The big lie

CRASH modified

Mike says he doesn’t get it.

“I follow on a somewhat daily basis the blogs, newsletters, Twitter Feeds and other similar media of a sample of 32 realtors in the Okanagan Valley,” he says. “Not one of them has shared or discussed ANY of this news with their “valued clients” while still toting themselves as real estate experts and professionals!”

And what news is that?

“There are over 12 stories in the MSM now over the past few weeks of large institutions (CMHC for example) now calling the housing market at least 30% over valued and today from Germany calls of 63% over-valuations.”

And the 32 local real estate brokerages?

“All of them are quick to share and report positive and favourable news from the media, CREA and their local RE Boards. This is the only industry in the world where “licensed regulated professionals” can constantly get away with this BS without any fear of retribution or consequence!”

Mike’s right. The unregulated, undisciplined, unethical, unprofessional DNA of the real estate business is in fine display right now, as much of the nation clearly heads into a potential housing spiral. At a time when the moist virgins should be beaten off with a stick for their own good and sellers encouraged to price their houses hard and realistically lest they be trapped, we’re being force-fed the usual Re/Max marketing swill about luxury houses in hot demand and 2015 looking like another robust romp.

Personally, I know how serious this is all getting when CBC Calgary asks me to be on the morning show to whack the locals. (Speaking of which, sales are down 20% and listings up 45%. Not good.) Although local realtors dare not speculate on the effect looming oil patch layoffs will have on over-leveraged, testo-drenched, McMansion cowboys, I’m happy to.

Anyway, I sure hope the message is getting through. Just look at this stuff from the past 24 hours, as the media starts to sound a lot like this pathetic blog.

Here’s a Bloomberg headline out of New York: “Canadian housing bulls are joining real estate doubters as warnings and oil collapse sink in”

Here’s that report from Germany’s Deusche Banks’s chief international economist, Torsten Sløk: “Canada is in Serious Trouble.” Homes here, he says, are 63% overvalued in general and 35% too rich compared to incomes. Worse, a real estate plop would hit our condo economy hard. Look at how many more people here work in construction, than in the US:

LABOUR EXTREME

Here’s Global News (of all people), saying this: “Cutbacks in the oil patch have been the first shoe to drop from a collapse in oil prices. Alberta’s real estate market now appears to be the second, with new sales data pointing toward a chilly spring in Calgary and elsewhere in the province.”

Here’s another Bloomberg headline, by the way. This story ran last night: “Oil Export Plunge Signals Canada Economy Running on Empty.”

And the economists? Pfft. They might as well be given collars and made honourary Blog Dogs. Says BeeMo senior economist Sal Guatieri: “Fissures are starting to show in Calgary’s housing market.” Adds Calital Economics chief North America economist Paul Ashworth: “You have a collapse in oil prices which is going to hit that industry. You have a housing market that could fall over at any point.”

Even the South China Morning Post is moaning about how the slide in our petro-currency has wiped out the profits from an investment in Vancouver: “Consider the common scenario of a wealthy Chinese purchaser of real estate in Vancouver. A detached house bought in late 2007 should have represented a spectacularly successful investment, with average prices rising from about C$850,000 to a whopping C$1.34 million today. Yet for some buyers, that 50% gain will have been virtually wiped out in Chinese yuan terms.”

So, there you go. Our biggest commodity is worth less than half what it was. We’ve achieved epic levels of personal debt selling each other inflated houses. A quarter of the economy rides atop a gossamer real estate bubble. Interest rates (in the US first) will start rising this year, ending a six-year borrowing orgy. Our trade’s now in deficit after six months running of falling energy exports. In fact, exports are tumbling in nine of 11 categories. And as I told you days ago, confidence is ebbing. Almost 70% of people Nick Nanos surveyed think housing will flatline or fall.

And Re/Max?

“With the New Year having only just begun, the housing outlook for 2015 across the country is generally bright. The average residential sale price in Canada in 2014 was $406,145; that’s expected to increase this year to $416,300, according to the Re/Max 2015 Housing Market Outlook Report.”

OMG.

187 comments ↓

#1 Millenaial on 01.08.15 at 7:25 pm

63% overvalued sounds about right to me.

#2 VanRant on 01.08.15 at 7:29 pm

63% over-valuations in Canada. Must be 126 over-valuations in Vancouver. Anyone thats buying in Vancouver is a sucker.

#3 Bobby on 01.08.15 at 7:29 pm

Realtors are like used car salesmen, they just sell a different product. If they don’t sell, they don’t get paid. So of course, it is always a good time to buy.
When was the last time you took the advice of a used car salesman?

#4 Godth on 01.08.15 at 7:34 pm

“Consider the common scenario of a wealthy Chinese purchaser of real estate in Vancouver. A detached house bought in late 2007 should have represented a spectacularly successful investment, with average prices rising from about C$850,000 to a whopping C$1.34 million today. Yet for some buyers, that 50% gain will have been virtually wiped out in Chinese yuan terms.”

Why are you quoting this racist crap? ;)

#5 Perry on 01.08.15 at 7:36 pm

I Just read in the Vancouver Sun how real estate in BC is up. I trust this pathetic website more than I trust the Vancouver Sun.

Also – I’m FIRST again.

#6 Steve French on 01.08.15 at 7:37 pm

So Dr. Smoking Man, what’s your opinion on all this?

#7 mark on 01.08.15 at 7:37 pm

“I know how serious this is all getting when CBC Calgary asks me to be on the morning show to whack the locals.”

You mean they’re not following the usual script of real estate economists telling the locals it will be fine, then after the dump getting the same real estate economists back to tell everyone how no one could have seen this coming?

#8 Mohamad on 01.08.15 at 7:42 pm

DELETED

#9 Mike in the Okanagan on 01.08.15 at 7:43 pm

Garth when are you on CBC Calgary? If they put a link to the show can you please share it with us. Break a leg!

#10 Loon on 01.08.15 at 7:50 pm

RE/tards

#11 Setting the Record Straight on 01.08.15 at 7:50 pm

“Grantmi: HAM doesn’t refer to house-buying by asians who immigrate to Canada. HAM refers to asians, who live in asia, but buy up Canadian real estate as an investment. If your problem is asians in your neighborhood, then yes you are racist.”

I do not see how a “your problem is Asians in your neighbourhood” implies “yes you are a racist”

“dictionary.reference.com/browse/racism
racism definition. The belief that some races are inherently superior (physically, intellectually, or culturally) to others and therefore have a right to dominate them.”

Not liking Asians in your neighbourhood does not imply the poster felt inherently superior and had a right to dominate.

Perhaps the poster thought Asians were superior intellectually. Unless he thought Asians should have the right to domination, that does not seem to meet the criterion.

Perhaps he thought Asians in his neighbourhood were racist and looked down on him.

Liberals are too quick to throw around charges of racism.

Not liking a group does not imply racism.

#12 TurnerNation on 01.08.15 at 7:50 pm

My realtress is even seeking a real, corporate job again.

#13 Smoking Man on 01.08.15 at 7:51 pm

No one paying attention to those head lines, all about the shoot up in France.

Home ownership in this country to the herd equals success and bragging rights , renters are losers that are looked down apon by the 70%.

December market hot, especially in Southside Johnnys county.

MSM take orders from a higher power, market soft, the blow sunshine, market hot, it blows rain.

The German bank posted Price to Income, Not Rent vs Ownership.. That spread is what the herd considers when buying, and will a premium for bragging rights.

Still a 416 real estate bull.

#14 Ben on 01.08.15 at 7:54 pm

Are you getting excited Garth? Rate rises coming, oil staying down. Soft landing? Doesn’t look likely…

#15 nonplused on 01.08.15 at 7:57 pm

Anyone remember the old bumper stickers in Calgary in the early 80’s?

“Dear God please let there be another oil boom. I promise not to piss it all away this time.”

Well, he did, and we did anyway.

And of course because the Alberta Government has been budgeting at much higher oil prices, there goes the budget. Part of the problem is going to be that all these new schools, hospitals and roads still need staff and maintenance so the ongoing expenses are pretty sticky.

#16 Butch on 01.08.15 at 7:58 pm

Heard this same thing last year. Falling sales, interest rates rising bla bla and then look what the spring market did.

Here is hoping this year and the next aren’t just a repeat of last.

#17 Happy Renting on 01.08.15 at 7:59 pm

The South China Morning Post reports that Canadian real estate isn’t a sound investment? Where have we heard that before?

#18 Jimmy on 01.08.15 at 8:00 pm

Garth Rules.

First!

#19 Roman on 01.08.15 at 8:00 pm

Are those 2 certified realtors on the scooter?

#20 Tee Dee on 01.08.15 at 8:02 pm

1st comment! yay! but that last part amount re/max is almost pathetic considering its stating they have an outlook file that points to growth. Absolutely no mentions of economic events to support this so called “inspected increase” but yet most Canadians choose to believe them over us neg-a-trons on the side that think were in a bubble.

#21 bdy sktrn on 01.08.15 at 8:03 pm

the truck would be out of focus if a crash was imminent.

#22 epr on 01.08.15 at 8:05 pm

Here is the result of an isolated one industry community and their real estate bubble when the industry takes a dive. Lots of unreported fall out, I know it has cost my employment a $40,000 a week in lost sales.

http://www.cbc.ca/news/canada/newfoundland-labrador/labrador-west-s-housing-bubble-is-deflating-rapidly-1.2892412

#23 ANON on 01.08.15 at 8:08 pm

And so it begins…
Now only the magnitude of the implosion is debatable, but based on all previous examples of ignoring en masse the compounding math of lending with interest, there is always an undershoot.
Also, based on the two most prominent examples (the Long and the Great Depression) there is a very worrying pattern that occurs when math is finally proven right, but everybody blames the others.

#24 ronh on 01.08.15 at 8:11 pm

Every week I peruse the local RE rag. From what I see houses are selling. Just takes 6 to 9 months and at least
one price reduction. Market not that hot in the south Okanagan.

#25 Victoria Real Estate Update on 01.08.15 at 8:12 pm

2014 was another weak year for Victoria real estate as prices continued to cascade lower and sales of single family homes remained well below Victoria’s long-term average.

I posted this chart on December 11th (comment #60). At that time, Brookfield’s price chart for Victoria indicated that house prices were 3.6% lower than a year earlier.

. . . . . . . . . . .Victoria House Prices. . . . . . . . . . . . . . .
. . . . . . . . (Compared To October 2007). . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+13%. . . . . . . . . . . .x . . . . . . . . . . . . . . . . . . . . . . .
+12%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+11%. . . . . . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . .
+10%. . . . . . . . . . . . . . . . . . . *. . . . . . . . . . . . . . . .
+ 9%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 8%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 7%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 6%. . . . . . . . . . *. . . . . . . . . . . . . . . . . . . . . . . . .
+ 5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 4%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 3%. . . . . . *. . . . . . . . . . . . . . . . .*. . . .*. . . . . . .
+ 2%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 1%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
..0%. . .*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 1%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . .
———————————————————————————————
. . . . .Oct. . Oct. . Oct. . Oct. . Oct. . Oct. . Oct. . .Dec. .
. . . . . 07. . .08. . . 09. . . 10. . .11. . . 12. . . 13. . . 14. .

x = peak (June 2010)

(source: Brookfield’s index)

Late in 2014 prices in Victoria were lower than at any point since August 2007 (even lower than 2009’s lowest point).

If today’s historically low (emergency level) mortgage rates can’t stop Victoria’s price decline, what will?

