and then decline.

Isn’t this exactly what’s currently happening?

“This is the first time you have admitted the lack of new land in big cities is causing prices to swell, yet you have never mentioned this before even though it has been the case for many years…”

What does this comment have to do with anything? What’s to admit? Old houses are torn down, new houses to up…so?

#151 Daisy Mae on 03.25.14 at 10:47 am

#49 Jan: “Also,Kevin O’leary today has also given up by saying:ITS JUST AMAZING,OVER 20 YEARS OF THIS BULL MARKET AND NO CORRECTION IN SITE,its just AMAZING.”

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

Amazing that the bubble has lasted this long. The correction is just around the corner. Yep. Amazing.

#152 airhead princess on 03.25.14 at 10:54 am

“What’s with all the tech people on this blog who worked in Texas for AT&T at $ 50 an hour?

Picasso, Ben, Truth Hammer, Airhead Princess, Ripped?

I bet you all rented in the same ‘extended-stay’ hotel too!
………………………………………………………………………

I’m also Piccaso, but I don’t know the other handles.

… and that Extended Stay in Dallas just in case you forgot or can’t find my post was $750 a month.

Yup… $750 a month and came with Cable TV , Internet and Swimming Pool for those 100F days.”

I have no idea what kind of crap hole and extended stay at $750 p/m would look like…….I know on none. The average here in Irving ( where all the biggest companies are located….are at least $100 per day for full service.

The new FACTA laws are in effect and only the best and brightest are here any more. The immigration rules changes for HB visas have become so rigid that thousands of tech workers were bounced.

TN visa holders can have no ‘dual intent’ to make residence here now. You can’t rent an apartment…get a DL…SI….buy a car…..make any show that your presence is permanent. The upside is that companies have to pay contractors through the nose to keep them here….so few qualify that there’s a huge shortage.

Canada’s Revenue Agency has got into the action and has started to threaten people with a departure tax forcing the deemed disposition of all Canadian assets if out of the country for too long. Everyone has to return to the home province every six months for at least 30 consecutive days in order not to lose provincial healthcare.

Bottom line is that it is increasingly difficult for companies to find a rare qualified worker and they are giving out fat ex-pat bonuses and bonuses in order to get people to stay through all the regulatory hassle .

But…my place does have a gorgeous pool…come with a free gym membership ….and its 80 F today and not a cloud in the sky.

#153 TheCatFoodLady on 03.25.14 at 11:02 am

#112 – AndrewWooburn:

I agree with you completely & apologize for not being more clear in my post. I was trying to convey the reality; that in spite of the glossy ad copy; the flogging of lifestyles consisting of unicorns pooping rainbows, when you buy a house you’re buying a thing that will need to be looked after.

It’s bad here too – not just in terms of properties for sale but rentals. To look at the ad copy for my rental property, you’re not looking to rent a small 2 bedroom unit; you’re renting a sanctuary, a place to unwind & enjoy a luxurious bubble bath, a peaceful retreat… ad nauseum.

What you’re renting is a 43+ year old building definitively on the shabby side. We’re a mere block or two from the worst area of the city. Every spring when I start working in my garden, I must first carefully rake through it & remove syringes, condoms & other nasty items. Police are here fairly often for domestics & other matters which I ignore.

This place is such a ‘sanctuary’, they’re offering $100/month off rent if you sign up by May 1st & that’s now carried over from March 1st.

You couldn’t pay me enough to send children to the local schools. That being said, our ‘kids’ are grown & gone & the location works well for us. We have no illusions about the area.

That’s the problem with sales pitches – they’re selling illusions that potential house purchasers are buying into. Your best bet checking out a neighbourhood is to look at the reality NOW. That’s unlikely to quickly change & is a better basis for decision making.

#154 Steven on 03.25.14 at 11:03 am

These grandiose property prices can not be supported on the basis of the $10.25 an hour employers want to pay or should I say are required by law to pay. I suspect they would pay less if allowed to do so.
I expect home sales and higher prices to come to an end soon followed by a collapse due lack of capacity to buy regardless of mortgage rates. You can not get blood out of a stone.

