The obvious

USELESS modified

Now I’m worried.

I write six million tedious words on this blog warning housing is overvalued and Canadians are horny debt snoflers. Nobody cares. Then the Bank of Canada, no less, suddenly agrees with me. People, it says, are paying between 10% and 30% too much for real estate, and household debt is the biggest single threat to the economy.

Meanwhile this pathetic blog carries the torch for realism, arguing that house-lusty locals, not rich dudes jetting in from Guangdong, are mostly responsible for properties average folks can no longer afford. Our debt levels prove it. Your condo-craving twentysomething daughter proves it. Real estate has morphed from a cult to a disease, for which we are responsible. The Asian guy in the big house down the street did not make you do it.

And now Canada Mortgage and Housing, no less, says it agrees. And can prove it.

CMHC just issued a report based on interviews and site visits with owners, managers and supers of 20,000 buildings across Canada (which is probably more research than all the puffed-up bigots who hang around this site’s unsavoury washroom conducted) and the stats are in. Nationally, about 2% of investment condos are owned by foreigners.

In Toronto, it’s 2.4%. In Vancouver, 2.3%. In Victoria, 1.1% and Montreal, 1.5%. Concentrations are higher in downtown cores, with the tops being in 416 (4.3%) and the Burrard Peninsula (5.8%).

Seriously. Two per cent. This is even lower than data I have presented for the total of foreign buyers in all of Vancouver and Victoria over the past months. It puts all of those racist, anti-newcomer comments from people wanting to blame someone else for their own issues, in context. Canadian real estate prices are insane because we’re a nation of idiots. Get over it. You did this. Most people you know have a one-asset investment strategy which usually involves extreme leverage. I just hope events of the last few days are making them think twice about their choices.

What’s next, CREA sending me a Christmas card? Letting me use the word ‘realtor’ again without being sued?

Well, it’s time homeowners sobered up. Fast. Look at Russia to see just how quick a modern, advanced economy can circle the drain. The currency lost 19% of its value before lunch on Tuesday. Russian bond yields spiked to 16%. The central bank raised interest rates from 10.5% to 17%, but that did squat. The stock market shed 12% of its value. Russians are sucking their savings out of banks before they wobble and currency controls are leveled. The Moscow real estate market has frozen. And gold took a hit on the assumption the country will have to dump its reserves to survive, now that oil revenues have collapsed.

Nobody’s suggesting anything remotely similar will transpire here. But I wouldn’t expect normal, either. Even the MSM is starting to sound like me, without the attitude or the tawny animal magnetism. The Globe carried a column on why people should actually listen to the Bank of Canada’s warning on fat house prices. And CBC editor Don Pittis wrote, “A sharp decline in house prices could happen once rising U.S. interest rates begin to push mortgage rates higher. The longer we let house prices continue to escalate, the more dangerous it becomes.” His thesis: hey, if oil can lose half its value in six months, why can’t real estate?

That won’t happen. At least not in 416 or 604, or in smaller markets where people curiously think of real estate as shelter, instead of a futures contract. In those places, houses will stop going up, flatline, and then begin a descent later in 2015 as it becomes clear oil hurt the economy and rate will be rising. The toll could be far worse in Calgary, Fort Mac, Edmonton and the bigger cities in the flat provinces next door.

Today (Wednesday) the Fed makes known its current thinking on the US economy after a two-day meeting. It may signal a change in interest rate intentions, but might also wait until after the holidays. Nonetheless, it’s coming. The American central bank will start to normalize the cost of money in 2015. At the same time OPEC says it will likely take no action to stabilize oil until its next regular meeting, in June.

The year to come, with the world feeding on cheap energy, will bring more dichotomy. A big tailwind for the US, a boost for deflationary Europe, recessionary Japan and stumbling China, but a whack on the head for the producers – like Canada and Russia.

By the week before next Christmas, you’ll wish you had less house and a bigger portfolio.

232 comments ↓

#1 Jim on 12.16.14 at 7:20 pm

The calm before the storm !

#2 LazyJason on 12.16.14 at 7:24 pm

So should investors be looking for buying opportunities in the BRIC and other emerging market areas?

#3 ILoveCharts on 12.16.14 at 7:27 pm

I suspected you were going to jump all over that. Can we at least agree the “survey” was seriously flawed?

#4 bill on 12.16.14 at 7:30 pm

I always wondered about how much ‘ham influenced sales.
To underline the obvious:
It would seem that ‘ham’ was just a way to get the xenophobic and naive to buy ‘before your priced out’.
All the while it was Canadians pricing themselves out…
Perhaps one day the powers that be will divulge the hard data. Not going to hold my breath though waiting or anything.
I wonder if the yellow helicopter jerk has left town yet?

#5 ILoveCharts on 12.16.14 at 7:30 pm

HAM is real

#6 Predictions2015! on 12.16.14 at 7:34 pm

Garth! Once again you pointed out the truth and removed the RE veil that has blinded and distorted the reality of so many house horny Kool-Aid drinking Canadians. Thank you!

Given the recent global events and the winding down of 2014, maybe it would be a good time to give predictions on the economic outlook in 2015. Especially when so many blog dogs seem more than willing to offer their “expert” opinion on what is currently happening. Haha!

#7 Dominoes Lining Up on 12.16.14 at 7:34 pm

After much observation and patience I said before I thought that the oil price drop was the first domino to topple in our real estate bubble’s inevitable deflation.

So much about real estate valuation, especially the “sticky” downward slide it usually takes, is about perception and psychology, people hanging on to illusory beliefs.

That makes this unexpected little CMHC report a second domino.

This is like a psychological punch in the gut, winding the speculators and mindless boosters.

Two percent is nothing to hang your dreams on. Not nearly enough.

This will literally take the air out of all the bluster of all the believers in HAM and foreign influence, from Toronto’s condo scene to Vancouver, the more it is repeated and discussed.

To see the Russian economy crater in mere days, even hours, is something else that takes the breath away. Nothing prevents sectors of our economy from doing similarly, such as Calgary and Fort Mac real estate.

Two dominoes are now tumbling against the rest.

I wonder what the third will be.

#8 Fred on 12.16.14 at 7:35 pm

I guess the MSM finally found your blog.

#9 Robert Agnew on 12.16.14 at 7:35 pm

What count possibly go wrong with Steve the Economist Harper and joe the undertaker Oliver running the reform-a-con government ? Folks hard times are coming time to dump a con .

#10 AngryMan127 on 12.16.14 at 7:37 pm

Anecdotal evidence looks different on the streets of Vancouver than in a cozy suburb of Ontario….love to see the stats on SFDs.

“Housing prices in Lower Mainland are predicted to rise a modest three per cent in 2015, while Canada’s highest prices, in Vancouver, will be sustained by demand from Mainland Chinese buyer” http://www.theprovince.com/business/2015+forecast+cent+rise+Vancouver+housing+prices/10457510/story.html

Garth, at what point will you recognize that something else other than low interest rates might be causing the seriously ridiculous prices CANRE markets

(It’s been 6 years and counting….we are waiting all the while watching our cities being sold at ridiculously prices and our cities beyond culturally replaced.. These cities are what we recognize as home).

#11 Derek R on 12.16.14 at 7:38 pm

Wow! Garth goes mainstream! Or perhaps the mainstream goes Garth!

#12 nufpid on 12.16.14 at 7:41 pm

I’m pretty much the opposite. I wish I had a house instead of a portfolio.

I’ve lost around $400k (from $1.6 to $1.2 million) this year as metals, commodities, emerging markets, and energy have been hit hard.

There are actually not a lot of stocks out there that are near 52 weeks highs, most are at multi-year lows. It’s because of the bias of a few large caps (AAPL, MMM, etc…) that have skewed the indices. The majority of stocks out there have been hit hard.

So yeah, I wish I owned a house instead of this big portfolio that has lost a ton of money. I’ve been renting and saving, and it’s gone the opposite way for me.

Losing 25% of your portfolio in a year of positive markets means you have a fool for an advisor. Might that be you? — Garth

#13 Chris in Calgary on 12.16.14 at 7:45 pm

So, when should I lock in my mortgage? And I have one rental property in a bedroom community. Should I sell?

#14 seeker on 12.16.14 at 7:49 pm

In Calgary realtors say houses are still increasing. My friend pulled his house off the market early fall. They told him to wait till spring as he had no offers and hardly any showings. The realtor told him he had just missed out on the good selling days by the time he decided to sell. He believed this, I was quiet.

#15 BillyBob on 12.16.14 at 7:51 pm

Comparisons to Russia are a bit of a rhetorical stretch. Harper is a goof, but he hasn’t shot down any airliners, invaded any neighbours, nor is Canada under UN sanctions.

But it is still a good illustration of how rapidly currencies and economies can collapse.

#16 The Patient on 12.16.14 at 7:52 pm

“The Asian guy in the big house down the street did not make you do it.”

and then:

“Nationally, about 2% of investment condos are owned by foreigners.”
=======

Since when did big houses = condos?

Fail.
===========

As for a rate rise in the U.S. in 2015, David Rosenberg doesn’t see it. He said so last week on CNBC, 1:57 secs, right here:

http://video.cnbc.com/gallery/?video=3000338831&play=1

Garth vs. David!

Hmm!

#17 RealisiticCalgarian on 12.16.14 at 7:54 pm

It’s happening!!! Just drove home from work here in Calgary, two new listings in my neighbourhood today!!!
Houses don’t go up for sale often here, close to both LRT and ring road. For example I live on an 19 house cul de sac for the past 17 years, only 4 houses have been put up for sale in that time period. We lack the house horniness of other Calgarians. We paid 150-200k, and now our humble abodes are supposedly worth 500-700k. We all prefer peace of mind.

#18 Terrier on 12.16.14 at 7:57 pm

2015 will be a year to remember. With currency wars in a full swing, global economic depression, crumbling commodity market and geopolitical situation we haven’t seen since the worst days of cold war, it seems we’re getting closer and closer to Dubya Dubya 3.

Where do you people come from? — Garth

#19 Yitzhak Rabin on 12.16.14 at 8:02 pm

If you re-read your description of the events in Russia, it sounds a lot like something a “doomer” would have predicted no?

In many aspects things are as chaotic there as they were in 1998. A large portion of the progress that country has made in 16 years has effectively been wiped out in a matter of a few months.

This is in a country with a budget surplus, low national and foreign debt, very low household debt and a positive balance of trade.

When you pre-mature hooki-la celebration post came out the day after the Fed tapering ended, I said give it 3 months for the dominoes to start falling. Despite the Bank of Japan trying to carry the baton for artificial stimulus, you are now seeing real market forces work.

Oil, thankfully is at least still a functioning non-central bank manipulated market. The first of the post-taper deflationary fallout is showing up here first.

As long as QE has ended, there will be temporary US dollar strength and deflation in America. While in other countries (Russia, Norway, Indonesia, Turkey, Brazil) you will see strong downward exchange rate pressure and import induced inflation. Norway and Canada with high household debts can least afford currency driven rate increases.

The US, as the world’s largest debtor nation can least afford a deflationary environment which will eventually lead the renewed QE on an even larger scale. At that point it is QE infinity, everything reverses and the end of the 45 year experiment of non-gold back money.

#20 Nick In Edmonton on 12.16.14 at 8:03 pm

We are early 40-somethings renting a house in central Edmonton, waiting to Vulch. Largely because of this blog.

So if you are seeking validation, we care :).

#21 Willy H on 12.16.14 at 8:05 pm

CMHC just issued a report based on interviews and site visits with owners, managers and supers of 20,000 buildings across Canada (which is probably more research than all the puffed-up bigots who hang around this site’s unsavoury washroom conducted) and the stats are in. Nationally, about 2% of investment condos are owned by foreigners.
__ __ __ __ __

Part of the reason for this misconception is the fact that immigrants to Canada who arrived between 10-20 years ago are likely the one’s that are most over-leveraged. Can you differentiate a visible minority immigrant (now citizen of Canada) from a foreign (mostly Chinese) buyer? I sure can’t. It should come as no surprise that these folks are drunk on realestate because they haven’t experienced a housing downturn in the new world. It’s likely 1990’s immigrants and their adult children who own multiple properties (eg condos) for investments purposes. Too bad we don’t have good stats on housing ownership. Despite these findings we need to go much deeper.

#22 Lumberjack arch on 12.16.14 at 8:09 pm

I’m not a believer in HAM for house prices but the cmhc survey was of PURPOSE BUILT RENTAL UNITS not the huge majority which are strata condos. Sorry Garth but it’s not the silver bullet you have been looking for, and does not prove the comment section of this blog wrong, for example coal harbour here in vancouver does not have any rental buildings they are individually owned units , the article is misleading

#23 80'sKID6$4 on 12.16.14 at 8:10 pm

No CHMC stats on foreign owned detached housing?
Thats convenient. Beijing Money bags look for safe holding ponds for their cash bigger than 350K Bosa shoe boxes in the sky. HAM isn’t the only reason for high prices in Vancouver. But it is one of them.

#24 John on 12.16.14 at 8:11 pm

#10 AngryMan127

Are you serious? The article is quoting Re/Max. Don’t you think they’re a little biased? Their business is to pump and sell real estate.
The Province is pathetic to even report this as news.

#25 james on 12.16.14 at 8:11 pm

If I had more time I would read the methodology in that report. I don’t believe that foreigners account for a huge percentage of purchases, but I also don’t trust the CMHC to unplug a toilet properly, let alone run a mortgage insurance scheme or conduct a proper study. The devil is always in the details.

In other news, my mortgage broker called to offer to refinance my 30 year mortgage here in the USA. Reduction of 0.5% in rate.

#26 Condos Only on 12.16.14 at 8:17 pm

The CMHC survey focused on condos only. HAM (that’s Hot Arab, Asian and even Russian Money) has invested more money in single family homes and development properties. Condos are a non-issue.

CMHC should start downsizing its research staff. The survey was a waste of tax money.

