The unequals

RAZOR modified modified

On one side of the river is a depressed little Ontario town of 29,000 souls, and on the other is a city in New York State with ten times the population, a daily paper, three local TV stations, pro hockey and football teams. The median home price in Buffalo is $69,900. But yards away in Fort Erie, it’s $179,680.

Niagara Falls, Ontario, is a little more upscale and home prices reflect it, at $215,625. But that same money will buy you three houses across the gorge in Niagara Falls, New York, where the average is $60,500.

These bizarre differenials are consistent from coast-to-coast. The median house price in Canada is now $402,100, while in the States it’s just $222,900. A survey done (and published in the aghast Buffalo News) showed that of 10 sets of border communities, houses on the Canadian side cost more in nine. The only exception was Burlington, Vermont ($266,950), which sits across from Saint Jean Sur Richieu, Quebec ($213,850).

This disparity is made all the more interesting because the Yanks can write off mortgage interest from their taxable incomes (a huge advantage), plus they can lock in an interest rate for an entire 30 years (currently about 4% ),while we have to play rate roulette every five. Imagine that. Never having to renew. Never seeing payments rise.

Now, Canadians earn more. But taxes here are (in general) considerably higher. And even accounting for the income differential, house prices in Canada are still wildly above those to the south. This is the case even after a 20% improvement in American real estate values since the depths of the housing crisis in 2008, when properties shed 32% of their value nationally.

Since then mortgage lending rules have been tightened and huge loans (called ‘jumbo’) have been curtailed. The home ownership level in the States has travelled from 69% down to 64% (the lowest level in 19 years), while it has increased here to 70%. In the States, first-time buyers have plunged as a share of all buyers, into the 20% range (historically it has been twice that), while here a stunning 49% of all offers are made by virgins.

The differences are epic. Two countries, side-by-each, with similar cultures, economies, incomes and structures, and yet in one – the nation with a tenth of the population, far higher taxes and riskier mortgages – houses cost twice as much. How could this be?

Simple. We’re fools. And the current oil-fired mayhem will play a role in proving it.

We have developed an appetite for debt that’s nothing short of awesome. Canadian houses cost more because Canadians are dumb enough to borrow unlimited amounts to buy them. Rates are low, bankers are omnivorous, mortgage rules are lax and most people still think paying $1,100,000 for a buggy beater house in a ‘developing’ neighbourhood is less risky than putting ten grand worth of dividend-spewing Canadian Tire stock in your TFSA.

But, all this will change. In fact, it is. A year ago one of the housing hotspots in Canada was Fort McMoney, that oily boom town in northern Alberta. Well, guess what? The latest stats are out, showing a 65% crash in new housing starts. CMHC reports that where 584 multi-unit homes were being built last year, now it’s 179. Single house construction has fallen by 50%. The resale market has also frozen – and not just because it was minus five there today.

A new RBC report says Alberta, Saskatchewan and Newfoundland will all be taking negative hits to incomes because of oil, while the provinces that suck up the energy (especially Ontario) will benefit. Even with oil at $70 next year and $80 in 2016 (which seems a stretch), growth in the Canadian economy will shrivel like a cowboy skinny-dipping in a mountain stream, and come in at less than 2%. Meanwhile a mess in the oil patch will ripple out broadly. Plot the flight destinations by Westjet and Air Canada out of Fort McMurray, and see what I mean. That’s where the paycheques flow.

Meanwhile, cheap gas (at these levels) is equivalent to giving everyone in the US a pay raise of 2%. Coming along with robust corporate profits and more than 200,000 new jobs every month this year, it all means a tailwind for America. One or two more quarters of surging economic growth there and the Fed will begin the inevitable process of raising rates.

That might not matter a whole lot if you just bought a nice house in Buffalo for $110,000 in cash. But it sure does when you borrowed $600,000 for a tract home in Mississauga.

At least everyone can bitch about their lousy hockey teams.

263 comments ↓

#1 Jimmy on 12.09.14 at 8:06 pm

Jimmy types fast!

#2 Mark on 12.09.14 at 8:09 pm

Its so bizarre that Canadians have so much hubris that they believe that Canada is magically immune to the same market forces that brought down US housing. And the same sort of debt deflation that is now pushing the US dollar sky-high (no, its not economic growth!!). If anything, Canada will experience both housing deflation and a Canadian dollar on steroids (ie: $1.5 USD$) as it all unwinds and the US resumes its long-term path of higher inflation, higher interest rates, and a depreciating currency.

I see Jeff Rubin is in the news again, having “thrown in the towel” on the TSX. I usually like the guy, but he’s been somewhat of a contrarian indicator with his predictions of peak oil, and now this latest nonsense.

#3 Jimmy on 12.09.14 at 8:09 pm

Garth has been watching Brokeback Mountain.

#4 Sheane Wallace on 12.09.14 at 8:10 pm

drug/debt addict can not exist without the enabler – the dealer.

CHMC and the government is the debt dealer in this case, without them the banks will never lend with all that risk.

So abolish CMHC and constrain government’s ability to do harm. so simple.

#5 Happy Renting on 12.09.14 at 8:14 pm

A picture of Taylor Lautner on Garth’s blog? Maybe we do need to panic about the end of the world!

#6 TurnerNation on 12.09.14 at 8:15 pm

Hopefully Top 3. It’s been a while.

TLT -It’s Dynamite. TLT.US

#7 A Yank in BC on 12.09.14 at 8:17 pm

But the view of the Falls is way nicer on the Canadian side.

#8 ed_the_poor on 12.09.14 at 8:19 pm

Canadians are willing to take out bigger mortgages to up bid others also willing take bigger mortgages.

#9 the Jaguar on 12.09.14 at 8:20 pm

“We’re going to be in a low trough in the price cycle for some time.”

That comment comes from Jim Prentice. If anyone would want to find a positive ‘spin’ you would think it would be him.

#10 Dalton on 12.09.14 at 8:21 pm

First!

#11 De'Sean Roosevelt on 12.09.14 at 8:22 pm

I’m curious – have similar surveys been done in the past? If so, what were the results historically? Have Canadian houses always been more expensive in these neighbouring communities?

#12 Grooby on 12.09.14 at 8:23 pm

In response to Calgarytimers #140 yesterday:
———————————————————

My wife has been keeping a list of properties and monitoring the changes in list price. This week alone, 4 of the properties she was monitoring in the 500-900k range have had drops in list price of 40k or more! For 2 of the places, this is the 2nd drop in as many weeks.

I’m not sure what or where you’re looking at, but the impact of declining oil prices has been immediate and obvious (i.e. 22% increase in listings YoY, as noted by CREB).
Not surprisingly, however, you don’t see this comment on this topic nearly anywhere in the media, though it’s very apparent to the ‘boots on the ground’.

A final note; I work in O&G at a mid-size oil sands producer, and the change in forecasted budget from July 2014 to the budgets being put together now has been staggering. Nearly a 40% reduction in spend across the board. Contractors will lose jobs, without a doubt. You just don’t hear about ‘contractor’ job reductions much; unless it’s for a larger co (like Ledcor), where we can expect serious staff cuts in 2015 once 2014 budgets in the patch are finalized.

#13 JSS on 12.09.14 at 8:24 pm

“putting ten grand worth of dividend-spewing Canadian Tire stock in your TFSA”

I don’t like Canadian Tire simply because of their lousy service in the Auto section. On the other hand, bought an electric griddle for 1/2 price.

#14 TurnerNation on 12.09.14 at 8:25 pm

Poor LH and his old gutters in C01, 02. The Fed is gonna crush that premium down. Walking distance to what?

#15 totalinvestor.com on 12.09.14 at 8:25 pm

Buffalo? Don’t you have to factor in the snow removal expenses?

http://tinypic.com/r/2hgzu6a/8

http://tinypic.com/r/i36smv/8

#16 ALBERTASTROPHE on 12.09.14 at 8:27 pm

Umm, Stephen, I’m not sure this approach will generate the sympathy throughout the country that we’re going to be needing pretty soon.

http://www.cbc.ca/news/politics/stephen-harper-says-oil-and-gas-regulations-now-would-be-crazy-1.2866306

#17 unbalanced on 12.09.14 at 8:27 pm

Keep up the great reporting as usual. Thanks

#18 Snowboid on 12.09.14 at 8:30 pm

“… 20% improvement in American real estate values…”

In the area around our winter home in Phoenix, a decent SFH (3bd/2bth, 2.5 car garage) with a .25 acre lot could be had for the low $ 100Ks in 2010.

These same properties have sold last couple of months for around $ 200K – even at these increased prices they are bargains compared to the Okanagan.

The Albertans (and other Canadians) around us that winter here are a happy, contented group – even those who purchased in the last year at the higher prices.

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

“…Plot the flight destinations by Westjet…”

There are dozens of ‘oil’ types that own in the Kelowna complex we rent in. Personalized plates extolling the virtues of black gold may soon be taken off their Jags, Maseratis, and Mercs.

We have met most of these Albertans and they are generally a surly bunch – probably going to be worse when we get back. We think most of them are upset because of the minimum $ 100K they lost since they bought their ‘get-away’ condos six years ago.

On the other hand, the renters in the building seem to be a happy friendly lot!

#19 takla on 12.09.14 at 8:32 pm

60,000 G houses…bring em’ on,Ill take 3,one for the little lady and meself and 2 for rental income after retirement.
Its not just the housing that’s cheaper down south,we go down for the dairy products/groceries /beer ect and fuel.Save 20-30%
As a non consumer of bank debt products the forementioned hike in future rates will help lessen the burden after retirement as well with interest on saveings,no to just keep my job!

#20 Nemesis on 12.09.14 at 8:33 pm

#NothingGoesWithFusion… #QuiteLike… #YeOldeSpiceyMen….

http://youtu.be/3R2cnxz27LI

#21 Gregor Samsa on 12.09.14 at 8:34 pm

House in Florida within walking distance of a beach = $150K.

House in Saskatchewan, on the edge of town in Regina which currently overlooks a frozen tundra = $400K.

Makes sense…

#22 -=jwk=- on 12.09.14 at 8:35 pm

for the first time on this blog I feel we may have a chance. and by ‘we’ I mean people who own multiple florida homes and would like to trade 2-3 of them in on ONE toronto home.

#23 Kris on 12.09.14 at 8:35 pm

Ich bin zuerst….yeah baby !!

#24 GS on 12.09.14 at 8:36 pm

I agree there is a disparity, but it isn’t apples to apples….

Living along the border in Canada is the most desirable place to live in Canada. Living along the Canadian border is the least desirable place to live in the USA.

That’s why 90% of Canadians live within 100km of the border, and why 10% of Americans do.

But I digress…. a good correction is coming for sure.

#25 I stand corrected on 12.09.14 at 8:37 pm

Garth, the Buffalo Braves left Buffalo in 1978. I believe they are now the beloved LA Clippers.

#26 bubu on 12.09.14 at 8:37 pm

Noting will happen in Ft. Mac or Edmonton or Calgary… The prices will go up only 3-4% next year and that’s everything until 2016 when the oil will be back in the 90s. How many layoffs have you seen to affect the prices? Almost none… Unless the oil is going to $30-40 and stays there for 2 years I don’t see the prices going down…. As you mention here, less new houses construction doesn’t mean lower prices…

#27 Cici on 12.09.14 at 8:38 pm

Wonder how many “firsts” there will be tonight?

But what’s always struck me the most is that the majority of Canadians (me included) whine about having to shell out more for consumer staples and goods than our American counterparts, yet most rejoice about the fact that homes cost four times more here. Perhaps they believe that carrying four times the debt load makes them richer than they think?

#28 triplenet on 12.09.14 at 8:39 pm

Welcome to governmental participation/interference/influence in Canadian real estate values.
What’s new?

#29 hamish42 on 12.09.14 at 8:44 pm

Very well put, I have just returned from Atlanta where they have clearly come out the other side of the big financial hump that we are entering into. With lower energy costs in the US and lower housing costs, how do we think Canada can compete with the US??

#30 everythingisterrible on 12.09.14 at 8:47 pm

I’d love it if I could live in Blaine, WA. full time and commute into my job in Van. I could probably get an acre or two of land and still save a couple hundred grand compared to what I would pay for a detached house in Vancouver. Too bad traffic is so terrible.

#31 charles on 12.09.14 at 8:51 pm

Why dont you just move there and wallow in your wealth.

#32 miketheengineer on 12.09.14 at 8:54 pm

Garth et al:

You said: “Even with oil at $70 next year”….this is a nice start….but it it “too little” and “too late” to save 2014. I would like to see it back about $50 a barrel…and keep it that way for a while.

If they keep energy reasonable, things should stabilize. But hydro and nat gas is due to go up again, by more than 2%…so any gain you get from gasoline going down a bit, will be more than offset by the increases in hydro and natural gas.

Merry Christmas…Woo Hoo! I’m rich, I save 6 bucks on my tank of gas….Woo Hoo…I think I will go to Mac D’s and get a big mack…oh that meal is 10 bucks now.

#33 Victor V on 12.09.14 at 8:55 pm

http://business.financialpost.com/2014/12/09/falling-through-the-garbage-can-tsx-venture-sinks-to-record-low-amid-resource-sector-woes/

TORONTO • Current market conditions aren’t as bad as the global financial crisis for Canada’s micro-cap companies — they’re worse.

The S&P/TSX Venture composite index sunk to a low of 675.10 on Tuesday morning. That’s the worst level the index has ever traded at, dating back to when TMX Group Inc. bought the Canadian Venture Exchange in 2001. Prior to now, the lowest it ever reached was in December 2008, when equity markets around the world were bottoming out after the financial crisis. (It closed slightly higher at 684.88.)

#34 Mean Gene on 12.09.14 at 8:56 pm

A $hit $how is about to begin in Canaduh.

#35 Mark on 12.09.14 at 8:58 pm

“So abolish CMHC and constrain government’s ability to do harm. so simple.”

Not so simple. If the CMHC was ‘abolished’, even for new guarantees, prices would immediately revert to the willingness and legal ability of Canada’s banks to make un-insured subprime loans. In other words, down severely from today’s levels. In effect, such would cause an acceleration against CMHC subprime mortgage insurance guarantees, and would leave a big smoking hole in the government’s balance sheet (which is inevitable, but leaving such aside for the moment!).

Hence, the government is in a sort of prisoner’s dilemma, where they’re damned if they take action to reign in CMHC subprime guarantee activity. But they’re damned if they don’t, as the problem will get even worse. “F” realized this and reigned in CMHC significantly in 2013 — causing the Canadian RE market to begin its decline which has been ongoing for the past year and a half.

The latest development is that all of the Canadian banks have missed their earnings projections, and are now in the process of increasing the risk premia they charge retail residential borrowers to make their numbers for Q1 2014. This promises to drive the market down even further, and most likely in a far more noticeable fashion than the first leg down experienced thus far.

#36 miketheengineer on 12.09.14 at 9:00 pm

Buffalo:

Oh yeah, been there done that. Drove over one time, long time ago..with the buddies, and girlfriends, before GPS…got lost. Pulled over to ask some dude for directions. He yelled at me to get “outa da hood”, cause if “they” catch you, they will shoot at you”. True story.

