The uncrash

SOLD modified

About the time Michael was a little wriggler dodging serious traffic in the birth canal, things were not cool outside in the cruel world. Just months later the Canadian real estate market would nosedive from a record high level to a pit it would take 15 years to emerge from.

Now Mike’s 27 and a banker. Sadly, he reads this blog.

“I was wondering if one day you can shed some light on the symptoms and causes of the early 90’s housing crash and what it was like for Canadians,” he writes. “I’ve been trying to google it, but google is full of talk about our potential housing crash or 08 in the U.S… I was too young to remember or know better in the early 90’s.

“I have clients that lived through the housing crash in the 90’s and are under the impression that housing crashes are a thing of the past. I believe corrections are a regular part of history, especially since my girlfriend and I wouldn’t be able to afford anything until my income increases by about 300%. So, why is it that all of these boomers are so ignorant to history? BTW – they’re passing this ignorance down their kids, (my friends) the echo-boomers.”

Don’t you wish your banker was this smart, instead of cramming a bigger mortgage loan down your piehole? Now with house prices once again at nosebleed levels, and economic uncertainty building, the kid asks a serious question. Why did housing crater the last time, and are there many similarities? Could it happen again?

Well, in 1988 the average Toronto home sold for $229,635. That seems like nothing, but the market was on fire – prices had doubled in less than three years, and jumped an astonishing 21.4% from 1987. The fire continued, adding 19.1% to the average price in 1989. And then the lights went out.

The decline started slowly, before taking hold in earnest. By 1996 the average Toronto house had eroded in value by 27.6% – not that far off the epic 32% collapse in US real estate eight years ago. Prices retreated to levels of nine years before, and it was not until 2002 that the 1989 high-water mark was surpassed. In other words, someone buying when our little banker was a gooey swaddler had to wait 13 years to break even – not including inflation.

And note the above: we did not have a crash. It took more than six years for the housing market to find its bottom, before requiring another six years to recover. But despite the gentle slope on both sides, this was enough to destroy the finances of an army of middle-class families who bought into a property boom only to end up as greater fools.

So what happened to the market?

The incorrect belief is that high mortgage rates killed housing. After all, the five-year rate in 1988 was 12%, on its way at 15% the next year. But mortgage rates actually peaked at around 21% in 1981, and had fallen back into the 9.5% range by 1987. Despite the huge cost of money, the market advanced relentlessly – because everybody was horny, because “houses always go up” and if you didn’t bite the bullet and get into the game, you’d be shut out forever.

Sound familiar? It was speculation, house lust and greed which pushed prices ahead, encouraged people to take on massive debt and divorced real estate from the real economy. Like now, actually. Because when all is said and done, it’s people who create risk – driving markets to unsustainable highs because they’re emotional. They fear losing out on gains, then they fear experiencing loss. Booms always end badly. When you’ve mortgaged your derriere off, there’s no such thing as a soft landing.

Well, here we are, Mikey. Your wrinkley clients have forgotten those lessons. Their kids never learned them. They all think this time it’s different.

But it never is. Lots of warning signs exist, for those who look.

The commodity plop this gilded blog detailed yesterday is not just about crashing gold miner stocks, out-of-work engineers or the misery of trying to find a buyer for your house in Calgary. As mentioned, the Bank of Canada rate cut seven days ago was an admission of troubles. It would be really smart to pay attention.

Fitch, the ratings agency, has joined the throng saying real estate valuations in Canada, as they presently stand, are doomed. Our houses are 20% over-valued, it adds, and headed for a correction. “The price growth that has characterized the country’s housing markets for more than a decade will abate, with modest declines to follow,” adding there will be “no collapse”.

Nothing to sweat about, right?

Hmm. But there was no collapse when Mike was backstroking his way to conception, either. Just the start of a grinding year-over-year decline that would end up being one of the greatest robbers of wealth in Canadian history. And there weren’t even 5% downpayments, cash-back mortgages, zero-financing, 70% home ownership, nine million geriatric Boomers or interest rates so cheap they had only one path ahead. Oh yeah, and only millionaires had million-dollar houses.

What a relief it is that history is bunk.