#155 cramar on 03.25.14 at 11:09 am

“Virtually no undeveloped land sits inside the big cities any longer, meaning most new builds are tear-downs priced in seven figures.”

————

I find it so mind boggling that 5 hours down the road and across the border, there is a city that is a galaxy away. Detroit! How can they be such polar opposites?

You want vacant lots? Detroit has plenty. Many thousands and its 10-year plan is to demolish another 70,000 abandoned homes. In a city covering 139 sq. miles, at least 20 sq. miles is vacant residential land!

Detroit is total bust! Toronto is total boom! Toronto will never become another Detroit, but surely you’d think the Kates and Alexes would clue in that the bubble cannot go on much longer. A return to reality is surely coming!

#156 Alberta_bound on 03.25.14 at 11:15 am

Kevin O’Leary was asked if he could give one piece of advice to young Canadians what would it be and he replied, don’t go into debt to own real estate R-E-N-T that’s your future.

#157 DM in C on 03.25.14 at 11:25 am

“What about the next generation, where will they live?”

They’ll be like my son and his girlfriend — living in a six bedroom house with 5 others, paying $2000/month split six ways. Ok to do at 20, not so much at 30. But hey, it’s cheaper than living at Mom & Dads. (we charge $400/month all in).

#158 Yo on 03.25.14 at 11:31 am

The problem with the property market is credit risk is being mis priced. For example, a colleague of mine just sold her house on a conditional offer. The buyer needs to get CHMC approval as they put only 12% down, but actually do have the min downpayment, but just want to see if they can get away with paying less. That was not the purpose of CHMC, allowing buyers to get away lowering their mortgage payments and banks making money on bad credit because the downside risk is hedged by CHMC (the tax payer). Its a very odd market right now. I assure you if there was no CHMC, or the thresholds were brought down to $500K from $1M, all these bidding wars would be worthless as the banks would never approve the final price for the mortgage to go through.

#159 karlhungus on 03.25.14 at 11:36 am

No crash in Edmonton. If you are waiting on the sidelines you will regret it come spring.

#160 Mr. Monday Night on 03.25.14 at 11:57 am

You have to wonder at what point the non-RE business community will wake up and realize what’s going on and put pressure on the Government to intervene.

If people are putting a higher percentage of their take-home towards real estate, that means there is less to spread around for other amenities. Don’t think that Galen Weston won’t notice if his sales figures start trending downward because people are buying groceries from the Dollar Store.

Before the inevitable correction, I expect other business sectors to start will get louder on this issue, or the Canadian divestment / job losses will continue.

#161 brainsail on 03.25.14 at 12:16 pm

“Time for boomers to sell and move on?”

http://www.cnbc.com/id/101487642

#162 Ray Skunk on 03.25.14 at 12:19 pm

#134 Steven –

I’d love to know why this is needed in advance, and what make/model of car is preferred if you’re a landlord. A nice shiny 2013 Beemer suggests success, but a massive monthly payment. A clapped out Ford Taurus may leak oil all over the driveway, but the tenant is more likely to have cash in the bank and the ability to pay.

——————————————

As for the O’Leary haters – yes, the guy is a penis, and that’s his shtick. He gets column inches and airplay by being controversial, “edgey” and crapping on people. He exudes this arrogance of starting from nothing, yet he never mentions the significant kick-off cash injection from his old man, and then lucking out at the time of the Dot Com bubble when big players (Mattel) were scooping up small companies with no care to the financials.

Take him for what he is – as I do – another performer who has created himself a niche to milk as much as possible from the CBC.

Otherwise, ignore him.
The truly wealthy and successful steer clear of the limelight.

#163 bob dog on 03.25.14 at 12:31 pm

Has the Harper regime broken ground on the new debtor prisons yet?