There is a reason, homes are cheaper there in Buffalo.

By the way…beer was amazingly cheap, and drinking was soo cheap there, we didn’t want to drink in Ontario again.

No wonder people hate us. — Garth

#37 Tom on 12.09.14 at 9:02 pm

It’s not about being more fool, it’s about the availability of credit. It dried up there in the US in 2009, not here.

No shortage of credit there today. I’d say it has more to do with experiencing a housing crash. — Garth

#38 jimbo on 12.09.14 at 9:04 pm

3 to 4 times more in taxes?? I doubt we pay more than 1.15 times more….

Not just income tax. — Garth

#39 Inglorious Investor on 12.09.14 at 9:05 pm

Here is a headline from The Globe:

“The close: TSX energy sector climbs as investors sense bottom”

But do they really? Whenever you talk to investors, or listen to money managers in interviews, they usually defer to the ‘wisdom’ of the markets when attempting to ascertain the trend.

You often hear comments such as, “we need to watch the markets” or “we’ll let the markets tell us when it’s time to get in/out.” This approach is so pervasive that technical analysis seems to have become universally employed as a market timing system by, well, almost everyone.

In that light, technical analysis is just a sophisticated method of everyone watching everyone else.

This gives the impression that all individual investors are somehow impotent observers positioned on the periphery of this arena we call “the market” and that the “market” itself is some sentient entity moving about the arena completely under its own volition.

However, we all know that the market is not some single entity; it is made up of millions of individual investors, who all seem to be waiting for everyone else to act. Or do they? Some investors somewhere must take the lead.

IMO this gives a lot of weight to the idea that markets move like herds of ruminants or flocks of birds. If everyone is watching everyone else, then it must be a few individual investors (the smart money?) with sufficient financial firepower to move prices who decide (wittingly or not) when the trend will change. Once their actions are telegraphed via price discovery, moving averages, MACDs, convergences and divergences, VIX, etc. then the rest of the market jumps in and a new trend is verily born.

That makes perfect sense to me, based on what I’ve read/seen/heard/experienced. The problem is, if markets move on the actions of just a few key, powerful investors, then the job of the herd is to decide if these market leaders are correct. But herds, don’t really decide, do they? They mostly just react. If the price of oil today was $83 instead of $63, how many people would say, “$83 is wrong, the real price should be $63”?

And what is “correct”? I have said before on the blog that I don’t think markets can be right or wrong in pricing assets. If the market determines value then the prices are just the prices at that time. Getting caught in a winning or losing trade doesn’t necessarily mean you were right or wrong about the price, just that you moved early or late within the herd. Of course this is all within the context of the short term. In the long term, other factors come into play, e.g. the ‘fundamentals’.

#40 Mark on 12.09.14 at 9:08 pm

“they charge retail residential borrowers to make their numbers for Q1 2014.”

Sorry everyone, meant Q1 2015 in my previous post. The next quarter.

#41 pitfield on 12.09.14 at 9:13 pm

“similar cultures, economies, incomes and structures, and yet”

Ya until you visit all their cities and see one little area that looks good, the rest is a slum. So much for comparison we are headed there very soon.
Keep Canada as it was.

You embarrass me. What a hick. — Garth

#42 Dr. Strangeglove on 12.09.14 at 9:14 pm

Vee have a plan to drive zee price of zee oil to zero. It will be very spectacular. Call it zee “demand destruction” plan. Ha ha ha.

#43 TEMPORARY® Foreign Prime Minister on 12.09.14 at 9:16 pm

“……This disparity is made all the more interesting because the Yanks can write off mortgage interest from their taxable incomes……”
==========================

Interestingly, thanks to massive lobbying in the early 90’s by that self-interested group called the Canadian Bankers Association, mortgage interest was conveniently removed from the Bank of Canada’s calculation of the Core Inflation Rate, thereby providing an illusion (or Frankenumber, as GT would say) that all was well with consumer inflation.

Of course, any Canadian with an IQ larger that the circumference of the PM’s growing waistline, has witnessed a staggering increase in the cost of servicing a mortgage, much to the delight of the Big Six’s continuing record bank profits.

Given the latest release of banking numbers, however, Canadians are now clearly and completely tapped out, and the Bank of Canada, CMHC, and CREA have finally choked the chicken that laid all the golden eggs.

#44 Market Man on 12.09.14 at 9:20 pm

# 26 bubu

Profits will determine everything. Major oil companies
Are cutting spending, junior gas companies will close and
Jobs will disappear and fear will be in all oil workers.

Even bank profits will shrink and more layoffs will result

Chmc works well in an environment of stable job growth and prices. If home prices decreases 10% because of affordability they don’t necessarily lose money. Home will lose equity but as long as they keep paying their mortgage everything is fine. Even if a few lose their job
In a stable job environment they can find someone to buy it.
However when many people can’t afford to pay because of job losses on a large scale then it’s different.

#45 Mark on 12.09.14 at 9:25 pm

“has witnessed a staggering increase in the cost of servicing a mortgage, much to the delight of the Big Six’s continuing record bank profits.”

Really? Haven’t seen anything like that. The low interest rates have, in most cases, reduced the cost of debt service, as interest rates have mostly been going downwards since the early 1990s. So effectively you seem to be arguing that inflation has been over-stated?

Given the latest release of banking numbers, however, Canadians are now clearly and completely tapped out, and the Bank of Canada, CMHC, and CREA have finally choked the chicken that laid all the golden eggs.

There’s no more room for debt expansion, but there’s plenty of room for the squeeze to be applied in terms of the risk premia on the credit itself. Which is what the banks have embarked on as a strategy. A large number of TD customers, for instance, on various adjustable rate credit products, recently received notices of 2% rate increases.

The defaults, of course, mostly fall onto the CMHC which will have to use taxpayer resources to clean up the mess as they clearly didn’t charge enough in premiums to cover the full-cycle probability of distress.

#46 Banjopete on 12.09.14 at 9:27 pm

I resent your last comment Garth. There’s nothing wrong with my Canucks.

#47 james on 12.09.14 at 9:27 pm

As down as I am on Canadian real estate, there’s an importance difference that is worth mentioning: crime. Your 60k house in Buffalo or Rochester may look good, until you try to walk around your new neighbourhood.

Just ask these refugees from Nepal, who have been targeted for years by African-American males. The police are trying to keep them from arming themselves:

http://www.democratandchronicle.com/story/news/2014/06/27/anxiety-mounts-refugee-community/11560881/

You have to pick your neighbourhood in the USA very carefully, looking closely at the demographics. 60k isn’t a bargain if a bunch of ‘youth’ send you to meet your maker.

Ever been to Jane-Finch or East Hastings? — Garth

#48 james on 12.09.14 at 9:31 pm

#26 bubu

So the price of oil tanks, and you think there will be no effect on Alberta? That there will be no layoffs, downsizing, putting projects on hold?

Wishing don’t make it so.

The only way that would happen is if producers are inefficient or incompetent. In forestry, mills are closed when market conditions aren’t good. The two are not equivalent, and for all I know oil sands projects work on longer term contracts, but the odds of some sort of deleterious impact are very high.

#49 TEMPORARY® Foreign Prime Minister on 12.09.14 at 9:35 pm

#35 Mark on 12.09.14 at 8:58 pm

Excellent post.

As they say, there’s no putting the toothpaste back in the tube.

#50 james on 12.09.14 at 9:37 pm

#47

“Ever been to Jane-Finch or East Hastings? — Garth”

Indeed, I have spent time in both places. Don’t take the non-rocket bus out of York University to downsview if you can avoid it.

However, those are NOT equivalent to the inner harbour of Baltimore, the bad parts of St Louis, Kansas City, Philly, etc. Walk both at night and see how it goes. I think Canadians are unaware of the chronic levels of violence in many American cities. A good percentage of crime is not reported, and a project in Oakland that installed a system to detect gunshots noted that 80% of gunshots were never reported to the police.

Walk around Wilmington Delaware or New Orleans at night, but I suggest having a glock or pitbull with you.

How about a frothing Canadian? — Garth

#51 Marco on 12.09.14 at 9:39 pm

Thanks Garth.

“No shortage of credit there today. I’d say it has more to do with experiencing a housing crash.” – Garth

Once bitten twice shy. Unlike here in Canada since 2008, gorging on low interest rates. 5% down payments, cash back mortgages etc… Historically, house prices have been quite even between the U.S and Canada, and I can’t see any reason why they won’t revert to the same.

http://www.huffingtonpost.ca/2014/04/28/canada-us-price-gap-record-high_n_5227782.html

#52 Moarbs on 12.09.14 at 9:40 pm

The price of oil and the crb index downdraft has called BS on any economic recovery that anyone thought existed since 2008.

Such pundits have exposed themselves for so many years, the internet is a great thing because it records all their nonsense.

All that matters now if if they have the courage to admit it…

#53 TEMPORARY® Foreign Prime Minister on 12.09.14 at 9:42 pm

Ever been to Jane-Finch or East Hastings? — Garth
===================

Did your Hummer come with the factory armour plating option?

Myself, I try to avoid areas where TripAdvisor emphasizes traffic lights as really only suggestions.

#54 JSS on 12.09.14 at 9:55 pm

Any thoughts out there on D’UN (Dream Office REIT).
Dividend almost 9%, owning the major office towers in the country. Possible dividend cut like the energy companies? Mark, what you think?

#55 Mike S on 12.09.14 at 10:02 pm

“If anything, Canada will experience both housing deflation and a Canadian dollar on steroids (ie: $1.5 USD$) as it all unwinds and the US resumes its long-term path of higher inflation, higher interest rates, and a depreciating currency.”

Assume the CAD did go to 1.5 USD. Then you must see real estate deflating by 60% or more (to return to sane valuation adjusted to currency)?

Why would you be bullish on the banks in this case? At least this will destroy their uninsured loan portfolio (along with Canada’s government and consumers)

#56 Ottawa on 12.09.14 at 10:07 pm

Hello Garth,

very good post. This house in Ottawa-Orleans for example has been on the market for about a year:

http://www.realtor.ca/propertyDetails.aspx?PropertyId=14954580

Price keeps dropping but no buyers in sight.
I wonder how they came up with that price. The house was purchase for 79 000$ in 1982. Even if you calculate 5% increase per year over 32 years it comes up to about 205 400$(79000+126 400 =205 400$).
Nothing has been renovated over the life of the house.
Ottawa now has about 10 000 properties on the market with very few buyers. What do you think the prospects are for that market?

Cheers,

Ottawa

p.s. This one has also been sitting on the market for about a year and now has been discounted 15K
http://www.realtor.ca/propertyDetails.aspx?PropertyId=14853180
The new homes at the premier golf community “Stonebridge” (by Monarch)are not selling at all.

#57 Taxes suck on 12.09.14 at 10:08 pm

“Now, Canadians earn more. But taxes here are (in general) higher by a factor of three or four.”

Not sure where you get this idea from…

Here’s a comparison of Ontario and New York State:

Gross Income = $100,000

Fed and Prov Taxes Payable Ontario = $26,400
Fed and State Taxes Payable NY = $23,992

Payroll taxes Ontario = $3339
Payroll taxes NY = $7,650

Total taxes Ontario = $29,739
Total taxes NY = $31,642

Don’t forget about payroll taxes, Garth. They’re punitive in the US. And don’t forget about New York City’s income tax, which should be about $3,530 on top of the NY state and Federal taxes.

And don’t forget about HST, land transfer taxes, higher realty tax or gas tax. Then drop US taxes by deducting all your mortgage interest and property tax from earned income. — Garth

#58 bubu on 12.09.14 at 10:08 pm

#44 Market Man and #48 james.. in theory you are right.. in reality the house prices will be ok in AB.

If oil is not going under $50 for more than 1 year no worries.. we’ll see next spring or summer when you want to come back with comments…

Why I’m saying this? The oil started to go down in July.. why we still don’t see the layoffs? To see a decrease in prices we need to see at least 8-10% unemployment in AB… I don’t think this will happen in AB…

#59 willworkforpickles on 12.09.14 at 10:14 pm

Hey Garth….did you know there’s lake trout in the potholes on Buffalo streets?

#60 Market Man on 12.09.14 at 10:16 pm

#2 Mark

CAD @ 1.5 US —never
First we will experience slow upward movement
Globally on interest rates. And the world is interest rate sensitive.
The CAD is tied into commodities
Canada will be one of the last countries to increase
It’s overnight rate

#61 Freedom First on 12.09.14 at 10:30 pm

……..stunning 49% of all offers are made by virgins. Yes, and many of them will never forget how much it hurt to lose their virginity. Many of the Boomers, and I know them, who lost their first house, and bankrupted in the process in the 80’s, will simply not ever mention it. There is many ways to lose your house and be bankrupted in Canada, without even losing your job. Don’t believe me?, just ask Garth. He’s seen it all too.

#62 rk usa on 12.09.14 at 10:30 pm

re: #47 However, those are NOT equivalent to the inner harbour of Baltimore,

FYI the inner harbor is the tourist area it probably has the least amount of crime, you want to stay away from the east or west side of downtown or the north west and there is no reason to go there

besides 90% of the crime is black on black gang and drug related

I know I reside here in the City, the City has suffered from severe economic restructuring, notwithstanding the crime in these areas it is a pretty cool city that is on the way up and has a more identifiable personality than most CDN cities

#63 rk usa on 12.09.14 at 10:32 pm

re: #47 However, those are NOT equivalent to the inner harbour of Baltimore,

plus you can buy yourself a nice single family home on a large lot for 150K in the northeast part of the city

and it is safe

#64 Dus10BC on 12.09.14 at 10:32 pm

USA housing has always been cheaper than Canadian. I’d be interested to know what the average difference has been outside of the bubble.
Other than a normal differential that’s always existed, there’s the horrible reputation that America has, and it’s not “home sweet home”. More like arm up and prepare to die. And don’t even think of going to the store after dark. Certain death if you do.
That’s likely an exaggeration. But from Canada, that country looks like it’s in a perpetual civil war.
No thanks!

#65 Vancouverite on 12.09.14 at 10:32 pm

#60 Market Man on 12.09.14 at 10:16 pm
#2 Mark

CAD @ 1.5 US —never

————————————
Never say never. We’ve been there before.

I remember having to pay C$1,600 to buy US$1,000 in around 2002 or 2003. Ouch!

#66 rk usa on 12.09.14 at 10:34 pm

re: #47 However, those are NOT equivalent to the inner harbour of Baltimore,

and you can buy yourself a nice single family detached home on a large lot for 150K in the NE and it is safe

#67 Christopher Mewhort, EA on 12.09.14 at 10:38 pm

Re #57 If a married couple financed that $110,000 house @ 4%, the interest in the first year would be $4,365. Add $5-6,000 for property tax in Buffalo, and the potential Schedule A deduction is $10-11,000. To use this, the couple would have to forgo the standard deducton of $12,400 (2014). Big whoop.

#68 Kenchie on 12.09.14 at 10:38 pm

#41 pitfield on 12.09.14 at 9:13 pm

“Ya until you visit all their cities and see one little area that looks good, the rest is a slum. So much for comparison we are headed there very soon.”

