Soggy

SWIM modified

So, both sales and listings tumbled last month in Vancouver. Compared to July, sales fell almost 10%. The number of new listings dropped by 20%, and overall there are 8% fewer houses for sale in urban 604 than a year ago. Does that sound like a hot market?

In Testo City (a.k.a. Calgary) sales of single-family detached McMansions dropped year/year in August for the second month running – off another 2.4%. Meanwhile prices rose. The average is now $545,238, up close to five-and-a-half per cent in a year, and it’s starting to hurt. “This is all coming down to affordability,” says the local cartel’s economist. Does this sound like a healthy market?

In the next day or two Toronto’s realtors will release their stats, after the usual secret revisions. Unless something dramatic happened in the last two weeks, you can expect detached houses in the crucial Republic of 416 to be 16% less costly than in the Spring. The seasonal decline this year has been twice the norm, with listings also on the slide. Does this sound different?

Al wrote me yesterday, and I thought you’d be interested in his observations. “When prices crashed in the late 80’s we bought a power of sale townhouse for $124,000, renovated it, and sold it a few years later into a stagnant market for $116,000.  (Tell the Hipsters today that you lost money in real estate and their eyes glaze over… they simply don’t want to hear it….)

“We have now sold our second place in the country, about an hour and a half outside the GTA, and during the process talked to some other sellers in the area.  Here are my observations on that sale, and market outside of the GTA, (strictly anecdotal, but I have been observing real estate for many years…)

  • Outside of the GTA, it appears we are already well into a buyer’s market.  There are many, many more listings than buyers.  Many properties that I have observed have been reduced in price by 5 – 15%, or removed from the listings, then re-listed at a lower price.  I assume they are re-listed so as not to have to show that they are being reduced in price.
  • In Guelph, Cobourg, areas of Belleville and Prince Edward county I have watched many listings that have been active for over 1 year, most of the listings I have followed have dropped in price over this time period.
  • In Victoria, BC, an area we are considering moving to, I have noted many properties sitting for 6 months or more, and then re-listed at a reduced rate.

“While there may still be a few bidding wars in urban Toronto there is definitely stagnation around the edges.”

You bet. And beyond that. Detached home sales are down in Montreal, the second-biggest market in the country. I’ve told you how dismal things are in Nova Scotia, with more than a dozen Halifax sellers for every buyer. Perfectly fab houses in clubby olde Oakville have sat on the market now for two years. In Edmonton August was a mess. Single family sales down 15.4%, condo sales off 20.8% and attached home sales lower by 12%. In Regina, house prices are down 6.6%, while days-on-market have bloated 31%.

Well, you get the picture. Here we are with 2.99% fixed-rate long mortgages, five full years after the financial crash, and the Number One fav investment asset of Canadians – residential real estate – is showing some serious cracks. This also comes after non-stop house-humping by the mainstream media and the greedy realtor tactics this pathetic blog loves to find when it turns over a few rocks.

Your friends, neighbours, misguided adult children, employees and confused spouse are now fully invested in this meme of an eternal bull housing market. Together we have amassed $1.2 trillion in mortgage debt. We’ve achieved a 70% home ownership rate. We’re now (says The Economist, again this week) the most oversexed housing market on the planet.

“This bears an unhappy resemblance,” says the mag, to the US real estate bubble that blew up the American middle class. Meanwhile the OECD asserts our houses cost 30% too much, Capital economics says 25% too much and the TD banks claims 10%. So, average it out and you probably can expect a 15% decline – but that’s only the first event. After that, as interest rates move towards more normal levels (starting in a year), I doubt real estate will recover during the rest of the decade.

And let’s not forget the wider implications. After all, being the collective numbnuts and house hornies that we are, we’ve allowed real estate to become the dominant feature of our condo economy. Dig this:

Canadian GDP modified

Yup, real estate is now the activity of choice in Canada. Add in the ‘finance and insurance’ category – much of it directly related to shoveling money into housing – and you can easily see the potential impact of a residential plop. Already we’re having a tough enough time creating jobs and goosing exports, so if real estate sales wither, we’ll suddenly have armies of unemployed Re/Max agents marching on the Peace Tower. (There are now almost 40,000 realtors in the GTA alone.)

The thing about big, negative events – a stock market crash, climate change, Jennifer Lawrence photos, terrorist attacks, a housing bust – is you don’t see them coming. But when they happen, you realize how obvious it all was. You wish you’d prepared.

That would be now.

180 comments ↓

#1 blue steel on 09.03.14 at 7:01 pm

The RE agents will spin themselves dizzy trying to come up with ways to hide the inevitable decline in real estate prices

#2 CPG on 09.03.14 at 7:03 pm

Website from the United States

Against Crony Capitalism

http://www.againstcronycapitalism.org/

#3 DreamingInTechniColour on 09.03.14 at 7:03 pm

…..and the band played on while the ship sank below the surface.

#4 I'm A Harper harper on 09.03.14 at 7:06 pm

You thought that they only posed for red carpet pictures eh!! Well not so, they love themselves soooo much that they do the nude thingy too. If it were a guy like Weiner the world would not let it go, but poor pretty girls, well then it’s robbery…… Oh, and the real estate thingy, well that will go on for a period yet at least till the first rate increase which may not happen for a time as Euro land is about to fall to new depths….

#5 I'm A Harper harper on 09.03.14 at 7:08 pm

Oh, and Harper for the Nobel eh!!!!!!!! What a leader we have as seen by the world of today!!!! I’m a huge fan!!!!

#6 riddlemethis on 09.03.14 at 7:10 pm

Garth why is west island montreal so cheap….serious cobsidering leaving north Toronto and be mortgage free there

#7 rower on 09.03.14 at 7:12 pm

It all depends on where in Prince Edward County you are looking.

Turnover in Picton has been very fast. Along the south shore, it is slow due to the threat of wind turbines.

The biggest losers in the housing lottery are those who built McMansions on the water. Not enough people with deep pockets are coming behind them to buy their houses. Some can’t figure out why. They believe that everyone wants to be them and have what they’ve got. Apparently not.

Historically, it has taken almost a year to sell a house in the County. The quick turnaround is relatively new (@ 10-15 years).

Being “discovered” has left a lot of good people priced out of the market, but we can’t be undiscovered. Sad.

#8 Mark on 09.03.14 at 7:12 pm

Mean reversion implies that for time spent above the mean, time will be spent below the mean. So if houses at 30% overpriced, they very well could end up being 30% underpriced at some point, hence, a 60% drop. Of course, Realtors will deny this until they are blue in the face, but as house prices continue to drop, they are likely to go far lower than anyone ever imagined. Enthusiasm is slowly, but surely, shifting back to the stock market as a place to invest, which will also lead to money flowing out of housing finance, resulting in wider spreads and even greater profitability for Canada’s banks.

Bottom line: if you want to make money in housing, you’re a decade late. But the stock market is just starting to warm up and is in the 2nd or 3rd inning of a decade or two long bull market.

#9 james on 09.03.14 at 7:13 pm

Anecdotally, having lived in Guelph before relocating to the USA, I was surprised to see the decline in prices when I checked things out yesterday. I also have friends there trying to sell their townhomes, and they bemoan the fact that they are having to reduce their asking price. They counted on price appreciation, to their detriment.

#10 CPG on 09.03.14 at 7:16 pm

“The thing about big, negative events – a stock market crash, climate change, Jennifer Lawrence photos, terrorist attacks, a housing bust – is you don’t see them coming. But when they happen, you realize how obvious it all was. You wish you’d prepared.”

I think you should put the link to the website The Automatic Earth back on your website Garth.

#11 Sheane Wallace on 09.03.14 at 7:19 pm

40,000 realtors in the GTA ?
Holy f..k /cow

#12 Mac on 09.03.14 at 7:19 pm

Whadya mean you don’t see it coming? You’ve been predicting it for over a decade. We’ve had 5 years of intermittent news coverage on the possibility? MacLeans. Globe. CBC. Even Gloabal does the will it crash scenario.

#13 waiting on the west coast on 09.03.14 at 7:21 pm

Al – don’t jump in Victoria yet. Keep watching for the excellent and very regular Victoria updates. I live in a Vancouver rural suburb and am looking there and have watched prices trickle down over the past year. I noticed some major price drops on labour day in the acreage category (which is what we are looking at).

#14 waiting on the west coast on 09.03.14 at 7:22 pm

Sorry… Forgot to mention the day… Watch those regular Victoria updates on Thursdays!

#15 JO on 09.03.14 at 7:26 pm

Hey Garth what are your thoughts on Hamilton area ?
Also what is your suggestion for the best area to buy in the western GTA? I won’t do Milton or Georgetown but Mississauga Streetsville and Erin mills is way too pricy

JO

#16 Happy Renting on 09.03.14 at 7:28 pm

oversexed housing market

I like that phrase. Describes the attitude perfectly.

It’s too bad we want to live in the 416, we could totally take advantage of the crumble around the edges. Even a 30% drop in prices around here might not entice us enough, though. We are getting more and more comfortable with the ease of writing a monthly cheque then prodding the landlord to fix any medium-to-large sized problem.

#17 Steve French on 09.03.14 at 7:29 pm

Sweet…. I’m First!!

You know you got it.. if it makes you feel good!

https://www.youtube.com/watch?v=tVfoT1r8Ay4

#18 LH on 09.03.14 at 7:29 pm

In the long run, urban toronto SFHs in c01 and c02 will do alright. In the short run, if the right house comes up at the right price, I might just buy the dip!

A winning strategy for the last decade!

#19 JSS on 09.03.14 at 7:30 pm

How is it that Calgary house prices keep rising, and Edmonton’s are wobbly?

#20 spaceman on 09.03.14 at 7:32 pm

Victoria may not be dead to the world, I am in the Glanford area of Sannich, I have seen some listings sit for a while, but eventually now have sold signs. As long as interest rates are low, houses will sell. But prices are going nowhere.

When we see a spike in interest rates, look out…

#21 Numbers on 09.03.14 at 7:32 pm

Garth, If realtors are constantly re-listing homes and putting them at a lower price, how is anyone suppose to know how much prices have fallen? The numbers that are posted each month are the comparisons of the sold prices?Correct? So what about all the houses that are listed, re-listed and taken off the market but not sold. Could we not already be in a decline that is not showing on the “books” yet?

#22 Darth on 09.03.14 at 7:32 pm

Funny thing is, this is exactly what’s happening and what will happen in the future. The only thing missing is the part about the 10 year recession…

#23 Boombust on 09.03.14 at 7:34 pm

The Metro Vancouver is going to see a HUGE implosion; especially with condos and townhomes.

The amount of over supply (not listed on the MLS) is enormous.

Of course, the developers can drop prices, still make $$$$ and blow Ma and Pa Kettle right out of the market.

#24 Loco on 09.03.14 at 7:40 pm

Tell you what I wish. I wish I had bought in the GVA 6 years ago instead of thinking it couldn’t last, couldn’t go any higher. Well, it did. Sorry to say, but it’s true. It goes against all metrics we commonly use for measuring a healthy market I know. But the fact is it did. And any correction to get you to pre-2008 prices (when this pathetic blog started) would be catastrophic, so much so even the die hard believers can’t imagine it. I admit it, I too believed it was impossible and needed correction. I was proved wrong.
Full disclosure, I am not a realtor, just a renter who completely misread the market.

