Surprise!

SURPRISE

There are 5,800 families trying to sell a house in Calgary.

You don’t live in Cowtown, and don’t care? Tough. Quiet up, sit still and listen. This affects you.

So far this month the number of days-on-market to find a buyer in Calgary has increased 35%. Sales are down 31% from last March. The median price has started to drop, now off 2.5%. Given what’s coming, that’s probably not much. As I mentioned the other day, the city is actually doing quite well compared to Fort Mac, Grand Prairie or other places where oil reigns.

What a difference a year makes. Here’s what the Calgary Real Estate Board told the media twelve months ago:

Calgary – Residential sales activity improved across all sectors in March. However, declining new listings in the single family sector combined with further gains in sales activity decreased single family inventory to the lowest March level since 2006.

“There are several factors contributing to the growth in housing demand, including the inflow of people to our province over the past two years, strong gains in employment and tight rental conditions,” says CREB® chief economist Ann-Marie Lurie. “However, supply conditions vary amongst the different property segments, impacting the number of sales and price growth. If supply constraints persist in the single family sector, prices are expected to record further gains as we move into the spring market.”

Single family sales at the end of the first quarter totalled 3,901 units, a 9.5 per cent increase over the same period last year. Meanwhile, the amount of new listings declined by nearly five per cent. As sales growth outpaced the amount of new listings growth in the market, inventory levels dropped to just over 2,000 units.

Persistently tight market conditions prevented any relief in terms of price gains. The unadjusted single family benchmark price totalled $490,600 in March, a 9.9 per cent increase over the previous year and monthly increase of 1.6 per cent.

See what I mean? Last March folks in Calgary were convinced the market was bullet-proof. More people moving to town. More jobs and higher wages. Little available to rent. Cheap mortgages. And momentum. Tons of it – sales surging 9.5% and prices bloating almost 10%. This is exactly the kind of realtor bravado which people in YVR and the GTA are coated with monthly. No sirreee. Can’t happen here. We have immigrants, jobs, confidence and horny buyers.

Well, here’s a reality check.

Deric Burton is a Re/Max guy in Calgary – a rare realtor with the experience and intellect to understand the macroeconomics impacting the housing market and the stones to honestly report it. He’s traced the impact of the oil downturns of 1981 and 2008 on real estate, and arrived at two scenarios for what likely lies ahead. Neither are happy.

From 1981 to 1986 oil lost 66% of its value and Cowtown housing plunged in price by 38%. It took two years for property values to fall and seven years to recover. The oil bust of 2008-9 came during the GFC, when crude fell 70% and real estate lost 18%. But this time the drop was quick – just 18 months on the way down, yet it took almost six years for houses to get back to pre-2008 levels. It’s worth remembering the Bank of Canada goosed this recovery with an historic plunge in interest rates – which cannot be duplicated.

What now?

Well, if this is a long slump, Burton figures the real estate bottom won’t come until July of 2017, by which time houses will cost 39% less than they did in September. It will then take until June of 2022 to recover to the 2014 peak – eight long years. If the oil collapse is short-lived, he says you can expect house prices to lose 18%, bottom a year from now and recover the lost ground sometime in the spring of 2020.

Here’s the chart:

CALGARY modified

Says the realtor: “If oil prices replicate 1981 with a steep drop and long protracted flattening of prices, then the resulting effect on the housing market (blue line) would be significant and long-term. On the other hand, if oil prices mirror the 2008 trend (green line) which resulted in a steep drop with a fairly quick recovery, then prices should rebound accordingly, but still take until May 2020 to recover…. There can be no doubt that the significant drop in oil prices has already been severe enough to cause a substantial decrease in prices but, more importantly, to undermine the confidence in making one of the largest family purchases.”

It now appears an oil rebound is as likely as the renaissance of my political career. Supply is swamping demand, monetary stimulus is being sliced back (the US Fed is preparing to raise rates, not lower them), and the bulk of oil patch layoffs is yet to come as most producers lose money with every barrel they suck from the tundra. In fact, this is just the latest blow. Overall job creation in Canada has never been as weak as it is now – at least not in the 40 years people have been counting.

But this post is not about Calgary. Or oil. It’s about surprises.

Are you ready for one?

257 comments ↓

#1 Leroy Washington on 03.23.15 at 6:04 pm

OMG!!! Canadians are as dumb as toilets.

Long live the U. S. of A.!!! Woo hoo!

#2 Broke Dick on 03.23.15 at 6:08 pm

Sorry to say but Calgary’s problem is not Toronto’s problem.
Demand is up, prices are up and it’s not stopping yet.
Maybe next year, who knows??

Why do I bother? — Garth

#3 PM on 03.23.15 at 6:18 pm

Without busting out a calculator. It looks like the rebound was pretty quick (30% over 6 years is 5% a year) so if you want to get in you need to be pretty quick after that bottom. Is that fair to say?

Now the bull is showing signs of slowing and fed rate increases don’t help. Where do park money until 2017?

#4 Interstellar Old Yeller on 03.23.15 at 6:20 pm

Neat chart by Deric Burton. For those used house floggers who say it doesn’t matter if you buy at the top, because you’re in it for the long haul. When there’s a potential $227k difference from market top to bottom, even saving half of that on your house purchase would be huge.

#5 FK on 03.23.15 at 6:23 pm

Thanks again for your insight. None of my friends and colleagues believe in diversified portfolio.

Do they believe in irony? — Garth

#6 Glengarry Glenn Ross on 03.23.15 at 6:25 pm

#1 Leroy Washington on 03.23.15 at 6:04 pm
OMG!!! Canadians are as dumb as toilets.

Long live the U. S. of A.!!! Woo hoo!

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

What a bitter,houseless, underachiever moron !!!!!

#7 young & foolish on 03.23.15 at 6:27 pm

Ouch! Sounds like we are facing another recession?

#8 Squirrel Meat on 03.23.15 at 6:30 pm

#1 Leroy Washington on 03.23.15 at 6:04 pm

OMG!!! Canadians are as dumb as toilets.

Long live the U. S. of A.!!! Woo hoo!
———————————————-

Some toilets are rather smart nowadays… need to keep up.

http://www.costco.com/New-Waves-Smart-Toilet.product.100089270.html

#9 heavily weighted oil portfolio on 03.23.15 at 6:34 pm

Alberta has the economy equivalent of a highly unbalanced portfolio.

If in 2008 you had similar overweight in financials, US real estate in an investment portfolio that you were forced to liquidate for any reason, you would have felt the same pain.

The key would be to have in the different provinces and in Canada as a whole a “balanced economy” – but this is just not the case, resource-based economy is just as tempting low-hanging fruit as buying a house. Requires huge investment which automatically screws up the balance of your “portfolio”.

But in the resource-weighted economies boom and bust goes hand in hand.

#10 earlybird on 03.23.15 at 6:35 pm

This is an oil/energy driven problem, not a liquidity crisis….it will be the 80’s all over again in Cowtown.

#11 Cici on 03.23.15 at 6:37 pm

Sounds like the next release TREB report might be a shocker?

#12 A Yank in BC on 03.23.15 at 6:37 pm

A friend of mine in the U.S. recently bought an Electric-Hybrid vehicle for his daily commute to work. Plugs it into 110v at home, and 220v at work. He hasn’t been to a gas station in over 4 months, and his tank is still half-full. Sure, he paid more to purchase than a conventional vehicle would have cost. But he is ecstatic over this thing.

#13 Randy on 03.23.15 at 6:39 pm

Oh yeah- U USA lover. USA NOT OKAY!
http://www.silverdoctors.com/10-charts-which-show-we-are-much-worse-off-than-just-before-the-last-economic-crisis/
Nor are we!!

#14 Obvious Truth on 03.23.15 at 6:40 pm

Theses macro events shouldn’t surprise anyone.

They are regular occurrences.

Folks should be able to take advantage of the good surprises and limit the damage of a bad surprise.

#15 Godth on 03.23.15 at 6:42 pm

#1 Leroy Washington on 03.23.15 at 6:04 pm

lol, you’re own fracking miracle is imploding too so don’t laugh too hard. The whole fracking miracle was another sham regardless, the peak was known to have been 2020, but within the next year or two we’ll watch the debt driven ponzi self destruct. Oil prices will rise again but the lesson seems to be that non-conventional oil supplies aren’t the same as conventional supplies. Like 100:1 isn’t 5:1 and that means everything to the house of cards we’ve built. Some of already realized this though.

#16 leslie on 03.23.15 at 6:42 pm

i guess no one needs oil anymore even though it is used in almost every product we use. Either way.. doesnt matter if it goes up or down it is just a house to live in .. significant drop means it is time to get a bigger one

#17 Tudor on 03.23.15 at 6:48 pm

The Americans are starting to notice — this guy has been getting a lot of air play:
https://www.linkedin.com/pulse/crazy-canadian-credit-confronts-crude-eh-vikram-mansharamani

#18 wishful_thinker on 03.23.15 at 6:52 pm

Unfortunately, the overall economy is suffering because of the “Housing Paradox” as well as low oil prices.

Simply put, housing boosts the economy during the boom years, thanks to the wealth effect, everybody feels rich through the perceived equity in their houses, so they spend more which helps the economy,
then, near the top of the cycle, houses cost so much that people have no money left after paying their mortgage so they stop spending on anything else, which affects the economy.

Until housing corrects, the Canadian economy will stagnate, since the consumer accounts for a very large portion of that very economy

#19 heavily weighted oil portfolio on 03.23.15 at 6:52 pm

It now appears an oil rebound is as likely as the renaissance of my political career…

But this post is not about Calgary. Or oil. It’s about surprises.

Are you ready for one?

——-

You never know… We might find you one they running for office on the balanced portfolio political platform.

Sounds much better to me than bill C51 (if I recall it correctly), or all the other threats poor citizens must face…

Now as I am writing this, I realize some similarities…

I guess, if you could just make the imbalanced portfolio into a national security threat, you may have a rebound surprise :)

It would be much more useful for Canada than the other scare-based political platforms.

#20 Babblemaster on 03.23.15 at 6:52 pm

“It will then take until June of 2022 to recover to the 2014 peak – eight long years.” – Garth

—————————————————–

OK, but it will recover. Buy for the long term and you’ll be fine. That’s true anywhere in Canada. That’s what history shows.

#21 Retired Boomer - WI on 03.23.15 at 6:55 pm

Garth I often wonder, why you DO bother. It is because you prefer people not be smitten by the temporary illusion go wealth, but they rather grab the gains they need to sustain them during their idle older years. A house is NOT a home, a home is where you make one.

Yes, that “balanced portfolio” works very well for the not too greedy geezer. He who has saved ‘enough’ but, not the most he could have done. The geezer who enjoys his Monday cocktails with friends, who regrets the impatience of the millennials, who doesn’t understand the rapid rate of change surrounding his increasingly frail carcass, and knows in the end he won’t get out of this one alive!

That would be me. After a mitt full of brandy’s tonight, I have no dog in any fight, except perhaps to find the bathroom later on.

Life IS good. Enough to survive on, enough for whatever I need, or desire. Does it get any better than that, my friends? I don’t know what tomorrow might bring forth, I know I am well settled for today. Economic Freedom.

Here endeth the gospel, according to the retired boomer.

Tomorrow we might live to face the challenges of another day, right? Long live the smoking men.

#22 Toronto_CA on 03.23.15 at 6:55 pm

All it will take is a fairly typical economic recession, which should be happening in the next few years if the past is any indication. When a recession hits, Toronto and Vancouver housing markets will implode under their own hubris. House prices need to be supported by something besides cheap, easy credit and hormones (such as increased wages or the rental market).

The difference between the next recession to hit Canada and all the ones in previous memory is that we are sitting at 0.75% “emergency” interest rates already, and never before have we been so high in household debt or had such poor job growth before we even got into a recession…

#23 Surprise! | Realties.ca on 03.23.15 at 6:57 pm

[…] Source: http://www.greaterfool.ca/2015/03/23/surprise-10/ […]

#24 Nora Lenderby on 03.23.15 at 6:59 pm

#6 Glengarry Glenn Ross on 03.23.15 at 6:25 pm
#1 Leroy Washington on 03.23.15 at 6:04 pm
OMG!!! Canadians are as dumb as toilets.
Long live the U. S. of A.!!! Woo hoo!

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

What a bitter,houseless, underachiever moron !!!!!

Your moron may have a point. Toilets are getting smarter all the time.

But I think the underachiever is us.

#25 Nicolas on 03.23.15 at 7:00 pm

Exactly zero friends and colleagues have a diversified portfolio.

Recently asked a friend who just got a huge promotion in Montreal if he’s using the extra cash to invest. His answer was a blank stare. Like I was speaking in tongues.

He said he’s investing in renovating his house.

#26 Rudygq on 03.23.15 at 7:00 pm

It going to take two consistent quarters of poor job numbers before we get an expose from a MSM outlet on the ills of the economy in Canada. It will probably be exacerbated by an election where the opposition will hammer poor job numbers into the minds of voters before the light goes on that the country’s ‘growth’ may not be as strong as thought prompting the general public to hold off on purchases “until things turn around”. With suspended purchases on a macro scale this accelerates economic slow down.

It is imperative to have an objective awareness as to what is the current economic climate and guide one’s actions accordingly. If you don’t know what to do seek competent financial help—no BILs (brother-inlaw) or MILs advise. Downturns are generally much shorter than bullish periods. But it is those who have prepared for up and down financial seasons who will be the long-term winners.
Invest with balance, courage and thoughtfulness to your long-term needs.

#27 Retired Boomer - WI on 03.23.15 at 7:00 pm

Damn… forgot the local economy. Well, frac sand mining is down quite a bit. local businesses’ feeling the decay.
I have a basement dwelling Gen X reject who has not been employed for 5 months now… the old man is getting peeved. He is untalented, and stooped which doesn’t help the situation. Maybe there is a future in used Kia’s?

#28 Semore Debt on 03.23.15 at 7:03 pm

bahahahaha “he laughs best who laughs last”

#29 james on 03.23.15 at 7:03 pm

#6 Glengarry Glenn Ross

To be fair to the troll, Canadians are indeed pretty stupid for not paying attention to the US housing bubble (and subsequent implosion).

They seem to treat it as something like a lightning strike out of the blue. Inexplicable. Unpredictable. An act of God or Nature.

Au contraire. It was the result of policy decisions, incentive structures and all the rest. The fact that Canadian home ownership is at 70%, Canadian personal debt levels are sky high, price/rent ratios and price/income ratios are at historic highs (etc) is greeted by a burp and a fart by the Canadian public. All of those things apply to other countries, not this one.

You’d have to be pretty stupid not to take some interest in the USA, Ireland, Spain (etc) and other countries with real estate downturns.

(Just as an Albertan have to be spectacularly stupid not to notice the massive flood of money into oil and gas projects in the USA a few years back).

#30 LL on 03.23.15 at 7:05 pm

More layoffs and end to lucrative gov contract. Yes the impact will be significant in the oil patch, but does anyone have data on what happened to house prices in Van and Toronto during the same period?

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/chinas-cnooc-shutting-nexen-oil-trading-operation/article23581788/

#31 omg the original on 03.23.15 at 7:07 pm

But this post is not about Calgary. Or oil. It’s about surprises.

Are you ready for one?
——————————-
ALL GOOD BUBBLES NEED A GOOD CATALYST TO RESET

All bubble need a catalyst to pop, otherwise they can go on seemingly forever – as we have seen with the bubble run in real estate in certain Canuck markets. Toronto been in a upward bull market which moved into bubble territory for the past decade. Vancouver has been in a RE bull/bubble market for 2 decades.