169 comments ↓

#1 TurnerNation on 07.21.15 at 6:15 pm

Top’s in on Spoos ;)

#2 Chris on 07.21.15 at 6:22 pm

The USA housing crash was only a 32% loss? That would still make Toronto/Vancouver housing expensive!

#3 rent4lyfe on 07.21.15 at 6:26 pm

My wife is convinced that if we continue to rent that one day there will be no where for us to live, that our landlord(s) could/can at anytime kick us out – and she’s right, they could. And she’s right, there could be a time when there is no where left to rent – but it’s in a time that’s never happen or going to in the next 100 years.

How do you combat this irrational emotionalism?

#4 Chris on 07.21.15 at 6:36 pm

32% isn’t bad. Goldcorp lost 12% in one day yesterday. Sitting on the sidelines waiting for a crash to scoop in and buy doesn’t seem like such a good strategy anymore. I was under the impression that the USA housing market imploded and that you could buy Las Vegas/Scottsdale mansions for $150,000.

#5 JSS on 07.21.15 at 6:37 pm

What happened to the TSX in the 1990s? Canadian bank stocks during this time?

#6 Paul Mack on 07.21.15 at 6:37 pm

I dunno-a 20% correction in Calgary would still leave me unable to afford a house and the 20% number has been kicking around for about 7 or 8 years.

#7 Totalchaos on 07.21.15 at 6:43 pm

My brother-in-law has a million dollar one bedroom condo downtown Vancouver, a holiday townhouse (that he could rent year round for less than it costs him to own), an empty lot (as an investment) and this week has been out with a realtor looking for a rental building. My spouse thinks this is great. Now, I just keep quiet. *sigh*

#8 bobo on 07.21.15 at 6:55 pm

How will this slide in house prices over the next few years affect multi unit rentals and rent prices? I have lots of multi units all cash-flow positive, is this a time to unload some ?

#9 Michael on 07.21.15 at 6:59 pm

Even with oil prices flirting with record lows, home prices here in Calgary are still insane:

http://www.rooneycroninvalentine.com/spw/C4018844-536-49-av-sw-calgary-t2s-1g5/

http://www.remax.ca/ab/calgary-real-estate/na-1120-bellevue-av-se-na-wp_id119248675-lst/

#10 ANON on 07.21.15 at 7:00 pm

#3 rent4lyfe on 07.21.15 at 6:26 pm
How do you combat this irrational emotionalism?

You don’t, that is a battle lost before it even starts. Become the problem, let her combat your “irrational” stubbornness. I assume it takes both of you to sign the dotted line.

#11 Mister Obvious on 07.21.15 at 7:02 pm

#2 Chris

“The USA housing crash was only a 32% loss? That would still make Toronto/Vancouver housing expensive!”
———————————

It takes only a 33% loss to erase a 50% gain.

You are correct to say that such a loss would still make Vancouver expensive. Vancouver will probably always be ‘expensive’, both to buy and to maintain.

But almost anyone who watches their recent 50% (or greater) gain wither away over a period of six years will be a rather sad puppy. Unless they have plenty of other money to burn.

It will hurt even more if they come to realize that wealth could have easily been preserved and put into diversified and productive investments.

#12 old gringo on 07.21.15 at 7:02 pm

Garth, any chance of showing a graph that correlates the price rise and fall back in the early 90’s and todays insane housing market.
As they say “seeing is believing”.
It may be scary but interesting or a liberal dose of reality.

#13 S.Bby on 07.21.15 at 7:06 pm

In YVR we’d need a 50% haircut before prices would even begin to approach affordability for the average resident.

#14 Squirrel meat on 07.21.15 at 7:08 pm

#9 Michael on 07.21.15 at 6:59 pm

Even with oil prices flirting with record lows, home prices here in Calgary are still insane:

http://www.rooneycroninvalentine.com/spw/C4018844-536-49-av-sw-calgary-t2s-1g5/

http://www.remax.ca/ab/calgary-real-estate/na-1120-bellevue-av-se-na-wp_id119248675-lst/
—————-

Those are nuts. Crazy Crazy. Wow. How about $150k

#15 Seth Cohen on 07.21.15 at 7:11 pm

I doubt much will change in the next 12 months. The Bank of Canada if it gets desperate already hinted at other measures if interest rates can’t be cut much more.