Poor you. No mortgage and doubled your liquid investment portfolio in that time. You did invest in that, right? — Garth

#25 Advice For a Book on 09.03.14 at 7:40 pm

Im looking for advice for a money book for my young adult children. The wealthy barber did it for me when it was first published. The save 10% thing and magic of compound interest never goes out of style. Beyond that; the book is dated. Any suggestions blog dogs?

#26 mitzerboy on 09.03.14 at 7:41 pm

so does this mean Saskatchewan will revert back to
having 1 horse cities in a 2 bit province with a semi-
pro football team ?

#27 crowdedelevatorfartz on 09.03.14 at 7:41 pm

I’ve just contacted Paypal and had them convert all my life savings into Bitcoin and toilet paper……..

Cause it one of them goes in the crapper……I’m prepared. Or is that pre-papered.
Anywho, if anyone out there sees a “flaw” in my strategy to success please advise me.
I may be a while in replying but not to worry, its just time to ride the elevator and remain calm while all others around me panic……..

#28 Freedom First on 09.03.14 at 7:43 pm

Enjoyed reading today’s post Garth. The truth as it is happening.

This is so much unlike the msm in Canada, as well as all of the countries, including the U.S.A., where the msm promoted their RE markets until the bitter end, quoting their various RE bosses, denying there was ever any vulnerability for years, until, the truth was out of the bag, and their RE crashes were well underway and could no longer be hidden and denied. Then, with no remorse of what they did, the msm’s merely reversed course and wrote with great energy and enthusiasm about the financial de-nutting of many millions of their citizens. Sad, but true. One a$$et portfolio=a$$ exposed. No exception. I always like putting my Freedom First.

#29 crowdedelevatorfartz on 09.03.14 at 7:43 pm

Sorry forgot to mention.

Excellent picture of a “Calgary lap pool” Garth.

#30 Jsan on 09.03.14 at 7:45 pm

Interesting little piece on our Central Bank.

“Presenting The Worst-Capitalized Central Bank In The West (Hint: Not The Fed)”.

“Moreover, Canada also has ZERO reserve requirements for its banks; this means that Canadian banks are not obliged to hold any of their customers’ deposits.

So yes, it’s legally permissible for a Canadian bank to loan out 100% of its customers’ funds.

Not to worry, though. The Canadian Deposit Insurance Corporation (CDIC) is standing by to insure bank deposits up to $100,000.

But when you look at it closely, there isn’t much there for depositors at all. There’s roughly $646 billion of eligible deposits in the Canadian banking system. Yet the CDIC only has $2.8 billion in cash available to insure it all… a ratio of just 0.43%.”

http://www.zerohedge.com/news/2014-09-03/presenting-worst-capitalized-central-bank-west-hint-not-fed

#31 devore on 09.03.14 at 7:48 pm

#6 riddlemethis

Garth why is west island montreal so cheap….serious

Isn’t that where the anglos live?

#32 FormerSaskie on 09.03.14 at 7:49 pm

Tomorrow a refresher on preparing for the slump, followed by a quiz?

#33 Smoking Man on 09.03.14 at 7:50 pm

Where the hell do you invest… Then Gartho.

Don’t think it matters.

Stocks at record highs, bond prices near historical highs, real estate at record highs. The world’s youth out of work. Un repayable debit.

OK time for the inverted tin foil cap. Let’s try and forecast which asset classes will be rocking after all the geo
political is done with..

Let’s define the machine, its like a stealth govt thats always there regardless of who’s elected. It controls MSM and all western governments.

Lets look at last year, the machine was hell bent on bombing Syria, after the false flag gas attack, Who out flanked the machine, why it was the evil Russian Putin.

Fast forward to today, the machine shoots down a jet liner, the cock pit riddled with 30mm gun fire, they blame the Russian. No black box or controller tapes. A day
before the downing The evil Russians signed an economic package, Bricks, competing with the IMF. Which basically is call to the street from the bar for a fist fight. Can you imagine Greece or Spain having an alternative.

Now we have ISIS a radical band of killers. Apparently they offed the heads of a few Americans, which we never see in the clip, just a head on a body with a poor photo shop job. and a British dude is up next.. Now ISIS say they’re going for Russia, Hamas, And Brazzer Alizad. I think that’s how you spell it.

So the USA and Britton drop a few bombs on ISIS, in Syria
oops, sorry Brazzer that was a mistake, we didn’t mean to bomb your army.

Now what if this game of chicken between the machine and Russia escalates further, and all the
powers that be, ready there first strike nuke plans. I’m sure it’s happening as I type.

Now I got some great performing investments in Isreal technology firms. Do I sell, where do I put the loot.

What if these yahoo, vodka drinking generals in Russia jump to a ridiculous conclusion that the machines brain is located Isreal.

What if Isreal thinks the Russians are going to attack, because a mossad agent heard a few Generals blame Isreal for Russia problems and can make the problem go away in a millionth of a
second.

What if Pakistan wanting to get revenge on the USA, turns it’s back on a nuke, and one goes
missing and off 30 miles of the cost in Isreal, then..what…. We stock up on welders masks. Iodine pills..

Do you see how fast this could get out of control.

Perhaps the best investment would be a beef packing plant in India.

OK bad idea, but would it matter?

#34 Sydneysider on 09.03.14 at 7:58 pm

“In Edmonton August was a mess. Single family sales down 15.4%, condo sales off 20.8% and attached home sales lower by 12%.”

Sales go down every year in August, as your readers point out every year.
http://edmontonrealestateblog.com/2014/08/weekly-market-update-aug-2914.html

What didn’t go down was the August selling price: SFH, detached, Edmonton.
http://www.ereb.com/pdf/MonthlyStats.pdf

(averages/median)

August 2014 – 435K/403K
August 2013 – 417K/381K
August 2012 – 395K/370K

#35 Mark on 09.03.14 at 7:59 pm

“How is it that Calgary house prices keep rising”

Calgary prices really aren’t rising (and haven’t been for the past few years). But what is seen in Calgary is a much starker spread between high end and low end. Any ‘price increases’ are entirely due to changes in the sales mix, not on individual identical properties actually rising.

The engineer, business owner, banker types, etc., in Calgary are still buying as normal. But what you don’t see is much buying from the normal average people. So those average (and even below-average) units are falling out of the sales mix increasingly.

#36 Mark on 09.03.14 at 8:01 pm

“Funny thing is, this is exactly what’s happening and what will happen in the future. The only thing missing is the part about the 10 year recession…”

Recessions are largely in the eyes of the beholder. For Canada’s ICT industry, its been a recession for over a decade. But housing obviously has done well. As investment capital is freed up from housing speculation, sectors outside of housing should actually see some growth. But a world of pain for those who are leveraged to the housing bubble, either because of financial over-extension, or because their industry/career/profession is largely tied to the fortunes of RE expansion and transactional activity.

#37 Kenchie on 09.03.14 at 8:02 pm

#8 Mark on 09.03.14 at 7:12 pm
“Mean reversion implies that for time spent above the mean, time will be spent below the mean. So if houses at 30% overpriced, they very well could end up being 30% underpriced at some point, hence, a 60% drop.”

That’s not how the math works. lol

PS: mean reversion is only on central limit theorum applicable examples. House prices are not one of them.

#38 Mark on 09.03.14 at 8:03 pm

“Garth, If realtors are constantly re-listing homes and putting them at a lower price, how is anyone suppose to know how much prices have fallen? The numbers that are posted each month are the comparisons of the sold prices?Correct? So what about all the houses that are listed, re-listed and taken off the market but not sold. Could we not already be in a decline that is not showing on the “books” yet?”

The decline has been happening for over a year, almost a year and a half now, in the wake of the 2013 CMHC subprime budget changes made by Minister F (RIP).

Its been pretty obvious to the Realtor crowd, that changes to the sales mix has been the only thing propping up average sales prices. Because actual transactional activity is down, and bank mortgage credit has slowed dramatically.

#39 Smoking Man on 09.03.14 at 8:06 pm

Or maybe we all die of Ebola less off course you are rich enough for the vaccine that’s not going to be ready for 3 years.

This is crap, I’m going to start drinking again… Sobriety is making me such a doomer.

#40 Nemesis on 09.03.14 at 8:08 pm

#@BoomBust/23. #”LifeOnTheFarmWasNeverLikeThis!” #Ma&PaKettleCashOut. #OohLaLa! #QuelVilainCartesPostales!

http://youtu.be/P_PkDGwoleA

#41 Terrier on 09.03.14 at 8:15 pm

The first cracks are showing … imagine the numbers in mid December. We crossed the line where slowdown was possibility, we are headed to a full-blown implosion.

#42 John Tory kick Rob Ford ass on 09.03.14 at 8:16 pm

Leak of Jennifer Lawrence pics is a BIG negative event??? Gimme a friggin break!

#43 };-) aka Devil's Advocate on 09.03.14 at 8:16 pm

#1 blue steel on 09.03.14 at 7:01 pm

The RE agents will spin themselves dizzy trying to come up with ways to hide the inevitable decline in real estate prices

Good REALTORS® don’t really care what prices do. We report the current market and work with it we don’t try to change it. It’s volume that matters more to us. That said a correction, as such, will mitigate the competion as there will be fewer REALTORS® competing for a piece of the pie. A market correction is one of the best times for a good REALTOR® to increase their book of businesss.

All boats float at high tide.

SHIFT happens. Learn to ride the tide.

#44 Kenchie on 09.03.14 at 8:25 pm

#23 Boombust on 09.03.14 at 7:34 pm
“The Metro Vancouver is going to see a HUGE implosion; especially with condos and townhomes.”

Bit hyperbolic, don’t you think?

That said, I am proud to say that the sale of my Vancouver condo closed today. I am so glad to no longer have exposure to the Van condo market. Particularly in a, potentially, rising interest rate environment.

PS: Garth, your pathetic blog had no impact on my rationale to sell. However, if I paid attention to your blog earlier (like 1-2 years ago), it may have. In other words, it took 10 months(!) from listing to completion (2 months and 1 week between signing and closing).

#45 David McKenna on 09.03.14 at 8:39 pm

@Advice For a Book

Mr. Money Mustache’s blog is actually a good way to get someone excited about personal finance, saving money, etc. The premise of being in complete control of your life and his punchy writing is good for those new to investing and finance. There’s limits to his blog and it gets repetitive sometimes, but I’d recommend it to someone new.

http://www.mrmoneymustache.com/

#46 crowdedelevatorfartz on 09.03.14 at 8:39 pm

@#42 John Tory
Truer words were never spoken…..or was that written?

#47 Loon on 09.03.14 at 8:39 pm

All I got from that was Jennifer Lawrence bust.