In Cowtown it looks like oil prices may be the catalyst, but wait to see the whites of their eyes before you consider buying – there’s a long way to go down before Cowtown prices reflect reality for a small and fridgid city without meaningful land constraints. But if oil prices recover quickly there will be nary a dip in house prices.

For the rest of Canada’s bubbly markets like TO, Vancouver or even Winterpeg we will need some macro driver such as an meaning increase in interest rates. That is not likely to happen anytime soon the way the economy is currently going.

When push comes to shove the Bank of Canada will let the dollar crater rather than increase rates if the Canadian economy is on the ropes.

A correction will happen and it will be big – but it may not happen for years and may take years to unfold.

So just hang tight, keep renting and investing.

#32 ALBERTASTROPHE on 03.23.15 at 7:07 pm

Catastrophe has its foot inside the front door. It will not be turned away now.

Alberta has set itself up for a multi-generational decline, not just a real estate pop of 5-7 years.

****Think what might have been if we had had intelligent, forward-looking and democratic leaders who truly cared about us, our children and the future:

http://www.cbc.ca/news/business/norway-s-sovereign-wealth-holds-lessons-for-Canada-1.3002803

Norway’s heritage fund is now worth about $1 Trillion.

Think about that amount. For a population of about 5 million.

Alberta has barely $17 Billion left of a fund it stopped contributing to in 1987.

Norwegians are set, for now and for whatever challenges await in the coming post-oil world. They will be fine, and so will their children and grandchildren. Their incomes per family are now even better than Albertans’.

And here? Fear and loathing. Alberta (and Ottawa) is looking for scapegoats and new Ponzi schemes to distract people with.

Albertans gave up on long term investing, just like the idiots Garth writes about who don’t see their money growing in a GIC so stop investing and saving, looking for a quick fix like real estate or some other dumb gamble.

Face it Albertans, we are the stupidest of the stupid, because we thought we were smarter than everyone else, but in fact we have been dumber.

Our political and social discourse is the most one-sided, and unbalanced in the country. Our politicians have been almost entirely pathetically mediocre hacks and intellectual defectives who make Ted Cruz and the Tea Party seem erudite by comparison.

Keystone and the tar sands will be dead and buried by the time there is any hope of renewal. This decline will extend 30-40 years, without a doubt.

On behalf of the life I have lived in Alberta, as have many reading here, I can only hang my head and accept that as we have sown, so shall we reap.

This is such a stupid, mediocre province of half-witted ideologues with no personal or political self-discipline.

Screwed. Totally screwed. For generations to come.

We have been at the front lines of neoconservative BS and stupidity, of our own free will.

We could have been at the front lines of the greatest longterm intergenerational boom in Canadian history.

We are the Honey Boo-Boo of Canada.

Inbred, insular, and really, really DUMB.

Don’t let your daughter marry an Albertan.

And Albertans, mix your genes with someone from outside. We simply must stop reproducing amongst ourselves.

#33 Liquid on 03.23.15 at 7:07 pm

Some people in Calgary have been actively looking to buy real estate in Vancouver. But I’m not sure if they know what they’re getting themselves into.

#34 DreamingInTechnicolour on 03.23.15 at 7:10 pm

Memo to # 2 When the housing market unravels in Calgary and car and truck sales, furniture sales etc. -along with dozens of other related industries are starting to go down the tube (e.g. mortgages, banking, real estate etc.) all shedding jobs held by many highly indebted folks who’s livelihoods are in question and who’s jobs are no longer required in Calgary of all places, where many Canadian head offices are located, – all of us should be concerned. Wake up.

#35 Rainclouds on 03.23.15 at 7:11 pm

Leeeeroy

You. Are. Brilliant.

Like everyone here I look forward to your daily words of wisdom.

Please don’t stop

#36 Cowpoke on 03.23.15 at 7:11 pm

If we built our current infrastructure on $10 to $15 dollar oil, how can we possibly afford to maintain it on $100+ oil. Correct me if I am wrong, but this don’t add up. All the basic commodities [raw materials] need to remain low in price, forever. It’s just that simple. You add value by adding real value to the resource. How they can get manipulated higher in price is beyond me.

#37 Arfmooocat on 03.23.15 at 7:12 pm

According to the local real estate board in Edmonton were just booming as usual… an island of prosperity in an ocean of recession. lol

http://edmontonrealestateblog.com/weekly-update

#38 prairie person on 03.23.15 at 7:12 pm

Surprises, Garth? I think the shocker will be the effect of pressure from the elderly and the young. For the elderly, the squeeze is on. We went to Vancouver on Saturday. Ferry return, 180.00, gas 40.00, food, 50.00, parking 13.50 plus change. Over three hundred to attend a two hour event. No shopping, no time for a fancy meal. Doesn’t sound like much but when fixed income meets increasing ferry fares, increasing groc prices, life becomes restricted. The other side? Van streets were jammed with young people. Well dressed. Healthy. Ambition is the dominant emotion. But there is a disconnect between qualifications and employment that already exists. As a student of immigration/recession/depressions I’m aware that young people don’t understand the term “no work”. Not underemployed. Unemployed. Historically,no work meant emigration, internationally or nationally. It would take little shift to turn our situation into that of Greece or Spain. No work. And the bank of mom and dad depleted. My description of a quick trip to Van is just to say, you have to have money.

#39 Tarzan on 03.23.15 at 7:13 pm

Looks like Cat is finally out of the bag – meanwhile some big name mortgage agents have a new advt campaign – called “it’s now or never”. Watch Out !!

#40 Canadian In Portland on 03.23.15 at 7:14 pm

I know the rest of the country will, but will Vancouver also return to the historical median?

#41 ANON on 03.23.15 at 7:16 pm

B…bu…but I’ve heard it’s different this time! Teh Great Oil Bottom is here!!! Teh Useless Money will be printed instead of loaned to be paid back with an extra promised cherry on top! They have A Great Printing Apparatus and they are not afraid to use it to make us all millionaires via EI&Welfare!
/s

The only #10 Surprise is that it is not different this time, except, quite possibly, for the worst.

#42 fancy_pants on 03.23.15 at 7:16 pm

Hey folks,

since RE prices have gone up 30% since 2008 (and this RE doomer blog started), if it falls 30% then people can all high five eachother and jump in. Line up for apologies and kisses for losing 10 years of your life living in a rental dump.

Still amazed folks are holding their breath on interest rates… IMO still not going anywhere up in a hurry. When central bankers flap their gums, it means nothing. Did you not pay attention during MC’s finger wagging?

#43 Godth on 03.23.15 at 7:17 pm

Do they believe in irony? — Garth

Do they believe in post irony; post sarcasm; post industrialism; post-post modernism; post capitalism; post communism; post anarchism; post civility; post empire; post granite , hardwood and stainless? How about pre-collapse, inter-collapse, watching collapse? Does anybody believe their senses anymore or is it all just propaganda? Is every thought bought and sold before it has relevance?

Terrorizing Canada With Stephen Harper
http://www.counterpunch.org/2015/03/20/terrorizing-canada-with-stephen-harper/

22 Minutes: Connie – Anti-Terror Legislation
https://www.youtube.com/watch?v=I1IliGODznk&app=desktop

Just keep shopping Canada. Neo-Liberal economics, Neo-Conservative politics and the Empire will save you. Have Faith! The Empire is a state of mind. Everyone is an island. Get rich and be the king of your own castle! (all with money you don’t have, borrow- mine the future it’s eternal! Like the grand banks)

#44 Balmuto on 03.23.15 at 7:20 pm

More carnage on the Calgary job front. These are new layoffs at Nexen – on top of the ones announced last week:

http://m.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/chinas-cnooc-shutting-nexen-oil-trading-operation/article23581788/?

#45 Washed Up Lawyer on 03.23.15 at 7:28 pm

Thanks for your daily efforts Garth.

Leaves me as a Boomer with a shack in Cowtown feeling as though I have a six inch section of drill collar in the pit of my stomach.

Premier Grim Jim’s budget this week won’t help even though the solutions are as plain as the large nose on my face. Unfortunately the mere mention of a PST, progressive tax regime (no self interest here as my wife and I enjoy a high household income – how virtuous of me), increased corporate taxes and an increase in royalty rates are the death knell of a politician in Alberta.

I could be surprised though. Who knows what the corporate interests are telling him what might be acceptable. Probably massive cuts to government expenditures starting with a delay on the $5 billion completion of the southwest ring road in Calgary. Maybe a jump of 2% in the regressive flat tax of Ralphie.

I will rent a truck tomorrow and stock up on sin supplies as sin taxes will take a jump.

#46 Yogi Bear on 03.23.15 at 7:36 pm

#32 ALBERTASTROPHE on 03.23.15 at 7:07 pm

Impressive rant. As far as self-loathing tripe goes, I rate your post A++++ WOULD READ AGAIN.

#47 Financial Freedom at 40 on 03.23.15 at 7:40 pm

I am not in Calgary. I don’t work in energy. But the focus at work is on AB 24×7 right now.

My employer is getting letters from all our large AB-based clients to significantly cut our contracted rates for services we provide. Finance is regularly recalculating the budget numbers for this year and trying to assess the impact. Quiet ‘restructure’ layoffs across the country a few months ago to get in front of it, more expected. AB has powered our growth numbers for the last 5 years. Most of our employees are in BC and ON, but we all feel tied to the strength of the AB economy.

Read somewhere (?) recently that AB has produced 50% of new Canadian jobs since 2010. Young people I know of from rural/small city ON have been flocking to AB because they couldn’t even find server or roofing jobs here after grad. Those here are stuck in internship and contractor-with-no-benefits hell. Canada can’t afford for the Alberta engine to sputter.

If you’re not in the public sector I would look twice at how connected your business may be to Alberta’s economic fortunes, and not take the impact for granted.

#48 Debt's Dark Embrace on 03.23.15 at 7:41 pm

Just a blip on the radar. Oil back to $75 by year end. Interest rates low until 2020 or longer. Business as usual. Yawn.

#49 lala on 03.23.15 at 7:42 pm

I’ll get my ticket in few days, dilema is to get an one way or not….not sure but wife is a Canadian and she doesn’t like the Mediterranean weather and food. Jealousy she thinks european girls who dress nice don’t looks like hoes. Don’t blame her,she wear “Sorel” 8 months in a row. Sometimes when im high I think I married to a men.

#50 Mark on 03.23.15 at 7:44 pm

“A correction will happen and it will be big – but it may not happen for years and may take years to unfold.”

Are you kidding? Vancouver and Toronto, along with the rest of Canada, have seen weakening RE markets and falling prices for almost 2 years now. Don’t know why you’re talking as though the RE decline is in the past. Its here. Its now. Consumers are running scared, retrenching their spending. Don’t let the Realtors and their bizarre interpretations and refusal to acknowledge the dramatically changed sales mix fool you. RE prices across Canada are in undeniable decline pretty much everywhere except perhaps a few narrow and highly over-cited enclaves of two major cities.

As for the trigger, the triggering event was “F”s crackdown on CMHC subprime mortgage insurance in Budget 2013. That was the trigger, the watershed event which marked the top of the Canadian housing bubble. Its been down ever since.

#51 John Prine on 03.23.15 at 7:45 pm

I have some really good friends from Alberta, big earners, big trucks,big homes, really nice people who would give you the shirt off their backs, but for the last 10 or 15 years all I hear from is how stupid British Columbians are for paying medical premiums, higher car insurance rates and voting NDP in as they know that they only ruin the economy by reckless spending…All these people live in BC……

Also, NEVER mention Pierre Trudeau to an Albertan over 50, they remember the “finger” as if it was yesterday. This next few years will be humbling for many.

#52 Same Story Since 2007 on 03.23.15 at 7:45 pm

What the story forgets to mention is that, interest rates were in DOUBLE DIGITS during 1981 to 1986….

Expect a 5 to 10% drop and a quick recovery in 2 years.

#53 nonplused on 03.23.15 at 7:46 pm

39%!!! Cricky I should have stayed renting, that’s going to wipe out hundreds of thousands of dollars in equity. 2020? I hope I can stay married that long.

I saw a CIBC report today predicting a fairly rapid rebound in oil but I don’t see it. I also saw another report saying natural gas is about to get hammered again below $2 Henry Hub which would mean well below that in Alberta. Yikes! Between the 2 the whole Alberta energy patch could go to zero capital expenditures, which means that companies only need enough staff to keep current production flowing. That could be ugly. At least as bad as the 80’s.

I remember the 80’s fairly well. A lot of oil workers, and I am talking geologists and engineers, never worked full time in the province again. The problem was that by the time oil prices recovered, many geologists and engineers had been off work for 4 or more years and then when the jobs came back they had to compete with all the new grads that were also having trouble finding work over the period. The surplus took forever to unwind and older workers were shunned due to the fact they were more expensive to hire and had been sitting on their hands for so long.

My father in law was a geologist and got let go in the 80’s. He managed to get by as a consultant after than but half of his income came from Central America and he also had to spend a lot of his time down there. He was also forced to subdivide his acreage into 2 acre lots and sell them off to survive. Thankfully he had that.

Hopefully it doesn’t get that bad.

#54 LL on 03.23.15 at 7:46 pm

…”From 1981 to 1986 oil lost 66% of its value and Cowtown housing plunged in price by 38%. It took two years for property values to fall and seven years to recover. The oil bust of 2008-9 came during the GFC, when crude fell 70% and real estate lost 18%. But this time the drop was quick – just 18 months on the way down, yet it took almost six years for houses to get back to pre-2008 levels”….

At that time, the real estate market was not as crazy as today. Houses prices in Canada were no so disconnected from salary (maybe just in Alberta because oil).

Today it’s a crazy market with crazy prices. Houses are considering as commodities!

Not so sure if we can compare 1980 to today (regarding future market value if the market drop).

#55 Timing is Everything on 03.23.15 at 7:47 pm

#6 Glengarry Glenn Ross

Don’t worry about it. The seats are smarter than Leroy.

http://tinyurl.com/mrsmlzc

Leroy…Just 4 u. Butt I don’t think you’re smart enough to use it.

http://tinyurl.com/q2vzhxo

#56 Everything is bad :c on 03.23.15 at 7:51 pm

http://business.financialpost.com/2015/03/23/nexen-energy-closing-down-crude-oil-trading-division-sources/?__lsa=665f-10a2

#57 Ontario's Left Coast on 03.23.15 at 7:52 pm

“It now appears an oil rebound is as likely as the renaissance of my political career.”

You can’t help but like a guy with a great sense of humour. Thanks as always, Garth, for the great advice and many laughs along the way.

#58 Frustrated Kiwi on 03.23.15 at 7:52 pm

It’s great to see some analysis by a realtor but I do wish that the norm for graphs like these were in real terms (i.e., inflation adjusted) – we would see much longer (and realistic) time periods for full recovery of prices and it would be more apples-to-apples.

#3 PM asks if these graphs mean you need to be in quick when it bottoms – well it rather depends what inflation was. If house prices increased at 5% a year back in the 80s but inflation was > 5% over that period then actually you should have waited. Impossible to tell with just these numbers.

#59 46 and 2 on 03.23.15 at 7:55 pm

#32 ALBERTASTROPHE
===============
Well, if Ottawa would stop raping us we might have a chance to build a nest egg.

You seem to be busy listing regrets and missed opportunities….you forgot to mention the west going it’s own way when we had the chance.

