The scent of a fall

BALCONY modified

A few days ago Dean Gaziosi published the story below on his web site, beside all the come-hither promos for his books, newsletters and seminars on how to get hideously rich by investing in US real estate.

I sometimes give this homeless guy 5-20 buks when I see him. He said his name is William but to call him Bill. He hangs out near the Walmart parking lot entrance near Shaw & Peach but he’s not your typical druggie alkie transient. This guy is crippled and seems reasonably clean cut.

I asked him if he’d like to make some money and he looked surprised and asked “What can I do”?

I gave him my card and told him to find me vacant boarded up houses. In the last few months he’s sent prob about 20 addresses. Well, wudnt you know it, I just got one of his houses on contract for $25,000. I ran it past my buyer and he wants it. I wonder how the 2 Grand I’m going to give Bill will change his life?

The title Graziosi gave this was, “Crippled homeless bird dog is making $2,000.” It was posted under his videos such as, “Unleash Your Inner Brilliance.” If you see nothing jarring about this exploitative juxtaposition, then you’ll absolutely love it when this dream merchant makes a one-day-only stop in Canada, in Toronto, April 24th.

This dude is the latest in a long line of people who, for $99, or $399, or $999, will give you four easy steps to unbridled wealth that’ll make the guys in the neighbourhood implode with envy, and turn on their hungry wives. Lately he’s been hired by Tony Robbins, who decided he’d become a finance guru since we all found our self-esteem. So, to promote both their books and take advantage of the world’s biggest coming property crash, the Graz is traveling north.

“He will be forecasting a decline in the Toronto market similar to the US in 2006,” his publicist told me, hoping this pathetic blog would promote the event. He sent me a media release asking, “Is it ready to burst?”

I mention this guy because there’s a pattern developing here, to which most people are oblivious. Six months ago it was rare to find a single reporter, economist or organization waving a yellow flag over the Canadian real estate market. Today it’s a blizzard of caution. No wonder the sharks show up when there’s the scent of blood.

Just consider some of the stuff that’s just transpired. For example, massive mortgage defaults in BC. A report prepared for that province’s Financial Institutions Commission is warning this could become a reality – a housing crash leading to over-indebted families walking away from their mortgages.

Sent to BC’s lend-happy credit unions, like Vancity, it says: “Default risk is of particular concern given the continuously climbing housing price in the Greater Vancouver area. When the US last experienced a housing price run-up, what followed was a disastrous crash, the effects of which still persist today.”

How dependent are that delusional province’s credit unions on real estate lending? Massively. Almost 70% of all CU loans are for real estate assets. Think about that if you happen to have your retirement money sitting in GICs there, and what good your provincial deposit insurance might be if the Big One hits.

But it gets worse. Did you see the latest Teranet house price index report?

“There have clearly been corrections in some markets,” it says. No kidding. Of the eleven markets tracked, prices were up last month in just three – Vancouver, Victoria and (please sit) Hamilton. Despite what the realtors tell you, losing cities included Toronto, Calgary, Quebec, Montreal, Edmonton, Winnipeg, Ottawa and Halifax.

Here’s how senior economist Marc Pinsonneault summed it up:

“In some markets there have clearly been corrections in progress. The monthly retreat in Calgary was the fourth in a row, for a cumulative decline of 2.3%. In Winnipeg it was the fourth in five months, for a cumulative decline of 3%. East of Toronto the corrections have tended to be larger. For Ottawa-Gatineau it was the fifth retreat in six months, total decline 5.2%, for Montreal the sixth in seven months, total decline 5%, for Halifax the fourth in five months, total decline 5.5%. Quebec City prices fell for a fourth straight month, total decline 2.%.”

Remember what I told you about 60% of Canada’s markets being in stagnation or decline? Sorry. Make than 80%.

Then there’s oil. More losses this week, so it sits at $47. Sales in Calgary today are down almost 30% again, with 5,700 houses listed and days-on-market up almost 40%. Not a happy place to be a seller, while the buyers have simply retreated. There are still hundreds and hundreds of families who bought before they sold a few months ago, thinking the bull would rage forever. Now they’re in panic mode. So, significant price drops coming.

To make things worse, on Thursday morning a thousand construction workers employed by a contractor to Husky Oil’s Sunrise project were punted. Just like that. “Guys were just notified this morning as they woke up in camp,” a union rep said. “They were supposed to be there until June, July and August. It was supposed to be a gradual decline through the summer, so this was unexpected.”

Finally, seems Canadians just can’t keep out of the trough. Every day comes more evidence of a colossal debt overhang that’s simple unsustainable. In a year or two or three, we will look back on this the way people now view the US housing debacle and say, ‘how did we not see it coming?’

Household debt hit a record in the last few months of 2014, when measured against incomes. Together we have $1.2 trillion in mortgages. And this accelerated dramatically in January after the central bank goofed, and cut its rate.

Says credit-rating agency Equifax:

“It’s a cautionary tale what we are currently seeing in the Canadian economy. The rapid decline in oil prices caught many by surprise. And, that’s the point – consumers and business owners need to be more vigilant. When economic change happens, it can happen very quickly and can challenge previously observed stability of key economic and credit indicators.”

You bet. We’re just one homeless, crippled bird dog nation, awaiting its Messiah.

297 comments ↓

#1 Squirrel meat on 03.12.15 at 6:41 pm

Yesterday’s fellow – with only one leg, would have had a harder time pulling off that dangling trick….

#2 ILoveCharts on 03.12.15 at 6:41 pm

Tsur is one of the few voices in Vancouver stating that the influence of foreign investment in Vancouver is a non-factor. (Despire our prices are still rising while the rest of the country is in a funk.)

Today, Tsur was exposed (by the South China Morning Post of all places.)
“Tsur Somerville’s institution has been sponsored by developers, and he’s done no peer-reviewed research into the city’s extreme unaffordability”

Is local ownership and high levels of a debt a factor: Yes.

Is foreign money a factor: Yes.

I don’t even know why this is a question or debate. It’s so obvious.

#3 Leo on 03.12.15 at 6:41 pm

Sometimes I wish I was American.

#4 CPG on 03.12.15 at 6:42 pm

Over the last several decades the Canadian people, their elected politicians and Bank of Canada governors have teamed up to create quite the economy, standard of living, and way of life in this country.

At the end of Dec, 2014 the total household, government (all levels) and business debt in Canada (bottom line of the credit market summary data table – total debt outstanding) was $5.75 trillion. In the calendar year 2014 the total debt outstanding in Canada increased by $243 billion. In 2013 it increased by $287 billion. In 2012 it increased by $272 billion. (The start date of the data table can be changed by clicking on the “add/remove data” tab at the top of the page and going to step 3, and then clicking on the “apply” tab in step 5.)

http://www5.statcan.gc.ca/cansim/pick-choisir?lang=eng&p2=33&id=3780122

To put these numbers into perspective, in the fiscal year 2014-2015 the federal government is expecting to spend $250.2 billion on program expenses. (Table 4.2.4 in the following link:)

http://www.budget.gc.ca/2014/docs/plan/ch4-2-eng.html

The approximate beginning of the global financial crisis was June, 2007. At the end of June, 2007 the total debt outstanding in Canada was $3.74 trillion. In the 7 1/2 years which has gone by since the start of the global financial crisis the total debt outstanding in Canada has increased from $3.74 trillion to $5.75 trillion. This is an increase of 53%.

#5 Mountain Man on 03.12.15 at 6:45 pm

Me so house horny.

#6 Mark on 03.12.15 at 6:45 pm

“Almost 70% of all CU loans are for real estate assets. “

That’s insane! And what are the other 30% for? Small business that are highly levered to RE in some form or another?

I know lots of the socialist/commie types will cry wolf and blame the ‘big international bankers’ when their particular credit unions go belly up and have to be taken over by the big-5. But its pretty hard to imagine a scenario in which these institutions, which are deep into subprime lending, surviving.

#7 Smoking Man on 03.12.15 at 6:46 pm

#210 Ponzif on 03.12.15 at 2:05 pm
#206
make your kids learn how to program.
—————-
Kidding me?
See where it got Smoking Man.
……………….
NOW I’M PISSED.!!!!!!!!!!!!!!!

WHERE IT GOT SMOKING MAN!

Seriously, just because my online persona goes throughly against your teacher manufactured belief system, It dosent realy mean I’m wrong about anything.

You bastards may not like to hear this, it may offend you to the core. But.

You’re all pathetic servants. Bitches, only usefull to butter the Masters toast. I loath 99% of you. You have brains but don’t use them. I can’t forgive that, it annoys the shit out of a logical mind.

Yes your grammar and spelling, exquisitely brilliant. It don’t mean shit in the real world. And that is the world of making real money, not the crumbs your master tosses you for wagging your tail, and being a good smiling boy.

Is code smithing so bad, that and revenue generation are the only occupations to have going forward. Only ones that will pay.

The code smith destroys inefficiency, kills jobs, in the right circumstance pays handsomely.

The Con Man, the sales men that brings home the bacon is payed good too, after all the peasants get his crumbs.

The one with the deed, owning the above, is the winner.

Me, I’m a Gambling Man, I’m not influenced be fear cowardly teachers tried to put in my head.

They all promote safety, they never played poker, yet they tell you playing poker is bad.

They will encourage you, and your kids to wrap your ass around a flag, be proud and go risk your life in an other land, fighting for the Capitalized word of Freedom.

Ya, freedom for your masters, not you idiots.

That’s high risk in my eyes, risk vs reward, where is it in that scenario.

Not I bastards, making a shit load of loot is freedom, and is bloody easy to do.

Had they not bulldozed into your grey matter from a young age you might have a shot.

Short cuts are bad they say, you must sweat with blood and tears to be successful. Do your homework dog. WHAT!!!!! To a Smoking Man, that’s absolutely Rediculos.

But for 99% that’s the way you think. You where trained to serve, not to be served .. And you were trained to love it. So when you encounter someone like me. It blows a gasket.

Your programing forces you to skip my posts. Bad mouth me, critize me. I never get mad, I know what these pricks did to you.

Not everyone skips my posts. Getting some pretty cool success stories emailed to me.

Shit, I know Garth doesn’t like to advertise his advisory services here, but this pathetic blog is his little obsession. He’s a Freak of some kind, that’s why I love the bastard. Not to many good shits around anymore.

How many of you cowards have even contemplated using his services, designed for cowards, safe balanced approach. Your even too scared for a relatively risk free return. It’s your teachers fault.

Forget my Gonzo approach… None of you can pull it off. Not with your current programing, that’s why I’m frightened to show any of you how it’s done. You won’t follow the plan, emotions will destroy you.

The day you can contract out 4 short term rentals at once, completely forget about them the moment you close the hotel room door , and bring home flowers to your wife is the day your ready to Gonzo trade . No emotion, logic only…

I’m not going to teach you what I’ve taught my youngest son.. He has no emotion, never did, he’s pure logic, just like daddy, did shit crap nothing in school, just like daddy, he saw through it, had fun tormenting his stupid, and I do mean stupid teachers…especially in high school.

He’s me… He’s better than me.

100% return on his trading In two months. I’ve never done that.

It’s on my blog. Click my name if you your new, screw it, skip the post.

Chirp away bastards and Smoking Man post skipping idiots.

One day mabey 5% of you might wake up from your trance.

Now where the hell is my waitress.

#8 mark on 03.12.15 at 6:49 pm

Your old buddy Tsur “there’s no bubble here” Somerville got a bit of a beating.

http://www.scmp.com/comment/blogs/article/1735460/vocal-academic-isnt-just-observer-vancouvers-real-estate-industry-hes

#9 Andres on 03.12.15 at 6:50 pm

Sounds like the homeless guy is making more money finding vacant houses than I am practicing law. Anyone want to trade a shopping cart for my tie?

#10 Joe Schmoe on 03.12.15 at 6:52 pm

So when do the respective governments come after those who saved? Curious what happens first..dividend tax credit reduction? Capital gains tax increase? Difficult to tax savings directly, but they can sure encourage blowing dough.

Alberta needs a sales tax/graduated income tax…not sure about the rest of the country.

I hope I don’t feel foolish for not pigging out on debt like the neighbours…

There are going to be some interesting times again.

#11 zedgt87 on 03.12.15 at 6:55 pm

Source for the BC mortgage defaults? SHTF

#12 Yogi Bear on 03.12.15 at 6:58 pm

Inb4 crash.

#13 NoName on 03.12.15 at 7:01 pm

1st robocall of the year, robot called earlier and asked me whay do I think about homeless and homelessness in Canada, and for who I would vote…

#14 Irish Stew on 03.12.15 at 7:01 pm

Tenth!

#15 Real Jimbo on 03.12.15 at 7:08 pm

Here’s my story – and lesson. I read Garth’s Greater Fool book when it came out back in 2008. In response to Garth’s warning in the book, my wife and I sold our condo. We rented a house in suburban Vancouver with our kids, waiting for the promised big correction and buying opportunity.

Seven years later, we are still renting. We’ve spent roughly $200,000 on rent in that period. Houses that cost $700,000 in 2008 are now easily $1.5M. Our friends and family who all bought instead of renting have built up equity in their secure homes and rightfully view us with pity. We missed out.

In that period we’ve been unexpectedly booted from our rental houses twice – once because the landlord informed us that he planned to tear down the house and build a new one, and recently because the landlord wants to move back in. Unexpectedly being forced to relocate introduces so much stress: the discouraging search for a reasonable rental, uprooting the kids from schools and neighborhood friends, dismantling everything and packing, moving, setting back up, changing addresses on accounts, etc. Each move has taken a good productive month or two out of our lives and cost a lot of money. We’re sick of the insecurity and uncertainty. And heartbroken as we get further and further behind.

In the early days of this blog, we saw our neighborhood overrun with droves of frenzied Asian buyers. My wife and I were at the front lines of the takeover, and it was like a tsunami hitting. One year the playground had dozens of Canadian kids. The next year, English was no longer spoken on the playground. I’m not exaggerating. This rapid change has hit us in three different neighborhoods now – in three different suburbs of Vancouver.

I asked on this blog, “What on earth is happening with Chinese? They are arriving en masse with seemingly unlimited amounts of cash and the government does not seem to be protecting Canadian interests. Won’t prices just keep moving up if this practice continues?” Garth responded a couple times, asserting that there is little or no foreign influence and implied that my observations were racist.

In the end, trying to time the markets has been the biggest mistake of our lives.

The truth is NOBODY KNOWS what will happen in the future. Could be a deflationary collapse or hyperinflation. Rates could rise or stay low for years. The government could slam the door shut on immigration and off-shore speculation or could continue to allow Canada to be the money laundering capital of the world. There are just too many variables for anyone to predict the future. Period.

(By the way, did you know that China has capital controls that allow only $50,000/year to be legally moved out of the country. So when Chinese show up with millions in Vancouver for a house they are already breaking laws. Can you tell I’m frustrated?)

The best way to protect yourself with regards to real estate is diversity and compromise. Losing makes you wiser. I’ve lost a lot in this game, and I am now wiser. So here’s my advice.

For young people interested in real estate, get into the market. But only when you’ve saved a sizable down payment. And starting with a basic, unimpressive, low cost place that is WAY below your means. They are out there. If the market continues up, you participate. If it crashes, you can easily weather the storm. Continue saving your money and, every few years, upgrade to better places (still below your means) on your own schedule regardless of whether the market is shooting up or depressed. It’s called “averaging in”. And it works.

The two extremes – either renting for years or leveraging to the hilt on an overpriced place that you can barely afford – are BOTH very risky. You’re just betting on a market direction. And if you bet wrong, it can set your back years or even decades. The safest road is the middle road I described.

This tried and true strategy applies to all investing. At a young age start saving your money and averaging into a diverse range of investments: real estate, stocks, bonds, cash, commodities, gold, etc. Rebalance regularly. Do this religiously throughout your life for the best chance of coming out ahead. I’ve learned that believing “experts” can predict the future and market directions makes you the Greatest Fool, as that is just gambling in disguise.

So, to summarize: You are houseless and blame a guy who wrote a book. You blame immigrants. You blame the government for letting too many in. You blame people with millions. Your family pities you. So do I. — Garth

#16 Millenial on 03.12.15 at 7:09 pm

#217 H on 03.12.15 at 3:12 pm
One simple chart that states where the Fed is Going.

http://www.tradingeconomics.com/charts/united-states-inflation-cpi.png?s=cpi+yoy

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

Janet Yellen told a congressional committee on Feb 24th (in her PREPARED statement, not Q&A) that they’re looking for a sustained return of inflation to 2%, prior to raising interest rates. She called the current inflation rate “well below” the desired level.

Also she said: “If economic conditions continue to improve as the committee anticipates, the committee at some point will begin considering an increase in the target rate of fed funds.” So they haven’t even begun to consider rate increases!! LOL.

Add on top of that 3 consecutive months of negative US retail sales. An incredibly strong US dollar already weakening American exports. The whole world (including South Korea last night) is lowering interest rates in a race to the bottom.

There is absolutely no way interest rates are going up in the US this year, no way.

#17 David Lee on 03.12.15 at 7:11 pm

More for “The Writing is on the Wall” file:

http://www.theglobeandmail.com/report-on-business/economy/housing-market-the-most-glaring-blind-spot-in-canadas-regulatory-regime/article23420195/

and from the guy Garth can’t call racist or xenophobic:

http://www.scmp.com/comment/blogs/article/1735460/vocal-academic-isnt-just-observer-vancouvers-real-estate-industry-hes

#18 Mister Obvious on 03.12.15 at 7:11 pm

Albertans are famous for saying they’re used to boom and bust cycles. It’s just a fact of life for them and they structure their lives accordingly.

I applaud them for that down home prairie fortitude and expect that going forward they will exhibit the usual pragmatism for which they are well respected.

A similar economic downturn occurring in Vancouver would have thousands of miserable, rain soaked pantywaists howling in the streets.

Stick around for it.

#19 Retired Boomer - WI on 03.12.15 at 7:11 pm

“We’re just one homeless, crippled bird-dog nation awaiting the Messiah”

…or perhaps, just awaiting the next bus to the promised land. Hell, we are ALL at that bus stop.

Whether you believe in global warming, the tooth fairy, easter bunny, or the ‘stars’ of whatever religion or philosophy of your conviction… (see “Now Playing” on the marquee)… you DO await your bus, or Messiah, or intergalactic conveyance.

Just make sure your “choice” doesn’t slop onto me, OK?

I know, I DON’T know, I can’t NOW know, and that’s perfectly alright by me.

#20 Craigster on 03.12.15 at 7:13 pm

Ah, Garth, you are too kind about BC credit unions. The truth you didn’t give in addition is that 85% of their entire book of business is mortgages… whoops!

#21 Shane on 03.12.15 at 7:17 pm

East or toronto meaning whitby , oshawa?

#22 Washed Up Lawyer on 03.12.15 at 7:18 pm

#7 Smoking Man

Bravissimo!

#23 Londoner on 03.12.15 at 7:22 pm

The BBC recently ran a survey about election issues. Among 18-24 year olds in the UK, top 3 priorities are:

1. keeping the cost of shopping down
2. improving education
3. being able to afford your own home

These people are saying that, by not being able to afford to get on the property ladder, they’re missing out on returns of up to 8% a year.

Sorry but this house lust and education brainwashing is endemic. Say what you want but you won’t be able to cure it.

#24 Estrella on 03.12.15 at 7:22 pm

Very thought provoking post garth. We were regarded as the pillar of economic stability and our banks were credited with their prudence only a few years ago. How did we not learn from the lessons of our neighbors?

#25 Jsan on 03.12.15 at 7:25 pm

What an absolute @$!#@ mess that has been created in this country. Harper and the PC’s (and I am Conservative) seemed to have done everything in their power to blow this Gargantuan housing bubble when they could have VERY easily poured cold water on it by toughening the CMHC (our very own Fannie Mae/Freddie Mac) lending and qualification standards. Now, they are painted into a corner knowing full well that the housing market is beyond reigning in and any attempt would cause this bloated pig to implode.

It blows my mind how after watching the US housing train wreck this was allowed…..NO, encouraged to happen in our very own back yard. Is he purposely trying to destroy this economy? I have no other explanation other than gross mismanagement or for pure political gain?

#26 Calgary's Housing Market on 03.12.15 at 7:25 pm

. . . . . . . . . . .Increase In House Prices. . . . . . . . . . . . . .
. . . . . . . . . .(Compared to January 2000). . . . . . . . . . . .
. . . . . . . . . . . . .Calgary and Dallas. . . . . . . . . . . . . . . .
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————————————————————————————————–
. . . . . 00. . . 02. . . 04. . . 06. . . 08. . . 10. . . 12. . . 14. 15.

* = Calgary (source: Teranet’s index)
x = Dallas (source: Case-Shiller index)

This chart shows that:
* From January 2000 to January 2015, prices in Calgary increased by 159%, while prices in Dallas increased by 43% over the same period of time.
* From January 2006 to January 2007 (1 year), house prices in Calgary increased by 38%, which almost equals the total increase in prices in Dallas from 2000 to 2015 (43%).