Why has Victoria’s housing market gone through a sustained price correction since 2010 while other Canadian markets have experienced the strong price gains that are expected in a highly stimulated housing market complete with emergency level interest rates?

It’s easy to argue that Victoria’s weakening economy is to blame. Among other things, the price of BC bud has dropped from about $10 a gram down to about $7 a gram, helping to flatten the tires of Victoria’s economy.

2015 doesn’t look any better for Victoria’s economy or housing market. Consider the following negative factors that will be kicking in soon:

* Interest rates will probably begin to rise in 2015 (as Garth has explained).

* Layoffs in the oil patch through 2015 as a result of today’s crashing oil prices.. This isn’t just a blip. Those Victorians who commute to northern BC and Alberta for work will be affected. Victoria’s economy and the economies of Canadian cities from Newfoundland to BC will be negatively affected.

How deep will Victoria’s price plunge be and how fast will prices fall? So far prices in Victoria have fallen about 12-15% and that’s before rising interest rates (coming soon). Taking into account rising interest rates alone, it is obvious that prices in Victoria are nowhere near reaching bottom. We may see a year or two where prices fall 10-12% per year or more in Victoria. We just don’t know how deep this price correction will be. One thing we can be quite certain of is that the biggest leg down in prices for Victoria hasn’t happened yet. That will probably happen as prices across Canada are falling in unison.

It will take more than a year or two for Canada’s enormous housing bubble to deflate. Once a bubbly housing market begins to deflate emotions help push prices lower as quickly and as much as they help push prices higher.

Girls and guys, don’t even think about buying a house in Victoria at this time. If you buy now you will be forced to watch the value of your property decline significantly, putting your family in an extremely stressful financial situation for years. Learn from the mistakes of our American friends. Don’t expect housing prices to always rise and don’t buy a property when a housing market is obviously bubbly (think Victoria).

Continue to rent. It‘s risk-free and cheaper than buying even with today’s rock-bottom mortgage rates.

Until next time – Cheers!

#26 Dominoes Lining Up on 01.08.15 at 8:12 pm

Previously I said that I thought the oil price drop was the first domino to drop, and the CMHC report Garth discussed on December 16 showing the puny portion of offshore buyers in our RE market was the second.

The first domino was, and continues as, a powerful economic force, a black swan of sorts, to weaken the RE economy in key areas.

The second domino was smaller, but an important perception-changer, casting doubt upon the myth of HAM-driven RE going ever upward.

This new report today is, I strongly feel, the third domino. It could be huge, bigger than the others, when all is told.

http://www.thestar.com/business/real_estate/2015/01/08/canadian_home_prices_overvalued_by_63_bank_says.html

63% overvalued. So a $650K slanty semi might realistically be worth about $400K. That sounds about right. Still pretty high based on incomes though.

This is another major perception-changer, and in the doldrums of winter and a Calgary meltdown, people will have an awful lot of time to digest this. For me, this makes perfect sense and I have long felt Toronto RE is overvalued by about 70% compared to its real utility value.

Three dominoes now have toppled or continue to topple.

Momentum is here folks. The wheels are grinding forward on their own now. It is slow but unstoppable.

—————————————————–

And if there wasn’t enough doubt about the integrity of the mainstream media repeaters, how is this news for you!?

http://www.thestar.com/news/gta/2015/01/08/global_tv_anchor_leslie_roberts_suspended.html

Stuff like this will certainly not help support the RE-fed media.

#27 james on 01.08.15 at 8:16 pm

In asset bubbles like south seas company shares, tulip mania and dot com stocks, consumer sentiment is key. This seems to be the turning of the tide, if even the mainstream media is talking openly.

Five years from now they will blame the downturn in housing on oil prices. Easier that way.

#28 Timmy on 01.08.15 at 8:18 pm

Of course if the Chinese money is not a significant factor in driving up real estate in Vancouver then the South China Morning Post wouldn’t even report on it.

#29 Andrew Woburn on 01.08.15 at 8:22 pm

“Who Will Get Caught When The Oil Debt Bubble Pops?”

The other day I raised the question of who will be hurting from buying the wrong side of oil price hedges. This is part of the answer.

“Something else to worry about: banks have several trillion dollars of exposure to oil and gas derivatives (much of it as counterparties to oil company production hedging), it’s plausible that a bottoming out of oil prices could detonate massive losses for banks, even if their oil company clients somehow survive.”

http://www.forbes.com/sites/christopherhelman/2014/12/19/who-will-get-caught-when-the-oil-debt-bubble-pops/3/

This is over and above the risk of debt defaults from over leveraged fracking outfits.

By the way, 25 US banks carry virtually all of the risk of US derivatives which probably means they are on the hook for most of the global risk. Of these 25, four banks hold almost all of it.

1 CITIBANK – $70 Trillion
2 JPMORGAN – $65 Trillion
3 GOLDMAN SACHS – $48 Trillion
4 BANK OF AMERICA – $37 Trillion

These four hold $220 Trillion compared with the total for ALL US banks of $239 Trillion. See page 26. Guess we don’t need no stinking regulators.

http://www.occ.treas.gov/topics/capital-markets/financial-markets/trading/derivatives/dq314.pdf

#30 Ronaldo on 01.08.15 at 8:23 pm

#3 Bobby –

”When was the last time you took the advice of a used car salesman?”

I think it was in 1964. He told me never to buy a new car but to buy one that is 3-5 years old with low mileage and keep it til the wheels fall off. And that’s what I’ve done. I believe Jim Pattison still drives used cars as well. A few of them I am told. Anyway, that advice has served me very well and as a result, money that would have been lost to depreciation was invested elsewhere.

#31 OMG the original on 01.08.15 at 8:23 pm

#15 nonplused
Anyone remember the old bumper stickers in Calgary in the early 80’s?

“Dear God please let there be another oil boom. I promise not to piss it all away this time.”
————————-

Unfortunately, most of the decision makers of that era retired years ago.

If you ask most of the guys currently working in the oil sector about the 1980 price collapse, at best they might have heard of it.

So it was full speed pedal-to-the-medal over the last 8 years.

#32 Washed Up Lawyer on 01.08.15 at 8:24 pm

Garth:

When you are on CBC, can you mention moist virgins and Ft. McM hookers?

#33 RayofLight on 01.08.15 at 8:25 pm

The only thing worse than Realtors or used car salesmen for ethics (or lack thereof), is Mutual Fund Salesmen, (AKA “Financial Planners”)

#34 OMG the original on 01.08.15 at 8:26 pm

#25 Victoria Real Estate Update
One thing we can be quite certain of is that the biggest leg down in prices for Victoria hasn’t happened yet. That will probably happen as prices across Canada are falling in unison.
——————-

Exactly, especially since a big chunk of the mid to high end housing in Victoria is going to HAM (hot Alberta money).

#35 NoName on 01.08.15 at 8:32 pm

Interesting read

“Home ownership is so fundamental to Chinese security that there is a popular term, fangnu, meaning “house slave,” for those locked into jobs they may not like in order to meet their mortgage payments.”

http://goo.gl/889iUJ

#36 OMG the original on 01.08.15 at 8:32 pm

#25 Victoria Real Estate Update
2014 was another weak year for Victoria real estate as prices continued to cascade lower and sales of single family homes remained well below Victoria’s long-term average.
———————–

Of course nobody in Victoria knows that prices are down year after year after year. The local board is expert at messaging just the right thing to the MSM.

The only people that understand what has happened to housing in Victoria are those that have to sell. Then they find out the nice investment condo they bought in 2009 for $525k will only sell for $475k. And that before commissions, rental income loss, and the few thousand required to repaint and put in new carpet.

Yikes – to bad the rest of Canada didn’t learn from Victoria.

#37 Nemesis on 01.08.15 at 8:36 pm

#TheBigOneIsSurvivable&OtherPorkies… #Fissures?YouCan’tHandleTheTruth!,Or… #BonusKarmaAwardedTo… #NostalgicSaltierDogz… #WhoRemember… #TheTheatricalDebutOfCerwin-VegaUniversal’s… # S E N S U R R O U N D ®

“Hysteria and mass emotion that will surround and engulf you completely…”…

http://youtu.be/aFjSMPBW9AY

[NoteToGT: Some cinema goers were so upset by the 110dB 25/35Hz SubSonics that they literally wet themselves and/or puked. They sure don’t make ’em like to they used to, do they!?!]

#38 Retired Boomer - WI on 01.08.15 at 8:36 pm

Commodities all round the world seem to be on the downward slope. Not just OIL.

NOT strange that a lot of countries are struggling with debt, flat business, and restless populations.

Affluenza has stricken many places. The feeling one is RICH until they are forced by circumstance to confront reality. OOPS!!!

When reality strikes us in North America is anybody’s guess. Oil has yet to find a bottom, and most people can’t find theirs either.

#39 Eastern Creep and Bum on 01.08.15 at 8:42 pm

Well at least I am leaving Alberta for a warm home that we can afford with warm friends and family around who are used to tough times and living within their means. That takes the chill off winter.

And to you, Washed Up Lawyer, thanks for your kind words this week.

You’re welcome to come by for a visit and we’ll have some Glen Breton Rare to share with you when you do.

#40 Rabi Dmangycur on 01.08.15 at 8:47 pm

“The March of Folly”

The Canadian real estate mania can now realistically qualify as Folly, according to Barbara Tuchman, in her classic 1984 book The March of Folly.

According to a review:

“To qualify as folly for this book, Tuchman explains, acts have to be clearly contrary to the self-interest of the organization or group pursuing them; conducted over a period of time, not just in a single burst of irrational behavior; conducted by a number of individuals, not just one deranged maniac; and, importantly, there have to be people alive at the time who pointed out correctly why the act in question was folly (no 20/20 hindsight allowed). ”

The book is available as an audiobook from Hoopla (free from your local library) if you like to exercise while you “read”.

http://www.stoneschool.com/Reviews/MarchOfFolly.html

#41 Brian Ripley on 01.08.15 at 8:50 pm

“The big lie” said Garth.

Fortunately we have momentum to look at:

http://www.chpc.biz/housing-price-momentum.html

The TSX Real Estate Index after failing to break above this year’s late summer spike has continued the downturn.

And perhaps “real” prices are informing us of the blowoff top?

http://www.chpc.biz/real-price-of-housing.html

Vancouver, Toronto and Calgary SFDs are going hockey stick, breaking well above the highs of late 2009, the summer of 2012 and the late 2013 highs.

#42 Linda on 01.08.15 at 9:01 pm

Regarding the German banking report, that is being panned (for the 2nd time – apparently they are re-releasing this report which was originally unveiled over a year ago) by most of the financial gurus. I’d say I’d have to agree. 63% over valuation is just a tad over the top for reality. 30% is a much more supported figure.

IF 63% were the true over valuation of Canadian housing, the property market would be back to levels not seen since the 1990’s. The Re/Max estimate of what average housing will be for 2015 – $416,300 – would by that standard only truly be worth $154,031.

#43 Steve on 01.08.15 at 9:02 pm

I tell you, I’m glad I’m done with this racket. Renting rules! I have an 80 year old landlord that insists on mowing the lawn for me…OK! Lol, also I got handed a damp plastic 100$ bill for caulking the tub. Really?!? You pay me to fix the tub? OK! This is nuts! I tell you this, I bought a 35′ bus. It’s got a 100,000$ interior. It’s a house. It’s fully paid for. It’s parked next to he house I rent. No debt. No house to sell. A giant bus my wife and I can live in with a shower, queen size bed, and mood lighting. Hmmmm. Time to bail.

