Race to the bottom

HUMMER modified

Melissa Hart is desperately unhappy, and rutting season is only a few weeks away. Her sad story in a moment.

First, oil. It looks like tomorrow (I’m scribbling this on a Sunday afternoon) will be hard on Calgary. Not only did crude crumble to $57 and a half bucks on Friday (down more than 12% on the week), but it’s about to get worse. The OPEC dudes are, like, totally serious about crushing the oppo.

Listen to what spokesguy Suhail Al-Mazrouei said on the weekend: “We are not going to change our minds because the prices went to $60 or to $40. We’re not targeting a price; the market will stabilize itself. We need to wait for at least a quarter to consider an urgent session. We will not have a real picture about oil prices until the end of the first half of 2015.”

In other words, now that he’s said it, $40 oil is distinct possibility. OPEC is intent on flooding the world with cheap oil, which will render uneconomic the stuff flowing from Venezuela, Russia, the shale fracking in the northern US or the oil sands in Alberta. Too much production has collided with falling demand. You know why. Japan is in recession. Europe’s fighting deflation. Russia’s savaged by sanctions. China’s slow.

So, we’ll see what happens. But if the big producers are willing to let prices fall another 20%, and stay there until next summer (at least) it might change a lot. Remember the Alberta government has based its whole shtick on $90 oil. It things go to forty, that province plunges into deficit. Last week poor Jimmy Prentice, the new premier, was forced to say this: “I won’t cushion it. We will have to make some tough decisions and the impact will be felt in every corner of this province.”

Ya think? The shortfall in revenues could be $10 billion. Imagine the impact of that in a province with a surplus now of less than $1 billion.

But this is not just about Alberta. An oil collapse itself is deflationary in an economy like ours, barely growing and having developed a condo economy. It means a big reduction in foreign revenue through crude exports, as well as lost investment and jobs at a time when employment gains have been elusive for more than a year. The consequences would probably include further losses for investors in energy companies, reduced economic growth, seriously tough times for real estate in Alberta, Saskatchewan and northern BC, cheap gas, a way-lower dollar and constipation at the Bank of Canada.

On one hand, the central bank cannot let the dollar plunge to 80 cents and wildly inflate the cost of imports while the economy is struggling. At the same time, it can’t jack rates much to support the loonie when the population is pickled in debt and still curiously horny.

Which brings us to Melissa.

METRO modified  Last week this was the front page of a daily paper which floods the transit system.

She wants a house. Bad. Just a day or two after the Bank of Canada said properties cost 30% too much, and yet Re/Max claimed they will jump 4% in 2015, it means only one thing to Melissa – buy now, or buy never.

“Hart, 33, and her husband Brian owned a home briefly but found themselves stretched too far financially. Since then they’ve rented a two-bedroom apartment in the east end while standing on the sidelines – watching and waiting for a housing correction that hasn’t come.

Now the couple, like many others who had the same hope for a correction, find themselves facing another grim reality. They may have inadvertently joined the ranks of renters-for-life. “It’s all we think about every day – that if we had just bought a house back when we first started looking, we would have overpaid, but at least we would have been in a house,” says Hart.”

The theme here could not be more obvious: ‘renters-for-life’ means failure. Melissa and Brian epitomize a wide swath of the population who would gladly trade steaming heaps of debt and living ‘stretched too thin financially’ for being in a place they think is their own. Even though it costs half as much to rent. Even when owning will mean no savings, no investments, no Plan B, and financial failure if real estate values flatline, let along decline. What happens if they have a kid? Lose a job? Retire with no pension?

All in all, I’d say things just got more dangerous.

As I mentioned last week, almost 60% of the debt being carried is by people who owe 250% or 350% of what they earn annually. Those are extreme numbers. They should worry everybody, since most of that debt is attached to the one asset Canadians have chosen to mainline, and in which they store the most wealth. The decline in oil may make it cheaper to drive around (thankfully for me) but it’s nothing but misery for the economy – exactly the opposite of what will happen in the US.

The argument for a diversified financial life grows stronger. God help Melissa.

185 comments ↓

#1 Sebee on 12.14.14 at 6:42 pm

Bright side?

At least this dropping CAD dollar will eat away some difference to US home prices.

#2 Chickenlittle on 12.14.14 at 6:45 pm

You know, I want a new car “bad” but it just ain’t in the works yet. Welcome to the real world Melissa.

Oh these first world problems….

#3 turd ferguson on 12.14.14 at 6:52 pm

First? So what

#4 CalgaryBoy on 12.14.14 at 6:55 pm

Love all the posts about Alberta, Calgary, oil, and the housing market!

Let the race begin!!!

This is what I’ve been waiting for! I’ve been renting in Alberta for years and all my friends and co-workers have bought now. All the purchases have been extremely high, with most recent ones at $700K! Who needs to pay that much for shelter?!? No one needs to spend that much money. It’s too excessive! Indeed, we are living beyond our means. No wonder people in Alberta are so heavily in debt! This will not end well, as you would put it!

#5 Koshy Alex on 12.14.14 at 7:04 pm

http://economictimes.indiatimes.com/news/economy/indicators/how-chinas-economic-slowdown-can-adversely-impact-india/articleshow/45506925.cms

#6 ALBERTASTROPHE on 12.14.14 at 7:08 pm

Garth points out the two horns of this dilemma, the falling dollar and expensive imports, plus the danger of raising rates when people are so in debt.

Is it a trilemma for Albertans?

In a classic example of bad timing, the Alberta conservatives seem to feel the need to cater to their neandercon base.

The Best Mayor in Canada, Naheed Nenshi, calls them out as complete retards for even thinking like this.

And crap like this will totally remove any sympathy the ROC might feel for Alberta as the SHTF.

http://news.nationalpost.com/2014/12/12/albertans-will-be-labelled-hillbillies-if-tories-pass-gay-straight-alliance-bill-naheed-nenshi/

Harper better watch out, too. Stuff like his negligence and bigotry against native women, ridiculous anti-crime approach when crime is dropping, refusal to meet the Premier of the largest province and other dumb social agenda items could be the tipping point against him when people are already unhappy with a falling economy and evaporating home values.

Ground zero will be Alberta. The shock waves will hit all of Canada, and conservative political types may suffer the most.

#7 Harbour on 12.14.14 at 7:10 pm

Ritchie Brothers, the world’s largest auctioneer of heavy equipment and trucks will see some low ball bids coming.

#8 Visitor Number 9 on 12.14.14 at 7:11 pm

The U.S. Will tell Saudi Arabia to cut production or else they will pull out the troops which keep the Saudi royalty in power.

#9 sideline sitter on 12.14.14 at 7:14 pm

We’re moving. WAY bigger place. WAY more money, but why not? We’ve been scrimping for 2+ years… and renting is is still only 60% of cost to own. :-)

#10 Mukadi on 12.14.14 at 7:16 pm

I doubt that God will help poor Melissa unless there are two Gods, one renters and one home owners.

I’ve been renting for ages from Montreal to Ottawa, to Connecticut to California and now in Seattle and I love this flexibility. My friends who bought million $ houses in California and Nevada in 2001 and 2007 are still holding underwater properties. I have no worries, I am not sweating to pay mortgage on a worthless property.

It’s a matter of choice, some people want to be bank slaves and some don’t.

#11 Arfmooocat on 12.14.14 at 7:18 pm

#8 Visitor Number 9

Why? The U.S. economy will rev even higher RPM with cheap energy

#12 Mark on 12.14.14 at 7:21 pm

The whole idea of the CAD$ dropping for much longer is highly, highly over-done. Remember, we are going into deflation. Deflation saps consumers’ purchasing power, particularly in discretionary stuff that tends to be imported. It forces people to pay back their debt rather than blow it on the latest toys.

Canada cannot, and will not merely be allowed to devalue out of this mess and maintain domestic demand. Central bankers throughout the world simply won’t allow it.

#13 Retired Boomer - WI on 12.14.14 at 7:21 pm

Melisa is a FOOL. She has a severe case of ‘house horny.’

She needs to chill a bit, save up some serious dough, and then think about the reasons for buying. MANY, many, many people rent for life. Relatively few home owners are IN their homes til they hit room temperature. A good number end up in old age homes, skilled care facilities, and it seems increasingly people seem to outlive their brains.

This weekend I visited a school chums’ mother. This person I have known since graduating from three cornered shorts. She recognized me, still loves life, but during my visit mentioned her long dead husband was at work, but he would be back later. She drifted between the now, and 30-50 years ago with ease. (Actually think it was rather nice). Still, she can no longer live by herself, cook, drive etc. Sort of sad, the body is in great condition, the mind not so much.

Melissa can’t think beyond her greed need of a house.

Yes, she might think they are great, but really they are a money pit. I live in a rural area where homes cost 1/5 of TO’s average. Wages reflect it as well. There is no free lunch, no magic wealth in ownership. I do not understand the hormones of ownership. You can’t just leave, you have to SELL it first. Remember that when you start being forgetful. We are only a few years away from this decision on ownership ourselves.

The US market suffered terribly in the RE crash. Every area was hurt, some terribly impacted others that had not run up in value less so. Today, there has been some recovery, but those who were crushed, were crushed!

Be careful what you wish. Oil is being manipulated by the big cheap producers. This will hurt Banks, oil and associated workers & industries. Canada is in a position to feel the squeeze more acutely than the US but, we will not be unscathed. No country is currently problem free.

#14 Mark on 12.14.14 at 7:22 pm

“The U.S. Will tell Saudi Arabia to cut production or else they will pull out the troops which keep the Saudi royalty in power.”

Really, a net importer of oil which never will become a net exporter, is going to call upon its suppliers to reduce production? Get real.

#15 Sad sack on 12.14.14 at 7:23 pm

I had a call from a local sales rep the other day asking if I was interested in selling my house. “I’m renting”, I said. Shocked pause at the other end. “So sorry to have bothered you”, he said.
Once upon a time, he would have tried to sell me a property. Now, I guess, he just assumed that I was in such dire financial straits that I couldn’t qualify for a mortgage

#16 Wayne2yerGarth on 12.14.14 at 7:29 pm

@ visitor 9 – ya, the US must be pissed about low oil prices ….sure..best thing for their economy in years

Wondering about your take on the oil flood garth,

Is this to capture market share? Test the true worth ? Keep the world running on oil for an extra couple decades? Geopolitical strategy ?

#17 cam on 12.14.14 at 7:29 pm

!st

#18 crossbordershopper on 12.14.14 at 7:30 pm

life is about living who cares if you go back to renting, thats where the little people are, roll the dice, go out on a limb, extend yourself, take that course, go on that trip, hit on that girl, bla bla bla. live before you die. we all end up in the box anyway, at least you rolled the dice, and if it doesnt work out, so it doesnt, you back to renting when your 65. i know millionaires and gis recipients living in the same building. when your old, you only need the doctor on speed dial, your kids and grand kids dont call very often.

#19 B.A. Baracus on 12.14.14 at 7:32 pm

Cheap oil benefits everyone except the rich…

#20 LH on 12.14.14 at 7:34 pm

I disagree
Mr. Export Canada is not going to hike rates just to protect the loonie. Inflation be damned.

#21 mike in kelowna on 12.14.14 at 7:36 pm

So what do you think Garth….considering all the global financial and geo political risks out there, perhaps a couple bars of that shiny stuff under the pillow might be prudent?… 2-5 % of ones total portfolio..

Why? — Garth

#22 Party tiem on 12.14.14 at 7:39 pm

Calgary market is slowing down already
http://i.imgur.com/W81TLJl.jpg
Number of listings balloons, sales are more or less the same as last year for now.

#23 TEMPORARY® Foreign Prime Minister on 12.14.14 at 7:39 pm

“……I won’t cushion it. We will have to make some tough decisions and the impact will be felt in every corner of this province……..” – Alberta Premier Jim Prenctice
=========================

TRANSLATION: As the Monopoly Party of Alberta for the last half-century, we find ourselves once again in the embarrassingly self-inflicted position of being unable to mask our overwhelming provincial financial incompetence with resource royalties.

Until oil prices resume to more hypocritical levels, our smug lecturing of other provinces to get their financial houses in order will promptly cease.