I went to Washington DC in October and sauntered through their “Chinatown”. I saw more black people there than in all of Vancouver. Worst Chinatown evarrr.

#69 stop lying on 12.09.14 at 10:44 pm

#65 he’s talking about the other way, C1000 to buy US1500. which is ludicrous and will never happen.

i’ve been to jane and finch and east hastings and there are some bad people there you can’t compare them with inner city us. not even close.

Some nights I hate this blog. This is one of them. — Garth

#70 Kenchie on 12.09.14 at 10:47 pm

#54 JSS on 12.09.14 at 9:55 pm
“Any thoughts out there on D’UN (Dream Office REIT).
Dividend almost 9%, owning the major office towers in the country. Possible dividend cut like the energy companies? Mark, what you think?”

It’s yield has creeped up steadily since last year. It’s risky for sure. It’s just doubled the commissions for leasing agents for all of their office portfolio in 2015. Every property in the country! That stinks of desperation!

#71 ronh on 12.09.14 at 10:48 pm

On another topic from Bloomberg.

http://www.bloomberg.com/news/2014-12-09/think-central-banks-are-done-stimulus-set-to-accelerate-in-2015.html

Overweight USA

#72 rk usa on 12.09.14 at 10:48 pm

re #62 comment

should not have referred to race but that the crime is primarily gang on gang and drug related

#73 Waterloo Resident on 12.09.14 at 10:50 pm

To anyone who owns a house or a Condo in coastal parts of Southern Florida: YOU MIGHT JUST WANT TO SELL WITHIN THE NEXT 10 years or otherwise it ‘might’ be too late. In the next 40 to 60 years ocean levels are guaranteed (yes, guaranteed) to rise 10 to 12 feet, and the average height of land in Ft. Lauderdale is only 4 feet high.

Quote: “South Florida is extremely vulnerable because the land is flat and full of swamps and canals, high population density (where many of which reside in areas just 4 feet or lower above sea level)”

Source: http://www.dailykos.com/story/2014/05/11/1298603/-Why-is-Rick-Scott-and-Marco-Rubio-Telling-South-Florida-to-go-Flood-Themselves#

I just read about how even if global greenhouse gas production was cut to zero, its too late for massive amounts of ice shelves in the Antarctic area, they are already collapsing and there is nothing on Earth that can stop them now. Total sea level rise in next 30 to 50 years = 10 to 12 feet, minimum.

Quote: “the collapse is predicted to raise sea level by 11 to 13 feet (3.3 to 4 meters).”

Source: http://www.livescience.com/45534-west-antarctica-collapse-starts.html

Right now almost no one knows about this fact, but when the word starts to get out and people know about it then who is going to pay $150,000 for a house that will be under water in 30 to50 years time? No one. So think about selling your coastal Florida condos soon, before this word gets out. Seriously.

And if you have never visited the Florida Keys, your generation will be the last to ever see it before it turns into an ‘underwater’ attraction.

#74 The Emir of Schmoe on 12.09.14 at 11:00 pm

Yes, this is all well and good but you have to remember that all Yanks are from somewhere else: people in LA and NYC were not born there. We Canadians largely stay in our own provinces. The banks know this, so we’re forced to pay whatever the market will bear just for the priviledge of living on our own land. I’m speaking of Canadians of course, immigrants aren’t even spending their own money on housing.

#75 Mark on 12.09.14 at 11:02 pm

“Assume the CAD did go to 1.5 USD. Then you must see real estate deflating by 60% or more (to return to sane valuation adjusted to currency)?”

Isn’t a 60% deflation already in the cards just to get us back to reasonable ratios in terms of price to income, price to depreciated replacement cost, etc.? Nevermind overshoot that usually occurs with transient events? Doesn’t seem far fetched to me.

Wouldn’t expect 1.5 USD/CAD$ to be the long-term equilibrium point, much like $0.63 USD/CAD$ proved to be an extremity. Equilibrium is likely in the $1.1-$1.2 range.


Why would you be bullish on the banks in this case?

Because they’ll enjoy a chronically low cost of capital in such a deflationary environment?


At least this will destroy their uninsured loan portfolio (along with Canada’s government and consumers)

$1.5 is an extremity, and would likely be accompanied by vibrance in, for example, the gold sector. Much like the extremities of the USD$ were, in the late 1990s, driven by the US tech sector’s outperformance. US banks weren’t destroyed in that environment, now were they? Consumers did very well, and the strong USD$ was very good for their economy. Don’t see why the same dynamics won’t play themselves out in Canada. A chronically weak dollar is what we should fear in terms of being bank stock owners as eventually it will increase the cost of capital to the banking sector, which, in term, will drive defaults down the line as the sector is forced into raising rates.

“Never say never. We’ve been there before.”

No we haven’t. When I say $1.5 USD/CAD$, I mean, it costs $1500 USD to buy $1000 CAD. It has never happened, although the inverse has, as you point out, occurred. On account of a depression in the resource sector, and a bubble in the tech sector. Since interest rates and exchange rates tend to be cyclical over the long term, the argument is, an inversion of circumstances (ie: Canada’s gold sector doing very well, the US economy doing very poorly) would create an inverse reaction completing the other half of the cycle.

Canada will be one of the last countries to increase
It’s overnight rate

I agree, and this is why the CAD$ will strengthen. There is an incredible amount of deflation in the pipeline in Canada, plus we are the worldwide headquarters of a sector, the gold mining sector, that responds extremely well to debt deflation.

Don’t fall into the often-repeated line of thinking that higher interest rates cause currencies to appreciate. There is tons of empirical evidence that suggests that such is *not* the case, and that the opposite is true. Higher rates are almost always associated with higher inflation, and higher inflation is the very definition of a fiat currency losing strength.

#76 Herethere on 12.09.14 at 11:08 pm

Garth, ironic picture, if memory is right, with the ink barely dry on the free trade deal, Gillette was one of the first companies to let in Canada only sales offices y move everything else south.

#77 Ex-Cowtown on 12.09.14 at 11:10 pm

The average American family of four now pays around $20K/year in Obamacare. And that’s not counting the $8K deductible and the co-pay amounts. Can’t pay much fora house when healthcare is eating your lunch. I worked in the US for most of the last three years so these are da facts.

In Canada, housing prices may be bankrupting us, but in the US it’s healthcare. Lots of Yanks are locked into jobs they hate but can’t quit or retire because they’d lose healthcare. One guy bemoaned to me that after working for 35 years and scrimping and saving he was scared that one major illness would wipe him out, so there was no way he could retire and lose his healthcare.

The Americans do have one thing in their healthcare system that we don’t have in their ours….fear.

I’m good with Canada. Be careful what you wish for.

That $20,000-per-average-family Obamacare premium is a media myth. To pay it a family would need to earn $120k a year with nobody uninsured through their jobs, and who choose to buy insurance on the exchange instead of buying private insurance. This is only a fraction of the population. Saying the “average family” is completely inaccurate. Be careful what you fall for. — Garth

#78 Smoking Man on 12.09.14 at 11:14 pm

The herds are different, in Canada a home ownership is status, success, pride. You’ve made young ladies. Let’s face it, most guys could rent for ever.

It’d the Competative assertive Canadian woman who’ve caused this madness.

Forcing her man to trade in the sports car, the bike, beers with the boys just so she’s got bragging rights over other females.

In the USA the men have F150s tail gate parties, wives that want to please there men, and there home is a home. Not a prop for showing off.

I blame it on teachers.

#79 Mark on 12.09.14 at 11:20 pm

“Any thoughts out there on D’UN (Dream Office REIT).
Dividend almost 9%, owning the major office towers in the country. Possible dividend cut like the energy companies? Mark, what you think?””

Don’t want to talk about individual companies, but the REIT sector in Canada has been heavily characterized by high GAAP P/E ratios, extensive reliance on relatively short term debt, tax preference as flow-through entities which make comparisons to traditional corporations even more absurd, and the industry’s use of non-GAAP metrics to promote their investments instead of properly acknowledging the impact of long-term depreciation.

Can REITs be part of a balanced portfolio? Absolutely. But like residential RE, whether they’re good long-term investment prospects heavily weighs on their valuation. The time to load up on assets with high correlation to long-term bond prices is when interest rates are high and are coming down, not when rates are low and going up. Outsized REIT/RE gains are in the rear view window, not in the future. Many major Canadian corporations have been actively selling their RE assets into or to REITs as an acknowledgement of not only bubbly valuations of real estate, but also as a low cost source of operating leverage.

#80 Taxes suck on 12.09.14 at 11:23 pm

“And don’t forget about HST, land transfer taxes, higher realty tax or gas tax. Then drop US taxes by deducting all your mortgage interest and property tax from earned income. — Garth”

NY sales tax = 8.875%

And most damagingly, add back the private health insurance premiums (average per family) = $4,565

Also, not everyone owns a home (i.e. 64% as you mention), therefore deductions for interest (with limits) and taxes (capped at $375 and applicable on houses assessed $85k or less) don’t affect 36% of the population.

Furthermore, estate taxes are way higher in the US than in Canada.

Anywho, the US is undertaxed for the level of government spending. Canada at least has a relatively small budget deficit.

And the US feds get roughly 2x the amount of tax revenue the individual states due in total. In Canada, provinces and territories have more tax revenue than the feds by about 20% (in 2009 at least). So it’s not comparing apples to apples anyways. They are much more centralized, which is probably part of the reason why there are so many sh!t areas of the US.

#81 Country Girl on 12.09.14 at 11:24 pm

.#74 The Emir of Schmoe on 12.09.14 at 11:00 pm

Your post is hilarious. Ever been to Toronto? Or anywhere in Ontario?

#82 Taxes suck on 12.09.14 at 11:25 pm

“Some nights I hate this blog. This is one of them. — Garth”

Cheer up Garth, you could be a frothing Canadian!

=P

#83 Joe Calgary on 12.09.14 at 11:32 pm

Handed in one of the best essays I’ve ever written in my life in my MGMT 3010 business ethics class at UofL, wrote about the unethical real estate boards fibbing statistics. Got a 55%, teacher must be highly leveraged in a particle board McMansion.

#84 Ford Prefect on 12.09.14 at 11:35 pm

“Even with oil at $70 next year and $80 in 2016 (which seems a stretch)”

Predicting the future price of anything is a mugs game and oil is no exception. But here goes.

Conventional oil production = cheap oil peaked at 73 mbd in 2005 and has been declining since. These facts are even acknowledged by IEA. Thus at the present time the total of conventional oil is less than 73 mbd. But the world economy has grown considerably since 2005.

The difference between production and demand has of course been made up by unconventional oil production and depending on the figures totals from 10 to 20 mbd. Unconventional oil production is very expensive – again depending on whose figures to believe from $60 – $85 per barrel.

Clearly for prices to remain low the world economy will have to operate at a level of oil consumption below that of 2005 or even earlier because only 73 mbd or less of conventional oil is available. I find this scenario very unlikely and expect crude oil to recover to the plus $95 level within the next year. But who knows?

#85 Julia on 12.09.14 at 11:37 pm

See Why Engagement Rings are a Scam. Same applies to house prices. http://www.collegehumor.com/post/6985745/adam-ruins-everything?utm_source=facebook.com&utm_medium=post&utm_campaign=august

#86 joblo on 12.09.14 at 11:39 pm

“The Americans do have one thing in their healthcare system that we don’t have in their ours….fear.”

Maybe, but is the U.S. system headed for bankruptcy, lower quality of care and or higher taxes? Do their politico’s ignore a failing system?
Canadian healthcare system, a ticking time bomb?

#87 Snowboid on 12.09.14 at 11:46 pm

#64 Dus10BC on 12.09.14 at 10:32 pm…

No, according to many comparisons done (and reported on this blog as well) prices were the same around early 2006.

Then the US took a steep dive down and Canada continued its’ bubbly way up.

Oh, by the way, where we winter in the northwest valley of Phoenix, the crime rate is substantially less than any Canadian city of similar size.

It’s like most cities anywhere in the world, there are areas you don’t want to wander into, even during daylight hours – just happens we know of more of them up north than down here.

#88 Retired Boomer - WI on 12.09.14 at 11:48 pm

#77 EX-COWTOWN

You are dead wrong with US Healthcare costs. Obamacare, while hardly perfect has been a good thing for most US citizens in need of healthcare.

Each state could of had their own exchanges, but some states declined to set them up. Generally the citizens of those states have fewer choices. Fewer choices usually means less price competition.

Most working families I know have good coverage, and yes, the prices might not be as cheap as Canada, the attendant taxes aren’t as stiff either, so probably overall a wash.

One would need to sit down and compare ALL the costs to be certain. One thing for sure, neither country is “Free” to line in, they just squeeze their citizens a bit differently.
******

Some commenters have stated Buffalo, or Niagara Falls might not be a ‘safe’ place to live. I think that is grossly overstated having lived in Buffalo. Yes, there are neighborhoods that are older, more run down. There are many nice areas as well. I’ve spent time in Toronto as well, some areas much like old Buffalo, but with more brick.
Same can be said of Detroit, or Milwaukee, and I have lived in both towns city proper not the burbs. Yes, there are nasty places in EVERY large city, just know your hood.

#89 VandammeCouver on 12.09.14 at 11:53 pm

I lived at Jane & Sentinel for 2 years as a student at York University, which is close to Jane and Finch. That is a very dangerous neighborhood.

Personally I find East Hastings less dangerous than Jane & Finch.

#90 rk usa on 12.09.14 at 11:54 pm

re: #77 Ex-Cowtown on 12.09.14 at 11:10 pm

The average American family of four now pays around $20K/year in Obamacare.

obama care is for the uninsured, those who do not have insurance through their employer, and once you retire at 65 everyone goes on medicare

I pay $600 a year my employer pays the rest and I have access to some would say, the best health care in the world – Johns Hopkins

and pretty much on demand no waiting

and this coverage is available for those that retire early

#91 Nemesis on 12.09.14 at 11:57 pm

#@SnowBoid/18

“There are dozens of ‘oil’ types that own in the Kelowna complex we rent in. Personalized plates extolling the virtues of black gold may soon be taken off their Jags, Maseratis, and Mercs.”-SnowBoids

Just between the two of us, I’m somewhat pissed to report that a TarSandRefugee’s recently MothBalled SVT Raptor has rather complicated my subterranean ParkingManeuvers of late… You don’t suppose there’s a FortMac BountyHunter looking for that puppy, do ya?

Yes SaltyDoggies, the merest of FirstWorldTrifles, as it were… That said, “Harbingers, much?”…

@Jimmy#3/Funny!/BonusBrokeBack… “ItWasAFiveYearMission”… [ForgiveMeNichelle]…

http://youtu.be/7xSOuLky3n0

[NoteToGT: NichelleN.? Yep. OldSpice. Works every time.]