#48 Paul on 09.03.14 at 8:40 pm

#21 Numbers on 09.03.14 at 7:32 pm

Garth, If realtors are constantly re-listing homes and putting them at a lower price, how is anyone suppose to know how much prices have fallen? The numbers that are posted each month are the comparisons of the sold prices?Correct? So what about all the houses that are listed, re-listed and taken off the market but not sold. Could we not already be in a decline that is not showing on the “books” yet?
———————————————————-
In the end list prices don’t matter much it’s like a car ask $40,000 sell for $30,000 that’s the price
and the only number you can go by

#49 2or3orsometimes7 on 09.03.14 at 8:43 pm

Random Ottawa real estate observations:

– many many Glebe homes on the market and the high end ones have not sold in 6-12months
– in the Westboro area, brisk activity only in $600k-$750k range. Any SFH below that price are dumps “starter homes” size, and advertised as “great value”. Anything over that range takes several months to sell, and anything over $1million has price reductions, not really selling.

#50 Fred on 09.03.14 at 8:51 pm

TREB will now use “indexing” on its market reports if it gets worse.

#51 Retired Boomer - WI on 09.03.14 at 8:55 pm

Lots of pessimists tonight. Self fulfilling prophecies of gloom sand doom.

Are you employed? Can handle your bills? Not to deep in debt? Good, you will be just fine.

Unemployed with no or a useless education, and little to offer? Screwed. Bought a house with less than 20% down. Screwed. Expanding your debt bubble every month because life sucks, and you’re just clueless? Screwed.

There, now I should have pissed off dam near everybody.

So, what ARE you going to do about more perceived hopeless situation funky? You could go smoking man and
sell. Hard, tough, and a winner. You could just whine, but that solves nada, but its easier. So many choices so few are fit to succeed.

#52 devore on 09.03.14 at 8:59 pm

#42 John Tory kick Rob Ford ass

Leak of Jennifer Lawrence pics is a BIG negative event???

She seemed like such a nice girl… :(

#53 notagreaterfool on 09.03.14 at 9:01 pm

#24 is right irrespective of I’d one has invested along the way. It costs more today to buy than 5 years ago. Even with a correction, the price may just return to 2008 levels. Of course, if you saved and invested since then, you may be better positioned than before to purchase. I too am happy renting and investing.

#54 Larry Laffer on 09.03.14 at 9:05 pm

That’s right, I was totally unprepared for Jennifer Lawrence photos. Sheesh!

#55 we on 09.03.14 at 9:08 pm

#39 Smoking Man:
Please have a drink will yer…

#56 notagreaterfool on 09.03.14 at 9:11 pm

There may some cracks in the house market but until we see house price declines year over year, we have a “leveling” off and not a correction. Need to see the price declines trend in the 416 to start to think a correction is possible.

#57 Shawn on 09.03.14 at 9:13 pm

All Hail Banking

Jsan at 30 worries:
So yes, it’s legally permissible for a Canadian bank to loan out 100% of its customers’ funds.

and

Yet the CDIC only has $2.8 billion in cash available to insure it all… a ratio of just 0.43%.”

***************************************
True banks don’t have to keep cash in the vault. But they tend to anyhow since it’s embarrassing if a customer comes in for cash and they don’t have any.

But really who actually needs much ‘cash” these days. Two years ago when I was buying an $8,000 diamond ring at Costco (they have the lowest mark-ups by far) I had to go to two TD branches to round up that much cash. Their limit is $4000 on a walk in basis, more than that and they can have it ready next day.

Most large transfers are electronic.

As long as a bank can honor all its commitments there is no problem.

Keep in mind too that many deposits officially require notice before a withdrawal though that is rarely enforced except for bigger amounts.

Canadian Banks ARE subject to minimum invested equity and debt ratios.

Before deposits are at risk they would have to burn through and lose about 8% of loans that are funded by their own equity.

CDIC needs little equity because none of the big banks are going to fail.

For the average person what is the worry?

Your deposits are safe.

Bank shares are safe.

Government provide mortgage and deposit guarantees that allow banks to offer such cheap loans and yet the guarantees are extremely unlikely to be needed to any great extent.

The whole system works fantastically and is part of the reason why we can sit here and basically waste time discussing this whereas our ancestors had to work many more hours per week than we do.

#58 CJ on 09.03.14 at 9:20 pm

#35

Mark. Here is the fact: Calgary house prices are up 11% year over year. They are going up every month.

Here is a tip: read more.

#59 Smoking Man on 09.03.14 at 9:27 pm

#50 Retired Boomer – WI on 09.03.14 at 8:55 pmUnemployed with no or a useless education, and little to offer? Screwed. Bought a house with less than 20% down. Screwed. Expanding your debt bubble every month because life sucks, and you’re just clueless? Screwed.

There, now I should have pissed off dam near everybody.

So, what ARE you going to do about more perceived hopeless situation funky? You could go smoking man and
sell. Hard, tough, and a winner. You could just whine, but that solves nada, but its easier. So many choices so few are fit to succeed.
……..

Good point, now that I’ve self medicated, I feel a lot better, withdrawal is such a downer…

In today’s world, working won’t pay the bills, you need to create… You need to sell what you create.

Even as far as jobs go, the higher paying ones involve creation of some kind…

Strive to be the Creator…..

#60 Chump on a Stump on 09.03.14 at 9:35 pm

My hood (Hamilton) is making up for all the markets that have seen price declines this year. Hamilton’s prices have been increasing at about 1% per month. Any decent properties are sold in one day. It looks like all the poor people who can’t afford GTA prices are coming to Hamilton and snatching anything they can get.

Is Hamilton just a late-bloomer and seeing action after all the other surrounding markets have been oversexed? Is Hamilton just sloppy seconds? I’d love to hear Garth’s take on this.

#61 AACI Home-dog on 09.03.14 at 9:38 pm

Add construction bar in that graph too…makes it huge. Is that all construction, including residential construction ?

#62 Dean on 09.03.14 at 9:43 pm

How is it that Calgary house prices keep rising, and Edmonton’s are wobbly?

Ever been to Edmonton?

#63 OttawaguyINGREENRenting on 09.03.14 at 9:49 pm

Random Ottawa real estate observations:

– many many Glebe homes on the market and the high end ones have not sold in 6-12months
– in the Westboro area, brisk activity only in $600k-$750k range. Any SFH below that price are dumps “starter homes” size, and advertised as “great value”. Anything over that range takes several months to sell, and anything over $1million has price reductions, not really selling.
—————————————————————-
What this guy said times 10

The Glebe is a sea of For Sale signs

Whole thing is hitting the emergency brake…. BAM

@&$ em ALL

I have no patience for all my peers and their BS “best time to buy is now… How will you retire? Where will you live?”
The ones with the loudest BS are the ones that bought recently in the hoods you just described above…

They HAVE it ALL on the table

They never leave the house .. Less holidays… They go to local shops… That won’t last
That rate will raise and the art house bakery artisan coffee and eggs for 27 bucks won’t be an option

#64 Cici on 09.03.14 at 9:50 pm

#25 Advice for a Book

David Chilton (author of The Wealthy Barber) is back with a vengeance; his new title, “The Wealthy Barber Returns,” is a really good, fast and easy read, and pretty funny too. He warns about housing too; thinks prices are way too high for most people, especially today’s youth. I suggest you start with this one to pique your kids’ interest. Better to start out with something fun to get them motivated.

The index in the back also has an excellent “Recommended Reading” list.

When I asked the same question on this blog a couple of year’s ago, some incredibly generous and helpful commenters recommended that I read the MoneySense Guide to the Perfect Porfolio and The Millionaire Teacher (author Andrew Hallum has a new title out too, but I haven’t read it yet).

Although I can no longer remember who those blog dawgs were, I’ll always be forever grateful to them.

Here are the links:

http://www.wealthybarber.com

http://www.moneysense.ca/uncategorized/moneysense-guide-to-the-perfect-portfolio-2

http://andrewhallam.com

#65 45north on 09.03.14 at 9:54 pm

Outside of the GTA, it appears we are already well into a buyer’s market.

in the US, the markets crumbled in the outlying areas first. not to say that the Canadian market will collapse in the same way as the US. For one thing the US was able to reduce interest rates to cushion the fall. Not so in Canada.

riddlemethis : why is west island montreal so cheap

here’s my west island story

I was in Montréal a few years ago helping my son at a hockey tournament. A woman with a strong New York accent left her purse at the booth. I picked it up and ran downstairs to look for her. I ran past a group of people speaking French, I looked around but couldn’t see her, finally I turned around and saw her in the French group. Americans will invisibly blend with Canadian society.

http://www.greaterfool.ca/2009/06/30/dominion-of-debt/#comment-34020

winter in Toronto is nothing compared to Montréal. And there’s also the French thing.

boombust : Of course, the developers can drop prices, still make money and blow Ma and Pa Kettle right out of the market.

which is exactly what happened in the US

mitzerboy : so does this mean Saskatchewan will revert back to having 1 horse towns in a 2 bit province with a semi-pro football team ?

well no 1950 is not coming back, for one thing Wal Mart will remain pervasive and the Ma and Pa shops are not coming back. Funny there was a time when there were no horses in Saskatchewan – they first arrived in 1700. The Saskatchewan Roughriders will continue to beat the Toronto Argonauts.

#66 Nemesis on 09.03.14 at 9:54 pm

#Undeniably… #ThereAreAdvantages… #ToCreatorship… #If,Occassionally… #ItHasItsDrawbacks.

http://youtu.be/bjAM2J_D4UY

#67 David Lee on 09.03.14 at 9:56 pm

Mark, somebody, anybody:

This is not a challenge, it’s a call for help:

Please point me in the direction (i.e. links) where you get your data (prices, sales, DOM, location, etc.) that prices are coming down and have been for a while.

Putting my money where my mouth is, I sold my own SFD in 2011 before getting married. Now that I am married, I don’t want to buy a SFD in Vancouver (yet) but the wife does. Every time we start talking about purchasing a SFD, it’s always the same:

Me: I’m not going to buy at the top of the market, become a debt slave, Rule of 90, illiquid asset, etc.

Wife: (shows freshly printed “data” from REBGV’s website) Prices keep going up as we keep waiting!

Me: But the Economist says …., Garth says…, Ross Kay says …., even Ian Young from SCMP is saying … and then there’s Morningstar, Macleans, history, Robert Schiller, …

Wife: (again, with the freshly printed “data” from REBGV) Prices keep going up as we keep waiting!

Trying my best to be quantitative and counter the REBGV “data”, I show her this:

http://vancouverpricedrop.wordpress.com/2013/08/02/drop-from-peak-chart-june-2013/

Eventually, the discussion always ends with me putting my foot down, saying “I’m not going to commit financial suicide!” and lots of hurt feelings.

I really need something better/more up-to-date than the “Drop from Peak” chart in the link above.

Any help would be appreciated.

Thanks.

#68 Ardy on 09.03.14 at 9:59 pm

Encouraged by Al……….I will make a confession.

We owned 5 homes between 1980 and 2007.

We lost money on 1 home, broke even on 3 homes, and made money on the last home.

Overall……when counting upgrades, real estate fees, lawyer fees, and moving expenses………we lost money.