The difference between house prices in Calgary and Dallas is quite extreme. Consider the prices of these Dallas houses, keeping in mind that a similar house in Calgary would cost upwards of $400 K.

$104 K, Venus, TX (Dallas) (3 beds, 3 baths, 1,895 sq. ft., built in 2005, attached double garage)

$125 K, Terrell, TX (Dallas) (4 beds, 3 baths, 2,296 sq. ft., built in 2005, attached double garage)

Houston:
$120 K, Houston, TX (3 beds, 3 baths, 2,206 sq. ft., built in 2009, attached double garage)

The performance of Houston’s housing market is similar to that of Dallas.

Oil isn’t the reason behind the unusually strong price gains that Calgary’s housing market has made since 2000, as similar price gains were made in all major Canadian markets since that time.

Oil doesn’t fuel unusually big gains in house prices. If it did, then housing markets in oil-rich Texas, Dallas and Houston, would have outperformed most other American markets since 2000, but that didn’t happen.

Why did Calgary’s housing market dramatically outperform Dallas’ market since 2000? We know it wasn’t oil. We know it wasn’t low interest rates since rates in Canada and the US have been similar since 2000.

Obviously, something has acted as a constant (major) source of housing market stimulus in Canada that isn’t present in the US. This source of stimulus is responsible for the continued inflation of Canada’s housing bubble (in its 15th year) and broke the long-time house price parity between Canada and the US, that existed until 2006 (see first chart)

This powerful source of stimulus stems from the fact that mortgage lending standards in Canada are much laxer than in the US. In Canada, lenders are willing (and happy) to take on high-risk, high-ratio loans (made under loose lending standards) because CMHC and Genworth Canada remove the risk and put it onto the backs of Canadian taxpayers.

As Canso Investment explains, it was the availability of credit that caused the housing boom in Canada (see page 8).

Mortgage lending standards in the US are much stricter than in Canada. Consider some of the main differences:

* Minimum down payment:
– US – typically a down payment of at least 20% of the value of the home is required.
– Canada – the minimum down payment is 5%, but some Canadian lenders can help you get away with only 2.5%.

* Maximum insured mortgage loan:
– US – in most areas, the maximum loan limit for mortgages acquired by Fannie Mae and Freddie Mac is $417 K (Fannie Mae and Freddie Mac are like Canada’s CMHC).
– Canada – CMHC will insure loans up to $1 M. That limit was $250 K in 2003 (see page 7).

Other examples of lax lending standards in Canada that are currently in effect:
* Subprime loans are becoming increasingly popular in Canada, showing a 25% increase year-over-year.
* Canada now has teaser loans.
* Canada’s “Home Buyer’s Plan” allows buyers to raid their RRSP to fund their down payments (see page 13).
* Canso explains that, in Canada, “… the banks, regulators and police don’t consider fraudulent information on mortgage applications to be a crime. They call this “soft fraud””(see page 14). Is that honesty thing preventing you from getting that mortgage on a bubble-priced house? No problem – lie.

House prices in Calgary will be much lower in the future. Consider the following:
* Even the most extreme housing market stimulus eventually wears off.
* The price of oil will probably be low for a long time, expect even more job losses and layoffs.
* All housing bubbles deflate and once prices are in correction mode, that downward price momentum is difficult to stop.
* Calgary’s housing market will not be rescued again, as it was in 2009, by a major, dramatic drop in rates, since rates are already at emergency levels.

Until next time – Cheers!

#27 Victoria Real Estate Update on 03.12.15 at 7:26 pm

I will be posting a comment today, scroll down if you are interested in reading it.

Cheers!

#28 Forzudo on 03.12.15 at 7:30 pm

For a mere $1,395, Dean Gaziosi will make you Tom Vu wealthy: https://www.deansinsider.com/offers/edge15/e15/

#29 H on 03.12.15 at 7:34 pm

Garth.

Straight Questions.

1)Does the USDX being in the stratosphere give you any warning sign or pause of something being wrong?

2)Have you been considering the CPI in the US. Headline and Core?

These are the 2 levers that control the Feds moves.

And as one person it the other day, if an alien came down from outer space and saw whats going on he would see:

Italy Rated at BBB (Next stop junk)
Debt to GDP 150%

USA Debt to GDP 75%
AAA

Why does this matter? Rates in Italy are LOWER than the USA. NEAR ZEEEEROOO

Risk my a$$

Read the data guys. US is decades away from “Raising”

#30 Happy Renting on 03.12.15 at 7:36 pm

#7 Smoking Man on 03.12.15 at 6:46 pm

Seriously, dude, as a guy that baits people to get a reaction, you can’t see when it’s being done to you?

#31 tammy on 03.12.15 at 7:38 pm

I always look forward to your insightful take on money matters, but even more I love the comments like Tony Robbins has turned to finance since everyone found their self- esteem. Thats a hoot…

#32 Waterloo Resident on 03.12.15 at 7:38 pm

Canada does not have a manufacturing / production economy anymore, all we have is a resource extraction AND consumerism based economy. It’s those 2 things. That’s it.

For resource extraction we cut wood, mine minerals, grow wheat, and drill / dig for oil.

For consumerism, we have the SERVICE economy, and house construction / sales is a huge part of that economy.

Resource extraction seems to be wilting due to a slow-down in China, so it’s our Consumer-spending that is the only thing holding up our economy right now. If CONSUMERISM fails then our economy will fail, so let us hope that our housing boom will continue for the next 20 to 30 years, otherwise we are going to quickly fall into a very nasty recession, perhaps even depression (like Japan).

Knowing how dependent our economy is on consumers continuing our massive spending, I think the government will open up the floodgates of every type to keep our housing market party rolling on. it might come in the form or doubling our immigration rate, it might be economic incentives for families to buy / purchase a second investment home / property, so perhaps something else. Whatever is going to happen, the government is not going to let our housing market fall because if it does there is nothing left to keep our economy afloat for long. And without a healthy economy the ability of the government to service its debt load will be severely strained.

#33 H on 03.12.15 at 7:39 pm

This is another self explanatory chart.

http://cdn.static-economist.com/sites/default/files/imagecache/original-size/images/print-edition/20150314_FNC483.png

US raises rates, you will see the US currency go to a place with the Unemployment rate in the sates will skyrocket. Any chance of a manufacturer of anything denominated in USD competing against another currency will be wiped out.

Obsessed, aren’t we? — Garth

#34 Can't Get Enough of My Sugar Crisp on 03.12.15 at 7:42 pm

& then…. TOAST ?

#35 Italians love real estate on 03.12.15 at 7:43 pm

Garth have you done any research into how many people read your blog as opposed to how many people watch CP 24 ” Hot Property” ?

I would venture a small guess that the show is having a much greater affect on prices to the upside than your blog is having to the downside and this in spite of the fact that you probably have a more educated readership than hot property has as a viewership( yes that’s meant as a compliment)

Real estate is religion here . It has worked . It has won for its owners . Recency bias ( fancy concept for a simple guy like me ) has more of an impact than anyone here realizes.

Prices going up. My opinion

There are 7.2 million visits a year to this pathetic site. Tell me how many ‘Hot Property’ receives. Would be interesting. — Garth

#36 MSM-free Zone on 03.12.15 at 7:43 pm

As a ‘Crippled homeless bird dog’ myself, I resemble that comment.

Having gone through maimed, gymped, handicapped, disabled, physically challenged, I believe the latest, current, politically correct term is ‘differently abled’.

Or not.

#37 Chaddywack on 03.12.15 at 7:44 pm

“All money on deposit and money invested in non-equity shares with a BC credit union, regardless of whether it is
placed directly with the credit union or through a broker, is 100% guaranteed”

This is from the BC Credit Union Deposit Insurance Corporation website……

Interesting how there doesn’t seem to be a limit, yet federal banks are only covered to $100,000 by CDIC.

Good luck with that. — Garth

#38 Lisa on 03.12.15 at 7:45 pm

Smoking Man manifesto tonight! Perhaps better than Garth’s post! (No disrespect intended to Garth)

#39 Freedom First on 03.12.15 at 7:48 pm

If the guy in the picture were to fall he would not have a soft landing.

I was asked by an acquaintance of mine if I would ever buy RE again? I said maybe. He said when? I said when I can’t say no. His reply “good answer”. I am a numbers man. No exception. I live by my rules and always put my freedom first. I am a man, I have too. I learned when I was a kid that nobody was going to look after me but me. That is good. It’s the way I like it. Rule 1: look after me. Rule 2: help others. If what I am posting ever offends anyone, tell someone who cares.

#40 Ray Skunk on 03.12.15 at 7:49 pm

Ah, I thought he was going to pay the homeless guy to line up for day at the latest “red hot” condo development, akin to that farce over at One Bloor East a few years back.

#41 Unbalanced on 03.12.15 at 7:50 pm

Read up on credit unions deposit insurance in Manitoba

#42 LJ on 03.12.15 at 7:51 pm

Reading SM’s blog today, I’m beginning to wonder if he and Garth aren’t one and the same. Is SM a second personality? Sort of like the Fight Club?

#43 Ex-Cowtown on 03.12.15 at 7:52 pm

#15 Millenial on 03.12.15 at 7:09 pm

“There is absolutely no way interest rates are going up in the US this year, no way.”

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

You may be right, but it doesn’t really matter. When 1000 guys get laid off and the company doesn’t even give a @#$% about getting them home from a remote location you know that there is something massively bad coming down the pipe.

Broke is broke. Interest rates could be zero, or -2%, but when the bank wants their $$$ they want it. All. Now. And. You. Are. Broke.

#44 Fred on 03.12.15 at 8:00 pm

Smoking man. Love your insight. Keep it up and ignore all others.

#45 nonplused on 03.12.15 at 8:01 pm

The thing about HAM that makes it silly is that Canadians also invest in real estate abroad, we just usually go south to the US or even further into Latin America. I know a few people who have properties in the US, sometimes 2. How come we aren’t causing a bubble there? Where is the talk of HCM?

But what I worry about most is NATO threatening Russia. But I can’t do anything about that so let’s skip it.

What I worry about second most is other people’s finances. I know what mine look like, and sure the balance sheet is good but revenues compared to expenses is pretty tight at the moment. But yet everyone I run into at whatever the kid is doing has a big mortgage and the same cash flow problem or worse. People who work as electricians (a fine trade, no insult intended) are trying to live like lawyers.

I read a spot by Jim Sinclair years ago where he said you should track your net worth at reasonable intervals and plot it on a graph if necessary. His point being if the trend line was down, you are digging a hole and need to cut expenses or raise revenues until it’s going up. A home equity loan to buy granite doesn’t help get the line pointing up.

#46 Linda on 03.12.15 at 8:02 pm

Got a credit card limit offer in the mail today – second one in the past two months. They want to up our limit because ‘you are excellent customers & we are here to serve you!’. Ack. If we ‘had’ to use our credit card to purchase life’s necessities, ouch. As well as the offer to increase our card limit we recently received the recent rule changes regarding credit card missed payments. Miss making the monthly minimum 2 months running & the card rate jumps from 19.99% for cash advances & 22.99% for purchases to 25.99% for cash advances & a whopping 28.99% for purchases. I just bet they’d like us to hike our limit & would jump for joy if we ‘missed’ making the minimum payment a time or two. We pay in full every month, no balance carried. I shudder to think there are those out there who will 1) take them up on the offer to increase their limit & 2) use the card when they KNOW they can’t pay it off in full.

#47 Mark on 03.12.15 at 8:03 pm

“This is from the BC Credit Union Deposit Insurance Corporation website…… ”

Why don’t you figure out what the “BC Credit Union Deposit Insurance Corporation” really is? As far as I can tell, its a consortium of credit unions promising to ‘guarantee’ each other. Nothing more, nothing less. No different than the Royal Bank which theoretically ‘guarantees’ the various legal entities that make up the company.

Unfortunately there are some people out there who seem to not understand what a ‘guarantee’ really is, and seem to equate a credit union “guarantee” with the government guarantee provided by the CDIC or FDIC. It may not turn out well for those people, I’ll just leave it at that, given the alleged composition of the credit union loan books, and their obvious activity in the subprime marketplace (see one of Garth’s recent posts where he posted an email of a Vancity rep offering subprime mortgages!).

#48 Smoking Man on 03.12.15 at 8:03 pm

#34 LJ on 03.12.15 at 7:51 pm
Reading SM’s blog today, I’m beginning to wonder if he and Garth aren’t one and the same. Is SM a second personality? Sort of like the Fight Club?
………

God damn conspiracy theorist, ok, the part where I pumped Garths services, I realy ment it, I also had a fear he would broom the post because of my confession of doing 4 at a time, he’s wierd like that. , it was a gamble..you Got to throw the dog a bone, it’s how it works.

So because I promoted garthos services, I’m him. I’m insulted, I’m way better looking.

Lol you’re all wack jobs…. Fn JD brings out monster of some kind.

#49 Ogopogo on 03.12.15 at 8:06 pm

It’s amazing how many are still deluded about the unfolding collapse of the great Canadian housing bubble. I had several spirited debates with financial illiterates today in the FP: http://business.financialpost.com/2015/03/12/canada-household-debt-ratio-hits-new-record-of-163-3/

In other news, the RE carnage in Kelowna continues to decimate mortgage owners in my building. The worst case I know of here is a couple on my floor who left for a “rig pig” job in AB three years ago and have been unable to sell their unit here meantime. I hope to goodness they weren’t one of the poor souls laid off today.

I’m sure DA would volunteer to sooth their fears and sell their unit without commission.

#50 screwed on 03.12.15 at 8:06 pm

DELETED (Anti-Chinese)

#51 Vivek on 03.12.15 at 8:09 pm

Why I think there is some sort of crash/downturn coming here:

1. Ads on Radio / Youtube on how to make it rich in RE by flipping houses.
2. Can overhear too many conversations involving RE in familiar places like the office and the closest mall food court.
3. Too many ads and flyers by the Brick, Canadian Tire and others that say: “Don’t pay until 2017”.
4. 6 or 7 year car loans.

#52 Paul on 03.12.15 at 8:14 pm

Hey Garth
What happened to your free seminars went to one in Toronto two years ago, you gave great advice.
I was too smart didn’t listen! Waahhhaaa

Too busy. Maybe this Spring. Pay attention this time. — Garth

#53 ANON on 03.12.15 at 8:15 pm

Fall is the new spring. Deflation is the new inflation. And negative profits is the arithmetical result, affecting nouveau riche and old money alike. You can feel it in the air, in the blogs, even in the media.

#54 Brian on 03.12.15 at 8:16 pm

What oil crash? I’m paying almost the same at the pump at $50 per barrel than I was paying at $100 per barrel. All that extra gravy is probably making its way back to the governments hands. So its a wash?

#55 Mark on 03.12.15 at 8:19 pm

“Why I think there is some sort of crash/downturn coming here:”

5. Airlines, with their pulse firmly on consumer demand, in Canada are rapidly moving to increase density to lower unit cost of their product ahead of a massive decrease in consumer purchasing power:

http://www.thestar.com/business/2015/03/12/air-transat-to-increase-seating-density-on-paris-london-routes.html

Air Canada did exactly the same thing last year with an almost unheard-of 458 seat configuration of a plane that most other airlines fly with barely 300 seats.

#56 Herf on 03.12.15 at 8:19 pm

#2, #8 Re: South China Morning Post’s story on Tsur Sommerville and his UBC-affiliated Centre for Urban Economics:

Good find! Talk about investigative reporting, the kind that’s lacking amongst the Canadian news media. Sad that it takes a foreign news source to do the investigative journalism the Canuck news schucks won’t/can’t. It reinforces (as has been stated multiple times on this blog), the sense that the Canadian news media are in bed with the Canadian real estate industry. I never would have suspected that a school affiliated with a major Canadian university (UBC) was too.

#57 Rob on 03.12.15 at 8:20 pm

Smoking Man! You rock buddy. I loved your rant! Most on this blog are sheep. Pretty funny how they are calling the top on real estate but they missed the biggest bull mkt in history. Most don’t even know how rrsp’s work! Now they are all following Garth’s balanced portfolio aproach. It looks easy since the market has been going up just wait till the market drops 20 percent. They won’t be able to sleep at night and will sell at the low. Garth will be able to handle the drop because he has brains but most steeple will cave in to the pressure.

#58 Concerned on 03.12.15 at 8:22 pm

Almost 70% of all CU loans are for real estate assets. Think about that if you happen to have your retirement money sitting in GICs there, and what good your provincial deposit insurance might be if the Big One hits.
_____________________________________________

Explain this to me. I HAVE $60k sitting in GIC’s at Credit Union in BC. I was under the impression that I am guaranteed a certain amount back by the federal government. Isn’t it like 100K a person?

Am I at risk?

Please advise.

If your credit union is not on this list, it does not offer you CDIC coverage. — Garth

#59 the Jaguar on 03.12.15 at 8:22 pm

#18 Mr. Obvious:
It’s nice to read something complimentary about the Albertans. Usually it is the opposite, though the negative sentiment is often driven by envy.
Faith, renewal, hard work, the ability to dig in when the going gets tough. Still traits of those who are living in Alberta for the long haul.

#60 TakingResponsibility on 03.12.15 at 8:25 pm

“Almost 70% of all CU loans are for real estate assets. “
**********
Can someone clarify for me as I am reading mega “disdain” for that insane percentage!!! And, reading “those insane socialists”… from Mark… regarding Credit Unions. Hate that – feeling like I’m the only one who didn’t “get the punchline” of a joke…

When the share of residential mortgage loans that the BIG 5 have in their lending portfolios is at 60% – doubling over the past 70 years or so; I’m not understanding the “particular disdain” for credit unions. And, are prov banks such as the ATB not backed by the same guarantees as the Big 5? Is the ATB socialist?

Are we wrinkling our doggy noses up because the CU’s are at 70% rather than 60%?

What am I missing?

A lot. RBC (for example) has assets of $860 billion, of which residential mortgages constitute $206 billion. — Garth

#61 Concerned on 03.12.15 at 8:31 pm

http://www.cudicbc.ca/pdf/cudic/CUDICGuide.pdf
______________________________________

Looks like you are wrong Garth. ALL deposits guaranteed at Credit Unions in BC.

Not wrong. As I stated, there is provincial insurance but no federal CDIC insurance. Good luck with Victoria coming to your rescue if (as I said) the big one hits. — Garth

#62 Concerned on 03.12.15 at 8:39 pm

Garth you are inaccurate about your statements. People need to know this regarding BC Credit Unions. Straight from the website (below)

unlimited deposit protection

As a Credit Union member, deposits are 100% guaranteed through the Credit Union Deposit Insurance Corporation of British Columbia (CUDIC). On November 27, 2008, the Provincial legislature passed amendments to the Financial Institutions Act to provide UNLIMITED deposit insurance protection on all deposits in British Columbia’s credit unions.

All money on deposit with and money invested in non-equity shares of a BC credit union is 100% guaranteed, including foreign currencies and accrued interest, regardless of the length of the term to maturity.

You do not need to apply for deposit insurance – it is automatic.

More information on deposit insurance is available on the Financial Institutions Commission website: cudicbc.ca.

Sorry, pal. Your credit union does not offer federal deposit insurance. It is provincial. If you believe the province can bail out all the CUs, then sleep tight. — Garth

#63 BS on 03.12.15 at 8:41 pm

15:

Here’s my story – and lesson. I read Garth’s Greater Fool book when it came out back in 2008. In response to Garth’s warning in the book, my wife and I sold our condo.

That was actually a good move. Condo’s have been flat since 2008 and you avoided special assessments and the premium you would have paid over renting.

You refer to houses going up but you didn’t own a house so it is irrelevant. You owned a condo and those did not go up.

If your ‘story’ is true you should be thanking Garth.

#64 Washed Up Lawyer on 03.12.15 at 8:45 pm

#45 nonplused

“People who work as electricians (a fine trade, no insult intended) are trying to live like lawyers.”

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

There was an article in MacLean’s magazine last year that said the average lawyer in Ontario made what the average teacher made – $83,000.

I usually try to provide links but I am getting lazy.

Go to the University of Gargle. It is easy to find.

#65 TakingResponsibility on 03.12.15 at 8:46 pm

“Then there’s oil …”

It’s one calamity after another here – the day before those 1000 workers were abruptly “finished” at a Husky site, a different bunch of workers found themselves stranded….on a CNRL site. Their contracting Employer went bankrupt – and these guys don’t even have a ride into town.

http://edmonton.ctvnews.ca/mobile/stranded-alberta-oilfield-workers-to-return-home-1.2275671

Insecurity and anxiety abound when Employers start with the bankruptcies. Buying property in “precarious” times becomes very unimportant.

#66 Linda on 03.12.15 at 8:47 pm

#7 smoking bumwipe

What useless, hackneyed, unoriginal trash.

#67 ManyYs on 03.12.15 at 8:52 pm

What’s about deposit protection for Credit Unions in Manitoba? Pretty much the same as in the case of their friends in BC?