#92 lumberjacks arch on 12.10.14 at 12:05 am

a lower dollar and a us economy firing on all cylinders is good for bc and our still very much large lumber industry, good paying jobs that can make mortgage payments, see its not all bad garth…. dont get to excited yet

#93 stop lying on 12.10.14 at 12:14 am

Some nights I hate this blog. This is one of them. — Garth

sons of anarchy finale is tonight, what’s to hate?

don’t think i’m hating on buffalo either, i love the place. every time i want to do some serious clothes shopping or buy some new tires i’m there. even done the flight thing a few times. the extra 10% lately hasn’t been fun but still has value. if only i was close enough to fill the tank and buy groceries once a week.

#94 Terrier on 12.10.14 at 12:15 am

I talked the other day with the friend of mine who’s been in real estate business for a while. The guy spent last 25 years selling properties in Toronto and he have seen it all. He went through the 90’s dip, good and bad years and everything in between.

I prayed since 2010 that prices will cool-off or at least freeze for a while … this run will end badly for everyone, he said. Half dozen of my listings are sitting on the market for almost 6 months and I’ve been trying to sell two properties for more than a year! These are single family homes in the range between 2 to 4 million dollars. The first time since late 90’s I’ve been getting low ball offers, he added. We’re not talking about 10% – 15% off the asking price but 30% – 35%.

He added, even those who’re selling multimillion dollar homes, a substantial price reduction is not an option. I told him, I think it will get much grimmer than this. He tapped my shoulder and said, I’m afraid what spring is gonna look like …. a whole lot of melting.

#95 jrochest on 12.10.14 at 12:15 am

Outside of all the wittering and stupidity expressed above, maybe the reason for cheaper US prices is that there are far more small towns and smaller cities in the States than here. A much larger proportion of Canadians live in the largest cities than do Americans: NYC, LA and Chicago add up to about 35 to 40 million population in a total US population of 300 million. Add together the population of the GTA (6 million) the CMA of Montreal (4 million) and Vancouver (2.5 million) — and throw in a couple of million each for Calgary and Edmonton, and you’ve got 15 million out of a population of 36 million. Bigger cities are more expensive, and more of us, proportionally, live in and around them.

That said, yes: there’s a massive correction coming.

#96 realtor and bankers pooping on garths blog on 12.10.14 at 12:15 am

It’s so easy to see which posters are running around scared as the Canadian housing crash is taking hold and hitting hard. Alberta is facing $50-60 oil for the next two years at least and should expect 40-50% layoffs and they should expect housing to fall a good 25% in the next two years. Construction layoff in toronto is beginning to hit and will accelerate over the next two years. Financial services are also taking a hit. The Canadian fairytale in housing is over and every realtor and mortgage broker that posts on this blog knows it.

#97 Drill Baby Drill on 12.10.14 at 12:16 am

#79 Mark
You are a moron. There are 400 oil company head offices in Calgary. The more you blog the more it becomes evident that you do not really know that much. Please get educated and knock off the BS. Put your keyboard away you are wasting everyones time.

#98 kommykim on 12.10.14 at 12:18 am

Looks like housing is about to be goosed again in the good ol’ US of A:
http://www.marketwatch.com/story/fannie-freddie-detail-3-down-payment-mortgage-program-2014-12-08

#99 realtors and bankers pooping on garths blog on 12.10.14 at 12:24 am

A lower dollar does nothing to help Canada as it is cheaper to manufacture in 50% cheaper USA. US big boys have bet big on the short Canada trade and they are now taking down the Canadian bubble. Nothing you realtors, bankers and soon to go bankrupt greaterfools can say or do. Check mate Canada

#100 Cato the Elder on 12.10.14 at 12:31 am

Re: #92 lumber

WRONG! A lower dollar hurts all Canadians. All the products we buy become more expensive.

Exporters are hurt too! The capital equipment they use to create their products becomes more expensive. Wages become more expensive. And raw materials for manufacturers are more expensive too.

A strong dollar stimulates investment into productivity enhancing devices. More productive workers=better paid workers.

This episode of common economic misunderstanding was brought to you by the letter ‘K’ – ‘K’ as in ‘Krugman’, like Paul Krugman, the destroyer of worlds.

#101 Alberta housing prices to fall like oil stocks on 12.10.14 at 12:34 am

We should expect to see job reductions in the oil patch to hit 50-60% and that will translate into RE price drops by the same amount. NO jobs and thus no money to pay for grossly overvalued housing. Try to get some sleep in Alberta cause you will still lose your job and home . No point in worrying about it.

#102 Obvious Truth on 12.10.14 at 12:40 am

I don’t think everyone appreciates the real impact of these oil prices for canada and the oil companies. There are a lot of write downs coming. It’s just what happens. Debt and growth doesn’t look sexy anymore. Jobs get slashed. Companies have to try to save themselves. Who puts money into this when there are so many other choices. I personally don’t see an investable bottom even though I thought it would settle just under 70. Who’s going to stop traders from putting a 5 handle on oil at this point.

It’s such a large part of the economy now that the effects on other sectors is very material.

Portfolios in canada have been creamed. It can’t be easy to explain this to clients if you are a money manager. Imagine that xgd beats xeg on the year. Wow.

This all feels very serious to me. The perfect storm. And I’m no conspiracy theorist doomer.

A while back I chuckled to myself when garth hinted at a possible 70 handle on cad….
Could be the call of the decade.

#103 omg the original on 12.10.14 at 12:44 am

13 JSS
I don’t like Canadian Tire simply because of their lousy service in the Auto section.
—————–

But do keep a wad of crappy tire money in your wallet when you go on vacation to some 3rd world country…….when you get mugged by some local that’s what you hand over to them.

#104 Joe2.0 on 12.10.14 at 12:45 am

A cache of people with loads of money want to get as far away from the US or China or Iran…as possible.
Money’s the least of their worries, as is rain.

#105 OttawaMike on 12.10.14 at 12:46 am

The shut-ins here on the blog are in fine form tonight.

Have any of the commenters ever truly traveled in the US or are they getting their stories from The Wire and other Netflix series playing on their basement TVs?

#106 Nomad on 12.10.14 at 12:47 am

I made bad calls this year, but I made some good ones. My favorite was to stay away from Canadian Western Bank. $CWB is down 23% in 3 months. Yes, stocks can react extremely fast to the possibly repercussions of a shock. Oil in this case.

#107 Nomad on 12.10.14 at 12:50 am

#64 REITs

About REITs, they might sell-off when the US first raises rates but they’ll recover within a few months. I mean, they already overreacted last year (taper tantrum) and recovered after. People know rates are going up. REIT know it as well.

Actually, retail focused REITs might be positively impacted from low oil prices. Money in the consumers’ pockets. I’ll admit I’m only guessing here (hey does that make me an “analyst”?)

Also, retirees are afraid of banks and energy stocks, so it doesn’t leave many options for getting (monthly) yield.

#108 Christopher Lackey on 12.10.14 at 12:51 am

There are two aspects to the US home prices being cheaper that makes real estate there lose some of its allure. #1 you are ultimately financially responsible for your healthcare there more than you are here. Here anybody just shows up and no its not free but pre-Obama if you didnt have insurance through your employer you were basically screwed. Even if you did the private model created a plethora of atrocious stories where companies just refuse to pay stuff that was covered. Either way its a fiasco you don’t have to deal with in Canada.

#2 is property taxes. In Rochester NY for example the taxes on a stately 4 bedroom detached are over $1,000 a month even though the house only costs $300,000 and would easily go for 4x that across the lake. Home prices are deceptively low because broke municipalities have to get their money from somewhere.

I still agree Canadian real estate is outrageously overpriced.

#109 Harbour on 12.10.14 at 1:01 am

I think there’s a lot of Canadian homeowners posting tonight that are addicted to “The First 48 Hours”

#110 meslippery on 12.10.14 at 1:29 am

Here’s a promo video on Rochester NY.
Made me laugh.
https://www.youtube.com/watch?v=iXEVSlahF1s

#111 Tap on 12.10.14 at 1:29 am

#57 Taxes suck,

There’s something wrong with your tax calculations. I live in CA, my family’s income is way, way over $100,000 and the average fed + state tax (taxes/gross income) is below 15%. NY and CA rates are similar.

My utility bill (water, gas, electric, heat and AC) is less than $2000/year; less than $1/ft^2.

BTW, what the relative taxation level of the two countries is, is obvious considering their sizes and economies.

#112 T on 12.10.14 at 1:31 am

Just about 3 payments shy of finishing off an ill conceived auto loan, reducing line of credit balance by the month. Things looking up for a bonus in spring. Job not dependent on oilpatch, will probably benefit from lower prices as transportation costs are reduced. Finding more money left over at the end of two weeks and money going into savings. No wife, no kids, rent. Trying to stay the course.

#113 Timmy on 12.10.14 at 1:54 am

Try living in the states and you’ll see why most cities are cheaper: guns,crime, expensive health care.., there are only two neighbourhoods in Canada that I wouldn’t walk around in, while there are neighborhoods in many US cities that I wouldn’t walk around in, but hey, the US Military is giving their used weapons to the cops, now we all feel safe. Lol

#114 Tony on 12.10.14 at 2:04 am

Re: #13 JSS on 12.09.14 at 8:24 pm

For those who don’t remember Canadian Tire was bought in bulk by the Canadian Pension funds when they dumped Nortel. Canadian Tire was trading in the 8 to 10 dollar range at the time but the company had never made a profit, only on their credit card divsion. Today this is the same company and without a doubt the most overvalued stock on the TSX maybe ever on the TSX if you don’t count Bre-x and Nortel.

#115 Plum Sauce on 12.10.14 at 2:16 am

A huge factor is US household budgets is education.

Americans with children face highs cost to offset the lack of good, affordable public education in the US. The quality is so poor in so many places that parents do what they can to get their kids out of them: roughly 10% of US children go to private schools (vs. 5.6% of children in Ontario, though the US number is declining, perhaps because of the GFC). There’s also far more homeschooling in the US, too, which exacts a different cost on the parents who provide it.

It only gets worse at university level. Public, in-state tuition at US universities roughly $15K/year (vs. $5-6K in Canada), not including room and board. Plus, only 3 US public universities (Berkeley, UCLA, and Michigan) are ranked in the top 20 worldwide (vs. one in Canada, UofT) – great if you live in California or Michigan, but kind of a nightmare if you live elsewhere because then you’ll have to pay out-of-state tuition ($30-35K/year tuition only) for an education at an equally esteemed institution. Increasing the number of US state schools to those comparable to UofT, UBC, or McGill adds to the list: University of Washington, UT Austin, University of Illinois at Urbana-Champaign, University of Wisconsin, and UC Santa Barbara. When students go out-of-state or to a private university, costs surge to $50-60K/year for tuition and room-and-board – a staggering $200-$240 price tag per kid per university education!

Much as I’m no fan of the Canadian property bubble, I’ve long seen it as the Canadian parallel to America’s education bubble – a perfect vehicle for the “investment” of STUPID amounts of money.

#116 Timmy on 12.10.14 at 2:19 am

I think the majority of yanks are nice people. Though it is clear that the U.S. is a much more violent place than Canada, with many more people that are left to fend for themselves. This is what you get with a more polarized, highly segregated society. The states gas the highest incarceration rate I the developed world. So many people have guns in the states and you never know who is carrying. Now that the rabid Republicans have captured both the senate and the house you couldn’t pay me to live there.

#117 Tony on 12.10.14 at 2:26 am

Re: #75 Mark on 12.09.14 at 11:02 pm

Canadian gold companies do not benefit from a higher Canadian dollar, The converse it true.

#118 Lillooet, BC on 12.10.14 at 2:41 am

Yup. These wide price differentials also exist within Canada. In my beautiful little town, there are 50 houses for sale under $200,000 each with two bedrooms or more, on lots with nice mountain views and fruit trees. Meanwhile, two hours drive away in Whistler, houses are four times that much. Why? They have skiing. Go figure.

#119 bdy sktrn on 12.10.14 at 3:31 am

#92 lumberjacks arch on 12.10.14 at 12:05 am
a lower dollar and a us economy firing on all cylinders is good for bc and our still very much large lumber industry,
— ———————
and our movie industry, and our tourism, and fishing, and agriculture(weed), and our HAM industry(with a low dollar our shacks are cheaper than san fran), and our tech industry. nat gas has been so cheap for so long there is no risk there

this all aside from the fact that money from all corners of the world just flows into van, like a river , or gravity.
just because, well, because it’s special here.
all the griping of nothing moving in ottawa or halifax, well duh, where do you think those people are going and desperately trying to find a place when they arrive?
hint …maybe somewhere it was 15c today

ps the downtown eastside(the proper name for the ;small; area of misery squalor and poverty around hastings and main (wastings and pain) is very very very safe 24/7 compared to parts of most us cities. there are no random shootings/killings EVER. muggings are extremely rare. not saying it’s a nice place, it’s not. it’s sad and sick and awful and don’t leave you car there, but it is in not really unsafe to walk the street at 2am. as a female. who is blonde. in her 20’s.

the cops don’t travel in groups of 6 as they did at 2am in
washington dc when i spent time there.

that being said, most Americans are great people and most areas are perfectly safe and wonderful.

#120 Westcdn on 12.10.14 at 3:41 am

I am glad I did my traveling when I was younger – it makes me appreciate being Canadian. Not that it is the best but better than most – I don’t mind cold weather, goes with the territory. I see Alberta wants to have more temporary foreign workers. Not a surprise as who else will attempt to live in this province on $10 an hour. I am in favour of more Habitat for Humanity in this province.
I read an article by Andrew Coyne that Ontario’s debt has increased more than the Federal Government since 1991. I could not find the link (surprise) but I offer this one instead.
Ontario auditor general sounds alarm over province’s growing debt | CTV News

Who do you think is more stupid? – Wynne or Harper. Reminds me of a joke: There are only 2 ways to win argument with a woman – neither one works.

I think the Energy East Pipeline project is smart. If the US wants our cheap Canadian Select then let them build the pipeline. I believe our cheap “crude” to Europe and India can beat the Arabs if we are willing to fight. Asia energy exports are now a lost cause. However the greenies in ON, QC and BC don’t realize their provinces are broke – I have no idea why they think a pristine province will lead to exciting profits from tourism given they like to tan their butts southward. I don’t think greenies and do-gooders are wrong but simply simplistic (they don’t test their idealism). Dogma is a curse. I am stunned when people don’t see the strategic advantage beyond their self-importance.
Sorry about the Hummer comment – should have included trucks with ballz. I burn maybe 50 litres of gasoline a month so don’t expect me to light up Calgary with consumer purchases.
Snowboid, I agree Americans live cheaper than Cdns – I haven’t traveled stateside for a few years so I was surprised the price differential as a tourist had disappeared. I am sure that once adapted, I could stretch my Cdn$ into a very nice lifestyle down there or anywhere else.
Good to see Cato and SM up and kicking – these guys seem to want their egos stroked but eh, what do I know about personalities and I like to hear what they have to say.

#121 bdy sktrn on 12.10.14 at 3:52 am

***fun east hastings fact***

amaze and impress you friends at the mid block signal light at or near the save-on-meats on hastings.

it’s the only red light you are allowed to run. of course 99+% of the vehicles just sit there and wait, but after stopping you may proceed legally straight thru the red if no tweakers in the crossing (as there is no intersecting street). Even more fun is honking at the car waiting in front of you!