If we include all those years of paying from a low of 7.9% interest to a high of 19% interest……we lost a lot more money.

No housing bubble for us.

For those who have watched your home price soar into the atmosphere………all that free money gathering at your feet, for just living in the house……take Garth’s advice to sell and invest the loot.

The people who buy your home…….are paying for your retirement.

Congratulations……..and happy travels…….

#69 Holy Crap Wheres The Tylenol on 09.03.14 at 10:00 pm

Holy crap Smoking Man you have confused the shit out of me! You actually made sense. You had better start drinking your JD and get back to the book old man!

#70 Sebee on 09.03.14 at 10:02 pm

You trust the cloud and then wonder why your security was compromised? I bet Jennifer doesn’t even know that she passed ownership of photos to Apple the minute she uploaded them. Oh that’s right, you didn’t read the user agreement for iCloud, dropbox, whatever. Cloud…you suckers! Get a NAS!

#71 Nemesis on 09.03.14 at 10:02 pm

#Advantages…

http://youtu.be/aYM0SAcDZ0c

#72 TEMPORARY® Foreign Prime Minister on 09.03.14 at 10:03 pm

#57 Shawn on 09.03.14 at 9:13 pm
“….Two years ago when I was buying an $8,000 diamond ring at Costco (they have the lowest mark-ups by far)…..”
=========================

News flash….no one on the dance floor can tell your $8,000 carbon pebble from an $800 one, unless or course, you pin the receipt & appraisal to your lapels.

For the ladies, size matters on this one….it’s all about Carats……clarity, colour, cut don’t mean squat in the moonlight.

You’ve been had, my friend. I always pictured you smarter than that.

#73 45north on 09.03.14 at 10:09 pm

Ontario beekeepers are suing pesticide manufacturers for $450 million

The manufacturers say neonicotinoids replaced toxic insecticides that were harmful to the broader environment and note that bee deaths aren’t an issue in Western Canada

http://www.ottawasun.com/2014/09/03/ontario-beekeepers-sue-pesticide-manufacturers

Utopia says they are an issue in Western Canada:

Just two months back we received the results in Saskatchewan for the winter mortality of the year 2009/2010 and the outcomes were not good.

http://www.greaterfool.ca/2011/03/27/strike/#comment-92313

the internet is forever

#74 loco on 09.03.14 at 10:12 pm

Garth,
I did invest of course, with a very reputable manager that even you would approve of. But if you read my post carefully, I wasn’t referring to investments but rather the idea of the crazy rise in Real Estate prices in GVA coming to an end. It’s not happening, and not likely to start anytime soon. We–me included–are in this state of denial clinging to the notion that there is no empirical data proving foreign investment is skewing prices here. You know, just like the tobacco companies telling us for years that there was no proof smoking caused cancer. Well, I live here and have for 53 years. I can tell you the demographics have, and continue to change very dramatically.
Just to be clear, I love and embrace cultural diversity, I just wish it didn’t have the impact it has had on RE prices.

#75 saskatoon on 09.03.14 at 10:12 pm

#30 Jsan

banks don’t technically have to keep reserves…but they do keep a “suggested” amount of 6-8%

when canadian bank reserves get too low…they just have the taxpayer bail them out: like in 2009: “funded” 75 billion.

gotta love canada, dude! “banks” do!

p.s. anyone who understands history will realize that “banks” are not “fantastic” entities–socially, morally, or economically.

#76 Spectacle on 09.03.14 at 10:13 pm

Re: #25 Advice For a Book on 09.03.14 at 7:40 pm

Im looking for advice for a money book for my young adult children. Any suggestions blog dogs?
************************

Good evening , #25 Advice For A Book.
Your appreciate this blog, share it with them. And to conclude, Mr Garth Turner writes volumes, actual books worth reading . Share them, discuss them with your family. How many people on earth do you know who have read the National financial tax act?

Honours to you Sir Garth !

#77 Son of Ponzi on 09.03.14 at 10:14 pm

#142 devore on 09.03.14 at 2:53 pm
#133 Son of Ponzi

I’m planning to put all my retirement savings under a mattress.
Can I write off the cost of the mattress?

If you also sleep on it, only a portion qualifies. The CRA has a formula you can use.
———————
Thanks for the not fee based advice.
But I think I go ahead and write the entire cost off.
After all, a famous politician once said that the Government had “no business in the bedrooms of the Nation”.

#78 NostyVlad the Snugglebombed on 09.03.14 at 10:16 pm

Garth — “But when they happen, you realize how obvious it all was. You wish you’d prepared. That would be now.”
— plus —
#33 Smoking Man on 09.03.14 at 7:50 pm — “Do you see how fast this could get out of control.”

That’s the great thing about life. No one knows what’s going to happen tomorrow — a mega quake on the west coast, currencies / stock markets ascending to new highs or collapsing, an undiscovered asteroid heading toward us at breakneck speed with no chance of defending ourselves, etc.

Wasn’t it Groucho Marx or Stan Laurel who once said, “Never let a good crisis go to waste!”

Re: the email you sent me last night, SMan — New Russian fighters, Scotland’s vote (which was precisely what the Crimean govt. and populace voted, to secede from Ukraine), The latest CIA – Mossad inventions, Robot Labor, Mexico / California and Gotta luv it! Time to bild another berger for the Bilderbergers.

#79 High Plains Drifter on 09.03.14 at 10:20 pm

The Oilers and all fun seeking rig workers are riding in a convoy to take care of the retirement of this dreamer. Yep, we are back in the lead in the real-estate lottery and it looks like it’s going to be big. This is old school, buying on 40th and Plum and waking up a dozen years later on Main St.

#80 Lexie on 09.03.14 at 10:22 pm

#25 Advice For A Book

“Cold Hard Truth on Family, Kids & Money”
I never liked Kevin O’Leary on The Dragon’s Den but I sure wish I had read his book when I was starting out.

#81 IM Weasel on 09.03.14 at 10:25 pm

“#33 Smoking Man on 09.03.14 at 7:50 pm
Where the hell do you invest… Then Gartho.

Don’t think it matters. …………………………

Perhaps the best investment would be a beef packing plant in India. ”

Definitely not a good idea, as cows are revered in India, so that kind of beef is scarce…..buffalo meat is more widely available but tastes like crap.

#82 Smoking Man on 09.03.14 at 10:26 pm

#69 Holy Crap Wheres The Tylenol on 09.03.14 at 10:00 pmHoly crap Smoking Man you have confused the shit out of me! You actually made sense. You had better start drinking your JD and get back to the book old man!
…..

I’m the old man, look who’s talking, you Vietnam fighter pilot.

You got a few years on me buddy….

Cici, one thing to read a book, another thing trying to break through your programing and grow some nuts.

The globe and mail had a story about self employment, written by the schooled and taught by people who never had there back against the wall, and had to guess right on an all in bet to survive….

The article was a joke… The hunt and kill instinct required by the self made.. Not even mentioned..I bet it’s not even mentioned in an MBA course….

Frauds all of them…… And yes JD is going down smooth, what was I thinking…

#83 Nemesis on 09.03.14 at 10:26 pm

#DiamondsAren’tAlwaysForever,Mr.Lee… #BetterThanBitcoinsInCairo,Though.

http://youtu.be/ztXmwXBlF-E

[NoteToGT: Speaking of Cairo… a most disturbing development: http://english.ahram.org.eg/NewsContent/1/64/109899/Egypt/Politics-/Egypt-religious-authority-calls-for-ban-on-obscene.aspx ]

#84 Dobert on 09.03.14 at 10:28 pm

Garth

Am impressed you read the Economist, but that kind of high brow reading will go right over the heads of the average young person today. Suggest you target these impressionable types by starting a Dilbert like comic strip, with you dressed as a caped crusader sharing pithy observations on diversification….this will reach the masses and could have a cult following….will send you the bill for this great idea later

#85 Jason on 09.03.14 at 10:30 pm

http://www.torontorealestateboard.com/market_news/market_watch/2014/mw1407.pdf

I am surprised by the level of duplicity that you uncover I had to check it out for myself. Take a look at their statistics for the month of July 2014. Specifically their days on market would be impossible given the level of sales and inventory of home.

#86 Reader66 on 09.03.14 at 10:31 pm

Any one interested living in Milton? This “GORGEOUS ” townhouse has just dropped its price by 10K.

http://www.realtor.ca/propertyDetails.aspx?PropertyId=14842095

#87 takla on 09.03.14 at 10:46 pm

with all the potential black swans flying around youd have to be either crazy,ill informed or have balls of steel to be highly leverage with realestate at this juncture.
Possible war,stock market bubble,rising interest rates,the list goes on.Haveing
more debt then equity will be the great killer of the middle class in the not too distant future.
Its too bad these greater fools couldn’t take a debt holiday to see how enjoyable life can be when your liquid with NO payments other than basic living expenses..

#88 Mr Blobby on 09.03.14 at 10:47 pm

you can have this house for $1.1 million in trendy Toronto, complete with 49,000 gallon pond in the backyard.

http://www.remax.ca/on/toronto-real-estate/na-552-merton-st-treb_c2991045-lst

#89 AndrewAB on 09.03.14 at 11:04 pm

Edmonton Real Estate Blog says:

“In August(ed. 2014), 879 single family homes sold in Edmonton, through the MLS® system, up over 15% from last August.

“No skin in the game” Bob from Calgary writes:

“Despite the shortage of listings, it was the third-best August ever for SFH sales(second-best for overall sales due to strong condo sales”

I rely on these bloggers to report the real estate truth in Alberta, so it’s just so tough to know who to believe nowadays Garth…

All data on this blog comes from official real estate board stats. Dig a little. — Garth

#90 Smoking Man on 09.03.14 at 11:05 pm

#78 NostyVlad the Snugglebombed on 09.03.14 at 10:16 pm

The problem with games of chicken, your driving toward the other car for a head on collision, they are doing the same toward you.

No one is going to turn away at a mile out.

What if the drivers are like me, your 50 feet away, you shut your eyes convinced the other bastard will turn away.

In the other car a smoking man…

Gross ending…..

#91 };-) aka Devil's Advocate on 09.03.14 at 11:16 pm

#67 David Lee on 09.03.14 at 9:56 pm

I’ll offer some advice };-) Well not so much advice really as thought provoking questions…

In Mexico they have a saying “You marry, you carry.” In North America I’m hearing a lot of “Happy wife, Happy life.” What’s your marriage worth? What’s it worth to keep your wife happy? If you bought the house she wanted what’s the worst that could happen?

The price drops that took place during the last “correction” didn’t amount to the lofty losses people thought they would. I’m not going to suggest any figures just that they really didn’t go down nearly so much as people feared they would…. Check that out for yourself.

I’m not going to suggest that buying a home is a stellar investment strategy unto itself. It’s as much a lifestyle as anything. But I will point out that try as hard as you might, you won’t find nearly so many homeowners who are unhappy with their “investment in a home” as those who are bitter about not having one – your wife included.