#164 Aj on 03.25.14 at 12:36 pm

Anyone else find it odd that someone in my age group (25-40) has perfeclt white hair??? Just saying. Furthermore, I think these two are showing whats scary about our education system – If they’re teaching your kids, you’d better watch out.

But here is what I don’t get: “Second, cheap mortgage rates have allowed house prices to inflate while still making it possible for people to buy them.”

….sooo this is his green flag to drastically over pay and probably raise personal debt…..is this guy (Wiebe) a moron? Or does he believe people won’t have to pay back the extra money due to inflatation?

#165 };-) aka Devil's Advocate on 03.25.14 at 12:38 pm

Musings from the Beach

2008 is now 5 1/2 years behind us. When you folks gonna realize the market has shifted and we are on the upside? If you hang in there long enough though you’ll be able to catch the next one (recession) without skipping a beat in your chicken little warnings. In the meantime there are those of us who choose to stay busy making hey while the sun’s shining.

SHIFT happens, always has and always will. Ride the tide.

Damned iPad

#166 airhead princess on 03.25.14 at 1:02 pm

Bill Gross says that rates will be ‘repressed’ for at least another ten years.

http://business.financialpost.com/2014/03/25/baby-boomers-struggle-to-retire-in-the-financial-repression-decade/

Governments are borrowing massive amounts at artificial rates to pay for their cronies in the ‘tax and spend’ circles. Savers are being forced into poverty while borrowers get rich…..quite a turnaround from the last 300 years of western economy….eh?

At the rate that real estate is inflating……only the elite civil service with automatic raises and indexed pensions will keep up. ….everyone else is already suffering. Better buy now….or be priced out by the entitled class.

#167 HD on 03.25.14 at 1:05 pm

@ #69 TheCatFoodLady on 03.24.14 at 9:22 pm

Wow! Killa post.

Beautifully said!

Best,

HD

#168 World Traveller on 03.25.14 at 1:12 pm

A letter and wedding photos to prove you are worthy enough to buy a house? What is this? The Hunger Games?

#169 devore on 03.25.14 at 1:13 pm

#134 Steven

I think we are also in the age of qualified renters as well as qualified home buyers.

These are on standard rental forms around here, released by the RTO. Everyone is always qualified, even if it is not strictly legal.

#170 Republic_of_Western_Canada on 03.25.14 at 1:17 pm

#165 };-) aka Devil’s Advocate on 03.25.14 at 12:38 pm

Musings from the Beach

2008 is now 5 1/2 years behind us. When you folks gonna realize the market has shifted and we are on the upside? […]

Dude, when are you gonna realize the fundamentals are so whacked out, that you won’t get any more steers on the train regardless how much anybody pushes?

If the choice for the average fool is to have any sort of job in larger centers and work your guts out just to pay living costs, vs go elsewhere and scratch out a living, better to stay elsewhere. At least you won’t die tired.

#171 [email protected] on 03.25.14 at 1:19 pm

This current post is inaccurate. In Calgary there are certainly those that want a really nice place, however that is not the norm. Simply having a place, rented or owned is the dilemma. There are bidding wars because there simply arent enough places to go around. Many people dont want to rent because they will likely live in Calgary for at least 20 more years and dont want to pay rent that long. This has zero to do with some arbitrary fantasy of having a really nice place, because most cannot afford that in Calgary. What should be $200K is likely $450K. Small kitchen, small backyard, 5-8 feet between houses, decent appliances, 2000 sq feet. What $450K in Houston Texas would buy would likely be $1 million in Calgary, although the property taxes there are much higher and the risk of insect and mold infestation there are dramatically higher.

People are much better off not wasting their time dreaming about fantasy land: Turn off the shows about people living in Hawaii/overseas, turn off the shows and ideas about winning the lotto, instead look right in front and understand why they do everything they do each day. Likely most people cannot or will not answer why they do things because they dont know. They are really no different from zombies. And therein lies the inherent problem of modern society, a ship of fools. I do not worry about things I cannot changes and instead I focus each day on doing everything to the maximal strength rather than worrying about all the things I do not have because when I am dead what will matter is the ideas and skills gained not how many toys I have accumulated and all the material nonsense. But to the majority these ideas are just to be ignored because the majority dont give a f*&k.