#44 mutual fund salesman on 01.08.15 at 9:04 pm

#33 Hey, what’s with bashing mutual fund salesmen? Mutual funds are pretty cool. Most Canadians like them… AKA financial planners are worth their trailer fees… potato potato, most people have lira’s and rrsps

#45 mutual fund salesman on 01.08.15 at 9:04 pm

so they don’t write off the fees

#46 boonerator on 01.08.15 at 9:12 pm

#25 Victoria Real Estate Update

Sounds like my August sale as very timely. Renting and glad of it.
Yet, psychologically that ownership and the HELOC that came with it has power.
It’s like the 2 angels on the shoulders of the dog in this Warner Bros classic.
http://www.dailymotion.com/video/x1ylgo0_daffy-duck-ep-54-daffy-duck-hunt_fun

Garth is the good angel, the HELOC is the bad one.
HELOC
“Come on, you can afford that Bonneville, your house is worth megabucks”

Garth
“If you want that motorcycle, set some cash aside from your invested income stream until you can afford it”

Diversified investing is wiser but not as much fun.

#47 Turnerite on 01.08.15 at 9:14 pm

Serious question from an aspiring investor : How does an investor take a ‘short’ position for Canadian residential real estate, particularly Alberta if possible? Would this be a terrible idea? Thanks

#48 Sheik Yerbouti on 01.08.15 at 9:17 pm

I am surprised that some enterprising RE shill hasn’t packaged together a currency hedge together with the properties on offer to snare in more HAM and get around the currency loss experienced due to Cdn dollarettes…..of course, they might need to be regulated then, since they are entering the realm of regulated markets…..I can almost hear the sales pitches though…..

#49 devore on 01.08.15 at 9:20 pm

#28 Timmy

Of course if the Chinese money is not a significant factor in driving up real estate in Vancouver then the South China Morning Post wouldn’t even report on it.

Really? Open up any random newspaper to any random page, and count the stories that are not a significant factor in your life, and yet, there they are, in black and white, apparently totally worth reporting on.

You’re grasping at straws.

#50 The big lie | Realties.ca on 01.08.15 at 9:20 pm

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#51 ShawnG in TO on 01.08.15 at 9:22 pm

German’s estimate of 63% over-priced has a major flaw.

Calculation of BC’s income left out values of hookers and drugs in their local economy. It is now a standard practice to include such “services” in their GDP (such as latest UK numbers). in BC’s case, such values are very high.

so it is settled then, everything is fine. please continue to shop on credit. people who have their interest against yours said so.

#52 Nemesis on 01.08.15 at 9:26 pm

“A giant bus my wife and I can live in with a shower, queen size bed, and mood lighting.” – Steve

Such exuberant, hortatory imagery, Mr. Steve…

http://tinyurl.com/olpgxd3

Never mind… One must start somewhere.

Indubitably, certainly it’s only a matter of time before the rest of ElBertah’s HuddledMasses are similarly tempted to trade up?

#53 Dominoes Lining Up on 01.08.15 at 9:29 pm

#42 Linda

Ummh…your math skills suggest perhaps you are a realtor? TNLTB?

$416,300 if overvalued by 63% would mean the mean-reversion price should be about $255,398.

Now, that actually does sound like a very reasonable resetting of these bubble prices. (Still not cheap, by price to income measures)

You probably just slipped up, I realize, but there is a bigger issue of just how utterly math-challenged have been all the house horny buyers and their supporters who routinely ignore costs like opportunity costs, taxes, maintenance and closing costs as they calculate their “equity”. This kind of innumeracy is a large part of our soon-to-be disastrous bubble.

For now Linda, Staples has a good Casio calculator for $9.99. (I prefer that to the financial planning calculators – I like to keep my mind numerate by doing all the steps myself and as many in my head as I can)

#54 Sponge Rob on 01.08.15 at 9:29 pm

I have not see this mentioned here but my apologies if it’s old news. I believe the biggest losses in the bubble collapse will be in cottage country right across Canada. Real estate bubbles die from the outside in always. When things get iffy and oil patch jobs become less secure, households that will only sell the house as a last resort will find it easier to hit the eject button on a second property in Radium, or Campbell River, or perhaps Lake of the Woods. I think the wipe out in recreation areas could be breath taking.

#55 saskatoon on 01.08.15 at 9:33 pm

bloom doom 63% report taken down from star website.

at least on the front page…i can’t find it.

replaced with:

Rise of the selfie stick:

A global tour
Selfie sticks have become popular among tourists because you don’t have to ask strangers to take your picture, and you can capture a wide view without showing your arm.

http://www.thestar.com/news/world/2015/01/08/rise_of_the_selfie_stick_a_global_tour.html

true, canadian journalism.

#56 Victor on 01.08.15 at 9:36 pm

The REMAX comment makes it a big liar and douchebag.

#57 earthboundmisfit on 01.08.15 at 9:36 pm

@#9 Mike in the Okanagan
You might want to rephrase that bit about the leg. I would imagine he’s is still in physio from the last one.

#58 Harbour on 01.08.15 at 9:38 pm

Saw Harper on TV today talking… don’t know the show but it was my BNN channel

It’s all okay… we’ve been through these up and downs many times… not to worry… blah blah blah

#59 Uh Oh Canada on 01.08.15 at 9:42 pm

Congratulations Garth, you were right all along- just blew the whistle too early. (You thought Canadians were smarter than we really are, didn’t you?) From now on, you will be known as the Housing Crash Expert (HCE) that called the burst first. I look forward to watching you appear on MSM.

May Garth triumph in 2015!

#60 Mark on 01.08.15 at 9:42 pm

“”IF 63% were the true over valuation of Canadian housing, the property market would be back to levels not seen since the 1990’s. The Re/Max estimate of what average housing will be for 2015 – $416,300 – would by that standard only truly be worth $154,031.”

Careful here. 63% is the alleged “overvaluation”, ie: houses are valued at 163% of what they really should be. Hence, an ‘average’ $416,300 house really should be ‘worth’ ~$256k.

*However*, as with all mean reverting processes, there tends to be overshoot. With the amount of debt embedded into the Canadian housing system, and with the buyer pool having been utterly exhausted over the past decade of expanding house ownership, dropping to $150k seems highly plausible. After all, for periods spent above the mean, periods must be spent below the mean.

Housing must always be, by definition, accessible to new buyers at the margin. And with how poor the salaries are of new grads (if they can even find jobs), $150k doesn’t seem out of line either.

#61 Mark on 01.08.15 at 9:44 pm

“Calculation of BC’s income left out values of hookers and drugs in their local economy. It is now a standard practice to include such “services” in their GDP (such as latest UK numbers). in BC’s case, such values are very high.”

No they aren’t, and shame on you for suggesting that purveyors of illegal goods and services are a major driving force in the BC economy. Additionally, when this illegal activity does take place, it does appear in salaries and wages, as these illegal entities compete with the labour market for goods and labour as well.

#62 Victoria Real Estate Update on 01.08.15 at 9:46 pm

Excellent post as always Garth.

I can’t imagine what the Canadian media will make of you once prices in all major Canadian cities are falling, knowing that you were right all along. I think it will be quite interesting.

#63 McFly604 on 01.08.15 at 9:55 pm

#32 Washed Up Lawyer

Garth:

When you are on CBC, can you mention moist virgins and Ft. McM hookers?
***************************************

Don’t forget “real estate porn” and “house horniness”

#64 joblo on 01.08.15 at 10:00 pm

Hooray!
U.S. Banks can’t go BANKRUPT anymore, they go into Resolution and
the U.S. taxpayer is now on the hook if derivatives go bad.
Back up the Truck!

#65 Obvious Truth on 01.08.15 at 10:01 pm

#47. The answer has been the same all along. Loooonnng. USA.

RE is not much different than oil. Lots if all in leveraged longs. Where they stop is where the cash buyers are. Same as every other country.

#66 will on 01.08.15 at 10:09 pm

To #38 Retired Boomer:

Well one writer at the MSM (G&M) disagrees with you regarding the price of other commodities:

This from David Rosenberg:

“•Copper trades at a level that in the most recent past coincided with $75 (U.S.) a barrel on WTI
•Lead is at a level consistent with $85 a barrel in the past
•Both tin and zinc are trading as if oil is back to $100

None of these cyclically sensitive metals are trading anywhere near April, 2009, levels – which is where oil is today. Base metals in aggregate are about 70 per cent higher than they were the last time oil was trading below $50 a barrel – if this was principally a broad-based global turndown story, the industrial-commodity complex in general would follow suit as they did six years ago.”

#67 charles on 01.08.15 at 10:10 pm

If you like your propaganda streamed in pear shapped tones.

http://www.cbc.ca/liveradio/popup/index.html?networkKey=cbc_radio_one&programKey=calgary

#68 JustMe on 01.08.15 at 10:12 pm

To: #39 Eastern Creep and Bum

I thought Ralph said bum before creep

#69 economictsunami on 01.08.15 at 10:13 pm

The big lie?

Here’s the inconvenient truth/ irony:

Many small/ medium unconventional oil producers, even in the midst of a sizable global glut, you may need to pump more, just to cover your debt…

Oil price blowback: Producers, others brace for cutbacks:

http://www.cbsnews.com/news/oil-price-blowback-oil-producers-and-others-brace-for-cutbacks/

Is the debt super cycle finally over?

http://www.economist.com/news/finance-and-economics/21638153-trapped-world-high-debt-low-rates-and-slow-growth-falling

#70 long dong on 01.08.15 at 10:18 pm

Devore you miserable old bat, why are you always so condescending? Suck on a prune.

#71 Andrew Woburn on 01.08.15 at 10:27 pm

#35 NoName on 01.08.15 at 8:32 pm
“Home ownership is so fundamental to Chinese security that there is a popular term, fangnu, meaning “house slave,” for those locked into jobs they may not like in order to meet their mortgage payments.”
————————

The English language has always been ready to accept and adapt really useful foreign words. How about “fangnuked” meaning a house slave with negative equity?

#72 Smoking Man on 01.08.15 at 10:29 pm

Toronto!!!!!

Wow, bond yields in the basement.

GUAVA.CA lowest inventory ever. Just look at those charts, no wonder MSM is trying to pour cold water on the market.

Official Smoking Man call..

The spring market will be a rocket ship strait up…

#73 Joe2.0 on 01.08.15 at 10:38 pm

A friend of mine is a RE Max used and new house salesman.
RE Max pumps BS down their salesbots throats like high fructose corn syrup 2.0.
I listen to him talk and he actually believes the crap they are pushing, pumping and dumping.
I show him other articles and info from reputable sources and his eyes glaze over.
The RE cartel is a billion dollar mind control factory.

#74 Mohamad on 01.08.15 at 10:44 pm

DELETED

#75 Realist on 01.08.15 at 10:44 pm

The rape of the land in Alberta ie. The Tarsands has been buoying Canada’s economy up until now and according to this blog Canadian real estate as well. Rivers have been poisoned. The people have been poisoned. The Boreal forest scraped, levelled and raped and all we can talk about is our precious real estate values? I don’t know but it looks like we’re on the wrong path. Maybe we can we regroup and come back with a better plan.

#76 Paully on 01.08.15 at 10:55 pm

OMG: Oh Mighty Garth!

#77 3s on 01.08.15 at 10:55 pm

You guys have obviously taken a page out of the Aussie rule book where a collapse in Iron Ore prices have led to a government backed rebalancing into real estate activity to replace the mining FIFO etc jobs. Quite Easily done!