#122 Larry1 on 12.10.14 at 3:55 am

> Ever been to Jane-Finch or East Hastings? — Garth

Yeah, been to E. Hastings and it’s harmless for the most part. Not interested in living there though. Can rent on the west side for comparable prices and walk to the ocean.

#123 bdy sktrn on 12.10.14 at 4:01 am

#39 Inglorious Investor on 12.09.14 at 9:05 pm

——————————
great insight, love your posts, keep them coming please.

#124 bdy sktrn on 12.10.14 at 4:13 am

#73 Waterloo Resident on 12.09.14 at 10:50 pm

In the next 40 to 60 years ocean levels are guaranteed (yes, guaranteed) to rise 10 to 12 feet,

—————————————–
without a doubt, the most idiotic, scientifically illiterate, sheeplestupid, alarmist, panic-strewn horseshit ever posted to this finest of all(ye somehow still pathetic) blog.

—————————-
#73 Waterloo Resident on 12.09.14 at 10:50 pm
” its too late for massive amounts of ice shelves in the Antarctic area”

————————
were you born retarded or just never learned how to read?

The October 2014 Southern Hemisphere sea ice extent was 19.20 million square km (7.41 million square miles), 870,000 square km (330,000 square miles), or 4.8 percent, above the 1981-2010 average, ranking as the second largest October Antarctic sea ice extent on record.

#125 Leo Tolstoy on 12.10.14 at 4:28 am

Its so bizarre that Canadians have so much hubris that they believe that Canada is magically immune to the same market forces that brought down US housing.

It’s not bizarre at all. Canadian real estate prices have traveled a straight upward line for years and years and years with no end in sight.

What is actually bizarre are investors in gold and gold miners who continue to be deluded despite an in-their-face collapse in commodity prices. Oil, gold and other commodities are dead.

#126 Leo Tolstoy on 12.10.14 at 4:31 am

$1 USD will be worth $1.50 CAD. Soon. Guaranteed.

#127 bdy sktrn on 12.10.14 at 4:44 am

a TarSandRefugee’s recently MothBalled SVT Raptor has rather complicated my subterranean ParkingManeuvers of late
————————————
if you find parking ‘complicated’ you are lacking the skills needed to posses a drivers licence. (assuming he is within his spot).
like thousands more out there, consider transit, or practice practice practice until you find operating a vehicle uncomplicated.

#128 BillyBob on 12.10.14 at 4:55 am

“Dus10BC on 12.09.14 at 10:32 pm
USA housing has always been cheaper than Canadian. I’d be interested to know what the average difference has been outside of the bubble.
Other than a normal differential that’s always existed, there’s the horrible reputation that America has, and it’s not “home sweet home”. More like arm up and prepare to die. And don’t even think of going to the store after dark. Certain death if you do.
That’s likely an exaggeration. But from Canada, that country looks like it’s in a perpetual civil war.
No thanks!”

++++++++++++++++++++++++++++++++++++

Dear God. To any Americans reading this blog, I apologize on behalf of completely ridiculous statements like this. They DO NOT reflect the overall sentiment nor level of intellect in Canada. I truly hope. I’m embarrassed to hold a Canadian passport sometimes.

(“certain death”?! I’m speechless.)

Writing from Entebbe, on layover. (That’s Uganda, for the folks from Windsor. And uh, Uganda is a country in Africa.) Driving from the airport to the hotel is enough to make comments by Canadians about the dangers of US city living a bit trivial and silly. lol

I’m slowly realizing that the image abroad of Canadians is a bit well, hillbilly-ish. Most would blame it on Harper but judging from multiple comments it seems the apple of ignorance doesn’t fall far from the tree.

#129 drydock on 12.10.14 at 6:24 am

#89 VandammeCouver on 12.09.14 at 11:53 pm

Yeah i agree, Hastings and Main area is populated by poor lost delusional souls for the most part.
Jane and Finch on the other hand is water moccasin central.

#130 bdy sktrn on 12.10.14 at 6:27 am

and overnight oil bustin’ down to 62.40 – maybe another bad day for tsx.

#131 Cato the Elder on 12.10.14 at 7:09 am

It’s incredible how much power Saudi Arabia has over the price of oil, even after this many years of high production.

We’ve all been had. The US via proxy (through Saudi Arabia) has always held the key. As long as the US can threaten the royal family with military bases surrounding them, oil can be manipulated to whatever level they deem necessary.

Don’t get me wrong – the suffering of the average person paying high gas prices they don’t care about. It’s all about the US dollar. Stop trying to use it (Russia), and you will be retaliated against. Plunging government revenues from oil royalties will be the consequence.

Predictions for the future? Russia will continue to accelerate it’s breakaway from the US dollar. How it does that I do not know, but tension will continue to be high and a military confrontation is brewing. That could be very dangerous…

#132 Chickenlittle on 12.10.14 at 7:37 am

LOL! This was my Facebook profile picture a while back.

I’m much better looking. ..I use Venus razors. . ;)

#133 earthboundmisfit on 12.10.14 at 7:48 am

Gillette has a > 4000% profit on razor blades. Biggest consumer rip off in the history of mankind. Buy the stock!

#134 rosie "moving forward" in the knowledge that, "this won't end well" on 12.10.14 at 9:02 am

This house just came up. It’s located in my town of 15000, about 15 minutes from Niagara Falls. This is representative of many of the houses in town. Average median income for Niagara area ,around $70000. This house is priced at around 8.5 times the median income for the Region.

#135 rosie "moving forward" in the knowledge that, "this won't end well" on 12.10.14 at 9:02 am

Forgot the house.

http://www.realtor.ca/propertyDetails.aspx?PropertyId=15131749

#136 Obvious Truth on 12.10.14 at 9:23 am

C’mon everyone. Garth is giving the comparison so it gives perspective. Most of the nuanced differences are ridiculous.

People aren’t buying houses in canada with money. It’s about financing and a mentality. Those are both shifting.

The news shift could take place if traders put a 5 on oil and banks continue to correct. Canadians are surely all in on these sectors as well. Investors are now looking for profit not growth and reserve value. Those will be changing. And debt now matters.

What happens when the same applies to houses.

#137 Mr. Frugal on 12.10.14 at 9:24 am

You don’t need to be a “fan” of the U.S. to invest in their economy. Just buy some U.S. ETFs (e.g. VTI) and collect your dividends each quarter. Then you can spend it on snow shoes, Canadian beer, maple syrup and peameal bacon (YUMMY). Thanks America, you’re the best!!!

#138 angela on 12.10.14 at 9:37 am

Well, apparently Ottaway is investigating price gouging in Canada and creating legislation to curb it.

A little confused how Morgan Stanley predicts $43 oil, according to blog yesterday, and today’s blog is quoting $70 or $80 a barrel. Huge price gap in a short time. A drop for a short period of time isn’t going to set off the kind of housing correction we need. And it’s going to benefit Ontario. So I’ll still have to tolerate more Toronto-based reality shows about flipping houses.

Diagnosis: No change.

#139 fancy_pants on 12.10.14 at 10:03 am

definitely adding Gillette to my portfolio. That guy cleans up nice…

…oooh! gotta run, “Property Virgins” is on now. She is “not only a RE agent, counselor and financial advisor, but above all a trusted friend. After all, navigating the real estate market can be an emotional experience”

:)

#140 Holy Crap Wheres The Tylenol on 12.10.14 at 10:20 am

#78 Smoking Man on 12.09.14 at 11:14 pm
The herds are different, in Canada a home ownership is status, success, pride. You’ve made young ladies. Let’s face it, most guys could rent for ever.
It’d the Competative assertive Canadian woman who’ve caused this madness.
Forcing her man to trade in the sports car, the bike, beers with the boys just so she’s got bragging rights over other females.
In the USA the men have F150s tail gate parties, wives that want to please there men, and there home is a home. Not a prop for showing off.
I blame it on teachers.
____________________________________________
Well Smoking Man you are partially correct. I would say I agree with the bragging rights in the GTA and any other upscale urban environment. However you get out to a small town and things change, small town Canada is much like the USA. I grew up in my late teens in Detroit, San Diego and Lakeland Fla. The attitude there is similar however bragging rights for the Nouveau riche upscale that want bigger homes than their neighbors.
Oh yes I showed my wife this blog and your diatribes and she laughed at first and then said in her heavy Irish accent and I quote,” Many people are alive only because it is illegal to shoot them. This guy is a blowhard.” She walked away in disgust. What can I say she was a high school calculus teacher. She isn’t the kind of teacher you had in school. She used to say to her students if you don’t like what I’m teaching then drop the class, I’m not here to baby sit you or mold you into something, I’m here to teach you calculus. So if you don’t like it get out of my class!
I think she also mentioned something about kicking your ass.
Keep up the writing either way its entertaining.

#141 fancy_pants on 12.10.14 at 10:23 am

a day late and a dollar short but straight from the horse. just not sure which end.

http://www.cbc.ca/news/business/oil-price-expected-to-hold-back-house-price-gains-in-2015-remax-says-1.2866970

#142 SWL1976 on 12.10.14 at 10:24 am

Some nights I hate this blog. This is one of them. — Garth

————————————————

I don’t know how you do it sometimes? Seems a lot of people love to hate on this blog. Please don’t cut us off cold turkey though Garth

————————————————

#124 bdy sktrn

were you born retarded or just never learned how to read?

The October 2014 Southern Hemisphere sea ice extent was 19.20 million square km (7.41 million square miles), 870,000 square km (330,000 square miles), or 4.8 percent, above the 1981-2010 average, ranking as the second largest October Antarctic sea ice extent on record.

————————————————

Hey now that’s not very nice, everyone has a point to make, and this is mine….

I read somewhere awhile ago (sorry no link) that this new ice sheet expansion was nothing to get too excited about. See what some scientist feel is happening is that the massive amount melt water from the ice sheet melting in the summer is flowing into the sea and floats on top of the very cold sea water without properly mixing. This causes a very thin but large surface area ice sheet to form on the sea in the winter giving us the illusion of expanding ice. A thin seasonal sheet is not even in the same league and multi year or multi century ice

Costal cities will be swimimng sooner than later, maybe not everyday, but have you maybe heard the new term “king tide” that’s what they call it when the Stanley Park sea wall is occasionally under water.

Prepare accordingly and most of all be nice :-)

#143 José on 12.10.14 at 10:28 am

The Re/Max canadian housing outlook report for 2015. Predicting mild growth even in Calgary.

http://download.remax.ca/PR/HMO2015/Report/Outlook2015Final.pdf#20389715

#144 steelman on 12.10.14 at 10:53 am

The question is; whats going to happen when junk bonds can not be repaid by Oil fracking companies?. How will that effect the over all market?.

#145 Don on 12.10.14 at 11:09 am

My Google Finance news feed led me to this jewel. The headline:

“Slumping oil prices to impact home prices in Calgary in 2015: Re/Max report ”

The article itself:

“The average sale price of a Calgary home is expected to rise by only three per cent in 2015 to $497,500 after shooting up six per cent in 2014, as more buyers are expected to sit on the sidelines to see if the recent slump in oil prices will make houses cheaper.”

I can’t even. Just keep printing those Re/Max pressers, mainstream media. They make you look amazing.

http://www.cfra.com/NationalCP/Article.aspx?id=446560

#146 Lumberjacks arch on 12.10.14 at 11:11 am

#100 Cato

No doubt Cato a lower dollar makes us all essentially poorer….but the mortgage payments in Canada are paid in Canadian dollars, as another poster said, it brings more buisness to alot of BC industries, it’s hard to default on a loan when your company has a ton of work
Hard to see a housing correction in Vancouver when everyone is working coupled with a growing population……I’ve yet to hear a credible story of falling prices in Vancouver ….even a slow down, its 13c today, mite go to the driving range after work.

#147 Rational Optimist on 12.10.14 at 11:13 am

135 rosie “moving forward” in the knowledge that, “this won’t end well” on 12.10.14 at 9:02 am

Thanks for that! “Welcome to Hollywood.” That’s a new one! Only one other gem in that listing: “hi [sic, obviously] quality upgrades and finishes.”

Hey, not far from the 406, an easy drive to the engine plant… I am sure you are a nice person and have many fine Fonthill neighbours. Those folks I know in St. Catharines and Hamilton who buy in Fonthill are usually not my favourite people, for whatever reason.

#148 Daisy Mae on 12.10.14 at 11:32 am

News Alert
Oil continues to slump, now below $62 US per barrel

This breaking story will appear soon at http://www.cbcnews.ca

#149 Victor V on 12.10.14 at 11:35 am

https://ca.finance.yahoo.com/news/slumping-oil-prices-impact-home-prices-calgary-2015-110010035.html

TORONTO – Slumping oil prices are likely to impact Calgary’s real estate market in the coming year, causing home prices to slow their rapid acceleration in Alberta’s largest city, according to a report by realtor group Re/Max.

#150 NoName on 12.10.14 at 11:40 am

#131 Cato the Elder

us doesn’t have to threaten the royal family, they have so many internal and external pressures and problems that me here is having concern for them.
just look at a map of the region and its self explanatory.

considering that extraction cost in SA is very low 6-10$, it would surprise me that royals them self offer help with keeping russia in check. keep in mind SA population growth (550k births and 100k deaths) and that close half of population is 35yrs or younger, so major problem for royals are “young ones”. they could be uneducated and working or like what happened in egypt educated and not working…

http://upload.wikimedia.org/wikipedia/commons/0/0a/Median_age.png

#151 Bdy sktrain on 12.10.14 at 11:45 am

Tsx started off 2014 at 13.6k

If tomorrow is like today tsx will be at 13.6k tomorrow

Van assessments up 25% y/y

Zoom zoom baby.

“The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $637,300. This represents a 5.7 cent increase compared to November 2013.” (Vancouver real estate board release). The TSX with dividends is up 7% YTD. S&P up 12.94%, or 16% with dividends. — Garth

#152 Daisy Mae on 12.10.14 at 11:47 am

East Hastings…

The Downtown Eastside is one of the oldest neighbourhoods in Vancouver, British Columbia, Canada and is erroneously known as “Canada’s poorest postal code”

#153 not 1st on 12.10.14 at 11:47 am

Well there is is finally, about 8 years too late;

“Canada’s housing market may be overvalued by as much as 30%: BoC”

http://www.theglobeandmail.com/report-on-business/economy/bank-of-canada-says-housing-market-overvalued-by-as-much-as-30/article22021768/

#154 Daisy Mae on 12.10.14 at 11:55 am

The BC government closed facilities in the late fifties — New Westministers’ Essondale comes to mind — effectively throwing the patients out on the streets to fend for themselves. Many wound up living on East Hastings…

#155 TnT on 12.10.14 at 11:59 am

#131 Cato the Elder

We all have benefited from this relationship. The US is not using force against the Saudi family, they use it to protect them from the Wahhabi fanatics (same teachings Osama and his followers adhere to).

The US trains and supplies weapons to the Saudi military in exchange for control on Oil. This is a great relationship. If you had it your way then who else would you pick to replace USA in this relationship? China or Russia?

Judging by your tone and fervent postings, I suspect you are an agent of the Chinese Social Media brigade on a mission to undermine the freedoms we enjoy in a system the US invented and the West thrives in.