#60 nonplused on 03.23.15 at 8:04 pm

#12 A Yank in BC

60% of the electricity your friend is charging his car with comes from gas of coal fired generation, and most of the rest nuclear. Yuck.

#36 Cowpoke

The $15 oil is long, long gone. Saudi Arabia can’t even produce for that.

#61 Godth on 03.23.15 at 8:05 pm

France Now an Obedient, Cowardly Nation
The Collapse of French Intellectual Diversity
http://www.counterpunch.org/2015/03/20/the-collapse-of-french-intellectual-diversity/

At least the French had a sense of intellectual/artistic culture that they’ve betrayed. Canada is just a nation of redneck shoppers, we skipped the renaissance entirely – thank God for that!

#62 nonplused on 03.23.15 at 8:11 pm

#44 Balmuto

Crap, I have friends that work there.

#63 Rexx Rock on 03.23.15 at 8:12 pm

What I’ve being told is that a lot of Albertans are moving to Vancouver and Toronto were the job market is still strong.I don’t think they’ll get the big bucks like before but at least theres some work.

#64 Demolition Doug on 03.23.15 at 8:12 pm

Jeez. Check out the Globe… Finally (kind of) admitting that there might be a shift:

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/change-your-plan-to-cash-in-on-changing-housing-trends/article23586248/

Please note the second to last paragraph:

“plan. Use our housing price calculator to help in your analysis. What you want to avoid as a baby boomer is trying to sell amid a market downturn in your city. That would encourage more boomers to try and cash out of their homes, thereby depressing the market even further.”

Of course, if you need the money, you need the money. And the spiral begins.

#65 Canadian in Portland on 03.23.15 at 8:15 pm

and all the while Harper worries about what women wear when their picture gets taken. Nice to see him fiddle while Rome burns.

#66 nonplused on 03.23.15 at 8:20 pm

#36 Cowpoke

PS we probably don’t need $15 oil anymore. In the days of $15 dollar oil Dodge was selling Chargers that got at best 10 mpg highway. The new Charger gets much better than that and much of the fleet has moved to much smaller cars getting up to 4 times better millage.

Also at $15 oil a lot of power was generated using oil. Those plants only run a few days a year now when it’s really cold and they aren’t building any more.

Marginal oil production is north of $80/bbl now and the price will return there eventually. And the infrastructure will adapt.

#67 The real Kip on 03.23.15 at 8:31 pm

I am revising my interest rate forecast for the remainder of the year. As you know I have already called of a .25% BoC reduction between now and the federal election. I am now revising that to two, .25% reductions for a total of 25 bips.

That’s right, you heard it here first!

#68 Robert Agnew on 03.23.15 at 8:32 pm

I support the Harper plan to transfer wealth to people know what’s best for us – the rich and well connected reform conservative cronies.

#69 bigtown on 03.23.15 at 8:35 pm

I am going to look at a fancy new condo rental on the Oakville/Mississauga border this week. It is a one bedroom plus den. It is the runner up or second choice for our family rental. The winner is an older condo with two bedrooms/two baths and close to 1200 sq. feet versus 700 sq. feet. Also with the fancy Oakville one I have to get a minimum of $200 off the rent…so it will probably be a runner up. One has to be very sensitive to the landlord when one relates the fact that his asking rent is 17% over our budget but the GTA is not for the timid of wallet or nerves. At this juncture in our rental adventure after the past fifteen years renting all across Southern Ontario I am experienced at being 100% right when I say “It’s a dump”….you can trust me on that.

#70 Linda on 03.23.15 at 8:36 pm

Before everyone gets hysterical about the housing market meltdown in Cowtown, lets put this into perspective. There are over 1.2 million people living in Calgary. 5,800 homes on the market is not even 1/2 a percent of the Calgary population at large & represents about 1% (one percent) of the tax base of some 600,000 homes & businesses that Calgary collects property tax on. So hardly Armageddon figures here.

Second, if housing prices fall & continue to fall even the higher amount of 30% that has been touted by some, the average house price in Calgary was flirting with $500,000 not that long ago (2014). Using $475,000 as the average figure a 30% drop in value still is a pretty hefty $332,500 average price per home. Your minimum wage earner is still not going to be able to scoop up a house without taking on some pretty serious debt load, if indeed they can find anyone to loan them that much money on minimum wage in the first place.

Third, if prices do drop over the course of 2 or more years, those who maybe were priced out of the market might indeed be able to score home ownership after all. Still going to be tough especially if interest rates climb to ‘only’ 5 or 6 percent from their current lows, but an opportunity may open up for some who had thought it would never come their way.

Finally, if you don’t have to sell & can keep paying the mortgage then really, what is the problem with staying somewhere for 2, 4 or even 8 years? Prices will eventually climb back up & maybe just in time for you to sell without taking a loss. Meanwhile you have a roof over your head. Yes, you possibly could have made more on the market with a balanced portfolio etc. But this presumes the market won’t swing down just when you need it to swing up to realize your gains. Case in point, the many people who were going to retire in 2008 but who are (maybe) thinking about retiring 7 years later – IF their portfolios regained their losses & IF they hung in there & didn’t bail in a panic in 2008, ensuring the loss for all time. Remember the RRSP story? Put in X dollars for 40 years & at X rate of annual return you would have a million dollars plus? Except that story never mentioned that the X rate of return was not guaranteed. Did some people score a million after 40 years? I’d say yes, but I’d also say the number who scored that much are by far the minority.

That sounded desperate. (Always wondered: why do you post under a woman’s name?) — Garth

#71 Alberta wing-nuts on 03.23.15 at 8:41 pm

Both Stephen Harper and Ted Cruz are selling their Calgary estates.

#72 torontogal on 03.23.15 at 8:48 pm

hi mike!

#73 mdm on 03.23.15 at 8:48 pm

I live in Calgary in property management which is more or less safe regardless of oil prices and housing busts. I rent an apt here and own a house in Kelowna I bought with my sister a few years back as a foreclosure. I can bide my time for another 2 years and grab another foreclosure in Calgary. I just need to wait for the cowheads to be cut down to size before I take their house.

#74 Daisy Mae on 03.23.15 at 8:53 pm

#2 Dick: “Sorry to say but Calgary’s problem is not Toronto’s problem. Demand is up, prices are up and it’s not stopping yet. Maybe next year, who knows??

Why do I bother? — Garth

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

Who knows? We’re so damn ignorant. Real dumb asses. But don’t give up on us, please.

#75 Mike T. on 03.23.15 at 9:00 pm

‘Well, if Ottawa would stop raping us we might have a chance to build a nest egg.’

seems to me that the vast majority of oil $$ is going into the pockets of a select few private individuals

like 80+

#76 joblo on 03.23.15 at 9:01 pm

Heard on radio (so it must be true) energy analyst says down to $36 a barrel then…………..
BACK UP THE TRUCK!

So then will all the jobs come back?

#77 46 and 2 on 03.23.15 at 9:01 pm

#73 mdm
=======
Maybe you should head back to Kelowna to take advantage of the numerous career chances and job opportunities. Oh wait……that’s why you left wherever you are from and came to Calgary, to actually get ahead.

#78 Randy Randerson on 03.23.15 at 9:06 pm

DELETED (Sexual)

#79 J in Calgary on 03.23.15 at 9:09 pm

My co-worker and his wife (both engineers) listed one of their 3 properties for sale in December of last year. (They were trying to make money off rental properties. Didn’t go so well, they finally managed to evict the latest tenants – after they paid a grand total of 2 months rent over 1 year.)

After dropping the list price $30,000, they finally got one offer – at $50k less than the new asking price. Listing expired last week and they’ve given up trying to sell it. At the latest price point, they would already be losing money over what they paid for the property nine years ago.

The condos in my inner city neighbourhood typically sell within 2 weeks. Now, nothing has sold here in more than 2 months. Detached homes are in the same boat. I check the Calgary real estate stats regularly – in a city of more than 1 million, a total of 4 homes were bought yesterday. Seriously?

Mind you, I can’t understand why anyone would buy now. Wait even 6 months and there will be twice as many homes on the market and prices will be down at least 20%. IMHO anyway.

Not a day goes by that I don’t hear of someone else losing their job. No official announcements, just a few people here, a few there but it all adds up. Privately, most people are worried and everyone is talking about paying off their debt. Just hope they keep their jobs long enough to do that.

#80 Retired Boomer - WI on 03.23.15 at 9:11 pm

#45 Washed Up Lawyer

Sin taxes are ALWAYS the low hanging target of lazy politicians.
Speaking of “dumb politicians” isn’t Harper a product of Albertan politics? Seems to me the “conservative reformed party of Alberta” merged with the conservatives
to form CCRAP or “see-crap” as we mocked here in the states? Memory foggy -too many brandies tonight.
Anyway, you might care to know Wisconsin has NOT raised the beer taxes since 1969. No wonder we drink.
Hey, at $2 a can at any bar who goes wrong?
Gotta wonder if his line of thinking wasn’t worth a hoot on the provincial scale, what improvements did you expect on a national stage?
Stay tuned in 2016 we have our own ugly parade.

#81 Mike P on 03.23.15 at 9:14 pm

hey Garth, what do you think of the CBC Norway oil story? Could that have been us? http://www.cbc.ca/news/business/norway-s-sovereign-wealth-holds-lessons-for-canada-1.3002803

#82 Godth on 03.23.15 at 9:17 pm

#77 46 and 2 on 03.23.15 at 9:01 pm
Tool – Aenema
https://www.youtube.com/watch?v=uCEeAn6_QJo

#83 P.Bocanegra on 03.23.15 at 9:19 pm

#59 46 and 2 on 03.23.15 at 7:55 pm

What a pile of nonsense. Alberta is screwed due to the stupidity of it’s citizens and corrupt, corporate owned, politicians. Nothing to do with Ottawa.

#84 Nora Lenderby on 03.23.15 at 9:20 pm

Off topic. I know the central bank is meant to be independent of government. Is the recent drop in interest rates expected to help governments with their deficits? Are things that bad?

#85 Glengarry Glenn Ross on 03.23.15 at 9:25 pm

City of vancouver wants to know what make Vancouver special.
Any ideas #1 Leroy Washington ???

#86 SWL1976 on 03.23.15 at 9:26 pm

#1 Leroy Washington on 03.23.15 at 6:04 pm

OMG!!! Canadians are as dumb as toilets.

Long live the U. S. of A.!!! Woo hoo!

——————————————–

Give it up. Have you looked into the ‘Good ol US of A’s’ track record and stats?

Your dollar is next, and won’t you be disappointed to know it was your ‘democratically elected’ government behind it all.

No worries though, those FEMA camps will keep you safe

Are you on the red, yellow, or blue list?

#87 Boombust on 03.23.15 at 9:32 pm

#1, Leroy…

Shove it.

#88 Smoking Man on 03.23.15 at 9:33 pm

Sunrise, how’s this.

I close the door, this morning and head for my truck.. Huh it’s not where I thought it was. I must have parked it in the drive way. So walk 120 feet only to discover my son’s car there.

It’s five thirty in the morning and I bust out onto a raging, howling belly laugh, my nabours lights turn on.. Who the hell steals a small pick up truck, with roll down windows and a stick sift.

Then to extreme horror and fear, I was quite looped last night, did I go for a drive…?

I wake up Jr, extremely hung over, let me get to the tax farm, have a few coffees then figure it out.

On the ride over my kid says, do you have any unpaid parking ticket, you have 3 then you get towed..

I don’t think I have any.

Well, son one years ago, drove a disposal car I got, him, keeper it in my name. Save him on insurance..

To my horror , when I called the cops, they said it was towed. I said, I have no tickets on it. They said I had 12 on the other car….

Surprise………

Thank you John Tory.. You are now on my shit list..

Oh, still working on rebuttal…

#89 Godth on 03.23.15 at 9:33 pm

#84 Nora Lenderby on 03.23.15 at 9:20 pm
Comer Vs The Bank of Canada
http://pressfortruth.ca/top-stories/comer-vs-bank-canada/

#90 Boombust on 03.23.15 at 9:35 pm

#65, Canadian in Portland,

That’s because Harper is a manipulative, smarmy sociopath. He’s just trying to divert your attention.

Get it now?

#91 TurnerNation on 03.23.15 at 9:40 pm

The Canada Bread Company has announced it is shutting down its Halifax bakery in November, affecting more than 100 employees.

The bakery produces sliced breads and English muffins primarily under the Ben’s, Dempster’s and Villaggio labels.

The products made in Halifax can be made at its bakeries in Moncton and Woodstock, N.B., with improved efficiency, said Park.

http://www.cbc.ca/news/canada/nova-scotia/canada-bread-company-to-close-halifax-bakery-in-november-1.3006084

#92 BG on 03.23.15 at 9:44 pm

#61 Godth on 03.23.15 at 8:05 pm
France Now an Obedient, Cowardly Nation
The Collapse of French Intellectual Diversity
http://www.counterpunch.org/2015/03/20/the-collapse-of-french-intellectual-diversity/

At least the French had a sense of intellectual/artistic culture that they’ve betrayed. Canada is just a nation of redneck shoppers, we skipped the renaissance entirely – thank God for that!
—————————————————————–

How can you go through life with that kind of thinking?
Depressing.

I read the article but almost threw up.
France does have problems but I can’t stand the tone of a self indulgent so called “philosopher” with too much free time, throwings lightning from their throne up their in the sky.

#93 Oceanside on 03.23.15 at 9:46 pm

#65, Canadian in Portland,

That’s because Harper is a manipulative, smarmy sociopath. He’s just trying to divert your attention.

Get it now?
___________________________________________
Hopefully all Canadians will get the message before the election….Amazed that we don’t seem to be paying attention…

#94 Glengarry Glenn Ross on 03.23.15 at 9:47 pm

#86 SWL1976 on 03.23.15 at 9:26 pm
#1 Leroy Washington on 03.23.15 at 6:04 pm

OMG!!! Canadians are as dumb as toilets.

Long live the U. S. of A.!!! Woo hoo!

——————————————–

Give it up. Have you looked into the ‘Good ol US of A’s’ track record and stats?

Your dollar is next, and won’t you be disappointed to know it was your ‘democratically elected’ government behind it all.

No worries though, those FEMA camps will keep you safe

Are you on the red, yellow, or blue list?

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

C’mon people…this looser who calls himself #1 Leroy Washington is soooooo canadian ,it hurts.
You gotta read between the lines.
Besides. americans have way more class then that.

#95 Washed Up Lawyer on 03.23.15 at 9:49 pm

#80 Retired Boom – WI

Anyway, you might care to know Wisconsin has NOT raised the beer taxes since 1969. No wonder we drink.
Hey, at $2 a can at any bar who goes wrong?
***************************************

Tomorrow I am listing the shack in Calgary into a market that has gone “no bid” and moving to Madison to relive the “Summer of ’69”.

Harper did not serve at the provincial level. Personally I think his outlook represents the ultimate revenge of the Nerds. His policies were more likely shaped by having been hung by his underwear from the soccer goalposts at recess.

Then again, I am not a poli sci grad.

#96 Blogbitch on 03.23.15 at 9:50 pm

One of the things I appreciate about this blog is that I get a different narrative than what I hear among friends and co-workers, most of whom are house-horny (virgins or not) and stare you blankly when you say the word “diversify”.

So, I keep my mouth shut and my portfolio diversified. And I come here every day for a reality check and a good chuckle at some of the comments.