QE, forward guidance, and who knows what else they will do.

The way things are going, 1.75% to 1.85% 5 year, fixed rate mortgages are coming soon.

Savers, fixed interest investments are paying less and less with no bottom in sight.

Please, don’t answer me that there are other investment options because I know this but many others don’t want or feel comfortable with them.

#16 Bottoms_Up on 07.21.15 at 7:12 pm

There are differences this time around. Emergency interest rates…could last awhile. Plus, in the early 90s boomers were just starting to accumulate their wealth. Now, lots of them have lots of it. Plus substantial increases in canadian and world GDP. Yet 2561Yonge street is still the same building, in the same location, and now the population has also doubled.

#17 BC Guy on 07.21.15 at 7:14 pm

The real estate crash mirrored the recession that hit hard in the early 90’s.

It began in the late 80’s as US companies outsourced manufacturing overseas. US companies also shut down Canadian branch plants due to the Free Trade Deal. Then the real kicker was when Bob Rae’s NDP got elected in Ontario and jacked up corporate tax rates. Massive layoffs, plant shutdowns, apocalyptic economic doom all round. I lived through it. Interest rates had been high for a while, around 10%. The Federal debt skyrocketed, as did Ontario’s debt. Even Bob Rae had to start cutting back on expenditures, laying off civil servants – there was a public sector strike – remember “Rae Days”? Forced vacation days to save money.

It was economic doom and gloom everywhere you looked. Then everyone started panick-selling real estate.

Not really. The housing decline commenced prior, and made the downturn worse. — Garth

#18 LS in Arbutus on 07.21.15 at 7:15 pm

Remember circa 1996 a tax partner relocated from Toronto to Vancouver and he was feeling the pain of selling his Toronto house. Yeah and he had $$ too, but didn’t lessen the blow.

Also remember Vancouver being on fire in 1994 and then doing NOTHING from then until about 2002-2003. So 8 years of nothing…. If you bought that SFH for $2 million today and even if it did not crash, but did NOTHING for 10 years… imagine the lost opportunity cost.

Buy low, sell high people.

#19 Joseph R. on 07.21.15 at 7:20 pm

#9 Michael on 07.21.15 at 6:59 pm

That first house, the 800k price tags is probably due to the detached double-garages: You can easily rent it out for 600$ a month, probably more since you are in the inner-city. If you work downtown, you save on a parking spot that go for a good 500-600 a month.

In fact, the “new” in-thing in Calgary real estate is not houses but downtown parking spots. My girlfriend was offered to buy a parking spot for 30k so that she can rent it out for around 500$/month.

No, she didn’t buy it.

#20 Daisy Mae on 07.21.15 at 7:22 pm

CBC: “…Citing the time needed to get the program up and running, the government delivered the first seven months of payments this week, in lump-sum payments of $420 or $520 per child that Employment Minister Pierre Poilievre called “Christmas in July.”

But there are caveats. The enhanced UCCB replaces a previous tax credit and it has other tax implications.

We crunched some of the numbers to get a closer look at the impact of the increased UCCB payments.

How much is clawed back?

With the enhanced UCCB, Canadians will receive an extra $720 annually for each child under 18, including the lump-sum payments this week retroactive to the start of the year.

However, on the same day the UCCB came into effect (Jan. 1), the federal government also eliminated an existing child tax credit of $2,255, which was worth $337.50 per child annually in 2015. That change alone wipes out almost half of the UCCB increase for taxpayers.

The UCCB goes to parents of minor children whether they pay tax or not — but it is also taxable, both federally and provincially. An Ontario parent earning $50,000, for example, pays income tax at a combined marginal rate of 31.15 per cent. So, with $720 of added income from the UCCB, an additional $224.28 would be clawed back as taxes next year….blah, blah, blah….”

So…the government giveth and the government taketh?