You want ammo against your girls cry? Just fish back into the archives of this blog. Better yet have your girl read them herself. Chances are though that it won’t win your case for you. The emotional side of home ownership is ingrained in most all of us.

If you truly love your wife then, understanding the breadth of emotion, you will recognize her dreams of building a “home” (physical and emotional) with you needn’t be logical to be defensible. Between her emotional argument and your logical one there must be a collaborative plan you can agree on that will satisfy all. Use your differences to build a stronger future. Hell there are others who are both too emotional and then on the other hand those who are both too logical neither as well off as you on such decision making matters.

In closing I am compelled to ask what, if anything, did you do for a wedding ring and how did you justify it to yourself?

#92 Happy Renting on 09.03.14 at 11:48 pm

#67 David Lee on 09.03.14 at 9:56 pm

In addition to any charts the other blog dogs turn up, this post from six months ago is a fun read.

http://www.greaterfool.ca/2014/02/28/happily-ever-after/

You didn’t post your income/NW situation, but since you called buying a SFD “financial suicide”, I’m going to guess your family can’t comfortably afford the house your wife wants. Point out to your wife all the lifestyle changes the couple in the post had to make for their house (no money for anything, two extra jobs, delay starting a family.) And your marriage will undoubtedly suffer if you’re both always working and never have any leisure time (or disposable income) to spend together. If it comes down to divorce or buying, have your wife put in writing that should an additional job be required to support your RE misadventure, she promises she will work it. No exceptions.

And if your wife is just nesting, rent a bigger place and start asking her opinion on themes for the nursery. If she just needs something to show off to her friends, buy her some bling, lease her an expensive car, or take her on a crazy vacation. All of this will cost less than the house. It sounds like numbers and logic may not sway her completely, so you may have to entice her with the goodies a renter lifestyle can allow you. Good luck!

#93 Cici on 09.03.14 at 11:51 pm

#82 Smoking Man

I don’t need balls, I’m a woman! But hunt & kill works for me ;-) And as for reading, for some of us it’s a good place to start. We can’t all be “natural born stock killers.” Besides, I’m not up to forex trading yet. Baby steps is where I’m at now, but you never know, what day I may beat you at your camel toe and batman game…

For now, I’ll stick with Garth’s advice and ETFs. Portfolio (although small) is doing well (everything’s up between 13% and 27%), but I’m sure I’d be doing better if I was invested with the great bearded one. I’ll keep at it for a bit, and once the portfolio is sizeable enough, I’ll hand it over to the expert. I’m no poor sport, but if I have to pick a game, I’d rather lose at tennis than the stock market.

#94 Mark on 09.04.14 at 12:09 am

“Mark. Here is the fact: Calgary house prices are up 11% year over year. They are going up every month.”

That is simply not true and you know it. Additionally, that says nothing about the prices of individual houses. Anyone who follows the RE scene pretty much anywhere in Canada has known how profound an effect a reduction in CMHC subprime credit availability has meant to the practical buying activity of FTB’s. It doesn’t take rocket science, nor fancy statistics, to come to the conclusion, if anecdotal evidence isn’t enough, that any alleged “increases” are entirely due to a shift in the sales mix.

The data I’ve seen is that even in Calgary, YoY prices are down, and that’s before any sales mix adjustment. So nice try with your so-called ‘facts’.

#95 Robert Henry on 09.04.14 at 12:12 am

Garth : The text in the bar chart in tonight’s (Soggy) article was unreadable. Could you please also make illustrations available as pdf files.

#96 KWkid on 09.04.14 at 12:27 am

Does Home Ownership include condos and mobile housing? Because then I could see how we are at 70%.

Garth BTW how are recreational properties faring in all this?

#97 prairie person on 09.04.14 at 12:40 am

Victoria real estate on the rise, up-Island sales dip – See more at: http://www.timescolonist.com/business/victoria-real-estate-on-the-rise-up-island-sales-dip-1.1339094#sthash.JrU1a9n6.dpuf

Not sure what to make of this.

#98 Kenchie on 09.04.14 at 1:05 am

#67 David Lee on 09.03.14 at 9:56 pm
“Eventually, the discussion always ends with me putting my foot down, saying ‘I’m not going to commit financial suicide!’ and lots of hurt feelings.

I really need something better/more up-to-date than the “Drop from Peak” chart in the link above.

Any help would be appreciated.”

Run your combined numbers on the RBC mortgage pre-approval calculator under different scenarios: 1) 3% interest rate, 2) 3.5% interest rate, 3) 4% interest rate, 4) 4.5% interest rate.

Show her how fast the maximum you can borrow will go down under the different scenarios. RBC expects a Gov’t 5-yr bond to yield 3.3% in 16 months time, while TD says it will be 2.9%. Average is 3.1%, then add on 1.5% premium for the banks and you got yourself a 4.6% interest rate in 16 months time. It’s just guesswork, but if it did come true, ppl be ducked.

https://www.rbcroyalbank.com/cgi-bin/mortgage/tools/howmuch/afford.pl

Of course, there is the possibility that you’ll get a raise over that time period, but don’t mention that to the wifey.

PS: I told my buddy to do this (they are house horny too, been married for 1.5 years). Within 2 weeks, they decided to put their condo up for sale in DT Van and rent a house in E Van from his aunt. Huge u-turn.

PPS: Previously, they put bids on houses in E Van, S Bby and NW and lost each time. They were planning to keep the condo and buy a house (they have parental help).

#99 Butch on 09.04.14 at 1:09 am

Haven’t we been preparing since 2008?

#100 Kenchie on 09.04.14 at 1:13 am

#84 Dobert on 09.03.14 at 10:28 pm
“Garth

Am impressed you read the Economist, but that kind of high brow reading will go right over the heads of the average young person today.”

The Economist is not high brow. It’s an easy read.

#101 devore on 09.04.14 at 1:17 am

All joking about Jennifer Lawrence nudies aside, here’s a pro tip: hackers and system administrators have full access to everything you have stored on internet servers. I used to be a systems administrator of sorts for an ISP in my former life, and I had shells open to all our major systems, including web and mail servers. At all times I was one command away from perusing any subscriber’s mailbox or web space. I never did, actually, just never interested me, nor did I have a compelling target. These days, much of the day to day administration is done by outsourced IT firms. Do you think some guy in India gives a flying f*** about your privacy or our laws?

You can extend this today to anything you have stored anywhere, webmail (Hotmail, Gmail), forums, blogs, Facebook, Flickr, cloud storage. If you don’t encrypt it yourself, assume it’s like a postcard. People still know what those are, yeah?

#102 Setting the Record Straight on 09.04.14 at 1:25 am

“Ontario beekeepers are suing pesticide manufacturers for $450 million

The manufacturers say neonicotinoids replaced toxic insecticides that were harmful to the broader environment and note that bee deaths aren’t an issue in Western Canada

http://www.ottawasun.com/2014/09/03/ontario-beekeepers-sue-pesticide-manufacturers

Utopia says they are an issue in Western Canada:

Just two months back we received the results in Saskatchewan for the winter mortality of the year 2009/2010 and the outcomes were not good.”

Now that is a serious issue. Not the phoney issue of CO2.

#103 Setting the Record Straight on 09.04.14 at 1:26 am

It’s

Deadmonton

#104 ju \no on 09.04.14 at 3:25 am

Canada is different. Remember from 2007 til now the US is finally showing signs of recovery. That is almost 8 years.

The difference was the US can walk away from their ball and chain (mortgage debt). Canada cannot!

What does that mean. Well the guys that walked away could restart their lives and can get back into the real estate game, contributing by becoming buyers again.

In canada, if real estate goes down by 30 ++ you would be straddle with that debt for a lifetime. Meaning you’ll probably never be able to buy again, taking down your parents and anyone who signed on the dotted line.

You’ll probably get a divorce and start doing drugs, spiralling to a life of hopelessness.

#105 Armand R. Dillhole on 09.04.14 at 3:59 am

Holy fiuke! All of the idiots have some how escaped the cosy little condo I sold them and they’re back! Beware the moronic, know it all ramblings have resumed. Please be cautious and remember; it’s bad luck to take advice from insane people.

Also please remember that I started my service as a labour of love, I just love to see the smile on your faces when I give you the keys. buyi’mgone.con for all of your condo housing needs.

#106 Londoner on 09.04.14 at 4:37 am

More bad news for Vancouver. Virgin Atlantic is cancelling it’s Heathrow to Vancouver route as of October. This is a real shame as Virgin offers a far superior experience then Air Canada and BA (especially in upper class). On top of that I much prefer to fly to Maui via Vancouver then LA.

Back to the topic at hand:

“Right now, inflation, at most, is at the middle of that target zone and is probably going to drift lower unless
we get that rotation [from household spending to exports and business investment]… we’re more pro-growth than anti-inflation in that situation.”
– Poloz

Remember that quote when forecasting rate hikes by the BoC.

Now, let’s see what Draghi has to say today.

#107 Sgip on 09.04.14 at 4:51 am

DELETED

#108 liquidincalgary on 09.04.14 at 6:19 am

previous thread

Black Sheep says:

Bitcoin will never be accepted to reconcile tax burdens and will never replace any western sovereign currency.

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

actually, Germany has accepted it as currency

http://www.cnbc.com/id/100971898

#109 Dr. Talc on 09.04.14 at 6:37 am

@#67 David Lee on 09.03.14 at 9:56 pm

—-

this blog is for entertainment purposes, if you take real estate buying advice from people over the internet who have never seen the house, you are making, or have already made a mistake. Your wife is your partner, no one here is.

Sounds like you’re in trouble. — Garth

#110 Nobleton Bill on 09.04.14 at 7:45 am

Anyone?

BNN aired a clip today from southerby’s that seems to contradict your numbers. Can anyone make sense of this?

http://www.bnn.ca/News/2014/9/3/Luxury-home-sales-up-34-in-Toronto-and-Vancouver.aspx

A real estate marketing company. Very credible. — Garth

#111 Centre-ville on 09.04.14 at 7:50 am

#31 devore

“Isn’t that where the anglos live?”

It’s where they survive.

#112 Londoner on 09.04.14 at 8:24 am

So the ECB cut the benchmark rate to 0.05% and the deposit rate to -0.2%. Way to go Draghi! Are we going to get QE as well? This should be good for the FTSE.

#113 Smoking Man on 09.04.14 at 8:55 am

OK basement dwellers, it’s sort of a good day for you, intl merchandise trade up 2.58 b

So expect a huge job gain in tomorrow numbers, and the USDCAD getting crushed.

It’s another Pebble on the scale for a higher rate.

It now costs you 2% to keep your loot in the EU bank.

Dingbat, darn auto correct, I meen Draghi drops overnight rate by 10 Bps.

#114 Yanniel on 09.04.14 at 8:57 am

I can’t see the chart.

#115 luc on 09.04.14 at 9:01 am

mortgages rate debt up, Canadian credit card balances also up…

http://www.ctvnews.ca/business/canadians-taking-on-more-debt-but-delinquencies-are-down-equifax-1.1990564

#116 Holy Crap Wheres The Tylenol on 09.04.14 at 9:12 am

#82 Smoking Man on 09.03.14 at 10:26 pm
#69 Holy Crap Wheres The Tylenol on 09.03.14 at 10:00 pmHoly crap Smoking Man you have confused the shit out of me! You actually made sense. You had better start drinking your JD and get back to the book old man!
…..