#97 Ray Vasquez on 03.23.15 at 9:51 pm

Don’t underestimate the Bank of Canada, CMHC, lenders, real estate industry etc.

What if they have 0% mortgages rates for a 2, 3 year period?

They can still stretch this thing out for any 3, 4, 5 years etc.

They can increase RRSP Home buyers plan to be paid off in 25, 30, 35, 40 years instead of 15 years.

They can increase the maximum amount to $35,000 or $40,000, $50,000 etc.

They can have more government tax breaks for first home buyers, maybe $2,000 per household.

They can have RRIF’s and other pension income tax breaks from seniors, retirees be tax free or at a reduced tax rate 5%, 10% allowed to be given to their family members.

They can have no H.S.T or higher H.S.T. rebates for new house purchases.

They can have TFSA limits increased to advance amounts like a one time $27,500 or $55,000 5 or 10 year down payment or to purchase a home, condo etc.

They can interest payment or mortgage payment holidays, for instance, $0 payments or only 50% of your mortgage payment for 18, 24 months.

They can come up with so many gimmicks, artificial, government, lender, builder incentives to help the party going, as I just thought a few here in just about 5, 10 minutes.

#98 NorthOf49 on 03.23.15 at 9:51 pm

Big surprise for the 10 people terminated this morning at my spouse’s work. Oil & gas engineering / manufacturing firm in Mississauga, directly impacted by the price of oil. Spouse survived the cut this time, but unlucky ones included engineering, marketing, operations.

#99 46 and 2 on 03.23.15 at 9:56 pm

#83 P.Bocanegra
===========
Nothing to do with Ottawa, really?

So you are saying that the rest of Canada has not benefited from the enormous revenue and wealth created by Alberta?

Question is…..if this downturn turns out to be just an Alberta thing (and it could well be) will the rest of the country offer to help us out? If all of “this” is isolated do you think Ottawa will give a damn? No….not enough votes out west but they (both Ottawa and the rest of the country) are happy as hell to take when the taking is good.

#100 Ret on 03.23.15 at 10:05 pm

Albertans will not be able to deal with the new economic realities. it was a great party on the way up, but the party is over.

The blame game has started. The unions have dug in and expect continued raises. Everyone wants their neighbour to make sacrifices but, they themselves, will not give up anything because they see themselves as particularly deserving or special.

Ontarians think the same way and will eventually feel the same pain. When over almost half of the police and firefighters in Ontario are making over $100,000 a year, who would opening a manufacturing plant that could compete with wages that are that high? Manufacturing has no where to go but down in Ontario.

Harper, Prentice and Wynne did what we allowed them to do. We can only blame ourselves.

#101 ALBERTASTROPHE is FINISHED on 03.23.15 at 10:05 pm

Inbreeding at its best…dulls the mind.

#102 HogtownIndebted on 03.23.15 at 10:07 pm

Just watched that CBC news short documentary on Norway vs. Alberta tonight

OMG. It’s all that I can think.

It takes your breath away to see the contrast between these two places.

I am a Torontonian, but would never have wanted Alberta to have all its oil wealth taxed away and spread evenly across the whole country. That would not have been fair.

But why could Alberta’s leaders not even maintain a decent level of tariffs on the oil industry to benefit its own citizens? And why fritter away what was in the fund?

OMG. This is like a punch in the gut if you have any empathy at all.

Albertans, it is so clear now you have been so betrayed by decades of utterly incompetent and immoral leadership.

Where has there been any real consideration for your future?

Instead of having rich extractors pay taxes in all those boom years, now you all will probably have to pay higher sales taxes, and lets all hope you can keep your jobs in what is to come.

I honestly feel so bad for your province, as well as the rest of Canada, seeing how well Norway has done and how badly you have been screwed by the special interest elites of the oil sector in two cases that are so very similar.

Norway even got its idea for a savings fund from Alberta!!

What a terrible loss, the missed opportunity of a lifetime for you, your descendants and all the rest of us in Canada.

Truly awful. There needs to be an accounting for this. So many lessons to be learned.

#103 Obvious Truth on 03.23.15 at 10:11 pm

#42 fancy_pants

Is that the new math.

$1M goes up 30%. It equals …..

$1.3M goes down 30%. It equals …..

$910k then needs to go up how much to go back to where it was? _______. And in % _____.

Let’s not even bother with maintenance, interest, land transfer, possible fees to sell or refinancing at different rates. Forget opportunity cost altogether.

One bit per day.

#104 Mark on 03.23.15 at 10:11 pm

“Off topic. I know the central bank is meant to be independent of government. Is the recent drop in interest rates expected to help governments with their deficits? Are things that bad?”

Certainly that’s an unfortunate side effect of ZIRP/LIRP and eventually NIRP, but not the raison d’etre. Central bank policy, at least in Canada, is set based on inflation targeting.

#105 PM on 03.23.15 at 10:11 pm

#20

“OK, but it will recover. Buy for the long term and you’ll be fine. That’s true anywhere in Canada. That’s what history shows.”

That’s misleading and you shouldn’t spread that line of thinking. For some might believe it (or maybe it’s just cognative dissonance to justify a purchase). Here’s why.

Lets say you buy a house for $200K with $40K down. Interest rates are such that it costs you $1K/month. Then in 1 year prices fall 25% and the house is $150K. In 10 years it’s up to $240K.

“No biggie, in the long run I’m still up right?”

Well here’s the rough math. You spent $40K up front and $120K in payments on the house and you still owe $40K.

However someone else waited a year (renting for $500) and then bought the house for $150K. Well they only had to put $30K down and their monthly payments are $780. Well 10 years later they’ve spent $30K and $90K in payments (1 year of rent plus mortgage) and they only owe $35K on the house.

Now that second person spent $10K less upfront (which they invested in their retirement fund and is now worth $25K) have spent less money in the intervening years (they’ve had more trips and buy more toys than you because your mortgage is 25% higher) and they still have less debt that you on a house that’s worth the same amount!

They’ve spent less and got more! Now this is a simplification (it ignores interest rate changes etc) but the principle is just: “It’ll come up eventually” is no excuse for ignoring the fundamental imbalances in the market. Fortunes are made because people can tell when things are over/undervalued. Not by waiting 20 years for recovery.

#106 Drill Baby Drill on 03.23.15 at 10:12 pm

You think the oil producers are feeling it right now. Just wait until this summer when their hedged production at $90/bbl unwinds. Then you will see cut backs.

#107 everythingisterrible on 03.23.15 at 10:14 pm

http://www.cbc.ca/news/business/norway-s-sovereign-wealth-holds-lessons-for-canada-1.3002803

Damn Norwegians, exposing us (Canadians) as the aimless hillbilly’s we truly are.

#108 Alberta is FINISHED on 03.23.15 at 10:16 pm

Socialist Norway saved $1,000,000,000,000.00 that’s one trillion dollars for the mathematically challenged CONservatives who couldn’t balance the books of a lemonade stand. What have cough cough laugh laugh CONservatives saved during the oil boom? Alberta you have not only ruined your economy but you have ruined Canada by voting in the most fiscally irresponsible spend happy corporate stealing thugs in Canadian history the Harper CONservatives. The spend and steal CONs has sold Canada away for pennies on the dollar . This is a mad man who is so crazy that he changed what was known as the canadian government to what he calls the Harper government. I think mad cow is rampant in Alberta. You fools should suffer great financial hardships for your stupidity.

#109 OttawaMike on 03.23.15 at 10:21 pm

For all the Norway enthusiasts on here, this 15 min. podcast :
http://freakonomics.com/2014/10/16/how-can-tiny-norway-afford-to-buy-so-many-teslas-a-new-freakonomics-radio-podcast/

Worth a listen on how the sovereign wealth fund got established.

#110 Brian Ripley on 03.23.15 at 10:21 pm

“There are 5,800 families trying to sell a house in Calgary.” Garth

My plot line shows 6,575 “total active residential listings at the end of month” (Feb 28/15 Chart) in Calgary:
http://www.chpc.biz/sales-listings.html

And in the same time frame the Months of Inventory is at 5 (+/- 150 days, down slightly from the previous month and again using TOTAL active residential inventory, not new listings added):
http://www.chpc.biz/mar-moi.html

The charts show a definite change in sentiment landscape.

I took the data from the CREB:
http://www.creb.com/~/media/Public/Statistics%20Package/2015/February%202015.pdf

#111 Ray Vasquez on 03.23.15 at 10:21 pm

If you think that oil is going to stay at $47 or less for long then you are dreaming.

In about 18 to 2 years, we will have $70 to $80 a barrel oil and $1.25 to $1.35 gas per litre again.

We will have $1.75 to $2.00 a litre gas by 2020 to 2021. You will see!

#112 46 and 2 on 03.23.15 at 10:22 pm

#97 Ray Vasquez
============
Dead on correct….but only if Ontario starts to feel the pain.

If all of you actually think that the banks, CMHC, the feds and the B of C are going to re-visit the 80’s you are dead wrong.

#113 Nemesis on 03.23.15 at 10:24 pm

#ILoveSurprises… #OnTheOtherHand… #OnceUponATime… #TheGuyWithTheFunnyMoustache… #IsReputedToHaveTold… #OberKommandoDerWermacht… #”NoMoreSurprises!”

#HowIsDericBurtonLikeA.O.Scott?… #Watch(It’sATimelyParable)…

https://youtu.be/wYFJmm0aK-8

(NoteToGT: The ClarionCall… Yes. StandingUp… Again.)

#114 Godth on 03.23.15 at 10:25 pm

#92 BG on 03.23.15 at 9:44 pm

How can you be so willfully blind? You should be throwing up on a daily basis.

Exit Through The Gift Shop
https://www.youtube.com/watch?v=a0b90YppquE

#115 Bongly on 03.23.15 at 10:25 pm

Garth,

That is a great teaser closing line….does it refer to tomorrow’s column….or is it speaking of surprises in general?

Btw, I see HAM have now bought the Italian iconic company Pirelli….how long b4 they buy the Leafs or more likely the Canucks?

#116 OttawaMike on 03.23.15 at 10:25 pm

I was talking to my Polish buddy tonight in the capital of a northern North American country.

He was showing me adds for Dodge Cummins at dealerships in a western province that recently underwent an oil bust. Some smoking deals on low mileage trucks that Polski is going to fly out and grab for his masonry company.

( I tried to keep my posting anonymous in the traditional Greaterfool comments section style, how’d I do?)

#117 Alberta is FINISHED on 03.23.15 at 10:27 pm

Alberta you are FINISHED. Socialist Norway one trillion dollars and Alberta is bankrupt. Good voting Alberta. Oh and a friend of mine (carpenter) is leaving Alberta . He went there about the same time oil starting dropping and he said the economy is collapsing. Lucky for him he rented and just want to taste the waters. People are fleeing Alberta. Alberta is finished.

#118 DOGMAN01 on 03.23.15 at 10:29 pm

Regarding Norway and Alberta.

Yes; Alberta has been totally screwed and Albertans manipulated.

I have lived here 40 years and I have always wondered what the heck is with the Heritage Trust Fund? Why is it not being funded?

No diversity, we do not refine here, no balance, a one trick pony. Planning horizon is less then one year.

Stelmach tried to raise Royalties and they ousted him.
http://en.wikipedia.org/wiki/Alberta_Royalty_Review

The Chairman of the review, Bill Hunter, said “Albertans do not receive their fair share from energy development and they have not, in fact, been receiving their fair share for some time.”

“The panel’s report not only recommended increased royal rates for all three major resources (conventional oil, natural gas, and oilsands) but also insisted that the government had failed to collect royalties already owed.

The recommended rate increase amounted to a 20% increase or an extra $2 billion per year.”

They scrimped on infrastructure etc etc.

Place is full of “Fred Flintstone” blowhards, unions bad, Global Warming is fiction, Conservatives represent my interests! They have being taken to the cleaners by the O&G connected Alberta elite.

http://thetyee.ca/Opinion/2015/01/19/Alberta-Oil-Bender/

http://credbc.ca/wp-content/uploads/2014/09/Alberta_vs_Norway_infographic.jpg

http://www.macleans.ca/general/norway-offers-lessons-to-canada-in-how-to-manage-oil-riches-report-says/

#119 Sheane Wallace on 03.23.15 at 10:31 pm

#97 Ray Vasquez

They can do anything they want but the Ca dollar will still tank.

And there will be no economy left due to the miss-allocation of capital.

So we would be left with houses, no economy and weak dollar with imported food prices tripping.

Great picture.

#120 AfterTheHouseSold on 03.23.15 at 10:31 pm

#2 Broke Dick
“Sorry to say but Calgary’s problem is not Toronto’s problem. Demand is up, prices are up and its not stopping yet. Maybe next year, who knows??”
And
“not going to happen in Toronto”
“moving is a pain in the butt”
“you got to live somewhere”

Wow. Those sound like the pat answers of a SurRealtor troll. Oh oh, Broke Dick’s been caught with his pants down.

#121 Squirrel Meat on 03.23.15 at 10:32 pm

But we had King Ralph…. doesn’t a king beat a knight… might have been a good idea to save the Ralph bucks

“Geologist Farouk al Kasim helped mastermind Norway’s management of its oil reserves. For that, he was knighted by the Norwegian king in 2012. (Corinne Seminoff CBC News)”

#122 Sheane Wallace on 03.23.15 at 10:32 pm

#111 Ray Vasquez

oil will be in 60-80 USD range, 150-200 Ca dollars.

Ca dollar at 40 cents.

#123 Smoking Man on 03.23.15 at 10:37 pm

Canadians are a demented species.

Reading these comments, the audulation at the prospect of young families suffering from the prospect of a down turn in the economy says it all.

The chippers, take-that-ers. Says more about your weak minds, than anything else.

It shows your lack of personal success, and an outlet to blame outhers for you short Cummings.

Your poor, and mad , and you will stay that way till you finaly discover the secret, hopefully before you grow grey hair. Or even worse, baldness.

#124 birdnite on 03.23.15 at 10:37 pm

#1 Leroy Washington on 03.23.15 at 6:04 pm

You need to try an automated “smart” Japanese toilet….the robotic efficiency and heated seats make for an “eye” opening experience……just be careful when pushing the different buttons or you will get a get blast of scalding hot water which will catapult you in the air faster than Old Faithful!

#125 SWL1976 on 03.23.15 at 10:39 pm

46 and 2 – I have always been a Tool fan and now thanks to Garth and contributors to his finance blog comments section I finally know the meaning behind the song.

Thanks

You’d have to be pretty ignorant to not learn anything here, but then again if you’re that ignorant chances are you haven’t found this gem of a blog

#126 46 and 2 on 03.23.15 at 10:42 pm

#117 Alberta is FINISHED
=================
Hopefully you are one of the fleeing.

#127 Squirrel Meat on 03.23.15 at 10:43 pm

This is how screwed over Albertans have been.. couple of years back the gov took in more from gambling than it did in oil royalties………..brutal.

http://www.cbc.ca/news/canada/calgary/alberta-gambling-revenue-expected-to-outstrip-oilsands-royalties-1.779547

#128 april on 03.23.15 at 10:43 pm

#105 – One can’t know if they’ll want to stay in a home for the “long term”. Life can change, job loss, divorce, illness, problem neighbours, don’t like the home anymore and want out, etc….

#129 46 and 2 on 03.23.15 at 10:45 pm

#119 Sheane Wallace
==============
You are wrong on so many levels it’s humorous.

Maybe you should head out to the bush and start “prepping”.