#172 Mr. Monday Night on 03.25.14 at 1:20 pm

};-) aka Devil’s Advocate on 03.25.14 at 12:38 pm

“…the market has shifted and we are on the upside.”

———————————————

1. Are you talking Canada or the U.S.?
2. If Canada, are you being sarcastic?
3. If not being sarcastic, tell us how we are on the upside. Is there a massive influx of manufacturing jobs coming that we don’t know about? Are salaries going to take a big jump so everyone can afford inflated mortgages just because?

I see little logic here, just snippets of catchphrases.

#173 sheane_wallace on 03.25.14 at 1:30 pm

95 Ralph Cramdown
—————————————
It is much more complicated than you are trying to present it. Reserve currency status is manifested in different forms, the most significant being the petrodollar/read about history and Kissinger.

It does matter big time which currency is the reserve currency and the dollar is not de-facto reserve currency but reserve currency as of an agreement, actually two agreements: Bretton Woods and the petrodollar agreement.

You need dollars to buy oil and commodities, this is it, once this changes there would consequences.

Not so much for Canada but for US.

BRICS has been pushing steadily for bilateral trade agreements in their own currencies for a reason.

SDRs are something that has been agreed upon by G20 and is coming.

I have significant exposure to BRICS ETFs and Europe, basically putting my money where my mouth is.

#174 sheane_wallace on 03.25.14 at 1:32 pm

If one thinks that Russians and Chinese are stupid by threatening to dump and actually dumping US treasuries and dollars think twice.

There is a reason these countries have been empires for centuries.

#175 sheane_wallace on 03.25.14 at 1:35 pm

read this

http://brettonwoods.org/document/bwc-top-cabinet-and-national-security-officials-letter-on-imf

#176 Republic_of_Western_Canada on 03.25.14 at 1:38 pm

#156 DM in C on 03.25.14 at 11:25 am

“What about the next generation, where will they live?”

They’ll be like my son and his girlfriend — living in a six bedroom house with 5 others, paying $2000/month split six ways.

That’s really the best way to live, and has been known and very popular since the 1960’s. That’s where you develop all sorts of friendships and relationships, and have a great support base to live from. Culture and personal growth are the hallmarks of it.

That contrasts with a more recent pathetic, deliberately divided, segregated money-grubbing consumptive ‘nuclear family’ arrangement, oriented to squeeze out screaming little wretches while racking your debt up and your IQ down.

The conditioned propensity to commit overpopulation with all its related socially negative and segregated behavior is the root cause for detached housing bubbles and over-consumption of domestic junk for the last couple of decades.

Hopefully it becomes (and stays) more popular again to live 5-up in a 6-bdrm house.

#177 DM in C on 03.25.14 at 1:41 pm

“I see little logic here, just snippets of catchphrases.”

That’s DA in a nutshell. Wait til he starts insulting everyone here and calling us ‘pups and poodles’.

#178 TurnerNation on 03.25.14 at 1:50 pm

#163 bob dog on 03.25.14 at 12:31 pm

Yes. And for enemies of the Party, leftists, trade unionists, clergy, womens’ righters, professors.

http://www.thestar.com/news/gta/2013/03/06/etobicoke_superjail_sits_empty_because_province_cant_staff_it_union_says.html


A new $622-million correctional centre in Etobicoke, the largest of its kind in Ontario, sits empty because the province is scrambling to find enough corrections officers to staff it, the Ontario Public Service Employees Union says.

“They got this new building sitting there empty because they don’t have the money to staff it properly,” said Dan Sidsworth, chair of OPSEU’s corrections unit.

Meanwhile, the cost to taxpayers is in the millions to pay the mortgage and to heat and keep the lights on in the sprawling Toronto South Detention Centre that will house almost 2,000 inmates, OPSEU says. The centre, built in two stages, was completed last September.”