P.S. Is anyone interested in some Oki-Noggin lakeshore property complete with Dodge Turbo Diesel Cummins Crew Cab, RV pad, wake-board Bayliner, his and hers matching Sea-Doos, and a life-time membership to the Coors Light fan club? Just askin…

#24 Realties.ca » Race to the bottom on 12.14.14 at 7:49 pm

[…] Source: http://www.greaterfool.ca/2014/12/14/race-to-the-bottom-6/ […]

#25 Uh Oh Canada on 12.14.14 at 7:54 pm

More propaganda from the RE Cartel. This renter-for-life is debt free and sits on a comfy pile of investments.
Woe for me!

#26 Linda on 12.14.14 at 7:54 pm

Regarding Melissa, instead of being depressed she should be excited. If Houseaggedon occurs as so many are predicting, then Melissa & her main squeeze will have the opportunity they’ve waited forever for – purchasing a house. And maybe not even overpaying too much for it. Of course, this plan goes awry if Melissa & her main squeeze suddenly are unemployed – one does need income to purchase, even in these dissolute times – but if they do happen to have the kind of jobs that won’t suddenly disappear due to a free falling economy they should soon be seeing a really big present under the Christmas tree……

#27 David McDonald on 12.14.14 at 7:54 pm

I just hope the US stock market reacts positively to lower oil prices after the initial shock. Logic dictates it should but emotion plays a big role. We’ll see starting Monday.

Canadians are indeed over leveraged and the adjustment will be tough. I remember back in the 80’s when interest rates rose to 20%. I saw couples crying in bankers’ offices because the bank wouldn’t renew their mortgage because they didn’t meet the income requirements to repay the higher mortgage payments. I thought of the ancient Rome practice called decimation. When a legion retreated the punishment was to kill every tenth man. In Canada it was every tenth mortgage holder – chosen randomly among those who had to renew at the wrong time.

#28 Here there on 12.14.14 at 8:01 pm

It very well be that Melissa, by renting, will avoid a lot of heartaches. If predictions come true, many activities will be affected. All construction related activities, realtors. People involved in staging, fluffing properties, big and small, to stand-up a close inspection; Tete-a-Tete, if you will. Lawyers, messengers and even bankers. The laters, may even work harder, to be able to pay their kids very expensive private schooling; talking about lucky sperms. Sadly, for many, it could prove more painful than, the radio guy’s foreplays.

#29 Roman on 12.14.14 at 8:14 pm

There was a nice suggestion at the end of that article for Melissa Hart and other sidelines, who are in desperate mood: close your eyes, buy a house and hedge it with shorting oil futures.

You’ll set for life.

#30 Left Coast Righty on 12.14.14 at 8:14 pm

A lot of self-styled greenies out here have bumper stickers on their SUVs that say:

“No fracking, No Pipelines, No Tankers, No Problems”

The irony is just too rich as the City of Vancouver recently punted all of their “green” hydrogen powered buses for scrap as they are a $75 million money bleeding failure. Oil fuels the “green” life, pure and simple. Without it there would be no whale watching tours, no treks to Machu Pichu, no jet setting to the next Climate Change conference in some exotic locale, no kevlar sea-kayaks oand no gore-tex underwear.

Greenies burn more energy than non-greenies as they travel the world far more than us poor homebound hunter-gatherers.

I think that the bumper stickers should actually say:

“No fracking, No Pipelines, No Tankers, No Jobs, No Roads, No Hospitals, No Schools, No Transfer Payments, No Pogey, No Welfare”

If oil falls into the $40’s and sticks, we’ll get a chance to see who’s right. Greenies: be careful what you wish for!

#31 CPG on 12.14.14 at 8:17 pm

Canadian car-part manufacturers and lumber producers are choosing to expand factories abroad to boost sales, rather than to increase export production at home, a central bank study shows.

http://www.bloomberg.com/news/2014-12-12/canadian-auto-lumber-firms-choose-factories-abroad-over-exports.html

#32 Piccaso on 12.14.14 at 8:18 pm

Feel pretty good in my Edmonton fully furnished $895 a month 1 bdr suite right now.

#33 Lillooet, BC on 12.14.14 at 8:26 pm

“Too much production has collided with falling demand. ”

Sorry, demand for oil is not falling. It’s about 90 million barrels/day, up from 85 million barrels/day a few years ago. Or a billion barrels every 11 days.

The Saudis need oil at a higher price. Their oil revenue is allocated and paid to various employees, sheiks, politicians. When their oil revenue drops, the people who gain financially from the Saudi oil fields will see a drop in their income. They will complain, they will scream, they will demand change. It’s inevitable. Also, as the price stays low longer, more and more production will come off the market, as frackers stop fracking (thank god!), more and more production will disappear. This will inevitably lead to higher prices.

And if there’s kind of geo-political event in the middle east or oil producing nation, the price will rise.

#34 Smoking Man on 12.14.14 at 8:37 pm

Charles Bukowski, thanks for that dogs. Been reading his stuff all afternoon.. Our brains obviously connected to the same power source.. You learn so much on this pathetic blog.

Today one of my kids buddies posted a photo taken in a sales office, they just bought a house.. 100 or so comments of congratulations… Not one comment , “are you guys out of your mind.” . If someone did, they would be mobbed like I was yesterday. Called envious.

But this is why I’m bullish on real estate, emotions generally beat logic everytime in every situation.

Now if I was a celebrity published author
I wouldn’t get chirped for Glooging,(just invented that word) posting while hammered.

Humans are so predicable.. Only celebrates are allowed to tip toe out side the boundaries of programed acceptable behaviour. We self police each other..thanks to teachers.

But my detractors are normal, I understand and pitty them. It’s no way to live.. Insanity is freedom… Normality is prison….

#35 dienekes on 12.14.14 at 8:38 pm

I don’t understand the problem?
You want a house? Can’t afford it? Then go make more money!
Fools earn money. You have to go take it. Legally of course.
One thing I always told freinds when they started a business and thought they had to work cheap to get rolling; “how many people wear GWG jeans? None. Why? They are cheap. People feel good when they overpay for stuff, like designer jeans.
I’m a contractor, yes, but I am in the business of making people feel good!”

#36 Herf on 12.14.14 at 8:45 pm

“The theme here could not be more obvious: ‘renters-for-life’ means failure.”

As a friend once said to me long ago, in North America, if you’re in debt, it means you’re a success. Then, by that standard, I guess I’m a total failure (thankfully) (-Cue Don Adams: “and loving it.”)

#37 Smoking Man on 12.14.14 at 8:46 pm

#25 Uh Oh Canada on 12.14.14 at 7:54 pm
More propaganda from the RE Cartel. This renter-for-life is debt free and sits on a comfy pile of investments.
Woe for me!
………

You could be sitting with millions, but your a renter.. People will negatively judge you.. And if you Flipped out one day printed off your balance sheet and showed it to your pals, you would be branded a show off.. You can’t win..

Canadians are passive aggressive braggers. Pound you chest and say look how great I am… Is not acceptable, go to yesterday comments and see what I’m talking about.

But buy a house, Granet and Hardwood.. You don’t to need to say shit.. Just a smug humble smile as your wife gives them the tour….

#38 OLDERTHANABOOMER on 12.14.14 at 8:47 pm

Linda:
Wise words.
Phases in life…rent from 18-28
Own a little one for 8-10 years
Own the move-up maybe for 15
Looking for vacation one at about age 48
Oh wait…48 year old folks today have grade school kids
Different times…

#39 robert james on 12.14.14 at 8:51 pm

Speaking of oil ,, trading at 56.62 with a low so far of 56.25 .. Maybe that money losing Fort Mac sludge should be left in the ground where it belongs..

#40 Drill Baby Drill on 12.14.14 at 8:53 pm

Dear Pathetic Blog : I thought the very same thing today when the Saudi oil minister stated that OPEC was not getting in the way of the oil price. He is telegraphing to the markets that oil is going to fall even farther and OPEC will not do anything about it. All the while he is blaming oil speculators for the current situation.

#41 Grant on 12.14.14 at 8:56 pm

Hi Garth, bil has purchased 5 townhouses in Grand Prairie over the last 5 years as investments, 20% min down on each, what advice would you give him?

#42 Ret on 12.14.14 at 8:56 pm

Gas will never be under a buck a liter again, (95.9 at Costco Ancaster on Thursday.)

Turkeys will never be 75 cents a pound again, (75 cents for Grade A at Walmart Ancaster on Friday.)

I guess that “never” is not quite as long as I thought.

I am amused by Albertan’s warped view of their new reality considering that this will not be their first bbq or have they forgotten the ’80s already? Ontarians thought the same way back in the ’60’s and ’70’s.

In 1975, I stood in front of the five open hearth furnaces at Stelco. Bells and sirens were going off every few minutes, furnaces roared as they belched out smoke and fire, and the massive concrete floor never stopped trembling. Hellish hot in summer and cold as a witch in the winter.

Six million ingot tons a year out the door produced by 12,500 workers living the middle class dream, well the pay check anyway. Dofasco down the street had 6-8000 workers doing the same thing. (It is no longer Dofasco but it is still going with maybe 1/2 the workers.)

None of those workers. the company or the government ever thought that it would end and when it did end, it was too late.

#43 Daisy Mae on 12.14.14 at 9:00 pm

I love how neat and clean your blog is. No crappy advertisements, no flashing neon lights to distract. Good for you, Garth! You have no idea how appreciated you are on all fronts.

#44 takla on 12.14.14 at 9:03 pm

hey garth you think its gonna be cheap fillin the hummer,just wait till you pull the HD into chevron and fill the bike for 12.00 bucks[and 50 cents worth of octain boost;]…ye haaa!Im assumeing yur rideing again since the bone breaking incident??
Springs comeing!!

on topic

Slowly but surely ive noticed even here in Vanloser area the shines comeing off home ownership…when owning a home is sooo extremely expensive it puts you/yours in continual financial hardship its time to change the strategy.We’re happily subsidized by our landlord and luv it!
need to get some value village and dollar store stocks…was shopping this weekend and these places were packed!

#45 Brutus on 12.14.14 at 9:06 pm

Sydney Australia is under multiple terrorist attacks at this moment.

Here’s hoping for them.

I have a feeling this will be a very bad run-up to Christmas in many ways, unfortunately.

#46 Drill Baby Drill on 12.14.14 at 9:06 pm

#39 Robert James
Alright let’s do that “leave the sludge in the ground” then where are we to get the oil to make up for this ?
Canadians need a major education in what oil provides us, where it comes from as well as how it affects our livelihood regardless of where we live in Canada. Without WCS oil we would be importing oil and paying as much as EU countries for the stuff. Oh and our supposed friends in the USA would finish that Keystone pipeline so fast it would put our Canadian pipeliners to shame.

#47 Daisy Mae on 12.14.14 at 9:11 pm

“On one hand, the central bank cannot let the dollar plunge to 80 cents and wildly inflate the cost of imports while the economy is struggling. At the same time, it can’t jack rates much to support the loonie when the population is pickled in debt and still curiously horny.”

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

So basically, the feds have done a lousy job of ‘managing’.

#48 Basil Fawlty on 12.14.14 at 9:19 pm

Can someone explain why the US is going to do better than Canada with the lower oil prices?
US oil production through Shale and Fracking has been the largest job generator in the US. In addition, the oil industry has $210B in junk bonds that are supported by $100 oil.

#49 Daisy Mae on 12.14.14 at 9:19 pm

#2 Chickenlittle: “You know, I want a new car “bad” but it just ain’t in the works yet. Welcome to the real world Melissa. Oh these first world problems….”

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

Tell me about it! What spoiled brats we are…time to just WAKE UP.

#50 bdy sktrn on 12.14.14 at 9:24 pm

#45 Brutus on 12.14.14 at 9:06 pm
Sydney Australia is under multiple terrorist attacks at this moment.

Here’s hoping for them
—————————————
all i see is an islamic nutbar with a gun in a small chocolate shop

#51 pravchaw on 12.14.14 at 9:29 pm

Most of you have it wrong. You just have to look at what happened in 2008-09. Lot of the crash is due to margin calls. A fair amount of oil is hedged. The hedges are now unwinding – and hedge funds who were long are liquidating. Sure oil can go down to 40 or even 30, but it will very temporary and will start reversing in a matter of weeks. Great time to buy stocks of oil companies who have low debt. Better three hours early than a minute too late.