#27 ILoveCharts on 12.16.14 at 8:23 pm

There was an excellent comment on Reddit:
“Licensed Strata Manager here. Let me explain how (from my perspective), CMHC comes up with these figures:

Someone from CMHC calls me, and my colleagues in my office, and asks us how many buildings we manage. They know a few of them by name, how they get that information I’m not clear on (our company, like most, doesn’t publish our portfolio) but they know of at least a few. They ask me how many Offshore Owners there are. I tell them I don’t know. They say, “how many have addresses registered overseas?”. I look it up and say “x… BUT, lots of them have local agents who handle their affairs so that might not be the best measurement”. Person on the phone says “Yes, we know, but it’s the best we can do”. Conversation ends. Sometimes they follow up with a formal written survey where we relay the same information.

This isn’t a judgement of the process, but a confirmation of (more or less) how it works from a Property Manager perspective.

#28 waiting on the westcoast on 12.16.14 at 8:25 pm

#10 AngryMan127 re: watching real estate prices rising in Vancouver re: province article

Do be too upset? It’s not HAM’s doing, it is your best friend, his/her dentist, the librarian, etc. Even if we assume in the SFD situation is larger (say 10% – 4X more than in condos), that still means that 90% of sales are driven by the rest of us. You don’t need to accept responsibility for the market’s ineptitude. Just try to not watch too much house porn on MLS TV.

I totally feel your pain – I have watched/waited assuming the market would exit the delirium… no such luck. But it will happen because it does not make economic sense and eventually all markets revert.

#29 chris on 12.16.14 at 8:25 pm

Today is wednesday?

Greater Fool: tomorrow’s news today. — Garth

#30 frank le skank on 12.16.14 at 8:26 pm

So what you’re saying is that now isn’t the best time to liquidate my portfolio in exchange for a house? I don’t want to end up like Melissa Hart….. oh the horror!!!

#31 Suede on 12.16.14 at 8:30 pm

Wonder how much I cam get me a flat on the water in Sochi for now..?

Also, who is orchestrating these oil prices. US and Saudi Arabia coup to destroy vlad? Hmmmm…

#32 Trojan House on 12.16.14 at 8:33 pm

The biggest threat to the economy is government debt.

#33 lisa on 12.16.14 at 8:33 pm

“Even the MSM is starting to sound like me, without the attitude or the tawny animal magnetism.” Love it!

#34 Andrew Woburn on 12.16.14 at 8:34 pm

#5 ILoveCharts on 12.16.14 at 7:30 pm
HAM is real
========================

Yes, but when the price drops, they’ll be real gone.

#35 Marco on 12.16.14 at 8:35 pm

Thanks Garth for another insightful write up.

I gather with all this “realism” hitting the MSM we could see a wave of listings this spring from coast to coast. I’m guessing the basic economic principle of supply and demand could weigh heavily moving forward in Real estate land. Even in La La land.

Cheers.

#36 AB Boxster on 12.16.14 at 8:35 pm

Garth,

Making the ‘racist’ comment adds little to the debate.
You disagree that offshore money has any effect on local markets. It’s a fair perspective.

Others, especially those that live in these overpriced RE markets,(and who do business in these markets) disagree.

Really though, it’s only through information and fact that any case can be proven one way or another.

The survey from CMHC is a good start to begin to review the facts.
Is it the definitive answer?

Well as FP comments today:

http://business.financialpost.com/2014/12/16/cmhc-finally-releases-foreign-ownership-data-on-housing-too-bad-few-believe-it/

Brad Lamb, a developer with projects in Toronto, Edmonton, Calgary and Ottawa, said the numbers produced by CMHC don’t come close to what he sees in his sales office.

Does this prove anything? No, it is a personal perspective. Does this comment make Mr. Lamb racist? Uh, No.

Benjamin Tal comments in the same article:

“foreign ownership levels in the condo market would probably be higher, depending how the investment is calculated”

He comments that if CMHC is only tracking pure foreign investment (i.e. no connection whatsoever to Canada. No family member here. Nothing) that this will likely skew the numbers lower.

Said Mr. Tal, ” in many cases you have someone living here with the money coming from abroad. The number is higher, if they include that.”

Really, how much higher?
Maybe it’s statistically insignificant.
Maybe not.

Do Mr. Tal’s comment prove anything? No.
Does this comment make Mr. Tal racist? Um, No.

But his comments lend some interesting perspective to the debate.

Perhaps CMHC should continue to collect this information in a slightly different way, as described by Mr. Tal.
If this would further our understanding of the issue, why is this a bad thing?

#37 sideline sitter on 12.16.14 at 8:41 pm

#10, angryman, are you waiting for some confirmation bias here? I don’t think it’ll happen.

We now have CMHC saying 2%, what percentage do you think it is, and what DATA is it based on?

#38 Lumberjack arch on 12.16.14 at 8:42 pm

I’ll try again:

The cmhc SURVEY, was of PURPOSE BUILT RENTAL UNITS, this means apartment buildings that are owned by one person or corp. Not condos as a whole which are majority individually owned strata units , the author of the article and Garth are both misleading in trying to convey this as real data on foreign ownership in canada

Data is data. Where’s yours? — Garth

#39 waiting on the westcoast on 12.16.14 at 8:43 pm

It’s too bad there weren’t more outspoken (read that as tawny attitude ;-) people on MSM… definitely makes the world a better (and more fun) place…

Canada is definitely going to feel a scary squeeze. You have the US punching out of the bag while commoditites get crunched. We will definitely get some lift from the US, but will it compensate enough for the resource royalties/salaries.

My wife brought back a pamphlet from our local bank with four pages outlining the risk of interest rate hikes to follow what is already happening in the US. Seems to be a hedge on responsiblity for throwing so much cash at all of us over the past decade. Not that it is their fault – they are just making great dividends for their shareholders (wish I bought more) ;-)

#40 Dirty Debtor on 12.16.14 at 8:47 pm

@ #26 Suede

I can’t believe how house horny you are! It’s like Russia just got their pants pulled down, the whole world can see the scabs, blisters, and pus they have going on…

… and you’re frothing at the mouth on the thought of diving in!

DD

#41 NoName on 12.16.14 at 8:48 pm

#6 Predictions2015!

predictions are funny thing, but estimation, extrapolation, forecasting are interesting.

In 1942, the associate editor of Better Homes and Gardens predicted that the housewife of the future would know how to repair radios, irons, lamps, washing machines and cars. (yes its oil change time…)

#42 waiting on 12.16.14 at 8:49 pm

Even CMHC agrees their data is not comprehensive, and this is just condos. http://business.financialpost.com/2014/10/20/cmhc-admits-data-gap-in-foreign-ownership-of-canadian-real-estate/
In Vancouver, the big issue is the high end market and foreign ownership. It’s not my elderly Asian neighbours who came here decades ago, worked hard and raised their children here. It’s the Iranian Imams who fled with millions as opposed to the Iranian immigrants who fled with their lives. It’s China’s corrupt officials and crooked businessmen who have smuggled billions of dollars overseas, much of which has ended up in real estate in the United States, Canada, Australia and the United Kingdom—particularly in high-end neighborhoods.
Today from the Washington Post regarding illegal money flowing from corrupt sources: “China leads the pack, contributing just under $250 billion in illicit financial flows in 2012, the latest date for which data is available.”
http://www.businessweek.com/articles/2014-10-15/chinese-home-buying-binge-transforms-california-suburb-arcadia
I agree with so much you say Garth, but there is real and anecdotal evidence to the contrary. I’ve seen it in companies I’ve worked for – where the bulk of the investment dollars were from Asian companies with little technical knowledge of what they were buying. Mining companies owned and headed by people with little to no mining knowledge.
We are only a few decades past Mao’s cultural revolution where anti- intellectualism was rampant. A country doesn’t bounce back from that kind of purging without long term ramifications. The Chinese companies that exist today evolved from assets controlled by the Chinese government. China’s economic and business landscape was transformed in a short span of time and involved a lot of favoritism, nepotism, cronyism and bribery.
The Washington-based Global Financial Integrity Group estimates US$1.1 trillion illegally flowed out of China between 2002 and 2011.
A typical scenario involves officials sending their spouse and children overseas, often using them as a conduit to shift assets offshore. With barely any assets to their name, the so-called “naked official” – as is the popular term for them in China – is then able to join their family overseas at the first whiff of trouble.
As time goes on, they start to put [their funds] into legitimate assets such as houses and property and shares and bank accounts and then the money becomes their wealth. But it’s never been their money to start with in the first place; it’s the corrupt money flowing out of China.”
It’s not the condos Garth, it’s the multi-million dollar mansions and developments that have changed the face of Vancouver and the prospects of many young people of any ethnicity ever being able to afford the prices that have resulted from this massive in-flow of cash.

I understand. People with more money than you must have stolen it. — Garth

#43 Toronto Hipster on 12.16.14 at 8:50 pm

AB Boxster – hear, hear.

#44 Shawn on 12.16.14 at 8:51 pm

A small change to my self-imposed hiatus

Due to vast popular support (from both of my followers / fans) I may occasionally post something. Only on days when I will not be working. Like today. Wednesday.

Just one, condition though. I will only post if there is something worthy to reply to.

So, my hiatus will now be until that worthy-of-response post happens (and I am on a day off or weekend) or a year passes, whichever is first.

No longer will I correct those many posts that need correcting. Mark has taken on that role with a gusto usually reserved only for those employed to test condoms.

#45 Mark on 12.16.14 at 8:51 pm

Of course real estate can easily shed a lot of value without interest rates moving one iota. The rules of supply and demand have not been repealed. Evidence is significant that Canadians are tapped out in terms of their ability, willingness, and most importantly, capacity to purchase additional real estate.

The major inflection point that sent RE down in Canada actually occurred last year, and that was, the significant CMHC tightening in Budget 2013. However, I have an awful feeling that the oil and gas industry’s regular cyclicality will probably end up taking the blame.

#46 Lumberjack arch on 12.16.14 at 8:54 pm

Garth Your just as bad as remax , your spinning it. The survey is not of the typical Canadian owner or unit , they barely build rental buildings anymore , this survey was useless and all it proves is the very few remaining old purpose built rental buildings are owned by you guessed it Canadians

#47 Brian Ripley on 12.16.14 at 8:54 pm

Garth said: “By the week before next Christmas, you’ll wish you had less house and a bigger portfolio.”

Developers already reduced their future projects, starts are down 8% Y/Y in Canada on Nov data:
http://www.chpc.biz/housing-starts.html

The page also includes provincial stats and I bet the Alberta builders would like to reverse their starts stat of 4% up Y/Y (starts are counted when concrete footings are poured.

And if you want a quick look at what the cash real estate markets are doing, here is my StockCharts “Real Estate” thumbnails of ETFs & Indexes

http://stockcharts.com/freecharts/candleglance.html?$HGX,IYR,ITB,XRE.to,FFR,TAO,$MFX,SRS|B|0

#48 Smoking Man on 12.16.14 at 8:57 pm

I have a different read on MSM recent assault on properties..

A little shit bungalow down here in house of Southside Johnnys just sold 1000 bucks short of 800k. I’ve seen complete madness…

msm operates like a sheep dog, a bit to close to cliff, the dogs move them, to close to the forest, woff, woff.

All this madness in the slowest time of the year.. In this hood, spring prices are generally 75 k higher.

Everyone is terrified of the spring market. Not only is a hockey stick pattern forming, but it’s starting to look like a big hard banana…

I bet without MSM intervention that bungalow goes for North of 950k in the spring..

#49 Inglorious Investor on 12.16.14 at 8:59 pm

Rolling, global hyperinflation coming?

Is Russia just the first loser in the currency wars where the ultimate weapon of mass destruction is the US dollar (at least for now). I don’t know, but what happens when a world drowning in debt and engorged in overvalued US dollars reaches the point where economic growth can no longer support the necessary growth in money-credit?

What happens when governments cannot service their debts in real terms and there is no more wealth to steal from the people––either in reality or for political (read revolutionary) reasons? (Thank goodness Americans love their guns, or they’d have no chance to save themselves once the stuff really hits the fan.)

It makes sense the US dollar is rising while the rest of the world roils. When empires collapse, they do so from the periphery first, as the central powers do everything in their power to protect the core––and themselves.

It’s OK for now; and I’ve said that lower energy and commodity prices can boost the US economy. But if things get really bad and all those US dollar reserves start coming home, watch out.

#50 Mark on 12.16.14 at 9:03 pm

“My wife brought back a pamphlet from our local bank with four pages outlining the risk of interest rate hikes to follow what is already happening in the US”

Really??? The banks are stooping to the level of passing out literature to scare people in such a way? Usually banks do not particularly dispense financial advice on products for which they act as principal, rather than as an agent, such as mortgages.

Maybe there’s a contrarian motive, ie: the bank is predicting strong deflation and wants to lock in the rate on its money by scaring people to accept longer-term fixed rate mortgages. After all, the deflationary abyss we’re staring at here in Canada looks pretty deep, especially with the key demand drivers of RE, consumer consumption, and the O&G industry looking incredibly weak.

#51 waiting on the westcoast on 12.16.14 at 9:04 pm

#35 AB Boxster – re: Said Mr. Tal, ” in many cases you have someone living here with the money coming from abroad. The number is higher, if they include that.”

So if my kid wants to go to university in Quebec and I help him buy a place… what is the difference? He is still living there, etc. He still needed a place and either would have bought/rented. Both add to demand. If anything, the influx of $$$ has driven more supply to be created and as long as the person stays in the market, it will balance out.

This isn’t a zero sum game. As money/people enter, things are built to satisfy. Valuations are still a choice. Just because a lot of people are buying a stock/house/car, doesn’t mean that I should. They feel “right” that they bought in and I will feel “right” in a couple of years when I buy in. At the end of the day, I can’t believe I am saying this, SHIFT happens ;-)

What I am saying is that blaming others for their purchases at inflated values is a waste of time. It doesn’t take opportunities away for “us”. It tells “us” that we shouldn’t play there right now. Again – whether foreign or domestic, stupidity is universal. Let’s not look for straw men to blame…

#52 Ferguson State Prosecutor on 12.16.14 at 9:05 pm

post #36 AB Boxster

I like the cut of your jib, son!