#130 rentin on 03.23.15 at 10:48 pm

Friends just sold their house for SFH in Surrey in 1 week. House across the street from me sold in 2 days. 540K and 650K. I rent mine for 1700. My 600K made me 90K last year. That leaves 40K in my jeans.

Right time to buy, you could argue forever, who cares? Renting is cheaper.

No way that houses are going up 7% per year any more.

#131 Andrew Woburn on 03.23.15 at 10:50 pm

Leroy Washington on 03.23.15 at 6:04 pm
OMG!!! Canadians are as dumb as toilets.
Long live the U. S. of A.!!! Woo hoo!
==============

Hey, aren’t you the guy that plays banjo in “Deliverance”. You’ve got the same sense of humour. OK, I’ll spell it slower for you. “H-u-m-o-r”.

#132 Mukadi on 03.23.15 at 10:51 pm

Garth,

I am already used to surprises.

I was in Silicon Valley when the IT bubble burst in 2000 and when the RE crashed in 2008….

I know the impact of the first shock wave when the economic disaster hits..

I was told by Nostradamus that such things will never happen in Canada though…

#133 Drill Baby Drill on 03.23.15 at 11:01 pm

This Pathetic Blog is turning more and more into a forum of vitriolic acidity. While Alberta was creating 70% of the jobs in Canada since 2008 what did the other provinces do ? What no answer ? I think I hear crickets !!!

#134 Interstellar Old Yeller on 03.23.15 at 11:05 pm

From previous post’s comments:

#213 Daisy Mae on 03.23.15 at 8:44 pm
#191: “I know of an elderly Women in the states, she took out a reverse mortgage with her husband. Since they could get a bigger loan with just her husband, they took her off the deed…”

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

And the logic behind this would be….WHAT?

I imagine the reverse mortgage terms were that the homeowner could remain in the house for the rest of his life. Actuaries would have expected the wife to live longer, so the company would advance more money if only based on the husband’s lifespan (less equity needed to remain untapped to feed the interest obligation, since statistically, the husband wasn’t likely to live as many years, so overall, less interest would accumulate.)

Incredibly foolhardy and shortsighted not to provide for the wife’s living expenses once the husband died. Perhaps they were certain she’d go first, but it didn’t work that way. Hope there were family members able to take her in or help.

#135 Godth on 03.23.15 at 11:05 pm

#123 Smoking Man on 03.23.15 at 10:37 pm

…and Diogenes would piss on you. What’s your point.

#136 45north on 03.23.15 at 11:08 pm

See what I mean? Last March folks in Calgary were convinced the market was bullet-proof.

well first it was “Canada is not the US” and now it’s “Toronto is not Calgary”

Demoliton Doug: from your link: Buried in overall national real estate numbers that still look fine are multi-month price declines in cities such as Calgary, Winnipeg, Montreal, Ottawa, Quebec City and Halifax.

as I said the real estate boards will not proclaim a decline. Too bad people look to them for advice.

#137 dienekes on 03.23.15 at 11:14 pm

#42 fancy_pants on 03.23.15 at 7:16 pm
Classic fool who can’t do math. A 30% decrease does not equal a 30% increase. 30% wipes out close to 50% of your gains.

#138 Squirrel Meat on 03.23.15 at 11:14 pm

Really hope Bombardier can find a way to succeed…

http://news.nationalpost.com/2015/03/23/brazillian-aircraft-maker-embraers-decision-to-target-regional-jet-market-pays-off/

#139 gut check on 03.23.15 at 11:15 pm

#12 A Yank in BC on 03.23.15 at 6:37 pm
A friend of mine in the U.S. recently bought an Electric-Hybrid vehicle for his daily commute to work. Plugs it into 110v at home, and 220v at work. He hasn’t been to a gas station in over 4 months, and his tank is still half-full. Sure, he paid more to purchase than a conventional vehicle would have cost. But he is ecstatic over this thing.
————————————————-

Well your friend does not live in the world’s worst electric power jurisdiction: Ontario.

Seriously, we’ve been called the worst in the world. thanks, government dumbasses. That Green Energy Act was amazing (for three or four of your closest buddies)

#140 46 and 2 on 03.23.15 at 11:17 pm

#133 Drill Baby Drill
=============
Bang on buddy!!

I have just joined this blog and I already figure that about 3/4’s of the people posting are not from Alberta and more than likely would not make it in Alberta.

#141 Smoking Man on 03.23.15 at 11:19 pm

#135 Godth on 03.23.15 at 11:05 pm
#123 Smoking Man on 03.23.15 at 10:37 pm

…and Diogenes would piss on you. What’s your point.
….

No idea God, what else is new, we’ll beyond the creative zone between the wines, tonight I saw a new born, one day old, would have been the uncle, of my late Nephew.

Jesus Christ… He’s Marks clone…

Watching a bit of happiness in marks folks, the baby’s grandparents, I had to lie.

I Need a smoke, I went outside and balled my eyes out, today was marks birth day…

I feel responsible, I encourage him to clime mountainS, I so looked forward to him destroying everest..

It was for selfish reasons, LOOK AT what I’ve created..

Never doing that again, or teach anyone suicidal forex trading.

Or anything dangerous.

I’ll reserve that for people about to lose there teeth, liver failure, or lung cancer…

Not the young..

#142 Nemesis on 03.23.15 at 11:21 pm

#@Godth… #Don’tBeTooQuickToJudge,GrassHopper… #Sometimes,ThereBePearls…

https://youtu.be/69F7GhASOdM

#143 Vicpaul on 03.23.15 at 11:22 pm

#51 John Prine

but for the last 10 or 15 years all I hear from is how stupid British Columbians are for paying medical premiums, higher car insurance rates and voting NDP in as they know that they only ruin the economy by reckless spending…All these people live in BC……
———————–

Uh John, are you high or just part of the idiot elite. The BC Liebrals have been in power for the last fourteen years and have pissed away billions, all the while cutting back on services to single-parent families, people with mental-health challenges and others who haven’t a voice to defend their rights.
I’m much more afraid of people like you who spread misinformation (or outright lies) to obfuscate truth and push their own agenda.

#144 Squirrel Meat on 03.23.15 at 11:24 pm

#95 Washed Up Lawyer on 03.23.15 at 9:49 pm

“His policies were more likely shaped by having been hung by his underwear from the soccer goalposts at recess.”
————————————————
Bang on right… he used to be my neighbour in cowtown… nasty nasty piece of work he is… bitter little chump of a fellow…. nothing, absolutely nothing could be worse for him than to lose to 2.0..he is completely obsessed with PET……he’ll do anything to avoid that.. hey he just decided to bomb syria too! terror terror everywhere

#145 BG on 03.23.15 at 11:26 pm

#92 BG on 03.23.15 at 9:44 pm

How can you be so willfully blind? You should be throwing up on a daily basis.
——————————————————————–

Easy.
If you see something you don’t like, try to change it or just forget about it.

#146 Ray Vasquez on 03.23.15 at 11:31 pm

To #119, 122 Sheane Wallace

We already had a 62 cent dollar in the 1990’s and everyone was saying we would have a 50 cent dollar to U.S dollar and it did not happen.

If we do go and get a 60 cent dollar to U.S. dollar, all you exporters will like that crap, right!.

You actually think policymakers, government cares. They are just there to save their themselves and enrich themselves.

If they cared about a balanced, growing economy and employment, they would never let Canadian housing prices increase 3, 4 times in the last 18, 19 years.

They don’t care that a senior, retiree couple for instance that has $150,000 or $300,000 is getting peanuts in interest or about anything else.

The next big market and winning opportunity for banks, lenders and government is reverse mortgages.

Raising property taxes, water bills, electricity bills, other taxes and adding new ones, just helps this financial fire grow.

#147 omg the original on 03.23.15 at 11:33 pm

50 Mark
Are you kidding? Vancouver and Toronto, along with the rest of Canada, have seen weakening RE markets and falling prices for almost 2 years now. Don’t know why you’re talking as though the RE decline is in the past. Its here. Its now.
————————–

Sure, picking and choosing numbers from a few suburbs, you may see a very, very minor reduction in some prices.

BUT THOSE ARE IN MARKETS THAT ARE UP 100-150% IN THE LAST 10 YEARS.

There is simply no denying that RE in Canada’s two biggest cities has been on fire for the past decade. If you bought in either market you have done exceedingly well.

It has taken a decade in Toronto to get where we are now and 2 decades in Vancouver. Unless there is a major catalyst to significantly change the cost of owning a home in those markets there will not be a correction in the short-run.

Prices will correct but over a long period as real value come down.

Of course all bets are off if interest rates increase significantly in the next couple of years, and by significantly I mean by more than 2 percent.

#148 Godth on 03.23.15 at 11:39 pm

#142 Nemesis on 03.23.15 at 11:21 pm

…and the prisoners kill the man that escapes, and bothers to come back to try to free them. Your claymation forgot that part, but still…

#149 Entrepreneur on 03.23.15 at 11:39 pm

Everyone should not live above their means and try not to be someone they are not. Easy credit should not be available.

#51 John Prine…The Liberals have been in power in B.C. for the last 10-15 years and the worst deficit in history. You are so wrong about the NDP.

#150 Godth on 03.23.15 at 11:49 pm

#141 Smoking Man on 03.23.15 at 11:19 pm

At least he died while living. Most forget to do that these days. Safety and security rule: granite, hardwood and stainless. Funny that debt has become security though, but the monkey hierarchy is a strong impulse. Gotta’ have me more than my neighbor. Such small worlds.

Diogenes would have pissed on you too though.
https://www.youtube.com/watch?v=hhjU4EA_Or0

#151 Bjorn's Salmon Fund on 03.23.15 at 11:51 pm

Those pesky Scandis are at it again..am guessing no Canuck funds will be bidding against them….

http://www.japantimes.co.jp/news/2015/03/23/business/corporate-business/norway-sovereign-wealth-fund-eyeing-real-estate-in-tokyo-singapore/

#152 Snowboid on 03.23.15 at 11:54 pm

#102 HogtownIndebted on 03.23.15 at 10:07 pm …

It’s not just Alberta, the BC Liberals decided a few years ago to ‘give’ away all the resources and assets of the province, corporate socialism at it’s finest.

Just wait until we find out how much we have to pay the foreign companies to take all our LNG, instead of the multi-billion dollar prosperity fund we were promised!

#153 NotAGreaterFool on 03.24.15 at 12:00 am

What surprise(s)?

Here is a real scenario: FEDS raises rates this summer causing money to exit emerging markets and furthermore, suppressing demand for Canadian goods. Just as Harper is running an election a recession kicks in. Of course, all you hear about is ISIS (shiny object over there vs. the elephant in the room).

#154 John Prine on 03.24.15 at 12:02 am

43 Vicpaul on 03.23.15 at 11:22 pm
#51 John Prine

but for the last 10 or 15 years all I hear from is how stupid British Columbians are for paying medical premiums, higher car insurance rates and voting NDP in as they know that they only ruin the economy by reckless spending…All these people live in BC……
———————–

Uh John, are you high or just part of the idiot elite. The BC Liebrals have been in power for the last fourteen years and have pissed away billions, all the while cutting back on services to single-parent families, people with mental-health challenges and others who haven’t a voice to defend their rights.
I’m much more afraid of people like you who spread misinformation (or outright lies) to obfuscate truth and push their own agenda.

Interesting response, I agree totally, have no agenda however.

#155 Lobster Man on 03.24.15 at 12:11 am

I have a prediction to make, also a “surprise” perhaps.

Within 10 years, our capital gains tax exemption on principal residence may eliminated, or perhaps severely curtailed.

Why? Government needs new sources of revenue, and the new political wind will favour such policy changes.

A “curtailment” on the principal residence capital gains tax exemption could be as follows:

If you have tenants renting your basement, and/or your “laneway house” (all the rage as in Vancouver), and the value of these portions of your property exceeds a certain percentage of the property’s total worth, then you may be unable to claim the principal residence capital gains exemption. At the present time, that percentage is set at 50%. That can easily be changed.

So, be on guard, and act accordingly.

#156 MTVmademedoit on 03.24.15 at 12:19 am

#133 Drill Baby Drill
Where did you get that 70% figure? I’d love to see the source on that…

#140 46 and 2
Couldn’t make it Alberta? Why not? ‘Cause Alberta folk are special? You’re right, some people just aren’t attracted to their cousins and putting testicles on their jacked up truck they never even take off road.

#157 Herf on 03.24.15 at 12:22 am

#8 Squirrel Meat

“Some toilets are rather smart nowadays… need to keep up.”

If the toilet shown at your link doesn’t automatically lift it’s seat up when a guy walks into the bathroom, it’s still a dumb toilet.

#158 Hash on 03.24.15 at 12:41 am

The government cannot lower the rates much to stop the housing market from falling at a steep rate (if there is a catalyst), this I understand. But what if they allow once again 40 yr amortization as they did in 2008/2009? Wont that artificially stabilize prices if not send it to new heights?

#159 Herf on 03.24.15 at 12:51 am

#51 John Prine

“Also, NEVER mention Pierre Trudeau to an Albertan over 50, they remember the “finger” as if it was yesterday.”

For the historical record, the Trudeau “finger” event occurred in Salmon Arm, BC, not in Alberta. Of course, if your reference to the “finger” meant how Albertans felt they were treated by Trudeau and his government in general, then point taken.

At the time the Trudeau one-finger salute happened (1982), some group in Salmon Arm (Chamber of Commerce?) made and sold t-shirts featuring a caricature of Pierre Trudeau on a train while flashing his infamous one-finger salute. Beneath the picture was the caption “Pierre says we’re #1, Salmon Arm, BC”. They seemed happy to have a means to drum up some tourism bucks and promote the town, given that the town, province and country in general, were going through a severe recession and could use any kind of a boost to the local economy. My late mother bought me one of the t-shirts and I proudly wore it while attending university in Ontario.

#160 sad day on 03.24.15 at 12:58 am

Don’t ever think a surprise could come your way…. I received a email today stating the company I contract for is being bought us co buying a us co. They worded it like no changes until the closing date 2 months from now. In other words my gravy train is likely ending. Just to think we nearly bought a house recently. ..omg I would have spewed. Fortunately my portfolio generates me enough to pay the rent eat and survive should the work end. Thank goodness

#161 Herf on 03.24.15 at 12:59 am

#70

“That sounded desperate. (Always wondered: why do you post under a woman’s name?) — Garth”

Perhaps he’s a real estate eunuch?

#162 Glengarry Glenn Ross on 03.24.15 at 1:37 am

THE REAL DEAL WITH TRANSLINK IN BC IS…………….

#1 Leroy Washington on 03.23.15 at 6:04 pm
OMG!!! Canadians are as dumb as toilets.

Long live the U. S. of A.!!! Woo hoo!

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

What a bitter,houseless, underachiever moron !!!!!

#163 Glengarry Glenn Ross on 03.24.15 at 1:38 am

THE REAL DEAL WITH TRANSLINK IN BC IS…………….

Kudos to columnist Geoff Olsen for this editorial in the March 13 vancouver courier.

http://www.vancourier.com/opinion/columnists/hold-your-nose-and-vote-no-on-plebiscite-1.1791689

“There is plenty of proof over the last two decades that hub to hub transport by TransLink is merely a ploy for businesses to make money from building the concrete intensive SkyTrain lines and concrete intensive condos along the SkyTrain lines,” insists Eric Chris.