#179 Pope Ice Cold Snugglebums the 666ie (aka Nosty) on 03.25.14 at 1:58 pm

NO PROOF! Simply amazing how deaf, dumb, stupid and blind sheeple are when a govt. official, standing in front of the cameras, speaking in low, hushed tones says what everyone believes is gospel truth, but there is a vast chasm between knowing and believing. Then further incidents, worldwide take sheeple’s attention spans away, puts them on another bunch of horsefeathers shouting their meaningless and futile opinions, all the while ignoring what is happening in the here and now.

So for you, SMan and a few others — these came over last night, but I was too busy sleeping to be of any use. Scroll down the second one, and see what the percentages are.

BTW — “Russia doesn’t need to seize anything. Eastern Ukraine is going to split away from the coup d’etat government in Kiev and plop into Russia’s hands without a single shot being fired.” wrh.com. These are the Americans who put everything in place for TPTB.

#180 Republic_of_Western_Canada on 03.25.14 at 2:04 pm

#146 Holy Crap Wheres the Tylenol on 03.25.14 at 10:25 am

#133 crowdedelevatorfartz on 03.25.14 at 8:15 am
[…]regrettably you cannot educate, teach, or street smarts or common sense! It’s either in you or not!

Not true. That’s mostly just environmental conditioning.

Common sense grows by having a rich diverse environment to develop in, and maybe taking a few painful but non-fatal hits along the way.

Lack of common sense can either result from being stuck at the end of wrench in the same plant doing the same thing the same way all your life, or being stuck behind a desk and TV in suburbia all your life.

#181 };-) aka Devil' Advocate on 03.25.14 at 2:05 pm

#170 Republic_of_Western_Canada

Yes, you are correct, the system is wacked out… but only if you are stuck on the old economic paradigms. This is a new version of that unsustainable economic system. Yes you heard me “unsustainable” economic system. It will break, eventually, but not likely in your, my, our children’s or grandchildren’s. lifetimes. The powers that be will keep “bubble (pun intended) gumming” it together for as long as they can. They achieved what we all thought impossible in 2008 and learned some valuable lessons in doing so. So I’m pretty sure their game ain’t near over yet. Sooner you take up this game and play by its rules the better off you’ll be. Don’t fret you don’t have to sell your soul, but, to survive, you better start observing what is and isn’t reality my friend.

In the meantime people; ride the tide or wait for the next wave, although this one looks to me like it has some serious lift in it. Wait too long and it’ll be gone before you notice though and you’ll have fulfilled your personal doom and gloom prophecy not even noticing what you missed as we head into the next inevitable recession likely to hit about 4 to 6 years from now };-)

SHIFT happens.

#172 Mr. Monday Night

DITTO

#182 None on 03.25.14 at 2:20 pm

#175 Republic_of_Western_Canada on 03.25.14 at 1:38 pm
That contrasts with a more recent pathetic, deliberately divided, segregated money-grubbing consumptive ‘nuclear family’ arrangement, oriented to squeeze out screaming little wretches while racking your debt up and your IQ down.

========

I get it, some people (esp you) don’t like kids. However, I’m always shocked at the vitriol of the kid-hate here. Don’t you people remember you used to be kids too?

#183 None on 03.25.14 at 2:22 pm

#166 airhead princess on 03.25.14 at 1:02 pm
At the rate that real estate is inflating……only the elite civil service with automatic raises and indexed pensions will keep up. ….everyone else is already suffering. Better buy now….or be priced out by the entitled class.

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

Phew, for half a second I thought you were not going to relate that article to your hatred of civil servants. Thankfully, I was not disappointed. God, what happened to you in those few years of front-line service that made you so angry?

#184 happity on 03.25.14 at 2:25 pm

Bank of Canada to investigate Cdor, which affects basically $11 trillion.

The libor scandal equated to $300 trillion manipulated, but don’t worry, BoC says it it’s “less likely”.