We legal authorities here in Missouri feel the same way you express so eloquently – if a fellow has even a teeny bit of black in him, say from a couple generations back, as far as we’re concerned, he’s as dark as a new moon and we treat him in our own special way accordingly.

Same difference in what you say, and I totally agree.

If a buyer has any relatives offshore at any time in the last century or so who are helping him out, well, by gum he’s a foreigner! No matter what colour his passport happens to be – this month.

And even if those relatives are here already, if they spend any time together eating any kind of rice product, well for sure they are HAM.

(And that includes Rice-a-Roni and rice pudding)

Don’t let the liberal bigots try to put you in a corner, fellah!

Oh,….and…..HANDS UP!!!

Geez, I just love sayin’ that :)

#53 Habs76-79 on 12.16.14 at 9:07 pm

A big part of Canada’s problem as well as most of our western nations is that we have now had and have generations who have not known real suffering and/or hardships. No real wars (WWI-WWII), even the Cold War is old days for them. No devastating economic depression like in the 1930’s. No major global pandemics like the 1919 Flu. History for many of these folks living such ways today, see’s that history to them began on their birth date. Nothing mattered before nor do many, much care to know of such older history and to take as lessons from it all.

What we have had is propaganda run amok, jingoistic flatulence by those in power, the pumping and propping up of false and corrupted economic ideals and a level of arrogance beginning first with the elites and those in government, right down to regular Joe and Mary Sixpacks who live life as if they too are Princes and Princesses and such.

Much of today’s youth look to have been coddled and given all they ever wanted and more. They are brought up to believe they are so special in society (NO YOU AND NONE OF US ARE!). They are entitlement driven and if they do not get their way or what they want, when they want it they are often quick to cry “I’M A VICTIM!” (of something).

I’m not saying that all people are not suffering and do not suffer in our LA, LA, LAND nation, nor that of any of our western peers. But I am saying that as a greater society we are living distracted, vacuous and rather shallow lives filled with a never ending desire to buy and have MORE CRAP! to get on whatever consumerism bandwagon that we can.

The governments at all levels, most business leaders, financiers, NGO’s and main stream media all spin half truths to outright lies. Josef Goebbels during the Nazi tyranny in Germany could only have dreamed to have such wide ranging and easy compliance by these peoples and groups.

But alas as with all things in life, including the proverbial good times must and will come to an end. The price of it all will be tabulated and will demanded as to paid. We all will likely suffer to some extent, but those who live beyond their ability to pay. Those who many have never heard nor known the word “NO!”, never lived without, never endured any credible suffering. Those who live shallow lives of ME TOO! will probably pay the biggest price.

TRAGIC!

#54 Mike T. on 12.16.14 at 9:07 pm

This was printed in the Kelowna Daily Courier and it bears repeating

‘I know people so poor all they have is money’.

#55 Waterloo Resident on 12.16.14 at 9:08 pm

You know, this housing bubble and debt bubble could easily continue for another 10 to 20 years. Like they say:

“Never underestimate the power of stupid people in large numbers.”

#56 Mark on 12.16.14 at 9:09 pm

“The CMHC survey focused on condos only. HAM (that’s Hot Arab, Asian and even Russian Money) has invested more money in single family homes and development properties. Condos are a non-issue.”

Condos are a far better proxy for what the foreign investors would be buying, than SFH’s which are messy, take a lot of maintenance, and can’t be merely visited a couple times a year.

And evidence is abundant, not only from the CMHC survey, but also from the fact that high prices in Canada are fully explained through the domestic CMHC-inflated subprime credit bubble.

In yesterday’s comments, someone said that the Vancouver economy was a sort of bath tub. If there were truly foreign investment inflows, the tide would be rising, and Vancouver salaries would be rising as well. But evidence is abundant that there is no meaningful foreign investment in real estate, hence, no additional inflow into that bathtub. High prices on RE, are at best, observations of severe waves in such bathtub. With RE vendors obviously getting very wealthy, and mostly re-investing their proceeds into bank deposits and similar proxies which are re-cycled back into funding buyers.

#57 nonplused on 12.16.14 at 9:15 pm

I like my house and I am keeping it at least until my son is done with the school across the road. But we bought within Garth’s “90” rule so it’s all ok I think, unless that rule has been revised. Ya, we probably over paid. But if you look at the housing index we sold the old one pretty close to the top and bought this one not much off the bottom so far. Probably well above the eventual bottom but I am getting increasingly comfortable that the long term trend is catching up, which is why Garth won’t forecast a crash. Still some bubbliness in there though. And of course it could overshoot on the way down. But if it goes down 50% and I have any money that hasn’t been “bailed in” I’ll be a buyer. Probably REITS.

Oil (yes I consider myself an expert, or at least I’ve had lots of contact with experts) can stay down for a year or 2, and maybe they are right when they say 5 years before it sees $100 again (although I doubt it). But it can’t stay at $55 forever without a global economic collapse. The marginal cost is higher than that, so either prices slowly go up or economic activity goes down. The battlefield is in Europe.

Gold, well, it’s a barbarous relic and nobody owns it anymore so who cares? But it’s interesting how they can spread speculation that Russia will have to sell and then the price collapses. Why would Russia need to sell? They don’t have much debt. What they are selling is US treasuries. And so is China. I think I’ll still hold about 20% in gold for now. High by Garth’s calculation, but I’m not all in.

I lost a lot of theoretical money when gold went from $1900 down to current levels. But it wasn’t money I earned since I bought at $800. Still I should have rebalanced at 1900 as per Garth’s advice, I’d be ahead. I am still ahead, but not as far as I would have been implementing that strategy. Gold can be bubbly too.

#58 Mark on 12.16.14 at 9:17 pm

“You know, this housing bubble and debt bubble could easily continue for another 10 to 20 years. “

The housing bubble is already deflating, so why would it just magically start up again?

“You know, this housing downturn and impending debt implosion could easily last 10 to 20 years”.

#59 dave on 12.16.14 at 9:18 pm

I think taking credit for being correct about predicting a Canadian real estate correction is pretty lame since you’ve been wrong for the past 5+ years about RE prices.

Just my 2 cents…I enjoy your blog.

Did you start getting each years ago? Hope so. — Garth

#60 Dean on 12.16.14 at 9:22 pm

Thank you Garth for the six million tedious words!
You can not wake a person who is pretending to be asleep

#61 Mark on 12.16.14 at 9:23 pm

“So if my kid wants to go to university in Quebec and I help him buy a place… what is the difference? He is still living there, etc. He still needed a place and either would have bought/rented. Both add to demand. “

So if demand for Canadian RE, particularly Vancouver/Toronto RE, was ravenous, this would be reflected in rents. Rents and prices would continue to track each other.

But what we have in those markets is a very clear pattern of multiple expansion. RE multiples are mostly a function of the availability and use of credit.

We know that, in the long term, credit is cyclical, but demand is far less so. Evidence is pretty much everywhere that Canadians are tapped out on credit, so it would appear the most prudent thing to do is to stand back and let the debt bubble collapse on itself. So much additional supply has been stimulated its insane.

Rents certainly can rise in Canada in the future, but with the lack of meaningful land constraints in any major Canadian city, including Vancouver, the capacity for such is very limited.

#62 TEMPORARY® Foreign Prime Minister on 12.16.14 at 9:24 pm

“……and household debt is the biggest single threat to the economy………”
=========================

Actually, I’m beginning to think that our own banking system is the biggest threat to the economy. Despite record Canadian personal debt levels, it’s clear our banks are so addicted to their own record bank profits, they’ll now do anything now short of blowing their financial brains out (can you say ‘too big to fail, too big to jail?).

Just received my own personally addressed form letter from my bank, wishing to raise my Visa Card limit from $12,000 to $17,000 (apparently they’re disappointed I don’t yet belong to the $20,000 debt/Canadian person club yet.) Not sure why, because I rarely carry a monthly statement of more than $2,000 and pay it off completely each month.

“Experience the Freedom”,
“….Treat yourself to a special purchase”,
“……….Take that trip you’ve always wanted”,

…says my form letter.

More moronic behaviour from a maroon-coloured bank.

#63 Inglorious Investor on 12.16.14 at 9:29 pm

#54 Mike T. on 12.16.14 at 9:07 pm

“This was printed in the Kelowna Daily Courier and it bears repeating ‘I know people so poor all they have is money’.”

Without knowing the context in which that statement was made, I will say that quote is actually not as ludicrous as it may sound at first.

While it’s prudent to have some cash reserves for emergencies, and highly liquid assets that can be turned into cash in order to buy undervalued assets, those who understand money know that your savings should be in the form of assets, not currency. Then, what you want is income.

#64 bdy sktrn on 12.16.14 at 9:29 pm

In 1942, the associate editor of Better Homes and Gardens predicted that the housewife of the future would know how to repair radios, irons, lamps, washing machines and cars. (yes its oil change time…)
————————–
maybe he foresaw stay at home dads – that stuff is childsplay – add in boats(re-powering), heavy equipment, computers,cellphones,motorbikes,hw tanks, new roofs and renos; it’s the least we can do

#65 pete on 12.16.14 at 9:35 pm

The Russians played a masterful move by raising their interest rates. They knew this would lower the value of the Ruble. Now, they can INCREASE oil output (which is priced in US dollars) and receive MORE Rubles per barrel, off-setting any losses and thus being able to continue to crush the US oil competition. It’ll be tough on the average Russian when he needs to buy foreign-made products, but that is not the main concern of Moscow right now.

#66 Nemesis on 12.16.14 at 9:35 pm

#OldiesButGoodies… #WetCoastSurveyMischief…

http://youtu.be/lKevSXL_104

#67 Reluctant Home Owner on 12.16.14 at 9:35 pm

Is there a financial way to short the housing market in Canada? (other than selling my house)

#68 Inglorious Investor on 12.16.14 at 9:36 pm

#41 NoName on 12.16.14 at 8:48 pm

“In 1942, the associate editor of Better Homes and Gardens predicted that the housewife of the future would know how to repair radios, irons, lamps, washing machines and cars.”

I guess she never foresaw “China.”

#69 Inglorious Investor on 12.16.14 at 9:41 pm

# 36 AB Boxster on 12.16.14 at 8:35 pm

“Does this prove anything? No, it is a personal perspective. Does this comment make Mr. Lamb racist? Uh, No.”

I’ve heard the same “personal perspective” on ‘foreign money’ in the RE markets from many realtors in Toronto. And they were not all trying to sell me a property; just casual conversations.

#70 Cato the Elder on 12.16.14 at 9:43 pm

The international banking squid is punishing Russia for demonstrating too much independence.

You can not vary outside of prescribe norms. Your country MUST be massively indebted – forever. You MUST sell your oil for US dollars.

These people are lunatics. They’re psychopaths. They are putting the ENTIRE WORLD in jeopardy in order to preserve their privileged position. They are risking NUCLEAR WAR in order to make a few dollars. What is wrong with these people!

And most of us are allowing them to do it. We think somehow we are justified being on Russia’s borders.

#71 CPG on 12.16.14 at 9:46 pm

3 day rolling price chart of light crude oil (NYMEX)

http://futures.tradingcharts.com/intraday/CL_F15

#72 Smoking Man on 12.16.14 at 9:46 pm

#55 Waterloo Resident on 12.16.14 at 9:08 pm
You know, this housing bubble and debt bubble could easily continue for another 10 to 20 years. Like they say:

“Never underestimate the power of stupid people in large numbers.”
………

Boom!!!! Goods to know some people understand…

Perfect post…

#73 David McDonald on 12.16.14 at 9:47 pm

Yes, Canada and Russia are in the same boat having invested so heavily in oil production. No doubt both have suffered versions of the Dutch disease where oil revenues drive up the currency and make many businesses unprofitable. Both are largely responsible for their own predicament.

The similarity ends there. Canada plays by the international rules but Vladimir Putin’s Russia doesn’t. This plus sanctions accounts for the flight of capital and the collapse of the ruble. I think there is a real danger of a new provocation by Russia if Putin thinks he has nothing to lose.

#74 Paul on 12.16.14 at 9:49 pm

Losing 25% of your portfolio in a year of positive markets means you have a fool for an advisor. Might that be you? — Garth
————————————————————-
You do have a way with words ,Ouch

#75 M on 12.16.14 at 9:50 pm

US… the mother of all QEs is coming. Rates WILL go up indeed but only because market will force it up, then we’ll see a paradox: rates going up AND QE going up .

Canadian RE ? Black smoking hole in the ground. Deepest holes: Vancouver, Calgary, Toronto (obviously where the biggest excesses are).

Housing down 60% over the next many years.

..and yes.. what’s happening to Russia now is oil..BUT ALSO real estate.

For mortals with normal money Moscow is THE THIRD MOST EXPENSIVE PLACE TO LIVE
http://www.pfhub.com/top-10-most-expensive-cities-in-the-world/

..malenkaia devushka and roll on the benz everywhere.

..so what’s happening in Russia is GOOD for the real economy.

#76 x-moose on 12.16.14 at 9:50 pm

“Look at Russia to see just how quick a modern, advanced economy can circle the drain.”

There is an old Russian joke that goes like this:
A man tells his doctor – “Doctor, I am very concerned with the state of the Russian economy”. “My dear chap”, answers the Doctor, “there is no such thing as the Russian economy. It is a fiction, a delusion. You must let go that bottle”.

#77 Inglorious Investor on 12.16.14 at 9:55 pm

#12 nufpid on 12.16.14 at 7:41 pm

“Losing 25% of your portfolio in a year of positive markets means you have a fool for an advisor. Might that be you? — Garth”

Garth is absolutely correct, nufpid. While market breadth may be low and performance fragmented (see the Venture!!), there should be no way a professionally managed portfolio would shed 25% under the circumstances. Get some help from a pro.

#78 marquis de sale on 12.16.14 at 9:57 pm

Is Dean Del Porkchop’s face gonna be on the new Canadian $1050 dollar bill?

#79 bdy sktrn on 12.16.14 at 9:58 pm

#52 Ferguson State Prosecutor on 12.16.14 at 9:05 pm
post #36 AB Boxster

I like the cut of your jib, son!
————————-
hilarious!

i may disagree with your point (it’s the money not the people) but that was damn funny.