#52 Timmy on 12.14.14 at 9:31 pm

Once again, the BOC will leave interest rates alone, thereby prolonging the low interest rates and reducing chances of a housing crash

#53 Daisy Mae on 12.14.14 at 9:33 pm

#35 dienekes: “People feel good when they overpay for stuff, like designer jeans….”

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

I don’t….regular price is ‘over priced’.

#54 Timmy on 12.14.14 at 9:37 pm

Microsoft Gets Green Light from Immigration Canada for Foreign Trainees

http://www.cbc.ca/news/politics/foreign-workers-microsoft-gets-green-light-from-ottawa-for-foreign-trainees-1.2870289

More cheap labor, less jobs for us and lower wages. Studies show many immigrant tech workers move around less and are paid less. Companies like Microsoft take advantage of this and the Harper government, not caring about Canadians is only glad to give Microsoft a special deal

#55 bdy sktrn on 12.14.14 at 9:40 pm

desperately searching for a decent rental property here in east van, something older and tired that i can fix-up, with a good location.

since wed. this week i found a nice 7plex (1.8m) and a 10 plex (2.2m) and the only ONE sfh for sale (850k tiny bung)between comm/nanaimo and 1st/hastings.

walked around today to see them all. sold sticker on sfh. the 7plex looked great, big yard, plenty of room to build a bigarse garage(my dream), good ext condition, killer view, next to a park/school – we loved it and as long as the inside was 4/10 or better we agreed it was a go.
go home, looked it up again, guess what – sold.

i feel like the virgins ‘buy now(like yesterday) or be elbowed out by the end of the week”.

#56 Lumberjack arch on 12.14.14 at 9:47 pm

Melissa is not a ln idiot. She’s right, vancouver is a cruel mistress when it comes to housing, even Garth doesn’t want to take her on, it’s already made anyone calling a top look very foolish….

#57 dienekes on 12.14.14 at 9:48 pm

US oil jobs to US economy = squeaky fart in hurricane

#58 Freedom First on 12.14.14 at 9:50 pm

Sad post for many people today Garth. I feel for people when the economy flows into the septic tank. God knows I have seen it happen to many people who sank to the bottom of that tank too many times in my life. Run Melissa run!!!!

#59 Smoking Man on 12.14.14 at 9:56 pm

Wow its already been branded…
Even Harpo posted on Twitter #SydneySiege

Our leaders are getting good at this..

#60 Strathcona on 12.14.14 at 9:58 pm

Here on the ground near Edmonton. This is what a downturn looks like. I can report that there are MANY construction yards filled with heavy equipment. In many cases, the yards are at full capacity.

Over the past few years, there has been empty space, as their equipment was all out on jobs. Freeze up is coming soon, although we have had some warm days here last week.

This is not good. You’d have to be an idiot to buy a home in Alberta in the next year or two.

#61 mike in kelowna on 12.14.14 at 9:58 pm

So what do you think Garth….considering all the global financial and geo political risks out there, perhaps a couple bars of that shiny stuff under the pillow might be prudent?… 2-5 % of ones total portfolio..

Why? — Garth

Read above.. I said why…Sorry for asking..I remember now you are a gold hater..even though bullion did better the past 15 years than any other sector..like 4 to 5 times better …

Gold is dead money, with massive losses over the last three years. Why would you want some? I don’t hate it, but I pity those smitten by it. — Garth

#62 robert james on 12.14.14 at 10:01 pm

# 46 Uneducated Canadians will not be the ones deciding to leave the WCS in the ground.. The high cost companies producing it and losing money while doing it will make that decision.. The cheapest place to store oil is in the ground and bring it out when the price is right.

#63 Joe Bytowner on 12.14.14 at 10:03 pm

@ #48 Basil Fawlty

“Can someone explain why the US is going to do better than Canada with the lower oil prices?”

Here in Canada, we are a net oil exporter. One of our richest provinces is about to be crippled by low crude prices. No need to say which one, except that even though it’s moron leaders think that they are oil sheiks, the’re finding out (yet again) how insignificant they are in the big oil picture. After multiple oil price shocks, the dopes have still not diversified their economy.

The USA is a net oil importer. Check out the S&P 500. Boeing, Fedex, General Motors, Apple, Microsoft, Xerox, GE, Goodyear, and many other companies will only benefit from lower oil prices. For every job lost in their oil patch, a whole lot of jobs will be created in other sectors of the economy.

#64 Edmontonian on 12.14.14 at 10:10 pm

Living in Edmonton here, I am seeing a lot of empty housing already. If you look on MLS.ca at least 80% of the houses look empty or staged, like no one is living in them.

If you look at Kijiji alone there are about 5000 units for rent, some condos, and some houses. Many greedy people out there, but rent shave started to plummet already, there is a lot of “ghost” inventory out there. I think that there will be a plunge in prices in the summer!

#65 Sydneysider on 12.14.14 at 10:10 pm

#45 Brutus

The Oz govt was due to announce $6B revenue deficit in budget today, so that’s lucky for them.

To put things in perspective, downtown Sydney and Bondi can be very violent at the weekend, with many random, brutal, attacks fueled by booze that have led to deaths and disablement in recent years. The govt has done little to stop that, showing that they are not serious about crushing violent crime per se.

This incident will turn out to be a piece of theatre organised by an unemployed kid from Western Sydney who has created a myth for himself in lieu of a happy future.

#66 King George IV on 12.14.14 at 10:13 pm

The gov will let the Canadian dollar fall.

They have been lying about inflation and spreading more lies about so called deflation.

Dollar falls from par to 86 cents and no inflation? Oh, forgot, everything is made in Canada (sarcasm). anyone that believes this has to be the dumbest humans to walk this planet.

#67 King George IV on 12.14.14 at 10:15 pm

@DaisyMae: “So basically, the feds have done a lousy job of ‘managing’.”

No. They’ve made certain people very rich.

#68 King George IV on 12.14.14 at 10:19 pm

@Mark:

What planet are you on? The Canadian dollar has been devalued from over Par to 86 cents. Going to 75 cents and you’ll still be spewing the same drivel. IT IS MORE THAN HALF WAY THERE! sheesh.

#69 bdy sktrn on 12.14.14 at 10:19 pm

#59 Smoking Man on 12.14.14 at 9:56 pm
Wow its already been branded…
Even Harpo posted on Twitter #SydneySiege

Our leaders are getting good at this..
———————————————–
his PR people hired an oily 16yo, the kid just tweets what the PR folks tell him.

——————

on a different topic is it ethical to send your teen kid to school with a spycam pen to record her ultra-looney art teacher who can’t stay on topic, or even lucid, for more than 30seconds at a time? she has been telling me how wacked this old woman is and i’m dying to see too. she is in an enriched/advanced academic program and pulled straight a’s on her first high school report.

and when we have the video, might there be implications to posting it on the u-tube????

what fun!

#70 Boom Boom June on 12.14.14 at 10:19 pm

The $C has been publicly bashed by the BOC since the Poloz came to office….why won’t the $C get to 80….thats what the BOC has been suggesting all along. If Poloz stays at BOC we could easily see a $C at 50 cents……and an economy reminiscent of the 1950’s…rocks, trees and drawers of water.

Only this time a banana will cost $10. Seniors are already starving…..we’ll all cheer for Poloz when they capitulate and stop eating due to skyrocketing food costs. What social revolution will this lack of food have among our young. Will Poloz succeed in disguising the problem and keep our youth in the bsmt with Mom and Dad?

G7 countries have the option of increasing taxation when oil and other deficits occur. We are already seeing a race towards 100% taxation Ontario. What will happen when we actually hit100% taxation is uncharted territory.

What concerns me is how countries like Nigeria, Sudan, Venezuela and around 90 other countries with collectively 5 1/2 billion citizens will do when oil revenue no longer subsidizes food in those countries? The mass starvation will cause flash floods of starving immigrants over our borders. We will most likely see revolutions and bloody coups very soon.

The Saudi may be announcing that they control the flow of their oil but I think deeper. I believe this is all political…to cow Russia and the Iranians so that Obama can score one foreign policy coup before he’s booted into infamy. Meanwhile chaos will ensue.

I’d say batten down the hatches…we ain’t seen nothing yet.

#71 batt519 on 12.14.14 at 10:20 pm

#61 Mike…
$ilver is a far better buy. They use that stuff in solar.
It may be dead money and it has been down for 3.5years, but every market turns. Look where new highs every few days have lead us…
When Russell Oliver is on my television offering $ilver for sale and the masses are lined up around the block to buy it from him, I will dismantel my $uicide portfolio.
Regards to all

#72 K on 12.14.14 at 10:22 pm

As a race we have short memories. We also want to get rich quickly. Most people want to take the elevator to wealth….not the stairs. Unless you are born into wealth, the best way to gain wealth is slowly and steadily. Most don’t have the gumption. 1% do.

#73 Smoking Man on 12.14.14 at 10:26 pm

#69 bdy sktrn on 12.14.14 at 10:19 pm

Brilliant, spy cam… Please do share.
Right after your kid graduates. Not before..

#74 Smudgekin on 12.14.14 at 10:31 pm

“We will not have a picture on oil prices until the end of the first half of 2015…”

Just in time for ‘Jurassic World’ June 12th 2015.

Don’t live in a skyscraper condo with no balconies. A fire below will fill above with smoke. Office towers aren’t such an issue. People don’t live there 24/7 and have cooking fires or exploding meth labs.

In a sixty storey condo the smoke will kill you and there will be hundreds above trying to get out on the stairs. These buildings meet all existing fire codes. But there’s not much proven history to them.

#75 West Coast on 12.14.14 at 10:33 pm

This is like living in a nation of drug addicts. Do we really think that once the bottom falls out of some of the regional markets in Canada that the banks will still be handing out mortgages like the ‘dealers’ that they currently are?
When and if it really gets bad a lot fewer people are going to be eligible for a mortgage. Interest rates will go up, down payments will increase, a lot more scrutiny will be placed on buyer’s sources of income and job security. You can be sure the banks will be looking more carefully at the properties being mortgaged.
How about that depreciation report for that luxury condo?…You going to have the money for the elevator repair, the garage floor re-coating, the re-piping, the building envelope repair, the failing windows etc. etc?
And no – your measly $600. a month condo fees do NOT cover the above. Those fees are for the day to day running of the building.
That’s before we even start on the replacement of your ‘designed for obsolesce’ appliances, your moldy bathroom, your crappy floors.
Get a grip folks – just try buying or selling in a bad market. Been there – it sucks.

#76 Smoking Man on 12.14.14 at 10:35 pm

http://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/

Wow, yield in the basement on the date.

12/13/14 yesterday was the date, Next time dates roll sequenced like this, we will all be dead.

#77 The Patient on 12.14.14 at 10:45 pm

Dearest Garth,

A problem emerges with your “don’t bet against America” approach at this point in time. With Japan and Europe receding, and China (as you politely put it) “slowing” and emerging markets pawny collateral damage, that leaves exactly who to do “bidness with ‘Merica?” Answer: crickets.

So, I ask you: with the global economy “slowing” and all markets in a state of contraction and, here in North America, on the verge of official correction territory, just where do you see upsides? And, after you tell me, what’s your dealer’s cell #?

#78 Mark on 12.14.14 at 10:48 pm

“What planet are you on? The Canadian dollar has been devalued from over Par to 86 cents. Going to 75 cents and you’ll still be spewing the same drivel. IT IS MORE THAN HALF WAY THERE! sheesh.”

Yet the purchasing power of the Canadian dollar in the actual basket of goods and services that Canadians need to buy is remaining remarkably stable, and lately, is actually growing. That’s what an economic slow-down does. As I pointed out in a previous post, the CAD$ bond market isn’t ‘buying’ the CAD$ remaining down for any meaningful length of time. If you really have a lot of USD$ obligations, perhaps you should take Garth’s often-given advice and diversify your income streams.

#79 Arfmooocat on 12.14.14 at 10:49 pm

Good debate about Canada and oil on The National

Comparing us with Norway and how we’ve just blown our oil money and Norway has 1.2 Trillion put away.