This argument is echoed by Charles Menzies, a UBC professor of anthropology. A passage from his blog deserves to be quoted at length:

“Fundamentally the transit referendum is about subsidizing the real estate development industry of the Lower Mainland. It is a wealth transfer from the majority to the elite minority who are raking in big dollars by revalorizing land through the development of public transit. This is not a new plan, it’s one used by developers historically and the world over: use the mechanisms of the state to take money from the majority to fund the profit making ventures of the minority.”

#164 CalgaryBoy on 03.24.15 at 1:48 am

Traffic has slowed down significantly in Calgary! Instead of inching on Crowchild and Glenmore Trail, people are able to go 60-80 km/hr during “rush hour”!

There’s been so many price drops in Calgary!

From $649K to $574 (been listed for a few months now)
http://www.realtor.ca/propertyDetails.aspx?PropertyId=15344188

From $595K to $650K
http://www.realtor.ca/propertyDetails.aspx?PropertyId=15219306

From $589,900 to $489,999 (That’s pretty much $100K reduced!)
http://www.realtor.ca/propertyDetails.aspx?PropertyId=15259005

From $650K to $629,900
http://www.realtor.ca/propertyDetails.aspx?PropertyId=15184231

From $689,900 to $674,900
http://www.realtor.ca/propertyDetails.aspx?PropertyId=15147619

From $639,900 to $599,900
http://www.realtor.ca/propertyDetails.aspx?PropertyId=15339388

From $784,900 to $749,900
http://www.realtor.ca/propertyDetails.aspx?PropertyId=15416282

Most agents have stopped putting “Reduced Price” in the description. I believe they know people are keeping track of the price drops. But as a potential buyer, I want to see “Reduced Price” because who doesn’t like a good sale? If I know a house has dropped $50K, I’d be more interested. I think it’s the same as when I go shopping; I’d be more interested if there’s a red tag over the original price. Just a thought. They are kinda shooting themselves in the foot by not letting customers know about the discount!

Thanks for another great post, Garth!

#165 Vanecdotal on 03.24.15 at 1:51 am

#146 Ray Vasquez

“They don’t care that a senior, retiree couple for instance that has $150,000 or $300,000 is getting peanuts in interest or about anything else.”

You make some valid points, some I have also considered given anything is possible considering the hubris of our current Oiligarch, however you are neglecting the fact that it’s the Freedom 55+ers that so far have kept the NeanderCons in power.

Wrinklies, and Alberta are their primary support base. Hmmm…

The very same fixed incomers and savers they keep screwing over repeatedly are the very same contingent they need to convince to vote for them for another term, especially to achieve a *cough* majority. Oh, and BCers as well, goooood luck with that.

Rock – hard place. I truly believe to expect the unexpected in the near to mid term. Aprés election, all bets are off.

#166 Vanecdotal on 03.24.15 at 2:01 am

I would add that when it comes time for the population to swallow some bitter Govn’t mandated austerity medicine, these policy changes often come out of the blue, (historically speaking), i.e. without much warning or forward guidance.

Pre election: Ponies and Rainbow Unicorn Plebeian carrots sprinkled with continuous looming terror doomsday reminders and fear of everything unCanadian eh.

Aprés election: Crickets, then Suprise Announcements! Decreased public sector funding, wage freezes, CMHC, immigration, interest rates, CRA policy changes etc. (Build the bunker).

#167 Ilona on 03.24.15 at 2:19 am

From [URL=”http://canadianmoneyforum.com/showthread.php/39873-24-yr-old-female-looking-for-ways-to-earn-additional-income-millionaire-by-age-35″]a post on Canadian Money Forum[/URL]:

[BLOCKQUOTE][B]24 yr. old female looking for ways to earn additional income;millionaire by age 35[/B]

I am a 24 yr. old female college student. Next month, I will be graduating college for the last time and start earning my full-time income on my own while continuously educating myself. I am looking into getting to university and become a licensed accountant in the future.

Current Assets: 
2013 vehicle: 21k 
TFSA-10k
Savings/GIC-11k

Total Assets: 42k

I am looking for ways to earn more money and maximize my savings. I want to make a sound decision. I am hoping to invest in rental properties. Luckily, I have parents who are currently doing that as a passive income. I am hoping to do the same since I have the help from them and advice on how to get a decent property. However, I need cash to do this and don’t want to start paying mortgage. [/BLOCKQUOTE]

Garth save us all… lol

#168 Nemesis on 03.24.15 at 2:30 am

#”It’sDelicate”… #Over?… #HellNo,It’sJustBeginning…

https://youtu.be/aLvQyu9oguE

#169 Mark on 03.24.15 at 2:57 am

“This Pathetic Blog is turning more and more into a forum of vitriolic acidity. While Alberta was creating 70% of the jobs in Canada since 2008 what did the other provinces do ? What no answer ? I think I hear crickets !!!”

The ‘problem’ in those other provinces was that the BoC simply wasn’t aggressive enough in keeping the interest rates low, nor initiating QE like was done in the USA in the aftermath of the 2008/2009 collapse. Inflationary pressures, yes, have existed in Alberta over the past few years, but were quite minimal elsewhere.

I’ve read that if you oi the shale oil producing states from the US, basically there has been no employment growth (and arguably economic growth) since the collapse. Its the same way in Canada, obviously begging of much more dramatic stimulus given the large quantum of unemployed or underemployed people.

Of course all bets are off if interest rates increase significantly in the next couple of years, and by significantly I mean by more than 2 percent.

Hardly. RE will, and has rolled over merely on tighter lending standards across the country, and will continue to go down independant of any changes to policy rates or actual retail rates. Neither higher interest rates, nor any sort of economic shock not already applied to the system (ie: the CMHC shock of 2013) were necessary to achieve the outcome of falling prices. The market simply peaked and rolled over. Now the downwards acceleration is becoming increasingly dramatic.

There wasn’t a big watershed event at the top of the US RE market in 2005-2006 either, other than, the subprime lenders simply pulled back on the loans. It took 2 years until the consequences of such started to be appreciated by the marketplace, which is relatively consistent with the timelines experienced in Canada. In the US, as in Canada, Realtors played overtime in manipulating and presenting statistics in such a way as to attempt to mask the decline, such as presenting statistics not adjusted for the rapidly changing nature of the sales mix.

#170 Leo Trollstoy on 03.24.15 at 3:08 am

Are you kidding? In my imagination, Vancouver and Toronto, along with the rest of Canada, have seen weakening RE markets and falling prices for almost 2 years now.

I fixed that for you.

#171 TRT on 03.24.15 at 3:27 am

No correction coming in Vancouver. The suburb of Surrey has an estimated 80,000 basement suites.., all with people hoping to buy a SFD.

#172 Nagraj on 03.24.15 at 3:30 am

Well, I was doing a pretty good job of seriously reading Garth’s post, and the comments. [LitCrit primary “Rule of 3” : 1) Consider the platform 2) Supply your own context 3) Don’t get the subcontext wrong.] BUT BUT BUT then I got to #27
“I have a basement dwelling Gen X reject who has not been employed for 5 months now . . . the old man is getting peeved. He is untalented, and stooped which doesn’t help the situation.”
[It does read “stooped” and is not meant to refer to “the old man”. Presumably.]

Driving dramatic thoughts of a possibly hunchbacked old bag of a spouse added to the cast out of my little mind – I continued valiantly on. BUT OMG! then I get to this. ” #49
“I’ll get my ticket in few days, dilema is to get an one way or not . . . not sure but wife is a Canadian and she doesn’t like Mediterranean weather and food. Jealousy she thinks european girls who dress nice [ . . . ] hoes. Don’t blame her,she wear ‘Sorel’ [boots] 8 months in a row. Sometimes when im high I think I married to a men.”

You ask what’s meant by subcontext in 3) of the Rule of 3 as mentioned supra? To get at the subcontext one asks: Why am I of all people reading this here and now?

#173 B G Lebowski on 03.24.15 at 3:32 am

Garth,

Regarding your yesterday comment,

“He thinks about selling it now, but Faye won’t abide it. So he wrote me………”

I give you permission and poetic license to paraphrase my “the dude abides” by saying “the Garth abides”…it is time for you to become the cultural relic errrrrrr icon, that you so deserve!

#174 Realtor_Math on 03.24.15 at 4:07 am

Here’s a handy little formula to calculate how much of a % price increase is wiped away by an X% drop in price. Even used house sales persons should be able to apply this formula correctly.

% increase wiped out by X% drop in price= X/(100-X).
A 40% drop has wiped out a previous 40/(100-40)=66.67% increase in price.

Try a 50% drop. Yup; that wipes out a previous 100% gain.

#175 Oot der Hoos on 03.24.15 at 4:18 am

Norway $1 trillion might not benefit Norwegians because it could be invested in Greek bonds and Solyndra-type criminal projects. Who knows what will happen to it?

The history of politicians investing capital is not good; eg. CBC, Mirabel airport, Pickering airport, Expo67, SkydomeToronto, USSR, lol.

http://www.torontosun.com/2014/05/01/canadas-largest-ghost-airport-to-be-demolished

Concentrated decision making by a few persons is never good. Distributed decision making of the same capital by millions of persons is best. But then you would have no big sum to point at, and not understand the benefit of small sums and lots of decision makers.

P.Trudeau: MONTREAL — The biggest white elephant in the history of Canadian airports will finally be put out of its misery.

Officials said Thursday they plan to demolish the $500-million Mirabel Airport terminal, once projected to be the country’s main air hub, but which has sat nearly unused north of Montreal for 10 years.
——-

Canada’s Messy History of Big Ticket Airport Projects, from Mirabel to Porter and Pickering

http://www.torontoreviewofbooks.com/2014/01/canadas-messy-history-big-ticket-airport-projects-mirabel-porter-pickering/

#176 John Smith on 03.24.15 at 5:23 am

Give us interest rate hikes already !!!

Give us a 30 % drop in real estate prices already !!

#177 pbrasseur on 03.24.15 at 7:51 am

@ #175

«Norway $1 trillion might not benefit Norwegians because it could be invested in Greek bonds and Solyndra-type criminal projects. Who knows what will happen to it?»

Norwegians entertain a huge housing bubble with a debt ratio of 240%. Meanwhile oil production is declining quickly and the economy badly needs to diversify. For all we know that fund could go to bailout a banking crisis!

«The history of politicians investing capital is not good»

You can say that again and again….

#178 Financial Planner Dude on 03.24.15 at 8:00 am

Why do I bother? — Garth

Because those that listen don’t comment. My family is mucho appreciative of everything you’ve written

#179 Kevin on 03.24.15 at 8:08 am

@38 (Prairie Person):

For the elderly, the squeeze is on. (…) Doesn’t sound like much but when fixed income meets increasing ferry fares, increasing groc prices, life becomes restricted. My description of a quick trip to Van is just to say, you have to have money.

The elderly are the wealthiest cohort of any age group in Canada. They’re not the ones you should be worried about.

#180 MF on 03.24.15 at 8:33 am

Hey all blog dogs.

A tad off topic but this millennial is about to take the plunge and create a balanced diversified portfolio (using BMO investorline).

Question is about timing. I know it’s a bit of a fool’s game trying to time markets, but some including my advisor, who my parents use, have said that the stock market is also due for some correction. It sure looks like it if you examine all the charts. They are all up over the past 5 years. Wouldn’t it be a bad time to buy? When is it ever a good time?

I’m sure I have seen this discussed before in the comments. Pretty sure Mark mentioned P/E’s…which I hear aren’t totally accurate.

What do you guys think?

Thanks for the blog Garth,

MF

Stop obsessing about the ‘stock market.’ A balanced and diversified portfolio has a minority exposure to the Dow or the TSX. People on this blog have been saying the same thing for five years, during which a balanced portfolio gained about 10% annually. — Garth

#181 jess on 03.24.15 at 8:41 am

ALL GOOD BUBBLES NEED A GOOD CATALYST TO RESET
=======================

Processing one ton of rare earths produces 2,000 tons of toxic waste;
http://earthobservatory.nasa.gov/IOTD/view.php?id=77723

#182 Victor V on 03.24.15 at 8:54 am

http://www.theglobeandmail.com/report-on-business/economy/us-consumer-prices-rebound-underlying-inflation-firming/article23589827/

U.S. consumer prices rebounded in February as gasoline prices rose for the first time since June, and there were also signs of an uptick in underlying inflation pressures, which could keep a June interest rate increase on the table.

The Labor Department said on Tuesday its Consumer Price Index increased 0.2 percent last month after declining 0.7 percent in January. That ended three straight months of declines in the index.

#183 Holy Crap Wheres The Tylenol on 03.24.15 at 8:56 am

#88 Smoking Man on 03.23.15 at 9:33 pm
Sunrise, how’s this.
I close the door, this morning and head for my truck.. Huh it’s not where I thought it was. I must have parked it in the drive way. So walk 120 feet only to discover my son’s car there.
It’s five thirty in the morning and I bust out onto a raging, howling belly laugh, my nabours lights turn on.. Who the hell steals a small pick up truck, with roll down windows and a stick sift.
Then to extreme horror and fear, I was quite looped last night, did I go for a drive…?
I wake up Jr, extremely hung over, let me get to the tax farm, have a few coffees then figure it out.
On the ride over my kid says, do you have any unpaid parking ticket, you have 3 then you get towed..
I don’t think I have any.
Well, son one years ago, drove a disposal car I got, him, keeper it in my name. Save him on insurance..
To my horror , when I called the cops, they said it was towed. I said, I have no tickets on it. They said I had 12 on the other car….
Surprise………
Thank you John Tory.. You are now on my shit list..
Oh, still working on rebuttal…
___________________________________________

Well I can’t understand why John Tory is on your shit list? Was John Tory parking your car illegally? This is totally illogical. Your anger is aimed at the wrong person Smoking Man. If my son had been given a car with paid insurance to give him a break and he had 12 unpaid parking tickets I would kick his ass for being firstly lazy and secondly for being irresponsible and not owing up to the fact that he was ticketed and not paying the dam tickets.

#184 maxx on 03.24.15 at 9:01 am

#28 Semore Debt on 03.23.15 at 7:03 pm

“bahahahaha “he laughs best who laughs last”

…and he who laughs last saved the most.

“Do not save what is left after spending, but spend what is left after saving.” – Warren Buffet

#185 Victor V on 03.24.15 at 9:02 am

#106 Drill Baby Drill on 03.23.15 at 10:12 pm

You think the oil producers are feeling it right now. Just wait until this summer when their hedged production at $90/bbl unwinds. Then you will see cut backs.

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

http://business.financialpost.com/2015/03/24/at-30-crude-something-has-to-give-why-theres-a-reality-check-coming-for-canadian-oil-stocks/?__lsa=ca77-ac0f

Declining share prices have reduced the average price-to- cash flow ratio, another closely watched metric in the energy industry, to 8.8 for Canadian producers in the index from 14 a year ago, according to data compiled by Bloomberg. That compares with the average 6.6 times cash flow for the U.S. energy index and still too elevated for some investors.

“Whether you look at P/E or price-to-cash flow, they’re high,” said Barry Schwartz, chief investment officer at Baskin Wealth Management in Toronto. “Either we’re at the bottom and you should be buying or they’re running on fumes.”

Schwartz, who’s firm manages about CUS$800 million, is in the latter camp, saying it will be “nasty business” once oil company hedges peter out in 2016 if the price hasn’t rebounded.

“We have no holdings in energy producers whatsoever,” he said. “There won’t be a quick snapback to levels that would make these stocks attractive.”