#21 Financial Freedom at 40 on 07.21.15 at 7:25 pm

I had started biz school in the early 90s when my elderly grandparents considered unloading their house in a prestigious area of central T.O., as RE agents kept knocking at their door offering insane $,$$$,$$$s which became a point of animated discussion. By the mid 90s when I graduated, and they had passed on without selling, the valuation was down 40% when it came time to deal with the estate. So that was one real-life financial lesson that stayed with 20 year-old me, contributing to RE sales now at 40 in 2012 and 2014.

#22 JO on 07.21.15 at 7:26 pm

i am in banking for years too. Worked through the 99-00 bubble at a major, and then the 08-09 crash in a head office job.
I also remember the 90 s very well. Debt and leverage is much much higher. Bond prices are near record highs too. This is a deadly combination. I try everyday to tell people to not borrow more and to prepare for higher rates. Sadly many ignore and go on. If I decline the application I get the looks and many go on to find another lender or shady broker to ” get it”.
I have lost any hope of helping most of these people.
It is most likely we see the following between now and early 2020:
-houses drop slowly at first then accelerate down from mid 2017 until early 2020 and lose 30%
-as the fake aggregate demand/ GDP / income created by the greatest debt bubble of all time disappears, look for unemployment to rise sharply and hit 15-20 % by early 2020
-faced with collapsing tax revenues and exploding health care, interest costs, and pension ( not to mention welfare and EI) governments do what they do best and raise all kinds of taxes extremely aggressively further destroying the economy and helping drive growing riots
-while we will likely have a 10-20% stock drop soon we still have a good chance of seeing a massive flood of capital into blue chip stocks as the bond market begins to smell a looming default globally. Then after one final rocket rise similar to what China just experienced, bond prices and stock prices collapse together going into 2020

We have been subjected to the most radical monetary and government experiment in the last couple of decades. I hope we muddle through but odds are better we will start replacing the R in recession with D by 2020

#23 Daisy Mae on 07.21.15 at 7:35 pm

#17 BC guy: “….Then the real kicker was when Bob Rae’s NDP got elected in Ontario and jacked up corporate tax rates. Massive layoffs, plant shutdowns, apocalyptic economic doom all round. I lived through it….”

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

And, that’s what a federal NDP government will do –drive corporations out of Canada. And with them, jobs.
As they say, be careful what you wish for.

#24 Seth Cohen on 07.21.15 at 7:40 pm

To #16 Bottoms Up

You just made your own point. Precisely why they will keep pushing interest rates down is because Boomers have alot more savings and fixed interest investments.

They want them to be more in debt and they are succeeding as seniors and retirees are going much more in debt in any time in history.

By the way, reverse mortgages will the norm for them and they are growing more every year. The income tax free pitch by the real estate industry is not that great after all.

#25 lee on 07.21.15 at 7:41 pm

#2 Chris,

Houses as opposed to condos in Toronto are not overvalued 30 percent. The demand will keep flowing. No more than 500,000 houses in Toronto. There,s almost that many teachers in the GTA. Nobody is ever going to be able to buy a decent house in Toronto without a bidding war. I think 30 percent against inflation might happen so in ten years you might be paying what you’d have to today. In fact that may be already happening. I expect though year to year you won’t notice much cause the boards will keep selling everyone a lie. Houses in TO cost what agents tell you they cost and until that changes everyone will keep bidding each other out.

#26 not 1st on 07.21.15 at 7:42 pm

What about that little japan thing in 1989-90?

#27 Joseph R. on 07.21.15 at 7:43 pm

#7 Totalchaos on 07.21.15 at 6:43 pm

I take it his 20% down payment will be from a personal line of credit.

Rumours as it that a lot of couples are doing the same: owning a house then using a line of credit to buy rental properties; they can own 3-4 houses that way. They look at it as easy money; the bank is giving you the money and you simply collect the rent money and cash-in the equity yourself when you sell. At least, that’s what I understand of it.

I choose not to play that game and choose a balanced portfolio to invest instead.

Sometimes, I feel I missed out on the party.

#28 Ghost of Recesssions Past on 07.21.15 at 7:50 pm

Meanwhile the TREB just announced hey will no longer post mid month numbers. Coincidence? I think not.

Welcome 2015 Canadian Recession!!!!!