Corrupt Chinese Money is also most welcome to prop things up;)

House prices to the moon – Yay.

#78 Paul Sinclair on 01.08.15 at 11:10 pm

Is London, UK overvalued. You bet it is. Why? Because the riches of the world like this city and the money keeps pouring in. Same thing is happening here, as long as China prospers there will be no crash in Vancouver and Toronto.

London vs Van? Seriously? — Garth

#79 Lloyd Jensen on 01.08.15 at 11:16 pm

#61 Mark “… and shame on you for suggesting that purveyors of illegal goods and services are a major driving force in the BC economy.”

Six Billion a year. That’s what a Senate Special Committee on Illegal Drugs estimates was the value of the B.C. Pot industry in 2003.

Twenty thousand. The estimated number of grow-op houses in B.C., per the RCMP. Most are not occupied, so these 20,000 purchases put additional upwards pressure on house prices.

#80 BG on 01.08.15 at 11:27 pm

Je suis Charlie.

#81 Gov of Canadai on 01.08.15 at 11:30 pm

Thanks Garth to the stats. If 7% employment is related to housing, we’ll just introduce a few more Immigration programs. To keep the 7% there. And they’ll vote for us.

Thanks again.

#82 Calling it. on 01.08.15 at 11:33 pm

Vancouver inventory approaching a decade low. Smoking Man, Toronto similar ? I see a huge spring ahead just based on supply and demand. Watch the prices in 100 days.

#83 Christopher Lackey on 01.08.15 at 11:37 pm

Nothing is moving in Montreal. Nothing. I peruse periodically and I notice properties sitting for weeks, months, seasons, and yes years. I think this is only the beginning. While the Toronto Star assiduously reports three real estate deals over asking in its “What they got” feature, the equivalent in La Presse every weekend shows properties consistently selling under asking. And all over my neighbourhood, the city, the suburbs, and the country there are new condo projects. Some people are going to seriously get soaked.

#84 Waterloo Resident on 01.08.15 at 11:53 pm

Just North of Toronto, around the Newmarket area, I swear at least 50% of all men work in the housing and house construction industries. God help Newmarket if the housing sector ever takes a dive, no guys will be left with any jobs.

#85 Mark on 01.08.15 at 11:54 pm

“Twenty thousand. The estimated number of grow-op houses in B.C., per the RCMP. Most are not occupied, so these 20,000 purchases put additional upwards pressure on house prices.”

Even if that number is anywhere near accurate, and not typical RCMP exaggeration for the purposes of fundraising, a shortage of housing would push the rents up.

Yet we don’t have high rents in BC. In fact, rent is extremely affordable compared to buying.

So nice try, but even the exaggerations don’t support high house prices. The only explanation that really works is that of excessive leverage and investor optimism towards housing.

#86 Victoria Real Estate Update on 01.08.15 at 11:57 pm

#79 Lloyd Jensen

“Twenty thousand. The estimated number of grow-op houses in B.C., per the RCMP. Most are not occupied, so these 20,000 purchases put additional upwards pressure on house prices.”

Source?

Doesn’t matter.

The pot industry has been a part of the BC economy for decades. It is not putting additional upwards pressure on house prices since it has basically been a constant for years.

For something to be an additional source of upward or downward pressure on house prices, it would have to be from a source that has recently changed or is new to the housing market.

For example, as I have mentioned, the price of BC bud has dropped from about $10 a gram to about $7 a gram. This is a source of downward pressure on (already falling) housing prices in Victoria since it represents a recent negative change to the overall economy of Victoria.

The falling value of BC bud is also a source of downward pressure on Vancouver house prices.

Rising interest rates is another example of a source of downward pressure on house prices, while falling interest rates is a source of upward pressure.

Whether or not your stats are true doesn’t change anything.

#87 Andrew Woburn on 01.09.15 at 12:00 am

#79 Lloyd Jensen on 01.08.15 at 11:16 pm
Six Billion a year. That’s what a Senate Special Committee on Illegal Drugs estimates was the value of the B.C. Pot industry in 2003.
=================

Couldn’t agree more. We had a grow op across from us in West Van. The clue was that nobody seemed to live there except four pit bulls. The parents of one of the kids’ school friends moved to the valley to start a grow op. The economies of several Gulf Islands depend on pot and their are towns in the Interior were only every fifth person has a job but every other person drives a monster pickup.

I have been to parties where senior lawyers and judges are smoking. My guess is that BC will have to push Ottawa to legalize pot when the LNG pipe dreams fade away, especially if the Boy Wonder gets elected.

#88 Sheik Yerbouti on 01.09.15 at 12:03 am

I wonder if some Wall Street/Bay Street whiz kid will be able to re-package underperforming Canuck RE mortages and sell them on the market….oh wait, that’s what the wizards did during the US RE meltdown, leading to the GFC…..guess we can scratch that off the list.

#89 Smoking Man on 01.09.15 at 12:03 am

Humans

Today I got caught talking to myself while out having a smoke, I was seeing how dialog sounded in chapter 7. I got to hear it before I type it.

I got the strangest looks. I convinced myself it was because I was outside without a coat. That’s why they stared with weird faces.

Then I’m watching TV. Religious jews at the wailing wall, Muslims asses in the the air heads down, Christians dancing and singing with wild crazy eyes.

All talking to someone who’s not real.

But I’m the crazy one.. Humans..

#90 nonplused on 01.09.15 at 12:05 am

#31 OMG the original

You speak truthiness but it reminds me of another saying:

“Those who do not learn from history are doomed to repeat it”.

Can’t remember who said it but I am sure a simple google search could sort it out.

I was still in school but I was old enough to know what was happening in ’82 when my dad lost everything. Been a bit paranoid ever since.

#75 Realist

My dad likes to joke that the tar sands are a giant reclamation project. After all, they are removing tar from contaminated soil, not much different than you would see if there was an oil spill. It’s meant to be funny.

More to the point though, there isn’t anything up there but a few buffalo and the tar sands workers, and the rest of us are still driving our cars meaning we are implicated. People who love pristine sub-arctic wasteland so much should park their car and turn off the heater in their house. The same can be said about fracking.

And don’t heat with wood either, the ecological damage caused by that far exceeds natural gas extraction. If we all tried to heat with wood the forest would be gone in no time.

The fact is every decision we make has some impact on the earth. Plug in your iPhone? A little coal gets burned. Turn on the lights? Maybe a little natural gas and coal. Recharge your Telsa Roadser? Lots of coal. Eat soy based tofu? Well a farmer has to clear a field and monoculture it? Buy toilet paper at Walmart? A co-op shuts down. Eat salmon instead of beef for health reasons? Oh no there goes the fishery.

Fact is every choice has a downside. I guess we can all choose to have the lowest impact we are comfortable with but there will always be an impact.

So I say save the whales and the trees and screw the tar sands. It’s no different than the landfill, your garbage has to end up somewhere.

And finally to all your “First” people. Boring. And almost never right. When I first commented today there were no comments showing and I got approved #15. Garth’s Amazon assistants have to moderate everyone before they get posted so you go in a que.

#91 Steevee on 01.09.15 at 12:11 am

Lloyd Jensen,

That was 12 years ago. The pot industry in B.C. is nothing like it used to be. People in other parts of Canada have figured out they can grow the stuff in their basement too and the Americans don’t take it anymore.

#92 nonplused on 01.09.15 at 12:15 am

Oh and another story about choices:

We all know about the giant windmills killing birds and bats (although I don’t know how, the blades don’t turn fast enough to get either one, they certainly don’t travel as fast as a car and when was the last time you killed a bird. I know it happens occasionally but not often. but the explanation that it is pressure cavitation behind the blades might be plausible. On the other hand sometimes birds just die. But anyways….)

So they built this solar plant in the desert. It’s done and working. The way it works is a huge field of mirrors reflects sunlight onto this tower where the tower focuses the sunlight on a boiler to make steam and drive a turbine. The great feature is that if it isn’t sunny then they can use natural gas to keep the steam boiling and the turbine turning so they can make electricity 24/7.

Great. Except that birds and insects can’t see the concentrated sunlight from the mirrors until they are in it and then poof! They literally burst into flames and down they go. Ha ha. There is always an unintended consequence. Haven’t heard about bats though, they should be safe because it isn’t too sunny at night.

#93 Larry1 on 01.09.15 at 12:17 am

15X rent for a haus in van is < $400K. Should the place drop from millions to that, I would buy it. Otherwise, let the landlord subsidize retirement.

#94 Tom from Mississauga on 01.09.15 at 12:18 am

Question: Do dividends from public companies get included in the debt to income ratio Statscan releases?

#95 Lukas on 01.09.15 at 12:21 am

Headlines sound familiar…been hearing for the last 3 years. I guess eventually there will be a correction and the “gurus” will finally be right…just don’t know when

#96 Ultraman on 01.09.15 at 12:25 am

“The only thing worse than Realtors or used car salesmen for ethics (or lack thereof), is Mutual Fund Salesmen, (AKA “Financial Planners”)”

Having been one of the later I can attest to that. The worst of them are the ones working for Credit Unions under the guise of “people before profit” BS.

#97 ole Doberman on 01.09.15 at 12:26 am

CBC might turn out like Jerry Springer show where they bring on the surprise guest Brad Lamb. First they’ll debate it out…then exchange punches and body slams
Jerry jerry jerry!

#98 Irish Stew on 01.09.15 at 12:26 am

Cottage country will be fine…..even w/ the oil downfall……the middle class will buckle – the higher class will stay make their money.

#99 Franco on 01.09.15 at 12:30 am

Garth, I refuse to believe that you believe that the housing market in Canada is 63% overvalued, that just does not make any sense at all. Economists and the so called experts, including yourself have been calling for a collapse for a long time and not for the reasons that are been played out now which is the orchestrated collapse of the oil price, which you know will go back up, probably sooner than later.

#100 GoldnSilver on 01.09.15 at 12:30 am

“Is London, UK overvalued. You bet it is. Why? Because the riches of the world like this city and the money keeps pouring in. Same thing is happening here, as long as China prospers there will be no crash in Vancouver and Toronto.”

The realty of any and all economics is that not one empire, nation, or country will prosper indefinitely. Eventually they will fall and another will rise. Be careful. Below is just one small example of what is happening in China, and there could be many more not reported as yet.

http://www.bloomberg.com/news/2015-01-09/kaisa-bondholders-wait-to-hear-whether-developer-has-paid-coupon.html

http://www.zerohedge.com/news/2015-01-08/chinese-developer-kaisa-verge-5bn-default-whos-next

#101 45north on 01.09.15 at 12:32 am

Sponge Rob: I believe the biggest losses in the bubble collapse will be in cottage country right across Canada.

I think so too. Funny the cottage is a lot fancier than it was. I remember cottages were strictly one season. There were cool nights in August, the cottage lost heat and was chilly in the morning but when you went outside it was warm in the sun.

Despite the internet, despite cheap reliable phone service, I think the person who lives close to his work has the advantage.

What’s on my mind is the 4 lane widening of Highway 11 (in Ontario). The cost is huge. Like in the billions. Tomorrow morning Highway 11 at Sundridge is going to look very empty. On the other hand travel time to Sundridge (from Toronto the centre of the universe) has been reduced 3 hours. The investment in Highway 11 makes Muskoka more attractive and resistant to a price drop.

#102 Charles Ponzi on 01.09.15 at 12:33 am

The American Dream – You Have to be Asleep to Believe It

http://www.zengardner.com/the-american-dream-you-have-to-be-asleep-to-believe-it/

#103 Carpe Diem on 01.09.15 at 12:36 am

And Re/Max?