#80 The Patient on 12.14.14 at 10:50 pm

#77 The Patient

So, I ask you: with the global economy “slowing” and all markets in a state of contraction and, here in North America, on the verge of official correction territory, just where do you see upsides?

___________________________________

You cricketed me? Really? Not even a terse, laconic dismissal? That IS worrying!

#81 nonplused on 12.14.14 at 10:56 pm

This response isn’t directly to today’s wonderful post from Garth but it is very much in response to a general theme that’s been carried on this blog a long time.

So, it’s about living standards, the middle class, and even inflation.

Preamble: Now it is said that it now requires 2 incomes to support a family whereas the previous generation could do it on just one. My parents were a 1 income family. So I for some reason started to think about it and realised that there are some structural changes in my own and indeed everyone else’s expectations that might be largely responsible for the change in perception. To wit, here is how I grew up in a single income family in the 70’s and 80’s:

– 900 sqft house, nothing fancy like a fireplace or granite
– only one car (my dad had a work truck too but the family only paid for one car)
– no fly-away vacations. We went camping a few weekends or a week a year and I slept in a tent.
– no big screen tv. We didn’t even get color until I was 8
– no extra-curricular activities for the kids like soccer, hockey or music lessons
– Mom made all meals from scratch except for soup from the can
– No designer clothes and by age 12 the boys had to by their own with paper route money
– No saving for retirement (think not for tomorrow – JC)
– Nearly no eating out and when we did it was McD’s or the local pizza shop
– My dad made a lot of the furniture himself including the bunk bed which almost killed me
– No fancy electronics
– They didn’t drink a lot and almost never in bars
– Church every Sunday was the big social event of the week
– No movies in theaters. I remember My uncle brought me to see Star Wars when I was a kid and it was the first time I’d been in a theater
– Boys pay for half their bikes using paper money again
– toys only at Christmas, along with underwear
– no maid, I mowed the lawn, and hardly any babysitters. They were so glad when I turned 12 so they could go out and I never got paid
– not a cent for the kids to go to post secondary education. You want to do it, you pay for it or get a student loan
– no skiing except as provided by the school

See? You can still raise a family on one income if that’s how you want to live. Not for me though, I prefer 2 incomes and we have 3 cars and 2 motorcycles, a 1950 sqft house, and we cam in a trailer. Plus electronics everywhere. So maybe the changes have been expectations, not the environment. Just in my family of 5 we have 5 cell phones, 2 iPads, 4 personal laptops, 2 desktops, 2 work laptops, a net book, and 6 TV’s including the one in the trailer 2 of which are 55’s, and cleaning lady, and one of those whole home PVR’s and an alarm system with monitoring. And we ski, play hockey, soccer, and music and art lessons, plus summer camps. So yes we need 2 incomes. The only thing we don’t do much is fly-away vacations.

#82 j on 12.14.14 at 10:58 pm

It appears the same story ran in the Star and the Melissa in question has a blog on ridiculous Toronto real estate

http://www.thestar.com/business/real_estate/2014/12/11/stuck_on_the_sidelines.html

#83 nonplused on 12.14.14 at 11:01 pm

Oh I posted before I made my point, but I think it might be obvious. I think you can still raise a family on one income the way I was raised, but it looks like this:

– one car, probably a Ford Fusion
– a 900 sqft house
– no vacations
– no extracurricular activities
– no maid
– no fancy clothes
– cook from scratch
– no eating out
– no drinking
– no movies

Who wants to live like that?

#84 VICTORIA TEA PARTY on 12.14.14 at 11:20 pm

#30 Left Coast Righty

Well written there LCR.

Hypocrisy, flim’flam and dark plots are the mainstays of those unctious, hubris-laden so-called environmentalists who, especially if they are Americans, are really reactionary agents of US foreign policy; to namely beggar their trading partners with various imposts to make it tough for them to survive in the current economic, world-wide depression. See what’s happening to Russia because Putin refuses to cave into the Yanks.

Those mountebanks don’t really want to shut down the hydrocarbon industry because they’re all shareholders!
They get juicy dividends that help finance their “environmental” campaigns.

They just want Canadian hydrocarbons sequestered for US’s future use and, therefore, they must not be exploited by us until they say so “because we don’t know what we’re doing”.

They’re very bad people.

To attempt success in their campaign they’ve found, and use, a number of Canadian useful idiots to do their bidding. They pay them a pittance for doing so and deduct the expenses off their US income taxes.

So, we see TV coverage of these rain-soaked unfortunates stomping about on Burnaby Mountain or doing insane things like shackling themselves around their necks, for what purpose?

How about to destroy Canada’s economy.

For a mini-view of what that disaster could look like, if those idiots win their battle, just watch the crooked Saudi Arabian clan continue to put the boots to oil prices and watch government revenues sag and programs end and homelessness and joblessness increase manifold.

That’s good, you mindless twits?

TIME FOR A GOOD PUBLIC REACTION…

If the rest of us just ignore these big-time so-called environmentalists, their slick PR campaigns and cease contributing donations to their cute little door-to-door beggars,THAT would be a good start.

Yeah, the environment’s got problems and some of it is man-made (person-made?) but the cure does not lie in destroying a country and its people to find an Al Gore-inspired so-called “cure”.

We have rights and we must defend those.

Or else.

BTW, hope some of those fancy California environmentalists suffer from dividend-depletion when their fracking oil companies start throttling back on operations as the Saudis continue to kick the crap out of the American oil and gas industry, too.

Just desserts, I say.

Good piece,

— 30 —

#85 joe calgary on 12.14.14 at 11:24 pm

Wow it sure seems the time has finally come for the smugness to be wiped off of the face of Albertans. At work there is lots of talk of oil prices, job losses, oil sands shutdowns. However I am still amazed that the same over leveraged junior Trumps are still anticipating a inflationary housing market, “I’ve made $50000 on my house I bought 6 mod ago”, “even if prices adjust 20% I am still up from my purchase in February this year”, “buy now or buy never”, are just some of the quotes I’ve heard at work. Two of my acquaintances even talking about buying more property, one saying that his life goal is to own 5. I then explained how my landlord is subsidizing my rent, he looked at me with a blank stare and said he has made $225000 on his property in the last 3 years and it was the best decision he has ever made in his life. Canada-wide the masses are convinced that debt is wealth, renters are losers and real estate is the holy grail to human existence. A reality check for these people is long overdo.

#86 Smoking Man on 12.14.14 at 11:35 pm

#83 nonplused on 12.14.14 at 11:01 pm
Oh I posted before I made my point, but I think it might be obvious. I think you can still raise a family on one income the way I was raised, but it looks like this:

– one car, probably a Ford Fusion
– a 900 sqft house
– no vacations
– no extracurricular activities
– no maid
– no fancy clothes
– cook from scratch
– no eating out
– no drinking
– no movies

Who wants to live like that?
………

You make a point… If one decides to trade time for wages and scraps.

But if you grow balls, start a business, you can have it all.

But years of training to be a slave and loving it by school. Most don’t realize this other universe exists..

#87 Drill Baby Drill on 12.14.14 at 11:35 pm

#83 joe Calgary
I have been in the O&G biz in Cowtown for 35 yrs. Your friends and co-workers are in for a major shock. Major Oil crashes in Alberta are brutal when they happen and this one is going to be just as bad. I have lived thru 4 oil crashes to date this one will be the 5th. Not all are severe or long lasting however this one has all of the hallmarks of a brutal one.

#88 Porsche on 12.14.14 at 11:38 pm

#81 nonplused

We were all brought up that way in the 50’s and 60’s

#89 Andrew Woburn on 12.14.14 at 11:54 pm

74 Smudgekin on 12.14.14 at 10:31 pm

Don’t live in a skyscraper condo with no balconies. A fire below will fill above with smoke.
=====================

You are so right. I was caught in a hotel fire in the eighties. It was one of those long squat Holiday Inn 1970’s style places about 8 storeys high. The fire was in a lower room at the far other end of the hotel. We didn’t worry about the fire alarms. We thought the fire was too small and too far away to be a problem. That was until we tried to walk down the stairs at our end of the building. By the fifth floor we couldn’t see. A fireman in a respirator ran up the stairs and ordered us back up onto the roof and we were stuck there for an hour until the stairwell cleared. Even in a building that shape, smoke went everywhere. In a tall, narrow building, good luck. When the fire alarm goes, get out. Now.

#90 Jen on 12.14.14 at 11:55 pm

I was on the fence on buying a house in the Gta but that plan has been out on hold until RE falls 30% as everyone know housing in toronto is in a huge bubble including the BOC. Realtors who post on this blog reek of being desperate with their flawed and sometimes demented logic (think realtor smokingman)
.

#91 kommykim on 12.15.14 at 12:01 am

RE: #83 nonplused on 12.14.14 at 11:01 pm
Who wants to live like that?

Oh you poor poor consuma-sucka! Keep running on that consumer treadmill till you die. Sad.

#92 JSS on 12.15.14 at 12:13 am

#87 Drill Baby Drill on 12.14.14 at 11:35 pm

—-

Do you think the Worley Parsons offices in Edmonton also be affected?

#93 NoName on 12.15.14 at 12:18 am

#33 Lillooet, BC

you are funny, read this

http://www.ritholtz.com/blog/2014/12/oil-as-a-weapon/

Art Cashin of UBS shares the following observations from Don Coxe this past week. I thought it was interesting, and wanted to pass it along:

“The incomparable Don Coxe, one of the very best observers and analysts of global commodities recently wrote this:

Most observers thought the Organization of Petroleum Exporting Countries (OPEC) would cut its production to protect its members’ incomes and slash frackers’ profits. If these were ordinary times in the Mideast, that forecast would have been accurate.
But this has been a year of major geopolitical crises in the region, and the Sunni Arab oil states have found themselves facing grim challenges.

By October, it was becoming clear to us and others that Saudi Arabia and its Gulf Emirate allies could not afford to continue petro-pricing business as usual with sectarian wars exploding out of control, threatening the entire region.

In particular, they were infuriated that the Shia regime in Syria was being propped up by Iran and Russia. Moreover, Iran seemed to be getting closer to becoming a nuclear power with each month. Amid the chaos, the Islamic State terrorists had suddenly become a formidable challenge to the entire region, and they were getting increasing revenues from oil properties they had seized.

The Saudis had long since concluded that U.S. President Barack Obama was a weak reed – at best. So, we believe they felt forced to stop the cash flows to Syria, Iran and the Islamic State and deter Russia. They decided to keep pumping oil, allegedly to fight fracking, but also to weaken their regional foes.

No one knows how long this strategy will continue. The Gulf States have trillions in sovereign wealth funds to back their budgets.”

#94 AB Boxster on 12.15.14 at 12:20 am

#13 Retired boomer
____________________________
I disagree with your comment that Melissa is “a fool’ and is”greedy for a house”

Why should home ownership not be a reasonable option?
The concept of earning a fair wage and being able to purchase a home are not unreasonable goals.

Renting is fine, but their are downsides.
Calgary has less than 1% rental vacancy rate and renters can easily be taken advantage of.
It ain’t all roses when the landlord fixes nothing, can increase rates by any amount. Renting can have its financial benefits. I can also be a friggin nightmare.

Because the RE market is a massive mess right now, people who desire to own are ‘fools and greedy’?
No, the policies of government and central banks are foolish, and incompetent.
But hey, lets blame the average Joe for wanting to live in their own home, without having to put up with the BS of some @hole landlord or the drug pushing neighbour.

It may be foolish to pay the absurd prices for homes, but it is not foolish or greedy to desire to own a place of your own.

And I have ultimate sympathy with those who have been waiting for what seems like forever for these prices to change.
Sure, when Garth was saying 7 years ago that prices were too high, and that a correction was coming, he had a valid point.
The fact is though that if persons bought at that time they would have had 7 years of living in their own home, and even if prices correct 30% they would likely still be ahead.

#95 $40 oil is coming cowtown on 12.15.14 at 12:25 am

Alberta is toast. Anyone who bought a house in Alberta will be bankrupt in a year. The ripple effect will be felt all over Canada so you smug toronto realtors are going to be in a world of hurt also as prices are said to be overvalued by 30% via BOC. Sorry high school drop outs (realtors) it’s true….. why else do you think the BOC is warning people? Oil is the black swan that’s going to knock out the Canadian housing bubble.