It’s different here… but smells like ABCP…

It took them this long to look into this?

#185 };-) aka Devil' Advocate on 03.25.14 at 2:29 pm

#172 Mr. Monday Night

The old rules don’t apply anymore. The transformation we are undergoing today is as significant as that when we changed from a Hunter Gatherer society to that of an Agrarian society. Hunters and Gartherers couldn’t produce nearly as much as Farmers. And then it was the industrial revolution. In this current SHIFT we are outsourcing. Job losses are not due to domestic tariffs or fiscal and/or monetary policy. It’s a transformation to the information/technology age and Bill Gates and Steven Jobs were merely early pioneers. Hang on ’cause this one’s gonna really shake up those old paradigms. This one, I’m pretty sure, will be the last one and a timely at that for what it’s bringing to the table that will be of emmense benefit to us as we enter the New Age. Allas neither you nor I nor our children will be around to see that one happen. I am quite sure we are on a good path though and each day brings promise despite the too apparent overwhelming concerns. Just do your best. Play this game so you can help make it better. Don’t give up for to do so will cause you to lose and in so doing you will be of no good to that better social order you seek.

Maybe our grandchildren };-)

#186 Daisy Mae on 03.25.14 at 2:48 pm

#126 Jane24: “It is just unbelievable now. The govt have left it too close to the election to rein anything back now. They will just have to let it run till next year.”

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

I agree. It would appear the feds’ plan is to continue to encourage this stupidity until after the election in 2015…..because it’s too late now to reverse this trend.

Did a poster just mention Harper increased CMHC insurance ceiling by $450b?

#187 Daisy Mae on 03.25.14 at 2:52 pm

Nary a word from Garth…

I guess he’s reading these posts relaxing with his leg propped up…just shaking his head. LOL

I heard that. Was out jogging. — Garth

#188 };-) aka Devil's Advocate on 03.25.14 at 3:14 pm

Damned IPad

#189 Ronaldo on 03.25.14 at 3:17 pm

#142 Daisy Mae –

”Maybe not. Was it ever realistic for crack houses in Vancouver to be asking $1.5 million?”

Exactly, a 70% drop on these crack shacks would bring the value of the lot down to $450,000 which imo is still too high. Most of these are not worth renovating and the cost to tear down and rebuild a similar house on the lot costs more than buying an existing one that has been totally renovated. There are many examples of this to be found in Vancouver since CMHC no longer insures houses over a million. A couple I know had to get an appraisal for a remortgage on a place they bought 5 years ago for around $800,000. They asked him if it would be worth it to renovate the place which is a 1920s two that has had little done to it and not a well built place to start with. He basically told them the house had no value and it would need a minimum of $300,000 to renovate and they would still have an old house. He told them it really was only worth lot value. So they basically have gained zero in the time they’ve had it. I suspect there are many like this in the BPOE.

#190 Renter's Revenge! on 03.25.14 at 3:20 pm

“Toronto will never become another Detroit.” – #154 Cramar

At its peak in the 1950’s, when its population was more than twice what it is today, probably no one there could have imagined Detroit being in the state it is in now.

Canada is a younger country than the US with fewer large cities. Maybe nothing on the scale of Detroit’s decline has happened here yet, but who’s to say it couldn’t happen?

It just goes to show that even investing in land isn’t sure thing, despite the fact that “they ain’t makin’ more of it”.

Garth preaches diversification because there are clearly never any guarantees in life.

#191 };-) aka Devil's Advocate on 03.25.14 at 3:22 pm

Apparently Mexican internet services have not kept pace with the growth in personal electronic devices. That may not seem significant at first glance but think about it…

Remember just a few years back we’d check into an Internet Cafe to get online? SHIFT happens };-) before that… ???

Put a deal together while dipping my toes in the Pacific. Can you spell “Game Changer” .

#192 Ralph Cramdown on 03.25.14 at 3:34 pm

#173 sheane_wallace — “You need dollars to buy oil and commodities, this is it, once this changes there would consequences.”