#80 Wellmart Goodfrey on 12.16.14 at 10:02 pm

Garth, For someone who wants to invest in gold, would you say that there is enough gold in the TSX that it will satisfy a reasonable allocation of a balanced portfolio? TSX, S&P, Rest of World and some Fixed Income Assets

Also, how long can Russia survive this volatility?

#81 Sheane Wallace on 12.16.14 at 10:04 pm

Losing 25% of your portfolio in a year of positive markets means you have a fool for an advisor. Might that be you? — Garth
……………………………………….
What is interesting is that the real growing economies of BRICS had their stock markets decline while we in the indebted west with very little if no growth at all are seeing massive appreciation in stocks.

Something does not add up unless our currencies nosedive behind the scene.
..
P.S. do not sell your commodities, It might be a good time to buy ERUS or EWZ.

BTW Europe etfs declined this year and I have absolutely no intention of selling them, on the contrary.

#82 Jan on 12.16.14 at 10:05 pm

5.8 % is not nothing you people.
Thats like 6 out of every 100…are you people nuts..that is a lot.

#83 sylvia on 12.16.14 at 10:12 pm

Good article today.
I have no problem with Russians. Great people, fantastic culture that gave us some literary giants and their scientific accomplishments do give Americans run for their money from time to time. Russia is never to be underestimated. But I think you might be one of three people around the world that would refer to the country as “a modern, advanced economy”.

#84 Rexx Rock on 12.16.14 at 10:13 pm

Time will tell?The U.S.is getting better,unemployment under 6%,consumer confidence up,stock market at all time highs and housing construction is up.If they don’t raise interest rates in 2015 everyone will know its one big lie.Very interesting times were in because the U.S may come out and say were going to follow what Japan has done for the last 20 years.

#85 bdy sktrn on 12.16.14 at 10:14 pm

#65 pete on 12.16.14 at 9:35 pm
The Russians played a masterful move by raising their interest rates. They knew this would lower the value of the Ruble.
——————-
ummm, i think you got the chicken/egg order switched.

now i’m hungry.

————–
and inginv – i think it only means we need more than just money (also helps poor not feel so bad) think ebenizer s.

#86 Inglorious Investor on 12.16.14 at 10:15 pm

#65 pete on 12.16.14 at 9:35 pm

“The Russians played a masterful move by raising their interest rates. They knew this would lower the value of the Ruble.”

In all sincerity, would you care to explain that? Everything I’ve read says higher interest rates tend to raise the value of a currency as the higher relative rates attract capital. This would be particularly true of a currency that is not widely held in reserve. Given Russia’s dependence on oil exports, you’d think that collapsing oil prices is the reason for the rubles swoon, no?

#87 Ford Prefect on 12.16.14 at 10:16 pm

“The year to come, with the world feeding on cheap energy, will bring more dichotomy. A big tailwind for the US, a boost for deflationary Europe, recessionary Japan and stumbling China, but a whack on the head for the producers – like Canada and Russia.”

——————————————————

I would not count on cheap energy and presumably cheaper costs of other inputs to give a tailwind to any economy. If the consumption of oil, which is integral to the entire world economy, makes an unprecedented 12 year decline to a level last seen in 2003 then this can only mean that worldwide demand for almost all goods and services has plunged. Unless there is good reason to believe that demand will increase in the relatively near future reduced input costs will not lead to an increase in production. Why make something if no one is buying?

#88 mel on 12.16.14 at 10:16 pm

Please, stop talking about higher interest rates for U.S.
Lower house prices will be the result of too much debt, and high unemployment in Canada.

U.S. shale oil economy has created most of the middle class jobs since 2009. Other jobs have lost about 500,000 jobs. When big layoffs become the norm in the oil industry, there will be no job growth similar to Europe.

Fear low oil prices. This is what is coming for Dow index next year. Quick, and brutal.

My advice, keep cash and wait for great opportunities in the coming years. Dow will hit 6000 in the next couple of years. Oil, will hit $30/barrel.

If you are truly a long term investor, you will buy low ALWAYS. Stop listening to Garth to buy now. Couple of years waiting will pay big in the future. It will minimize your RISK/REWARD ratio.

#89 daivey on 12.16.14 at 10:16 pm

i knew you were going to say something meaningless about Russia. Russia a first world economy? LOL, ok go live there then. Russia’s a joke of an economy, always has been always will be. And the rouble is falling because of economic sanctions placed by US/NATO.

#90 Gary on 12.16.14 at 10:17 pm

You don’t believe the 2% nonsense do you? There are agents in TO who only sell to overseas buyers who don’t even set foot in Canada. It’s obvious foreign money is driving this market.

#91 DJG on 12.16.14 at 10:18 pm

Russia is a “modern, advanced economy”? What? If by modern and advanced you mean an utterly corrupt state, which favoured oligarchs / criminals have bled dry for years, then I suppose that’s reasonable.

#92 cynically on 12.16.14 at 10:19 pm

It’s not locals who have been purchasing 3 to 7 million dollar houses on the West Side of Vancouver and in West Vancouver, especially the British Properties. It is foreign money, especially so-called HAM. Those same houses would not be selling at those inflated figures were it not for outside money coming into the country because the vast majority of locals don’t have huge bank balances. Certainly some do but they are and have been in their own expensive homes for maybe years and are not likely to buy a new one, rase it and build a monster on the lot. That is what is happening in those pre-mentioned areas of the city. You have to live here to see it. There are other foreign buyers who are buying blocs of condos for rental income. Nothing wrong with either group doing what they are doing if the federal government is allowing them entrance into the country legally but if locals are upset and angry then the onus should be put upon the government. There is an upside to the entire situation that seems to be completely lost and that is the spending by these new buyers, if they become permanent residents, thus contributing to the local economy but if they buy and then go home, that is wrong and Ottawa should get the blame.

#93 omg the original on 12.16.14 at 10:19 pm

I write six million tedious words on this blog warning housing is overvalued and Canadians are horny debt snoflers. Nobody cares. Then the Bank of Canada, no less, suddenly agrees with me.
————————————–

Somebody, I forget who, said that a major new idea
1) is first met with ridicule,
2) is then grudgingly accepted as its validity becomes evident,
3) and is eventually self aggrandizingly co-opted by those that originally ridiculed it. They are the ones that usually gain the fame and money rather than the original proponent.

#94 Bob Copeland on 12.16.14 at 10:20 pm

Has there ever been a generation that didn’t think they had to work 10x harder to overcome the toughest times? Ever been one that doesn’t think the younger generation is nothing but lazy and thinks they deserve everything handed to them?

#95 Smoking Man on 12.16.14 at 10:22 pm

The similarity ends there. Canada plays by the international rules but Vladimir Putin’s Russia doesn’t. This plus sanctions accounts for the flight of capital and the collapse of the ruble. I think there is a real danger of a new provocation by Russia if Putin thinks he has nothing to lose.
…….

That’s the most ridiculous thing I’ve ever heard… Canada plays by the rules.. Kiev shoot down, murdered, MH17.

Our government knows it, MSM knows it. Most of us who have viewed the pics of the cockpit panels of the wreckage know it, those perfectly round one inch holes or 30mm.. Say it all.

False Flag ops have been around since the days we came out of the caves. We self police each other, call each other names. Especially when we call out the teacher, the preacher, the man.

The ones who programed us… Laughing all the way….

#96 Grantmi on 12.16.14 at 10:24 pm

In Garth we trust!!

http://bit.ly/1sCjix5

#97 Obvious to who? on 12.16.14 at 10:25 pm

This may be obvious to us, but what do we do about the oblivious?

#98 omg the original on 12.16.14 at 10:27 pm

#44 Shawn
Due to vast popular support (from both of my followers / fans) I may occasionally post something. Only on days when I will not be working. Like today Wednesday.
——————-

You wrote that whole thing with such a straight face – good one.

#99 Waterloo Resident on 12.16.14 at 10:27 pm

Oh my, the mysteries of life:

Why do people buy houses that they cannot afford?
Why do dogs chase cars that they cannot drive?

Same reason = stupid internal instincts.

Now here’s something to expand your mind:
Lets talk about Quantum Mechanics and how thing sometime act in ways that cannot be explained in our 3-D universe.

You mentioned something about how “The toll could be far worse in Calgary, Fort Mac, Edmonton and the bigger cities in the flat provinces next door.”

That got me thinking about how that area of Canada is often referred to as the ‘FLATLANDS’, and the people who live there are referred to as the ‘FLAT LANDERS’.

And that got me thinking about Quantum Mechanics and how we have a hard time understanding how certain things work here in the 3-D universe. For example, just try to predict the position of an electron orbiting around a nucleus; it seems to jump randomly from orbit to orbit without any steps in between, something that is impossible in a normal 3-D universe.

Well, just imagine a 2-D universe (Flatland) and everyone who exists in that universe only sees things in 2 Dimensions. Now imagine that 2-D universe is the surface of your dining room table. When you place a glass of water on that table the flatlanders see a circle suddenly appearing in their universe. When you lift up the glass, move it over to another part of the table, then place it down, in the 2-D universe the glass suddenly disappears and then re-appears in another part of their universe, something that does not make sense to them.

Well the exact same thing is happening to electrons orbiting the nucleus in our 3-D universe, they are moved from place-to-place in other dimensions that we cannot fathom and that is basically explains the mysteries behind quantum mechanics that no one can seem to figure out.

Now if it is so easy to figure out quantum mechanics, why the heck is it so hard for others to figure out that home prices in Canada are so ridiculously over-priced?

Oh yeah, I forgot; = DOGS CHASING CARS.

#100 Inglorious Investor on 12.16.14 at 10:29 pm

# 57 nonplused on 12.16.14 at 9:15 pm

All assets have their ups and downs. But gold is not a barbarous relic. It’s money. No, it’s not the people’s money. We get the crap pretend money euphemistically referred to as ‘currency’. But gold is the ultimate form of final payment at the highest levels of international finance, and it’s the best store of value we have. I’ve said it before and I’ll say it again: as long as the world’s money masters (the central bankers) hold gold, so should we.

Gold is not money. Currency is money. And rocks will never again back paper. — Garth

#101 quebec economist on 12.16.14 at 10:30 pm

Québec city house crash, hope so, people here are house horny and it makes me sick! Hopefully with tightwad Couillard cutting gov. and a little pressure from the BofC we can get a little ajustement.

That way I can say ‘told you so!” to all my mortgage paying friends…ah they love me!

#102 Waiting on 12.16.14 at 10:31 pm

#42 “I understand – people with more money than you must have stolen it”
No garth, you entirely missed my point. I’ve followed you for a number of years and appreciate the free advice and humour you dole out but you are very quick to condemn any mention of ill gotten gains coming to Canada as jealousy or bigotry.

#103 Ole Doberman on 12.16.14 at 10:37 pm

Gartho is on his way to becoming a national hero after 8 years of posts.

Next they’ll resurrect a bronze statue of him on parliament hill wearing a cape and tights showing off his iron man 6-pack and firm buttocks.

#104 AB Boxster on 12.16.14 at 10:39 pm

#52 FSP
————–
Thanks for your comments bubba.
They truly elevated the level of debate

#105 Heh on 12.16.14 at 10:42 pm

http://youtu.be/knHE31FtJww

#106 Smoking Man on 12.16.14 at 10:42 pm

#70 Cato the Elder on 12.16.14 at 9:43 pm

Most people have no idea what danger were in messing with Russia like this. Putin has followed art of war to a tee.

I’m glad I don’t live in NYC, London, Netherlands, Isreal or LA. 5 NUKES and you’ve killed the brain…

Bet fifty bucks I Russia’s back room boys are thinking this way..

I figgure it’s the inexperienced offspring of the elders who set up this power, force if you will, who are going to totally screw it up for all of us.

The second Putin renounced his countries first strike doctrine, that’s when a Smoking Man goes, oh shit.

#107 Sheik Yerbouti on 12.16.14 at 10:51 pm

Canada needs to militarize the economy as this is where the quickest near term growth is…..the next 50 years will see a lot of jousting and small skirmishes in the Asia Pacific with the US Pacific pivot, and the Japanese looking to militarize and sell, subs, aircraft and other kit to Aussies, India and others, the time is ripe. This does not mean to increase the actual Canadian armed forces, but to become a major parts supplier to the allies (US, Japan, etc.)Maybe one of the auto-parts manufacturers in Ontario could get down on one knee and beg one of the big Japanese military companies to help them transform their factory to one making periscopes(or whatever parts are needed)….then get Bombardier to jump in with Mitsubishi and jump start the aircraft business….who knows maybe the next flying Zero could come from Canada, and I do not mean an overlevered RE investor!

#108 waiting on the westcoast on 12.16.14 at 10:54 pm

#65 pete “Russia raising rates to devalue the ruble”

I guess all the selling of US$ reserves to support the ruble was for show… Wow – they are really sneaky.. /s

#109 souvereigninternational on 12.16.14 at 11:01 pm

“In those places, houses will stop going up, flatline, and then begin a descent later in 2015”. I called above “when” about two years back here on this blog. I also stated decline % for GTA. Glad you Garth finally timed the decline. It is fallowing similar signs to US decline, when MSM started to warn about it when it was imminent and they had to get their “I told you So” articles to safe face.

@ #44 Shawn on 12.16.14 at 8:51 pm

Mark is filling in well even thought unguided by buffet.Here are some doomer links for you reflect on:

http://www.zerohedge.com/news/2014-10-06/will-gold-crash-dow-or-soar

@inglorious investor

http://usawatchdog.com/war-cycle-europe-absolute-disaster-zone-martin-armstrong/

new opinion from ben hunt:

http://www.salientpartners.com/epsilontheory/

#110 Nomad on 12.16.14 at 11:03 pm

Investors that see things in black or white, selling a sector or market completely for another, rarely do well.

As such I wouldn’t recommend selling 100% of your canadian bank stocks, but seriously think of selling 25% of them and buying US big banks and regionals. If banks loans start to materialize over here, it’ll have no effect on US banks. It’s hard to see our banks outperforming theirs, starting in 2015.