#96 chapter 9 on 12.15.14 at 12:25 am

#33 Lillooet BC
Right now,the Saudi’s are sitting on $741 billion in cash. At the end of their last fiscal year had a $15 billion surplus and all of their recent mega-arms purchases are now complete which will free up even more cash. Iran and Iraq are trying to destabilize the Arab world and it will not be tolerated. Canada as a oil producer is caught between a religious rock and an economic hard place!

#97 Hawk on 12.15.14 at 12:29 am

There is a solution for people like Melissa and Hart, if they would recognize it. Buy a nice house outside GTA in a place like Barrie or Guelph for about $250 – $350K and rent it out. Meanwhile continue to work and rent in Toronto till retirement.

When retirement comes, move back to the house and the easier country life and come to Toronto once in a while for the fabulous nightlife. A reasonable compromise that enables them to own their own place and also live in the city for their working life.

#98 nonplused on 12.15.14 at 12:33 am

#86 Smoking Man

My dad and his partner were running a business, but then the 80’s happened, etc. He made good eventually and as I’ve posted before he’s now spending his retirement riding around in a 10 ton motorhome living large. But I was well out of the house by then and had to make good on my own. Technically I am running my own company too right now but it’s consulting so I don’t know if it’s really the same. My younger siblings got to enjoy the upswing and now they are useless moochers with delusions of grandeur.

#88 Porsche

Yup. I’m just trying to suggest the reason we “can’t make it work anymore” might not be the economy. Maybe we expect too much. It’s hard not to want good things for your kids, I couldn’t imagine not being able to pay for my son’s hockey. But that’s me. My dad had no problem me not playing hockey. Our expectations now include tablets and big screens. They didn’t always. Hands off to the marketers though.

#91 kommykim

My wife and I have talked about it and we consciously decided not to ever turn down a good dollar for a good day’s work. So far everything is paid for, and so I don’t mind spending a bit of cash to go skiing with my kids.

And some of it seems so cheap! The last 55 inch I bought cost less than $800 (so $300 in my dad’s time) and if you have ever seen my wife and her girlfriends playing “Just Dance” while I sip Scotch you would understand that consumerism can have it’s finer points.

#99 Timmins miner on 12.15.14 at 12:35 am

Gold is dead money, with massive losses over the last three years. Why would you want some? I don’t hate it, but I pity those smitten by it. — Garth

It doesn’t matter what your opinion of gold is, you are a small parts of this massive game call the markets, it is not the opinion of one that changes, but of the masses, right now the masses think RE is the way to go, because all else seems like a casino.
but he facts are
-all central banks are buying gold, so much for it not being real money.
-it has been revalued at 100%, in the past gold was only valued at 50%
– the mint is running out of the metals coins all over the world and now in America
-China , is the largest producer and purchaser of gold, 1.2 billion people can’t all be wrong
-India , their hearts and soul is all about wealth, and it’s not housing, it is GOLD, 1.1 billion people can’t be all wrong, their new gov. wants to remove the tariff this year, because it has led to a huge black market in gold, and another curious outcome is India this past year has purchased huge tonnage of silver, to them the poor man’s gold.
-Russia has increased their tonnage, Brazil, Thailand, Japan, South Korea etc… another billion or so people.
So let’s say these BRIC nations decide between them in trade gold is going to have a $10000/oz value, who cares what the rest of the world values it at, but between then, the trade one brick of gold and it is valued at X, for oil, food , gas etc…. If we look at oil verse gold the ratio is still the same as in 1985.
and what about all the gold stolen from say, Ukraine, Libya, Iraq, etc….
IT is what people see as a herd that counts, not what one individual things is right and where it should be relative to the past.

The game will be up once the physical demand exceed the paper game, all the gold ever mined in the world is sitting in vaults, so the game can keep going with the derivatives, but silver is consumed every day, and once we run out the game will be up , China wants to add 70 terra watts of solar panels, India has just announced they also want to do the same, huge solar projects, and they need silver, that will be the game changer.

You guys are just sad. Hoarding rocks, dreaming of tomorrow when you will be coveted. Losing wealth and income meantime. Sad. — Garth

#100 Julian on 12.15.14 at 12:37 am

To Mark, re #12: ”Canada cannot, and will not merely be allowed to devalue out of this mess and maintain domestic demand. Central bankers throughout the world simply won’t allow it.”

Care to expand upon that last sentence? And do you have a financial background?

#101 45north on 12.15.14 at 12:50 am

On one hand, the central bank cannot let the dollar plunge to 80 cents and wildly inflate the cost of imports while the economy is struggling. At the same time, it can’t jack rates much to support the loonie when the population is pickled in debt

funny Daisy Mae picked this too

how does this not become political? Bank of Canada has a measure of independence. I’d say interest rates are going up. If I lose, I’ll read Cato the Elder’s posts. I mean one of his posts.

#102 nonplused on 12.15.14 at 12:55 am

Oh and I might further comment that in my dad’s day the $300 he might spend (so $800 for me) would get him maybe a 24 inch color TV in a big frickin wooden case with 3 channels or with cable 19 channels. For that same investment in real dollars I get a 55 inch smart TV that I can hang on the wall with hundreds of channels and my wife and her girlfriends dancing around. Life is better even though the money is hard. But it was hard then too.

But I guess the other point is don’t buy stuff you can’t pay for. The real problem today is that there is so much cool stuff available, and other people have bought it and are flaunting it, so you think you need it too. But you don’t if you need credit to buy it. Credit and debt are the killers and we have forgotten that.

iPhones are a great example. Does everyone really need an iPhone? No they don’t, but if your friend has one you can. not. stop. yourself. even if you can’t really afford it.

#103 takla on 12.15.14 at 12:57 am

DELETED

#104 waiting on 12.15.14 at 1:12 am

hmmm, Dirty money from any country – Iran, Russia, China is probably here to stay.

http://www.chinadaily.com.cn/world/2014-12/15/content_19084124.htm

#105 Nomad on 12.15.14 at 1:13 am

If you own little US stocks, consider selling some of your canadian bank stocks and buying US bank stocks.

You don’t have CAD money? Buy “ZUB” ETF by BMO. It’s got US big banks such as Bank of America but also regional banks. Our canadian banks are good, but they could be under pressure as uncertainty quickly settles in. Especially after what Poloz said. In contrast, the US is doing better and better. Better to put more chips on the US side.

This week is a big one for tax-loss selling. It should be a fun ride.

#106 Waterloo Resident on 12.15.14 at 1:14 am

I don’t think anyone here truly understands exactly whats going on here. A few months ago when Russia took over Crimea, Obama went to Saudi Arabia and had a big talk with them over there. You see, a war with Russia is out of the question because Crimea is in Russia’s backyard, it would quickly escalate into a nuclear war, but Russia’s economy depends upon oil revenue immensely, without oil revenue Russia would crumble quickly.

Now suddenly oil prices are falling like a rock.
The truth is that this is the NEW ECONOMIC WAR against RUSSIA, it is not a coincidence, it is planned.

The plan is to quickly drop down the price of oil down to the $28 to $42 range and hold it there for the next 3 to 4 years. The top brass in the U.S. government figure that this would quickly result in Putin being thrown out of power without a nuclear war destroying the world.

That is the plan.

#107 Spectacle on 12.15.14 at 1:26 am

#82 VICTORIA TEA PARTY on 12.14.14 at 11:20 pm
#30 Left Coast Righty

Well written there LCR.

Hypocrisy, flim’flam and dark plots are the mainstays of those unctious, ……..They just want Canadian hydrocarbons sequestered for US’s future use……..
*******************
My response to both blog entries:
Excellent writing , have me hooked. I must add that despite their unctuous action, it is their ( the canadian resource protesters) solid attempt to thwart the Agenda-21 Vision , and the United Nations disastrous intent on society as we know it. The protestors also are concerned citizens trying to stop pipelines etc, stopping the giving of our fuels away to foreign interests, and can be seen in another way. A healthier response , sort of. They are trying to stop those interests ( taking sovereign resources).

The oil companies, Banksters, insider trading corporations, and so much more, They are very bad people, I also agree completely.

You are most correct in that the leagues of Agenda-21 are most happy to turn their good efforts into a Trojan Horse, and ruin their honest work.
Very much look forward to reading your posts again.

In a similar note: a great recent book by Michael Lewis, “Flash Boys” a Wall Street Revolt, addresses electronic trading that speaks to what I’ll loosely term” Trojan Insider Trading” at its worst. Essentially outlines he unique story of a canadian who unravelled the U.S. Speed Trading or high frequency trading.

Regards all,

They’re very bad people.

TIME FOR A GOOD PUBLIC REACTION

Yeah, the environment’s got problems and some of it is man-made (person-made?) but the cure does not lie in destroying a country and its people to find an Al Gore-inspired so-called “cure”.

We have rights and we must defend those.

#108 Victor V on 12.15.14 at 1:37 am

#37 Smoking Man on 12.14.14 at 8:46 pm

You can win if the house you’re renting is in a better neighbourhood than theirs and worth significantly more than theirs.

You can win if your child goes to a better school than theirs.

You can win by driving a better car than them but never talking about your ride.

You can win by posting the very occasional social media selfie of you and your wifey sitting in business class flying off on an exotic trip and when probed; lying and dismissing the seats as lucky upgrades.

You can win by not mentioning the size of your portfolio — ever — a passing reference to having maxed out all the family’s registered accounts on rare occasions to a chosen loose lipped friend or two in your circle will work wonders.

Every judgement they could make has a crafted countermeasure in place.

The schooled are easy to school; you of all people know that, right?

Class dismissed.

#109 Gregor Samsa on 12.15.14 at 2:35 am

#33 Lillooet, BC

You need to separate actual demand from speculative demand. I have read that a large part of the current demand was in fact speculative, fueled by peak oil predictions. But something funny happened: when the price of oil went up because of the speculation, suddenly a whole bunch of places (like Alberta) became profitable to extract oil, so now everybody and their dog could become oil producers. Oil is not as rare as people think, it’s just hard to get at in most places. You can even make oil from coal if you want to.

Also, the Saudis don’t win if they stop selling oil – they will just lose revenue and market share from other oil producers. I find it funny that this one country gets singled out like they should be the ones to stop producing while places like Alberta keep pumping and expanding. Why doesn’t Alberta shutter the oil sands for a couple years to drive up prices?

#110 Rexx Rock on 12.15.14 at 4:00 am

Looks like a 62 cent dollar will be coming soon.Not good but the bankers and the government will say its great for exports and keep people from traveling outside the country.

#111 Willy2 on 12.15.14 at 4:25 am

Mr. Turner,

Watch what happens to the USD !!! Because ALL commodities are prices in USD. That means that when one is “long” commodities (e.g. oil) then one is automatically “short” USD.

Rumours say that oil has been “knocked down” deliberately to “punish Russia”. But things got a little out of hand and now oil has gone down further than a number of people would like to. So, a falling oil price has nothing to do with a glut of oil. Canadian oilproducers got hammered but one shouldn’t forget that US shale producers “don’t like this” as well.

US shale oil simply needs ~ USD 70 or more to remain profitable and oil is now below that level.

Contrary to common belief Gulf States don’t like oil prices this low as well. Population in those states have grown fast in the say 30 to 40 years. And to keep the population of those states happy those states need an oil price of around $50 or more.

Will we see the next episode of the “Arab Spring” in the coming months ?

#112 Second Class on 12.15.14 at 4:42 am

250-350% debt honestly seems low.

I see people making 80-90k between 2 with $500,000 houses and 2 brand new cars. Nevermind thr daycare they gotta pay for.

People with 40k are in 300k homes

Then there are those with 200-300k in million dollar homes.

NONE of these people have 25% down unless someone gave it to them.

Right now if I bought a place with the aubstantial amount I have put away. Buying what others in my income range are buying, I would be in the hole for 100-200% of my yearly income.