#68 4 AM Sunrise on 03.12.15 at 8:53 pm

Bad news if you have deposits in a Manitoba credit union: “There is no legislated requirement for the Manitoba government to provide financial support to the Deposit Guarantee Corporation of Manitoba.”

http://depositguarantee.mb.ca/faq/

#69 Mark on 03.12.15 at 8:53 pm

“Looks like you are wrong Garth. ALL deposits guaranteed at Credit Unions in BC.”

A guarantee is only as good as the guarantor. Just remember that. A scenario I’ve put forth many times is that it seems likely the (federal) government would strong-arm the federally chartered banks to take over failed credit unions in such a situation, at a complete loss of equity to the existing members, but the usual method of resolution of a failed institution, a debt to equity conversion (sometimes called a ‘bail-in’), isn’t out of the question.

#70 Smoking Man on 03.12.15 at 8:56 pm

#57 Rob on 03.12.15 at 8:20 pm
Smoking Man! You rock buddy. I loved your rant! Most on this blog are sheep. Pretty funny how they are calling the top on real estate but they missed the biggest bull mkt in history. Most don’t even know how rrsp’s work! Now they are all following Garth’s balanced portfolio aproach. It looks easy since the market has been going up just wait till the market drops 20 percent. They won’t be able to sleep at night and will sell at the low. Garth will be able to handle the drop because he has brains but most steeple will cave in to the pressure.
………

GARTHS approach is good, it’s a hedge, it’s balanced in away, if one asset class goes south, the other goes North… It’s for the non thinkers, the non risk takers, have I described Canadians accurately.

GARTHS a good shit, ya he charges a fee for great advice, but I’m sure if you could come up with a good bull shit story, I’m hard done by bla bla bla, the prick would help you for free…

I feel it, he could be an asshole, but UCC is saying the opposite.. I’m never wrong, Bombardier, and yellow pages don’t count, I was sobar.

Damn I’m realy drunk.. Now..

If only I could figure out a way to get Dorothy to let him come out for a beer with me..

Not a chance,, she’s got a good connection to the UCC too..

It’s life.

#71 4 AM Sunrise on 03.12.15 at 8:56 pm

#15 Real Jimbo on 03.12.15 at 7:08 pm

OK, but how much did your investment portfolio increase over the past 7 years…including the doldrums of 2009?

#72 HJD on 03.12.15 at 8:56 pm

Everyone should carefully read the comment left by Real Jimbo #15. I believe he accurately describes what has occurred in various neighbourhoods in and around Vancouver. He also correctly describes what happened to anyone who followed the real estate suggestions Garth made back in the early days of this blog. Sadly, Garth’s response to Real Jimbo read like words written by a politician.

Jimbo blames everyone but himself, and yet he alone is responsible for his own actions. He is also overtly anti-immigrant, almost always the sign of a loser. — Garth

#73 Marco on 03.12.15 at 8:57 pm

Danke Garth,

It’s all about the mortgage insurance.

“It is one of the reasons why Canadian banks continued to lend mortgages even in the tumultuous years after the financial crisis. Thanks to that, spending on homes and construction has given the economy a big hand. But mortgage insurance has also inflated home prices by allowing people to buy homes they otherwise couldn’t afford. If the market were ever to crash, those who have overextended themselves will be hit hard.”

Doesn’t mortgage insurance just save the financial sector in a crash but not the people? Am I missing something here? Seems to me it would have been better not to have CMHC, like the Irish, then the banks wouldn’t have leant to everyone and their dog.

http://www.theglobeandmail.com/report-on-business/economy/housing/the-real-estate-beat/canada-better-served-learning-from-the-housing-crash-in-ireland/article19815811/

#74 Concerned on 03.12.15 at 8:58 pm

Sorry, pal. Your credit union does not offer federal deposit insurance. It is provincial. If you believe the province can bail out all the CUs, then sleep tight.
__________________________________________

Actually, Credit Unions are absolutely massive in Alberta. Not that terribly many in BC. Being that members buy shares and we are neighbors with the richest province in BC I’d say the money is safe Garth.

#75 4 AM Sunrise on 03.12.15 at 8:59 pm

#69 Mark on 03.12.15 at 8:53 pm

I appreciate the logic, but won’t emotion trump reason when the SHTF? The federal government bailed out our airline industry twice in recent history amid questions over whether it “should”.

#76 Smoking Man on 03.12.15 at 8:59 pm

DELETED (Sexist)

#77 Erick on 03.12.15 at 9:00 pm

Garth,
First time i disagree with you.
I think Jimbo is right and you are mocking him.
The government is to be blamed for the bubble.
There you go!!!

#78 TRT on 03.12.15 at 9:00 pm

Garth,

Are you going to make Smoking Man apologize for post #7 calling students and teachers ‘bitches’?

Just like delusional Mark?

#79 dosouth on 03.12.15 at 9:02 pm

Do you think that maybe the result of the declining oil prices and the fall out just hitting the markets now is lost on all but a few??

#80 Vanecdotal on 03.12.15 at 9:03 pm

#56 Herf
Re: re: #2, #8 Re: South China Morning Post’s story on Tsur Sommerville and his UBC-affiliated Centre for Urban Economics

+++

Well said, agree with your entire post, (and thank you also to original posters of the SCMP link).

“Sad that it takes a foreign news source to do the investigative journalism the Canuck news schucks won’t/can’t.”

Ian Young does great work, he is an excellent journalist, does thorough, and apparently objective research, cites and provides links to his myriad sources, and is in the unique position to be able to report based on actual facts, not hyperbole.=

He is becoming increasingly active in exposing the true state of the YVR RE market, to attempt to fill the factual void perpetuated by every level of government here that has been willfully blind (as they profit from development fees and increase property taxation) to what is occurring, WHATEVER THAT actually is. We need to keep pushing for unadulterated public access to this (market influencing) information as well as implementing sweeping strict regulatory oversight and reform of the entire RE industry. Ian Young is a breath of badly needed fresh air imho.

The guy is incrementally restoring my faith in humanity.

#81 Victoria Real Estate Update on 03.12.15 at 9:04 pm

. . . . . . . . . . . . . . House Prices. . . . . . . . . . . . . . . .
. . (Percent Above/Below November 2013 Price Level). . .
. . . . . . . . . . . Victoria and Winnipeg. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 7.0%. . . . . . . . . . . . . . . . .x . . . . . . . . . . . . . . . . .
+ 6.5% . . . . . . . . . . . . . .x . . . .x. . . . . . . . . . . . . . .
+ 6.0%. . . . . . . . . . . . . . . . . . . . .x. . . . . . . . . . . . .
+ 5.5%. . . . . . . . . . . . x. . . . . . . . . . x . . . . . . . . . .
+ 5.0% . . . . . . . . . . . . . . . . . . . . . . . . x . x . x . . . .
+ 4.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 4.0%. . . . . . . . . . . x. . . . . . . . . . . . . . . . . . . . . . .
+ 3.5% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 3.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 2.5%. . . . . . . . . .x. . . . . . . . . . . . . . . . . . . . . . . . .
+ 2.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 1.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 1.0%. . . . . . . .x . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 0.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . 0%. .x*. . . x . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 0.5%. . . x*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 1.0%. . . . . . . . . . . . . . . . *. *. *. . . . . . . . . . . . . .
– 1.5% . . . . . *. . . . . . . *. . . . . . . . . . . . . . . . . . . . .
– 2.0%. . . . . . . .*. . . .*. . . . . . . . .*. . . . . . . . . . . . .
– 2.5%. . . . . . . . . .* . . . . . . . . . . . . *. *. . . . . . . . . .
– 3.0% . . . . . . . . . . . . . . . . . . . . . . . . . . .*. * . . . . .
———————————————————————————————
. . . . . . . N. D. J. F. M. A. M. J. .J. A. S. O..N. D. J. . . . . .
. . . . . 2013. ./. . . . . . . . .2014. . . . . . . . . . ./. 2015. . .

(Source: Brookfield’s index)

Winnipeg = x
Victoria = *

Monthly price levels for Victoria and Winnipeg have been plotted on this chart, dating back to November of 2013 (based on Brookfield’s stats).

This chart shows us that:

* House prices across Greater Victoria fell in January, making it the 5th consecutive month of falling prices.
* Prices were 1.74% lower than a year earlier.
* Prices in January were 11.4% lower than in Victoria’s peak month (June 2010).

In Winnipeg:
* House prices increased in January.
* Prices were 5.3% higher than a year earlier.
* Prices in January were only 1.5% lower than the all-time high for Winnipeg (July 2014).

If emergency interest rates can’t stop Victoria’s price decline, what will?

Winnipeg hasn’t had any problems posting strong price gains since November 2013. The obvious question is: what is Victoria’s problem?

Is there a housing market in the world that is currently being subjected to more stimulus than Canada’s? I doubt it.

Victoria’s housing bubble is deflating, but house prices in Victoria are still extremely bloated. Consider the prices of these beautiful homes in these US cities that have summer-like winter weather.

Arizona:
$118 K, Coolidge, AZ (Phoenix) (4 beds, 2 baths, 1,903 sq. ft., built in 2006, attached double garage)
$118 K, Maricopa, AZ (Phoenix) (4 beds, 3 baths, 2,013 sq. ft., built in 2006, attached double garage)

Florida:
$125 K, Palm Bay FL (3 beds, 2 baths, 1,801 sq. ft., built in 2006, attached double garage)
$130 K, Jacksonville, FL (4 beds, 2 baths, 2,030 sq. ft., built in 2007, attached double garage)

Girls and guys, you can get your granite, stainless and hardwood fix by renting for now until prices fall more. In terms of plus-minus on renting vs. becoming a first-time buyer in Victoria since 2008, renters have easily won that battle. This trend will continue until prices are lower.

Don’t become a first-time buyer with Victoria’s near-peak, bubble prices and subject your family to the same financial hardship that millions of American families continue to go through today as a result of buying near the peak of the 2006 US housing bubble.

Wait for lower prices.

Until next time – Cheers!

#82 ANON on 03.12.15 at 9:05 pm

RE CDIC/Provincial promises:
The provincial governments cannot issue their own debt .
Only the federal government can issue these promises and lend them over to provinces to be fulfilled, with extra promises on top, which extra the provinces cannot issue themselves, thus … you figure it out.
It is simple math, not very hard. The results and implications may be unpleasantly surprising, if one bothers to think about them, but it is still math.

#83 TRT on 03.12.15 at 9:05 pm

@55 Mark

Good job, you got something right. By the way, retail industry has been preparing for this for 6 months now.

Iphone 6 price has gone up 15% as will every other item imported from China, India, USA. Statscan won’t acknowledge it in inflation numbers.

http://mobilesyrup.com/2015/03/12/canadian-carriers-increasing-iphone-6-and-iphone-6-plus-pricing/

It’s going to get ugly in the details. The bottom 80% will end up with less purchasing power while the top 20% power ahead.

You won’t read about it as the media are the corporations/government.

#84 Smoking Man on 03.12.15 at 9:06 pm

#76 TRT on 03.12.15 at 9:00 pm
Garth,

Are you going to make Smoking Man apologize for post #7 calling students and teachers ‘bitches’?

Just like delusional Mark
……
Last time I checked dictionary dot Com, a bitch was a dog.. Are we all not blog dogs..

Jesus Christ…. Lord give me strength..

#85 TRT on 03.12.15 at 9:11 pm

Real Jimbo:

I warned you in 2009. No one listened to me calling me a Realtor and troll…

#86 Mr.Millenial on 03.12.15 at 9:14 pm

Garth, awesome read tonight. Thank you. And Smoking man that was one of the best rants I’ve seen on this blog so far. Well done sir. Well done. Now excuse me while I look into borrowing more money to keep up with my neighbours.

#87 Mark on 03.12.15 at 9:15 pm

“I appreciate the logic, but won’t emotion trump reason when the SHTF? The federal government bailed out our airline industry twice in recent history amid questions over whether it “should”.”

I can’t see the federal government letting the little old ladies who comprise a substantial portion of the CU deposit base twist in the wind. That’s why I believe the politicians at both the federal/provincial level will pitch, to the big-5, the merits of “acquiring” such wrecklessly-lending institutions with no loss of funds to the depositors. After all, the big-5, who have most of their mortgage book CMHC subprime insured, will be, at such time, receiving significant cash payouts from the GoC/CMHC. Few opportunities exist for the big-5 to expand in the Canadian banking landscape (they’ve bought most of the independent broker/dealers out!), so being able to take over some credit unions for a song probably wouldn’t be viewed as an overly negative burden.

Basically the consequences of such is that competition will be even further truncated, and the extra 100bp that the credit unions were typically paying to their depositors will disappear as a product in the Canadian banking landscape.

#88 Washed Up Lawyer on 03.12.15 at 9:18 pm

I dug deep and overcame my dotage and senility. I started to worry about my bold statement about average Ontario lawyer salaries vs average Ontario teacher’s salaries. I started to think that perhaps Osgoode Hall threatened a lawsuit against MacLean’s magazine and the article was scrubbed because of the litigation chill.

Herewith:

http://www.macleans.ca/economy/business/the-new-upper-class/

#89 Maggie the Teck Writer on 03.12.15 at 9:18 pm

Here’s the list of Ontario credit unions insured by the province:

http://www.dico.com/design/1_1_Eng.html

#90 Trojan House on 03.12.15 at 9:21 pm

Jimbo blames everyone but himself, and yet he alone is responsible for his own actions. He is also overtly anti-immigrant, almost always the sign of a loser. — Garth

Garth, your blog provides advice that obviously people rely on. Since starting to read your blog two years ago, your advice has constantly been to rent (and invest of course). When you advocate yourself as an authority figure on a subject (and because of your experience of being a former MP & cabinet minister) and provide advice then you have to take responsibility when that advice turns out to be bad advice to someone who took it.

Also, once again, like accusing me the other night of being arrogant, you are labeling someone as anti-immigrant merely from an observation he made based on his experience of living in that neighbourhood. Then you insult him by calling him a loser.

What I took from his post was that he took your advice, started renting, and because of a variety of factors that took place that apparently you said would not happened, he ended further behind than ahead.

Yes, people have to take responsibility for themselves, but you know how people are – they will read and believe anything.

I stand by my advice to live a balanced and diversified, debt-diminished life accepting responsibility for one’s own actions and not blaming others for the outcome. Get over it. — Garth

#91 Mark on 03.12.15 at 9:21 pm

“Iphone 6 price has gone up 15% as will every other item imported from China, India, USA. Statscan won’t acknowledge it in inflation numbers. ”

Not true at all. USD$ prices are decreasing as well, so the CAD/USD$ cross rate, although rather pathetic as of late, isn’t having much impact. Inflation is 1% YoY and the past few months are probably in deflation.

Not sure why people resort to calling ‘conspiracy’ when the numbers disagree with them. I haven’t seen any inflation. The bond market hasn’t seen any inflation. Housing certainly isn’t inflating anymore. So why libel StatsCan?

#92 Frustrated Kiwi on 03.12.15 at 9:23 pm

In our latest numbers Auckland median prices up 14% year on year, the rest of the country up 0%:
http://www.interest.co.nz/property/74495/big-rise-number-homes-sold-february-outside-auckland-prices-are-largely-flat-reinz-sa
Not quite sure how to interpret it. Seems similar to Canada and Australia (where it looks like only Sydney and Melbourne are on the rise).

#93 Plan B Guy from Calgary on 03.12.15 at 9:26 pm

RE#54 Brian
What oil crash? I’m paying almost the same at the pump at $50 per barrel than I was paying at $100 per barrel.

Hey Brian. Not true. Oil is down 50% and gasoline is down 30%. The difference is that the refining costs, distribution, and dealer markup have not gone down. Enjoy it while you can.

PB Guy

#94 Bubbles Abroad on 03.12.15 at 9:27 pm

#45 “… Canadians also invest in real estate abroad, we just usually go south to the US or even further into Latin America. … How come we aren’t causing a bubble there?”

We are. Take, for example, Peru, where the Harper govt is doing lots of mining without being bothered by the kinds of environmental protection laws we have in Canada. In Miraflores in Lima, there has been a major condo boom. In the past ten years, prices have almost quadrupled. Those who bought here in 2008 still saw their property values quadruple.

#95 Smoking Man on 03.12.15 at 9:28 pm

#86 Mr.Millenial on 03.12.15 at 9:14 pm
Garth, awesome read tonight. Thank you. And Smoking man that was one of the best rants I’ve seen on this blog so far. Well done sir. Well done. Now excuse me while I look into borrowing more money to keep up with my neighbours.
……..

If I ever get sobar enough to finish my damn book you will enjoy that too.

Question is, two packs of smokes a day, 1.5 letters of wine, and a Micky of JD a day..

Life expectancy, at 56 , it’s going to be a tight dead line, pun intended.

#96 prairie person on 03.12.15 at 9:29 pm

I’m disturbed by the casual way people talk about bankruptcy. The consequences on individuals and families are enormous. When I was young, I worked for a credit rating agency for a time. Being a junior member, I got to deal with the small accounts–usually individual small businesses. Late payment 30 days, 60 days, 90 days. Businesses people worked to build for most of their lives. People who had all or nearly all of the wealth invested in their business. You can’t pay the bills, the wholesalers cut off your credit. No credit, no stock. No stock, no customers. You’re done. People had nervous breakdowns, committed suicide sometimes. It’s not just the large oil sands companies. It’s all the suppliers, all the service industries, all the restaurants, all the truck dealers. Lenders aren’t swayed by “oil will go back up” arguments. They have lost money already and don’t want to increase that loss. Nobody laughs when someone calls or writes saying we’re foreclosing on your mortgage. You now are homeless. You have to find a placed to rent that you can afford. You have to pay off the loss on what used to be your house. Your credit rating is a problem. When times are good, we are full of confidence. It’s our business, our house, our vehicle. When times turn bad, it can soon be it’s not our business anymore, not our house anymore, not our truck anymore. It can happen slowly or very quickly. 1,000 layoffs in one morning. Guys heading home to BC, to Newfoundland, to…No paycheque. Granite countertops? Big mortgage? New vehicle? Or thriving business gone silent. My favorite TV, electronics store just announced it is going out of business. Just like that.

#97 Bubbles Abroad on 03.12.15 at 9:30 pm

Of course, I didn’t mean to say that the Harper govt is doing the mining itself :-)

The Washington Consensus is alive and well in parts of Latin America, and it most definitely is creating related property bubbles.

#98 Obvious Truth on 03.12.15 at 9:31 pm

Smoking man.

It took me 40 years. I actually thought I was having fun before that. But now I know better.

When I read your posts I see the brick in the wall album cover.

#99 [email protected] on 03.12.15 at 9:33 pm

Credit Unions are still a safe bet, methinks. CDIC is just for banks. CUDGC insures 100% of the deposit, not just 100k like the CDIC does.

That said, if there’s a run on the CUs, it might get interesting, I think.

And while I don’t disagree with SM on the codesmith being on of few viable careers left, the offshoots, like sysadmin are also viable. A dev needs an admin.

And people have being saying the same for years. Knowledge economy and all of that. I’ll believe it when I see it…the day certainly does seem to be drawing nearer.

#100 Squirrel meat on 03.12.15 at 9:34 pm

Houses for $500usd. $800 CDN pesos

http://news.nationalpost.com/2015/03/12/detroits-500-foreclosure-homes-five-things-to-consider-before-buying-for-a-quick-flip/

#101 BG on 03.12.15 at 9:35 pm

#15 Real Jimbo

I agree that you shouldn’t time the market.

But Garth’s blog is more about pointing out the risk and promoting a balanced/diversified approach.

Your post would have been more interesting with hard numbers. Maybe you did not miss out that much.

#102 Victoria Real Estate Update on 03.12.15 at 9:38 pm

Brookfield monthly index levels – Victoria. (link)

Will these price levels be changed in the future?

2015:
Jan. 158.4

2014:
Dec. 159…Nov. 159.2…Oct. 159.8…Sept. 160.6… Aug. 161.8…July. 162.2…June. 161.6…May. 160.8…April. 160…March, 159.8…Feb. 160.2…Jan. 161.2

2013:
Dec. 162.2…Nov. 163.6… Oct. 163.4…Sept. 162.6… Aug. 161.6…July. 160.6… June. 159.6… May. 158.6… April. 157.8… March. 157.8… Feb. 158.6… Jan. 159.8

2012:
Dec. 160.8…Sept. 163.8…June. 168.8…March. 170.6… Jan. 171.2

2011:
Dec. 171.2…Sept. 175.8…June. 178.4… March. 176.8…Jan. 172.2

2010:
Aug. 177.6… July. 178.4… June. 178.8… May 178.6… April. 178.2… March 177.4… Feb. 177… Jan. 176

2009:
May. 161.2… April. 158.4… March. 156.6… Feb. 156.2… Jan. 156.8

2008:
July. 162.2… March. 156.8… Jan. 154.2

2007:
July. 149…Jan. 134.4

2006:
July. 123.2…Jan. 107.4

2005:
July. 100.8

#103 TRT on 03.12.15 at 9:44 pm

Post #90 Trojan House:

And thats why i have been posting for 5 years…to let readers know the ‘other point of view’. Unfortunately, some don’t think for themselves.

My advice Jimbo: Move to Abbotsford or Chilliwack.