Why take a risk, when US banks are just as cheap and about to raise dividends.

$ZUB costs 0.35% per year. I don’t work for BMO ;)

#111 Mike T. on 12.16.14 at 11:11 pm

‘#63 Inglorious Investor’

I am not sure what you are talking about. The quote means having only money makes you bankrupt….so yeah, merry Christmas?

Go Leafs.

Go Black Knights?!

#112 Inglorious Investor on 12.16.14 at 11:14 pm

DELETED

#113 Raj on 12.16.14 at 11:15 pm

In Canada if we buy US stocks or ETF , I heard we have to do some paperwork for filling US taxes etc. Is there some easy way around . Garth Sir, please advise

#114 Snowboid on 12.16.14 at 11:17 pm

Our favourite Arnold impersonator and his son are once again at it, explaining the Kelowna real estate situation and after ‘phoning’ Ft MacMurray, what’s really happening there.

Oh, but they do have a good deal for that HAM (Hot Albertan Money)! Hint, it’s a downtown condo, whoopee!

Bonus, comment on their video and you could win a bottle of wine – which they will gladly share with you to pump them up while they tape their next RE spiel!

https://www.youtube.com/watch?v=zGtjxJK2cKA

#115 Fortune500 on 12.16.14 at 11:21 pm

We have no one to blame but ourselves.

#116 mark on 12.16.14 at 11:22 pm

Right around the time Russia bites it, oil looks to have bottomed. I guess we’ll stay here a while.

#117 james on 12.16.14 at 11:25 pm

The talking heads on economics on CBC news with Petey just gave their forecasts for oil. Their predictions are for between $20 to about $48 per barrel, and 3/4 of them think it will be down there for a long while, leading to takeovers in the sector. Preet Bannarje said that the Saudis can take oil out of the ground at a marginal price of only $6 a barrel, which is lower than I thought.

He’s his usual misinformed self. The Saudi break-even point is almost exactly the current price, once social costs are factored in. — Garth

#118 kommykim on 12.16.14 at 11:30 pm

RE: #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.

What age do you think I am?
Besides, I know plenty of people my age and older who have an iphone. Age has nothing to do with it.

#119 souvereigninternational on 12.16.14 at 11:32 pm

“Gold is not money. Currency is money. And rocks will never again back paper. — Garth”

And so they should not. Backing paper with gold or anything for that matter is useless. Money is whatever we want it to be, until we want it to be. Gold just functions best as money that is all. We should be free to use any money we want to be it PMs, bitcoin, fiat and let their value fluctuate. Off course bad money drives out good money and the winners would be established quickly.

#120 espressobob on 12.16.14 at 11:34 pm

#110 Nomad

Why not be overweight the S&P 500 and underweight the TSX? Less focus on the financials, more on diversification. Wait for opportunity, then pounce.

#121 Inglorious Investor on 12.16.14 at 11:39 pm

#109 souvereigninternational on 12.16.14 at 11:01 pm

Europe is indeed a disaster. So is Japan. China will have some serious growing pains. The US is bad too, but to a much lesser extent. The thing is, there is now a real demarcation between finance and the real economy. The two have become detached. I see that as a warning sign, not a good thing.

There are some who would like us to believe that everything is OK, if not great, because asset markets have risen so much. Like the Wizard who said, “Pay no attention to the man behind the curtain” they want you to look only at the markets and ignore all the real people who are falling into poverty. If you are not one of them, like me, that’s fine. But a society ignores its poor and desperate people at its own peril. Not to mention the immorality of pushing aside masses of human beings.

Make no mistake. With or without a severe recession/depression the bill has to be paid. Do we pay all at once with a massive depression, or a currency reset, or over time with a slow burn financial repression? That seems to be the plan. We’ve simply overspent our future wealth and the situation has gone critical. If you are paying attention you know this is true. The only thing that can save us is some new and massive revolution in technology and/or energy that can vastly improve productivity, drastically raise efficiencies and boost real incomes and tax revenues.

I just read that the US navy now has an actual laser weapon that can do the work of missiles at a fraction of the cost. This is one example of what I mean (though the ability to destroy things more cheaply may not be seen as very productive).

#122 Harden on 12.16.14 at 11:43 pm

2% – hilarious!
– are you sure they weren’t studying the actual occupancy rate of all these new condo towers in Vancouver?

#123 Leaving Cowtown on 12.16.14 at 11:44 pm

Garth one thing I notice with my friends and aquaintances who work in Alberta has not gotten much attention.

It seems almost everyone I know who works in the oil sector has not just leveraged themselves to the hilt in housing.

They also put almost all of any investment savings into oil and resource companies. Whether it is company shares/options/matching contribution plans or their RRSPs or TFSAs it is pretty normal for people here to be true believers and double down on the same industry they work in.

A few have been telling me how unhappy things are looking with the values of those shares and funds in the dumpster.

I think it is quite likely that people in Alberta are not only at risk for the most serious housing correction in Canada. They seem to be disproportionately invested in the oil sector as well and this puts the rest of their finances at greater risk compared to most Canadians who invest.

So just when they need money and investments to help them the most they may get a double-whammy.

These are my own observations, and I’d welcome any thoughts from others.

People who invest in their employers double their risk – employment risk and investment risk. Never a good idea, unless you’re CEO of a bank. — Garth

#124 k on 12.16.14 at 11:45 pm

Oil depreciating at such an extreme level so quickly is a shock to markets and the average person. It shows us how quickly fortunes for nations and individuals can change, ….it is and always has been an experiment. God bless us all and a merry Christmas to you all

#125 Predictions2015! on 12.16.14 at 11:50 pm

Dear Garth & fellow Greaterfools,

Here are my predictions on the CDN & US economies for 2015 as it pertains to oil, gold, and currency.

Oil drops and holds temporarily around ~$35-$40 but surges towards ~$80-$90 by the end of 2015

Gold initially dips below ~$1,200 but surges to ~$1,500 by the end of 2015

US dollar will temporarily increase to 1.20 to CDN$ but eventually drops to $1 to CDN$

US Federal Reserve delays increasing interest rates in 2015 and instead chooses some form of QE, using the collapse of oil prices as an escape goat excuse.

Bank of Canada will keep prime steady in 2015. The major retail banks will increase its interest rates accordingly to compensate for increased lending risk.

Cheers!

Do you understand that raising rates removes monetary stimulus and is the opposite of quantitative easing? — Garth

#126 NoName on 12.16.14 at 11:53 pm

#75 sylvia
some literary giants yes, while in my teens i did red only 4 out of many books written by russian authors, don’t know personally i didn’t like them, probably because i have to spend most of what would be equivalent of march break to read any 3 russian novelists of my choosing. i remember it like it was a yesterday. 14 days of non stop reading…
Dostoyevsky (The Idiot) and (Crime and Punishment)
Tolstoy (Anna Karenina)
Chekhov (The Lady with the Dog)
Scientific accomplishments very questionable, get a book(s) The Mitrokhin Archive sheds some light how with help of KGB they got to their scientific accomplishments. Sad part is that they didn’t invent ak47, but they took credit for.
Forget russians read germans and french. kafkas (Metamorfosys), (Trial) and Flauberts (Madame Bovary)and maybe add some jack London in a mix.

when teacher asked me what was most memorable part of Tolstoys (Anna Karenina), i quoted this:
One of Vronsky’s feet touched the ground, and his
horse stumbled. He had scarcely time to clear himself
when the horse fell on her side, panting painfully, and
making vain efforts with her delicate foam-covered neck
to rise again. But she lay on the ground, and strug-
gled like a wounded bird ; the awkward movement
that he had made in the saddle had broken her back.
But he did not learn this till afterwards. Now he
saw only one thing, that Makhotin was far ahead, and
that he was tottering there alone, standing on the
muddy immovable ground, and before him, heavily pant-
ing, lay Frou Frou, who stretched her head toward
him, and looked at him with her beautiful eyes. Still
not realizing what had happened, Vronsky pulled on the
reins. The poor animal struggled like a fish, splitting
the flaps of the saddle, and tried to get up on her fore
legs ; but, unable to move her hind quarters, she fell
back on the ground all of a tremble, Vronsky, his face
pale and distorted with passion, and with trembling
lower jaw, kicked her in the belly and again pulled at
the reins. But she did not move, but gazed at her
master with one of her speaking looks, and buried her
nose in the sand.
” Aaah ! what have I done .•’ ” cried Vronsky, taking
her head in his hands. ” Aaah ! what have I done .-* ”
And the lost race ! and his humiliating, unpardonable
blunder! and the poor ruined horse! “Aaah! what
have I done ? ”

and guess what she failed me…
———————————————————————————–

#70 Cato the Elder
“These people are lunatics. They’re psychopaths. They are putting the ENTIRE WORLD in jeopardy in order to preserve their privileged position. They are risking NUCLEAR WAR in order to make a few dollars.”
1st you should change a nick to Cato The NoName, and come to term that we (you, me and rest of the working stiff) are unimportant and irrelevant…
did you ever wonder why is so many dash cam in russia?
and good read for you
http://www.amazon.ca/Judo-History-Practice-Vladimir-Putin/dp/1556434456
and this
http://www.amazon.ca/Putins-Russia-Life-Failing-Democracy/dp/0805082506/ref=pd_sim_b_4?ie=UTF8&refRID=1VY46JEGPGK6AB66ZME1

#127 a question for Garth on 12.16.14 at 11:54 pm

Not in 604 eh?
And just who is supposed to be buying these million dollar teardowns here, the cash poor nvirgins ????
Clarify if you please.

#128 Spock on 12.16.14 at 11:55 pm

>>> And gold took a hit on the assumption the country will have to dump its reserves to survive, now that oil revenues have collapsed. <<<

Due to the collapse of the ruble, Russian companies are making more money (production costs in rubles, paid in USD).

New reason for gold going down. Tomorrow it wil be be because of Canada selling all the gold that they don't have.

#129 scared straight on 12.16.14 at 11:57 pm

Yup Hilarious……”Believe me…I’m from the government….I’m here to help you”. I also think they’re telling the truth on inflation, immigration and the national debt. More likely, the government(s) have decided that they don’t want to ‘scare the straights’ by allowing the facts to be released. Please Garth…go to a place like Richmond BC where you won’t see anything but PRC nationals.

Go to neighborhoods in Vancouver that are completely abandoned because the owners are 100 PRC and don’t reside in Canada. Entire blocks where shopkeepers have shut shop and left because the area has died….no one lives there to get their hair cut or buy the kid an ice cream.

Garth…like it or not…people like me have been on the front lines. I have been one of those whose dealt with the flood of PRC’s…picking them up at the airport to buy multiple houses in a day and dropping them off at the airport at the end .

Just because the government doesn’t want to tell the public the truth…doesn’t mean the truth doesn’t exist. These new stats are an exercise in ‘moral suasion’…..BS for a cause…..don’t want to upset the immigration applecart and create bad feelings right?

Now Garth…you’re no dummy. You know that China has complained loudly for years that their criminals have been laundering billions into Canada. Chinese papers have published this openly and extensively. Thousands of wanted criminals have looted ministries and burned down villages to loot the citizens.

Many tens of thousands are wanted by China….and China has demanded Canad send them back. That’s also public information from a government far larger than The Real Estate Board. Is China lieing and CREA telling the truth?

And meanwhile tens of millions of millennials are living in poverty

http://www.cnsnews.com/news/article/ali-meyer/1-5-millennials-live-poverty-census-bureau-says

Lets focus Garth…squeeze ’em shut and bite down.

#130 Smoking Man on 12.16.14 at 11:58 pm

When some joins the newvo rich club, it’s a stage, an evolution of sorts… Been there done that.. Went full circle, then lost my mind and found the freedom of insanity and fake poverty.

Case and point, had a heart to heart with sis in law. Makes about 5 million a year and growing.. Her excuse for not inviting us for Xmas last year.. Pathetic bull shit.

We accepted the apologies, the other sis lost her son.. My favorite nefeew by the way.

The reason was, life is short, and I dident want my kids to see the contempt we had for others. Mean while, they exclude the crazy sister who has beautiful kids that wanted to be included. No thought of there feelings.

I took a stand, a Jd induced F you all on Facebook for all the world to see.

I’M about to convert a newvo to Smoking Man doctrine. Life is short.. Your slaves that worship you are just idiots.. Your more lucky than smart, don’t let your slaves kissing your ass go to your head.
and think, your an intellectual.

Fk I was going somewhere with this post. Damn, dementia setting in

#131 Predictions2015! on 12.17.14 at 12:04 am

Do you understand that raising rates removes monetary stimulus and is the opposite of quantitative easing? — Garth

——————————————-

Hi Garth, thank you for the comment.

To clarify, I’m predicting that the US Federal Reserve will delay and not follow through with increasing the interest rate in 2015. Instead, the US Federal Reserve will choose to implement some form of QE by using the collapse of oil prices as an escape goat excuse for not increasing the interest rate.

So you mean as an excuse for not removing monetary stimulus the Fed will add stimulus. Perfectly clear. — Garth

#132 RayofLight on 12.17.14 at 12:04 am

My wife and I visited Russia in 2012. We found it to be a beautiful country. The buildings we saw were rich in history and the people we met were warm, knowledgeable and friendly. The people that will loose/have lost the most because of Mr. Putin’s adventures are the Russian people themselves. I don’t believe Mr. Putin will be coerced to leave by financial pressures. He is very old school. I believe he will become more dangerous the more he is cornered.

#133 Westsider on 12.17.14 at 12:20 am

Ridiculous!! I guess if you don’t include Coal Harbour, Marpole, Metrotown, Brentwood, UBC, Kerrisdale, and Richmond, it could be 4.8%. Check out the full report and it’s not quite what the headlines are saying.
http://www.theglobeandmail.com/report-on-business/economy/housing/cmhc-releases-long-awaited-data-on-foreign-condo-owners/article22101935/?cmpid=rss1

#134 Spectcle on 12.17.14 at 12:20 am

Rock-Paper-Scissors…..