“With the New Year having only just begun, the housing outlook for 2015 across the country is generally bright. The average residential sale price in Canada in 2014 was $406,145; that’s expected to increase this year to $416,300, according to the Re/Max 2015 Housing Market Outlook Report.”

—–

So 416/406 = 2.5% increase? Sounds like RE/MAX confirms home prices are flat lining if you take inflation is consideration! Doesn’t sound so bright to me!

OMGarth!!

#104 Timmy on 01.09.15 at 12:39 am

Re #28: you are missing the point-they are reporting on Vancouver real estate because so many Chinese are invested in it.

#105 GoldnSilver on 01.09.15 at 12:41 am

As well you could add this to the mix also. When empires and nations begin to falter, the governments go desperately seeking cash flow to maintain constant revenue in a declining economy. Generally by way of hunting down any and all tax dollars. This is happening in most countries today, especially the USA and now probably China.

http://www.cnbc.com/id/102321402

#106 NotAGreaterFool on 01.09.15 at 12:44 am

Look at what a former Bank Of Canada Governor has to say about Canada:

http://www.macleans.ca/economy/economicanalysis/why-the-oil-crash-is-bad-for-canadian-house-prices/

Spoiler Alert: Canada is toast

#107 TurnerNation on 01.09.15 at 1:05 am

Brad Lamb is here at Trump tonight. Pathetic. Blog dog lodge #10.

#108 nonplused on 01.09.15 at 1:09 am

#79 Lloyd Jensen

Ha, ha. I’ve been saying much the same thing for years to much ridicule.

I don’t know if there are 20,000 grow ops in BC (and you don’t site a source) but I do know they don’t need them. There are plenty of places in the bush where the locals just plant them in the spring and harvest them when they are ready.

Hang out with the locals in rural BC for a while and it’s clear they all have ready access to cheap pot although not all of them choose to indulge. It helps keep the wheels greased though, you don’t rat out such a generous member of the community.

Same thing goes on in the US though. I read a legit article some years back that growers love Federally protected land. You just lip back into the bush where no one goes with some pipe and some seed, find a stream, set up a gravity fed irrigation system, do some planting, and come back in a few months. The trick is as old as the problem. Steve Earl even had a hit song about it called “Copperhead Road”.

But I think they also use the real estate market to launder some of the money. Just have your “workers” pay cash to rent a place from you. It’s well under $10,000 a month so it doesn’t trigger an investigation.

Oh well I don’t mean to sound critical I think they should legalize, regulate and tax the whole pot business anyway. Especially in places like BC where usage couldn’t possibly go up, it’s so pervasive. Let’s face it the people have spoken and the majority accept it. It’s just a nuisance drug after all. I have to pay taxes on my drugs and smokes so why shouldn’t pot smokers be in the same boat?

There should still be some laws, mostly modeled after alcohol. No giving or selling to minors, no driving under the influence, fit for work policies still apply, no smoking in a public place, etc. All the same rules that apply to alcohol. Private property owners like campgrounds that cater to families are free to prohibit use or limit use to designated areas. Same as the “no booze on the beach” rules.

So with a little common sense I am not afraid of pot legalization even though I don’t use it myself, I am happy with my beer and rye. Apply the same rules I have to follow to pot smokers and I am sure we can all get along. We already kind of do.

And that way pot growers can put their plants in a greenhouse where they belong and stop wrecking all the houses.

#109 nonplused on 01.09.15 at 1:12 am

Ha, ha I said “my drugs and smokes” but I meant “my booze and smokes”. I don’t use drugs because I’m already boozed up enough. But I don’t know if I see the difference with just pot. Some of the other drugs I’d be a little more worried about.

#110 B.Mc in the OKV on 01.09.15 at 1:14 am

Everything is BEAUTIFUL in the Okanagan….

http://globalnews.ca/news/1762855/okanagan-real-estate-sales-soar-in-2014/

Ugh.

#111 vic_guy on 01.09.15 at 1:15 am

#79 Lloyd : since 2003 :
In four states, Alaska, Colorado, Oregon, and Washington, the sale and possession of marijuana is legal for both medical and non-medical use.

–> and B.C. is sandwiched between 3 of these states

Twenty-three states and the District of Columbia have passed laws allowing some degree of medical use of marijuana,[18] and 14 states have taken steps to decriminalize it to some degree.[19][20]

http://en.m.wikipedia.org/wiki/Cannabis_in_the_United_States

Not as big a business as it was.

#112 prairie person on 01.09.15 at 1:17 am

Some people with money don’t believe the gloom and doom about Victoria. Three houses in my area being built. One is ready enough to have a sale sign. The other two coming up. The builder isn’t building for the fun of it. New condos going up. Fast as they can build them. I didn’t see how many are going to be on that property but it is a lot. Somebody thinks there are buyers in Victoria. Only evidence of a downturn is that here and there, I see for rent signs. 2 bed apt for rent, etc. That is surprising given that university is open. More concerning is the number of earthquakes we’ve had off the west coast of the island. There’s a fault line down the middle of Vancouver Island. Could be ugly if one side lifts and the other sinks. I’m away from the water and on a ridge so a tsunami isn’t a concern unless it is so big that nothing matters. Waterfront would disappear. Oil tsunami, okay. Real estate tsunami, okay. The real thing, not okay. At my job I had to take a number of earthquake prep workshops. best not to think about it.

#113 Well - someone needs to brotect the banks on 01.09.15 at 1:18 am

Well – someone needs to protect the banks ;)

Good job. The alternative:

En-masse massive creditors default, will bring mortgages holders in bank-rupcy… ruptured banks in translation – see US

Do you HAVE ANY DOUBTS?????

#114 Leo Tolstoy on 01.09.15 at 1:34 am

#47 Turnerite on 01.08.15 at 9:14 pm
Serious question from an aspiring investor : How does an investor take a ‘short’ position for Canadian residential real estate, particularly Alberta if possible? Would this be a terrible idea? Thanks

Be grateful that you can’t (or at least not very easily). Otherwise, you and other ‘investors’ would go broke.

Seriously.

#115 Leo Tolstoy on 01.09.15 at 1:38 am

Ultimately, who cares what some German bank thinks? Everybody and their brother thinks that Canadian real estate is overvalued. The only difference is the degree. None of those opinions have mattered.

The sensationalist title is just used to increase distribution of the article and bring eyeballs to the page. Pure useless speculative marketing.

Wait a minute…

#116 Lillooet, BC on 01.09.15 at 1:41 am

Houses in Vancouver and Toronto are overvalued by about 3 times. A $1 million home is really worth about $300k. In mid-size cities like Calgary, Montreal, Kelowna, overvalued by about 2 times, $500k homes really worth $250k.

In small towns, houses are UNDERvalued by about 30%, $200k homes selling for $140k. So really, it’s about supply and demand and people choosing where they want to live. Because so many people want to live in the most expensive cities in the country (and the world), it increases the price.

#117 Blacksheep on 01.09.15 at 1:42 am

Mark #61,

“No they aren’t, and shame on you for suggesting that purveyors of illegal goods and services are a major driving force in the BC economy.”
—————————————————
You may have crazy knowledge about many other topics, but as a lifelong resident of Vancouver, I can confirm, you have absolutely no Idea what your talking about here.

#118 Edmonton Oil Guy on 01.09.15 at 2:05 am

All this talk about Alberta Oilsands workers losing jobs, slow down, blah blah blah.

There’s lots of work here. Too much, actually, to the point contracting companies around Edm/Ft. Mac are seriously worried about manning up shutdowns coming up this spring. And guess what, next spring too.

All this doom and gloom sky is falling BS is played out.

There’s plenty of work. I’ve been in the industry here over 20 years.

RE prices are going too continue rising in Edm and Cgy. This oil dip isn’t going to change that. Who cares if you throw me some stat about some point in some day in a month being down in listings vs some point at some time in the past (that’s just a negative illusion).

Back in 2008 I didn’t notice anything (I wasn’t buying and selling RE though), and now myself and the people I’ve worked with over the years are either working or enjoying well deserved vacation time off with the option of working.

There is no drop in RE prices.

You people who believe this need to spend 1/2 hour on MLS and check on the same listings 1 month later and see if the decent ones are still there. Go further and get a RE Agent to send you comparables on areas around Edm and Cgy and that’ll show you what the sold price was (free service).

You know what you’ll find? Not what this pathetic blog preaches.

This doom and gloom stuff is old news. What happened in the States won’t happen here. Our people in power have learned from it. Our banks aren’t allowed to leverage they way they did down south.
Any reference to Detroit or Phoenix is ridiculous.

Don’t get me wrong, I respect Garth and have followed his blogs daily for a few years now. And if you plan on buying and flipping and buying and flipping…well, you’re dreaming if you think you’ll do as well as people have the last 20 years. Better off investing the way Garth preaches.

As far as renting vs owning? If you plan on staying there for at least 10 years, don’t let this blog talk you into renting. Especially if you live in Alberta.

Let the hating begin……..

#119 The American on 01.09.15 at 2:05 am

At #123 from the previous day’s post: GTA HouseHunter… The information you find on Zillow reflects an asking price for a home found in the neighborhood of Oak Cliff, a not-so-great area found Southwest of the city of Dallas. And that’s putting it nicely. Also, you’ll notice the Tax Assessed value for 2014 was only $453,640, a far, FAR cry from the $749,900 asking price. So, in this instance, the property taxes paid in 2014 for a home with an assessed value of $453,640 were $11,577, or about 2.55% of the value of the home, or $965/month. Just because that’s what they’re asking $749,900 (a pipe dream, no less in Oak Cliff), it doesn’t mean that’s what they’ll get for it, and obviously the house hasn’t been purchased for that amount as it is still for sale after nearly a year on the market (306 days), and it took a price cut over $25,000 just last month. If a person were to pay the ridiculous $749,900 asking price, you can assure yourself he/she will pay about $19,000/year in property taxes as the purchase price typically becomes the newly-assessed taxable value in Dallas (and many,many more cities throughout the nation). If you used this same rate and applied it to the house value found in Vancouver, B.C., that person would pay over $1,740/month in property taxes. It pays to know what you’re talking about.

#120 The American on 01.09.15 at 2:10 am

Update to previous post of mine… That $1,740/month in property tax that would be assessed on an $819,000 home in Vancouver if it were using the same milliage rate found in Dallas, TX, is in USD. Translation to CAD is $2,058/month vs. the actual $300/month Canadians would pay on the same property in reality.. Yes, I’d say Americans pay a SIGNIFICANTLY lesser portion of property taxes than Canadians do, and there is simply no way to dispute that.

#121 The American on 01.09.15 at 2:11 am

CORRECTION American pay a SIGNIFICANTLY greater portion of percentage of value of the home in property taxes than Canadians.

#122 No more lies - the truth from RICKARDS on 01.09.15 at 2:30 am

http://pro.moneymappress.com/MMRBSSH39PPM3/PMMRQC45/?iris=267040&h=true

Garth, please, this is serious, your thought will be appreciated

#123 Dan on 01.09.15 at 2:38 am

#54…sponge rob,

No doubt about “cottage country”,what the hell do you
think all the BULLSHIT!!!! global was spewing on behalf
of those corrupt,lying pricks at RE/MAX today!!!
Just think how soon all the slaughtered Albertans are
going to be dumping those lovely”Lakeside Getaway Homes”in the good ol OK nogin!
Dan

#124 Andre on 01.09.15 at 2:44 am

I think your first mistake, which sets the premise for the rest of the article is calling real estate agents ‘professionals’. Given the quantity of education that this ‘profession’ requires and the length of time said education requires paired with the seemingly disproportionaly large commission for a nominal quantity of work or risk I think its fairly easy to see why these people tend towards unethical behaviour (or at least misleading behaviour).