I’m the old man, look who’s talking, you Vietnam fighter pilot.

You got a few years on me buddy….
____________________________________________

“Old Man” Well its an phrase only, I surmise you are in your late forty’s or early fifty’s. I on the other hand am just at retirement age. By the way I didn’t fly fighter jets in Vietnam, large transport planes and a couple of bombers only. My buddies in the fighters would escort us in and out of the bases. I flew C-141, C-5 and B-52F. I have flown many fighters but not in fighting roles. We were the sitting ducks in the sky when we flew over hot areas. Big, slow and heavy. At least in a fighter use can pull the trim, put on the after burners, punch it and roll out of any situation. In a Galaxy no way, no punching, no afterburners, just fly through SAM’s or MIGs and pray. We used to have a saying, “Hold on it’s gonna be a hot one today” that wasn’t for the weather!

#117 Mark on 09.04.14 at 9:45 am

“The difference was the US can walk away from their ball and chain (mortgage debt). Canada cannot!”

Not really true. Even in the “non-recourse” states of the USA, walking away usually meant declaring bankruptcy or being indebted significantly because refinanced loans, 2nd mortgages, etc., are full recourse. True non-recourse loans in the US were quite rare, just like they are in Canada.

Given a choice between a year in bankruptcy and paying back $250k in debt (ie: a good estimate of how much the average Canadian house is overpriced) — there are a lot of families who will pick bankruptcy as an orderly way to resolve their excessive housing debt. And certain ethnicities may even decide to simply re-patriate themselves back to their foreign lands instead of facing the full brunt of the consequences. So don’t think for a moment that Canada is immune to the same forces.

#118 aaron on 09.04.14 at 9:50 am

http://www.thestar.com/business/2014/09/04/toronto_housing_market_hit_full_summer_slowdown_in_august.html

So much for the 16% drop. Price crept back up. Here we go again.

Not really. Still $100,000 below April level in 416. — Garth

#119 oldmac on 09.04.14 at 10:02 am

Anecdotal evidence here, but I have 2 friends with houses they can’t sell in Cowtown. Both bought 2 years ago, both reno’d. They are both asking ~50K over their purchase price, to which both were promised by realtors they would sell in days. They now languish, with nearly 50 viewings a piece and no bites AT ALL. Not even low balls. The market, for the first time since I moved here – is slowing. This would be unheard of 8, 5 or even 2 years ago.

#120 Kenchie on 09.04.14 at 10:03 am

Garth,

The MSM has started to capitulate in their cause for defending the RE market.

http://www.theglobeandmail.com/globe-investor/personal-finance/is-it-time-to-downsize-your-home/article20334556/#dashboard/follows/

#121 Smoking Man on 09.04.14 at 10:05 am

#116 Holy Crap Wheres The Tylenol on 09.04.14 at 9:12 am
…..

That’s impressive brother.. What an adventure.. I’m jealous…

Check out the clip NostyVlad posted up top of a Russian Gen 5 fighter with thrust defection technology. Simular to F35 but looks to be 10 times more nimble..

Anyway just to let you know, on Microsoft Flight Simulator I can land a 747 on Toronto Island Airport 2 out of 3 attempts.

Try it, not easy….

#122 Bdy sktrn on 09.04.14 at 10:12 am

#106 Londoner on 09.04.14 at 4:37 am
More bad news for Vancouver. Virgin Atlantic is cancelling it’s Heathrow to Vancouver route as of October……………….

Thanks for the useless, totally irrelevant info, old chap.

I know you want to be a Debbie downer on vancouver, but this is a problem with virgin, from London UK, and none other.
Yvr will somehow survive without Mr Branson,s birds, in fact business is positively BOOMING.

Aisa pac traffic up 13+%
All intl up over 10
Total up 9.6

I,d imagine rbc would kill for those growth numbers.

……….
Regarding Real, gva has higher prices fewer listing’s than a yr ago, yes that sounds like a hot mkt.
Still very few good houses available and they still sell in a few days or less round here. Of course you can still buy a standard lot teardown on the eastside for a million.

Someone paid 1.4 for the teardown round the corner a year ago and it remains empty but standing. I suppose there is no mtge on it.

#123 munson on 09.04.14 at 10:57 am

I haven’t seen any slowdown in the south end of Guelph. Three houses, same model as mine all recently sold between 445k and 460k, we purchased ours in 2009 for 330, so no complaints here.

Are you going to crystallize the gain, or gloat about it? — Garth

#124 Daisy Mae on 09.04.14 at 11:18 am

#21 Numbers: “Garth, If realtors are constantly re-listing homes and putting them at a lower price, how is anyone suppose to know how much prices have fallen?”

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

Read previous issues of Garths’ blog and you’ll get the gist.

#125 ozy: ride the storm cowboy on 09.04.14 at 11:25 am

ride the storm cowboys! if your house it’s in the right area, and the right type – boyyyy – you’ll love sailing through the storm. not only the dip will be limited 2012-2013 values (-15%) but you might get a chance at scooping great bargain that only a smart cowboy loaded with cash knows when and how to get ;) and sell it for double or more in 5-10 years.
If you bought value, you might even be sailing flat out -5% up and down over the next years. Hold on, pay off your mortgage in 3 more years and enjoy life while in top health. look around you. it’s short.

#126 Londoner on 09.04.14 at 11:35 am

#122 Bdy sktrn

“I know you want to be a Debbie downer on vancouver…”

I was being facetious, except for the flying to Maui part (I prefer Van to LA). Damn, how old are you?

#127 Bdy sktrn on 09.04.14 at 11:50 am

“look around you. it’s short”

That’s what she said!

#128 Accountant who hates numbers on 09.04.14 at 12:05 pm

Bought in 2006 in the now Trendy Leslieville a detached home for 450,000. Similar houses are selling for 800,000.

Even with a 25% drop I’m ahead. Will a 25% drop happen? Absolutely not

I’m rich!

If you sell and take the gain. If not, it’s illusory. — Garth

#129 Metrotown on 09.04.14 at 12:07 pm

Anecdotal evidence from a guy named “al” ?
This is getting ridiculous …… Less listings isn’t goin to help the price in van… Ur numbers are fine but tell them where the price just went Garth….. Wave the white flag on vancouver…..after a decade

http://m.theglobeandmail.com/report-on-business/economy/housing/vancouver-single-family-detached-homes-hit-record-high-prices/article20335517/?service=mobile

#130 nm on 09.04.14 at 12:10 pm

if we’re speaking “strictly anecdotal” I have a close friend who has been looking to buy for about a year outside the GTA and is finding it very hard to find something. Anything that comes up is taken within a week and usually with a bidding war. Not sure where the person referred to in this article is speaking of when they say GTA but Oakville/Burlington/Ancaster are still a sellers market.
Definitely a market that is too hot but I think all of the people on this blog that are expecting doom and gloom are going to be very disappointeed when there is a moderate correction.

#131 Italians love real estate on 09.04.14 at 12:18 pm

Deleted ? Why ? Nothing offensive.

What are you afraid of Garth?

Not afraid. Bored. — Garth

#132 Italians love real estate on 09.04.14 at 12:20 pm

#123 munson on 09.04.14 at 10:57 am
I haven’t seen any slowdown in the south end of Guelph. Three houses, same model as mine all recently sold between 445k and 460k, we purchased ours in 2009 for 330, so no complaints here.

Are you going to crystallize the gain, or gloat about it? — Garth

Actually Munson you are behind if you ever eanted to move. Ack to the GTA since house have appreciated more than that and have certainly run away from a 460 figure.

If you are staying in Guelph than you are ok

#133 Dziner88 on 09.04.14 at 12:22 pm

I guess the Calgarians are immune to the market….

Calgary luxury home sales on record pace

http://www.calgaryherald.com/business/Calgary+luxury+home+sales+record+pace/10173826/story.html

#134 Mr Stats on 09.04.14 at 12:38 pm

From Globe and Mail:

Vancouver SFD prices hit another record high!

Enough said. We all know why but can’t say it.

Sure we can. Stupidity. — Garth

#135 JSS on 09.04.14 at 12:46 pm

Calgary luxury homes hit record pace!

http://www.calgaryherald.com/business/calgary+luxury+home+sales+record+pace/10173826/story.html

#136 Holy Crap Wheres The Tylenol on 09.04.14 at 12:50 pm

#121 Smoking Man on 09.04.14 at 10:05 am
#116 Holy Crap Wheres The Tylenol on 09.04.14 at 9:12 am
..
That’s impressive brother.. What an adventure.. I’m jealous…
Check out the clip NostyVlad posted up top of a Russian Gen 5 fighter with thrust defection technology. Simular to F35 but looks to be 10 times more nimble..
Anyway just to let you know, on Microsoft Flight Simulator I can land a 747 on Toronto Island Airport 2 out of 3 attempts.
Try it, not easy….
____________________________________________
Tried the simulators, my children gave me a package about ten years ago. Just didn’t have the same feel of as much fun as the real McCoy. Assuming it will be a dry runway and given YTZ is at elevation is 567 feet it should take between 5250 and 6250 feet to land a 747. The longest runway at YTZ is 3988 feet, so Kudos Smoking Man! Some of my old friends who were jet jockeys in country get off on the simulators as we are all either too old to fly or have heart conditions.
Yes is was something else over there but I can tell you when you came in country landing for the first time we all shit ourselves. We were all scared young kids (FNG) and cherries to the two tour guys. After landing several times we would always find bullet holes in the fuselage.

#137 drooski on 09.04.14 at 12:56 pm

prices of SFH in the core of toronto are bulletproof.

the average decline may be 15% but in demand locations will barely budge.

what will homes in leslieville or roncey really move by? 5%? 7%?

#138 Abin Batince on 09.04.14 at 12:57 pm

Mr. Turner,

News report that the federal government will be in the black for the 2014-15 fiscal year. Do you think our current government will do good on his promise of raising the TFSA cap to 10K$ for 2015 or will they leave it at the current 5500$ and keep this card in their deck come election campaign time?

#139 Mark on 09.04.14 at 1:02 pm

“Calgary luxury home sales on record pace”

Exactly. The sales mix has shifted upwards. But for the rest of Calgary, actual houses that people closer to average buy, the situation is dismal in comparison.

Vancouver SFD prices hit another record high!

Similar deal, only the high end stuff is moving. Doesn’t mean squat for the average homeowner who is seeing their price go down, dragging consumer confidence along down with it.

#140 SWL1976 on 09.04.14 at 1:04 pm

I think your last paragraph pretty much sums it up. I’m just heading home to the left coast after a good long shift in oil country, and let me tell you that the squeeze is on in the patch. Besides the TFW deal being such as mess, big oil is really starting to watch their bottom line much closer.