#113 Cragmire Canook on 12.15.14 at 7:19 am

Bwahahahahahahahaha

Good debate about Canada and oil on The National

Comparing us with Norway and how we’ve just blown our oil money and Norway has 1.2 Trillion put away.”

I love how you used ‘debate’ and a CBC program in the same sentence. Hilarious. Four socialist bobble-heads ‘debating’one another over who hates Harper more than the other….pure comedy. The vert definition of debate….no bias at the CBC…..none…

#114 housedoc on 12.15.14 at 7:29 am

#35 dienekes on 12.14.14 at 8:38 pm:

“People feel good when they overpay for stuff, like designer jeans.
I’m a contractor, yes, but I am in the business of making people feel good!”

Yuck!
Distasteful in so many ways.

#115 Arfmooocat on 12.15.14 at 8:58 am

#113 Cragmire Canook

I just found it interesting how Canada has pissed away our oil profits and Norway has $1.2 Trillion in the coffers for a rainy day.

#116 Arfmooocat on 12.15.14 at 9:12 am

#113 Cragmire Canook

Just to add… Remember in the 70’s when Premier Lougheed set up the Alberta Heritage Trust Fund and Alberta had 12 Billion in it and 40 years later they have 17 Billion in it.

#117 asp on 12.15.14 at 9:21 am

This oil shock could result in the BoC cutting interest rates.

Garth said > the central bank cannot let the dollar plunge to 80 cents and wildly inflate the cost of imports while the economy is struggling

The BoC does not have a economic growth target, it has an inflation target of between 1-3%. Less jobs and less government spending results in lower inflation, see Europe for an ongoing natural experiment. As Canadian unemployment grows and inflation sinks, the BoC will need to act.

If the BoC cuts rates, we’re in trouble. — Garth

#118 asp on 12.15.14 at 9:26 am

The Saudis cannot influence the price of a barrel of oil because they are only 15% of world oil production. They tried before and lost. Lesson learned.

#119 TurnerNation on 12.15.14 at 9:38 am

Calgary has always has lots of new gauche money. People driving Ferarris to Earls on 4th St SW. Earls really?
Acreages, Cabins? How quaint.

Markets will get a Santa rally here into year end. Selling is ended.

#120 TurnerNation on 12.15.14 at 9:42 am

Renters for life: which other countries if any might share this lifestyle, and if so is their social clime anything like Canada’s: rampant leftism, whining and nanny stateism?
Or is this topic a myth from realtors?

#121 Stickler on 12.15.14 at 9:47 am

@ #46 Drill Baby Drill on 12.14.14 at 9:06 pm

” Canadians need a major education in what oil provides us, where it comes from as well as how it affects our livelihood regardless of where we live in Canada. Without WCS oil we would be importing oil and paying as much as EU countries for the stuff. ”

——————————-

Canada does import @ wti + prices. We export cheap (~$17/bbl discount), and import expensive…there is your education.

#122 miketheengineer on 12.15.14 at 9:47 am

Garth et al:

Looks like vaccination may not be the only option.

Ebola cure – check out the link:

“The treatment method for African Ebola patients which Dr. Rowen and Dr. Robins taught uses direct intravenous oxygen gas, which is 99 percent oxygen (O2) and one percent ozone (O3). “You start slow with 20cc. [Dr. Robin] works up to a maximum of 120cc of gas. He gradually increases the concentration. Initially, in the early stages of this treatment, you can get a cough and some chest tightness, which eventually with further treatments modulates and goes away. It doesn’t seem to be a big problem… [but] can be a little uncomfortable, because it takes about five to 10 minutes for it to go away,” explained Dr. Rowen to Mercola.com. He also stated that it was “extraordinarily effective” and “dirt cheap to do.”

Learn more: http://www.naturalnews.com/047997_Ebola_cure_ozone_therapy_Dr_Rowen.html#ixzz3LyRm40oB

#123 TurnerNation on 12.15.14 at 9:52 am

#44 takla – why is octane boost needed on a low compression engine like a HD’s?
(Higher octane fuel actually burns more slowly/less volatilely thus preventing pre-ignition and knocking.)

#124 Stickler on 12.15.14 at 9:55 am

@ #83 nonplused on 12.14.14 at 11:01 pm

Oh I posted before I made my point, but I think it might be obvious. I think you can still raise a family on one income the way I was raised, but it looks like this:

– one car, probably a Ford Fusion
– a 900 sqft house
– no vacations
– no extracurricular activities
– no maid
– no fancy clothes
– cook from scratch
– no eating out
– no drinking
– no movies

Who wants to live like that?
—————————————-

Most of the world would consider that a good existence. Sheesh.

#125 Grantmi on 12.15.14 at 10:14 am

Smoking Joe says there is no RE Bubble coming in Canada…. just a slow unwind.

Garth-o. He’s stealing your stick!

#126 Daisy Mae on 12.15.14 at 11:14 am

#88 Porsche
#81 nonplused

We were all brought up that way in the 50’s and 60’s

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

And, it wasn’t a problem. By the way, it’s not how much money you earn — but how that money is managed. We lacked for nothing.

And iPhones? I have one, and I wouldn’t be without it. I’ve given up my land line. Don’t need two. The iPhone costs $15 a month more…and it does literally everything. Great value.

#127 Retired Boomer - WI on 12.15.14 at 11:17 am

#94 AB BOXTER

Regarding my comments at #13.

It is not unusual to “want to own” a house. Since Melissa and hubby owned one and felt the confinement of costs they sold it. They live on the east side of the GTA not Calgary, or anywhere else.

Now, with costs up and interest rates down, no more income….they want to go back to DEBT servitude?

Yup, Fool here.

It is my humble opinion that “owning” a home while one thinks it is desirable, is actually the most expensive way to obtain shelter. Owning a condo is even worse, as you have no control over special assessments, etc.

We need to separate the ’emotional idealism’ of home ownership, from the economic realities it.

From the brief description Garth offered in his post, the emotionalism of Melissa far outruns the reality of their current situation. We know not what economic turns lie a year away. Do you see ‘blue skies’ and more earning power? Would you suggest she, or anyone with tentative abilities to buy a home actually BUY one today?

Since GTA prices have been dropping -slowly- for 7 out of the past 11 months, is there a reason to “rush” to buy right now? RE-MAX stats show otherwise, so who do you wish to believe here? Emotion, or Logic?

I’ll stay with my original posting – to BUY here would be the MARK of a FOOL!

To desire to own is merely being human. get over it.

#128 bdy sktrn on 12.15.14 at 11:19 am

cbc bc radio – on now

“a rental affordability crisis in vancouver. prices and demand keep rising, lack of units”

52% of city rents, watch out for rising rents.

they would have to gain 2x more to match buying for now.

#129 fancy_pants on 12.15.14 at 11:24 am

Melissa, you can blame the croonies on the hill for your dilemma. if the morons allowed the market to work properly back in 2009 and not offer 0-40 mortgages and drop rates to nothing, they wouldn’t have created this Canadian RE bubble. I hope the US raises rates and oil is manipulated low for a while. This RE problem will not be corrected until interest rates here are raised. Bravo external forces, keep making the Canadian $ less attractive, someone has to force their hand.

#130 Daisy Mae on 12.15.14 at 11:35 am

#81 Nonplussed: “Preamble: Now it is said that it requires 2 incomes to support a family whereas the previous generation could do it on just one.”

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

Family life today is different. But it’s not necessarily better. Well…actually it’s better for all levels of government (twice the income tax revenue) and big business (more disposable income to spend on ‘stuff’). LOL

#131 Blacksheep on 12.15.14 at 11:52 am

Turner # 123,

Re: Takla #44, bikes not stock.

Around 10.5:1 compression needs the extra octane to avoid detonation. Probably has compression releases to aid starting, specially when warm. People spend lots of money on a Harley, then spend a bunch more to get it to perform as well as a Japanese bike, but it’s all in good fun.

There is a mystique about a Harley that cannot be explained until you actually own one.

This, is what keeps these heavy, outdated bikes selling.

JARZ Performance, in Abbotsford BC is one of the best shops around for hot rod Harley work, if one is so inclined.

#132 NoName on 12.15.14 at 11:55 am

#44 takla
my wifes old car needed a premium gasoline, we did use premium mostly, but what i noticed that we were getting better gas milage with that pig of the car with mid grade gasoline. i tryed mid grade on my cars and yes better gas milage.
WHY can someone explain me this.plz

and this
R U Faster Than a Redneck
http://youtu.be/GRyF_9a401o

funny things twitter can do (6min)
http://youtu.be/2TIb7KhaAlY

#133 Doug in London on 12.15.14 at 12:02 pm

While that federal budget surplus may materialize for this year, it doesn’t look like it will materialize in 2015. Finally Joe Owe gets it, suggesting any surpluses should be put to reducing debt. Obviously he’s not a politician, actually focusing on long term thinking. So will the benevolent government still go with their generous tax breaks next year, and how will they pay for it? Time will tell.

@Basil Fawlty, post #48:
Yes, the oil producing sector in the U.S. will take a beating with falling prices, just like in Canada and abroad. However, lower fuel prices will cut the cost of doing business in other sectors of the economy which means more profits. Also lower prices benefit the consumer, less money spent on fuel increases disposable income, it’s the equivalent of a pay raise. That translates to more money to buy other goods and services, which stimulates the economy. All translates to more jobs, more profits, and more tax revenues. Since U.S. oil production a smaller percentage of the economy than in Canada, lower oil prices result in a net gain for the economy as a whole.

#134 rosie "moving forward" in the knowledge that, "this won't end well" on 12.15.14 at 12:11 pm

From the CBC, as quoted from CREA.

http://www.cbc.ca/news/business/average-house-price-in-canada-rises-almost-6-to-413-649-1.2873346

#135 fancy_pants on 12.15.14 at 12:14 pm

yep, a race to the bottom. party rages on

http://www.ctvnews.ca/business/household-debt-climbs-to-162-6-per-cent-of-disposable-income-statscan-1.2148248

#136 Republic_of_Western_Canada on 12.15.14 at 12:16 pm

#48 Basil Fawlty on 12.14.14 at 9:19 pm
[…] the oil industry has $210B in junk bonds that are supported by $100 oil.
That right there is the core of the whole problem.

Cheap money enabling high debt-leveraged oil producers to squeak by with high market prices, and cheap money enabling consumers to pay for it. Not much different from real estate really.

Problem is, once lower prices and higher interest rates have put the higher-cost producers on the back shelf for awhile, net inventories will still bleed down and high-volume low-cost producers will still deplete to the point prices get jacked up. At that point there will be no need for artificial production quotas.

Think about it. A billion barrels of non-renewable oil are consumed every 11 days. And that rate will continue to increase, with our global overpopulation problem.

#137 Luc on 12.15.14 at 12:18 pm

stats can report on debt to disposable income ratio…http://www.ctvnews.ca/business/household-debt-climbs-to-162-6-per-cent-of-disposable-income-statscan-1.2148248

#138 Drill Baby Drill on 12.15.14 at 12:20 pm

#92 JSS
“Do you think the Worley Parsons offices in Edmonton also be affected?”

WP’s offices in Edmonton primarily service all of the refineries, petro-chem, pipeline terminals and power plants along refinery row towards Ft. Saskatchewan so there will be some affects. However many of the projects in refinery row are ongoing maintenance and operations and these will not be as affected. So on balance WP in Edmonton will be OK.

#139 kommykim on 12.15.14 at 12:28 pm

RE:#102 nonplused on 12.15.14 at 12:55 am
iPhones are a great example. Does everyone really need an iPhone? No they don’t, but if your friend has one you can. not. stop. yourself. even if you can’t really afford it.

Now you’re getting it. I take it a couple of steps further. I don’t even WANT an iphone. Instead, rather than wasting my money on trinkets, I’d rather have all the income generated by a balanced portfolio (of otherwise wasted money) for the rest of my life. By living below my means, rather than AT my means, I can get off the work/spend treadmill sooner.

#140 DM in C on 12.15.14 at 12:41 pm

“Just in my family of 5 we have 5 cell phones, 2 iPads, 4 personal laptops, 2 desktops, 2 work laptops, a net book, and 6 TV’s including the one in the trailer 2 of which are 55’s, and cleaning lady, and one of those whole home PVR’s and an alarm system with monitoring. And we ski, play hockey, soccer, and music and art lessons, plus summer camps. So yes we need 2 incomes.”