#186 Holy Crap Wheres The Tylenol on 03.24.15 at 9:04 am

#114 Smoking Man on 03.22.15 at 10:01 pm
#101 james on 03.22.15 at 8:58 pm
#99 Smoking Man
“Amazing how our perfect school system produces so many obedient slaves, very few owners..”
However, aren’t we drifting off the topic?
……..
Well scum bag, you have lit a fire under my ass. You shouldn’t do that.
I’m going to take my time with the rebuttal, but some time this week, I’m going too, using perfectly spelt words, I’m going to rip off your head.
It’s going to be my most epic post ever on here, hope it makes it past the moderator.
___________________________________________
What happened to the rebuttal for James? This could make it into “The Book”

#187 Q2 Duplex Drive on 03.24.15 at 9:21 am

Garth – I’ve lived in the Big Lemon for 20-odd years after relocating from Montreal and the insularity of native Torontonians never fails to amaze me. Quite aside from the constant, and irritating, boosterism on the city’s radio channels, there are two persistent beliefs among locals:

1) It’s different here

2) Everybody wants to live here

Amanda used a variation of (2) in her story last week.

With all the condo construction going on – and it really is incredible – it is very difficult to refute these two strongly-held beliefs. So I just live small, live simply and rent and prepare for the day of reckoning, which still appears to be far-off.

#188 Prairieboy43 on 03.24.15 at 9:23 am

Discontent everywhere on your blog Garth. Reality is setting in. 2015 will be and interesting Election year. Participation factor? Millenials, Boomers, Retirees, Gen X. Ontario/Quebec will make this decision.

#189 Realtor007 on 03.24.15 at 9:25 am

It appears that every ‘expert’ is on board now when it comes to a housing crash, pullback, slow melt and whatever else they’re calling it, of course that is a good indication that it won’t happen.

That was insightful. Your clients are so lucky. — Garth

#190 Dave D on 03.24.15 at 9:41 am

“Risk is actually lowest when people (sheep) see it as the greatest, and when most people (sheep) think of it as absent, it is actually the highest.”

-Dick A. Stoken

#191 Realtor007 on 03.24.15 at 9:54 am

“That was insightful. Your clients are so lucky. — Garth”

I hope that my clients think for themselves and their situation. I am dealing with adults after all, we have seen RE doom predictions going on for 10 years now even before this blog started and the market keeps chugging along. Imagine I fell for the doom and spent my days telling clients to wait and keep waiting 10 years ago, it wouldn’t of went well looking back.

Of course it went just fine if they invested in other assets and eschewed debt. Going all-in with one asset, real estate or stocks, is a bad idea. — Garth

#192 young & foolish on 03.24.15 at 10:00 am

“Garth I often wonder, why you DO bother.”

Hmmm …. can you not guess? Have you no imagination?

#193 MF on 03.24.15 at 10:00 am

Stop obsessing about the ‘stock market.’ A balanced and diversified portfolio has a minority exposure to the Dow or the TSX. People on this blog have been saying the same thing for five years, during which a balanced portfolio gained about 10% annually. — Garth

Thank you for the response.

Maybe this demonstrates why so many of us are scared of stocks/bonds/etf’s or financial markets in general. The whole thing is pretty intimidating (even if you are diversified and insulated as recommended here).

I was just following the advice found in “Millionaire Teacher”, which was recommended on here by some posters. Great book. The author recommends a bond allocation equal to your age + Canadian index + US index + international index.

I reviewed the millennial portfolio you recommended
(http://www.greaterfool.ca/2014/05/15/the-millennial-portfolio/)

and in it you recommend a US, Canadian and international index which totals 55% of your portfolio. Is that not the Dow or TSX?

Also, what does large cap mean?

MF

#194 Broke Dick on 03.24.15 at 10:20 am

#120 AfterTheHouseSold on 03.23.15 at 10:31 pm
#2 Broke Dick
“Sorry to say but Calgary’s problem is not Toronto’s problem. Demand is up, prices are up and its not stopping yet. Maybe next year, who knows??”
And
“not going to happen in Toronto”
“moving is a pain in the butt”
“you got to live somewhere”

Wow. Those sound like the pat answers of a SurRealtor troll. Oh oh, Broke Dick’s been caught with his pants down.
+++++++++++++++++++++++++++++++
I still plan on moving out of the hell hole that is Toronto, looks like next year. I was just commenting that the tide has not turned with regards to pricing on SFH’s in 416.

Facts are facts.

#195 Ret on 03.24.15 at 10:26 am

#183 Parking tickets
“To my horror , when I called the cops, they said it was towed. I said, I have no tickets on it. They said I had 12 on the other car….
Surprise………
Thank you John Tory.. You are now on my shit list.”

Are you sure that the evil Stephen Harper isn’t the one really behind this?

#196 TurnerNation on 03.24.15 at 10:42 am

Look like Dollarama’s stock price breakout today will take it to $68ish. Dollarstore nation.

#197 anony on 03.24.15 at 10:47 am

Always enlightening to see the Canadian cultural values of underhanded snark and resentfulness of success on display. Thank you for this post and the associated comments Garth. it reinforces every idea I have about the “people” of this country and the personal desire I have to see them buried under a torrent of immigrants.

I will deny your children a future.

#198 TurnerNation on 03.24.15 at 10:48 am

…will buy kaputs at that level.

Anyway it’s a commodities rennisance this week. Nat gas, oil, potash. Rumors of demise are exaggerated.

#199 jim on 03.24.15 at 10:59 am

Alberta is FINISHED on 03.23.15 at 10:16 pm
Socialist Norway saved $1,000,000,000,000.00 that’s one trillion dollars for the mathematically challenged CONservatives who couldn’t balance the books of a lemonade stand. What have cough cough laugh laugh CONservatives saved during the oil boom? Alberta you have not only ruined your economy but you have ruined Canada by voting in the most fiscally irresponsible spend happy corporate stealing thugs in Canadian history the Harper CONservatives. The spend and steal CONs has sold Canada away for pennies on the dollar . This is a mad man who is so crazy that he changed what was known as the canadian government to what he calls the Harper government. I think mad cow is rampant in Alberta. You fools should suffer great financial hardships for your stupidity.
—————————————————————–

What’s surprising is that the people of Alberta despite all the evidence continue to plug their ears and go la la la la la la. Albertans are some of the most ignorant people in the world second to Texas.

#200 young & foolish on 03.24.15 at 10:59 am

re: #32 ALBERTASTROPHE

Albertans would never follow the Norwegian model because they fear the socialist bogeyman!

#201 Ray Skunk on 03.24.15 at 11:00 am

I see the World Class City (TM) of Toronto has once again ground to a halt because there was a leak at one of its subway stations.

“Steps to the TTC!” wail the Realtor ads.

Yep, the TTC. Where you’re packed in like sardines, fares increase every few months and you get completely stranded due to antiquated infrastructure on an increasingly regular basis. The downtown relief line is nothing but a distant dream, yet the condos keep going up along the Yonge corridor…

#202 A box in the Sky on 03.24.15 at 11:02 am

#50 Mark on 03.23.15 at 7:44 pm

Are you kidding? Vancouver and Toronto, along with the rest of Canada, have seen weakening RE markets and falling prices for almost 2 years now. Don’t know why you’re talking as though the RE decline is in the past. Its here. Its now.
——————-

100% Liar. Name the hoods in Toronto where house prices have fallen the last 2 years. Riverdale? Leslie ville? Leaside? Bellwoods? Junction?

You are so full of ish.

I’d love to be able to buy a house in TO today at less than 2013 prices. It’s not happening.

#203 Mark on 03.24.15 at 11:04 am

“I’m sure I have seen this discussed before in the comments. Pretty sure Mark mentioned P/E’s…which I hear aren’t totally accurate. “

On the topic of timing, its pretty hard to know. That’s why its a great idea to average into a long-term position, rather than buy the thing in one fell swoop right off the bat and expose yourself to a rather extreme outcome. With housing, unfortunately, its basically an all or nothing proposition — you buy a house at a given price, and volatility can be extreme. With a balanced portfolio, constructed of low-cost ETFs or index funds, it can be at your own pace.

Yes its true that I make a lot of reference to P/E ratios in my comments, particularly when talking about comparing Canadian real estate (P/E = 35) to the Canadian “stock market” (ie: the TSX index) at P/E = 15. And you’re correct, not terribly useful for predicting short-term return. But a useful construct, nonetheless, for showing relative valuation. I wouldn’t say the TSX is totally give-away dirt cheap (a few sectors are!), but its P/E valuation is below the average historically, which, if you have a reasonable enough time horizon, is usually a good indication of future outperformance.

#204 Mark on 03.24.15 at 11:07 am

“I fixed that for you.”

Sounds like you need to be fixed. Please report to the nearest veterinarian.

#205 kommykim on 03.24.15 at 11:15 am

Realtor007: he has a licence to kill your net worth.

#206 Ralph Cramdown on 03.24.15 at 11:16 am

#146 Ray Vasquez — “They don’t care that a senior, retiree couple for instance that has $150,000 or $300,000 is getting peanuts in interest or about anything else.”

I love this meme that there’s some bureaucrat in Ottawa with a little box on his desk that says “interest rates paid to seniors NB this doesn’t affect anything else in the economy” and he left for lunch without turning the knob.

#207 Ponzius Pilatus on 03.24.15 at 11:20 am

Coming soon to a TV near you:
Are you smarter than a toilet?

#208 Ralph Cramdown on 03.24.15 at 11:21 am

#147 omg the original — “Of course all bets are off if interest rates increase significantly in the next couple of years”

Another recent language innovation I love. “All bets are off” means — literally and originally — that something so fundamental has changed that everybody gets their money back (horse race got cancelled?). In modern usage, (e.g. above) it just seems to mean “we’re f***ed” — nobody gets their money back, and all bets are still very much still on.

#209 Holy Crap Wheres The Tylenol on 03.24.15 at 11:22 am

#195 Ret on 03.24.15 at 10:26 am
#183 Parking tickets
“To my horror , when I called the cops, they said it was towed. I said, I have no tickets on it. They said I had 12 on the other car….
Surprise………
Thank you John Tory.. You are now on my shit list.”
Are you sure that the evil Stephen Harper isn’t the one really behind this?
_____________________________________________
Yes Stephan Harper is definitely on his shit list but if we are going to go that far then lets talk about the real infiltrators of our world that are behind every curtain, the Raëlians and Reptilians.

#210 Daisy Mae on 03.24.15 at 11:25 am

#65: “…and all the while Harper worries about what women wear when their picture gets taken.”

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

‘When in Rome, do as the Romans do.’
Only gangsters wear masks in our world.

#211 Bottoms_Up on 03.24.15 at 11:26 am

#116 OttawaMike on 03.23.15 at 10:25 pm
—————————————————–
I’m still trying to figure out why your buddy in Iqaluit would be showing you dealership ads from Hejaz province, Saudi Arabia. :@

#212 Holy Crap Wheres The Tylenol on 03.24.15 at 11:34 am

#191 Realtor007 on 03.24.15 at 9:54 am

“That was insightful. Your clients are so lucky. — Garth”

I hope that my clients think for themselves and their situation. I am dealing with adults after all, we have seen RE doom predictions going on for 10 years now even before this blog started and the market keeps chugging along. Imagine I fell for the doom and spent my days telling clients to wait and keep waiting 10 years ago, it wouldn’t of went well looking back.

Of course it went just fine if they invested in other assets and eschewed debt. Going all-in with one asset, real estate or stocks, is a bad idea. — Garth
_____________________________________________
Going all-in is for poker players only!

#213 young & foolish on 03.24.15 at 11:35 am

“The history of politicians investing capital is not good”

Another Sun media kool-aid drinker. Inquiring minds have discovered that government funding has been behind almost every new technological development since the Industrial Revolution. (and that includes the internet and even algorithm development which is now search engines … think Google).

#214 Holy Crap Wheres The Tylenol on 03.24.15 at 11:38 am

In the sixteenth century, the Renaissance astronomer Nicholas Copernicus challenged the belief that the earth was the center of the universe. Copernicus argued that the sun didn’t revolve around the earth, but rather that the earth revolved around the sun. The Copernican Revolution turned the scientific world upside down by turning the universe inside out. Most people believe that the Toronto real estate market is the center of the universe and everything revolves around it. The more I think of it I’m beginning to believe that there may be some truth in it! Boy is everyone in for a rude awakening!

#215 Mike on 03.24.15 at 11:42 am

So much for “It’s different here” in Saskatoon! Look at the graphs… http://teamfisher.com/saskatoon-real-estate-week-in-review-march-15-21-2015

4 week median price year over year looks like it’s dropped about $19k. Sucks for anyone who bought in the last year in toontown.

#216 Deric Burton and the Animals on 03.24.15 at 11:55 am

And our next song is for Smoking Man:

When I think of all the good times that I’ve wasted having good times
When I think of all the good time that ‘s been wasted having good times
When I was drinkin’
I should’ve been thinkin’
When I was fighting
I could’ve done the right thing
All of that boozin’
I was really losin’
Good times
Good times
When I think of all the good time that’s been wasted having good times
When I think of all the good time that’s been wasted having good times
All of my lying
I remember her crying
My useless talkin’
I couldv’e been walkin’
Instead of complainin’
I couldv’e been gainin’
Good times

#217 dosouth on 03.24.15 at 12:05 pm

Canada’s SUN News replacement the National Post has even now gotten in on the real estate doom’s day predicting…Surprise!

Fort McMurray, who would have thought…?

#218 r1200c on 03.24.15 at 12:11 pm

Rumour coming out of C-Town as of late is that lay-off Armageddon will really start once all the companies that had hedged their sell-price at $90 a barrel will end (like now and the next three months…) and that unless price rebounds to the mid seventies within weeks, half the juniors will be gone.

The real Stampede parade will be heading out of town…

#219 boonerator on 03.24.15 at 12:13 pm

On Alberta and dumbness, this is a good read. 2007 pub date but probably even more relevant now.

“Stupid to the Last Drop: How Alberta Is Bringing Environmental Armageddon to Canada (And Doesn’t Seem to Care) ”
http://www.amazon.ca/Stupid-Last-Drop-Environmental-Armageddon/dp/0676979149

#220 young & foolish on 03.24.15 at 12:18 pm

“Stop obsessing about the ‘stock market.’ A balanced and diversified portfolio has a minority exposure to the Dow or the TSX. People on this blog have been saying the same thing for five years, during which a balanced portfolio gained about 10% annually. — Garth”

I need a financial education … since I thought you can only buy debt (bonds) or equities (shares in a company), or some form of derivative of the above

#221 Panhead on 03.24.15 at 12:29 pm

#152 Snowboid on 03.23.15 at 11:54 pm

Just wait until we find out how much we have to pay the foreign companies to take all our LNG, instead of the multi-billion dollar prosperity fund we were promised!

Just like the Tumbler Ridge coal that we were supposed to mine for the Japanese … didn’t turn out too well as I recall. See how much Christie’s LNG dream will cost us …

#222 Purdy on 03.24.15 at 12:43 pm

“It now appears an oil rebound is as likely as the renaissance of my political career.”

Garth is the best. I love this blog, read it everyday and it’s always a good post.