#104 M on 03.12.15 at 9:45 pm

Rejoice y’all, for there are people in the world worse off than in our land.
Who’d like to get double screwed in a two for one deal ?

https://ca.news.yahoo.com/indonesia-house-sale-comes-free-wife-153455339.html

#105 Andrew Woburn on 03.12.15 at 9:54 pm

“More Oil Price Weakness Looks Inevitable

While crude oil prices appear to have stabilized recently at $50-$60 per barrel and Saudi Oil Minister Ali Naimi is signaling that this calmer tone is welcome, some well respected analysts are still forecasting a move down to $20/bbl in the US. Predicting oil prices is notoriously difficult — especially in today’s uncharted waters for the oil market — but projecting from current trends in oil production and inventories, the prospect of a further decline in prices in the coming months seems virtually guaranteed. These signals are particularly strong right now in the US, but this partly reflects the greater transparency of US inventory data and the fact that much of the glut originates from rising US output. But US weakness will spread. What’s more, the inventory dynamics that are increasingly visible in the US are also at work in international oil markets.”

http://www.energyintel.com/pages/worldopinionarticle.aspx?DocID=879318

#106 4 AM Sunrise on 03.12.15 at 10:08 pm

#15 Real Jimbo on 03.12.15 at 7:08 pm

…although having said what I said, I do empathize with the emotional pain of having to move and – more heartbreakingly – uproot the kids from their school and their friends. I don’t know if we should institute renters’ rights like they have in Quebec. (I’m not up on this – all I know is that I’ve seen listings in Montreal that say, “there’s a tenant here till 2020 and by Le Tenancy Act de Quebec, you can’t kick them out, so you can only buy this place for investment purposes.”)

But let’s suppose the market cratered Kelowna-style. Wouldn’t you feel like a hero right now? Could that have happened? Sure – an authoritarian Asian government could change the rules and seal the borders by a simple pen stroke – er, sorry, I meant, signature seal.

People whose mortgages were making them live paycheque to paycheque and therefore can’t afford a downturn or any kind of SHTF (personal or market) absolutely should have sold. People who were out of whack by Garth’s rule of 35 probably should have sold. Now, you sound like maybe your balance sheet is more sound than most sheeple’s. Then you’d be like Bill Gates, whose net worth decreased by billions(?) during the dot-com crash, but he didn’t sweat it. But an amateur trader playing MSFT in that time and got hit with a margin call sure cried in those days. See what I mean? Same instrument, different circumstances.

And for every woulda shoulda coulda story like yours, there’s a sad story like this, of selling at a $100K loss: http://jrtom.livejournal.com/301596.html

One more thing about capital controls: back when I was [email protected], I’d see wire transfers come in like this into one account:

2015/03/12 Deposit $50,000.00
2015/03/12 Deposit $50,000.00
2015/03/12 Deposit $50,000.00
2015/03/12 Deposit $50,000.00
2015/03/12 Deposit $50,000.00
2015/03/12 Deposit $50,000.00

I used to think it was money laundering, until somebody explained to me that they take their egg and break it up among members of their family to wire separately into one account in Canada.

#107 4 AM Sunrise on 03.12.15 at 10:15 pm

I wish I worked in a realtor’s office. Then I could mentally compile stats on the source of buyers’ funds based on my super-awesome discernment skillz (Boomer parents? Lottery win? HAM? Vancity cashback loan? Self-funded?). Then we could put an end to this HAM debate.

#108 Retired Boomer - WI on 03.12.15 at 10:16 pm

Interesting talk about the Canadian tar sands becoming “stranded assets” should oil continue on its ‘new lower price.’
While I don’t realistically see that happening for more than a year, give or take, that is a long time for the newly punted.
Reading history in a few years will undoubtedly spin it differently. In the interim… gas prices rising here $2.39 a gallon (3.89 litres). Still a bargain, just not as great a bargain.
Oh, if you are thinking of selling your home soon in Canada, you might be past your “Best By Date” already.

Amazing how FAST things are changing!

#109 Lipstick-and-mascara-wearing Prime Minister on 03.12.15 at 10:18 pm

Mr. Turner, I am here to tell all your blog dogs, especially the females, how to dress. I will be posting regular instructions, and of course your readers can always just model their own appearance based upon mine.

**Please take off Bandit’s niqab before I send in Poilievre to do it for me. Don’t make me ask twice.

#110 BS on 03.12.15 at 10:26 pm

Jimbo blames everyone but himself, and yet he alone is responsible for his own actions. He is also overtly anti-immigrant, almost always the sign of a loser. — Garth

It is always the red neck racists who blame everyone but themselves for their failures. I wish just once they could take responsibility for their failures. They might find their fortunes would change if they took some responsibly, quit complaining and made something of their life.

#111 Fuzzy Camel on 03.12.15 at 10:29 pm

Went a Rich Dad, Poor Dad seminar. My girl wanted to go. I knew it was a scam, and when they told people to max their credit cards and drop $45k on their ‘training course’, I laughed my butt off. 3/4 of the sheep lined up to get fleeced, I had my awakening moment…Most people are sheep to be fleeced. Garth is polite, Smoking Man is blunt and I love that.

He is right on so many levels. Canadians are the most risk adverse people on the planet. This is why real estate is so overpriced right now. Half the country has cushy government gigs and a little safety nest house, with a locked in mortgage and hand sanitizer everywhere. I see them sipping coffee all day in their bubble, their world is perfect, they have arrived, nothing can shake them, don’t you dare try to scare them by talking about unpleasant things like reality.

The quasi-intellectual feminist teachers who rode a free degree off mom and dad and hopped into a risk free easy, overpaid teaching job, have strangled the fight out of several generations now, and despise anything resembling free enterprise or entrepreneurs. I see them seething and full of resentment when they hear of a guy running a small business out of his garage, how dare he violate the perfect urban planning and *gasp* make a profit.

Anyway, here we are. Socialism under a velvet glove. Real estate never goes down, it is safe. Go max out your mortgage now. Safety is a normalcy bias.

When Wynne runs out of our money to spend, things will get real. Wynne will go down as the worst elected official ever. She will destroy Ontario with her good intentions. I am with Smoking Man. It has taken almost a decade to deprogram myself. The hustle is my new passion. Buy and sell, look out for numero uno.

#112 Smoking Man on 03.12.15 at 10:30 pm

DELETED (Vulgarity)

#113 Andrew Woburn on 03.12.15 at 10:31 pm

I have noted in previous posts that bank regulators seem to be trying to rein in the Too Big To Fail banks around the world. Looks like it’s not all talk.

“- Goldman Sachs, JP Morgan, Morgan Stanley forced to slash dividend plans to pass U.S. Fed ‘stress tests’

WASHINGTON — Three major U.S. Wall Street banks had to scale back planned investor payouts after an annual check-up by the Federal Reserve, and two foreign banks failed the test altogether, a sign the Fed is keeping a tight lid on Wall Street.

Goldman Sachs, Morgan Stanley and JPMorgan Chase & Co, all with large and risky trading operations, lowered their ambitions for dividends and share buybacks, the Fed said on Wednesday, to keep them robust enough to withstand a hypothetical financial crisis. The revised plans allowed them to pass the Fed’s simulation of a severe recession.”

http://business.financialpost.com/2015/03/11/goldman-sachs-jp-morgan-morgan-stanley-forced-to-slash-dividend-plans-to-pass-u-s-fed-stress-tests/

#114 experienced.optimist on 03.12.15 at 10:34 pm

A couple of comments this evening from a blog site in the U.S. that I check in with regularly.

His first point is about the state of our Canadian economy. Although I do question this statement near the end concerning any rise in interest rates in Canada. “The Bank of Canada will have trouble ever raising rates, regardless of the distortion and mayhem near-zero rates are causing. ” I believe we have to follow the U.S. lead if they raise rates , even if there is a lag of a year or more.

http://wolfstreet.com/2015/03/12/household-debt-soars-in-canada-stability-at-risk/

The other article, although not concerning Canada directly, does show that we are not alone in attracting buyers for high end realestate. The well off, from around the world are looking for safe places to move their money.

http://wolfstreet.com/2015/03/12/thatll-kill-the-high-end-housing-bubble-in-us-trophy-cities/

And just in.

It looks like our Consevative Saskatchewan priemer is launching the tax hike balloon. The rest of you may not be far behind. Feds go down, provinces and cities go up. “Wall floats education tax hike”

http://www.thestarphoenix.com/news/Wall+floats+education+hike/10882461/story.html

#115 Rexx Rock on 03.12.15 at 10:34 pm

Sure Alberta is in trouble but Toronto an Vancouver still show signs of a robust economy.These two cities with average house prices over a million dollars just reflect what people can afford to pay.The prices will come down when there is no high income earners willing to pay these prices.Rejoice that we have so many people making great wages to buy and live in these wonderful cities.

#116 Bollinger RSI on 03.12.15 at 10:39 pm

#99 [email protected] on 03.12.15 at 9:33 pm

And while I don’t disagree with SM on the codesmith being on of few viable careers left, the offshoots, like sysadmin are also viable. A dev needs an admin.

========

devops is the writing on the wall

#117 Nacho Cheese on 03.12.15 at 10:40 pm

#7 Smoking Man on 03.12.15 at 6:46 pm

Rock on, Smoking man! One hell of a rant there! And just for the record, I don’t skip your posts – I ctrl-f “smoking man” to skip everyone elses posts only to read yours. You taught your son well and hopefully you will enlighten us too one day with your trading strategy.

#118 Christopher Lackey on 03.12.15 at 10:45 pm

Nice to see Friday night featuring a riveting debate on credit union deposit insurance. Seriously people. The idea of “I’m taking my business to the credit union because the banks are only interested in profits” is about as antiquated as the idea that the bank somehow has your assets in hard currency in the vault. First of all, for all their utopian beginnings credit unions are forced, to make a buck like everyone else to keep the lights on and that means heavy advertising that preys on people who get excited about 25 extra basis points or $3 extra per year on their grand of savings,with a good dose of B-lending. Still just trying to make a profit, like the evil guys, and probably charging a ton of fees too.

Second, we only have about $4 billion in actual cash sloshing around in this $3 trillion economy. So if *** ever really did hit the fan, your bank would be in at least as much trouble as the stock market, which has doubled while you’ve been collecting pennies on your savings at your “safe” bank./End of rant

#119 ANON on 03.12.15 at 10:46 pm

So, I made it through tonight’s Master Troll of the Blog much lauded comment. Guess what, he’s not as bad as his reputation makes him be. Maybe I won’t scroll away in the future.
Of course, he’s wrong in thinking he can pull it off forever, but he has some excellent points.
On what he’s wrong? There’s one instinct which no smart predator (not even a prey) misses, ever: when to duck and cover, either for danger, prey, or both. Those who don’t know both when the danger is imminent and when opportunity is near, don’t make it.
This is not a moral judgment, but the way of the world; I’m more of a squirrel, myself. :)

#120 Obvious Truth on 03.12.15 at 10:46 pm

Is brad lamb following anyone else around the internet in his BMW ?

#121 Wow on 03.12.15 at 10:47 pm

Wow. SM is begging for validation.

#122 Andrew Woburn on 03.12.15 at 10:48 pm

Bad news for Sinophobes but seriously good news if you need a job in tourism. Others might wish to escape to Lillooet while they can.

” – Chinese Tourists Are Headed Your Way With $264 Billion”.

“Here are the numbers: 174 million Chinese tourists are tipped to spend $264 billion by 2019 compared with the 109 million who spent $164 billion in 2014, according to a new analysis by Bank of America Merrill Lynch. To put that in perspective, there were just 10 million Chinese outbound tourists in 2000.”

http://www.bloomberg.com/news/articles/2015-03-11/chinese-tourists-are-headed-your-way-with-264-billion?

#123 SWL1976 on 03.12.15 at 10:48 pm

#70 Smoking Man

GARTHS a good shit, ya he charges a fee for great advice.

—————-

Last I checked this blog was solid advice and free, and always a great read. I read Tom Robbins in my youth, and now I think it’s about time I read one of your books Garth. And Smoking Man if you ever get your’s published, sign me up for a copy

Harsh deal for those poor workers being stuck on site. Been stuck on site myself lots, just not for that reason. Those poor bastards will have to fight to get a nickel out of PPEC

#124 pwn3d on 03.12.15 at 10:50 pm

“Despite what the realtors tell you, losing cities included Toronto”

LOL, actually teranet says toronto is up 7.32% y/y. If that’s losing I’ll take a loss every year please.

This spring is shaping up to be huge. T. hasn’t peaked yet, that’s for sure.

Year/year is rear-view mirror stuff. Teranet data is fresh. — Garth

#125 R Paulson on 03.12.15 at 10:54 pm

Garth,

I think you should challenge Robbins and his bagboy to a tagteam MMA smackdown for invading your turf…after all Canada is all about monopolies and preventing the next post 1812 Yank invasion innit?

Hold a survey on here for who your partner should be…my vote is for Smoking Man, but only if he is allowed to skull a bottle of JD b4 entering da octagon..

#126 The scent of a fall | Realties.ca on 03.12.15 at 10:55 pm

[…] Source: http://www.greaterfool.ca/2015/03/12/the-scent-of-a-fall/ […]

#127 Rexx Rock on 03.12.15 at 10:55 pm

DELETED (Anti-immigrant)

#128 crowdedelevatorfartz on 03.12.15 at 10:57 pm

@#15 Real Jimbo
1st.
You sold out of Real estate because you thought real estate prices were ridiculous.
Did you make money on the sale?

2nd.
What did you do with that money? Did you invest it?
If so, is it up?
OR
Is it still sitting in the bank gathering minimal interest dust?
3rd.
NO ONE can predict the future.
Educate yourself further on finances.
Stop blaming immigration. Its here to stay.
4th.
Your relatives with maxed out houshold lines of credit and Lexus payments might not be so smug this time next year……….

#129 davikk on 03.12.15 at 11:01 pm

Household Debt Soars in Canada, “Stability” at Risk

http://investmentwatchblog.com/household-debt-soars-in-canada-stability-at-risk/

#130 crowdedelevatorfartz on 03.12.15 at 11:02 pm

@#105 A. W.
Total agreement on the price of oil.
Storage worldwide is at 85-90% capacity.
Tankers are being leased for use as temporary floating storage facilities.
Oil consumption traditionally drops in the warmer months causing even more oil surplus.
Oil at $20/barrel by May?

#131 Squirrel meat on 03.12.15 at 11:02 pm

#108 Obvious Truth on 03.12.15 at 10:46 pm

Is brad lamb following anyone else around the internet in his BMW ?
——————————————————-

Good observation. I was thinking that bald lamb chops was popping up in way too many sites I was at….

#132 Squirrel meat on 03.12.15 at 11:11 pm

#117 Christopher Lackey on 03.12.15 at 10:45 pm

Nice to see Friday night featuring a riveting debate on credit union deposit insurance. Seriously people.
———————————————————-

Eh, it’s Thursday….. what world you in!

#133 Cici on 03.12.15 at 11:15 pm

#15 Jimbo

You’re complaining about how expensive and tedious it was to have to move two times in 7 years, yet you encourage the young to buy in, then move up every few years.

You do realize that would have meant just as much moving, only the owner would also have had to pay commissions and land transfer taxes as well, not to mention accumulating more mortgage debt.

Of course you realize that you phony real estate shill.

#134 Don on 03.12.15 at 11:15 pm

#7 Smoking Man on 03.12.15 at 6:46 pm

#210 Ponzif on 03.12.15 at 2:05 pm
#206
make your kids learn how to program.
—————-
Kidding me?
See where it got Smoking Man.
……………….
NOW I’M PISSED.!!!!!!!!!!!!!!!

WHERE IT GOT SMOKING MAN!

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

Don’t let the stupid get to you…man!

I just appreciate reading your concise observations over the last little while…always figured the bad spelling was somewhat of a cover. But your reasoning was/is spot on.

To be honest I do agree with you on the state of education. I always challenged my teachers..hehe (I may have been a tyrant back then). There are a lot of complacent teachers out there for sure, but it’s the good ones that hit the mark with the students so to speak.

Some people need direction, some need very little, and a few can find their own path.

By the way keep the East West intel up… – much appreciated.

Keep on Blogging MAN!

By the way my grandfather always thought he was from another planet…funny eh! Who knows maybe he wasn’t lying. One has to wonder given our current circumstances.

#135 omg the original on 03.12.15 at 11:19 pm

THE CULT OF CANADIAN REAL ESTATE

Real estate in Canada has reached levels that nobody would have predicated 10 years ago.

People in TO, YVR, Calgary, Victoria and even Saskatoon have come to believe that houses in their city are worth a shitload and will be worth even more in the future.

Its almost a badge of honour that housing in your city is unaffordable. If your housing is unaffordable you have “arrived”.

This did not happen overnight – its been a gradual change in sentiment over the past 10 to 15 years as prices steadily crept upwards.

It all seemed to make sense since back in 2006 we were still below the nosebleed levels of most equivalent US cities.

Then things diverged – the US had a major catalyst to reset the market back to historic levels. That catalyst was massive fraud in lending that give mortgages to people that had no hope of ever repaying.

While we undoubtedly have people that have no hope of repaying, Canada does not have the type of massive mortgage fraud that existed in the US market pre GFC.

So there will be no wholesale default of homes as there was in the US.

The only catalyst that is on the horizon to reset the Canadian market is interest rates. Short of rates rising in a significant way there will be no quick reset of the Canadian market.

The chance of rates rising quickly and meaningfully in Canada are about nil – it would simple kill the economy.

The more likely outcome will be a slow and steady decrease in the real value of homes as interest rates return to the “normal” levels that occur during an economic cycle.

Thus we could be looking at a 10 to 15 year reset of house values in Canada – in real terms, not necessarily in nominal terms.

A rest back to historic levels were a modest family house will run 1 1/2 to 3 times average annual income in smaller cities to 3 to 6 times in large cities.

#136 andy on 03.12.15 at 11:26 pm

More condos…now 80 stories….
http://www.cbc.ca/news/canada/toronto/the-one-80-storey-condo-pitched-for-toronto-s-yonge-bloor-corner-1.2991732

#137 omg the original on 03.12.15 at 11:29 pm

#114 experienced.optimist
“The Bank of Canada will have trouble ever raising rates,…..” from the wolfstreet.com
—————-

Beware of any financial commentator using the words “NEVER” or “EVER”. In finance (and life in general) there is nothing so definitive as never or ever.

The use of such categorical terms shows the commentator either does not have much experience or is just a “shock jock”.

Either way you should not place much confidence in the validity of the viewpoint. Usually their opinion ends up being lightyears from reality.

#138 Cici on 03.12.15 at 11:35 pm

#54 Brian,

Thank you for mentioning that…finally! I’ve also been lamenting the high prices at the pump vs. the exchange, and wondering why no else seems to notice or mind.

#139 ANON on 03.13.15 at 12:02 am

[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
All over the place. The storm is imminent.

#140 B Riding on 03.13.15 at 12:07 am

Grandparents Home:

Family Sold it Summer 2013 $920k Cousin RE agent, no fee, neighbor purchased.

No one in my family wanted to spend that much on a old 1950’s home. The House is one street away from brentwood mall, burnabys next massive development. When my grandparents bought the house, brentwood mall was a apple tree field, and they lived in the hicks so they were told by there peers.

I am 32 and for the first time question my decision and the world as a neighbors home, same condition, blocks away is being sold for 1.45 million.

I thought 920 was to much, two years later and it shoots up half million. MAKES NO SENSE. Still some what happy I did not buy my grand parents home, as it would have been a money pit. I wished I had Smoking Mans liquor courage to have the balls to buy it and flip it. Instead the new Chinese, hate to point it out but its true, will be the ones getting richer off it.

#141 devore on 03.13.15 at 12:09 am

#15 Real Jimbo

Here’s my story – and lesson. I read Garth’s Greater Fool book when it came out back in 2008. In response to Garth’s warning in the book, my wife and I sold our condo. We rented a house in suburban Vancouver with our kids, waiting for the promised big correction and buying opportunity.

Seven years later, we are still renting. We’ve spent roughly $200,000 on rent in that period. Houses that cost $700,000 in 2008 are now easily $1.5M. Our friends and family who all bought instead of renting have built up equity in their secure homes and rightfully view us with pity. We missed out.

Well, you didn’t have a house, did you?

Maybe you should check out what’s been going on with condo prices since then. I bought a condo in 2007, so I am acutely aware. Even houses haven’t done well at all in many parts of lower mainland; I doubt you were in the market for an $800k Van teardown.

#142 Fuzzy Camel on 03.13.15 at 12:12 am

I see why Smoking Man likes to type on this blog, it is addictive, mental masturbation, via extrapolating how things will play out shortly.

I am encouraged by Garth, and his readers comments. Enough pandering for now…

Everyone gets it, but doesn’t get it. Deflation!
What happens in deflation? Prices drop, layoffs, revenue shrinks, government gets nervous. Interest rates will drop. I fully expect more to come. Can a whopping drop of 0.75% save the day this time? Nope! BoC is out of ammo to fight this @ 0% rates.