#29 Scumop on 07.21.15 at 7:56 pm

Token member of the working poor reporting in.

Not everyone goes exclusively for real estate. In my browsing of my tiny herd of ETFs on yahoo finance charts, I see the trade volumes vary considerably. Sometimes the bars are so short I am not sure if they are not dirt specs on my screen.

Multiple times I’ve seen trades of ETFs (in the low $20s/unit range) with volumes as low as 23 units.

So what, you might say. The what is that you don’t have to have much of an income to get into the market with ETFs. It may not matter much to the 6 digit club on here, but I suspect a few less than flush lurkers have wondered if they could get into ‘the market’ but believed No.

Yes. And as cheap as any $500-to-start mutual fund without the high fees. Many free to trade ETFs are available. TFSA or not, all good.

My own trades have not been quite that low, though I will not admit to how close. Wish I had gotten into it year ago.

All it takes is knowing that you can (that was the missing element for me), a bit of patience, and a willingness to do a bit of research/thinking. There is a certain pleasure in seeing them spit money into your trading account, even if its only a few dollars a month. With time, and continued investment, more than a few dollars + long term value increase. Ignore (or enjoy) the bounces along the way.

Much more engaging than real estate.

#30 Thebarold on 07.21.15 at 7:56 pm

I was just a kid then but saw the impact on my family – upper middle class reduced to shambles. Wrecked my parents’ marriage and my outlook on real estate.

That being said, wasn’t black monday in 1987 the catalyst for the liquidity pressures that cause the ‘6-year deflation’?

#31 Sheane Wallace on 07.21.15 at 8:00 pm

#4 Chris

Do you own GoldCorp? Don’t sell it.

#15 Seth Cohen

Savers in CAD are idiots considering the clear message that the CAD would be destroyed,
the biggest problem is that nominal GDP shrinks while inflation is picking up and the interest rates are close to zero.

If they have any brains there would be massive QE coming soon, as I simply don’t see how they can reverse the negative GDP trend. Third quarter would be horrific, mark my words, despite the rate cuts.

Instead of rates going to zero and negative and then do QE they need to do QE now, which will of course destroy the CAD, considering the fact that massive lending with government guarantees was equivalent to 60-72 billions in new debt every year for the last few years, now at peak debt and zero rates they need to start printing north of 50-75 billiosn a year just to maintain nominal GDP while the dollars is destroyed.

Look at TSX, down when the CAD is down, the whole economy is down is this is just the beginning.

Brought to you by Harpo junior.

#32 Ben Bur on 07.21.15 at 8:01 pm

Re: “The uncrash” . . . ditto U.S. equities

#33 Realtor007 on 07.21.15 at 8:22 pm

#17 BC Guy on 07.21.15 at 7:14 pm

You hit the nail on the head, there was a lot more to it then just prices, free trade and Rae shocked the economy and many were stunned making knee jerk reactions by selling their homes, kind of like what people did with stocks in 08/09.

There needs to be a real catalyst for prices to melt, crash or whatever word we’re using, Wynne can be that catalyst in Ontario with her scandalous and irresponsible governing, we’ll see how that plays out.

#34 Sheane Wallace on 07.21.15 at 8:26 pm

#22 JO

fantastic post. But I think they will try to fight it with the devaluation/destruction of the CAD so the things will get trickier, the unemployment could be lower but everyone would be poor.

Panics do not destroy capital; they merely reveal the extent to which it has been destroyed by its betrayal into hopelessly unproductive works.

The destruction of capital is happening now, due to political games and policies.

Do you know why the banks don’t care about your deposits? Because they hold minimum loans in their books, mostly mortgages paid over 60-70 %, so no risk.
The rest is packaged as MBS (guaranteed by the CMHC) and sold to investors world wide immediately as the sub-prime loan is issues
Speaking about subprime lending…

and on top of it the geniuses at BOC destroying the CAD with negative real rates in a an attempt to boost ‘manufacturing’ (of what?).

#35 Retired Boomer - WI on 07.21.15 at 8:28 pm

So, what? I have no CAD. No Canadian RE. No DEBT of any stripe. My investments this year are in the black, but not wildly up, just what the total stock, total bond, and total int’l stock, and Int’l bond markets have returned.