Smokey, how come you never dive into the real Agenda, Agenda-21 ?

Tomorrows news from yesterday…and still none listen/think.

Could be your masterpiece!
And You could say….
tonight may well be the most important show i have ever done!
cumbey.blogspot.com/…/tonight-may-well-be-most-important-show.html

#135 Just Jack on 12.17.14 at 12:23 am

Where’s the proof of foreign market manipulation?

Unless you can get at the developer’s records you’re not going to find anything. That condominiums which should sell for $500,000 in Vancouver are sold to mainland Chinese as a cash deal at $700,000 to some straw buyer in Beijing to move cash out of the country.

That $700,000 inflates the market place as buyers have asymmetric information and as some appraisers will use that $700,000 as evidence for refinancing of other properties. Market prices become bloated to a level that is inconceivable to an outsider but appear reasonable to someone caught up in the deception.

You’re not going to find the evidence of how extensive the market has been manipulated until the market corrects. Only then will we know how large the corruption has been.

#136 Basil Fawlty on 12.17.14 at 12:28 am

Who overthrew the democratically elected government of the Ukraine? It was not Russia.

#137 Mukadi on 12.17.14 at 12:34 am

There is no problem with the Russian Ruble since they don’t spend USD or EUR in Russia. The oil price dropped from $107 to $55 per barrel and they ensured that their currency vs USD dropped by more than that decline rate so that they earn more rubles from cheap oil sell.

They should still be earning more rubles for their oil than before and I don’t see their budget been that affected!!

On the other hand foreigners should find it difficult to sell their products in Russia and Apple has just shut down its e-store in Russia..

#138 Piccaso on 12.17.14 at 12:40 am

#113 Raj
In Canada if we buy US stocks or ETF , I heard we have to do some paperwork for filling US taxes etc. Is there some easy way around . Garth Sir, please advise

……………………………………………………………………….

I have two U.S. accounts.

In my business I have Can. and U.S. accounts, they wanted 5 pages of info and 5 pages of forms for the U.S. account… I said screw you and don’t trade any U.S. securities in it.
For my personal, I also have Can and U.S. accounts and I just trade U.S. all the time and have never received any paper work to fill out.

#139 prairie person on 12.17.14 at 12:46 am

Went for a drive along the waterfront today. Our most prestigious area is Uplands. Shocker. Big mansions being torn down. Bigger mansions being built to replace them. I would love to know who the new owners are. In the meantime, the Oak Bay Beach Hotel was torn down and rebuilt much bigger, classier and it has gone bankrupt. Incredible contradictions. Evidence of huge amounts of money, yet classy businesses can’t survive.

#140 Piccaso on 12.17.14 at 12:48 am

#113 Raj

Then again, in my personal account I’d have to make a quarter million to break even so there not to worried about capital gains

#141 kommykim on 12.17.14 at 12:48 am

RE:Gold is not money. Currency is money. And rocks will never again back paper. — Garth

Paper beats rock every time. LOL!

#142 Gen Y on 12.17.14 at 1:33 am

Some help appreciated please.

My wife and I want to buy a house but are worried about a catastrophic drop in value. Can we set up a corporation and buy the house through it and rent it back to us? If things went south, we would stop renting and the corp could declare bankruptcy. Corps are allowed to do that. It shouldn’t be the fault of common families if corrupt bureacracy allowed a housing bubble.

#143 Gen Y on 12.17.14 at 1:37 am

@predictions2015

Bingo!

That info is not meant for the masses. Let’s scare them. Lol

#144 Devore on 12.17.14 at 1:40 am

He’s his usual misinformed self. The Saudi break-even point is almost exactly the current price, once social costs are factored in. — Garth

So before 2008 and to the beginning of time, everyone was extracting oil at a loss?

#145 Oracle on 12.17.14 at 1:45 am

#106 Smoking Man

Putin and his buddies are Gangsters. Gangsters are sociopaths and psychopaths. The west has something coming their way. I would avoid the markets. I don’t think Putin likes the economic attack on Russia.

India and China on his side and this economic game may be over.

#146 vb on 12.17.14 at 1:47 am

I do have a bigger portfolio ! But its manipulated by the big money….you just can’t win, a balanced portfolio means not much more safety and it certainly doesn’t guarantee gains …hows is your “balanced” portfolio doing this week ? lol

#147 everythingisterrible on 12.17.14 at 1:50 am

#38 Lumberjack arch
#46 Lumberjack arch

Thanks for pointing that out Lumberjack Arch.
So basically the report leaves out detached housing and strata owned condos. So basically everything in Vancouver. Awesome job CHMC,Thanks for the useless survey. keep up the good work.

#148 espressobob on 12.17.14 at 2:09 am

#113 Raj

I believe the form is the W8-BEN. It’s a pain in the ass.
Don’t ignore it.

http://www.blog.businessready.ca/what-is-a-w8-ben/

#149 Jr on 12.17.14 at 2:09 am

Garth why do you keep qualifying your predictions of market declines by excluding 604 and 416 from the worst of it? 604 has always declined as much or more than any other part of the country during RE “corrections”.

Being a long time resident I see no reason for history to not repeat itself. Maybe you are avoiding starting a stampede like the many vested economists the local MSM rely on for the don’t worry be happy commentary.

Frankly, I think we out here in Vancouver are the ultimate lemmings and our cliff is the highest in the land.

#150 eric on 12.17.14 at 2:15 am

You forget that a decent in 416, maybe 5%, will swiftly rebound due to high demand. Its a big city after all. Non event.

#151 Grasshopper 604 on 12.17.14 at 2:40 am

“tawny animal magnetism”

VERY nice, Garth…did everyone else miss it?

#152 Joe2.0 on 12.17.14 at 2:44 am

I call BS on the 2% foriegn money, it’s significantly more then that.
A very successful RE MAX friend of mine also would disagree.
It’s a crock, large sums of money are very creatively entering and being invested in our economy/housing market.
You believe the banks?

#153 Kev on 12.17.14 at 2:47 am

#67 Reluctant Home Owner

They say to short the market you should bet on REIT that are focused on rentals. However, if you look at every single one of these they took a catastrophic hit when the real estate market crashed back in 2008. So while they may make sense to buy into when things go to hell, it doesn’t seem like the place to park your money while you wait!

#154 a prairie dog on 12.17.14 at 2:49 am

What free money? What tax dollars? The only injustice here is your bigotry. — Garth

The free money they save paying reduced or eliminated fees. And we can trust the banks not to pass that lost revenue on to those of us who do pay those fees?

Tax dollars? Tell me with certainty that CMHC isn’t involved in any of these mortgages? Tell me that CMHC runs completely autonomous from the Federal government with no risk to Canadian taxpayers at all.

Bigotry? You brought race into it when you waved the B stick around. Newcomers and immigrants to Canada can be Caucasian too.

I happen to live in an extremely culturally diverse neighborhood, and it’s not because I can’t afford not to. It’s because I just don’t care.

Go wave that B stick at someone else.

#155 Freedom First on 12.17.14 at 2:57 am

Great post Garth. Interesting comments to go with it too.

Bottom line is, that with the recent events, news, and the price of oil etc., is that Canada and Canadians are finally starting to get worried about what is happening right now and what has a very good possibility of happening to the Canadian economy very soon, and it is not good. We have been warned by Garth, the IMF and every other World/Country debt rating agency about the danger to our economy pertaining to Canadians extremely high household debt levels and how any one of numerous unforeseen? events could trigger a serious financial $$$$$$hit $torm for Canada.

I like balance, diversity, cash, cash flow, income streams, liquidity, and no debt. Been doing it this way for decades. I am and will always be #1, and always always always, put my freedom first.

#156 whitehorn on 12.17.14 at 2:58 am

“His thesis: hey, if oil can lose half its value in six months, why can’t real estate?” – now that is a scary thought even if it partially comes to fruition. Being an Albertan Resident, come across a few oil downturns in my live span 85/86, 97/98, 2000/01, 2008/09 and 2015/?. I do know apart from the 08/09 time frame house prices took a good slide during those times and had the typical L-shaped recovery. Another thing of interesting note, as AB has experienced huge growth of people over the last 10 years. A lot of people will probably return/move to other provinces especially Ontario where the manufacturing industry should pick up. In AB, I think it needs to catch up with infrastructure etc. and well needed. This will definitely put some wind in the sails of real estate. Another interesting comment, I was doing a project in Drayton Valley (Major Oil Town in AB), it was extremely busy in the month of August. I was working with the company owner and he mentioned many of the oil companies had projects on the go in October but were on hold. He could not figure that out as being a service company , and we also mentioned how the traffic was considerably less than the summer. I guess looking back there were cracks at that time, despite OPEC or not. I remember that discussion vividly.

#157 Jan on 12.17.14 at 3:11 am

Global news reported 0.3% vacancy rate in downtown van with average rent being $1850 per month.
CMHC spokesperson says renters are saving money for their first condo/home.
There you have it folks.

#158 BC_Doc on 12.17.14 at 4:18 am

I came across this Old Testament guideline for asset allocation a few years ago over at the Bogleheads website and it stuck with me. I am anything but a bible thumper but this seemed like pretty solid, timeless advice:

“The oldest recorded asset allocation advice may be from biblical times. The Talmud, a record of rabbinic discussions pertaining to Jewish law, ethics, customs and history (circa 1200 B.C.–500 A.D.) recommends: “Let every man divide his money into three parts, and invest a third in land, a third in business, and let him keep a third in reserve.” Today we would call these three asset allocations (or baskets) real estate, common stocks and money funds.” (from http://www.aaii.com/journal/article/how-to-achieve-the-right-asset-allocation.touch)

This is posted simply as food for thought.

Thanks again for your columns Garth.

BC_Doc

#159 Steve French on 12.17.14 at 4:28 am

A really efficient totalitarian state would be one in which the all-powerful executive of political bosses and their army of managers control a population of slaves who do not have to be coerced, because they love their servitude.

#160 Tripp on 12.17.14 at 5:20 am

“Canadian real estate prices are insane because we’re a nation of idiots. Get over it. You did this.”

Garth, thanks for having the guts to say it!

When you finish with the RE, if I may, some interesting future topics would be healthcare, insurance, cable tv/internet, mobile comm etc.

#161 drydock on 12.17.14 at 5:41 am

Are Shawn and Mark the same person?

#162 observer on 12.17.14 at 5:41 am

50 Mark on 12.16.14 at 9:03 pm

I truly believe the banks whom were making a bundle selling mortgages is now in a state where it can’t sell like it used to.

Now they want to cheerlead for the other side, hoping housing collapses so they can buy all for pennies on the dollar. while still collection cmhc insurance

#163 eye on USA on 12.17.14 at 6:18 am

Hi Garth, the US just passed a 1.1 trillion 1700 page spending bill.
No debate. This president is acting like a king, interest rates will not
increase under his kingship. The US banks are under stress with oil at $56.
(they loaned billions to the oil company’s) this do nothing president will
just wait it out till 2016.

#164 liquidincalgary on 12.17.14 at 6:40 am

tawny animal magnetism…

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

was just about to say the same

#165 Chickenlittle on 12.17.14 at 7:33 am

From reading the comments it seems that we have a fresh batch of newcomers. Welcome. Grab a shot or two of JD and dive right in.

#166 Chickenlittle on 12.17.14 at 7:37 am

I’m guessing we will see a new wave of Russian hockey players come to NA.

#167 Inglorious Investor on 12.17.14 at 8:01 am

DELETED

#168 nubbers on 12.17.14 at 8:06 am

I propose that HAM could have a silver lining (however much of it there is).

Any person of a non-local persuasion buying property either now or recently is clearly just as much a (greater) fool as any local, and is just as likely to get caught out by a price crash.

The key point is that come the correction, the non-local will have effectively pumped a significant amount of cash into the Canadian economy.

This assumes that HAM is not too leveraged with Canadian mortgages, otherwise I can imagine there would be quite a lot of jingle mail, despite recourse loans. Does anyone have figures for this?

#169 TEMPORARY® Foreign Prime Minister on 12.17.14 at 8:09 am

#44 Shawn on 12.16.14 at 8:51 pm
“……So, my hiatus will now be until that worthy-of-response post happens (and I am on a day off or weekend) or a year passes, whichever is first………”
=========================

If a bear farted in the woods……..

#170 TEMPLE on 12.17.14 at 8:41 am

#131 Predictions2015! on 12.17.14 at 12:04 am

as an escape goat

Really funny. Unintentionally so, but still hilarious. I’d love to have an escape goat. I’d hop on, and ride off into safety…

TEMPLE

#171 TEMPORARY® Foreign Prime Minister on 12.17.14 at 9:11 am

#161 drydock on 12.17.14 at 5:41 am
Are Shawn and Mark the same person?
=========================

Only Garth and his I.P.addressor know for sure.

#172 Emma Zaun - GreaterFool Unpaid Intern #007 on 12.17.14 at 9:11 am

“I write six million tedious words on this blog warning housing is overvalued and Canadians are horny debt snoflers. Nobody cares.”

Oh, Garth, you really are pathetic, and uninformed. (But still tawny, when you are not the dickhead boss from hell)

Leave the word counts to us interns, ok?

And when it comes to those numbers, you’re not even in the big leagues on your own blog!

To compare with your measly 6 million words:

Those two auto-fellatio specialists, Smoking Man and Cato the Elder, have written about 20 million words here in the same period you cite.

So really, are you trying hard, or hardly trying, Garth?

No wonder you’re an Oilers fan :(

#173 Obvious Truth on 12.17.14 at 9:36 am

The bad news for Alberta and canada is in the very early stages. Cuts will run deep over the next year in private and pubic sectors. Revenues will be much lower.

This is much worse than most people think as the economy was not good before the oil drop.

Vancouver and toronto do not escape. They are likely the most leveraged. There is no real income to support these loans. When they turn about a year from now the downturn accelerates.

Also factor in that most Canadians are way overexposed to TSX.

Most people are very stuck in a bad situation and they will soon know it. Promises will disappear. The behaviour of banks will be shown. Bank economists are becoming nauseating.