#223 jess on 03.24.15 at 12:47 pm

#199 jim on 03.24.15 at 10:59 am

http://www.cbc.ca/news/business/norway-s-sovereign-wealth-holds-lessons-for-canada-1.3002803

Statoil’s historic disclosures blow holes in Exxon and Shell’s campaign for secrecy
19th March 2015

Transparency campaigners call on the U.S. Securities and Exchange Commission to follow Norway’s lead

The Norwegian energy giant Statoil today became the first major oil company to publish its payments to governments under a new, mandatory transparency standard being rolled out across the world. As the Securities and Exchange Commission works to create a similar transparency rule for US-listed oil and mining companies, campaigners in the Publish What You Pay coalition are calling on U.S. regulators to follow Norway’s lead. (1)
http://www.globalwitness.org/library/statoil%E2%80%99s-historic-disclosures-blow-holes-exxon-and-shell%E2%80%99s-campaign-secrecy
======
Publish What You Pay campaigns to promote greater transparency in the extractive industries, so that citizens of resource-rich countries are able track the money being paid for their natural resources and hold their governments to account for how it’s used.

Thanks to a decade-long global campaign, the era of secrecy over natural resource revenues is coming to an end.

71% of the world’s top 200 oil, gas and mining companies are now covered by transparency laws in the U.S. and EU, and forthcoming in Canada.
http://www.globalwitness.org/campaigns/publish-what-you-pay

#224 CHERRY BLOSSOM on 03.24.15 at 12:50 pm

The government should hire ALL Canadian Citizens as employees and pay them the f…king very large wage and ensure we all get a full pension like the existing ones get now. Only then could we be sure our taxes were well spent. …and did not go out of our country.

#225 jess on 03.24.15 at 12:55 pm

“unicorns,”
Americans’ Retirement Funds Increasingly Contain Tech Start-Up Stocks
By DAVID GELLES and CONOR DOUGHERTY

Drawn by fast-growing private tech companies, big money managers are purchasing their shares, betting that they’ll go public

=========
http://www.businessinsider.com/uber-encourages-drivers-sign-up-subprime-loans-2014-11

Corporate Insiders Charged for Failing to Update Disclosures Involving “Going Private” Transactions
FOR IMMEDIATE RELEASE
2015-47

http://www.sec.gov/news/pressrelease/2015-47.html#.VRGVrI5Tvwo

search – subprime auto financing investigations
http://www.law360.com/search/articles?q=subprime+auto+loans&facet=

http://www.law360.com/articles/624908/capital-one-auto-loan-anti-laundering-units-under-scrutiny?article_related_content=1

#226 ozy - sincerly Garth, can you get this one published in Toronto Star or Metro? on 03.24.15 at 1:04 pm

Can you get this one published in Toronto Star or Metro?

It would be awesome! Or get a group of volunteers to print and distribute at subway stations in Toronto?

#227 Holy Crap Wheres The Tylenol on 03.24.15 at 1:08 pm

#216 Deric Burton and the Animals on 03.24.15 at 11:55 am
And our next song is for Smoking Man:

When I think of all the good times that I’ve wasted having good times
When I think of all the good time that ‘s been wasted having good times
When I was drinkin’
https://www.youtube.com/watch?v=epVGErY7Ils
__________________________________________
Holy shit now Smoking Man will discover what a great load of music hes been missing! Just saw Eric a couple of months ago. Now all we will here is got my ear buds on listening to Eric Burden and the Animals. I wonder if this is more appropriate for his mantra.

It’s a hard world to get a break in
All the good things have been taken
But girl there are ways to make certain things pay
Though I’m dressed in these rags, I’ll wear sable some day

Hear what I say
I’m gonna ride the serpent
No more time spent sweatin’ rent
Hear my command
It ain’t no use, I’m breakin’ loose,
Holdin’ me down, stick around

But baby (baby)
Remember (remember)
It’s my life and I’ll do what I want
It’s my mind and I’ll think what I want
Show me I’m wrong, hurt me sometime
But some day I’ll treat you real fine

There’ll be women and their fortunes
Who just want to mother orphans
Are you gonna cry
When I’m squeezing them dry?
Taking all I can get
No regrets
When I … openly lie
And live on their money
Believe me honey, that money
Can you believe, I ain’t no saint
No complaints
So girl go out
Any doubt

And baby (baby)
Remember (remember)
It’s my life and I’ll do what I want
It’s my mind and I’ll think what I want
Show me I’m wrong, hurt me sometime
But some day I’ll treat you real fine

(It’s my life and I’ll do what I want) Don’t push me
(It’s my mind and I’ll think what I want) It’s my life
(It’s my life and I’ll do what I want) And I can do what I want
(It’s my mind and I’ll think what I want) You can’t tell me
(It’s my life and I’ll do what I want)

#228 Suing unethical agents on 03.24.15 at 1:16 pm

Garth, next topic – Is there OK to sue unethical agents for buying high when a massive decline was forthcoming/foreseeable by experts?

Or where should complaints for compensation be sent?

Has it ever happened? in Canada or US? what prove courts usually need: verbal statements assuring “prices always go up” – “buy now, or will be priced out forever” etc

Why those cases do not get the media light they deserve?

based on today’s article, it means Calgary courts (add GTA in 1 year?) will be soon too busy to accept complaints…?

#229 DisgustMadeMePost on 03.24.15 at 1:21 pm

THE REAL DEAL WITH TRANSLINK IN BC IS…………….

Kudos to columnist Geoff Olsen for this editorial in the March 13 vancouver courier.

http://www.vancourier.com/opinion/columnists/hold-your-nose-and-vote-no-on-plebiscite-1.1791689

….

My NO vote went in today. Thanks.

#230 DisgustMadeMePost on 03.24.15 at 2:04 pm

Speaking of price drops…

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/change-your-plan-to-cash-in-on-changing-housing-trends/article23586248/


Low mortgage rates are the main reason why housing prices have surged in the past six years. So you might wonder how it is that rates are moving lower and prices are doing likewise in some cities. It’s the economy. With oil prices falling, growth is weak. That’s why the Bank of Canada made that surprise interest rate cut in January.

The high level of household debt also weighs on housing, and so does weak income growth. Economic numbers issued earlier in March showed that disposable income rose just 0.5 per cent in the final three months of last year, the slowest pace in the past six quarters. Weak income growth isn’t a new thing, by the way. In an analysis done for the Broadbent Institute, economist Andrew Jackson found that employment income rose just 3.5 per cent on an inflation-adjusted, cumulative basis from 2006 to 2012, the most recent year for which there’s comprehensive data.

….

Not sure why they say Van, Hamilton, and Victoria as the only 3 out of 11 cities showing month to month price gains. The chart clearly shows the Victoria peak in 2010.

Strikes me that the way to get ahead is to be ahead of the trend. If prices in Van are not dropping yet, would appear a good time to cash out.

#231 Nora Lenderby on 03.24.15 at 2:07 pm

#210 Daisy Mae on 03.24.15 at 11:25 am
#65: “…and all the while Harper worries about what women wear when their picture gets taken.”

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

‘When in Rome, do as the Romans do.’
Only gangsters wear masks in our world.

Gangsters? Blimey, get a grip. I’ve got a cold and wore a mask when visiting my mum in hospital.

If someone wants to wear a bag on her head, (or indeed wants to appear in Parliament without a blouse) what’s the problem?

#232 Thomas on 03.24.15 at 2:12 pm

Clearly, The Demiurge holds in high esteem all canadians by continuing to keep wide open HIS ledger to them.

#233 Balmuto on 03.24.15 at 2:17 pm

And this will only suppress the Alberta market further:

https://ca.finance.yahoo.com/news/mortgage-insurer-exercising-heightened-vigilance-alberta-real-estate-180551762.html

#234 Brian on 03.24.15 at 2:26 pm

Come on Garth – I thought the renaissance of your political career had better chances than that!

#235 Jas on 03.24.15 at 2:31 pm

Check it: Crazy Canadian Credit Confronts Crude

http://www.mansharamani.com/navigating-uncertainty/crazy-canadian-credit-confronts-crude-eh/

#236 Holy Crap Wheres The Tylenol on 03.24.15 at 2:32 pm

Their back. We used to supply special circuits for pyrotechnics to these guys when they filmed in Vancouver back in the 90’s.
Will the real Smoking Man please stand up! Sorry Smoking Man this is the one and only original Smoking Man. Holy shit loved this show.

http://www.cbc.ca/news/canada/british-columbia/smoking-man-william-b-davis-hopes-x-files-returns-to-vancouver-1.2927899

#237 Former Fool on 03.24.15 at 2:36 pm

#193 MF on 03.24.15 at 10:00 am

Congrats on getting started in ETF investing! Sounds like you have some questions. I’d recommend this reading, which I’ve been doing myself:

http://www.amazon.ca/Exchange-Traded-Funds-Canadians-Dummies-Russell/dp/1118524578/ref=sr_1_1?ie=UTF8&qid=1427221960&sr=8-1&keywords=etf+for+canadians

To start yourself off, you’d probably do fine in one of these portfolios:

http://www.canadianportfoliomanagerblog.com/wp-content/uploads/2015/01/CPM-Model-ETF-Portfolios-iShares-2014-12-31.pdf?850eac

As Garth has mentioned a few times, I’d go light on Canadian equities (no more than 20% of your entire portfolio), and have a larger exposure to the US. 40% fixed income, 60% equities overall. If you have a little more tolerance for volatility, go 35/65 or 30/70.

Best of luck MF. Welcome to the world of investing, freedom, and liquidity.

#238 saskatoon on 03.24.15 at 2:40 pm

#215 Mike

NOOOOOOOOOOOOOOOOOO!

#239 Bottoms_Up on 03.24.15 at 2:43 pm

Jan. 18, 2002, we had a 62 cent US dollar:

http://www.bankofcanada.ca/rates/exchange/usd-can-summary/

Recession. And Toronto real estate prices would decline 32%. — Garth

#240 ron on 03.24.15 at 3:12 pm

@# 228

Do you know what MVA is
And Who implmented it
when there was no public
demand for it whatsoever?
Question the ethics of that.
Tax on inflation brought to you
by the same folks who created the
inflation
an agent offers an opinion
There are channels for ethics complaints
outside the courts

#241 Mike in Toronto on 03.24.15 at 3:26 pm

#220 young & foolish

If “diversified” doesn’t mean bonds indexes, REIT indexes, stock indexes, resource indices spread over domestic and foreign markets with holdings in real estate curbed by the rule-of-90, then I’m not sure what he means.

Diversified investments outside an investment account are inaccessible to the average person.

#242 Mike in Toronto on 03.24.15 at 3:27 pm

… managed by a fee-based advisor I should add. Garth’s careful about that detail.

#243 peter on 03.24.15 at 3:34 pm

I have been telling this for a long time. I think prices are going to flat. RE is going to behave as never before, economic principles are not any more ruling the world. It is a crazy one. People who need to sell RE are going to suffer depending how fast they need to sell….but for the rest, just hold until you really HAVE to sell.

#244 Mark on 03.24.15 at 3:36 pm

“I’d go light on Canadian equities (no more than 20% of your entire portfolio), and have a larger exposure to the US. “

Buy high, sell low? If a person is saving for retirement and most of their expenses ultimately will be denominated in CAD$, why overweight the US?

The argument that’s been made definitely has been for diversification, but overweighting the US is a trade whose time is long past.

#245 Sheane Wallace on 03.24.15 at 3:48 pm

good lord, what a mess is starting to unravel.

https://ca.finance.yahoo.com/news/mortgage-insurer-exercising-heightened-vigilance-alberta-real-estate-180551762.html

#246 rosie "moving forward" in the knowledge that, "this won't end well" on 03.24.15 at 4:52 pm

Well at least I didn’t have to pay for this information.

http://business.financialpost.com/2015/03/24/now-and-then-do-canadian-homes-really-cost-that-much-more-than-30-years-ago/

#247 D on 03.24.15 at 4:53 pm

Is there a Toronto realtor who could provide similar background on how the last TO crashes played out?

#248 TurnerNation on 03.24.15 at 5:03 pm

Albertans always have been blinded with ideology.
Raging against “the left”, the East, people overseas stroking their beards.
Thump thump our beliefs will save us against “the other”.

Well they have seen the other and it is them! Alberta: our Middle East. Oil but backwardism.

Disclosure: I lived here for 3 years around year 2000 and have visited for business countless times.

#249 jrochest on 03.24.15 at 5:11 pm

#215 #237

No shit. Checking the MLS for ‘new’ listings means watching as properties are re-listed with perpetually dropping prices. We’ll be well above 2000 listings by June or July at this rate — for a city with a 220K population. (Yes, I know, it’s supposedly 250K now, but not within the city limits). If Calgary’s bad at 6K for a million, we’re worse at 2K for less than a quarter of that.

Saskathunk.

Rents are interesting too. I drove past the place on Central at Arlington on the way to a doctors appointment: they have a big “rental promotions!” sign up. I think people are resisting paying 1300 a month for apartments that were less than half that in 2007.

#250 Obvious Truth on 03.24.15 at 5:41 pm

#242 Peter

In the investing world we call what you are advocating being a trapped long and becoming forced seller.

This normally creates a much larger correction over a longer period of time.

Not a good place to be if you can avoid it.

#251 Vanecdotal on 03.24.15 at 5:42 pm

#155 Lobster Man

“Within 10 years, our capital gains tax exemption on principal residence may eliminated, or perhaps severely curtailed. ”

Yup, was saying more or less the same think a few weeks ago. Too tasty a tax target to ignore much longer, and a much easier sell to the plebes (perhaps after a few years of deep public service cuts / austerity measures) as a means to “balance the budget”, to pay for promised entitlements and social safety net.

It would be unpopular, but still implementable. ow hanging fruit and very lucrative for the govn’t.

#252 Rainclouds on 03.24.15 at 5:45 pm

#247 Turner

Generalization but Agree, bumpkins…………..”git er done” “yee haaww” Vote Conservative! ALWAYS! White or Black, no subtle nuance or deep thinking.

Also Lived there, couldn’t wait to leave. met some great people but the moron quotient is very high……BC works for me

#253 Vanecdotal on 03.24.15 at 5:47 pm

I would add, that exemption is seriously “abused” to avoid paying tax on residential flips, to the point that it has become “standard practice” by builders / pro & amateur flippers in YVR.

I.e. the raze-raise-flip new home is only “lived in” (sometimes quietly rented out to a distant cousin, etc) for the one year period required to be able to “legally” declare the capital gains exemption.

CRA must be aware of this, I am AMAZED it has been tolerated (not enforced) for this long.

#254 Linda on 03.24.15 at 8:39 pm

Garth, I post under a woman’s name because I am a woman. Further, not desperate & wonder why you think my post was. I’m merely pointing out that the numbers in Calgary are hardly let’s leap off the nearest high structure in nature. Now, if you are talking tens of thousands of homes for sale, no takers then yes, panic is an appropriate response, useless as that might be.

Lots of people regard the house as an investment & talk about their gains. Your own comments have pointed out that to sell when the market is falling is to cement in one’s losses. Seems to me that unless you absolutely need to offload that falling asset that hanging in there might not be the worst strategy, as plenty of stock portfolios have taken a number of years to recoup their losses.

#255 Future Expatriate on 03.25.15 at 1:21 am

“Leroy” “Washington”, kindly quit making Americans look dumber than rocks.

#256 Fluorine on 03.25.15 at 2:06 pm

“It now appears an oil rebound is as likely as the renaissance of my political career.”

So you’re saying there’s a chance? :)

#257 Tamsen on 03.25.15 at 4:55 pm

http://www.vancitybuzz.com/2015/03/vancouver-housing-costs-2030/

Van City study says average home in Vancouver will cost 2.1 million by 2030? An average house already costs that much in West Van …