Extrapolate this out to June, when Yellen will hike interest rates. Think that will help deflation? No! Wouldn’t want to be long around Sept.

The powers that be, the rich, they are sitting on piles of cash licking their lips thinking about deflation. Garth is pushing investments, but in deflation cash is king. What does no one have? Cash. They have debt, lots of it, but no liquidity. Deflation has the nasty habit of making debt unserviceable. Think pin vs balloon.

Wynne won’t win, mehehe. She will succumb to austerity at some point. Right now people are milk cows, but soon you all will be beef cows.

Don’t you get it? You’ve been set up, sold magic beans, thrown under the bus. You’ve been suckered into leveraging yourselves beyond reason into real estate, only to have your means cut off. Try paying that mortgage in deflation, hard to without a job.

This summer, deflation -> layoffs -> stock market trouble -> zero sum austerity. Now the sheep haven’t a clue right now, they are sun tanning asleep while a T-storm is rolling in. When all this sinks in, panic! I suspect 2016 will be the year their perfect socialist bubble world of good intentions and rainbows comes crashing down to the reality that we aren’t the special snowflakes our social-engineering feminist teachers told us we are. We are servants licking the boots of the owners.

Welcome to reality —coming soon.

#143 young & foolish on 03.13.15 at 12:25 am

SM … Not sure where you got your education, but I’ve never had a good teacher who tried to get us to just swallow the rules as opposed to thinking things through. Maybe you just want to be the new Marlboro Man?

Regarding RE correction …. Nobody can say “we never saw it coming” …. There is an article about over indebted Canadians in the newspapers everyday….. And has been for months!

#144 Nov54 on 03.13.15 at 12:25 am

Hey Smoker, ya can’t figure out the purpose of this blog?
Your rite.
Ya did have shitty teecchers.

#145 NoOneOfConsequence on 03.13.15 at 12:30 am

Hi!
Kudos on the improvement to the ‘deleted’ posts…I love that you put the reason in brackets!!

There is a lot of whining about ‘following your advice’ in regards to selling their home. Funny I didn’t read anything about the improvement in their investment portfolio.

Shouldn’t their complaints start with…”I followed ONLY PART of your suggestions and…”

Question…don’t ETF’s require a bid to sell them so quickly? In a market crash….If there is no bid for the underlying equities…couldn’t you be stuck with them in a big slide? You always say that you can liquidate ETF’s quickly…but in a crash there is no bid….so can ETF’s still be sold quickly?

Thanks.

#146 waiting on the westcoast on 03.13.15 at 12:38 am

LOL – I had to do that… Garth – love the new format…

Real Jimbo – I feel for you selling and missing out on a tremendous run. That said, you probably made the correct decision based on valuations at the time. There were a lot of people who thought Buffett was a fool to not invest in internet stocks in the 90’s. He missed out on a lot of upside. He also missed on the downside which burned a lot of people.

I look at it like this. Does it make economic sense to buy the asset? If yes, I buy. If no, I wait. If I already own it – similar assessment. Is it overvalued – time to sell, etc.

#147 waiting on the westcoast on 03.13.15 at 12:43 am

SM – hey – I was looking through the trades you/your nephew made – seem to be a number of inconsistencies… Were you traveling close to light speed? May have created some interesting gravitational effects… ;-)

#148 S. Bby on 03.13.15 at 12:48 am

#2, #8 Re: South China Morning Post’s story on Tsur Sommerville and his UBC-affiliated Centre for Urban Economics:

This is not new news and it has been known for years; that department at UBC is entirely 100% funded by various real estate interests. I read about this years ago.

Get a load of his title:
Associate Professor – Real Estate Foundation Professorship in Real Estate Finance Director, UBC Centre for Urban Economics and Real Estate

#149 S. Bby on 03.13.15 at 1:00 am

Here’s some documentation linking Tsur S. to the real estate industry. Back from 2012.

http://whispersfromtheedgeoftherainforest.blogspot.ca/2012/06/conflict-of-interest.html

But now the actual link to the sponsorship page brings up a blank page. Hmm… Good thing Whisperer got a screen shot.

#150 Juanito on 03.13.15 at 1:14 am

#18 Mister Obvious on 03.12.15 at 7:11 pm
Albertans are famous for saying they’re used to boom and bust cycles. It’s just a fact of life for them and they structure their lives accordingly.

I applaud them for that down home prairie fortitude and expect that going forward they will exhibit the usual pragmatism for which they are well respected.

——————

Amen to that. Alberta’s housing market and economy isn’t dying as some seem to think, it’s correcting. It’s undergoing the necessary and painful transformation now to make business more viable in the future.

Take the medicine now and suck it up, or you can keep your head in the sand and end up needing a real estate enema after taking it from realitors for so long in Van or 416.

#151 Industrial Guy on 03.13.15 at 1:19 am

Another sign that the real estate zombie apocalypse is upon us …. Tiger Direct, one of Canada’s largest computer retailers started its bankruptcy liquidation sale today … Staff were shocked this morning to find out their jobs were gone.

Another retailer serving the Middle Class bites the dust ….

#152 What oil crash? on 03.13.15 at 1:22 am

I’m wondering about the so-called oil crash, in B.C. Not seeing much change at the pumps 1.15 a litre still cheaper to buy across the border at 2.10 a gallon even with the exchange.
Soon all the TFW’s will be coming for the fruit season because we don’t have skilled workers for these jobs – all the kids want higher education what a joke! I’ve seen lot come asking for a job only to be told there is nothing for them why??? Because they got TFW. Another thing maybe some of those houses in bc are so high due to money laundering the guy down the block had bought 5 houses big fancy ones well he’s in jail right now for drug importation hmmmm could that be why money is no problem for a bunch of these sales?

#153 Mark on 03.13.15 at 1:38 am

“The only catalyst that is on the horizon to reset the Canadian market is interest rates.”

Have to disagree here. What about good old fashioned “supply exceeding demand”. Which is what we already have, hence, house prices are going down undeniably across pretty much all of Canada at the moment despite “interest rates” being at record lows.

Housing is just like any other consumer good, not immune to the basic laws of supply and demand.

#154 Mark on 03.13.15 at 1:42 am

“Year/year is rear-view mirror stuff. Teranet data is fresh.”

Teranet data is a lagging indicator, as the methodology used to collect Teranet data is effectively a low-pass filter (low-pass filters filter out substantial short-term changes). I explained quite thoroughly it in previous posts (here and on RFD), but the Teranet methodology assumes that price changes are linearly distributed on individual samples over the period of many years between transactions in a given property, rather than instantaneously calculated.

So if the Teranet data shows declines, real declines on individual properties most likely began a year or two ago. Consistent with the peak of the housing market being just prior to the Budget 2013 changes to CMHC introduced by “F”.

#155 Hungry Bob on 03.13.15 at 2:16 am

Poloz has announced another nut kicking drive to every Canadians balls by saying he won’t raise rates if the Yanks do. This crash you’re talking about both in RE and the $C might be just the incentive foreign buyers need to sweep in a vultch Canada’s market.

But there’s no good news for Canadians….sorry. Got lettuce on the table…nope…thx to Poloz seniors will not be going green this year. He says low oil will offset the rise in imports…oh yeah…bwahahahahahahaha tell that to the thousands of seniors and families who can’t afford anything but packaged crap.

#156 SealTeam0 (so secret I don't know if I exist) on 03.13.15 at 2:23 am

“#19 Retired Boomer – WI on 03.12.15 at 7:11 pm
…or perhaps, just awaiting the next bus to the promised land. Hell, we are ALL at that bus stop.”

Waiting For The Bus / Jesus Just Left Chicago
https://www.youtube.com/watch?v=ipIdM33hsKo
Turn on your speakers!

#157 souvereigninternational on 03.13.15 at 2:33 am

#110 BS on 03.12.15 at 10:26 pm
wrote
“It is always the red neck racists who blame everyone but themselves for their failures.”

Garth should have deleted you. What’s next going to be allowed polak racist accussation’s etc.

see
http://en.wikipedia.org/wiki/Redneck

#158 SealTeam0 (so secret I don't know if I exist) on 03.13.15 at 2:45 am

“#48 Smoking Man on 03.12.15 at 8:03 pm
my confession of doing 4 at a time”

Seriously? I doubt that you can get all four fingers on that tiny thing at once.

#159 BigM on 03.13.15 at 2:48 am

For all those who are discussing CDIC and CU’s this evening, a gentle reminder.

Cyprus showed everyone worldwide that those ‘guaranteed protected limits’ only exist because the government says it does.

When the government says it doesn’t, then all bets are off.

Remember the ‘haircut’ initially was supposed to hit ALL
Bank accounts, not just the ones with deposits over 100k.
Signed off by the EU troijka, they agreed to pinch everyone’s money.

It was only after the outcry across Europe the 100k limit was actually enforced, and accounts over 100k got cleaned out.

Because the government said they were protected, until they said it wasn’t.

Only when it is convenient for the government.

When it isn’t, they will take your money.

All those nice words, ‘protected’, ‘guaranteed’, ‘insured’, are just words.

One would think there was an actual insurance program to protect deposits that governments pay into.
There isn’t.

Only because the government says it is.
Until they say it isn’t.

#160 DisgustMadeMePost on 03.13.15 at 2:57 am

Soooo… Very interesting info about credit unions.

What is the best way to examine the health of a specific credit union? How does one find out their level of exposure to sub prime .. Or mortgages in general? Is there an independent publication that rates each?

Also,
#17 David Lee on 03.12.15 at 7:11 pm. Thank-you for the article from the SCMP .

Things that make you go ‘hmmm’.

Salary for this professor is $243k?? Obscene .

#161 SealTeam0 (so secret I don't know if I exist) on 03.13.15 at 3:10 am

“#76 Smoking Man on 03.12.15 at 8:59 pm
DELETED (Sexist)”

Nice new feature giving the reason for deletion. Will we soon see yeah you’ve said the same thing for the past 3,946 posts so deleted. I’m thinking Mark, Waterloo whatever, Smoking Dickhead and a number of others. I’ve not followed closely but, speaking of nauseating and stupid repetition did you finally punt that Cato the Idiot or did he just wander off on his own?
Oh and CHMC has 900 billion trillion gazillion in subprime mortgages. Also Devil’s Anus is apparently entering the Lillooet market after reading that one poster here who trumpets how superior it is to the rest of the country. He has apparently struck an amazing deal with some CHMC backed subprime lenders to finance his prey I mean clients.

#162 juno on 03.13.15 at 3:26 am

Garth , with the increasing number of layoffs in high paying jobs in Calgary and the rest of Canada. One would think this will increase the 164% by quite a bit.

Since most will go from 6 digit salaries to nada

We can quickly shoot up to 180% debt load which will put the Canadian dollar into DEFCON 4

#163 Ulsterman on 03.13.15 at 3:52 am

Real Jimbo, Garth left you a scathing assessment of your situation but you speak for many I’m sure who read blogs like these. I understand your frustrations.

In theory most of the readers do a simple calculation that appears to lead to happiness. They find a house they like and sign a long lease – just like that. Then they calculate how much it would cost to mortgage, tax and maintain, and for good measure, the opportunity cost of the downpayment. Then they subtract their rent. Then they take the difference and invest it in a diversified portfolio – just like that. Some of course claim to continuously buy at the bottom and sell before every market correction. Then you go to an online calculator and figure out how rich you now are and are pleased you never bought.

The problem is few will actually do this. Like most, they rent but of course cannot save the difference between renting and buying because they could never have afforded to buy anyway. They save little. Ultimately they’ve watched their buying friends build absurd amounts of equity while they build little because like most regular joes they have little left at the end of each month to invest in their magical balanced portfolios.

I’m sure i’ll be pilloried for such views, but i suspect few of the bears are even close to keeping up with their Vancouver or Toronto home-owning friends. Real Jimbo, reading bear blogs was almost certainly the worst financial move of your life and the only way to recover now is to move to a much cheaper area. Staying in Vancouver will just prolong your pain. House prices will almost certainly never correct to the levels you’ll need to buy with comfort. You sold a condo, so I’m guessing you probably have a 100k at most in profit from that. It’s peanuts in this market and even a 35% correct (a fairly epic crash) would still leave an East Van shack at 650k and you probably STILL financing a crushing mortgage. For your own sanity it’s time to get the hell away from this madness.

#164 Why are you people so blind? on 03.13.15 at 4:12 am

The housing valuation/debt problem is going to be solved by a massive depreciation in the value of the Canadian dollar, I’m expecting down to .20s USD, given that markets always overshoot on the downside (Sorry Mark but I’m glad thinking like yours lets me enter into short positions). Think it won’t happen- that what they said when the CDN started its long march from the 90s to the 60s USD during the 80s. Look at history, it should be so obvious I shouldnt even have to argue. Globalization, the liability of excess immigration into a welfare state, an over leveraged commodity economy in a deflating world, the overhang of an excess government sector that minimizes business formation, just a plain stupid governing class.
When its all said in done, those million dollar 406 & 604 properties will be trading at ten cents to the USD and most of Canada’s wealth its resources will be bought out by foreign interest to bail out the financially incompetent governments and peoples of Canada.
And yes, middle class incomes in terms of PPP in Canada will be matching the third world, hopefully at least at the Mexican level, but then again, markets do overshoot on the downside.
A real estate bubble? Take off those rose colored shades- the whole country is an unsustainable bubble and hopefully we won’t see 10 or 20 Canadas in the future- but given the history of multiculturalism in other parts of the world during times of economic stress….

#165 Dogstar on 03.13.15 at 4:15 am

Report from Suncors Firebag site.

We have now got rid of honey, hot sauce and powdered milk in the kitchen. Other contractors have lost their break times, bonuses and retirement contributions. I now have to use the same towel for a week at a time.

Those poor bastards at CNRL were laid off then they company didn’t even have the decency to give them a bus ride off site.

It’s getting bad up here.

#166 Steve french on 03.13.15 at 4:58 am

so mr smoking man fancies himself a gambler and a wizened realist who can handle his drink?

ppffft.

Down here in Aussie land they would eat you for lunch smokey.

Watch this movie …. and be afraid.

“wake in fright”

It’s free on YouTube.

But be careful. you’ll need a full bottle of JD after viewing this movie. And you’ll need some during the movie too.

You’ve been warned.

Steve-o

#167 condopoor on 03.13.15 at 5:06 am

Dear Garth,

Just catching up after a few days of work and wanted to comment on your recent post addressing “world cities” – because I think it’s important. Truly amazing how many Canadians think that our Toronto, Montreal, Vancouver are the be-all and end-all cities on the planet. I used to think that way too, until I started working in New York, LA, and London. Now, don’t get me wrong – I’m a very patriotic Canadian and I love living in Vancouver. But if you travel, work, or live in these true “world cities”, you’ll know that our big 3 seem bush league in comparison.

I wonder how much this attitude has contributed to our current house-obsessed situation?

#168 Steve French on 03.13.15 at 5:07 am

Whats that Smokey? New to the Yabba?

And you say you don’t like the Yabba?

— I said I’d buy *you* a drink, now drink ‘er down!!!!

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

All the little devils are proud of hell…

“Wake in Fright” full movie:

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

#169 Habs76-79 on 03.13.15 at 5:19 am

I don’t know how Garth keeps up doing this blog as vital as it can seem to be.

As time passes all I see around me is people NOT LISTENING TO GOOD ADVICE! I don’t agree with Garth and some posters here at all times but I have learned so much over the last few years here. I’ve learned a lot about myself too and the idea of money, investments, real estate, credit and debt as well as the fact we have all too many putzes in govt. and its bureaucracy.

But I find it hard nowadays to relay info I have learned at a place like this to other folks. NOBODY SEEMS TO WANT TO HEAD WARNINGS AND TAKE ADVICE!

I harken to a scene from the Holiday movie, It’s a Wonderful Life. The dancing scene on the floor that lays over the swimming pool and the floor triggered to open up thus seeing the dancers all begin to fall into the pool. The economic train wreak beginning with real estate , HELOCS, other over indulgence in credit, idiots in banking, real estate and govt. blathering away in this country is sad and IMO will end tragically.

I know even wiser folks will be hurt by it all, but I find it too hard now to work up the energy to talk too much about it to the never ending scribe of human lemmings out there.

Garth’s blog is like the Dutch boy plugging the hole in the dam with his thumb, it won’t stop the dam from breaking in the end.

But again even though I do not agree 100% of the time with Garth, I agree much more than I had thought I would and I appreciate the education I have received from him and some other smart posters on his blog.

#170 Alberta is FINISHED on 03.13.15 at 6:49 am

Do I really need to explain why Alberta is FINISHED? Oil down AGAIN so far today.

#171 Jay on 03.13.15 at 7:24 am

Amazing that someone would actually make the “look at all the gains I’m losing!” Argument.

With that sense of entitlement, I’m certain they’d be whining for a government bailout if they did buy everything they could then housing collapsed.

I remember living in a prairie city in the mid 90s, we were stuck there because for years the house simply wouldn’t sell. The same house has now tripled in value, but that too can change on a dime.

#172 BG on 03.13.15 at 7:40 am

#163 Ulsterman

This was a very clever comment.
When you make a choice that implies long term discipline, you always have to honestly consider your ability to stick with it. We’re only human.

On another note:

Garth,
I admire your position on racism and xenophobia.
But I find sometimes you can be overprotective.
This is counterproductive in a public debate, because people will start to wonder why are some minorities so protected and these minorities will only get more stigmatized.
I’ve seen that happen, in other settings.

In the case of Real Jimbo’s message, I see what you may have disliked – but it would have been better to explain your point clearly rather than comment so harshly with no explanation.

I have written 1,600 posts about being diversified, investing in real estate prudently or combining renting and investing in a financial portfolio. If he doesn’t get it by now, that’s his problem. His rant against the world is childish. — Garth

#173 Jonathan on 03.13.15 at 7:45 am

So many condos have been built in Toronto, and are about to be built, close to 300 in total between 2012 and 2017 or so, according to the news, including the new tower condo likely for Yonge and Bloor.

Will these lead to a glut and lower prices or a crash?

Yes, short term. But over the next five to ten years, I think there may be another effect. After all, these are still only enough homes for 100,000 or so people.

I am thinking more and more that this will fuel an exodus of retiring and downsizing boomers who still want to stay in the city. So condo prices may be better than is feared longer term.

What may suffer much more than expected is the price of the single family detached homes these people will be leaving to get into a more care-free condo.

The SFD home imploded in Toronto in the 1990s. I think it could well be even worse this time coming up.

#174 The American on 03.13.15 at 8:18 am

At #26: You said, “This powerful source of stimulus stems from the fact that mortgage lending standards in Canada are much laxer than in the US. In Canada, lenders are willing (and happy) to take on high-risk, high-ratio loans (made under loose lending standards) because CMHC and Genworth Canada remove the risk and put it onto the backs of Canadian taxpayers.”

BINGO! You’re one of the very few who understand. This argument that prices in Calgary are high due to its connectedness with an oil-rich economy is just flat out bullshit. Texas and Oklahoma are some of the cheapest places to live in the entire U.S., and those are the two energy hubs in our nation. It seems to me Camadians are easily sold false stories and then they cling to it as if it’s a matter of life and death. I have to admit it seems very odd.

#175 Hot Albertan Money on 03.13.15 at 8:36 am

For example, massive mortgage defaults in BC. A report prepared for that province’s Financial Institutions Commission is warning this could become a reality – a housing crash leading to over-indebted families walking away from their mortgages.

How can that be? I didn’t think Canada had “jingle-mail”? Are they just walking away from the house, or are some people actually able to walk away from the mortgage too? I thought CMHC only protected the banks, not the buyers?

#176 Alberta is FINISHED on 03.13.15 at 8:47 am

It’s just will get worse and worse for Alberta . Alberta is FINISHED.

http://www.cbc.ca/news/business/oil-glut-getting-worse-not-better-iea-says-1.2993592

#177 Statistics Canada on 03.13.15 at 9:05 am

We here at Stats Can as we call it are proud to be introducing our new and improved Jobs Report formula. With the help of the PMO we have adopted an analysis that counts a FT job loss as 1/2 a job loss and PT and Self employed job created as 3 job gains. The loss of 1000 jobs under the old formula would really have been 2000 jobs. This should help clarify the matter.

#178 Happily Renting on 03.13.15 at 9:23 am

Hi Garth + dogs. Long time reader, first time poster.

Not sure how much Youtube you guys watch, but I just noticed today that the Financial Consumer Agency of Canada paid to have this cute little ad run on any Youtube videos viewed from Canada.

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

I immediately thought of this blog and smiled.

#179 Holy Crap Wheres The Tylenol on 03.13.15 at 9:42 am

#7 Smoking Man on 03.12.15 at 6:46 pm
Jesus Smoking Man after that rant have a Snickers for Gods sake. “Was pretty entertaining though”

https://www.youtube.com/watch?v=rqbomTIWCZ8

#180 tkid on 03.13.15 at 9:46 am

Is there anybody else here from Ontario who wants to take a cluebat to “Alberta Is FINISHED”????

Hey! Doofus! Alberta has taken a major economic hit AND THEY ARE STILL POSTING A DAMN SURPLUS! This puts them ahead of us in the Fiscal Superiority Nyah Nyah List! So shaddap!