That sounds….. exhausting.

#141 workingarchitect on 12.15.14 at 12:57 pm

Yay! Calgary keeps on giving! (but what, I’m not sure exactly…)

http://calgaryherald.com/business/real-estate/calgary-leads-country-in-yet-another-home-price-survey

#142 Drill Baby Drill on 12.15.14 at 12:58 pm

#121 Stickler
Oh that was deep insight. The amount imported to refineries geared to use lighter blends is minimal compared to what is sold as WCS. We also export NFLD offshore crude at Brent prices.

Please stay informed.

#143 Mark on 12.15.14 at 1:01 pm

“Smoking Joe says there is no RE Bubble coming in Canada…. just a slow unwind. “

Yeah I’m always amazed at reading some of the articles in the press — they talk as though the RE bubble has yet to even begin the unwind. Even though evidence is abundant that, pretty much across Canada, prices on similar properties have been declining for well over the past year now.

#144 Doug in London on 12.15.14 at 1:04 pm

Why would you want to buy an overpriced house when there are much better deals out there? XIU in down to $20, and as for oil stocks they’re almost being given away!

#145 chapter 9 on 12.15.14 at 1:13 pm

#106 Waterloo Resident
Barton Biggs was a money manager at Morgan Stanley for 30 years and was the first global investment strategists with an impressive track record. After retiring he formed a hedge fund-Traxis Partners. The end of May early June 2012 he was able to have a meeting with a Saudi businessman that had close ties to the royal family. The plan for $60 a barrel oil has been in the works for over 2 years, it has all had to do with timing. The enemy of the Saudi’s Iran/Iraq take them out financially. All other oil producers are just collateral damage. Barton Biggs passed away six weeks after these meetings.

#146 John on 12.15.14 at 1:18 pm

http://www.cbc.ca/news/business/average-house-price-in-canada-rises-almost-6-to-413-649-1.2873346

CREA’s chief economist Gregory Klump says. “It’s not clear how far oil prices may drop or for how long they’ll stay down. How that plays out may affect the outlook for interest rates, job growth, consumer confidence and sentiment about making major purchases.”

Other economists agreed with that sentiment. “The recent plunge in oil prices is likely to temper activity in housing next year,” TD economist Jonathan Bendiner said. “The drop in oil prices is expected to hamper employment and income growth in commodity driven markets such as Calgary and Edmonton. Prior to the slide in oil prices, these markets were considered front-runners in Canada’s housing market but are now expected to soften over the near-term as the low oil price environment persists.”

Of course… those cities are so overvalued it’s ridiculous and prices are about to crash on their own. The collapse in home prices in Edmonton and Calgary in the future will always be attributed to falling oil prices and the realtors will say “nobody could have seen it coming” . haha

#147 Mister Obvious on 12.15.14 at 1:36 pm

#140 DM in C
#81 nonplused

I have one ordinary flat screen TV, one very powerful desktop computer and one so-called ‘smart phone’ that is actually rather slow and dumb.

I could afford a whole lot more but what I have already eats up too much time that could be spent outdoors enjoying this unusually overcast-free Vancouver winter.

#148 tomsterms on 12.15.14 at 1:47 pm

Calgary has the perfect solution to lower demand. Nobody is selling. What do you do when sellers refuse to lower their prices and take their places off the market? The problem with Calgary is a massive housing and rental SHORTAGE. So no matter how low oil goes or how low people think house prices should be, it’s completely useless when sellers are not lowering their prices. You go looking for a place and say “hey this place is %30 over valued, lets negotiate”. The sellers say, “if you don’t like it tough luck, go buy something else”. And there is nothing else. So tell me, how are prices going to drop in this situation? Give me a real answer because right now prices are high and are going higher because there is continued buyer demand and sellers are continually RAISING their prices. People that talk about lower prices in Calgary DO NOT live in Calgary. That’s a fact. Prices are as high as ever right now.

#149 jess on 12.15.14 at 1:48 pm

self sufficiency race

Sustainability | King Abdullah Economic City
http://www.kaec.net/sustainability/
It’s our responsibility to create, build and develop King Abdullah Economic City in … KAEC’s master plan addresses economic objectives by acknowledging the

#150 Republic_of_Western_Canada on 12.15.14 at 2:16 pm

#148 tomsterms on 12.15.14 at 1:47 pm

Calgary has the perfect solution to lower demand. Nobody is selling. What do you do when sellers refuse to lower their prices and take their places off the market?

Life is pretty much a game of hardball everywhere. The sellers of overpriced properties will capitulate when they are forced to. See recent U.S. housing history, and that of NEP Calgary for details.

An extended period of layoffs or threat of layoffs, together with a ‘culture’ of financially overextended mortgage-payers, and a collection of people who have been shell-shocked by recent big drops in their stock portfolios (especially margin-players), AND in interest rate increases, will trigger house selling just like a drop in the stock market will.

The jaws of the vice move slowly, but are unrelenting when they do.

#151 Blacksheep on 12.15.14 at 2:21 pm

Fancy # 129,

“Melissa, you can blame the croonies on the hill for your dilemma. if the morons allowed the market to work properly back in 2009 and not offer 0-40 mortgages and drop rates to nothing, they wouldn’t have created this Canadian RE bubble. I hope the US raises rates and oil is manipulated low for a while. This RE problem will not be corrected until interest rates here are raised. Bravo external forces, keep making the Canadian $ less attractive, someone has to force their hand.”
—————————————————-
I lived this shit first hand and you are 100 % correct.

Word of the day: in•ter•ven•tion

1) the action or process of intervening.
2) interference by a country in another’s affairs.
3) action taken to improve a situation.

Having already experienced this as an official “policy action” from the federal gov. in 2009, how should one expect the gov. to react, if the RE market started to significantly correct today? How much of a price reduction are you hoping for: 10-20-30% ? Do you believe the lever pullers will just watch this happen?

Whom doesn’t think the CAN $ is going to 80 cents US, knocking at least 20% of our comparative RE values? Whom doesn’t want more export trade? When’s the next election?

Of course RE should have crashed in 2009 and like the US, we would be on the road to recovery. We keep thinking these markets are free, we could not be more wrong.

This is why after selling in Aug/2008, I got back in the market Dec/2013.

#152 Mark on 12.15.14 at 2:21 pm

” So tell me, how are prices going to drop in this situation? “

First of all, Calgary prices are dropping, and have been for a while now — the ‘stats’ are only going up because the shift in the sales mix has been so significant. Secondly, significant number of Calgarians are highly leveraged either to the oil and gas industry, or the local construction/real estate industry. Many of these people are going to experience impairments to their income. Additionally, RE is priced on what the marginal buyer will pay for it, so sellers can hang on as much as they want, and watch as the bids increasingly dry up.

Last but not least, the cost of mortgage credit is likely to rise as lenders perceive Calgary, Alberta, and even Canadian housing mortgages to be considerably riskier than in the past. This will further act to shake over-leveraged Calgarians out of their positions.

#153 Ken on 12.15.14 at 2:21 pm

Why not keep interest rates low and the dollar take the consequence? Forget the year round imported diet, where inflation will be highest and least resistant to interest rate changes in purchase decisions. Is this naive of me?

Canadian farmers might get a badly needed break
and Canada a wake up before all the best farmland is paved over.
The few Canadian manufacturers left might get a helping hand.
Though I hear from some, what gains they are getting from U.S.
exports is offset by a Canadian drop in demand. Plus growing anxiety, dropping transportation cost, is making goods shipped from China a whole lot more competitive. What a mess.

Isn’t a lower dollar kind of like a Carbon Tax without the tax? Give millennial’s a fighting chance. I don’t mean going to war with 50 year old planes. What a pathetic government cutting defence while the world gets dysfunctional.

#154 Snowboid on 12.15.14 at 2:43 pm

#148 tomsterms on 12.15.14 at 1:47 pm…

Back when I was a mere minion of the lords on the hill I would likely fallen for the scenario of ‘buy now or forever be a renter’.

But as an old geezer, and only slightly wiser, I can easily see the folly in your explanation of the situation in Calgary.

Only a seasoned salesperson could state your reasoning with a straight face.

#155 Stephen Harper + Mike Duffy = Rob Ford on 12.15.14 at 3:09 pm

It seems Stephen Harper likes his friends even less than his enemies. Here’s the Premier of N&L a conservative, saying Harper can’t be trusted.

http://www.cbc.ca/news/canada/newfoundland-labrador/paul-davis-cannot-trust-stephen-harper-says-rules-for-fisheries-fund-changed-1.2870812

But Stevie is a such a charismatic and personable fellow…?

Not his fault if others like to read the fine print, or dare to be lesbians of the biggest provinces or even want some actual economic leadership.

Such a charmer!

(Good thing there is no smiling, feel-good, friendly and pro-female leader out there to challenge him next year……….um, wait a minute……CPC headquarters, come in please!)

#156 condopoor on 12.15.14 at 3:30 pm

From the Star comments section,

“Melissa Hart is the go-to whiner for the media in Toronto for real estate stories.

http://www.theglobeandmail.com/news/toronto/if-its-got-pot-lights-it-must-be-worth-1-million/article550640/

http://www.thestar.com/life/homes/2012/02/11/toronto_real_estate_why_home_is_where_the_hurt_is.html

http://www.torontolife.com/informer/features/2012/06/15/reasons-to-love-toronto-19/#more-142765

http://www.chatelaine.com/living/budgeting/would-you-rather-buy-whitney-houstons-mansion-or-a-bungalow-in-toronto/

She also has a blog which features more whining and snarkiness than these articles could convey:

http://fmllistings.tumblr.com/

#157 bdy sktrn on 12.15.14 at 3:45 pm

55.68 -2.40 (-4.13%)wti

resume descent!

somebody is playing hardball.

can putin be struck out on 3 pitches?

#158 Lorne on 12.15.14 at 3:46 pm

#148 tomsterms on 12.15.14 at 1:47 pm

Calgary has the perfect solution to lower demand. Nobody is selling. What do you do when sellers refuse to lower their prices and take their places off the market?

The thing is, some people have to sell as they have been transferred or need to move elsewhere for other reasons. They HAVE to sell, so the price of a lowballed is better than no offer at all….and this sale sets the price for other sales in the neighbourhood…on on we go!

#159 Ex-Cowtown on 12.15.14 at 3:46 pm

My wife just got back from a Cowtown visit. She found the conspicuous over-consumption mindless and pathetic. While she was there she visited a girl friend from high school. The friend told her about another mutual girlfriend who was living the high life with her husband, houses and cabins, fancy new cars every year, jet set holidays, fancy clothes, the works.

The husband went out to shovel snow and dropped dead of a heart attack. Guess what? None of it was real. He kited their lifestyle and left her with massive debts. My wife said “My husband thinks that half the people in Calgary live like that”. The girlfriend’s husband said “more like three-quarters.”

You can never tell what’s going on in someone else’s house.

#160 Rational Optimist on 12.15.14 at 3:51 pm

151 Blacksheep on 12.15.14 at 2:21 pm

“Whom doesn’t think the CAN $ is going to 80 cents US, knocking at least 20% of our comparative RE values? Whom doesn’t want more export trade?”

This is backwards to the way most people get “who” and “whom” confused. I’ve never seen this before. Really something.

#161 Holy Crap Wheres The Tylenol on 12.15.14 at 4:10 pm

#139 kommykim on 12.15.14 at 12:28 pm

RE:#102 nonplused on 12.15.14 at 12:55 am
iPhones are a great example. Does everyone really need an iPhone? No they don’t, but if your friend has one you can. not. stop. yourself. even if you can’t really afford it.
…………………………………………………………………….
Now you’re getting it. I take it a couple of steps further. I don’t even WANT an iphone. Instead, rather than wasting my money on trinkets, I’d rather have all the income generated by a balanced portfolio (of otherwise wasted money) for the rest of my life. By living below my means, rather than AT my means, I can get off the work/spend treadmill sooner.