#156 I love real estate on 12.10.14 at 11:59 am

Garth, no disrespect intended, but the facts are lining up again to point to much more upward and sustained movement in GTA real estate.

http://www.thestar.com/business/2014/12/10/toronto_house_prices_to_outpace_country_again_in_2015.html

The estimate is 4% overall growth again next year.

Does that sound like a crash to you?

What is more, a new and capable mayor combined with the global attention of the Pan Am games will really help put a shine on Toronto, making it even more attractive for regional and foreign buyers.

Expect other major announcements next year or so as well, such as a possible Olympic bid, growth in TIFF and new events and festivals.

Toronto IS world class, we ARE different.

Deal with it, or be left behind forever, a renter until you retire and die.

I feel really sad for the basement dwellers who feel consoled by all the negativity on this blog, who still have not gotten into the GTA property market.

How many years, soon DECADES are you prepared to wait for a price drop?

It won’t happen, and 2015 will really be painful, unfortunately.

When all this comes to pass, you will only have one word, folks.

https://www.youtube.com/watch?v=g6GuEswXOXo

Always fun to hear from a Re/Max agent. Keep it up. — Garth

#157 rosie "moving forward" in the knowledge that, "this won't end well" on 12.10.14 at 12:02 pm

#147 rational optimist

I hear you. Moved here in 89. Nice, well run town then. Now, not so much. Mostly boomer downsizers, price wise anyway, from GTA. They tend to buy big places, German cars, and dine out a lot. The house in the picture is on my daily walk. I call it area 51. I think 5 kids live down there. The rest hide out in their mini-mansions, never see anyone.

#158 april on 12.10.14 at 12:15 pm

#143
What else would you expect from Remax!

#159 Macrath on 12.10.14 at 12:24 pm

So the wife asks a long time local co-worker ” Why are there so many house fires in Fort Erie lately ? ”

Reply. ” They`re moving !”

#160 bdy sktrn on 12.10.14 at 12:25 pm

60.90 oil rtq

#161 sotiri on 12.10.14 at 12:27 pm

#156 I love real estate on 12.10.14 at 11:59 am
“…Toronto IS world class, we ARE different…”

If we haven’t had the 5% down, cash back mortgages, 30 then 35 then 40 years amortization and the historically unprecedented emergency low interest rates put in place from the government, do you think Toronto will still be “a world class city”?
Take CMHC out of equation and you will see what “a world class city” Toronto is?

#162 JimH on 12.10.14 at 12:30 pm

#131 Cato the Elder
Re: Russia

The ruble has lost ~40% of its value this year relative to ALL major currencies. European sanctions, rising inflation, falling oil prices and global lack of confidence are the very obvious reasons for this, and Russia is about to raise interest rates as it struggles to contain the mess.

As you yourself are so fond of suggesting to others, WAKE UP!

#163 Tony on 12.10.14 at 12:41 pm

Re: #156 I love real estate on 12.10.14 at 11:59 am

Did you ever stop to think with all the teardowns and rebuilds that the end result could be any different? Strip out the teardown and rebuild sector and i guarantee you’d be looking at year over year losses in Toronto.

#164 Cato the Elder on 12.10.14 at 12:43 pm

Re: #155 TnT

Warmongering around the world does not make us ‘safe’. It does nothing to protect our liberties.

No nation on planet earth can defeat the US. They have 5000 nuclear weapons and over 200 million private gun owners. It’s IMPOSSIBLE.

The only thing that can destroy the US, or the west, is from the inside. Economic decay, which leads to authoritarian regimes as the populace clamors for a ‘savior’. This has been repeated throughout history, and this time is no different.

If you’re going to make an argument, at least the economic one has a little bit of sense to it. But even then, trading and providing value does much more to benefit your population. China has risen rapidly for decades out of poverty because they are trading with the world instead of bombing and invading them.

Friends with all nations, entangling alliances with none. Peace and commerce with all.

#165 Doug in London on 12.10.14 at 12:52 pm

On the subject of the Canada-US Border, last Friday I was in Queenston, ON. While there I noticed a steady parade of cars and trucks, most of which run on petroleum based fuels, coming off the Highway 406 and going on to the international bridge to Lewiston, NY. There were just as many cars and trucks, again that run on petroleum based fuels, going in the opposite direction. Hmm, I think there’s a better place to put your money than overpriced Canadian real estate.

#166 Mike on 12.10.14 at 12:54 pm

I sure wish there was more “what’s happening in my neck of the woods” comments, and less utter garbage and ranting on here. :(

Anyways, here’s what I’ve been observing in Alberta lately:
1) I’m a well educated middle management, looking for a new job because my employer is terrible and I’m severly (30%) underpaid in relation to others in my field. Been looking since August, and have only had a couple of in-person interviews. The belief that you can still walk out the door (at least here in Edmonton) and be handed another job is a complete myth

2) I’ve noticed a lot more radio and facebook ads for either home builders selling houses or individual realtors selling a particular home (on FB). Even in Calgary while I visited last weekend! Tons of Jayman home ads. Would lead me to believe homes aren’t just flying off the shelf anymore.

3) One FB realtor ad last night claimed that Edmonton house & condo prices have gone up 8.5% this year. From what i’ve seen in my neighborhood, it’s been 100% flat (at best)

#167 Jeff in Moose Jaw on 12.10.14 at 12:56 pm

#21 Gregor Samsa
House in Florida within walking distance of a beach = $150K.House in Saskatchewan, on the edge of town in Regina which currently overlooks a frozen tundra = $400K.
Makes sense…
………………………………………………………………………

Exactly, I have seen it with my own eyes. shocking.

Why in this part of SK where I live, people think high mortgage/rent prices are justified. Then I just remind them that MOST of the Canadian population doesn’t even know Moose Jaw exists…. how high should rents be?

Should be cheap like it was just a few years ago.

#168 Kalergie on 12.10.14 at 12:56 pm

#146: text book Re/Max talk

#169 bdy sktrn on 12.10.14 at 12:58 pm

have you maybe heard the new term “king tide”
————————————-
you mean the new scary name for the exactly the same event that has been happening with clockwork regularity for several billion years?

Definition[edit]
King tides are simply the very highest tides. Conversely, the low tides that occur at this time are the very lowest tides. They are naturally occurring, predictable events.

#170 Toronto_CA on 12.10.14 at 12:59 pm

Wow on the BoC up to 30% overvalued housing market news. An early Christmas present to most of Garth’s blogdogs.

Pretty stunning to hear it from our own Harpo puppets rather than say, the IMF, Moody’s, S&P, Fitch, the Economist, anyone who isn’t directly benefitting from overvalued house prices caused by ZIP and easy credit.

#171 TheLaughing(e)CONomist on 12.10.14 at 12:59 pm

“Bank of America sees $50 oil as Opec dies”

http://www.telegraph.co.uk/finance/oilprices/11283875/Bank-of-America-sees-50-oil-as-Opec-dies.html

Eye opening statements in the last two paragraphs.

#172 gladiator on 12.10.14 at 1:01 pm

Suddenly BNN spends lots of its air time talking about “elevated risk from home price correction” that BOC sees in its crystal ball. All morning today, the only thing they talk about is this.

After giving and then withdrawing 40-year amortization terms, after suppressing rates and assuming all risks for mortgages given to people who should have never received them, now they are trumpeting about “risks”.
They want to pull an “we told you so” later when TSHTF and come out clean and innocent, while we the populace will endure. You know, privatize profits and socialize “risks” and losses.

#173 Fred Smith on 12.10.14 at 1:04 pm

Meanwhile in news of the obvious. Bank of Canada warns house prices are overvalued by up to 30 percent.

http://business.financialpost.com/2014/12/10/bank-of-canada-warns-theres-an-elevated-risk-of-a-home-price-correction/

#174 not 1st on 12.10.14 at 1:14 pm

All TSX gains for the year have been given back in just a few weeks.

Garth can’t defend this one with his usual rhetoric. The TSX is likely going back even further in 2015. This is investing?

TSX YTD is up 4.76% as of this typing. Add in dividends and it is close to 7%. More significantly, a balanced portfolio would have about 17% maximum Canadian exposure of which only 8% is large caps (the TSX 60). No worries. — Garth

#175 Victor V on 12.10.14 at 1:18 pm

https://ca.finance.yahoo.com/news/high-household-debt-still-key-risk-canadian-economy-153746921.html

In addition to rising consumer debt, the review warned of the potentially overvalued housing market, increased risk taking in financial markets and emerging threats, such as weakening commodity prices and the plunging price of oil.

The bank also laid out possible pitfalls that threaten Canada’s position, such as a sudden rise in long-term interest rates, increased financial stress in Europe and China, and a sharp correction in house prices. It reiterated, however, its expectation that Canada’s housing market will have a soft landing.

The Bank of Canada suggested the housing market may be overvalued by 10 to 30 per cent.

#176 jess on 12.10.14 at 1:21 pm

It would seem that the YOUTH in the “basement” seem to have greater integrity than the adults

http://www.transparency.org/cpi2014/true_stories

“If not us, then who?” he asks. “If not our generation, then whose generation?”
http://www.transparency.org/news/story/if_not_us_then_who

=

companies falsely registered as cooperatives.
An estimated US$800 million of public funds are lost each year due to tax evasion in Palestine. The company was registered as a cooperative rather than a profitable business and so avoided paying tax – meaning much-needed public funds for health, education and other essential services were being lost.
===
– deceased employees on the active payroll, to “ghost employees” hired to receive a salary they later transferred to their employer, the journalists claimed that millions of dollars were being systematically rerouted from public funds into private bank accounts.
-The assembly introduced greater oversight on hirings and made it easier for citizens to access public information. According to the journalists, the number of employees at the assembly ultimately dropped by more than 1,000. They estimate that these changes could be saving the state as much as US$5 million each month.

Transparency International and the Instituto Prensa y Sociedad (Press and Society Institute), awarded the four Brazilian journalists the 2011 Latin American Investigative Journalism Award. Illustrating the power of transparency, their story shows what can happen when an independent media helps citizens access the information they need to stand up and demand change. In the words of the student protester, history is set in motion.

#177 bdy sktrn on 12.10.14 at 1:21 pm

• Respectful, wide-ranging discussion on the topic of the posting is encouraged, and will not be censored.

———————–
i will try again;


tsx
13890 (now)- 13621(dec31 close)=279

279/13621 = 2.05%

divs were over 5%?
……………
better now?

TSX YTD is up 4.76% as of this typing. Add in dividends and it is close to 7%. More significantly, a balanced portfolio would have about 17% maximum Canadian exposure of which only 8% is large caps (the TSX 60). No worries. — Garth

#178 Mister Obvious on 12.10.14 at 1:22 pm

#166 Mike

“I sure wish there was more “what’s happening in my neck of the woods” comments, and less utter garbage and ranting on here. :(“
———————————–

My sentiments exactly.

#179 jess on 12.10.14 at 1:25 pm

2014 OFR Annual Report, page 28
credit risk-taking in nonbank entities that are not directly regulated by banking supervisors.
http://www.treasury.gov/initiatives/ofr/about/Documents/OFR_AnnualReport2014_FINAL_12-1-2014.pdf
Last updated Thursday, Aug. 23 2012, 3:28 PM EDT

=========
hybrids

On May 14, 2008, FitchRatings issued a report that estimates total losses of $400 billion to $550 billion.23 In comparison, aggregate losses sustained from the savings and loan crisis are estimated at $199 billion.24 These statistics bring into sharp focus the seriousness of the situation caused by weak underwriting and deceptive marketing practices.

-negative impact that the payment shock in hybrid ARMs had on subprime borrowers and the compounding effect of declining home prices.
https://www.fdic.gov/regulations/examinations/supervisory/insights/sisum08/article01_Hybrid.html

#180 Marco on 12.10.14 at 1:27 pm

From the National post:
“The most important risk is the inability of stretched households to service their debt should they face a sharp decline in their incomes or a sharp rise in interest rates, which could trigger a correction in house prices,” the central bank said.

The probability of this happening is low . . . But if it did, the effect on the economy would be severe
“The probability of this happening is low,” it added. “But if it did, the effect on the economy would be severe. The bank maintains its assessment of this risk as “elevated.”

Lol, probability low, risk assessment elevated. That’s like saying: Forest fire risk elevated but probability of one starting is low, unless of course you throw a cig butt on the ground (higher interest rates, job loss)

Cheers.

#181 chapter 9 on 12.10.14 at 1:33 pm

#171 The Laughing(e)Conomist

December 11/2012 the Bank of America Merrill Lynch forecasted oil at $50 bucks a barrel on CNN.
Looks like nothing has changed in their forecast,good post!!

#182 TnT on 12.10.14 at 1:34 pm

#164 Cato the Elder

China has risen rapidly for decades out of poverty because they are trading with the world instead of bombing and invading them.

You act like there would be no wars if the US withdrew all influence on global dominance and that the vacuum would fill in with peace loving nations working together for the betterment of man kind.

Imagine China with the same influence and control the US has on global dominance and then look how China denies their own citizens the freedoms we have.

Like I said…

Judging by your tone and fervent postings, I suspect you are an agent of the Chinese Social Media brigade on a mission to undermine the freedoms we enjoy.

You love of China and hate for the West is evident in every post.

#183 bdy sktrn on 12.10.14 at 1:38 pm

my biggest disappointment is all of this oil soaked shrivelling of all things energy is not a single peep from our resident bat-toe-camel-man soothsayer of an impending implosion.
hey smokey wtf man, you are slipping bigtime

#184 Fortune500 on 12.10.14 at 1:39 pm

Most major MSM outlets in Canada reporting this story:

http://www.cbc.ca/news/business/stephen-poloz-says-debt-and-overvalued-house-prices-remain-biggest-risk-to-economy-1.2867184

Even without interest rate hikes, the BOC admitting things are overvalued by 30% will have an effect on the Groupthink we have been witnessing over the last few years. Even if the drop in oil isn’t enough.

Glad I am liquid. No debt. Feels good.

#185 Mister Obvious on 12.10.14 at 1:43 pm

#156 I love real estate

“…a new and capable mayor combined with the global attention of the Pan Am games will really help put a shine on Toronto, making it even more attractive for regional and foreign buyers.

Expect other major announcements next year or so as well, such as a possible Olympic bid, growth in TIFF and new events and festivals.”
——————————-

We’ve had that stuff in Vancouver, including a shiny new mayor and an actual Olympics, not just a bid.

The 2010 Olympics was largely a non-event in Vancouver city. We are still trying to recover from the financial damage. There are still unsold units in the Olympic Village and $170 million in lost land revenue that the city will never recover.

The recently re-elected Vancouver City Mayor oversees a rubber stamping service for condominium developers and heritage home demolishers.

In this town we’ve had it up to the teeth with promises of how some long-anticipated but short-lived international event will “really make the world stand up and notice us” while greatly enriching property owners in the process.

So far all it has served to do is lower the quality of life and raise the level of charlatanism. Spare me.