#181 NoName on 03.13.15 at 9:46 am

@#7 Smoking Man

“Seriously, just because my online persona goes throughly against your teacher manufactured belief system, It dosent realy mean I’m wrong about anything.
You bastards may not like to hear this, it may offend you to the core. But.
You’re all pathetic servants. Bitches, only usefull to butter the Masters toast. I loath 99% of you. You have brains but don’t use them. I can’t forgive that, it annoys the shit out of a logical mind. ”

I am a real life smoking man minus, smoking, drinking, other stuff and most importantly MONY. My whole adult life, I questioned everyone and everything, and in a process of doing that I pissed many.

Regardless how good I was at doing my job, at the end didn’t mater. My first “welfare” (ei) chq arrived earlier this week. Free thinking in todays society that is not desired,

So before you rants how we are all stupid, try not to discount 3 important things, when, where and to whom you are born. tell me would you be as successful if you didn’t obay your masters?

https://youtu.be/Ckom3gf57Yw

#182 Ben on 03.13.15 at 9:50 am

Garth – you have a link on the Montreal stats please?

#183 bdy sktrn on 03.13.15 at 9:58 am

#140 B Riding on 03.13.15 at 12:07 am
Grandparents Home:

Family Sold it Summer 2013 $920k Cousin RE agent, no fee, neighbor purchased.

I am 32 and for the first time question my decision and the world as a neighbors home, same condition, blocks away is being sold for 1.45 million.

————————————————
c’mon now, stop making stuff up.

as mark has explained many times, prices are going down, not up, it’s the sales mix, silly!

you see grammies house is probably blue and this other house is likely white, and we all know(?) the mix of more blue (expensive) houses sold is what is driving up the averages.

or mark is simply batsheet crazy.

——————————————

oil at 46 even. ouch for the bulls.

#184 Holy Crap Wheres The Tylenol on 03.13.15 at 9:59 am

#166 Steve french on 03.13.15 at 4:58 am
so mr smoking man fancies himself a gambler and a wizened realist who can handle his drink?
ppffft.
Down here in Aussie land they would eat you for lunch smokey.
Watch this movie …. and be afraid.
“wake in fright”
It’s free on YouTube.
But be careful. you’ll need a full bottle of JD after viewing this movie. And you’ll need some during the movie too.
You’ve been warned.
Steve-o
_____________________________________________
I don’t know about that Steve-O, JD here is like milk to a baby. Here the further North you go the heavier the drinking goes. To be honest though most of my old drinking buddies fancied Crown Royal, CC or Segrams VO, good old Canadian Rye. Have to say a though I brought a bottle of Australian Whiskey back home years ago. Nice stuff, Sullivans Cove from Tasmania. Great single malt!
https://www.youtube.com/watch?v=JffwloZ0WeM

#185 maxx on 03.13.15 at 10:03 am

“central bank goofed”

It most certainly did.

#186 Holy Crap Wheres The Tylenol on 03.13.15 at 10:05 am

“It’s a cautionary tale what we are currently seeing in the Canadian economy. The rapid decline in oil prices caught many by surprise. And, that’s the point – consumers and business owners need to be more vigilant. When economic change happens, it can happen very quickly and can challenge previously observed stability of key economic and credit indicators.”

You bet. We’re just one homeless, crippled bird dog nation, awaiting its Messiah.
_____________________________________________

Yes Garth the Messiah is coming, but we better be prepared. The economic situation is changing in the US and Canada. We tightened up our term to customers and Net 30 is Net 30 after that we have per day charges added on to the invoice. We are not the customers bank and cash-flow is imperative. I have US suppliers now offering discounts on paying early. Money is tight out there again!

#187 Rational Optimist on 03.13.15 at 10:20 am

I just checked the report of the credit union in my area, and 60% of the loans they issued last year were mortgages, by value. 7.3% were personal lines of credit. So there you go. This is Ontario outside of the GTA. The credit union has about a billion in assets.

I also checked First Ontario Credit Union’s report. They’re a pretty big one, 100,000 members in Ontario. 60% [i]of all their assets[/i] are residential mortgages. This not including lines of credit and loans for commercial buildings.

Re: Credit union deposit guarantees. As Chris Farley’s character said in the film Tommy Boy: “Hey, if you want me to take a dump in a box and mark it guaranteed, I will. I got spare time.”

#188 Alberta is AWESOME on 03.13.15 at 10:21 am

How do you get rid of an oil glut….. buy more hummers.. summer driving season.

#189 Rational Optimist on 03.13.15 at 10:21 am

That should have been “60% of all their assets are residential mortgages.” But that’s okay, it bears repeating anyway.

#190 Squirrel Meat on 03.13.15 at 10:41 am

#7 Smoking Man on 03.12.15 at 6:46 pm

#210 Ponzif on 03.12.15 at 2:05 pm
#206
make your kids learn how to program.
—————-
Kidding me?
See where it got Smoking Man.
……………….
NOW I’M PISSED.!!!!!!!!!!!!!!!

WHERE IT GOT SMOKING MAN!

Seriously, just because my online persona goes throughly against your teacher manufactured belief system, It dosent realy mean I’m wrong about anything.
————————————————-

Bang on about today’s school system. It’s become the gold sticker reward system. Destroying independence and creativity in far too many. It’ s gonna be a bugger to fix.

About banging 4 rentals simultaneously- hmm, I think the blog now needs a Clorox bath.

#191 Jeff in Moose Jaw on 03.13.15 at 10:42 am

#7 Smoking Man

I agree.

This is what happened to me back in grade 5.
The teacher had the class all in a group sitting. Then we had to stand up one by and compete against the one student who was excellent in rapid fire math.

Here we go…

Stand up teacher writes a math problem on the chalkboard, and it’s you vs. the smart girl (who comes from a privileged family). Of course she can do math quickly, and I lost, sit down and then she’s on to the next student who will be beaten as well.

This doesn’t teach math, but sure puts the students in their places, embarrassing lessons like this one over a number of years sure helps establish the pecking order.

#192 4 AM Sunrise on 03.13.15 at 10:52 am

#160 DisgustMadeMePost on 03.13.15 at 2:57 am

Well, it may not be as “independent” as you’d like, but you can grab yourself an annual report and get started:

https://www.coastcapitalsavings.com/Resources/Documents/2013_Annual_Report/CCS_Annual_Report_2013.pdf

“Loans” are 87.8% of their assets, of which 64.2% are residential mortgages. Inside their mortgage book, 11.7% are “insured” and 12.9% are “high-ratio” (that means subprime, right?). I don’t know where that is on the flashing-danger-sign scale.

#193 Lorne on 03.13.15 at 11:03 am

http://www.scmp.com/comment/blogs/article/1729003/bc-casinos-court-chinas-high-rollers-its-realtors-who-gamble-money

“People from mainland China routinely buy houses for millions of dollars in cash in Canada and those transactions may be problematic for money laundering. Real estate agents in Canada apply very relaxed anti-money laundering standards on real estate sales.”

Duhaime said that real estate agents have the same anti-money laundering obligations as casinos “but do not apply the same level of stringent controls”.

“If there is a place where a crackdown is needed, it is with real estate purchases,” she said.

#194 Trading Naked on 03.13.15 at 11:05 am

#111 Fuzzy Camel on 03.12.15 at 10:29 pm

I hear you. My Boomer parents are pissed that I found a way to make money outside of the traditional exchange of time for money. They act like I’m a coward for running away from an HR world where I’m at the mercy of somebody’s “Like” (or not). I never did well at job interviews – the interviewer coos, “ooh, you’re so smart!” right before her face falls; I’ve been told before with frustration that I don’t fit into a “category”.

It’s a paradigm shift. Kids are doing amazing things with laptops these days. I’m doing my bit, too.

#195 Obvious Truth on 03.13.15 at 11:08 am

Oh Canada …..

#196 jess on 03.13.15 at 11:24 am

If that is an example of unleashing one’s self- esteem
than the below is a “blast” of selfish-steam

The serially corrupt free markets

http://www.thescottishindependent.com/uncategorized/corporate-scandals-show-that-predatory-capitalism-is-institutionalised/

selling abusive :
pensions, endowment mortgages, payment protection insurance , money laundering,interest rate fixing
manipulation of foreign exchange rates.
Payday lenders -high interest / fake legal letters
Luxembourg leaks
energy firms overcharging customers
high train rates inspite of subsidies etc

=====================================
Price comparison sites accused of hiding the best energy deals from their phone customers – because they won’t earn a commission

Read more: http://www.thisismoney.co.uk/money/bills/article-2936481/Price-comparison-sites-accused-hiding-best-energy-deals-phone-customers.html#ixzz3UHKiQfUG

#197 Ralph Cramdown on 03.13.15 at 11:27 am

#180 tkid — “Is there anybody else here from Ontario who wants to take a cluebat to “Alberta Is FINISHED”???? Hey! Doofus! Alberta has taken a major economic hit AND THEY ARE STILL POSTING A DAMN SURPLUS!”

Without defending Ontario’s fiscal management…

Two things about Alberta’s ‘surplus.’

First, it’s based on royalties from a declining, finite resource. Part of which is dirtier and with higher extraction costs than comparable resources elsewhere. Best case it lasts another century or more. Worst case, much of the demand for it is supplanted by alternate sources of energy and lower cost sources sop up the rest, leaving it stranded and worthless in 20 years. The truth is probably somewhere in the middle, but the province has been living — and budgeting — like it’ll last forever.

Second thing, Alberta’s ‘surplus’ is through the magic of capital budgeting. “Alberta reported recently a surplus of $465 million for 2014-15 even though its deficit, measured as the decline in net financial assets, is $2.4 billion.”
http://business.financialpost.com/2015/03/12/jack-m-mintz-provinces-play-hide-the-deficits/

FINISHED is strident, repetitive and somewhat grating. But does provide a useful counterpoint to EVERY DAMN EARNINGS RELEASE OUT OF THE PATCH, which says approximately “We made a profit! [because we haven’t yet had to write down our reserves per accounting rules] and we’ll be producing more next year, and drilling for more, though not quite as much as we’d previously planned.”

One sparrow does not a spring make, and one producer announcing that they’re shutting in wells won’t end the glut. But it’d be a start, and I haven’t seen it yet.

Light sweet is at $45.38, and thousands of double bottom sniffers are staring at that February low on their screens, wondering “will it hold?”

#198 Dup on 03.13.15 at 11:28 am

I was sceptic at first, but now I see that Canadian housing market is finished. Those owners with large homes waiting to sell will wait a long time. Not many can afford a large home (and it’s running cost) with their own money without drowning in debt. House poor.

#199 Squirrel Meat on 03.13.15 at 11:37 am

Speaking about balls….. how does this fellow haul his massive set up these walls. Just awesome.

He lives in a van…… not that Van… in a van. He’s alive. Risk-reward.

http://www.nytimes.com/2015/03/11/magazine/the-heart-stopping-climbs-of-alex-honnold.html?hp&action=click&pgtype=Homepage&module=photo-spot-region&region=top-news&WT.nav=top-news&_r=0

#200 H on 03.13.15 at 11:40 am

“The fed has weighed the risks and while certain economic indicators have improved, the underlying available capacity is chronic, which is impacting underlying inflation”

It is the opinion of the FED to re introduce additional measures of bond purchases to stabilize the recent impacts on the dollar.

Figured I would post this now so its not a shock in a few weeks. Or sooner.

#201 H on 03.13.15 at 11:42 am

And that will do the following:

1) USD will tank
2) Oil and all commodities will rise
3) With the rise of #2 inflation will return in the CPI and CORE

4) Then the Fed can raise the interest rates to cool inflation.

Buckle up.

#202 Doug in London on 03.13.15 at 11:42 am

About this time last year I said that if you had a house in pricey places like Toronto or Vancouver which you bought many years ago (and have a VERY BIG capital gain on paper) you won the lottery now and the Lottery and Gaming Corporation were frantically trying to get a hold of you so you could cash in your ticket and claim your prize. I wonder how many people have done so? If you have, you’re laughing all the way to the bank and back again! If you haven’t, it looks like the window of opportunity is closing, and already has if you are in Cowtown.

#203 Josh in Calgary on 03.13.15 at 11:46 am

15 Real Jimbo,

It’s reasonable that you caution people to question the advice of anyone, including Garth. He was wrong on how soon prices would collapse because the government has kept the housing boom going much longer than anyone would have expected. By all logic we should have crashed at the same time as the USA. Or as my friend likes to say “the markets can remain irrational much longer than you can remain solvent”.

So like Garth always say you shouldn’t try to time the stock market, so to you shouldn’t try to time the housing market.

However, your advice to purposefully upgrade housing every few years is BAD and proves you’ve missed the point here. You claim this is averaging in. Garth’s main message is housing should not be viewed as an investment. You have to pay 5% of the total value of your house every time you “average in”. Assuming you’re carrying a mortgage on 75% of your house that’s like eating up 20% of your equity each time. Now compare this to “averaging in” on the stock market where you can make a trade for $10.

It is good advice that you should keep housing within your means. Upgrade every 5 to 10 years if you like. If you aren’t reasonably sure that you won’t be moving in 5 years then renting is probably the better option.

Buy a house because it provides shelter for your family. If you want real estate exposure in your investment portfolio buy a REIT.

#204 Doug in London on 03.13.15 at 11:47 am

@Brian, post #54:
The prices have fallen where I live, from a high of about $1.30/litre to about $1.05 now. If the high price of fuel really bothers you, why not take advantage of some sales out there? Lately XEG-T and USO-NY have been getting quite cheap, and at todays price XEG has a yield of 2.75%. Now’s the time to scoop some up, and when price goes back (bound to happen sooner or later) use the gains to offset fuel costs.

#205 Holy Crap Wheres The Tylenol on 03.13.15 at 11:49 am

#174 The American on 03.13.15 at 8:18 am

At #26: You said, “This powerful source of stimulus stems from the fact that mortgage lending standards in Canada are much laxer than in the US. In Canada, lenders are willing (and happy) to take on high-risk, high-ratio loans (made under loose lending standards) because CMHC and Genworth Canada remove the risk and put it onto the backs of Canadian taxpayers.”

BINGO! You’re one of the very few who understand. This argument that prices in Calgary are high due to its connectedness with an oil-rich economy is just flat out bullshit. Texas and Oklahoma are some of the cheapest places to live in the entire U.S., and those are the two energy hubs in our nation. It seems to me Camadians are easily sold false stories and then they cling to it as if it’s a matter of life and death. I have to admit it seems very odd.
___________________________________________
Agreed 100% my buddy live in Cushing OK and is up to his ass in the oil business. His home and living expenses are pennies on the dollar compared to here.
Buddy has a 2900 sq ft bungalow with 1/4 acre that would only cost $170K USD.

#206 Holy Crap Wheres The Tylenol on 03.13.15 at 11:51 am

#188 Alberta is AWESOME on 03.13.15 at 10:21 am

How do you get rid of an oil glut….. buy more hummers.. summer driving season.
______________________________________________
That could be a deciding factor this June. Storage tanks are full, gas is cheap, America will be on the road again!
https://www.youtube.com/watch?v=QexOuH8GS-Y

#207 Mike S on 03.13.15 at 11:52 am

Adding public sector jobs, to offset job losses in O&G + Manufacturing

This makes sense for a government which tries not to loose the elections.

But how are they going to balance the budget this way?

#208 Squirrel Meat on 03.13.15 at 12:00 pm

#7 Smoking Man on 03.12.15 at 6:46 pm

And speaking about rentals.. damn, images envisioned that can’t be unseen… farck.

I wonder what the other side thought of it all.

https://www.youtube.com/watch?v=yKQGT8Qc8Wo

#209 omg the original on 03.13.15 at 12:01 pm

#153 Mark
Have to disagree here. What about good old fashioned “supply exceeding demand”. ……
Housing is just like any other consumer good, not immune to the basic laws of supply and demand.
————————–

Yes I would like to think that was the case – but from my experience housing prices are sooooo very sticky on the upside – they ratchet up rapidly but have a very hard time moving down.

People hold on no matter what – it takes a very long time for expectations to reset down.

Calgary will be a very interest market to watch over the next year. Employment loss of high paying jobs in Cowtown will dwarf anything we would reasonably expect to see during a recession in other parts of Canada.

One would expect to see a significant move down in house prices – even panic selling – say maybe 15% to 25%.

But I will not be surprised if the price response is muted, maybe only 5-10%.

Yup, I know – makes no sense – but what about this market does?

#210 HD on 03.13.15 at 12:09 pm

@ #145 NoOneOfConsequence on 03.13.15 at 12:30 am

Question…don’t ETF’s require a bid to sell them so quickly? In a market crash….If there is no bid for the underlying equities…couldn’t you be stuck with them in a big slide? You always say that you can liquidate ETF’s quickly…but in a crash there is no bid….so can ETF’s still be sold quickly?

Why would you sell?

In the event of a ‘crash’, you should buy more until your portfolio reaches the balanced point.

The people who didn’t panic (aka ‘liquidate ETF quickly‘) and rebalance in 2008 did very well.

Best,

HD

#211 Canada is Cooked on 03.13.15 at 12:09 pm

$45 oil, 78 cent loonie

Nobody has had a raise in a decade

Nutcases paying half a million loonies for a box in the sky

aaa ha ha ha… forget about traveling outside your borders… YOU CAN’T AFFORD IT

#212 Dup on 03.13.15 at 12:09 pm

Canadians are easy to fool, how else would you explain shacks selling for millions!

#213 BlackDog on 03.13.15 at 12:15 pm

Garth re: “Think about that if you happen to have your retirement money sitting in GICs there, and what good your provincial deposit insurance might be if the Big One hits. ”

Since FATCA reared its ugly head, I made like a squirrel so am now dealing with a few CU’s for the first time, as well as a couple banks.

If the Big One hits, what difference does it make whether one is invested in a bank versus a CU?
Are CU’s more vulnerable than banks to a Big One?
Is the insurance on bank deposits better than the insurance on CU deposits?

I wonder if in the event of a Big One, it might be wise to be diversified in financial institutions (not just types of investments), so was thinking maybe being forced into hiding nuts in multiple CU’s was a FATCA bonus (trying to find a silver lining here so as not to be so bummed out about the whole thing). Any thoughts would be appreciated.

#214 Alberta is AWESOME on 03.13.15 at 12:16 pm

#206 Holy Crap Wheres The Tylenol on 03.13.15 at 11:51 am

#188 Alberta is AWESOME on 03.13.15 at 10:21 am

How do you get rid of an oil glut….. buy more hummers.. summer driving season.
______________________________________________
That could be a deciding factor this June. Storage tanks are full, gas is cheap, America will be on the road again!
https://www.youtube.com/watch?v=QexOuH8GS-Y
– See more at: http://www.greaterfool.ca/2015/03/12/the-scent-of-a-fall/comment-page-4/#comment-359443
—————————————————
Sweet tune. Been awhile. The bearded fellow is amazing!

Supply and demand… driving time.

#215 Julia on 03.13.15 at 12:22 pm

#192 4 AM Sunrise

“Inside their mortgage book, 11.7% are “insured” and 12.9% are “high-ratio” (that means subprime, right?). ”

I don’t think “high-ratio” means subprime on it’s own. High ratio means a small down payment which could be from many reasons, maybe no money, maybe borrowing more money at higher rates?

Subprime to me means higher risk overall, not just the security backing the loan but the risk from the actual borrower (income source, other assets, credit history etc…)

I recall the US subprime lending with NINJA loans (No income, no job, no assets). Now THAT was subprime.

#216 Julia on 03.13.15 at 12:23 pm

Correction: maybe borrowing more money at LOWER rates. Taking advantage of low mortgage rates.

#217 Josh in Calgary on 03.13.15 at 12:25 pm

#145 NoOneOfConsequence,

“Question…don’t ETF’s require a bid to sell them so quickly? In a market crash….If there is no bid for the underlying equities…couldn’t you be stuck with them in a big slide? You always say that you can liquidate ETF’s quickly…but in a crash there is no bid….so can ETF’s still be sold quickly?”

That’s a reasonable question. What you are asking about is called liquidity. When you are dealing with a small company liquidity can be an issue. If there is bad news then a small company can stop trading all together and you’re stuck to suffer the loses. In a big company that’s less likely to happen since the market cap can be in the billions and there’s always someone willing to buy at a discount. You might have to take a loss, but you can still get out. So if you buy a mainstream ETF that is a basket of large companies the liquidity is so large (I’m assuming you’re not investing millions or billions) that you would never have an issue.

Let’s take XIU as a case in point. This is ishare’s maintstream ETF for the TSX top 60. We’re talking all the big banks, oil companies and telecom in canada plus any other big companies. It has a market cap of $11 billion. On any given day you have in the range of 2 to 5 million shares changing hands. At a price of $20 per share that’s $40 to $100 million. In the days leading up to the last crash in 2008 when XIU went down by 50% (over the course of 1 year, not in 1 day) the trading volume actually went UP substantially. The trading in that time was closer to 10 million shares a day on average and quite a bit more on peak days. So if you were smart enough to bail after a 10% drop from the peak you could easily have moved several $million a day no problem if not hundreds of millions.