CPI down in us. I’m feeling no language change by the fed. Party on.

#174 Matt Gamon on 12.17.14 at 9:58 am

If the definition of a foreigner is a someone who owns property here but lives abroad, then maybe the 2% is correct, but this number does not reflect reality.
I think most foreign buyers are on the landed immigrant status, so they they don’t show up in that group, but actually they are the ones pushing the prices up.

That makes them Canadians. — Garth

#175 Capt. Obvious on 12.17.14 at 10:27 am

They also put almost all of any investment savings into oil and resource companies. Whether it is company shares/options/matching contribution plans or their RRSPs or TFSAs it is pretty normal for people here to be true believers and double down on the same industry they work in.

So apparently Nortel didn’t teach anyone anything.
There is actually an argument that your portfolio should tilt away from your employer’s industry, but putting that into practice can be more trouble than it’s worth.

#176 john on 12.17.14 at 10:29 am

Garth,
You are quick do dismiss CREA stats as manipulated and criticize the press for reporting without adequate scrutiny.
Well, you are doing the same by accepting a weak CMHS survey for your self serving interests. It makes you no different than CREA.

Show me better data. I will embrace it. — Garth

#177 iCare on 12.17.14 at 10:40 am

“I write six million tedious words on this blog warning housing is overvalued and Canadians are horny debt snoflers. Nobody cares.”

I care, Garth… I CARE!

#178 Franco on 12.17.14 at 10:45 am

Great post Garth and I totally agree with your educated opinion. Some people on this board think that when they see 30% overvalued somehow think that they will wake up one morning and walla houses are 30% cheaper. That is not what will happen, they may flat line for awhile and in some places like oil country they might drop in price, but a few years of low oil price would have to pass first before that happens. Unless our population drops very quickly, I cannot see how house prices in Canada will drop that dramatically all at once.

#179 Franco on 12.17.14 at 10:47 am

#175 – So apparently Nortel didn’t teach anyone anything.

Nortel no longer exists, but oil will rebound, it still is the fuel that powers our economy and is in no danger of being replaced anytime soon, that is not a good thing, but that too is reality.

#180 john on 12.17.14 at 10:51 am

I don’t have statistics, but my neighbor is building condos in Toronto waterfront and downtown. All of his real estate agents are Chinese speaking, I doubt the strategy is employed for only 2% of the buyers.

You may be shocked to learn this, but Canadian people ‘speak Chinese’, too. — Garth

#181 Simon Macdonald on 12.17.14 at 10:53 am

http://www.caseyresearch.com/cdd/the-oil-collapse-how-seasoned-traders-are-responding

For some countries, it’s unequivocally bearish, especially for adversaries like Venezuela, Iran, and Russia. But also for allies, like Canada, which is probably in the most precarious economic position of any country in the world.

… aren’t we an island of stability in unstable world?

#182 Kenchie on 12.17.14 at 11:11 am

Good comparison of what the thinking was for the oil sands in 2006 compared to what the situation is like now.

“Oil sands cost inflation coming back to bite us now”

http://www.macleans.ca/economy/economicanalysis/oil-sands-cost-inflation-coming-back-to-bite-us-now/

#183 -=jwk=- on 12.17.14 at 11:24 am

@176. Garth just because allwe have is BAD data doesn’t mean we should use it. We own several properties in the USA, and I manage them out of a mailbox in lewiston, NY. Per the CMHC those properties are NOT foreign owned because my mailbox is in the same country?

All we know from this data is that the foreign ownership levels is at least 2.4%. In reality it can only be higher than that!

#184 Doug in London on 12.17.14 at 11:38 am

@Waterloo Resident, post #55:
I doubt this housing and debt bubble will continue for another 10-20 years, but quite frankly I’m surprised it’s lasted this long. As you said, quite correctly, “Never underestimate the power of stupid people in large numbers.” Keep in mind that if it does continue for that long, it will have more distance to fall when it does end and will fall much harder. Right now, there are much better places to put your money instead of overpriced housing. Have you priced oil companies lately?

#185 Doug in London on 12.17.14 at 11:44 am

@Capt. Obvious, post #175:
If you work in the oil industry you already have exposure, in a sense, so it would have been foolish to also put a large portion of your portfolio into it. However, now that prices have dropped significantly (read: on sale) it’s probably a good idea to get some exposure to oil companies in your portfolio.

#186 Holy Crap Wheres The Tylenol on 12.17.14 at 11:45 am

#106 Smoking Man on 12.16.14 at 10:42 pm
#70 Cato the Elder on 12.16.14 at 9:43 pm
Most people have no idea what danger were in messing with Russia like this. Putin has followed art of war to a tee.
I’m glad I don’t live in NYC, London, Netherlands, Isreal or LA. 5 NUKES and you’ve killed the brain…
Bet fifty bucks I Russia’s back room boys are thinking this way..
I figgure it’s the inexperienced offspring of the elders who set up this power, force if you will, who are going to totally screw it up for all of us.
The second Putin renounced his countries first strike doctrine, that’s when a Smoking Man goes, oh shit
_____________________________________________

FYI Smoking Man. My late father was in the Armed forced stationed at North Bay in the 1950’s. Contrary to what all of the peace-nicks used to taut that Canada was a loving peaceful nation that no one would attack. We were number 1 and 2 respectively on the Russians nuke list. Toronto was a major communications center and one of the first targets for missiles coming from the north. My father knew military stuff that he took to his grave, but he did tell me that little tid bit. I always wondered why we had a bomb shelter in the back yard when I was a teen? It was a great place to take your girlfriend and sneak a smoke. Needless to day I got sick smoking but still liked the girl!

#187 Holy Crap Wheres The Tylenol on 12.17.14 at 11:49 am

#145 Oracle on 12.17.14 at 1:45 am

#106 Smoking Man

Putin and his buddies are Gangsters. Gangsters are sociopaths and psychopaths. The west has something coming their way. I would avoid the markets. I don’t think Putin likes the economic attack on Russia.

India and China on his side and this economic game may be over.
_____________________________________________

Putins days are numbered, he will just disappear one night. The ruble has tanked against the greenback much to the delight of the USA. It will further decline as they are getting desperate in mother Russia.

http://www.businessinsider.com/the-ruble-is-climbing-as-russia-throws-the-kitchen-sink-at-its-crumbling-currency-2014-12

#188 bill on 12.17.14 at 11:55 am

#136 Basil Fawlty on 12.17.14 at 12:28 am http://gwynnedyer.com/2014/ukraine-cock-up/

#189 Calgary Rip off on 12.17.14 at 11:56 am

“We lack the house horniness of other Calgarians. We paid 150-200k”

Earlier poster above today.

Has ZERO to do with “house horniness” in Calgary. Facts: Housing before 2006 was around $200K less than 2008 for the same place. There are zero rent controls. Those two realities is why many many people will acquire a mortgage, if they work in a sector where they will be for say 30 more years and dont plan on moving. Others closer to retirement and wanting freedom of movement may seek to rent. There is no clear answer of what to do. Is it correct for me to rent a place for more than I got my mortgage for? Maybe, if I bought the place for more than I will requalify for which is the case for many many people. Or, you could find a place for about the same price as a rental and then put $20-30K down and then assume the payments. But then there are the idiots(IQ of 0-52) that did the zero down and the ultra long term.

The poster that bought before the ripoff really set into motion in Calgary should consider themselves one of the privileged few who can instead focus on the essentials of where to take their vacations when they have time off work because knowing where in Arizona to visit is so important(sarcasm).

The sad reality is that real estate sucks. Some investment. Say the guy above sells their place they paid $150K for, now they either rent or buy another place at the new ripoff standard, so they really haven’t made any money. Keep this in mind when doing “renovations” to your owned property. Always remember the saying “Mortgage owners screwing other mortgage owners with nonsense advice”.

The best thing to do now is enjoy the lower cost of oil which means less cost to drive a petrol car. Soon a barrel of oil may be $20.

#190 Holy Crap Wheres The Tylenol on 12.17.14 at 12:00 pm

The year to come, with the world feeding on cheap energy, will bring more dichotomy. A big tailwind for the US, a boost for deflationary Europe, recessionary Japan and stumbling China, but a whack on the head for the producers – like Canada and Russia.
____________________________________________
What are we just sowers of wheat and hewers of wood! Oh yes and gushers of oil! I just made that last one up for shits and giggles Garth!

Jesus Canada start making some shit here, holy crap don’t go to Wal-Mart and buy cheap Chinese stuff. Buy some god dam quality made in Canada stuff. I started my company back in 1977 and I’m still here manufacturing, producing and selling to the world. If had many offers to relocate to the US and offshore some of our electronics to increase the profit margin. My profit margin is great and I don’t report to Wall Street big shots who do nothing all day except make back door deals to line their pockets for doing diddly squat!
Getting off track here…………..
Anyway Canada needs to move away from resources back to manufacturing!

#191 Smoking Man on 12.17.14 at 12:18 pm

#187 Holy Crap Wheres The Tylenol on 12.17.14 at 11:49 am

Putin’s days numbered ? .. Dude stop reading MSM.

USDRUB back down to 61-62

Its amazing, with all your world experience, pilot in Vietnam, your a vet.
You still cling to the official and sanitized narrative of reality…

I’m disappointed..

#192 JimH on 12.17.14 at 12:26 pm

Wow! Wow! and Wow!

After a couple of days away, I finally got a chance to catch up on the comments section of yet another of Garth’s informative and revealing posts. Thank you, Garth.

I’m a citizen of both the USA and Canada. I left Canada over two decades ago. At that time xenophobia was unacceptable, blatant racism was generally shocking, and mindless rants of vitriolic paranoia were symptomatic of neurological dysfunction.

Has Canada changed that much in a mere 20 years?

#193 saskatoon on 12.17.14 at 12:28 pm

#187 Holy Crap Wheres The Tylenol

americans shouldn’t be so smug:

could the u.s. RAISE interest rates to 17% like russia… and still be standing?

what does this tell you about which economy is ultimately (and truly) stronger?

#194 Ronaldo on 12.17.14 at 12:50 pm

You may be shocked to learn this, but Canadian people ‘speak Chinese’, too. — Garth

And Japanese, French, Portuguese, Italian, Greek, Hungarian, Dutch, Swedish, Norwegian, Danish, Galic, Spanish, Hungarian, Haida, Cree, etc etc. And go to Quebec and you will find Chinese that speak French too. Ain’t Canada great.

#195 Grantmi on 12.17.14 at 1:19 pm

Perfect! My cuban cigar collection just doubled in price..

#196 james on 12.17.14 at 1:41 pm

172, Emma Zaun

‘Smoking Man = auto-fellatio specialist’
————————————————-

LOL you pretty well summed up what he does here.

Now how do I get that image out of my head?

#197 JimH on 12.17.14 at 1:52 pm

#193 saskatoon
“… could the u.s. RAISE interest rates to 17% like russia… and still be standing?
what does this tell you about which economy is ultimately (and truly) stronger?”
===================================
You are either very, very young, have memory issues, or lack basic research skills. The US had rates through the roof in the early 1980’s! Yes, the US survived… and without decimating it’s reserves.

Are you aware that over 62% of the Russian economy is based on oil/gas? Are you aware that Russia now needs oil to be in the $90 – $100/bbl range to stay afloat?

Russia is in the mess it’s in because it is weak; weak politically, weak socially, and weak economically.

#198 chapter 9 on 12.17.14 at 1:52 pm

And why would anyone what to use nuclear weapons when with a click of a mouse you can take out energy grids,pipeline operations,energy equipment operations etc. Four months ago the “Dragonfly Virus” was detected targeting the U.S. and European energy sector. This group of hackers are technically adept and able to think strategically and are believed to be from eastern Europe.
This can be just as damaging as conventional weapons minus the blood shed and collateral damage.

#199 Mark on 12.17.14 at 2:27 pm

“Any person of a non-local persuasion buying property either now or recently is clearly just as much a (greater) fool as any local, and is just as likely to get caught out by a price crash.

The key point is that come the correction, the non-local will have effectively pumped a significant amount of cash into the Canadian economy.

Exactly!!!! Couldn’t have said it better myself. If foreigners are truly buying, they’re going to be the ones who suffer the most in a probable RE price correction. The foreigner-haters can take glee in such if they wish.

Unfortunately, as the CMHC survey states, involvement of foreign money in Canadian real estate is quite minimal.

#200 NoName on 12.17.14 at 2:43 pm

#198 chapter 9

yes, you are correct, lots of cyber bad stuff is originating in eastern europe, and far east and for the west there is no way to actively fight it, because many of former kommy countries are going thru renaissance of WILD EAST, leaders and countries failed their own people!

interesting read
Generation Putin

#201 Setting the Record Straight on 12.17.14 at 2:50 pm

#73 David McDonald on 12.16.14 at 9:47 pm
Yes, Canada and Russia are in the same boat having invested so heavily in oil production. No doubt both have suffered versions of the Dutch disease where oil revenues drive up the currency and make many businesses unprofitable. Both are largely responsible for their own predicament.

******
No Canada is not investing in oil. Companies and their shareholders are investing in producing oil.

#202 lumberjacks arch on 12.17.14 at 3:00 pm

i actually find it funny that after the boc comes out and says canadian housing is overvauled by as much as 30 percent, the CMHC rebuttles with a useless and tiny subsection survey saying RENTAL APARTMENT BUILDINGS are mostly canadian owned, trying to spin it off as condos as a whole, basically saying theres no need to worry the huge capital inflows are domestic and wont take flight at the earliest wiff of trouble, cmhc is pooched and they are trying to keep the lid on, dont buy this crap 20000 person survey, not data at all.

#203 Godth on 12.17.14 at 3:00 pm

#188 bill

What a load of crap.
https://www.youtube.com/watch?v=U2fYcHLouXY

Exiled Oligarchs sponsoring Colour revolutions, Georgia, the US/NATO encircling Russia…read The Grand Chessboard by Zbigniew Brzezinski sometime.

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

#204 Retired Boomer - WI on 12.17.14 at 3:00 pm

#193 Saskatoon

Yup, young pup no doubt, who has never seen 18% home mortgages like I have seen. 18% prime rate for a spell, too.