____________________________________________
Kim Jong-un has all of the toys already so why would he sit and say he is watching his balance portfolio. I don’t think you live below you means. So what are you going to do when you get off your treadmill sooner? Its boring lining up your enemies and making them disappear, after you’ve eliminated all of them there will be no people on the planet!
Now go get a god dam iPhone and join the fun before I nuke you! Its good for the economy!

#162 NoName on 12.15.14 at 4:15 pm

#110 Rexx Rock

you are so true on this one, considering that we have only 3 neighbour countries, and only one out of 3 is worth traveling to, but insanely expensive and unaffordable considering that average families travel budget is around 2000cad. at 80-85¢ dollar is probably break even point for shopping and travel to us, assuming that traveler piled on coupons beforehand.

Did i mention that Canada is not democracy, it is a monarchy and we know that monarchies are ruled by despots and dynasties… i am seriously considering to change my NoName to peasant

http://www.newswire.ca/en/story/1194869/cibc-summer-travel-poll-more-than-half-of-canadians-planning-a-summer-vacation

#163 Josh in Calgary on 12.15.14 at 4:18 pm

“OPEC is intent on flooding the world with cheap oil” – Garth

You are totally mischaracterising what the Saudi’s are doing. Nobody is flooding the market with cheap oil. If anything the North Americans are flooding the market with expensive oil. We are the least forward looking bunch in the group and we gripe and complain when anybody else uses a strategy that extends beyond 3 months.

The Saudi’s are the smartest bunch in the group when it comes to maximizing their profits from oil. They keep their supply relatively constant and try to keep the price in a predictable range knowing that stability is the most profitable outcome. But they do not possess unlimited power to stabilize the markets so when prices get too high and threaten to push demand too low they know that the fastest route to recovery is a crash in prices followed by a drastic fall in supply as North Americans predictably over react. They know that within a year or two they’ll again be in a position to maximize profits with steady prices and production. They’re also not fussed about a year or two of low prices since they aren’t leveraged to the hilt.

Can you believe that I’ve actually heard some people cursing the Saudi’s for disrupting the free market with their latest maneuver? The free market would be if they actually did open their taps all the way and pushed oil to $20/bbl.

As for Albertans (both governments and people) we should know by now that you should run your budget as if oil is 20% lower than it actually is. If there are surpluses you spend them the year AFTER they’re in the bank. Or better yet save them for the inevitable busts so you can ride out a year or two of low prices without panicing.

#164 Mike T. on 12.15.14 at 4:34 pm

‘250-350% debt honestly seems low. ‘

I am pretty sure that is just consumer debt
ie: mortgage not included

and that number is staggering if I am correct

#165 Kris on 12.15.14 at 4:36 pm

Everything hinges on RATES. This one factor, by far, has created the situation we’re in today. (Garth, you’ll say jobs matter as well – Yes, but will BoC raise rates when jobs and overall growth are in trouble?)

If the economy is good, people continue to sustain these house prices. If the economy goes bad, then the govt holds rates low – for the next 5 years if need be, as they’ve done the last 5 years.

What if rates stay this low for another 5 years? That’s right, no housing correction.

The government does not set interest rates. — Garth

#166 Nomad on 12.15.14 at 4:36 pm

House sales down 23% in Quebec City this November, relative to 2013.

Once the US federal reserve increases rates, this trend should keep going and us investors will be in a good position to buy a house.

Tomorrow we should find out whether or not they will raise next year.

#167 Detalumis on 12.15.14 at 4:53 pm

#97 some people hate suburbs and hate smaller cities. Just because you retire doesn’t mean you want to live in Anywhere Canada. Some people like walkability, good transit, everything on their doorstep and they ain’t scared of living in urban areas.

This couple already couldn’t stand commuting from Richmond Hill that’s why they sold the house. Melissa is the Erin Bury of big-city-house-entitlement. She has been quoted extensively for the past 3 years on how unfair it is that there aren’t enough walkable urban locations anymore. And guess what there aren’t. The Emperor’s New Clothes thingie is that city planners in 1910 new more about what people really, really want than anybody since 1950 or so. Guelph in 1920 was closer to the urban model than it is today. The same holds true for most small cities. That’s why Melissa will never ever be able to afford her dream home, it ain’t going to fall by 30%.

#168 Mark on 12.15.14 at 5:05 pm

“What if rates stay this low for another 5 years? That’s right, no housing correction.”

Housing is already going down in price across Canada, and rates are actually down as well. The problem facing the contemporary Canadian housing market is that there’s just too many houses, and not enough credit-worthy buyers. Which is to be expected as the industry has basically managed to get everyone with a pulse to sign up for subprime CMHC loans and “own” housing.

Even if the BoC leaves alone, or lowers the policy rates, I wouldn’t expect actual rates charged to consumers to go down. Why? Because credit-worthiness is increasingly poor.

#169 JSS on 12.15.14 at 5:08 pm

I am considering buying shares of either Suncor or CNRL at $22/share for either the TFSA or the RRSP. Or maybe both.

#170 Jan on 12.15.14 at 5:34 pm

#117 asp on 12.15.14 at 9:21 am
This oil shock could result in the BoC cutting interest rates.

Garth said > the central bank cannot let the dollar plunge to 80 cents and wildly inflate the cost of imports while the economy is struggling

The BoC does not have a economic growth target, it has an inflation target of between 1-3%. Less jobs and less government spending results in lower inflation, see Europe for an ongoing natural experiment. As Canadian unemployment grows and inflation sinks, the BoC will need to act.

If the BoC cuts rates, we’re in trouble. — Garth

WHAT KIND OF TROUBLE ?????????????

#171 screwed on 12.15.14 at 5:34 pm

all these idiots telling us the US economy is going strong and will go stronger

just who is the US economy going to sell to when the rest of the world is entering a recession?

don’t tell us this is “home grown” consumer demand driven growth in the US

the Fed turned off the spigot and the economy will go into the crapper again just like 2008

recovery is no longer a topic

#172 Blacksheep on 12.15.14 at 6:02 pm

Rational # 160,

“This is backwards to the way most people get “who” and “whom” confused. I’ve never seen this before. Really something.”
———————————
Thanks, but did you have an actual opinion on the subject, or are you just scanning the blog section for grammatical errors?

#173 Derek R on 12.15.14 at 6:06 pm

#171 screwed on 12.15.14 at 5:34 pm wrote:
just who is the US economy going to sell to when the rest of the world is entering a recession?

don’t tell us this is “home grown” consumer demand driven growth in the US

Yeah! and on a similar note — just who is the Earth economy going to sell to when the rest of the Solar System ain’t buyin’?

Don’t tell us this is “home grown” consumer-demand-driven growth on Earth.

#174 Jan on 12.15.14 at 6:10 pm

Hey Fellows.
Could it be that our spineless gov is trying to rescue the canadian real estate by assassinating cad to make our real estate cheaper to offshore money ?????
Btw – just saw the big O with his pathetic comment how there is no bubble in this country……good grief..
He looks like a castrated confused ostrich…lol
Yup, some leaders we have here….LOL

#175 Calgary Rip Off on 12.15.14 at 6:27 pm

@ #148 tomsterms

Prices have been $200K over real values since about 2006.

Housing in Calgary sucks. No rental controls. Unless you make $100K+, dont come here. That is how much you need to either rent or buy with some sanity.

Given the continual influx of people, think gridlock bs, every day. It is a nice day when I dont have to drive.

If Nenshi gets his way and starts charging to park in front of residences then I will just take the bus. Cheaper and less hassle. Then you can sit in the bus and let the driver sweat it.

Given the demand and the oil instability situation it is anyones guess as to what will happen in Alberta.

Calgary is and remains a total ripoff, rent or buy.

#176 Stickler on 12.15.14 at 6:53 pm

@ #142 Drill Baby Drill on 12.15.14 at 12:58 pm

#121 Stickler
Oh that was deep insight. The amount imported to refineries geared to use lighter blends is minimal compared to what is sold as WCS. We also export NFLD offshore crude at Brent prices.

Please stay informed.
————————————

According to the CAPP Canada produces 1.38 million barrels per day of conventional oil

& imports 642,000 barrels per day.

So “we” import 46% as much as “we” produce.

Minimal is not the word most would use to describe that dynamic.

You’re welcome.

#177 Herf on 12.15.14 at 7:04 pm

Opinions please. How truthful and/or accurate are the opinions expressed by the various commenters, in today’s Edmonton Journal article:

http://www.edmontonjournal.com/slide+troubling+Alberta+government+industry+consumers/10469924/story.html

Is most of it delusion or outright deceptive spin?

#178 Mark on 12.15.14 at 7:11 pm

“According to the CAPP Canada produces 1.38 million barrels per day of conventional oil “

“Conventional” oil has a very specific meaning in the industry. I suggest you research a bit further before coming to such profound conclusions concerning Canada’s energy sector.

#179 Smoking Man on 12.15.14 at 7:18 pm

#174 Jan on 12.15.14 at 6:10 pm
Hey Fellows.
Could it be that our spineless gov is trying to rescue the canadian real estate by assassinating cad to make our real estate cheaper to offshore money ?????
Btw – just saw the big O with his pathetic comment how there is no bubble in this country……good grief..
He looks like a castrated confused ostrich…lol
Yup, some leaders we have here….LOL
…………

Ha, the Media and the mind of the herd..

The herd so easily influenced by MSM and words from authority.

If resent you calling me a Realtor… Call me an ass hole, a jerk. A phyco..

But being a realtor is hard work… Hard work is not in my DNA.

#180 Bill Gable on 12.15.14 at 7:22 pm

The Russian central bank increased the key rate to 17 percent from 10.5 percent effective today, it said in a statement on its website.

Russia’s central bank raised its benchmark interest rate the most since the nation’s 1998 default, making the announcement in the middle of the night in Moscow as policy makers seek to douse investor panic and stem a ruble rout.

Link: http://tinyurl.com/lm96ruj

#181 AB Boxster on 12.15.14 at 8:31 pm

#127 Retired Boomer
______________________________
You miss the point of my comments.

No one would agree that it makes financial sense to purchase real estate at the current prices.
But like most things we do in life, are not everything is analyzed by monetary gain or loss.

The desire to own a home neither makes them foolish or greedy.
In fact it makes them human.

It currently makes absolutely no financial sense, any way you do the numbers, to have children.
If fact, it makes far more sense to rent them from your sister, and take all of the money you save, put it into a balanced portfolio for 30 years, and golly, think of the great retirement nest egg you will have.

For some, there is more to life than just the dollars and cents of everything.

The sad part of society is that ‘now’ because home ownership is out of reach for many, (through no fault of their own) its ‘fashionable’ to tell them how greedy and foolish they are for having this desire.

Soon we’ll be telling people how foolish and greedy they are for:

1. Wanting to raise children
2. Having your children complete college without crushing debt
3. having a job that pays a living wage
4. having a pension that can be relied upon when your retire
5. Having some job security when you do a good job
6. Having a government that works for the 99% and not just the 1%
7. Having affordable housing

You know.
All of things that once characterized a thriving middle class.
All the stuff that your generation just took for granted.

#182 K Evans on 12.15.14 at 8:47 pm

I think that Obama is encouraging Saudi Arabia to saturate the market so Russia suffers. The fact that Canada & Australia are casualties of this arrangement doesn’t concern him at all.

#183 Daisy Mae on 12.15.14 at 9:33 pm

#181 AB: “For some, there is more to life than just the dollars and cents of everything.”

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

Yes, there has to be a reasonable balance.

#184 Daisy Mae on 12.15.14 at 9:42 pm

#161 Holy Crap: “…I take it a couple of steps further. I don’t even WANT an iphone. Instead, rather than wasting my money on trinkets…”

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

Bully for you. iPhones are hardly ‘trinkets’. You’re showing your age.

#185 Daisy Mae on 12.15.14 at 9:48 pm

#140 DM in C : “Just in my family of 5 we have 5 cell phones, 2 iPads, 4 personal laptops, 2 desktops, 2 work laptops, a net book, and 6 TV’s including the one in the trailer 2 of which are 55’s, and cleaning lady, and one of those whole home PVR’s and an alarm system with monitoring. And we ski, play hockey, soccer, and music and art lessons, plus summer camps. So yes we need 2 incomes.”

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

That sounds….. exhausting.

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

And…hardly impressive.