#125 Don on 01.09.15 at 2:54 am

#42 Linda on 01.08.15 at 9:01 pm
Regarding the German banking report, that is being panned (for the 2nd time – apparently they are re-releasing this report which was originally unveiled over a year ago) by most of the financial gurus. I’d say I’d have to agree. 63% over valuation is just a tad over the top for reality. 30% is a much more supported figure.

IF 63% were the true over valuation of Canadian housing, the property market would be back to levels not seen since the 1990’s. The Re/Max estimate of what average housing will be for 2015 – $416,300 – would by that standard only truly be worth $154,031
*******************************
Resales in some places such as Port Alberni, BC Vancouver Island are still the same as the 90’s. I am sure new homes and high end are more expensive. But the vast majority of the housing stock are older stock. Was a mill town, and strategic deep water port (narrow inlet though) – The road in through the mountains from the gentler east side of the mountain is not retirement friendly even though the city’s amenties and surrounding activities are vast. High paying jobs forestry, mining jobs left long ago. A stop for gas, groceries and last minute camping/recreational supplies on the way to Tofino BC (Long Beach) The Whistler of the Ocean world, experiencing a downturn at the moment.

On the other side of the treacherous pass is retirement ville, infact the whole east side of the island up to Campbell River is retirement from all over and yes fly in and out oil patch workers.

When things are affordable based on local incomes than sense comes back bringing an equilibrium – my quess is that on the way down momentum will shoot passed equilibrium to bargain prices. Depends on the variables influencing the momentum. But is plausible. Real estate is local. Pain either way as loosing equity in real estate creates problems in many other areas most importantly marriages and families. That’s the real shame.

#126 Humanitarian on 01.09.15 at 2:58 am

Hi Gart, been reading your blogs for years.

Do you have any idea what impact will the increased of mortgage rates have on the value of apartment buildings in Canada? Would such property deflate with the price of housing? I have always rented and my portfolio is 100% stocks (I know I am not diversified). I am thinking of buying a 14 apartments building to diversify my assets. Would I take a hit in 5 years if I locked in the rate now with 25% down payment knowing the building is in high end location in YUL? At the current low rate of borrowing, the building would be paying itself? I am afraid of the situation in 5 years. Should I just maintain a balance portfolio and be care free ? Any thoughts on this specific idea is welcomed.

#127 Freedom First on 01.09.15 at 3:00 am

CBC asking Garth to be on their morning show to whack the locals. Gotta love it. Make my day. Congrats Garth. And then they surrender. Blog dogs know what this means, and the 1 s$$et strategists are about to find out.

Be careful in Calgary, they are not only as house horny as the Torontotonians and the Vancouverites, Calgarians hang their balls out the back of their V8 Trucks they use to go back and forth to work. You’ll be in the heart of Red neck country Garth. Albertans are a different breed, and as a former Torontotonion, I know, I have lived and worked among them for years. Don’t get me wrong, they are nice people, just make sure that you keep your conversations superficial, as they are a tough bunch.

However, the RE sales people are the same world wide. They have proven, and are continuing to prove, that there is no exception. Consumer beware.

#128 jane24 on 01.09.15 at 4:15 am

I totally agree that recreational properties will be hit very badly. Not only is a cottage an easier loss than a main home but the ‘cottage generation’ is dying out.

Few people today want to take time out of their busy lives to drive hours to and from a second home, one that they also need to upkeep in their rare spare time.

Plus in my generation Mom doesn’t get the summer off any more to go and live there with the kids. So what kind of accommodation value are you getting. Friends I know that cottage, simply rent one for a week.

Times have changed big time. Selling your cottage last year would have been a good move.

#129 Stephen on 01.09.15 at 4:21 am

Hey everyone, have about 100k in savings looking to invest it. I’m An extremely amateur investor. My ‘financial Advisor’ at bank is pushing to deposit in low risk mutual funds…5-6% return. Thoughts?

#130 Winston Smith on 01.09.15 at 4:49 am

The big lie is the American Dream–you have to be asleep to believe it.

“Being in a minority, even in a minority of one, did not make you mad. There was truth and there was untruth, and if you clung to the truth even against the whole world, you were not mad.”

“War is peace.
Freedom is slavery.
Ignorance is strength.”

#131 drydock on 01.09.15 at 4:51 am

#78 Paul Sinclair on 01.08.15 at 11:10 pm

Is London, UK overvalued. You bet it is. Why? Because the riches of the world like this city and the money keeps pouring in. Same thing is happening here, as long as China prospers there will be no crash in Vancouver and Toronto.

London vs Van? Seriously? — Garth

#####################################

When i lived in N. Van. i actually heard someone seriously compare downtown Vancouver to Manhattan.
A lot of people in Van. live in a fantasy world.

#132 Marco on 01.09.15 at 5:09 am

Thanks Garth for putting everything so neatly into perspective. Interesting year ahead (no pun intended).
Seems we are slowly coming out of the denial stage and will be moving into the angry stage soon. It’s the age old “art of persuasion” used in the Ad world. Realtors have been persuading people to buy by serving up a big plate of fear and loathing if you don’t. “London vs Van? seriously?- Garth. So true Garth to compare any Canadian city to the likes of London is ridiculous, and no justification for the overvaluation of Canadian real estate. Glad I’ve waited…

#133 Smoke and Mirrors on 01.09.15 at 5:35 am

The foreign investment impact is being felt elsewhere too. Why has this turned into a race issue when it’s a simple economic one (that should be curtailed, at least).
3 minutes in you’ll hear a very familiar story of a housing problem in the UK.
https://m.youtube.com/watch?v=jjH7a2dZi_o

#134 Urinal Mint on 01.09.15 at 6:17 am

How many of these economists predicted $40 / barrel oil….? So the experts predict housing will crash….? Like predicting the weather, it is all just a scientific wild ass guess.

Just wait until all the climate change refugees move to Pacific North West. Buy now or be priced out forever.

#135 liquidincalgary on 01.09.15 at 6:28 am

Washed Up Lawyer on 01.08.15 at 8:24 pm

Garth:

When you are on CBC, can you mention moist virgins and Ft. McM hookers?

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

oxymoron

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

if anyone has a link for garth’s interview, please post!

#136 Millenial on 01.09.15 at 7:50 am

Well, it’s looking more and more like Garth was right about real estate in Canada. But then, we all sorta knew it already. We just come here for confirmation of our beliefs. Props to Garth though for his indefatigable postings trying to warn people, especially youngsters, about becoming house rich and cash poor.

However I fear the problem is much bigger, and extends well beyond the real estate industry and the borders of Canada. This link posted by economictsunami (#69) summarizes it all: http://www.economist.com/news/finance-and-economics/21638153-trapped-world-high-debt-low-rates-and-slow-growth-falling

Garth says you’re a loser if you’re not investing. He says over the long run these S&P500/TSX60 ETFs only go up. 7% a year over the past 15 years on average. Or was it 6%? I forget. We’ll see if that trend continues.

#137 fancy_pants on 01.09.15 at 9:03 am

Given the taxes, fees, and costs involved in a move, one can comprehend the downward stickiness on prices. Until the squirrel soup and rice runs out, they ain’t moving.

maybe if the BofC hadn’t finger wagged us the past 4 years about low rates being temporary and imminent rate rises on the horizon, people might give them a glance. credibility lost long ago. People ignored their warnings and have made out like bandits with the RE gains.

I want to say it’s Peter crying wolf again but low oil may have taken control of their hand. We’ll see. The only thing more full of hot air than the RE market is the warnings from the BofC. Maybe they should wave a smaller stick and actually hit us for once. geez.

#138 apocalypse2015 on 01.09.15 at 9:46 am

People this is starting to look incredibly ominous. A second hostage taking and murder has just occurred in Paris. This is going to spread and break out all over and will likely be the new normal within weeks, including in North America.

2015 will be a global year of such events and catastrophes, large and small. Forget about real estate. It is toast. Just try to stay alive and protect your family, keep a job if you can.

We face terrible things in 2015:

-terrorist lone wolf outbreaks everywhere, plus much more organized ones
-possible war between Russia and the west
-economic collapse starting in Greece and Eurozone
-economic and real estate meltdown across Canada
-environmental disasters
-regular disruptions in our daily lives, schools on lockdowns, transit shutdowns
-all of this reported incessantly in media, terrorizing us more
-this will help re-elect Harper who will destroy more of our freedoms

On the bright side? Maybe we can continue to laugh at North Korea and the Maple Leafs.

Let’s hope.

You must be a riot to live with. — Garth

#139 Martin on 01.09.15 at 10:35 am

Hi Garth,

could you tell me your thought on this chart and post?

******************************************************************************
http://market-ticker.org/akcs-www?get_gallerynr=5093
And this explanation why unemployment rate is low in USA?
http://market-ticker.org/akcs-www?singlepost=3371492

The employment:population ratio decreased by two tenths, also being the second month in a row of declines.

So the bottom line here is that the “decrease” in unemployment had exactly nothing to do with improved employment (in fact actual employment declined for both of the last two months) but instead was comprised of people who are unemployed giving up on finding a job!

That, of course, is not being reported — all that is being talked about is how “strong” this report is given the establishment figure. However, the lie factory is running into fairly serious problem in this regard in that full employment (which is commonly regarded as a ~5% unemployment rate) should bring significant wage pressures (upward) — that isn’t happening, and the reason it’s not is quite simple.

The actual number of people employed is falling, not rising, and as a result there is no reason for employers to pay more!

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

You wrote whole book about how boomers will be leaving work force ….
I think it’s happening en masse in USA right now for 2 reason.
1. Age – I can’t work because of my age/health issues
2. Ability to abuse disability, food stamp payments/systems

Thank you for your response.

US job creation, 253,000. Canada job losses, 4,300. About all you need to know. I’d worry about us, not them. — Garth

#140 footydiver on 01.09.15 at 11:10 am

About the Re/Max quote at the end:

The mean housing price they use is across the whole country, which is a dumb estimator to start with anyways.

Even by their optimistic standards, it is a modest 2.5% increase. Factor in the transaction costs, taxes and cost of running the house….you would be making a loss.

#141 liquidincalgary on 01.09.15 at 11:10 am

#90 nonplused said:

After all, they are removing tar from contaminated soil

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

so wrong. the oilsands have about a 10% saturation. not tar-like at all. it’s like grabbing a hand full of beach sand and it ‘clumped’ together.

now, go correct your dad

#142 Vince on 01.09.15 at 11:31 am

If corporations and oil companies hedge oil prices during good and bad times, why to do not governments. The government in Mexico appears to have entered (what currently looks like a very prudent) hedge for 2015 at $76/bbl.

Did the Government of Alberta really not take out hedges on oil production? If it is simply royalty driven, I can understand how low prices result in low absolute production, and lower royalty payments, but it is baffling to think that they didn’t apply ANY sort of hedging given an almost singular economic focus.

Maybe Garth or others have some thoughts on this to add to the conversation. Particularly those people that are local to Calgary.

#143 liquidincalgary on 01.09.15 at 11:45 am

Freedom First says:

Don’t get me wrong, they are nice people, just make sure that you keep your conversations superficial, as they are a tough bunch.