Yup, that’ll deflate your property values faster than a ravenous wife and her divorce lawyer! It has happened, and while I doubt it will return I wouldn’t give a dam, I have no debt.

We had US Treasuries paying 15% back in those by gone days called 1980.

1980 when music came on Vinyl, gas was about .90 a gallon and working wages were about what they are now except now it’s called “minimum wage.”

18% was credit card interest then, but anything more was “USURY” and the one who charged it was a loan shark.

Ha,ha look what’s in your wallet today. Bet it costs you more than 17%.

Youth, why is it always wasted on the young? there so, so uninformed about history.

#205 Obvious Truth on 12.17.14 at 3:02 pm

Can’t believe everyone on russia with what the media has put out. Russia is fine. They get dollars for oil. And that means a lot if rubles.

And most money comes from gas. That’s not going away.

They also make a lot of stuff that just got cheaper. The people are savers. Interest makes up for devaluation.

They have dollar financing issues. But they’ll get over it. Are oligarchs really going to move money out?

I’m no Putin sympathizer but seriously. The narrative couldn’t be more false. If anyone can destabilize and win it’s russia. But they are clearly moving their ties eastward. Don’t want to bother playing games with the west.

Fed release is in. Merry Christmas.

#206 AB Boxster on 12.17.14 at 3:18 pm

#190 Holy Crap Wheres The Tylenol
______________________________
It great to know that there are still some companies left that create wealth by production and sales.

I just finished “The New Empire of Debt: The Rise and Fall of an Epic Financial Bubble” the other day.

Excellent section in this book on why the US (and Canada) have lost much of their production to offshore.
Much of it due to idiotic central bank policies of keeping rates artificially low, encouraging home indebtedness for all, and generally taking the position that massive consumption, and debt financing is just as economically viable as actual saving, investment and real production of goods.

Greenspan was the architect of this mess, and the sheeple followed, happy to consume more and more, despite little actual growth in productivity or income.

This pseudo-wealth based upon consumption today, and never pay tomorrow, has huge consequences for the next generation, by hey, that’s their problem.

Yes, Canada and USA can just print our way out of the problem. But as the paper fiat is devalued there will be consequences.

The ultimate hedge, buy gold. (Sorry Garth)

#207 saskatoon on 12.17.14 at 3:19 pm

#197 JimH

you didn’t answer the question…

also, it is not 1980.

#208 Urinal Mint on 12.17.14 at 3:28 pm

Does the CMHC survey count all of the vacent houses owned by rich Chinese who do not live in them? The survey results could be inaccurate for places like Coal Harbour that are virtual ghost towns.

#209 Nomad on 12.17.14 at 3:32 pm

“Fed Officials Lower Fed Funds Rate Forecast to 1.125% End-2015” – Bloomberg

Also said they will be “patient”.

Low rates for longer. Bought REITS and small caps. Sold insurers on the pop.

#210 Victor V on 12.17.14 at 4:00 pm

Fed confident in U.S. growth outlook, opens door wider to rate hike

http://www.theglobeandmail.com/report-on-business/international-business/us-business/fed-confident-in-us-growth-outlook-opens-door-wider-to-rate-hike/article22120666/

#211 Holy Crap Wheres The Tylenol on 12.17.14 at 4:03 pm

#191 Smoking Man on 12.17.14 at 12:18 pm
#187 Holy Crap Wheres The Tylenol on 12.17.14 at 11:49 am
Putin’s days numbered ? .. Dude stop reading MSM.
USDRUB back down to 61-62
Its amazing, with all your world experience, pilot in Vietnam, your a vet.
You still cling to the official and sanitized narrative of reality…
I’m disappointed..
___________________________________________

Disappointment is merely an common mans narrative of his feelings. You embellish the idea that freeing your mind of the machine give you power. My mind is free but my experience tells me something else.
Only a small reprieve, with them trying to raise interest rates so much that who the hell knows if they will commit to coming though on them, and throwing massive cash reserves to purchase Rubles? Yep shes going to be a goner! Still screwed!!!!!!!

http://www.slate.com/blogs/moneybox/2014/12/17/russia_s_currency_crisis_calmed_down_today_don_t_expect_it_to_last.html

#212 Holy Crap Wheres The Tylenol on 12.17.14 at 4:04 pm

#197 JimH on 12.17.14 at 1:52 pm

Agreed! Russia is in big do do!

#213 Smoking Man on 12.17.14 at 4:06 pm

Yelled says rate hike in within next two meetings.

Translation… Look you buggers, hire some people expand you business, see were serious…. Self fulfilling hope is what it is.

Low oil, no HI paid jobs.. They are banking on consumers spending gas pump savings.

Might work.. I don’t think so.

#214 Holy Crap Wheres The Tylenol on 12.17.14 at 4:08 pm

#195 Grantmi on 12.17.14 at 1:19 pm

Perfect! My cuban cigar collection just doubled in price..
_____________________________________________

It will take some time but now if anything prices should come down, as the Cuban cigars have to compete with the domestic, Honduran and Dominican markets that are already well entrenched in the USA. Their quality is equal to the Cuban right now!
We all knew this day was coming! Cuba will never be the same and once Americans can travel there its a whole different ball game for Canadians and their cheap vacations.

#215 rosie "moving forward" in the knowledge that, "this won't end well" on 12.17.14 at 4:16 pm

#95 S&M

You are a funny guy. You talk about goin’ nuclear, as Dubya would say. Two, or more, can play that game.

https://www.youtube.com/watch?v=JlSQAZEp3PA

#216 Holy Crap Wheres The Tylenol on 12.17.14 at 4:22 pm

#193 saskatoon on 12.17.14 at 12:28 pm
#187 Holy Crap Wheres The Tylenol
americans shouldn’t be so smug:
could the u.s. RAISE interest rates to 17% like russia… and still be standing?
what does this tell you about which economy is ultimately (and truly) stronger?
____________________________________________

The American economy is much stronger than the Russian economy could ever be!
There is no way to maintain that interest rate.

#217 BREAKING NEWS on 12.17.14 at 4:52 pm

Fed’s Yellen says interest rates may rise to 1% (15 of the 17 Fed officials view) in a year.

Yawn. Canada won’t follow.

Japan circa 1990

#218 bill on 12.17.14 at 5:05 pm

#203 Godth on 12.17.14 at 3:00 pm
5 billion -looks to me like it was over 20 plus years and hardly aimed at ‘subverting’.I wonder how much money india and africa [as a whole] got from the US?
the US has generously donated money all over this planet.
and that you tube vid ‘blaming it on the jews’?
spare me please . now THAT was a load of crap.
please take your prejudice elsewhere.
there are lots of websites that will embrace your bizarre world view.

#219 tkid on 12.17.14 at 5:08 pm

#213, Smoking Man, I had my doubts about your tales of filthy lucre but this post has convinced me you have more money than sense. Or how else could I explain how you couldn’t comprehend what lower gas prices will do to those of us with tighter budgets?

First, there is the initial giddiness of “below a buck for Christmas!” *glee* I’ve spent the past month chanting this every time I went past a gas station (instead of the usual swearing).

Because I’m happier than normal I’m inclined to do a tad more window shopping. And the driving freezing rain drives me inside the store. “How much for that blouse/hat/coat? On sale, eh?”

Yeah, I don’t drive a gas guzzler, but my trips to the gas station have gone from costing me $55 to costing me $40. I fill up once a week, so that’s $60 a month. God only knows what the savings are for those driving SUVs.

Lower gas prices makes it easier to pay the other bills. It’s easier to justify the impulse purchase, or extra/any presents for Christmas. Or, oh my God we have money to go out with on Friday night.

Dig, yes?

#220 robert on 12.17.14 at 5:12 pm

Common sense is difficult to find in Real Estate and the Markets. Suncor in June of 2014 was trading at $35.70 with oil at $115.00. Today Suncor is trading at $35.70 with oil at $57.00. Use whatever calculation you wish but this makes no sense to me. I have absolutely no interest in the Energy Sector for those that may accuse me of being short SU. Lol.

#221 Holy Crap Wheres The Tylenol on 12.17.14 at 5:23 pm

#191 Smoking Man on 12.17.14 at 12:18 pm
#187 Holy Crap Wheres The Tylenol on 12.17.14 at 11:49 am
Putin’s days numbered ? .. Dude stop reading MSM.
USDRUB back down to 61-62
Its amazing, with all your world experience, pilot in Vietnam, your a vet.
You still cling to the official and sanitized narrative of reality…
I’m disappointed..
_____________________________________________

Just for Smoking Man.
There is and always was an official sanitized narrative of occurrences and incidents according to “The Man”. However my friend the people that experienced the situation or op always knew the truth. What you observed may have been the truth but once it is classified and re-branded you have to forget about it. We knew what was real is what was scripted back on the mainland. Believe me anyone in the service knows what is real! One thing I learned in the service is to keep your eyes wide open, your ears to the ground, sleep with your weapon loaded, go with your training and never, ever trust anyone except your brother. Oh and the last thing keep your mouth shut once “The Man” tells you to!

#222 Smoking Man on 12.17.14 at 5:30 pm

#217 BREAKING NEWS on 12.17.14 at 4:52 pm
Fed’s Yellen says interest rates may rise to 1% (15 of the 17 Fed officials view) in a year.

Yawn. Canada won’t follow.

……..

Japan circa 1990
………

She’s on crack, she boxes here self in saying two meetings, it’s going up..

The S&P, NASDAQ, and DOW don’t believe her, late day rally.. As proof.

Treasury yields dident budge.

Man did she box herself in…

#223 JimH on 12.17.14 at 5:37 pm

#207 saskatoon
in reply to #197 JimH
“you didn’t answer the question… also, it is not 1980.
===============================
Look; If the last 5-6 years haven’t demonstrated the strength and resiliency of the American economic behemoth I doubt there’s anything anyone could say to change your mind-set. But you need it in black and white, the color of your world, I suppose.

Yes, IMO the American economy could survive, has survived, and quite possibly will survive 18% interest rates.

The Russian economy has always been weak, no matter if ruled over by czars, dictators or oligarchs. Generally speaking, at present, most European economies look rather shaky. But compared to those troubled economies, Russia stands out like a turd in a glass of milk… and about as appealing.

#224 JimH on 12.17.14 at 5:42 pm

The text of the Granny Yellen’s (bless her supportive and loving heart) FOMC release can be found here:
http://www.federalreserve.gov/newsevents/press/monetary/20141217a.htm

#225 Smoking Man on 12.17.14 at 6:24 pm

#221 Holy Crap Wheres The Tylenol on 12.17.14 at 5:23 pm
#191 Smoking Man on 12.17.14 at 12:18 pm
#187 Holy Crap Wheres The Tylenol on 12.17.14 at 11:49 am
Putin’s days numbered ? .. Dude stop reading MSM.
USDRUB back down to 61-62
Its amazing, with all your world experience, pilot in Vietnam, your a vet.
You still cling to the official and sanitized narrative of reality…
I’m disappointed..
_____________________________________________

Just for Smoking Man.
There is and always was an official sanitized narrative of occurrences and incidents according to “The Man”. However my friend the people that experienced the situation or op always knew the truth. What you observed may have been the truth but once it is classified and re-branded you have to forget about it. We knew what was real is what was scripted back on the mainland. Believe me anyone in the service knows what is real! One thing I learned in the service is to keep your eyes wide open, your ears to the ground, sleep with your weapon loaded, go with your training and never, ever trust anyone except your brother. Oh and the last thing keep your mouth shut once “The Man” tells you to!
……….

Come on man, give it up on UFOs

#226 Renter on 12.17.14 at 6:44 pm

#59 dave

Hilarious!

#227 Godth on 12.17.14 at 6:46 pm

#218 bill
Yeah, you couldn’t have watched that, F the EU, Nuland press conference with your ears unplugged.
That Russian Godfathers documentary series was a BBC production, as in British Broadcasting Corp. There was nothing prejudiced about it, that’s until you invoked one.

Unfortunately there are far more people with your obtuse lack of understanding.

#228 Michael on 12.17.14 at 6:50 pm

2105 Prediction: Dovish Fed

#229 Happy Renting on 12.17.14 at 6:54 pm

#190 Holy Crap Wheres The Tylenol on 12.17.14 at 12:00 pm

What does your company make?

Purely anecdotal, but in trying to buy better quality stuff for our kiddo I’m noticing a lot of made in the USA or Europe tags. We anxious, new parents are ripe to be bled dry, there’s no Canadian manufacturers who want to give it a try?

#230 Jan on 12.17.14 at 11:08 pm

#199 Mark on 12.17.14 at 2:27 pm
“Any person of a non-local persuasion buying property either now or recently is clearly just as much a (greater) fool as any local, and is just as likely to get caught out by a price crash.

The key point is that come the correction, the non-local will have effectively pumped a significant amount of cash into the Canadian economy.

Exactly!!!! Couldn’t have said it better myself. If foreigners are truly buying, they’re going to be the ones who suffer the most in a probable RE price correction. The foreigner-haters can take glee in such if they wish.

Unfortunately, as the CMHC survey states, involvement of foreign money in Canadian real estate is quite minimal.

THERE WILL NEVER BE ANY CORRECTION U DUMB BELL JUST LIKE THERE WILL NEVER BE A cdn AT 1.50 us.
GO BACK TO YOUR BASEMENT ALREADY.

#231 -=jwk=- on 12.18.14 at 9:50 am

Fed’s Yellen says interest rates may rise to 1% (15 of the 17 Fed officials view) in a year.

Yawn. Canada won’t follow.

Japan circa 1990

You say it like it is some sort of decision the government can make. Japan is an isolated,closed market (every buy stocks on Nikkei? You can’t). Canada is open and if the borrowers don’t pay, they don’t get the money.

#232 bill on 12.18.14 at 11:34 am

#227 Godth on 12.17.14 at 6:46 pm
you took the words out of my mouth you: are indeed obtuse.
you are NOT going to convince me , so why dont you go somewhere else and bug those people.
or up your meds
any illuminati under your bed?