#186 Victor V on 12.10.14 at 1:46 pm

Canada’s housing market overvalued by as much as 30%: BoC

http://www.theglobeandmail.com/report-on-business/economy/bank-of-canada-says-housing-market-overvalued-by-as-much-as-30/article22021768/

Among the worsening “vulnerabilities,” the bank’s Financial System Review pointed to a growing subprime mortgage market.

“A more worrisome aspect of this trend is that a sizeable proportion of new uninsured mortgages are being issued to riskier borrowers,” the bank said.

About 35 per cent of new, uninsured mortgages by smaller federally regulated banks since the end of 2012 could be considered non-prime, according to the report.

The bank said various less-unregulated institutions are also getting into the subprime market, which was famously blamed for helping to trigger the financial crisis in the U.S. in 2008.

#187 SWL1976 on 12.10.14 at 1:52 pm

#169 bdy sktrn

They are naturally occurring, predictable events.

———————————————–

So is the melting of the ice caps. They are contracting not expanding like you mentioned. Either way coastal cities will be swiming soon on king tides. Case in point; Vancouver and Courtenay/Comox this week

—————————————–

#614 Cato – Good points. I don’t know why people can’t accept that there is a better way to do business. The world doesn’t need a bully telling everyone else how to live. Trade fairly and get on with doing business.

Too bad we are very very far from that reality now. All the debating in the world on this blog will not change our course, but thought provoking conversations sure beat what’s on TeeVee these days

#188 NoName on 12.10.14 at 2:00 pm

#173 Fred Smith

That a scary, if its true, our home will be time machine, it will take us back to 1989.

http://youtu.be/zJiCswIaIkI

#189 Mike T. on 12.10.14 at 2:00 pm

#156 I love real estate

Oh man thanks for the chuckle

I see you are still pushing the ‘make people feel less than’ sales pitch

May the Infinite Creator bless your soul and guide you on your path, you have deviated in a most un-fortunate way

#190 [email protected] on 12.10.14 at 2:03 pm

Will the last one heading south please turn out the lights ?

http://zillow.mediaroom.com/2014-12-09-New-Zillow-Report-Buying-Twice-as-Affordable-as-Renting

#191 Godth on 12.10.14 at 2:07 pm

Natural gas: The fracking fallacy
http://www.nature.com/news/natural-gas-the-fracking-fallacy-1.16430

Why Beijing’s Troubles Could Get a Lot Worse
http://online.barrons.com/articles/anne-stevenson-yang-why-xi-jinpings-troubles-and-chinas-could-get-worse-1417846773?tesla=y&mod=djemb_mag_h

#192 bdy sktrn on 12.10.14 at 2:30 pm

#178 SWL1976 on 12.10.14 at 1:52 pm
#169 bdy sktrn

They are naturally occurring, predictable events.

———————————————–

So is the melting of the ice caps. They are contracting not expanding like you mentioned.
———————————-

simply flat out wrong.

NOAA data shows the planet has been GAINING sea ice extent steadily for 15 years

the south cap is 3x the size of the north. it has been growing fast (2013/14 most ever ice recorded by a wide margin). growing faster than the arctic is shrinking in absolute terms. we are simply adding sea ice by millions of acres yearly, steadily for the last 2 decades. (at record high co2 levels of the gaseous compound and the Scientology like panic surrounding it
—————————

Either way coastal cities will be swiming soon on king tides. Case in point; Vancouver and Courtenay/Comox this week

“Aaaaarg, ever been to seeeeeaaaa Billy?”
seemingly not. talk to a fisherman anywhere on the planet in the last 1000 years and ask him what happens when a ‘spring tide’ high combines with strong onshore gusts.

jees, seems some landlubbers think the ocean was just invented yesterday.

#193 old gringo on 12.10.14 at 2:33 pm

If 30% drop in home prices is a “soft landing”, I would hate for Canucks to see a HARD landing as USA did.
Alberta is going to feel a lot of pain that will pass through to the rest of Canada.
R.I.P.
And the crowds will say ” never saw this coming”.

#194 Nomad on 12.10.14 at 2:35 pm

Mortgage Insurance Trusts:

I was saying a few weeks back that I was buying Genworth Canada. I just sold with a puny 3% gain. The news that came out from the government today, saying our housing is 10-30% overevaluated, that will get investors to run for the exits. Moved that money into CGI, POW and ZUB (US financials ).

Total worth:

See how the US market is doing relative to ours. Since almost all canadians are 100% invested here, their “TOTAL WORTH” just quickly went down. Now retirees might think twice before giving 100k to their kids.

Margin:

And, many are on margin. Two 2 factors should also contribute to slowing down the real-estate bull market.

#195 rosie "moving forward" in the knowledge that, "this won't end well" on 12.10.14 at 2:37 pm

#178 Mr. Obvious

Wishful thinking I’m afraid. So long as the real estate industry controls the stats, people will only realize that it’s not ending well when it hits them. Many houses in my town now languish because of ridiculous asking prices, but the local real estate board says all is good, prices are rising. The sellers are still holding out based on this. Time will tell. The pond seems to be getting full, what with all the black swans paddling about.

#196 Jim B on 12.10.14 at 2:38 pm

#86 joblo
So you’re saying the “Canadian health care system” (there is no such thing; what province(s) are you talking about?) is headed toward bankruptcy? Please give me your detailed scenario of how exactly this is supposed to happen. Oh, I forgot, you’re just frothing at the mouth. I mistook you for someone who actually thinks things through.

#197 Rational Optimist on 12.10.14 at 2:39 pm

156 I love real estate on 12.10.14 at 11:59 am

“What is more, a new and capable mayor combined with the global attention of the Pan Am games will really help put a shine on Toronto, making it even more attractive for regional and foreign buyers… Expect other major announcements next year or so as well, such as a possible Olympic bid…”

The only silver lining to the congestion-filled nightmare that will be the Pan Am games (the event that Winnipeg has hosted twice) will be that the Province of Ontario has a good shot of bungling it so horribly that we will never again have to contemplate the potential horror of the IOC accidentally letting the golden horseshoe host an Olympics.

The Province has been dangling the dagger of an Olympics over our heads for 25 years now. Pan Am is going to be a distasteful and expensive mistake, but at least it may be bad and expensive enough that no one will be able to imagine Torontonians actually want an Olympic games.

#198 Smoking Man on 12.10.14 at 2:53 pm

#140 Holy Crap Wheres The Tylenol on 12.10.14 at 10:20 am

Ha, tell your wife I had no issues with my teachers… Apart from a goof who slapped me across the room in grade seven because he thought I swiped his bick pen..I had my revenge after school that day , four cut valve stems on each tire, and tank of gas full of sugar….

My issue is with my kids teachers, and what they tried to do to my kids.

I was grooming em to be Entrepreneurs, develop that opportunist mindset, little bit of lying is good, taking short cuts eqaute to productivity.

But no, thier job was to manufacturer robots, obidiant happy workers.

Made my blood boil….

Just as well your wee wife can’t read garths deleted folder..

She would come after me for sure….

#199 bdy sktrn on 12.10.14 at 2:57 pm

speaking of ‘HARD landing’

oil had resumed it’s freefall once again. please fasten your seatbelts.

i wonder how it’s gonna land? ;P

the oil chart is like a TimevsDist plot of the coyote falling of a cliff, and smacking into random tree limbs on the way down.

arg 60.67 – this is getting silly. was the market price really that wrong 2 weeks ago?
http://www.investing.com/commodities/crude-oil-streaming-chart

—————————-
perhaps it’s time to get the camping gear out for a bottomhunting expedition .

SM – a chance to redeem yourself – call the bottom and you are king again.
Everyone else – dee-luxe tinfoil fedoras will be mailed to all contest entrants who can call a greasy black bottom closer than the smokerguy.

#200 Habs76-79 on 12.10.14 at 2:58 pm

Jim Jones was so cheap that he and his cultish clan did not serve cyanide laced “KoolAid” but a cheap knock off as in cyanide laced ” Flavouraid.”

Seven, eight, nine years ago the Americans drank the equal to cyanide laced Koolaid, and they lost in the real estate market badly as a result. Us dumb Canucks even with the winds of history warning us have and are drinking the crappier cyanide laced Flavouraid.

IE: I just heard this morning on what was the top dog ( now the dying dog) CKNW 980 in Vancouver, Remax in Calgary says Calgary house prices will only rise an average of 3% next year even with the gutting of crude oil prices. These cult leaders in the real estate and also financing just can’t stop with their lies and distortions. False Prophets all of them!

As another here said, people will say “They didn’t see it coming.”

AMAZING! SAD! but AMAZING!

#201 not 1st on 12.10.14 at 2:59 pm

Oil’s swan song?

http://phys.org/news/2014-12-sunlight-electricity-percent-efficiency.html#ajTabs

#202 Herb on 12.10.14 at 3:00 pm

So Canada’s “Black Swan” turns out to be a simple white one polluted by oil.

And the Harper Government is wearing an albatross around its neck it can’t cut loose: hundreds of thousands of homeowners who happen to be voters.

Interesting times!

#203 saskatoon on 12.10.14 at 3:03 pm

#184 Fortune500

this article is highly significant.

the canadian housing market isn’t capable of change until the sheeple within are told that it has changed.

they have now been “officially” told.

change will now quickly follow.

#204 Victor V on 12.10.14 at 3:04 pm

#156 I love real estate

I feel really sad for the basement dwellers who feel consoled by all the negativity on this blog, who still have not gotten into the GTA property market.

Our family rents a $1.75 million home in one of Toronto’s best neighborhoods for $4,000 per month plus utilities. The landlord pays for landscaping, leaf collection, snow removal and any requisite repairs.

Care to share with me how much it would cost us to buy and maintain that same home? I’d like to understand why I’m feeling anything but sad.

Thanks.

#205 The Econoom on 12.10.14 at 3:25 pm

#167 Jeff in Moose Jaw
#21 Gregor Samsa
House in Florida within walking distance of a beach = $150K.House in Saskatchewan, on the edge of town in Regina which currently overlooks a frozen tundra = $400K.
Makes sense…
………………………………………………………………………

Exactly, I have seen it with my own eyes. shocking.

………………………………………………………………….

You guys do realize that Florida coastline will be under water within my generation’s lifetime right? And what, precisely, would you do for work in Florida? Pick oranges? Collect tickets at the gate of a theme park? Good luck with that.

You need to account for the earnings capability of homebuyers in the locations you’re comparing. Yes, Regina is likely overvalued, but that doesn’t mean it should be cheaper than shitty Florida.

#206 saskatoon on 12.10.14 at 3:26 pm

also of note:

as of 2:20pm, the toronto star doesn’t have this (poloz) news posted…anywhere!

although, they do have a nice piece on harper/gunsnroses.

interesting/telling.

#207 Mark on 12.10.14 at 3:32 pm

“Care to share with me how much it would cost us to buy and maintain that same home? I’d like to understand why I’m feeling anything but sad.”

At a historically average long-term interest rate of 8%/annum, you’re looking at $140,000 in interest payments alone. 1%/annum long-term maintenance = $17,500. Property taxes, another $10-$15k. So figure on the order of $175,000/year, plus whatever incremental cost of equity capital is required to capitalize such a house as an investment (so let’s round up to $200k/year). If you can rent that for $48k/year, you’re basically robbing the owner of the property blind. Congratulations!

#208 Cici on 12.10.14 at 3:40 pm

Oh look Garth,

The Bank of Canada says you are overly cheerful in predicting the possibility of a 15% correction; those government doomsters think that Canadian house prices are overvalued by up to 30%:

http://www.bloomberg.com/news/2014-12-10/bank-of-canada-sees-elevated-risk-from-home-prices.html

#209 Dub on 12.10.14 at 3:43 pm

http://www.bloomberg.com/news/2014-12-10/bank-of-canada-sees-elevated-risk-from-home-prices.html

#210 gut check on 12.10.14 at 3:55 pm

so…
who’s buying the dip today?

#211 TurnerNation on 12.10.14 at 3:56 pm

Flushhhh. Crowded exit trade.

#212 Obvious Truth on 12.10.14 at 3:56 pm

Waiting to see the bright yellow ticker on bnn so change from TSX loses more than 300 points to more than 400 points.

Cue more loss selling and forced selling?

BOC just came clean. Guess markets forced their hand. I’ve said before that price takes care of itself. Doesn’t seem like a soft landing for anything. Is the oil price an external shock? Maybe the BOC should compare shanghai and TSX. How many chances did the conservatives get to make investors money? Who would even think of investing here now. We need a currency and asset price bottom first. Investors don’t like losing money. It makes them sour. This is all very serious stuff now.

Maybe we shouldn’t worry. A td real estate economist just said were good. Incomes will rise faster than prices.

But wait. Also said Oil prices will be negative on incomes.

What sector will see rising wages?

This person is confusing me. But not really. It’s all expected.

#213 Obvious Truth on 12.10.14 at 4:01 pm

There goes the yellow ticker……

#214 calgaryPhantom on 12.10.14 at 4:01 pm

There goes the Santa rally hope.

#215 Grantmi on 12.10.14 at 4:06 pm

What more do you need to look at!!

Kabooommmm!

http://scharts.co/1BziHil

#216 Porsche on 12.10.14 at 4:07 pm

The TSX Venture Index is trading at it’s lowest level ever in it’s history.

These junior oil stocks are going to go bankrupt.

#217 Jetfixer on 12.10.14 at 4:09 pm

Frig… I thought the other day was a good dip. Good thing I pulled my punch a bit. What is the bottom of this? TSX down 380 as of right now!

#218 Slim on 12.10.14 at 4:09 pm

My daughter lived on Deptford High Street, not far from Stratford, London, UK, with no problems. So it doesn’t much matter where you go. For example, a credit union in Vernon, BC was just robbed at gunpoint today.

#219 TnT on 12.10.14 at 4:13 pm

#187 SWL1976

I don’t know why people can’t accept that there is a better way to do business. The world doesn’t need a bully telling everyone else how to live. Trade fairly and get on with doing business.

This is classic!

China and Russia are the epitome of Government’s bullying everyone else on how to live.

Read up on the internal strife surrounding western Chinese Muslim citizens and all the top to bottom corruptions within each level of government.

Ask the gay community in Russia how life is going these days.. etc.. etc…

It is very naive to think that the world is a friendly and peaceful place.

USA is a beacon of light for all the world. No other country inspires more immigrants than USA.

Why are there more Chinese and Russians emigrating to USA and not the other way around?

You and Cato can’t see the forest behind all the trees.

#220 Jetfixer on 12.10.14 at 4:14 pm

make that 410..

#221 Mike in Toronto on 12.10.14 at 4:15 pm

#210 gut check

Didn’t you hear? Yesterday was the bottom. You should be kicking yourself.

Funniest thing I heard on the radio “Don’t sell, you’ll turn your unrealized losses into actual losses”

Funny part is that given the market is in Jan 2014 territory, there would be no actual losses.

My only regret was not expanding my U.S. exposure. Didn’t want to take the conversion hit over an irrational hunch.

I guess it was the wrong decision for the right reasons.