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

that’s because, like all GOOD albertans, we’re originally from SK

go riders

#144 RayofLight on 01.09.15 at 12:04 pm

“#33 Hey, what’s with bashing mutual fund salesmen? Mutual funds are pretty cool. Most Canadians like them… AKA financial planners are worth their trailer fees… potato potato, most people have lira’s and rrsps”

Seriously?

Mutual Fund Salesmen (AKA “Financial Planners”), charge you 2.5%/ yr so that they can underperform on the index? 2.5% so that when you call to ask them to go cash, they can set up a client meeting with you two or three weeks in the future and then “hold your hand” while the market swoons. 2.5% regardless if the market improves or dies?
Who wants to swim with a 25 LB diving weight belt on all the time? Sure the market at times acts like a 6 year old boy with ADD on a sugar high, but you are still better off calling your own shots. Set up a low cost broker account and do your own buys & sells. Look for long term economic trends and find good companies in those trends with low Forward Price Earnings &with good forecasted earnings growth ,(PEG <1), and you will be fine.

#145 Josh in Calgary on 01.09.15 at 12:24 pm

#130 Stephen,

With 100K I’d say it’s worth your time and effort to set up a self directed account and put a bit of time into figuring out how to build a balanced portfolio. Your bank probably offers self directed accounts if it’s one of the big 5.

Just use the formula that Garth espouses here. You want roughly 60% in equity and 40% in Fixed income. Use either ETFs or mutual funds. NOTE: most self directed accounts offer a line of mutual funds that are EXACTLY the same as the one your buddy at the bank is pushing but with half the fee. Basically you save 1% per year by cutting the middle man out of the equation. ETFs will have even lower fees but sometimes the mutual fund performs better. I find the mutual funds are better on the fixed income side and ETFs are better on the equity side (usually hold the same stocks as the mutual fund anyways).

Now learn how to use your ETF and Mutual fund filter. If you want you can build a portfolio of 2 mutual fund (1 FI and 1 equity) and be covered. With a little more work you can customize it a bit more:

1 mutual fund for low risk fixed income (government bonds) – 25%
1 mutual fund for medium risk fixed income (corporate bonds) – 15%

1 ETF for Canadian equities 20%
1 ETF for US equities 25%
1 ETF or mutual fund for International 15%

These numbers are not gospel and are only meant to provide a rough guideline. You’ll have to pick your own percentages based on your own risk tolerance and research. Your self directed account will probably even have some recommendations for building a balanced portfolio. If you want you can add in some preferred shares and REITs as well. Maybe best to do that a little later once you’ve got the hang of things.

REMEMBER to REBALANCE once or twice a year. It sounds like a lot but it’s really not so bad.

#146 liquidincalgary on 01.09.15 at 12:28 pm

vince, mexican oil is nationalised.

do you really want to go back to the good ‘ol days of NEP??

#147 Iconoclast on 01.09.15 at 12:36 pm

#92 nonplused

The big windmills have look slow but have big blades.
The tip speeds can be higher than you might think.
90m/s = 320 km/h

#148 Victor V on 01.09.15 at 12:38 pm

https://ca.finance.yahoo.com/news/canadian-housing-starts-fall-december-132648487.html

TORONTO (Reuters) – Canadian housing starts fell more than expected in December and November figures were revised lower, suggesting the country’s once buoyant property market is starting to cool.

A report from the Canada Mortgage and Housing Corp showed the seasonally adjusted annualized rate of housing starts fell to 180,560 units in December from 193,199 in November. Analysts surveyed by Reuters had forecast 193,500 starts.

#149 TurnerNation on 01.09.15 at 12:42 pm

We have a live made for Tv action show on. Replete with gory ending. Why must our puppet leaders continually remind us we are free? Then show us their violent hand? They scambled only news helicopters that day not fighters. Of utmost importance.
Bombs away! It’s the only language they understand.

But of your kids in school even ape playing Cowpersons and Indigenous persons well it’s suspension and sensitivity training for them. We have zero tolerance wink wink.

#150 Victoria99 on 01.09.15 at 12:55 pm

What a Joke–B.C. assessment has my house in Victoria up 16% from last year.

#151 worried realtors on 01.09.15 at 1:13 pm

The high school drop out realtors sound like idiots with their everything will be ok no matter what happens. They sound so idiotic one doesn’t know where to begin. Canada monster housing bubble which everyone in the world can see is due to the over 1 trillion in sub-prime CHMC. The government should stop CHMC or lower total lending amount to $250k max and then see what happens. Housing would crash 70% over night and everyone knows this. Canada is a house of cards and the oil crash is pushing the house of cards over. It’s happening and worried high school drop out realtors know it. How many high school drop out realtors do you know?

#152 DM in C on 01.09.15 at 1:20 pm

#117
“In small towns, houses are UNDERvalued by about 30%, $200k homes selling for $140k. So really, it’s about supply and demand and people choosing where they want to live.”

Exactly right. For example in PEI you can get 36 acres including a house and horse barn, for $75k.

http://www.michaelshomes.com/pei-renovated-farmhouse-on-36-acres-near-beaches-with-horse-barn-75000-best-deal/

#153 Alberta housing prices to fall like oil stocks on 01.09.15 at 1:33 pm

An economist in germany said Canada is overvalued by 63% and oil stock so far lost that exact same amount. Financial pain is coming. :)

#154 Nemesis on 01.09.15 at 1:33 pm

#MoreBigLies,Or… #NeverConfusePhotoOpsWithActualPolicy… #Let’sPlaySpotTheDisconnect!

[G&M] – Harper urges employers to take on apprentices, announces loan at BCIT

…”Stephen Harper appeared at a British Columbia Institute of Technology (BCIT) campus on Thursday to tell trades students that the Canada Apprentice Loan is now “open for business,” providing apprentices in designated “red seal” trades with access to interest-free loans similar to the ones already available to college and university students.”…

http://www.theglobeandmail.com/news/british-columbia/harper-urges-employers-to-take-on-apprentices-announces-loan-at-bcit/article22372545/

[G&M] – Proposed Murray River mine to rely primarily on foreign workers

…“The whole town is basically unemployed,” Brian Cochrane, business manager with Local 115 of the International Union of Operating Engineers, said on Thursday. “So if any jobs are going to be available … you want to hold people’s feet to the fire and say, ‘Why aren’t we creating the appropriate actions so people from the local community are getting access to some of the employment?’”….

http://www.theglobeandmail.com/news/british-columbia/proposed-murray-river-mine-to-rely-primarily-on-foreign-workers/article22373861/

#155 CP on 01.09.15 at 1:40 pm

Good example of why you should take what the MSM says with a large dosage of salt:

http://www.thestar.com/news/gta/2015/01/08/global_tv_anchor_leslie_roberts_suspended.html

#156 everythingisterrible on 01.09.15 at 1:54 pm

#117 Lillooet, BC
You are like a broken record. Who are you trying to convince that housing in rural towns is undervalued by 30%, us? or yourself?

#157 Nomad on 01.09.15 at 2:28 pm

Shell Canada lays off oil sands workers

http://www.bnn.ca/News/2015/1/9/Shell-Canada-lays-off-oil-sands-workers-.aspx?hootPostID=d2e4413e3ea834c0fa5d886a33952013

Watch your canadian bank stocks fall.
Worst is HomeCapital and Genworth Canada.
Too bad I had only dumped the second.

Stop your love affair with our banks. Buy US banks.

#158 Bby604 on 01.09.15 at 2:34 pm

Chicago federal reserve said jobs report means we should hold off on raising rates…. How can they raise rates ? Debt payments would balloon and stop the economy dead.

#159 bob on 01.09.15 at 2:34 pm

Wow, you don’t even have to write anything original anymore Garth. You can just be an aggregator of news links! Your news looks absolutely positive compared to the other articles.

#160 Sheane Wallace on 01.09.15 at 2:38 pm

show must go on…

https://ca.finance.yahoo.com/news/sagging-u-inflation-keep-fed-hold-evans-144659881–business.html

It seems no interest rate increase this year? becouse the sky is blue.

#161 David on 01.09.15 at 2:56 pm

Alberta in particular is very poorly prepared for the next correction, recession, crash or whatever is coming is called. Alberta has a 13 billion sovereign wealth fund same as Alaska but with 8 times the population. The Russians and Norwegians had substantial holdings of US currency to cushion the bumps when their oil and currency fell in price.
When there is lots of free money out there how can any of blame the real estate and oil industry promoters for grabbing their share?
That hedge fund driven US oil shale revolution game changer is looking pretty shabby these days too. A lot of them would have been splendid investments if WTI hit $300 a bbl.

http://davidstockmanscontracorner.com/production-math-in-the-shale-patch-its-all-about-new-drilling-and-cash-down-the-well-bore/

#162 AACI Home-Dog on 01.09.15 at 2:56 pm

#139 apocalypse2015

you watch the news too much dude…chill out & enjoy some of the good things around us…2015 will be great !

#163 Nemesis on 01.09.15 at 3:12 pm

#FridayFun&PoliticalMischief…

#PrivatisedHealthCareWorks!… #JustAskTheNHS[Actually,NotSoMuch]…

[Guardian] – ‘Inadequate’ Hinchingbrooke hospital to be put in special measures: Care Quality Commission publishes scathing report revealing catalogue of serious failings at privately run hospital

http://www.theguardian.com/society/2015/jan/09/hinchingbrooke-hospital-special-measures-cqc-report

#WhichMustBeWhy… #TheSamePeopleWhoBroughtYou… #’TheNationalCitizensCoaltion’… #Can’tWaitToCutYourTaxes!…

[Tyee] – The Slow, Quiet Death of Medicare: Aiming to privatize, the Conservatives deprive our system of its sorely-needed salve: taxes.

Harper has quietly put in place the mechanism for deep cuts to federal support for public health care. There was, of course, no proclamation pointing that out. His government simply announced, just before Christmas in 2011, that there would be no negotiations to renew the expiring health accord with the provinces.

Instead, it unilaterally imposed a new formula — which will cut federal support for health care by an estimated $36 billion over the next decade, leaving the cash-strapped provinces scrambling to cover costs, with private, profit-seeking health entrepreneurs buzzing at their doorsteps…

As a result, few Canadians seem to realize that, as things stand, our medicare system — an institution cherished by millions — faces serious spending cuts starting in 2017.”…

http://www.thetyee.ca/Opinion/2015/01/09/Death-of-Medicare/

#HolyJunkets,BatMan!… #NoSpendingCutsOnHainan!… #JustAskSenatorVictorOh…

[ChinaDaily] – Chinese island holiday paradise for Canadians?

…”During his trip Oh also discovered new potential connections such as health care, environmental protection and cultural exchanges between Canada and Hainan.

“Hainan has a great chance to become a world-famous destination for convalescing; Canada has leading medical treatment services, thus I can see there is a complementary relationship which can boost Hainan become an international tourism island with advantaged healthcare service.” …

http://usa.chinadaily.com.cn/us/2015-01/09/content_19285044.htm

#OrIsItAllJustAnEvilPlot… #ToSubvertTimHortons!?!…

[ChinaDaily] – Dunkin’ Donuts to open 1,400 outlets in China

“We have created several doughnuts using flavors that are familiar to Chinese consumers, especially around our recent restaurant openings in Shanghai. We will also look for key moments to celebrate our coffee and doughnut heritage, including holidays like Global Donut Day and Global Coffee Day, which we celebrated in China and around the world in 2014,” George McAllan, Managing Director

http://usa.chinadaily.com.cn/us/2015-01/09/content_19285036.htm

#NoHainanCherriesForYou,BlogDogz?… #FearNot!… #YouStillHaveOneWeekEndToPeek…

VAG – The Forbidden City: Inside the Court of China’s Emperors & Canada’s Senators

https://www.vanartgallery.bc.ca/the_exhibitions/exhibit_forbiddencity.html

#164 Ronaldo on 01.09.15 at 3:22 pm

#117 Lillooet BC

”So really, it’s about supply and demand and people choosing where they want to live.”