Not bad, the weak tit is the oils, and utilities that I bought because “I know better”… so be it. Still black but lower
solely because of my own arrogance.

So, sell it to the indebted fools. I’ll survive, as they say money talks, bullshit walks.

Always has been true never more than tomorrow.

#36 MSM-Free Zone on 07.21.15 at 8:28 pm

#19 Daisy Mae on 07.21.15 at 7:35 pm
“…..And, that’s what a federal NDP government will do –drive corporations out of Canada. And with them, jobs.
As they say, be careful what you wish for…..”
_________________________

You’re a little late to the movie, Daisy Mae.

Mulroney/Harper Conservative Free-Trade agreements have already gutted much of Canada. And, with housing currently at record unaffordable levels, no Canadian (union or non-union) can afford to work for a Mexican’s three dollars an hour.

We now only pump, dig, and cut stuff from the ground in exchange for stainless, granite, and iPhones, and even then one-trick Harper sequel isn’t ending quite so well, as has been frequently pointed out.

#37 Bank of Millennial on 07.21.15 at 8:28 pm

#20 Jo “hope we muddle through but odds are better we will start replacing the R in recession with D by 2020”

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

Decession? uhm…no

#38 lee on 07.21.15 at 8:29 pm

#28

Why do you say that? Mid month numbers are not usually worse.

#39 Vanecdotal on 07.21.15 at 8:31 pm

“Don’t you wish your banker was this smart, instead of cramming a bigger mortgage loan down your piehole?’

Lolz GT. Few years back went to my partner’s (blue) Big 3 Bank to talk mortgage renewal. Enthusiastic woman who ran the numbers was generous with terms offered. Was discussing pros/cons of fixed vs. variable when I commented on fixed rate mortgages being funded in the bond market, having no correlation to the BOC rate, and… blank stare back, crickets. Seems in spite of being responsible for originating mortgages, she didn’t seem to understand that small point… wth?

[email protected] is a Salesperson, first and foremost, it was shocking her lack of basic financial knowledge. She didn’t seem to understood what a “bond” was either, apparently wasn’t covered in the hard/soft sell sales “training”. Not like we’re shopping for shoes here, it’s a freakn MORTGAGE, the biggest financial decision in most people’s lives. I couldn’t believe they would have someone originating mortgages that didn’t even understand how credit works.

As we left, my partner commented she had been a teller there for some years, apparently recently “promoted”. We promptly took our mortgage business elsewhere.

#40 bubu on 07.21.15 at 8:32 pm

If the prices in Edmonton and Calgary didn’t go down at least 10-20% now when the oil is down more than 50%, natural gas is “dead” then don’t hope for a correction in real estate in Canada…

#41 Vanecdotal on 07.21.15 at 8:33 pm

“understood” should be “understand”. Der.

#42 Frank on 07.21.15 at 8:41 pm

So when was buying a house in the 90’s a smart move? Obviously the bottom but what metric or valuation lets you know it’s a good decision beyond “the bank will give me this much money”.

#43 WiseGuy on 07.21.15 at 8:47 pm

I know generally you don’t say that foreign money in real estate has an impact, but there is the worry that the so called HAM put down on pre built condos and condos or housing already owned by people not from Canada may very well be in jeopardy with our falling dollar.

How can real estate in Canada be deemed an investment when the dollar is falling by the day.

As the economy slows, so will our dollar and so too will housing.

#44 ConSonAbuGraib on 07.21.15 at 8:49 pm

Donald Trump is a muslim.