No one can predict the future, but I am not putting my money on big oil to keep this nation going, between bloated RE and a one trick pony getting oil out of dirt, we might be in for a bit of a hangover here. I didn’t drink the kool aid, but many many did and are still chugging it

Thanks to Garth and all the blog dogs trying to steer this ship. I have always been diversified with my skill set and been able to earn a living anywhere, but only now am I learning the fredoms of being financially diversified as well

It really is sad what has happened to our manufacturing as Canada has some very talented minds full of innovation

#141 Victor V on 09.04.14 at 1:10 pm

http://m.theglobeandmail.com/report-on-business/economy/canada-posts-widest-trade-surplus-since-2008-on-auto-exports/article20343961/?service=mobile

Royal Bank of Canada, for example, is forecasting 3.3 per cent GDP growth in the third quarter. That is a full percentage point higher than the Bank of Canada’s own forecast.

If sustained, this economic spurt could pose a challenge for Bank of Canada Governor Stephen Poloz. Mr. Poloz has repeatedly warned that persistent economic weakness will likely delay the bank’s efforts to push up its key short-term interest rate to a more normal level. The rate, left unchaged again this week, has been stuck at 1 per cent for four years now – the longest interest rate freeze since the 1950s.

If the economy grows much faster than the central bank now estimates Mr. Poloz could be forced to revise the bank’s forecasts and push forward rate hikes.

#142 Ray Skunk on 09.04.14 at 1:11 pm

#130 nm

if we’re speaking “strictly anecdotal” I have a close friend who has been looking to buy for about a year outside the GTA and is finding it very hard to find something. Anything that comes up is taken within a week and usually with a bidding war.

————————————————

Could it be your friend doesn’t have the budget for the area they’re looking in, and as a result is looking at deliberately underpriced properties which are almost sure to go higher in a bidding war?

#143 miketheengineer on 09.04.14 at 1:20 pm

#117 Mark

You said, “And certain ethnicities may even decide to simply re-patriate themselves back to their foreign lands”

Many, many new peoples to the country, can and do return back to their mother country. And times are still “so called good times”. Just think about it a minute. Lots of new comers, just buying a ticket and leaving….debt, house, mortgage etc. If things go south, I too can believe that many will return. The question is, how many, how fast and will it have an affect on the economy, and make things worse. That will be the real question.

I don’t believe there will be a crash, that will force people to make those decisions on mass. And CMHC is there to pick up the pieces, via the Canadian Tax Payer.

What me worry, no sir!

Garth is correct.

#144 Smoking Man on 09.04.14 at 1:33 pm

#136 Holy Crap Wheres The Tylenol on 09.04.14 at 12:50 pm

Oh you are good, truth is I was trying to get you to try it, you would not have been able to… Lol

You need to program a 30 knot head wind, 1 degree glide slope, 5 knots above stall. On touch down, full reverse thrust, hammer the brakes…

2 out of 3 times, you won’t go in the drink at the other side.

I tried… :)

#145 Mark on 09.04.14 at 1:35 pm

“Remember that quote when forecasting rate hikes by the BoC. “

Not a chance of BoC rate hikes for years to come. After all, housing deflation is in its early innings. The question really becomes, if faced with outright negative CPI readings (which aren’t too far away), will Poloz have the fortitude to do the right thing and cut?

Of course, cutting won’t help home mortgage borrowers as they’ll be battling increased risk premiums on their loans on account of the falling prices and significantly increased risk profile. Much of which will just flow to the banks’ bottom lines as additional profit. Ka-Ching! Hope you own bank stock!

#146 Bottoms_Up on 09.04.14 at 2:03 pm

http://www.torontosun.com/2014/09/04/ontario-seeks-buyer-for-lcbos-toronto-waterfront-land

So how much is 11 acres worth in downtown Toronto?

Could Canada’s richest man (worth $22 billion) afford to buy it?

If he couldn’t, wouldn’t that mean land prices are significantly over-valued?

#147 Blacksheep on 09.04.14 at 2:05 pm

liquidincalgary # 108,

“actually, Germany has accepted it as currency”
——————————————————-
Yes. It will also accept Bitcoin for tax payments.
Their calling it a “unit of account”.

However, Germany is a currency user. It risks nothing by accepting Bitcoin as It is no longer a sovereign in control of it’s own currency and does not function the same way as Canada or the US.
Note, Bitcoin is being ‘accepted’ but is not replacing or even being considered a currency.

For the record, I have no problem with Bitcoin.

#148 Bottoms_Up on 09.04.14 at 2:05 pm

#123 munson on 09.04.14 at 10:57 am
—————————————–
You’re forgetting the key complaint: you live in Guelph!

#149 Lurcher on 09.04.14 at 2:15 pm

Metrotown and South Burnaby houses selling like hotcakes. Anything under a million rarely makes it onto MLS, a SOLD sign just pops up. Over that mostly still selling too, just takes a bit longer.

#150 Casual Observer on 09.04.14 at 2:20 pm

Ka-Ching! Hope you own bank stock!

There’s one thing that may cause bank earnings to be impaired if there’s a housing downturn.

http://www.cansofunds.com/wp-content/uploads/2013/07/Canso-Px-The-Canadian-Housing-Market-July-2013-Revised-2.pdf

The report is a year old and has probably been linked to before, but having just re-read it, I found something interesting.

From page 10-11 of the report…

“…Superintendent of Financial Institutions, Julie Dickson, had told him that the Canadian banks were not following their underwriting standards. Could it be that Official Ottawa is setting up the banks to deny insurance on poorly underwritten mortgages?

This is what happened in the U.S. in spades after the housing crash… Their assumption is that the gracious $900 billion of CMHC and private mortgage insurance backed by the Federal government would cover the banks’ housing losses.

In the United States, even though Fannie Mae and Freddie Mac (“implicitly” guaranteed GSEs) were seized by the government and continued to pay mortgage insurance claims, the U.S. banks have paid hundreds of billions in settlement of suits that they poorly underwrote mortgages or misled investors. In our opinion, Canada will not be different.”

Never underestimate the lengths an insurance company will go to in order to deny a claim, especially if they are under financial stress.

#151 JL on 09.04.14 at 2:24 pm

#8 Mark

Good math Mark. If prices are 30% overvalued and they drop 60% that does NOT make then now 30% undervalued.

Take a $390,000 property. Let’s say it’s overvalued by 30% which means it should be worth $300,000. ($300,000 x 1.3 = $390,000)

If it falls by 60% then it’s now worth $156,000. ($390,000 x .4 = $156,000).

$156,000 is 48% undervalued if we are saying the property’s true value is the $300,000.

I love people talking about a statistical concept such as “mean reversion” who haven’t mastered basic math.

#152 };-) aka Devil's Advocate on 09.04.14 at 2:25 pm

#128 Accountant who hates numbers on 09.04.14 at 12:05 pm
Bought in 2006 in the now Trendy Leslieville a detached home for 450,000. Similar houses are selling for 800,000.
Even with a 25% drop I’m ahead. Will a 25% drop happen? Absolutely not
I’m rich!
If you sell and take the gain. If not, it’s illusory. — Garth

I sold a property in the summer of 2008 for $450,000 which I had bought in the summer of 2000 for a hair less than $100,000 plus an additional $50,000 in renovations. I sold and took the gain only to realize now that property is worth today all of what I sold it for in pre-crash 2008. The government taxed me on 50% of the gain at my marginal rate which was a good chunk of the equity.

Moral of the story… I was getting $2,600.00/month in rent on an investment of $150,000 although you could say there was a tied up opportunity cost on the then current value of $450,000. I’m thinking an income stream of $30,000 per year and an equity gain of $300,000 in 8 years was a WAY better strategy than selling and investing it in financials. That was like a gross 20% ROI PLUS equity gains!!!

The real moral of the story… sadly you can’t find such investment property opportunities any more as the competition is so fierce people are willing to settle for a 5.0% and less ROI. That will change though and in equal part it will be rising rents as investors insist on a higher ROI considering other opportunities that will divulge themselves as interest rates begin to rise. But then those rising rates, when they finally do come as they inevitably will, will push down property values as well – or at least keep them in check.

Bing Bong Bing… c’est la vie… my head hurts.

Shift it happens… on it’s own terms and timeline.

#153 Shawn on 09.04.14 at 2:25 pm

Withholding tax question

American dividends received by Canadians are subject to a 15% withholding tax except in RRSP accounts.

I believe it is our Canadian broker who withholds the tax. (Who else would know it is an RRSP account?)

Is the the Withheld tax sent to Revenue Canada or to the American IRS?

Doing a corporate return in turbo tax I could not see where to report this so I reported it as a tax installment payment with the explanation that it was tax withheld.

I imagine if the withheld tax is not properly reported by individuals or Corporations, Revenue Canada (or who ever has it) just keeps it?

#154 Mike S on 09.04.14 at 2:28 pm

Financial Post:
“In the much sought-after detached home segment of the market, the average sale price reached $902,428 in the city of Toronto proper, a 14.7% increase from a year ago”

Garth:
“you can expect detached houses in the crucial Republic of 416 to be 16% less costly than in the Spring”

Can both be correct?

April 416 SFD: $1,012,172. August 416 SFD: $902,428. Decline: 10.8%. — Garth

#155 Metrotown on 09.04.14 at 2:29 pm

It’s not stupidity it’s supply and demand , the population in the 604 is increasing every year in fact the last census set a record for population growth. All municipalities are forecasting booming pop. Growth and are basically panicking about infastructure limits. This coupled with geographically limited land and also a agricultural land reserve equate to these insane levels . If you want a 15 percent decline go find somewhere with a ford plant or a cod fleet….otherwise. Your wasting your time and money in the land of sushi and gucci

#156 JL on 09.04.14 at 2:30 pm

#37 Mark:

That is not accurate. I’ve worked in real estate for several years in Calgary and this statement could not be further from the truth.

Calgary prices peaked in 2006, they remained largely flat if not down in nominal terms through 2012. A couple properties I owned personally fell 20% in value from 2006 to 2012. Since 2011-2012 prices started to increase and have now returned to their previous peak values and some are now 5%-10% higher than the previous peak, this has all occurred in the past 12-24 months.

I sure as heck was not predicting the move up in prices, I expetected prices to remain flat for several more years which is what Calgary has experienced in the past. I figured prices would be flat from 2006 to 2016 meanwhile inflation continuing at 3-4% which means a price drop in real terms of 20%. The huge migration into Alberta in 2012 and 2013 I think was the main catalyst plus low interest rates. Rents have increased 30-40% since 2005 in Calgary so increasing numbers of people simply buy because rents are so high.

#157 Holy Crap Wheres The Tylenol on 09.04.14 at 2:32 pm

Smoking Man

The C-5 was a big bus compared to a 747, the Jumbo has much more thrust as well although the C-5 can go longer and haul more. We didn’t try any shit with pitch and extended the flaps only as required when landing unfortunalty most of our landings were night and fast speed. You never know if the LZ was hot so you had go around fast! Try programming a cross wind at say 40 degrees from head! You will be testing your yaw cabablities at the same time. Let me know if you still survived? Actually fight dynamics are the same for a 172-RG as a C-5 just more controls for trim and more instruments.
Here enjoy!
http://www.simairforce.org/downloads/C5%20Galaxy%20Pilot%20Guide%202%20for%20kelly.pdf

#158 Holy Crap Wheres The Tylenol on 09.04.14 at 2:34 pm

P.S. Smoking Man, You are correct can’t fly a simulator as well as I could the real thing. You don’t die in a simulator. Agian kudos for your flying efforts.