I don’t know what makes you think that. If you buy oil on a commodity exchange, settlement is in US dollars. But most crude oil consumers buy privately from producers or middlemen, and can settle in any mutually agreeable thing, since it’s a private contract. Ditto with any other commodity.

Let’s look at this another way. China’s currency is not freely convertible, and it does not float with respect to other world currencies. It is backed by the full faith and credit of a government of kleptocrats which is reviled by many of its people, but which remains in power with the help of the world’s most extensive state censorship network, and a willingness to use police, army and courts against dissenters. It is currently in the midst of a bit of a building boom, and it is apparent that the government goes so far as to decide which banks and debtor business will be allowed to fail, and which won’t. If you were a central banker of a large economy and China asked you to consider the Yuan a major reserve currency, wouldn’t your answer be a diplomatic version of “let it float for ten years, freely convertible, and we’ll see how good you are at managing it”?

Alternatively get into a taxi in any large city anywhere outside China, and offer to pay with Yuan. He’ll probably drive you to the local currency exchange. Offer a US bill, and he’ll likely accommodate.

I understand completely why China and others would like to see the role of the US dollar reduced in favour of the Yuan. But I don’t understand why you think other large economies would agree.

#193 Holy Crap Wheres The Tylenol on 03.25.14 at 3:36 pm

#178 Pope Ice Cold Snugglebums the 666ie (aka Nosty) on 03.25.14 at 1:58 pm
NO PROOF! Simply amazing how deaf, dumb, stupid and blind sheeple are when a govt. official, standing in front of the cameras, speaking in low, hushed tones says what everyone believes is gospel truth, but there is a vast chasm between knowing and believing. Then further incidents, worldwide take sheeple’s attention spans away, puts them on another bunch of horsefeathers shouting their meaningless and futile opinions, all the while ignoring what is happening in the here and now.

So for you, SMan and a few others — these came over last night, but I was too busy sleeping to be of any use. Scroll down the second one, and see what the percentages are.
http://beforeitsnews.com/conspiracy-theories/2014/03/flight-370-largest-conspiracy-since-911-2461140.html

http://philosophers-stone.co.uk/wordpress/2014/03/youtube-investigator-flight-370-landed-at-diego-garcia-military-base-plane-and-passengers-then-put-in-a-faraday-style-hangar/

____________________________________________

So disappointing that there are no alien abduction theory’s out there with mass anal probing!
Oh well back to the National Enquirer for the real news.

#194 Holy Crap Wheres The Tylenol on 03.25.14 at 3:48 pm

#179 Republic_of_Western_Canada on 03.25.14 at 2:04 pm
#146 Holy Crap Wheres the Tylenol on 03.25.14 at 10:25 am
#133 crowdedelevatorfartz on 03.25.14 at 8:15 am
[…]regrettably you cannot educate, teach, or street smarts or common sense! It’s either in you or not!
____________________________________________
Not true. That’s mostly just environmental conditioning.
Common sense grows by having a rich diverse environment to develop in, and maybe taking a few painful but non-fatal hits along the way.
Lack of common sense can either result from being stuck at the end of wrench in the same plant doing the same thing the same way all your life, or being stuck behind a desk and TV in suburbia all your life.
_____________________________________________

Perhaps you are partially correct I will agree but I have run into many that have come from ideal situations in their family life and their vocational life that just can’t function. I agree parental and environmental influence can make or break some when it comes to common sense. Monkey see, monkey do! However I have associates that have traversed through harshly adverse conditions and horrific personal lives that are among the smartest most business savvy and street-smart people I have ever met. Their environment was at best a living hell. Anyway that’s my theory on it!
Cheers!

#195 Seane Wallace on 03.25.14 at 3:54 pm

191 Ralph Cramdown
————————
yuan is backed by the biggest foreign currency reserve, by the largest exporting economy in the world and by gold, China is importing over 2000 metric tons of gold per year + retains all the domestic production + buys foreign resource producing companies.