#45 Indie Chick on 07.21.15 at 8:49 pm

Hey Mike,
I can surely tell you what life was like from the standpoint of having witnessed my parents losing everything they had worked for in a matter of a couple of years. I was just about to start university in 1991 and of course prior to the melt down I had assumed my education was going to be paid for. Well, as it goes, my Dad was heavily invested in real estate in the late eighties, early nineties. He even built a huge house for my Mom which was sadly devoid of furniture and character. They lost it all. Thank goodness I had some meagre savings and was able to put myself through school, worked while going to school and paid off my loans when I was done. It was tough but we all got through it. My parents rebuilt their lives, albeit separately, and my sister and I went on to be quite successful in our careers. I remember the hardships and the sacrifices so well that it may be why I am averse to real estate right now. I have been a happy owner and am now a happy renter. Debt ( huge debt) is a high price to pay for freedom notwithstanding the fact that you can lose equity so easily. And just for the record, I still love my Dad. He’s awesome :)

#46 Sheane Wallace on 07.21.15 at 8:50 pm

BTW you are getting your child benefits cheques today (all 2 billions of it) in an attempt to ‘boost’ economy and help to somehow offset the negative GDP trend, they count on you spending it immediately while proclaiming that they care about the kids (with future career at Starbucks if lucky).

#47 Bottoms_Up on 07.21.15 at 8:51 pm

#23 Daisy Mae on 07.21.15 at 7:35 pm
————————————–
As opposed to the grand jobs record and debt reduction record under the conswervatives?

#48 ConSonAbuGraib on 07.21.15 at 8:53 pm

#22 JO on 07.21.15 at 7:26 pm

That’s just Onterrible.

#49 hardfi on 07.21.15 at 8:55 pm

#9 Michael on 07.21.15 at 6:59 pm
Even with oil prices flirting with record lows, home prices here in Calgary are still insane:

http://www.rooneycroninvalentine.com/spw/C4018844-536-49-av-sw-calgary-t2s-1g5/

——————————————————–

i grew up in a house just like that – my father paid 18,000 for it in 1966.

i believe his yearly salary then was around 7000.

#50 Obvious Truth on 07.21.15 at 8:56 pm

#29 Scumop

Right on the money. Way more fun and the learning is the best part.

Not sure I understood the etf volume. I assume you are talking buy or sell orders. Of coure buy whatever you can. Especially when there’s no charge.

#51 Squirrel meat on 07.21.15 at 9:02 pm

Renting sucks sometimes.

http://news.nationalpost.com/news/canada/balcony-oral-sex-prompts-eviction-notice-for-victoria-man-except-he-wasnt-party-to-the-pleasure

#52 Potato on 07.21.15 at 9:04 pm

Mustn’t forget that the 1989 crash had little to do with rates — they started going back down again shortly into the meltdown.

Oh, and nearly the same rhetoric about overseas investors, immigration (esp. from Hong Kong), etc.

I can’t recall how bank stocks performed, but it was the era where the trustcos went under or were taken over by the banks.

#53 Smudgekin on 07.21.15 at 9:09 pm

Hi Garth fancy a Triumph movie bike?

http://www.avclub.com/article/chris-pratts-jurassic-world-motorcycle-being-aucti-222664

#54 Panhead on 07.21.15 at 9:13 pm

Ah c’mon … let’s go back a little further to the early eighties … now that was a real bloodbath out here on the left coast for most … great buying opportunity for others though. Hope we never see something like that again, but …

#55 Grantmi on 07.21.15 at 9:25 pm

#3 rent4lyfe on 07.21.15 at 6:26 pm

My wife is convinced that if we continue to rent that one day there will be no where for us to live, that our landlord(s) could/can at anytime kick us out – and she’s right, they could. And she’s right, there could be a time when there is no where left to rent – but it’s in a time that’s never happen or going to in the next 100 years.

How do you combat this irrational emotionalism?

Get a new wife!!

#56 Obvious Truth on 07.21.15 at 9:28 pm

Calgary has record empty office space. Yikes.

I think bay street is next to see the job hatchet fall. The tsx could get taken to the woodshed. I don’t think Draghi or kuroda are buyers here.

But could poloz join the club?

#57 Stupesing in Cabbagetown on 07.21.15 at 9:32 pm

I too am astonished at boomers who don’t remember or who deny the housing downturn of the 90s.

I remember walking around new subdivisions that sprouted ‘for sale’ signs in the yards. Speculators had bought several pre-builds intending to flip and found themselves paying mortgages and property taxes on properties they couldn’t sell with prices steadily drifting downward.