#159 X on 09.04.14 at 3:07 pm

The fact that nobody can imagine a RE correction convinces me that one is inevitable. How much, who knows. By this time next year, I will be curious to know what kind of a spin, or buying opportunity the RE boards come out with.

#160 45north on 09.04.14 at 3:19 pm

David Lee : This is a call for help

and then Devil’s Advocate : I’m not going to suggest that buying a home is a stellar investment strategy unto itself. It’s as much a lifestyle as anything.

if you got the money! Garth posted a piece about Jason : Jason makes a lot of money and has a spouse who can’t understand why he’s so cheap.

http://www.greaterfool.ca/page/3/

Jason buys a house for his wife with cash and then figures out how to make it a fair investment.

Read the piece, understand it! You’re not Jason.

#161 Hot Albertan Money on 09.04.14 at 3:19 pm

Garth, thought you might like this given you’re fetish for exposing Real Estate schemes: An Ottawa builder is running a contest where you could win your downpayment…

http://www.brigil.com/win-down-payment.php

#162 harden on 09.04.14 at 3:25 pm

Re. Vancouver: If we agree that a drop in listings is not indicative of a hot market, then what does a surge in listings suggest? I’m thinking of Spring, when listings typically surge, and sales activity can often surge right along with that increase..

#163 45north on 09.04.14 at 3:25 pm

Munson : I haven’t seen any slowdown in the south end of Guelph. Three houses, same model as mine all recently sold between 445k and 460k, we purchased ours in 2009 for 330, so no complaints here.

in the US, by the time people saw it, it was too late. Way too late.

#164 bigtown on 09.04.14 at 3:47 pm

The house photo on today’s blog is your typical Nanaimo house…you know how all the bungalows in the GTA are brick well same on the Vancouver Island…all the houses are stucco.

Good news for BUFFALO NEW YORK home buyers. The City of Buffalo has a program where you can buy a vacant house in Buffalo for ONE DOLLAR…the stipulations include $5k in your bank; renovate home under eighteen months and not sell for three years.

So I know in Toronto there are some types who will appreciate a fixer upper in Buffalo

Also Detroit has a similar program with different criteria.

#165 QuestiontoBlogDogs on 09.04.14 at 3:52 pm

Ottawa Real Estate Board

http://www2.ottawarealestate.org/home/NewsInformation/LatestNewsRelease.aspx

The average sale price of residential properties, including condominiums, sold in August in the Ottawa area was $360,214, an increase of 3.4 per cent over August 2013. (The average sale price for a condominium-class property was $263,996, an increase of 2.7 per cent over August 2013. The average sale price of a residential-class property was $381,628, an increase of 1.9 per cent over August 2013.)

– Based on the numbers what are the circumstances under which 3.4% as the reported increase from Aug 2013 to Aug 2014 is accurate?

#166 Renter's Revenge! on 09.04.14 at 4:10 pm

@153 Shawn:

It could be the US corporation paying the dividends that withholds the tax. Maybe your Canadian brokerage tells them where the dividends are going so that they can comply with US tax laws and treaties.

That said, doesn’t your brokerage issue you a T3 or T5 for the dividends you received and the taxes withheld? Usually they put withheld taxes in the box for Foreign Non-Business Income Taxes paid, at least for mutual funds. I don’t know if they do the same for individual foreign stocks. I only hold Berkshire stock outside my RRSP :)

#167 Mike S on 09.04.14 at 4:25 pm

April 416 SFD: $1,012,172. August 416 SFD: $902,428. Decline: 10.8%. — Garth

Sure but it only happened because people were buying like crazy last fall/winter because they were afraid rates might go up making the winter prices skewed to the upper side (unlike normal)

This might happen again once the rates actually start to go up

#168 aaron on 09.04.14 at 5:03 pm

Not really. Still $100,000 below April level in 416. — Garth

Just proof it is seasonal. Come next April will be another record high. Most people don’t buy and sell the same year.

Kind of obvious by now 416 price will remain sticky as people won’t budge on price and expect nothing less.

Kind of obvious most people buy at the wrong time. — Garth

#169 aaron on 09.04.14 at 5:38 pm

Kind of obvious most people buy at the wrong time. — Garth

And kind of obvious buying the past 6 years was the right decision.

What a lame comment. There is no right or wrong regarding a major purchase made with major leverage. For some people, it’s correct and for others a misstep. Real estate plays a role in a healthy financial life. It does not constitute all of that life. Higher prices now bring significantly higher risk, which needs to be mitigated through diversification. Try to contribute something positive, or stay home. — Garth

#170 Kelly on 09.04.14 at 5:42 pm

#128

If you sell and take the gain. If not, it’s illusory. — Garth

—————————

Same goes with a drop then. Unless you sell and take the loss, it’s also illusory.

Out of context. He was crowing about appreciation he is not actually crystallizing. — Garth

#171 Funny that on 09.04.14 at 5:50 pm

#168 aaron on 09.04.14 at 5:03 pm
Not really. Still $100,000 below April level in 416. — Garth

Just proof it is seasonal. Come next April will be another record high. Most people don’t buy and sell the same year.

Kind of obvious by now 416 price will remain sticky as people won’t budge on price and expect nothing less.

Kind of obvious most people buy at the wrong time. — Garth

++++++++++++++++++++++++++++++++
that’s what you have been saying for the last six years

And it’s been correct six years. Some people are just thick. — Garth

#172 DM in C on 09.04.14 at 5:53 pm

JL 156:

“Rents have increased 30-40% since 2005 in Calgary so increasing numbers of people simply buy because rents are so high.”

Exactly why we bought. We couldn’t rent a place in our ‘hood for what our mortgage is – even if rates go higher. Utilities aren’t ever included in rentals either. Only difference was taxes. We still put the same amount away in TFSA and RRSP, so the purchase was negligible for us, and we like our house. Easy decision.

Curious. How much of your net worth is in the house? — Garth

#173 Crossbordershopper on 09.04.14 at 6:33 pm

rates are going down,
less than 1% (.9% per year) on german bundie bonds
japan is even lower
canada 10 year 2.11%
us rates 2.4%
rates are headed lower with the ecb overnight rate at zero.
if any sense of economic waiver they will crush it to zero, i wouldnt believe it.
so, borrow money, dont worry about it.

#174 devore on 09.04.14 at 6:42 pm

#146 Bottoms_Up

So how much is 11 acres worth in downtown Toronto?

Could Canada’s richest man (worth $22 billion) afford to buy it?

If he couldn’t, wouldn’t that mean land prices are significantly over-valued?

Or it means it has to be… subdivided? How much is 11 acres of land in Manhattan worth? If the richest person IN THE WORLD cannot afford to buy it, does it mean it’s overvalued?

I’m just not following the logic.

#175 Oceanside on 09.04.14 at 7:49 pm

#1 blue steel on 09.03.14 at 7:01 pm
The RE agents will spin themselves dizzy trying to come up with ways to hide the inevitable decline in real estate prices

Here on the “Wet Coast” the challenge for realtors is convincing vendors that watch Global TV that their homes are going down in value and if they really want to sell they have to lower their prices…Opposite.

#176 DM in C on 09.04.14 at 8:07 pm

Curious. How much of your net worth is in the house? —
Garth

14% And we’re 44 and 43. We have a mixture of cash, bonds, insurance, LIRA, TFSA, RRSP. We don’t include the RESP because though we fund it, it’s not for us.

#177 Mark on 09.04.14 at 8:09 pm

“Good math Mark. If prices are 30% overvalued and they drop 60% that does NOT make then now 30% undervalued.

I think you know what I meant, that if a house’s mean value is “1”, and it is currently 1.3, that means that it will drop to 1. And mean reversion implies that it will go down even further below than that, to make up for a period spent above the mean, ie: down to 0.7.

My post wasn’t mean to be mathematically rigorous as it is simply impossible to predict tops and bottoms (although major policy changes, such as last year’s 2013 Budget has been a major inflection point and marked the top of Canadian prices). But I think you’d agree that a drop from 1.3 to 0.7 is quite severe, and is exactly what can be implied when someone claims that housing prices are 30% above their long-term mean values.


I love people talking about a statistical concept such as “mean reversion” who haven’t mastered basic math.

Please spare us the insults. The take-away message from my post was that mean reversion implies that not only will pricing fall to the mean, but pricing will spend a period of time beneath the mean, to compensate for time spent above the mean. It is, however, impossible to predict the shape of such, the duration, etc. I make no apologies for speaking in generalities instead of being drawn into your extremely specific example where you attempt to apply rigour to something that simply is not rigorously defined. Housing prices are cyclical, but looking at any sort of long term chart tells you that they are not perfectly sinusoidal.

#178 Nemesis on 09.04.14 at 8:17 pm

#JustForFun #BiggestThangIEver… #”Flew?”

http://youtu.be/14PMgikQ6oo

[NoteToGT: Like I had a choice. All the RealPilots were drunk. Shame about forgetting to lock the TailWheel, though. Still, I didn’t break it.]

#179 Daisy Mae on 09.04.14 at 8:26 pm

#28 Freedom First: “I always like putting my Freedom First.”

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

Freedom is good.

#180 Danby on 09.04.14 at 11:39 pm

To: #25 Advice for a Book

1. I would highly recommend Mr. Money Mustache (nice to see #45 David McKenna likes him too! I’m not sure if your adult children are living in Canada or in the US but Mr. Money Mustache has lived in both and has relevant articles. I love his writing style and his approach: “Financial Freedom through Badassity!”, “save more than you spend”, “create a better lifestyle that’ll cost you 25%-50% less” etc… check him out: http://www.mrmoneymustache.com/
2. My husband and I really appreciated Andrew Hallam’s “Millionaire Teacher” – how to become a millionaire on a teacher’s salary. We ordered the CD version of his book for about $12 online and listened to them bit by bit while washing dishes after the kids went to bed etc. What I like about “Millionaire Teacher” is that it goes into PRACTICAL detail about HOW to build a portfolio of index funds (if you are Canadian, American, Singaporean…), WHEN to rebalance, WHICH BANKS/BROKERAGES are worth your time. We also liked that it prepares you for having those tough conversations with the Investor’s Group-type advisors who are trying to con you into their investment strategy. If your adult children are interested, Andrew Hallam writes in there that if you read these 2 books, you’ll know more than 99% of financial advisors: A Random Walk Down Wall Street (Burton Malkiel) & Common Sense on Mutual Funds (John Bogle) – apparently it doesn’t take a whole lot of training to be a ‘financial advisor’.
3. I see that #64 Cic commented that David Chilton came out with a new book: “The Wealthy Barber Returns”. Yes, that one is pretty decent.

Good luck!