I am not advocating for the Yuan though, the future will be called SDR issued by IMF.

Explain exactly how the yuan is backed by gold. — Garth

#196 Seane Wallace on 03.25.14 at 3:59 pm

BTW China + Russia combined are absolutely self-sustaining economies, if you add Brazil and India, it becomes scary.

#197 Burt Sanders on 03.25.14 at 4:53 pm

Does anyone know any good burgers joints in the east end of Toronto?

#198 Smoking Man on 03.25.14 at 4:54 pm

#197 Seane Wallace on 03.25.14 at 3:59 pm

Who cares, we still got USA and soon to have Europe for oil and gas.

Fat Bastard played a nice hand chirping Putin.

I still like Putin more though..

#199 jan on 03.25.14 at 5:03 pm

#124 straight six on 03.25.14 at 1:40 am
There is a fifth dimension beyond that which is known to man. It is a dimension as vast as space and as timeless as insanity. It is the middle ground between light and shadow, between science and superstition, and it lies between the pit of man’s fears and the summit of his knowledge. This is the dimension of imagination. It is an area which we call 416.

Hahahaha….good one
and 604…and 403……and on and on ……..

#200 reasonfirst on 03.25.14 at 5:18 pm

I think DA has truly lost it.

#201 jan on 03.25.14 at 5:20 pm

PLEASE UNDERSTAND.
Its is time to start build rental properties for the less privileged people.
How much plainer do i have to make it.
The alternative you ask???,well.
We will have a new class of citizens soon, the kind that will require government subsidy just to allow people to afford rent due to skyrocketing re prices couple with greedy/stupid landlords.
This government is beyond retared.
We have seemingly the largest,richest country in the world yet our dipshit government FAILED to diversify our economy away from housing and resources.
Harper btw strikes as the ultimate concrete-head.
Oh Canaduh……….

#202 Vangrrl on 03.25.14 at 5:25 pm

#177: Very well put.
#183: If the truth hurts your sensibilities, take out the part about kids. A lot of truth to what he says.

#203 Vamanos Pest on 03.25.14 at 5:45 pm

Sorry Garth, but I no longer believe a long slow slide is possible. This ends in crash (30% peak to trough as a national average. When the only things holding it together are sentiment and interest rates, it’s only a matter of time. Disaster is imminent. 70% home ownership rates, 17% of GDP in construction? There’s no way a so called ‘slow slide’ is sustainable. It will snowball. It’s too late. Soon the only question left will be “where’s the bottom?”, and it will be nowhere in sight.

And we have only ourselves to blame. This hubris will have a reckoning.

#204 Willy2 on 03.25.14 at 5:53 pm

Chinese buyers in Hong Kong seems to be in panic
http://www.reuters.com/article/2014/03/19/us-hongkong-property-chinese-idUSBREA2I23Q20140319

#205 Victor V on 03.25.14 at 5:57 pm

6 Signs Canada’s Housing Market Is a Bubble

http://www.fool.ca/2014/03/25/6-signs-canadas-housing-market-is-a-bubble/?source=c75yhocs0040001

#206 robert james on 03.25.14 at 6:31 pm

Chinese are getting jittery.. http://www.zerohedge.com/news/2014-03-25/what-bank-run-china-looks-hundreds-rush-banks-following-solvency-rumors

#207 Doug in Dallas, on way back to London on 03.25.14 at 7:15 pm

So what happened with those sellers in the GTA who got a price considerably above asking? They got a call, letter, or visit from the OLGC, or Ontario Lottery and Gaming Corporation, informing them they won the lottery and should come in and claim their prize. Similarly, if YOU have one of these grossly overpriced houses, don’t wait for the OLGC to contact you (remember, they’re a bureaucratic government outfit) but rather sell the house and claim your prize NOW!

#208 DR on 03.25.14 at 11:03 pm

Five bidding war losses?
Psssht….rookies.

#209 Follow the Money on 03.28.14 at 10:57 am

Last……..:-)