I would suggest that it has more to do with the lowest interest rates in history, government intervention in the markets, loose lending practices by the banks and the massive backing of mortgages by CMHC. The cure for high prices will be the normalization of interest rates.

#165 Alberta RE goes bye bye on 01.09.15 at 4:24 pm

Just the first bomb of many,……

http://www.torontosun.com/2015/01/09/shell-to-cut-jobs-at-alberta-oil-sands-project

#166 I'm stupid on 01.09.15 at 4:41 pm

Getting screwed over!

I’ve been insured with the same company for 15 years. Last year I hit a patch of ice and went into the guard rail. 5 months later and someone hit my car and took off. Now they won’t insure me. I called around for quotes and it turns out I’m a high risk driver and my premium is going to go up from $2200 a year to $7000 a year.

The kicker is that the repair total for both the accidents was $5000.

How is this a fair system, when I’m forced to buy insurance?

#167 I'm stupid on 01.09.15 at 4:43 pm

And it’s going to take 6 years before I’m no longer considered high risk. 7k a year for 6 years for 2 minor accidents.

#168 TurnerNation on 01.09.15 at 5:04 pm

Batman on the Dow index.

#169 Ontario's Left Coast on 01.09.15 at 5:07 pm

#153 DM in C on 01.09.15 at 1:20 pm

Exactly right. For example in PEI you can get 36 acres including a house and horse barn, for $75k.

Great… Daughter #1 is looking over my shoulder as I review the listing and now she wants to move to PEI! Sweet deal, though compared to the madness in the major markets…

#170 Nomad on 01.09.15 at 5:17 pm

Last year 99% of analysts didn’t predict bonds would do great.

Then analyst saids to take it easy on REITs. Now look at REITs. Doing great, relatively. XRE almost at 52-week high.

#171 bdy sktrn on 01.09.15 at 5:18 pm

#168 I’m stupid
———————
drop the optional coverage
plenty of nice cheap cars out there

#172 jess on 01.09.15 at 5:18 pm

not so clean nails and hair

http://www.therecord.com/news-story/5249319-brazen-scam-at-cambridge-bank-just-didn-t-smell-right/

======

China’s tax agencies begin tracking citizens’ overseas earnings
Thursday, January 8, 2015
http://www.chinaeconomicreview.com/chinas-tax-agencies-begin-tracking-citizens-overseas-earnings

===========
untangling

rated “triple-A” went to “junk” status certificates approx. 92% or $16.2 billion,
JPMorgan Said to Pay $500 Million to End Mortgage-Bond Suit
Bloomberg‎ – 3 hours ago
===============
U.S. SEC economists to write paper on risky ETFs and market volatility

By Sarah N. Lynch

http://www.reuters.com/article/2015/01/09/us-sec-etfs-markets-idUSKBN0KI20G20150109
WASHINGTON Fri Jan 9, 2015 2:25pm EST

#173 bdy sktrn on 01.09.15 at 5:19 pm

#170 Ontario’s Left Coast on 01.09.15 at 5:07 pm
#153 DM in C on 01.09.15 at 1:20 pm

Exactly right. For example in PEI you can get 36 acres including a house and horse barn, for $75k.

Great… Daughter #1 is looking over my shoulder as I review the listing and now she wants to move to PEI! Sweet deal, though compared to the madness in the major markets…
——————————–
hope she can speak acadian – nice folks though
s’side is close by

#174 Rexx Rock on 01.09.15 at 5:59 pm

If interest rates rise and incomes fall that’s when you will see housing prices fall.Vancouver and Toronto may not see a decline in house prices because of high median income in both these cities.
I hope we don’t see a 62 cent dollar like 1999.I guess Canadians don’t care about our government deliberate devaluation of our currency due to low interest rates for years to come.

#175 Sheane Wallace on 01.09.15 at 6:10 pm

#167 I’m stupid

Looking for fairness here? How naive, no wonder insurance companies consider you a big risk… while CMHC ‘insured’ mortgages are not…, their total insurance for a house north of million is the same as yours for 1.5 years of newly inceased premium.

How ironic and sad.

#176 devore on 01.09.15 at 6:13 pm

#70 long dong

I’m pretty short with posts that don’t even pass the basic smell test. Sorry if it ruffles your feathers.

#177 devore on 01.09.15 at 6:24 pm

#105 Timmy

you are missing the point-they are reporting on Vancouver real estate because so many Chinese are invested in it.

It is of interest to _some_ people, yes, of course, but that does not mean there is a “significant influence in the market”. I have interest in a lot of stories about a lot of things from many parts of the world, which is why they are printed, but reading anything more into that is silly.

#178 eric on 01.09.15 at 6:33 pm

#10 Smokin Man

It is a given after all we are talking about Toronto core. Anyone thinking otherwise are smoking some good stuff.

#179 MGTOW on 01.09.15 at 6:56 pm

To #167 (‘I’m Stupid’): You said that you had those accidents and now your insurance has skyrocketed.

I had a very similar situation as you had. However my car is a 2006 model with 300,000 kms on it, and as a result of that it has almost no market value. I paid for it with cash so I am able to get ‘LIABILITY ONLY’ insurance for it; no collision coverage, no comprehensive coverage. As a result, my insurance is only $1,300 per year. But when something bad happens to it I have to pay out of pocket myself.

My car is black, so I go to Canadian tire and buy a touch-up can of spray paint for $6 and fix any scratches myself.

6 months ago I was standing still in a mall parking lot when a guy backed up into the side of my car and busted my driver’s side mirror clean off the car. In parking lots the insurance industry considers each driver to be 50/50 at fault, so no use going to my insurance company to pay for the mess. We split the bill on the $200 mirror, he paid me $100 and I installed the mirror myself at home (open up the door panel, wire it up, put everything back together, back to new.)

Then a few months later another guy backed into the side of my car, bashing in the rear left door. He took off when I told him that according to the law we have to report the accident. I got his insurance information and I guess I could have made a claim against HIS insurance, but the damage was estimaed to be well over $3,000 and my car is only worth about $1,200 so his insurance would have only written me a cheque for about $50 and then totaled my car, so it was better for me to just take my rear door off, open up the inside panel, bang out the dent with a sledge hammer and some pieces of wood to spread out the force, and then put the door back together, back on the car, and then spray paint it all back to the same black color it was before. This way I keep my car (it still runs fine), my insurance stays at a nice low $1,300 per year, and I don’t get put on any ‘HIGH RISK DRIVER’ list.
If I had done as you , I too would be paying $7,000 per year, so I’m saving about $5,500 a year, and that’s what’s about what I paid for my used car in Cash 4 years ago.

My suggestion to everyone: if the damage to your car is not too bad, just forget about it, maybe fix it yourself if you can, because if you go and make a claim on your insurance then you will really regret it, eventually.

#180 jess on 01.09.15 at 7:00 pm

#116 Leo Tolstoy

safe harbour
Derivatives and the Bankruptcy Code: Why the
Special Treatment?

http://www.theguardian.com/business/2014/dec/10/congressional-budget-big-bank-bailouts

#181 Mike on 01.09.15 at 10:39 pm

Pathetic, suicidal cynical and snide,
This blog’s stuck on replay – run and hide, run and hide

Blog dogs keep reading , hoping for the crash
Garth keeps repeating , diversify your cash

So go ahead now, invest what you’ve got,
Some on Green, Some on Red, Some on Black…hey why not?

It’s all good, just know this – the house always wins
Stock-Market casino or the shack in the hills,

If you put down thirty, sit back and relax
A Housing correction – who needs that?

When interest rates rise, it’ll be a joke
Don’t be a greater fool – stuck, still reading this blog

#182 Nemesis on 01.09.15 at 11:24 pm

#JustCurious…

MLX™ in maintenance mode, ‘Mike’?

#183 blair witch on 01.10.15 at 12:32 am

Anyone buying into the housing market now are out of the friggin minds, the asking prices for homes in BC are so beyond comprehension for anyone to understand. Is RE and BC Assessment in co-hoots with each other. Is the greed so atomic that it feeds on the system which will eventually break down.

Even if the rates go up 1/4 point is it not going to make a difference to the housing market in BC, sorry no. BC is known for it’s banana belt of luxury, unless there is a drastic change in the interest rates, there will be nothing than an black hole of debt and tears in BC.

#184 Mark in Perth on 01.10.15 at 8:43 am

Interesting parallels between two commodity exporting countries – Canada and Australia. Until today I didn’t appreciate the close connection. We (in the Land Down Under) — with our sharks, snakes and sunscreen — have been selling iron ore to China for top dollar for years, while Canada has been exporting tar sands oil at a similar rate.

Both commodities have seen declines of over 50% recently.

Both countries have experienced a housing bubble as well. Yes, it’s true, Virginia. Household debt to income is now pushing 160%. Yum. What’s not to like?

Oh, and our dollars which were once both about 1.10 to the greenback, are now humbled down to the low 80-cent range. How times change.

If only there were an export market for sunburn (or frostbite).

This is Mark from Perth (originally from Edmonton).

#185 Timing is Everything on 01.10.15 at 1:07 pm

#180 MGTOW – said “In parking lots the insurance industry considers each driver to be 50/50 at fault… ‘

Not true. The person driving the vehicle that is backing up is 100% at fault . Where do you get your information? You should have made a claim and taken a cash settlement (everything is negotiable and costs you nothing…his deductible). You could keep your car and ‘fixed’ it yourself, as you did anyway.

“The Motor Vehicle Act places the responsibility squarely on the driver who is backing up. It says that a driver must not in any event or at ANY place [parking lots for instance] cause a vehicle to move backwards unless the movement can be made in safety.”

“…courts generally rule that a reversing vehicle is 100 per cent at fault for ANY resulting accident.”

http://tinyurl.com/ndc3q2n

Dude (Dudette), just google it. Yikes!

#186 PVS Inquire on 01.10.15 at 3:27 pm

#117 Lillooet, BC
You are like a broken record. Who are you trying to convince that housing in rural towns is undervalued by 30%, us? or yourself?

Not sure about rural towns, but here in Windsor, ON housing is undervalued by about 10-20% for the average home (150-250K).

Chrysler has recently announced a billion dollar re-tooling of their plant here. Months ago the CEO said “see you later” to the gov’t and now is investing here. It doesn’t seem to make sense, but it’s happening.

A teacher of mine used to drill into our brains “where there’s a will, there’s a way.” This is true for many towns and cities outside of the illusions of Toronto and Vancouver.

I have a suggestion for you Garth. Make it a requirement to stick to the topic on this forum. Comments should have some direct connection to the story/theme of the day. On a daily basis there are people who post things that should never be published. Or does the entertainment value trump common sense? :)

#187 Linda on 01.10.15 at 5:35 pm

#53 Dominios & #60 Mark: Your math is correct if you take the position that 63% of the estimated average of $416,300 would be the true cost of Canadian housing: in my example I reduced the estimated average by 63% ($416,300 x 63% = $262,269; $416,300 less $262,269 = $154,031). If the German report was meant to say housing would drop by 37% (63+37=100%) then the valuation of housing would indeed be $262,269 by that estimate.