Just thought I’d put it in perspective.

#218 Mark on 03.13.15 at 12:26 pm

“Question…don’t ETF’s require a bid to sell them so quickly? In a market crash….If there is no bid for the underlying equities…couldn’t you be stuck with them in a big slide? You always say that you can liquidate ETF’s quickly…but in a crash there is no bid….so can ETF’s still be sold quickly?”

Your logic is absolutely correct. Small ETFs with minimal activity should be avoided by investors who may find the need to unload a position quickly. However, ETFs have the benefit of the creation/destruction mechanism, so if price imbalances (ie: deviation against NAV) become severe enough, an arbitrageur can sell the basket of stocks short, go long the ETF units at a discount, and earn a profit from “redeeming” the ETF units with the fund sponsor for the underlying which are delivered against the short positions.

Of course, this only works for ETFs that use publicly traded instruments. Derivative-based ETFs, such as the currency hedged ones, the “2X, 3X” leveraged ETFs, the weird “tax efficient” ones marketed by a certain sponsor, etc., are dramatically more problematic and probably should be avoided.

#219 tkid on 03.13.15 at 12:33 pm

#197 Ralph, nuh nuh, I ain’t having any of your well reasoned logic. AiF is yapping from the confines of a province which last posted a surplus back in the 90s and has taken bad-math to a new artform. We’re broke, we’re making no attempt to fix things, so we’ve no business yapping at Alberta because oil tanked. Y’all still have a surplus.

Granted that will change next quarter, but even then you won’t be any where near Ontario’s debt level.

Aif crowing about y’alls misfortune is like the bankrupt and evicted Smiths sniggering when the debt free ex-neighbours are laid off from their jobs.

#220 Holy Crap Wheres The Tylenol on 03.13.15 at 12:41 pm

What are they thinking?
http://www.msn.com/en-ca/autos/news/koenigsegg-adds-next-north-american-dealership-in-calgary/ar-AA9F5Aq?ocid=mailsignoutmd

#221 Holy Crap Wheres The Tylenol on 03.13.15 at 12:42 pm

I know this is MSN but it rings true.

http://www.msn.com/en-ca/news/other/oil-glut-getting-worse-not-better-iea-says/ar-AA9J0bA?ocid=mailsignoutmd

#222 Canada is Cooked on 03.13.15 at 12:43 pm

Did I mention your unemployment is rising

aaa ha ha ha

#223 The American on 03.13.15 at 12:49 pm

At #205: Cushing, Oklahoma? Funny… That’s only 24 miles from the town in which I grew up, Stillwatwer, OK. Real estate is CHEAP CHEAP CHEAP there.

#224 Canada is Cooked on 03.13.15 at 1:08 pm

You numbnuts can’t even live on lettuce after your half a million monthly mortgage payment.

What is a head of lettuce up there now? … $10 Rupiah?

Sorry mean’t loonie

aaa ha ha ha

#225 Mark on 03.13.15 at 1:21 pm

“If the Big One hits, what difference does it make whether one is invested in a bank versus a CU?”

CDIC-insured banks have the backing of an insurance scheme that can ultimately access the Bank of Canada’s printing presses at the Mint. Guarantees of the CUDGC, in comparison, are only private sector guarantees which do not guard against the systemic/correlated insolvency of the rest of the credit union sector. The expression, “there’s never just one cockroach” is apt here.

As the argument goes, backed by a few posts and research done by participants in this thread, the credit union sector is far more vulnerable to house price declines, than the relatively more diversified federally chartered banks.

“I don’t think “high-ratio” means subprime on it’s own. High ratio means a small down payment which could be from many reasons, maybe no money, maybe borrowing more money at higher rates?”

Subprime means loans that aren’t of high enough quality that they are accepted as investable assets by the investment community (ie: banks, insurance companies etc.). When CMHC subprime mortgage insurance is applied to a subprime loan, it becomes a prime, eligible for investment asset on account of the CMHC insurance being applied. Therefore, by definition, if a loan requires CMHC subprime mortgage insurance at the time of issuance, the loan itself is subprime.

“High Ratio”, and other marketing terms are merely designed to down-play the very poor metrics of such subprime loans, to make them more palatable to the public. In a sense, “subprime” has become a perjorative term because of all the negative outcomes of such loans experienced in places like the USA. Sort of like we call certain people “developmentally challenged” these days instead of the more traditional term of “mentally ***arded”. I have to hand it to the CMHC, their marketing folks have done a wonderful job at convincing Canadians that they’re not involved in subprime, but the facts of their business really speak otherwise.

The Bank Act sets the minimum threshold for investment in mortgages by a Bank Act regulated institution at a 20% downpayment without credit enhancement such as CMHC subprime mortgage insurance. In practice and prudence, the Bank Act institutions exceed such by a very wide margin.

#226 Fed-up on 03.13.15 at 1:31 pm

#207 Mike S on 03.13.15 at 11:52 am

Adding public sector jobs, to offset job losses in O&G + Manufacturing

This makes sense for a government which tries not to loose the elections.

But how are they going to balance the budget this way?
————————————————————————

Yes if we in the ever shrinking private sector operated our businesses the same way all governments run this country, we’d all be bankrupt in a matter of minutes.

#227 Julia on 03.13.15 at 1:37 pm

#225 Mark

That’s what I mean: High-ratio mortgages do not mean sub-prime just as a sub-prime loan does not mean it’s high ratio.

Just because someone has a mortgage at 50% loan/value of a property assessment, no mortgage insurance required as per the Bank Act, doesn’t mean they have the ability to pay.

Case and point: With the quick increase in real estate values, some home owners that bought and financed at high-ratios have been able to refinance based on a new appraisal below the 80% threshold. They are no longer considered high ratio but does that mean they are “prime” borrowers?

#228 Fed-up on 03.13.15 at 1:39 pm

#204 Doug in London on 03.13.15 at 11:47 am

@Brian, post #54:
The prices have fallen where I live, from a high of about $1.30/litre to about $1.05 now. If the high price of fuel really bothers you, why not take advantage of some sales out there? Lately XEG-T and USO-NY have been getting quite cheap, and at todays price XEG has a yield of 2.75%. Now’s the time to scoop some up, and when price goes back (bound to happen sooner or later) use the gains to offset fuel costs.
——————————————————————————

Oil collapses from an all time high of $140 per barrel in 2008 to the current $47 and you are satisfied with paying only 20% less at the pump from that historical high? It’s no wonder banks, corporations and governments get away with murder in this country. Check the gas prices out in America and you may change your perspective on this one.

#229 S. Bby on 03.13.15 at 1:47 pm

#140 B Riding

Burnaby is rife with speculators right now. I know of several houses that were sold in the last two years that are flips and are back on the market for $500K more than they were bought for two years ago. Asking price does not equal sold price though, and my suspicion is the tear-down market is seizing up as the developer’s inventory of unsold new builds is piling up.

#230 Poutchli on 03.13.15 at 1:53 pm

BNN says a report from a US firm shorting some of our companies, says that immigration has been responsible for propping up house prices, that the oil price drops cause a immigration to go down, and therefore house prices to loose their support. My words. Source:

http://www.bnn.ca/Video/player.aspx?vid=569847

I have no problem with immigration. It gives me better employees. What I like is their theory. Makes sense?

#231 Nagraj on 03.13.15 at 1:55 pm

I was hoping to read some comments on today’s US PPI numbers, especially from Mark (whose academic style notwithstanding is always very interesting) and from those of you who see no fundamentally economic reason for the Fed to hike – a point of view I agree with (pace, GT).
Of course that does not mean that the Fed is missing other compelling reasons to hike.

#232 Vamanos Pest on 03.13.15 at 1:56 pm

#15 Real Jimbo

I’m sorry, I flat out just don’t believe you.
Maybe some real numbers would help, but there’s no analysis that I can see that results in selling in 2008 and putting the proceeds into a diversified portfolio results in you being worse off.

This argument comes with the caveat that by mid 2008 there was blood in the streets in the stock market, and I don’t think anyone with fresh capital would have been able to ignore it and simply go “all in”. (700 point drops on the dow were lead stories on evening news broadcasts, banks were at risk of failure, credit markets had seized, the world was on the brink of a breakdown of the global financial system). Even by mid 2009, with a few months of gains under our belt, it took substantial fortitude to get back in.

Okay so following Garth’s advice, you did this. Diversified, rebalancing, all that. You have easily, EASILY, tripled your money. (my total returns since 2009 have been well over 400%). The stock market has seriously outperformed the real estate market.

As for the 200k in rent, this is not money you would otherwise have. In that time you’ve saved ~25k in property taxes, another 25k in condo fees, and most of what’s left I suspect would be paying interest, not building equity.

I’m sorry, putting your story in the context of real recent history just doesn’t add up. You either read Garth’s book up to the point that you sold your house, and forgot to read the rest of the strategy, or, more likely, you’re just lying.

The fact that the the one paragraph about “averaging in” to RE sounds like something out of a ReMax pamphlet does nothing to add credibility to your story.

So if I’m wrong, prove me wrong, tell us the real numbers, when you started building your portfolio, what you bought, how it performed, what tax strategy you used, etc.

Without some of those details, I just don’t find it believable.

#233 IM in C on 03.13.15 at 2:01 pm

WRT high risk loans:
Back in 2005-6 financiers in the US started shorting the mortgage market when then noticed that the number of mortgage holders defaulting on their _first_ payment had become statistically significant.

#234 BlackDog on 03.13.15 at 2:04 pm

@Leo, #3 re: “Sometimes I wish I was American ”

I and a whole lot of people I know wish we weren’t.

#235 Oil Is Sticky on 03.13.15 at 2:05 pm

#93 Plan B Guy from Calgary on 03.12.15 at 9:26 pm
RE#54 Brian
What oil crash? I’m paying almost the same at the pump at $50 per barrel than I was paying at $100 per barrel.

Hey Brian. Not true. Oil is down 50% and gasoline is down 30%. The difference is that the refining costs, distribution, and dealer markup have not gone down. Enjoy it while you can.

PB Guy

——
Actually in Scamcouver gas is down a mere 14% whereas oil is down 55%. Nope. No ripping off the public here….

#236 Blacksheep on 03.13.15 at 2:06 pm

# 15 Jimbo’s complaints, tie directly into #7 Smoking man’s rant.

Garth’s call on RE crashing back in 2008, turned out, wrong. My personal call on RE crashing back in 2008, was also, wrong. But I made that call, and I dealt with the outcome.

Jimbo never made a call on RE crashing back in 2008, because he was indoctrinated by a ‘system’ that taught him to follow and respect authority.

Seems he was influenced to sell his home based solely, on the ‘expert opinion’ of a ‘public figure’ instead of actually thinking for himself.

I found Garth’s blog when I saw the risks of RE in 2008 and started doing my own research. To this day, I believe my (& Garth’s) call was technically correct, because with out substantial systemic intervention, this bloated flying canadian RE pig, would have crashed to the ground like a Pink Floyd show, gone horribly wrong.

Sorry Jimbo but you gotta ‘relearn’ what you think you know about the ‘system’ you were born into. Deprogramming is a long and sometimes unpleasant experience. The sooner you realize it (the ‘system’) doesn’t necessarily have your you best interest at heart, the better.

I continue to arrive at my own conclusions, like buying house a year ago even as Garth continues to warn daily, of potential RE doom. We will see how things turn out.

#237 Daisy Mae on 03.13.15 at 2:08 pm

#90 Trojan: “…but you know how people are – they will read and believe anything.”

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

Yes, often people DO believe everything they read and hear. It’s amazing. However, no one else is responsible for the actions, choices, and decisions adults make.

#238 Mark on 03.13.15 at 2:09 pm

“Just because someone has a mortgage at 50% loan/value of a property assessment, no mortgage insurance required as per the Bank Act, doesn’t mean they have the ability to pay.”

Its not about the ‘ability to pay’. Secured lending, of which mortgage lending is the quintessential example, is all about the bank being able to foreclose upon and sell the property (or accomplish the equivalent through a power of sale or any other legal process) to entirely recoup their investment in the loan and any costs of the associated legal action.

Therefore, equity is the single most important determinant of loan quality. Everything else, in comparison, is minor. After all, jobs can be lost, financial mistakes can be made, but so long as the bank has a valid mortgage on the house and so long as equity is positive, the obligation can be satisfied if the payments stop rolling in.

“Case and point: With the quick increase in real estate values, some home owners that bought and financed at high-ratios have been able to refinance based on a new appraisal below the 80% threshold. They are no longer considered high ratio but does that mean they are “prime” borrowers?”

Yes, their loans with those metrics would be prime. Because they have brought equity to the table. Now, obviously a lender has to weigh whether that equity, even at 20%, is adequate for the lender to consider the loan to be a prime asset, or whether they will purchase insurance.

There is evidence that the big banks have been, on their own account, purchasing CMHC insurance against loans with as much as 30-50% down at the time of issuance. Which gives you an idea of how much confidence the banks actually have in the future prices of Canadian houses. If “the smartest people in the room”, the big Canadian mortgage lenders, are making preparations for a 30-50% crash, well, its pretty likely that there’s going to be a 30-50% reduction at some point in the cycle.

#239 FullOfFear on 03.13.15 at 2:13 pm

“How dependent are that delusional province’s credit unions on real estate lending? Massively. Almost 70% of all CU loans are for real estate assets. Think about that if you happen to have your retirement money sitting in GICs there, and what good your provincial deposit insurance might be if the Big One hits.”

What’s the implication here? That depositors on going to lose out if there is loan defaults? Those loans are backed by the CMHC (or government). And another thing … credit unions are not leveraged like the big banks. Your GICs are far safer there than with RBC.

That was funny. — Garth

#240 Obvious Truth on 03.13.15 at 2:14 pm

#194 Trading Naked

No one will ever understand you. Don’t worry about it. Many here have written about it. Average people can’t even begin to grasp it. They want you to fall in line like they do. Climb some sort of ladder to success and gain a title. Just change the conversation.

You’ve won the title. You count on yourself. A young Freedom First. Maybe not quite as hardened. Lol

And who knows where life will take you. One day you may spot a business or investment opportunity that has you doing different things.

Never stop learning. Your skills will always serve you well. Good on you.

#241 Mark on 03.13.15 at 2:14 pm

“Okay so following Garth’s advice, you did this. Diversified, rebalancing, all that. You have easily, EASILY, tripled your money. (my total returns since 2009 have been well over 400%). The stock market has seriously outperformed the real estate market.”

If you arbitrarily set your datums and exaggerate returns, sure, stocks have outperformed. But truth is, the major stock market indices (ex-the USA) haven’t even yet to fully return to their 2007/2008 highs. While RE has charged forward quite significantly. The return of a globally diversified investor even since the 2009 lows is closer to 100%, not 200%. And that was only after losing ~50% the year from the previous year’s peak to get to that 2009 bottom. Which, by the way, barely any real investors actually took advantage of (which is exactly why it was a bottom!).

Yes, the stock market should continue to outperform the RE market for decades to come, but exaggerating returns, or implying that your particular style of investing can be generalized over the universe of all investors, isn’t particularly helpful.

#242 Mark on 03.13.15 at 2:16 pm

“I was hoping to read some comments on today’s US PPI numbers, especially from Mark “

A disaster, deepening deflation setting in. Go study your financial history texts or have a beer with a properly educated deflation-focussed goldbug to find out what this meant when similar events occurred in the late 1920s/early 1930s.

The US is not falling into deflation and there is no valid similarity to the 1930s. Sheesh. — Garth

#243 Blacksheep on 03.13.15 at 2:23 pm

To all the Bond nerds:

How will US raising rates play, with the Euro 10 year bonds trending towards zero?

Will the US $ not spike hurting exports? Helping Imports? Consequences?

I thought it was a currency race to the bottom.

What’s the plan here?

#244 Squirrel meat on 03.13.15 at 2:26 pm

Entrepreneurial minds scavenging Detroit’s abandoned homes…

http://business.financialpost.com/2015/03/13/detroits-70000-abandoned-homes-a-treasure-trove-for-rubble-sifting-artisans-its-like-a-treasure-hunt/

#245 NEVER GIVE UP on 03.13.15 at 2:37 pm

#7 Smoking Man on 03.12.15 at 6:46 pm

Your programing forces you to skip my posts. Bad mouth me, critize me. I never get mad, I know what these pricks did to you.
———————————————————

SM: Remember, They know not what they do…

#246 Alberta is FINISHED on 03.13.15 at 2:49 pm

Look at oil crashing which is crashing Alberta hopes of getting out of their economic nightmare. There is no waking up from this nightmare as Alberta is FINISHED. Oil now touching $45… lol. $60 and Alberta is FINISHED. $45 oil and it’s game over. Alberta is FINISHED.

#247 Ralph Cramdown on 03.13.15 at 2:50 pm

#225 Mark — “As the argument goes, backed by a few posts and research done by participants in this thread, the credit union sector is far more vulnerable to house price declines, than the relatively more diversified federally chartered banks.”

Yep. But if you sift through enough dross, you can find the occasional diamond. Like this:

“The credit union can afford to offer such an attractive long-term rate in part because few people actually take seven-year mortgages and the company’s primary business is commercial lending to the region’s natural gas industry, North Peace chief executive Mitchel Chilcott said.”
http://www.theglobeandmail.com/report-on-business/economy/housing/smaller-mortgage-lenders-sacrifice-profits-to-compete-with-big-six-banks/article23018446/

Just as in the US; lower overhead and less geographically concentrated risk for universal banks and the large regionals gave them pricing power, so the local banks (and the S&Ls, back in the day) specialized in higher risk commercial and construction loans. Which worked great until it didn’t.

I hope North Peace Savings and Credit Union enforces a strict “No Smoking” policy in its underwriting department, otherwise it might blow up.

#248 StatsCan on 03.13.15 at 2:51 pm

For the sheep: Canada loses 1000 jobs in feb.

For those with an open mind: Canada loses 12,000 jobs in Feb. 4500 Express Entry and 6500 TFW entries were counted as jobs created in Feb.

#249 Holy Crap Wheres The Tylenol on 03.13.15 at 3:01 pm

#223 The American on 03.13.15 at 12:49 pm

At #205: Cushing, Oklahoma? Funny… That’s only 24 miles from the town in which I grew up, Stillwatwer, OK. Real estate is CHEAP CHEAP CHEAP there.
____________________________________________
My buddies son was on the foot ball team at Oklahoma State. When to see him play once, holy shit their football stadium was bigger than the Argos stadium here. Still recall everyone chanting! Ride ’em Cowboys
Lots of red clay, everywhere, whats with the red clay?

#250 Julia on 03.13.15 at 3:31 pm

Mark, we were discussing the definition of a sub prime loan and I beg to differ that the distinction does not strictly lie within the security held.
Bank’s do not lend on security alone. OSFI would have a field day. The security may mitigate risk of loss but not default risk.

And refinancing a property based on an appraisal is not bringing equity to the table. The borrower has put ZERO skin in the game, they have only benefited from a hot market on paper.

We’ll just have to disagree.

#251 Doug in London on 03.13.15 at 3:42 pm

@Fed-up, post #228:
You should check out gas prices in European countries, it’s quite cheap here by comparison. If gas is so outrageously expensive, why are sales of SUVs and trucks up in Canada? If everyone REALLY thought gas was expensive, they would all be driving little econo box cars like the Mazda 2, and be walking or biking in the warmer months for shorter trips like I often do. I even bundle up and walk in the colder weather here in London, just like I did in Timmins and Ottawa where the winter weather is much colder than here. Also keep in mind that the price of crude is only part of the price of gasoline or diesel fuel. Do you ever wonder how crude oil just magically gets refined, additives put in it, and somehow it teleports to your local fuel station? Believe it or not, these services actually cost money and get added to the cost of fuel at your local station. So, as I said before, take those meager fuel cost savings and buy investments that are on sale (like oil ETFs) while you can. If you’re still unhappy with fuel prices here, you could always pack and move to The States.

#252 Porsche on 03.13.15 at 3:47 pm

The Canadian government gave Facebook the green light to hire 93 temporary foreign workers in its Vancouver offices

http://thetyee.ca/News/2015/03/12/Facebook-Hired-Foreign-Workers/

#253 Alberta is AWESOME on 03.13.15 at 3:54 pm

#246 Alberta is FINISHED on 03.13.15 at 2:49 pm

You should get yer self a tattoo.. in case you forget.

https://www.pinterest.com/pin/159033430564853879/

#254 Henry Rearden on 03.13.15 at 3:56 pm

Kevin O’Leary on CNBC just now: “Don’t. Touch. Real Estate!”

#255 Mark on 03.13.15 at 4:00 pm

“Bank’s do not lend on security alone.

Of course they do! Margin lending, for instance, is entirely done on the strength of the collateral pledged. As is mortgage lending.


OSFI would have a field day. The security may mitigate risk of loss but not default risk.”