#222 Sid on 12.10.14 at 4:23 pm

Canadian Housing overvalued by 30%, Bank of Canada thinks. Worse than Garth predicted. Is it the beginning of the end!

http://winnipeg.ctvnews.ca/housing-market-could-be-overvalued-by-as-much-as-30-bank-of-canada-1.2141723

#223 Jan on 12.10.14 at 4:25 pm

#156 I love real estate on 12.10.14 at 11:59 am
Garth, no disrespect intended, but the facts are lining up again to point to much more upward and sustained movement in GTA real estate.

http://www.thestar.com/business/2014/12/10/toronto_house_prices_to_outpace_country_again_in_2015.html

The estimate is 4% overall growth again next year.

Does that sound like a crash to you?

What is more, a new and capable mayor combined with the global attention of the Pan Am games will really help put a shine on Toronto, making it even more attractive for regional and foreign buyers.

Expect other major announcements next year or so as well, such as a possible Olympic bid, growth in TIFF and new events and festivals.

Toronto IS world class, we ARE different.

Deal with it, or be left behind forever, a renter until you retire and die.

I feel really sad for the basement dwellers who feel consoled by all the negativity on this blog, who still have not gotten into the GTA property market.

How many years, soon DECADES are you prepared to wait for a price drop?

It won’t happen, and 2015 will really be painful, unfortunately.

When all this comes to pass, you will only have one word, folks.

https://www.youtube.com/watch?v=g6GuEswXOXo

Always fun to hear from a Re/Max agent. Keep it up. — Garth

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

Is it any wonder why these realturd parasites are among the most hated anywhere.
Just pray you don’t run into one of the wrong loser basement dwellers as it might just change your perspective a little what it really means to be a whore.

#224 TnT on 12.10.14 at 4:28 pm

To Cato and cohorts

China’s way of playing fair – and Cato wants China to usurp USA in global dominance

Of the same piece is China’s attacks on foreign companies and brands on the grounds of claimed antimonopoly practices, discriminatory pricing, corruption, and inadequate product quality. Chinese state-owned companies and firms in which party members are invested, however, are largely exempt from such scrutiny. In a state economy like China’s, the playing field is increasingly tilted so ultimate gains go to Chinese companies.

China’s way of Governing – and Cato wants us to replace Harper with Xi

As for Xi’s much-ballyhooed anticorruption campaign inside China, it offends me that international media depict it as a good-governance effort. What’s really going on is an old-style party purge reminiscent of the 1950s and 1960s with quota-driven arrests, summary trials, mysterious disappearances, and suicides, which has already entrapped, by our calculations, 100,000 party operatives and others. The intent is not moral purification by the Xi administration but instead the elimination of political enemies and other claimants to the economy’s spoils.

#191 Godth – thanks for the link

http://online.barrons.com/articles/anne-stevenson-yang-why-xi-jinpings-troubles-and-chinas-could-get-worse-1417846773?tesla=y&mod=djemb_mag_h

#225 Victor V on 12.10.14 at 4:28 pm

#207

Thanks Mark. I recall having a celebratory drink or two the night we signed the lease ;)

#226 bdy sktrn on 12.10.14 at 4:33 pm

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

welcome back alberta !(sung to welcome back kotter)
“your like a prairie…. version of blackberry”
“oh alberta relax, introduct a sales tax, welcome back”

22min on oil prices – hilarious!

#227 Dub on 12.10.14 at 4:38 pm

This was the best time for BOC to unload the bad news. It will be forgotten or ignored in a week or so after the markets start going upwards. Smart move….

#228 Bobs ur uncle on 12.10.14 at 4:51 pm

#191 Godth

From that Barron’s link on China:

“In fact, there are 50 million units in China that are owned but vacant. The owners won’t rent them because used apartments suffer an immediate haircut in value.”

Just – wow…

#229 Mark on 12.10.14 at 4:58 pm

In light of the collapsing stock market, and collapsing consumer energy prices — anyone here still think that the next BoC move will be a hike?

Nothing is ‘collapsing.’ Why do people here have to speak in extremes? — Garth

#230 Jeff in Moose Jaw on 12.10.14 at 5:06 pm

#205 The Econoom
“You need to account for the earnings capability of homebuyers in the locations you’re comparing. Yes, Regina is likely overvalued, but that doesn’t mean it should be cheaper than shitty Florida.”

All I account for is the median per capita income.
Prices here are jacked up.

#231 brad on 12.10.14 at 5:08 pm

Poloz came clean to avoid embarrassment when we land hard. His attempts to engineer a soft landing have failed. The gigs up…..doomed.

#232 Porsche on 12.10.14 at 5:18 pm

The TSX Venture Exchange is at a record low. It’s 70% commodity

#233 JimH on 12.10.14 at 5:21 pm

#210 gut check on 12.10.14 at 3:55 pm
“so…
who’s buying the dip today?”
================================
Simple: Greater Fools!

#234 devore on 12.10.14 at 5:26 pm

Combine this with the BoC statements, I smell a spring election!

#235 JimH on 12.10.14 at 5:29 pm

Any interest among the blog dogs in a 2015 ETF trading/investment lottery? Say, for eg., everyone gets to hold no more than 10 ETFs, but can trade/ re-balance/ reallocate at will?

Garth could donate the Harley to the winner?

Second place would have to settle for the Hummer?

#236 stevep on 12.10.14 at 5:30 pm

mortgage rate in USA is 4% Canada variable is 2.75%
health care insurance in USA is $500/month
health care is paid for by govt. in Canada

this is why home prices are higher here

#237 devore on 12.10.14 at 5:39 pm

#220 stevep

mortgage rate in USA is 4% Canada variable is 2.75%
health care insurance in USA is $500/month
health care is paid for by govt. in Canada

this is why home prices are higher here

Mortgage interest and property taxes are tax deductible in US: a wash, plus rates guaranteed for life of mortgage.

Healthcare in Canada is not free.

Any other fairy tales?

#238 Mike S on 12.10.14 at 5:43 pm

“so…
who’s buying the dip today?”

Tempting, but I think I’m done for this year, need to head for a vacation soon, and can’t re-contribute to that TFSA till 1st Jan …

#239 Spaccone on 12.10.14 at 5:44 pm

>#214 calgaryPhantom on 12.10.14 at 4:01 pm
>There goes the Santa rally hope.

Don’t worry, we’ll get a Befana rally.

#240 SWL1976 on 12.10.14 at 5:53 pm

#219 TnT – I’m not saying the world is fair by any means, but leading by example is a good start

—————————————–

Ask the people of Iraq how they like there leftover radioactive munitions, or the Soldiers who handled them while they were looking for WMD’s

Yeah beacon of hope

#241 Mike S on 12.10.14 at 5:59 pm

“Nothing is ‘collapsing.’ Why do people here have to speak in extremes? — Garth”

I think he means, that given that the latest inflation numbers were highest in Alberta (relative to rest of the country) and lower gas prices, the next BoC move upwards will be to protect the currency and to stop growing debt load, instead of CPI rise

#242 calgaryPhantom on 12.10.14 at 6:00 pm

>#214 calgaryPhantom on 12.10.14 at 4:01 pm
>There goes the Santa rally hope.

Don’t worry, we’ll get a Befana rally.

—————————————————————–

Not sure if i want to put my money on an old Italian woman.

#243 Ronaldo on 12.10.14 at 6:08 pm

#232 Porsche

”The TSX Venture Exchange is at a record low. It’s 70% commodity”

And 90% garbage.

#244 Mark on 12.10.14 at 6:09 pm

“I think he means, that given that the latest inflation numbers were highest in Alberta (relative to rest of the country) and lower gas prices, the next BoC move upwards will be to protect the currency and to stop growing debt load, instead of CPI rise”

Higher rates would damage, not ‘protect’ the currency. And a lot has changed in the past month or two adding to the deflationary pressure already in the system. The BoC now appears to be severely behind the curve in lowering policy rates, and probably should have been lowering far earlier to mitigate the effects of the housing bubble popping (which started in Q2/2013) and now the O&G industry dramatically slowing in its activity.

Alberta inflation was at best, tame, and very likely transitory. Deflation, not inflation, is the real threat as consumers slow down their spending and attempt to repay debt.

The bank will not lower rates. What absurd talk. — Garth

#245 Financial Freedom at 40 on 12.10.14 at 6:17 pm

My festive holiday present to my planner will be, for once, to not complain bitterly, at least at this quarter end’s meeting, about MERs on the actively managed funds that make up part of my portfolio. My apologies if that’s a sacrilegious thought to have here in the doghouse. For the moment at least, worshipping at the altar of downside capture.

#246 Drill Baby Drill on 12.10.14 at 6:19 pm

#244 Mark
Please go away

#247 Harden on 12.10.14 at 6:21 pm

while Vancouver holds collective breath for results of independent study to determine impact of HAM on our local real estate , this just in:

“Offshore buyer demand from Mainland China continued throughout the year,” the report says. “Demand for westside homes (in Vancouver) will continue to be driven by offshore buyers who can afford to pay the two million dollar-plus price tag.”

http://www.theprovince.com/homes/2015+forecast+cent+rise+Vancouver+housing+prices/10457510/story.html

#248 Smoking Man on 12.10.14 at 6:30 pm

#183 bdy sktrn on 12.10.14 at 1:38 pm
my biggest disappointment is all of this oil soaked shrivelling of all things energy is not a single peep from our resident bat-toe-camel-man soothsayer of an impending implosion.
hey smokey wtf man, you are slipping bigtime.
….
Go to my October posts, I’m busy writing a shit fiction that never sell but having the time of my life writing it..

You have my lessons , put em into play.

#249 gut check on 12.10.14 at 6:31 pm

and last week I spread out my savings into several banks. for the insurance. not a moment too soon?
I noticed also that Revenue Canada is punishing successful investors via their TFSAs.
The bail in legislation is looking scarier now.

It was tough to ride this out in the face of everyone looking at me like I had three heads. But.. well, here it comes. The house price crash, the sneaky wealth attack (read: confiscation) and the sudden realization that all the ‘productivity’ in the world means nothing when bread costs $6.00 a loaf and isn’t even made with real wheat.
:)

You seriously think a bank will fold, requiring deposit insurance? You need a dog. Or a scotch. — Garth

#250 Grantmi on 12.10.14 at 7:03 pm

So what are the Tar Sands good for now!

http://bit.ly/1Bbcvdo

Maybe turn them into new strip malls. First TH’s on the way!

#251 gut check on 12.10.14 at 7:05 pm

“You seriously think a bank will fold, requiring deposit insurance? You need a dog. Or a scotch. — Garth”

do they need to fold for that to happen?
but you’re right on the second part. I do. :)

#252 TnT on 12.10.14 at 7:07 pm

#240 SWL1976 on 12.10.14 at 5:53 pm

How about your take on China and Russia’s human rights history. Are you with Cato that China is the right model for global dominance?

Slam USA all you want… It’s allowed here :)

#253 Mike S on 12.10.14 at 7:15 pm

“You seriously think a bank will fold, requiring deposit insurance? You need a dog. Or a scotch. — Garth”

You don’t know where he put the money:

“35% of new, uninsured mortgages by smaller federally
regulated banks since the end of 2012 could be considered non-prime”

#254 old gringo on 12.10.14 at 7:20 pm

#236 stevep on 12.10.14 at 5:30 pm
mortgage rate in USA is 4% Canada variable is 2.75%
health care insurance in USA is $500/month
health care is paid for by govt. in Canada

this is why home prices are higher here

Just reminding you that health care is paid for by the tax payers in Canada.
The gov’t pays for nothing!
Not sure why canucks don’t get that.

#255 Albertaguy on 12.10.14 at 7:37 pm

Wow, 254 comments….Gman taking some time off and thats ok.

Heres an interesting view of how we fit into the world…

In housing markets, five economies stand out as the “weakest links” among commodity exporters by virtue of the fact that house prices have been rising faster than household income over the past decade. Such multi-year declines in housing affordability have proven to be excellent markers for housing crises in the past, for example in Japan prior to 1990 and in the U.S. in the run-up to 2007. The “frothy five” are Brazil, Peru, Colombia, Norway and Canada.

http://http://seekingalpha.com/article/2730225-where-are-the-weakest-links-among-commodity-exporters

#256 SWL1976 on 12.10.14 at 7:59 pm

#252 TnT – Actually I am against global dominace but that it a whole other story in itself

—————————

One thing I notice here in oil country is lots of people have much more spring in there step to make themselve useful. Kinda nice the shoe being on the other foot now when trying to get things done

The big players are not worried, but the fat will be trimmed

#257 Fisherman on 12.10.14 at 7:59 pm

If the banks go down don’t worry about your deposit insurance. I’d go for the barking dog, Mr. Lee Enfield & 500 of his little helpers, a case of scotch & neighbours of the same ilk.

#258 Inglorious Investor on 12.10.14 at 8:09 pm

#236 stevep on 12.10.14 at 5:30 pm

“health care is paid for by govt. in Canada”

Are you serious?

#259 AK on 12.10.14 at 10:11 pm

#1 Jimmy on 12.09.14 at 8:06 pm
“Jimmy types fast!.”
===================================

Jimmy has no life…

#260 cynically on 12.10.14 at 11:58 pm

The American haters are out in full force again tonight. I think it is the lack of enterprise in them that fosters their dislike of Americans who are, as a nation, more goal-oriented. After all it is not Canada which has given the world so many advances and discoveries in medicine, science and the arts. Some of us accept and appreciate this and others seem to feel inadequate as a nation so they look for the negatives, and there are many, but what country doesn’t have any, including Canada so until we get our own house in perfect order let’s cap it.c

#261 Doug in London on 12.11.14 at 1:43 pm

@gut check, post #210:
I was buying XEG-TSX and USO-NY on the Dec. 10 dip. Yes, oil could go lower and I have no idea for how long. However, in the longer time span I believe it will be a good investment. Earlier this year I sold off my last holdings of XEG at $21. You are supposed to buy low and sell high, is that right?

#262 gut check on 12.11.14 at 5:27 pm

#261 Doug In London
that’s the theory. and it works, too, if you can read the tea leaves. i won’t dare say ‘well done’ just yet. Let us know when you sell for the high.

#263 Doug in London on 12.12.14 at 12:18 am

@gut check, post #262:
I don’t read tea leaves, but rely on past experience. Here’s a summary:
1) In 1998 when oil was $11/barrel and the “experts” said it could go as low as $5 I decided to buy TD Energy Fund and Altamira Energy Fund. I patiently waited and sold them both, bit by bit, in the next decade for a tidy profit, selling the last in 2007. How was I to know oil would go all the way to $147/barrel in 2008?
2)When all stocks were on sale in 2008-09 I bought both of the above back, and sold them about 2 years later for another tidy profit.
3)Stocks went on sale again in the last quarter of 2011. When prices of other stocks were recovering, XEG was still on sale so I bought some. Earlier this year I sold it off again at $19, $20, and the last at $21 (see above).

Fast forward to now, is there any reason to believe this time will be different? Oil stocks are ON SALE now. That reminds me, I should Email my friend who went to Bangkok after I sign off here. I wonder how he got there so quickly? I doubt very much he walked or biked to the west coast then took a wind powered sailboat from there. More likely he went on a jet plane that runs on a PETROLEUM PRODUCT, and burns a lot of it on such a long trip.