All that really matters is the risk of loss. Defaults aren’t a problem as long as they’re loss-less defaults. The Bank Act is very clear that at least 20% down is required as a minimum standard for mortgage loans at Bank Act institutions, but mostly falls silent on the other aspects of credit-worthiness that comprise an acceptable loan. And for good reason.

And refinancing a property based on an appraisal is not bringing equity to the table.

Well in the eyes of the bank, yes, it is bringing equity to the table. Whether its enough equity for the loan to be taken onto their books as a prime loan, depends upon many factors, with equity always having the highest weighting amongst the many factors involved.

The borrower has put ZERO skin in the game, they have only benefited from a hot market on paper

In a particularly hot market, such as we’ve seen, the threshold for equity that the banks are willing to accept for tends to rise. Lending standards tend to rise just prior to price peaks being hit (hence, as the new standards become apparent to the marketplace, prices start to fall, setting off a self-reinforcing chain of even more tightening), and lending standards tend to be overly tight at the long-term bottom of an asset class as skepticism reigns supreme.

#256 AB Boxster on 03.13.15 at 4:01 pm

15 Real Jimbo on 03.12.15 at 7:08 pm

____________________________________

I liked your post for its honesty.
I found no hint of ranting, blaming others for your situation or even anti-immigrant comments, where others may.

What I heard was that you made the mistake of taking the blogged musings of Mr. Turner far too literally.
I also heard a good argument for ‘not renting’ as opposed to owning.
Financially, renting may be a great deal for some, but for others, depending on circumstance (such as you describe) renting is a mess.

I also heard your frustration at how rapidly, in some areas, immigration policies seem to be causing rapid changes some communities.

And again, I hear your frustration at what seems like a large amount of wealth and a correspondingly absurd increase in property values in your region.

For some, your comments just indicate what a racist, ranting, and anti-immigrant person you must be.

Others may just wonder:

What are the business, economic and societal impacts of the Canadian government policies designed to attracting wealthy immigrants to Canada?
http://www.theglobeandmail.com/news/world/rich-chinese-angry-over-cancellation-of-canadian-immigrant-program/article17269390/

Is all immigration, at any levels, in any circumstances, always good for all countries?

Mostly what I wonder is:

Why is it always racist and anti-immigrant to describe ask these questions?

Canada allows annual immigration equal to just 0.8% of the population. It has immensely strengthened our society and economy. — Canada

#257 Yogi Bear on 03.13.15 at 4:16 pm

#246 Alberta is FINISHED on 03.13.15 at 2:49 pm
Look at oil crashing which is crashing Alberta hopes of getting out of their economic nightmare. There is no waking up from this nightmare as Alberta is FINISHED. Oil now touching $45… lol. $60 and Alberta is FINISHED. $45 oil and it’s game over. Alberta is FINISHED.

What is with your hate on for Alberta? I think Alberta is in a lot of trouble as well, but your obsession with it is disturbing.

#258 Porsche on 03.13.15 at 4:20 pm

#252 Yogi Bear

I guess “Alberta is FINISHED” got his pink slip and took a bus back to Ontario to live with mom. Now he despises Alberta.

#259 OMg on 03.13.15 at 4:26 pm

#245 NEVER GIVE UP on 03.13.15 at 2:37 pm

#7 Smoking Man on 03.12.15 at 6:46 pm

Your programing forces you to skip my posts. Bad mouth me, critize me. I never get mad, I know what these pricks did to you.
———————————————————

SM: Remember, They know not what they do…
;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;

GIVE EM A FEW HOURS He will be in a drunken stupor. Blah, blah, blah, casino shit this, your all owned by me, my wife needs more cash for her gambling, something about aliens, my son rocks at selling, I’m god, and I fight God on the lake in my boat, oh ya and I’m writing a book. Opps forgot to through in a the school system sucks and so did my teachers. Just fill in the blanks if I forgot anything. __________________________
______________________________________
______________________________________

#260 Everything is bad :c on 03.13.15 at 4:26 pm

Now is your chance to get a lifted Ram 3500

http://i.imgur.com/80dnp6P.jpg

#261 The American on 03.13.15 at 4:33 pm

At 249: Holy Crap Where’s the Tylonol, this true. I grew up, graduated OK State as a born and reared Cowbow. As for the red clay, it’s just part of the topography of the place. Boone Pickins Stadium is great, and a great venue to watch the ol’ college football game. Boone donated over $165 Million to complete the rebuild of the stadium, and so far has donated over $500 Million to Oklahoma State University. I suppose that’s why the stadium bares his name. :-). Ride ‘Em Cowboys!!! Song in link below.

https://m.youtube.com/watch?v=88-1JulfVis

http://newsok.com/oklahoma-state-football-why-boone-pickens-mark-on-osu-will-last-a-long-time/article/3840929

#262 Vanecdotal on 03.13.15 at 4:34 pm

#148 S. Bby

“This is not new news and it has been known for years; that department at UBC is entirely 100% funded by various real estate interests. I read about this years ago.”

True, as did I, however I think it’s fair to say that the majority of the unwashed masses are not aware there is a direct connection.

Happy to see msm (ironically from a foreign source, but one with a considerably higher standard of journalism than our pathetic local blogger/intern/verbatim press release regurgitating msm choices) putting a spotlight on this ridiculous conflict of interest.

#263 Julia on 03.13.15 at 4:35 pm

Mark, Banks do margin lending as a means of control of the security held after approving said borrower on credit worthiness. The default rating of a Borrower is the 1st deciding factor, not security. Same for mortgages.

Risk of loss is not all that matters. Loss given default is and borrower’s default risk forms part of that calculation as well as security. Banks have to have reserves for their loans and those are not strictly based on collateral. Default risk matters greatly which is why Banks spend a lot of time and effort in building risk assessment tools and are closely overseen by the regulators.

Equity in a property on paper is 1 thing. Actually putting down cold hard cash as equity is much different. A borrower is less likely to walk away from his cash equity than his paper one.

#264 LTL_FTC on 03.13.15 at 4:39 pm

#96 prairie person on 03.12.15 at 9:29 pm
I’m disturbed by the casual way people talk about bankruptcy.

I’m surprised no one commented on this comment with which I agree whole-heartedly. People talk like it is some great game and that bankruptcy merely is a strategy like using your Parker Brother’s Get out of Jail Free card.

Bankruptcies and even near bankruptcies disrupt lives in a major way, lost homes, broken families, heart-attacks, suicides, re-kindled alcoholism, on and on. People are such smart asses until it happens to them (no, I’ve never been there).

#265 Leo Trollstoy on 03.13.15 at 4:43 pm

A disaster, deepening deflation setting in. Go study your financial history texts or have a beer with a properly educated deflation-focussed goldbug to find out what this meant when similar events occurred in the late 1920s/early 1930s.

You’re wrong.

Burn your textbooks for heat. At least you’ll get some utility out of them.

#266 Leo Trollstoy on 03.13.15 at 4:45 pm

That’s what I mean: High-ratio mortgages do not mean sub-prime just as a sub-prime loan does not mean it’s high ratio.

Bang on.

#267 Mark on 03.13.15 at 4:55 pm

“What are the business, economic and societal impacts of the Canadian government policies designed to attracting wealthy immigrants to Canada?”

It would be nice if these wealthy people actually were coming to Canada, and even more importantly, bringing money. But evidence doesn’t exist of any meaningful amount of such occurring. Which is why blaming what effectively is a domestic debt bubble on “wealthy foreigners” or whatever disgusting narrative the sell-side comes up to justify high RE prices simply doesn’t pass the smell test.

Yes, there are some new Canadians who probably could do a better job of integrating, and integrating their kids into mainstream Canadian society. But no, this is no reason for the RE sell side to advance a rather xenophobic and racist narrative that paints new Canadians as wealthy (often from alleged criminality overseas) when most barely bring enough for an apartment rental damage deposit and a used Honda to Canada as their initial funds.

#268 Jan on 03.13.15 at 5:02 pm

#3 Leo on 03.12.15 at 6:41 pm
Sometimes I wish I was American.

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

I always wish I was an American!

#269 4 AM Sunrise on 03.13.15 at 5:09 pm

Because I’m Too Lazy To Read a Textbook: Today I learned the difference between “high-ratio” and “subprime”.

#270 Enthalpy on 03.13.15 at 5:11 pm

Home Capital Group has been taking a beating. hrmm

#271 Squirrel meat on 03.13.15 at 5:16 pm

#268 Jan on 03.13.15 at 5:02 pm

#3 Leo on 03.12.15 at 6:41 pm
Sometimes I wish I was American.

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

I always wish I was an American!
_________________________________

Careful what ya wish for……….My son is as a dual citizen……………
The TAX man cometh on force from everywhere.

#272 stale news on 03.13.15 at 5:20 pm

# 256:
Why does a year old news article have any bearing on whats happening today?

#273 Vanecdotal on 03.13.15 at 5:26 pm

#229 S. Bby

Was just commenting on this the other day, as it’s the same scenario in Whiterock / Crescent Beach / South Surrey. In WR proper, the post flip luxury sfh’s are piling up, some onto re-list year 3+, a few being perpetually listed.

Here, the smallish old-timer “cottages” on their small shotgun lots were trading hands to speccers typically + – the 700k range, and promptly replaced with a 3-4 story “luxury” monster homes nearly right up to lot lines with small front / rear setback. These come back to market typically starting > $2 million. Prices slowly drifting down on the perennially overpriced listings as we speak. Still many more holes coming online this season. As you are noting, where are the luxury buyers?

It’s pure, high stakes speculation fueling this stage of the market. The amount of RISK developers are assuming is astonishing.

#274 Mark on 03.13.15 at 5:27 pm

“Today I learned the difference between “high-ratio” and “subprime”.”

“high ratio” is just a subset of subprime, referring to mortgages that may have decent borrower metrics, but very poor equity.

#275 The American on 03.13.15 at 5:29 pm

Holy Crap Where’s the Tylonool, did my lil hometown of Stilly look like this on game day?

https://m.youtube.com/watch?v=Wxx1GibSiRA

https://m.youtube.com/watch?v=mOmv-P15o-I

https://m.youtube.com/watch?v=Nuu_J5y0wG4

#276 Vanecdotal on 03.13.15 at 5:36 pm

Further to last post, there are plenty of really nice, stylishly updated, but NOT brand new, spectacular ocean view homes languishing on the market presently in the $ 1 Million – $2 million range. These are not selling quickly either.

The land they sit on becomes too expe$ive for a speccer to be able to turn a profit with a teardown flip, but they’re still out of reach of typical local incomes, and anecdotally by virtue of not being “brand new”, apparently unappealing to foreign buyers.

This type of home is also drifting down in price, this spring seeing quite a few getting closer to the CMHC magic $million. STill unaffordable though to local earners, and so they sit…

#277 Doug in London on 03.13.15 at 5:40 pm

@Alberta is FINISHED, post #246:
Alberta somehow managed to survive 1998, when oil dropped to $11 a barrel, and it will manage to endure this crisis. Most likely, it will emerge even stronger, especially when oil prices recover. Will oil prices ever recover? I worried about that all today as I drove in my GASOLINE fueled car on streets with other GASOLINE fueled cars, saw many trucks and London Transit buses that run on DIESEL FUEL going by, and had to stop at a crossing while a CP train, with 2 DIESEL locomotives in front, passed by. To add insult to injury, I had to refuel my car at the Canadian Tire Petrol station. Did that plane I rode back from Bangkok recently run on JET FUEL by any chance or was that just my wild imagination?

#278 Leo Trollstoy on 03.13.15 at 5:41 pm

Julia is schooling Mark and calling him out on his fantasy make-believe school of banking and finance.

#279 Porsche on 03.13.15 at 5:46 pm

Job growth in the last 4 months in the U.S. is greater than anytime in the last 20 years

CEO of Tricon Capital
BNN

#280 S. Bby on 03.13.15 at 5:50 pm

#7 SM

Your best one yet.
What did we do to deserve you?

#281 S. Bby on 03.13.15 at 5:51 pm

That was weird.

#282 Porsche on 03.13.15 at 5:51 pm

Canadian banks are 2 times GDP

U.S. banks are less than 1 times GDP

European Credit Research
BNN

#283 AB Boxster on 03.13.15 at 5:52 pm

#256 –
Canada allows annual immigration equal to just 0.8% of the population. It has immensely strengthened our society and economy. — Canada

———————————————–
I agree.

But that does not mean that there are not consequences from the policy or recent policies that should be ignored or discounted.

Importing temporary foreign worker can be argued as a ‘great program that provides a path to citizenship for foreign workers while addressing a critical need of workers for corporate Canada.’

Sounds like peaches and cream, but…

Why were Canadians being fired and replaced by TFW’s?
Why were TFW’s being taken advantage of by employers?
Why is the free market (such as wages being determined by the local labor force) OK in Canada when things are working fine for business, but the market needs to be distorted when labor is in short supply.

Was it anti-immigration or racist to question these abuses?

For 150 years it was sufficient to build this country with hard working Canadian citizens and by welcoming immigrants that would become strong citizens of this country.

Why is it today necessary to try to attract immigrants to Canada that have higher net worth than any regular Canadian will accumulate in their lifetime?

Is our country so pathetically lame that we need massive infusions of foreign cash and we are willing to sell citizenship based on this?

Is this policy causing distortions in our economy that should be better understood?

And why is asking this question racist or anti-immigration?

#284 Arthur on 03.13.15 at 5:55 pm

#270 Enthalpy on 03.13.15 at 5:11 pm

Home Capital Group has been taking a beating. hrmm

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

Could be all those options being exercised ;)

http://www.theglobeandmail.com/globe-investor/investment-ideas/insider-selling-at-home-capital-group/article23316580/

#285 Kevin Unfortunately in Wpg on 03.13.15 at 5:57 pm

Here is an interesting graph I created from pricing data and includes 1 and 2 year moving averages and price to inflation at 3 % a year. It gives a great prospective of what is happening. Winnipeg prices are well below the 2 year moving average and falling.

http://members.shaw.ca/shomimore/wpg_real_estate.jpg

#286 Nagraj on 03.13.15 at 6:15 pm

Oh fer cryin’ out loud!
NOBODY except Mark and GT is paying any attention to the most interesting ec data to come out of the US in a long long time: today’s Producer Price Index number.

Couple that data with the US Inventory/Sales ratio and – no opinions? Why don’t we just exchange recipes and trade knockknock jokes? (Spare me.)

#287 cramar on 03.13.15 at 6:17 pm

#260 Everything is bad :c on 03.13.15 at 4:26 pm
Now is your chance to get a lifted Ram 3500

http://i.imgur.com/80dnp6P.jpg

————-

I’m looking for a used truck and wondered if there are bargains in AB. Don’t want to buy new since they are too expensive by a factor of 2. Looked that this dealer’s website and not impressed with the prices for new and used. When the tar finally hit the fan in AB, maybe 30% discount on new might get my attention instead of a pathetic -10% or less.

#288 free wish on 03.13.15 at 6:28 pm

#3 Leo on 03.12.15 at 6:41 pm
Sometimes I wish I was American.

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

I always wish I was an American!

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

You can just cross the border and sell your labor there.

Hold on… the free trade agreement easy border crossing applies only to capital, goods and services… selling your labor is not included.

Looks like you are out of luck.

Maybe the US also has some temporary worker program that you can apply for.

#289 AB Boxster on 03.13.15 at 6:42 pm

267 Mark on 03.13.15 at 4:55 pm

—————————————
Mark,

Your comments about xenophobic and racist remarks might be reasonable if not for the fact that the Canadian government has had a policy of ‘selling’ citizenship to wealthy immigrants for many years.

In fact they recently cancelled this program leaving 65,000 of these folks out of luck.

Globe and Mail – Mar 4, 2014

“About three-quarters of those were Chinese, most of them eager for a ticket into the British Columbia Lower Mainland, with its familiar culture and access to Canadian food safety and health care.”

These immigrants needed a net worth of 1.6 million which is higher than 80% of all Canadians will ever achieve in their lifetimes.

This program is now being replaced with a new program to attract wealthy immigrants, provided they invest a minimum 2 million Canadian dollars ($1.7 million) into a venture-capital fund.
They must have a net worth of at least C$10 million.

So, you are correct.
Most immigrants to Canada are not in this category.

To categorize ‘all’ immigrants as being wealthy would be racist and xenophobic.

But to ask the question:
Does the federal program of immigrating high net worth immigrants, ( and soon to be, very high net worth immigrants) cause distortions in the Canadian economy in some markets.

This question is neither racist nor xenophobic.

#290 Retired Boomer - WI on 03.13.15 at 6:50 pm

#156 Seal Team 0 (So Secret I don’t even know if I exist)

Yeah!! ZZ Top good tune!!

Add in Robert Johnson, Hellhound on my Trail
(just for balance)….

#291 Oil Is Sticky on 03.13.15 at 6:54 pm

#279 Porsche on 03.13.15 at 5:46 pm
Job growth in the last 4 months in the U.S. is greater than anytime in the last 20 years

CEO of Tricon Capital
BNN

—–

What kind of low wage zero benefit McJobs are you referring to?

Look the sky is blue. Does that accurately describe the weather beneath the sky? Could be minus 30. Could be plus 30.

#292 hamish42 on 03.13.15 at 7:09 pm

I posted a comment beneath a typical Gary Marr article in the NP pointing out that the Teranet data tells a different story than the MLS data- lo and behold a couple of hours later he posts another article quoting the Teranet data (well a tiny part of it anyway).
Maybe these writers do read comments beneath their articles…..

Not me. — Garth

#293 Herf on 03.13.15 at 11:43 pm

#170, 176 Alberta is FINISHED

Quit raggin’ on Alberta ya putz. Their oil & gas industry is helping to clean the dirty oil sands by removing the oil. With the drop in oil prices, it just means it’ll take longer. Imagine what the place will be like once they’re done? With all the new clean sand, maybe they’ll have an artificial desert with sand dunes, and they can plant palm trees (genetically modified to handle the long cold winters)? Maybe Fort Mac can become Las Vegas North with casinos and hotels to replace the oil patch companies once the place is finally all cleaned up? Maybe?

#294 Ulsterman on 03.14.15 at 1:31 pm

Good points Mark:

Yes, the stock market should continue to outperform the RE market for decades to come, but exaggerating returns, or implying that your particular style of investing can be generalized over the universe of all investors, isn’t particularly helpful.

Real Jimbo sold his place and could have bought an East van place for 600k (lets take a bottom in the market as the stock market investors always do when choosing starting data points). Now it’s $1m+ and the gains tax free if he sells. He’s also not been renovicted twice, swapped schools, and has been able to put down roots, decorate etc. This may not seem important to the young studs who bought into the stock market March 9, 2009, but try it with a family and you’ll know his point. Maybe he had 50-100k to invest from his condo. It’s gone up 100-200% if he’s lucky in the market. Much is taxable. I’m sure most people would rather have the equity and the security than the alternative. Of course if houses correct it won’t all be sweetness and light – people will lose some of their paper gains. But that too can happen very quickly in the stock market. Based on past performance of the Vancouver market, many would rather take their chances in real estate.

#295 Plan B Guy from Calgary on 03.14.15 at 11:37 pm

RE: #173 Storefront

It was a provincial program, definitely. Alberta’s version has Peter Lougheed on TV with a model of a house in his hands. He explained in simple terms the the Alberta government was going to help folks with locked in high interest mortgages. He looked a bit like Mr. Dressup.

#296 Sunday Morning Dump: St. Patrick's Day, Brunei, Abraham Lincoln - Financial Uproar on 03.15.15 at 6:22 am

[…] Canada’s housing market is all hunky dory? Nope. Garth Turner throws some cold water on that myth. A preview: In 8 out of 11 of Canada’s largest markets, […]

#297 Peter on 03.16.15 at 10:08 am

Re: #294

“Now it’s $1m+ and the gains tax free if he sells. He’s also not been renovicted twice, swapped schools, and has been able to put down roots, decorate etc.”

If you have an appreciable gain in value, this triggers a taxable capital gain for the Canada Revenue Agency (CRA). Sure, it’s at a very nominal and favorable rate but it’s still taxed. I am also sure that renovations are not tax-deductable.

http://business.financialpost.com/2014/01/07/tax-tips-for-investors-clearing-up-real-estate-confusion/

“Maybe he had 50-100k to invest from his condo. It’s gone up 100-200% if he’s lucky in the market. Much is taxable.”

If it was an unregistered investment account, I would agree. If it was an RRSP, it would be taxed when you retired. If it’s a TFSA, which Garth advocates, you would not be taxed on any gains you withdraw from dividends.

In the example East Van property, at 600k, he could have had a conservative 8% growth, over the last 10 years, throwing 2300 a month tax free (investing in CPD at $15/share with a 0.06 monthly dividend). I know rent is expensive in Vancouver (single occupancy in Kits can be around $1600/month) but, if he was working and earning an income (and I didn’t calculate increase of investment value over time), rent and most expenses would be covered, making his earnings “gravy” (allowing a significant way to max his RRSP and TFSA every year) for even more growth.

It’s not for everyone. I am sure setting roots, owning a home is really important for many; especially families. Given those numbers, the state of the country, and my own personal bias, I would rather be financially independent than strapped to debt/mortgage/property.

To each their own.