My own marriage tanked at that time and I lost my job in the recession of the 90s. And when the bank repossessed the house it was worth substantially less than what we bought it for. A truly horrible time.

Yet, a friend of mine denies that a housing downturn ever took place. He and his wife bought their home in 1986 and sold it in 2002 and they made money.

Apparently bad economic events don’t effect people who buy “for the right reasons” and he strongly encourages his kids to buy property. Sigh!

#58 Freedom First on 07.21.15 at 9:33 pm

I think people are missing the myriad of signs of what is happening in Canada. However, they will definitely not be missing the consequences. Also, be patient, it’s like when you jump out of a plane without a parachute, everything can look great for a time, and then the ground hits you. Only the amount of time is different. Trust me. I always put my own Freedom First.

#59 Washed Up Lawyer on 07.21.15 at 9:33 pm

#9 Michael on 07.21.15 at 6:59 pm

Even with oil prices flirting with record lows, home prices here in Calgary are still insane:

http://www.rooneycroninvalentine.com/spw/C4018844-536-49-av-sw-calgary-t2s-1g5/
******************

That house on 49th Ave is a few blocks away from Jarome Iginla’s former shanty in the same ‘hood of Elboya. Iggy listed for $3.9MM and sold for that price in a fairly short time. I don’t know if the wine collection was included or a signed, game worn jersey.

The average and median for the ‘hood were skewed a tad.

Iggy had a nice shack. Here:

http://www.cbc.ca/news/canada/calgary/jarome-iginla-s-calgary-house-up-for-sale-1.1345281

#60 TurnerNation on 07.21.15 at 9:37 pm

Looking in this month’s Toronto Life magazine. A huge multi page sell job (second such article there recently) on Toronto’s chief urban planner Keesmaat.
Me thinks get ready for life in an “agenda 21” 500 sq foot condo and on yer bike and rickshaws.

Another article on couple with 100k gift from parents purchasing an old 800k semi in a so so area.
Mum on bidding war though.

I can wait.

#61 Chaddywack on 07.21.15 at 9:43 pm

I had this conversation at work today. It seems no one remembers real estate ever going down.

The one person who did admit prices went down said “Yeah, but that’s because interest rates went up to 21%, that’s the only reason, and the government said they would never do that again, and they haven’t!”

#62 Nagraj on 07.21.15 at 9:44 pm

#22 JO and #31 SHEANE WALLACE:

I’m kinda on the same wavelength as youse guys EXCEPT that I think the GDP number for just the next quarter will tell a Depressionary Canadian tale if it comes in negative.

#17 BC GUY:

Rae was the first to issue prov of ont paper denominated in a foreign currency: yen junk bonds. But his mess was as nought compared to McQuack’s. I fully expect a colourfully kerchiefed babushka Wynne to dance (hopscotch) about the rutabaga fields of Moravia tryin’ to sell ont bonds denominated in zlotyshkies or perogies to the healthy local peasant boys and girls toiling in the rutabaga fields. What’s the Bohemian version of “Cockles and mussels alive-oh!” ?

P.S.
Years ago I had this enterprising friend who came up with “Evening in Lackawanna” cologne. Now I’m thinkin “Fear on Bay Street” might sell. WANT TO SMELL LIKE A GREAT CANADIAN CEO? Try our new “Fear on Bay Street” executive cologne, aftershave and mouthwash!

#63 Smoking Man on 07.21.15 at 9:54 pm

Again you dogs can’t see the obvious..

The crash happend when John Crow (you would love this guy dwellers) spiked rates huge.

Why?

Real estate went up by almost 100% in a two year span.

Today, it’s 3 to 5% ish. Per year.

Hardly worth mention….

No hockey stick, no crash….

#64 Investorz on 07.21.15 at 10:04 pm

A friend who has a kid just realized that having a house that increased in value on paper, in Toronto, isn’t helping her fund future university costs. She can’t downsize because they are now used to leaving in a large space and have accumulated lots of stuff. I guess that leaves leasing, but that’s not going to happen.

I told her that instead of paying a mortgage I bought two real-estate stocks during the summer:

– CAP REIT which pays 4.4% per year
– Tricon which gets revenue in US dollars

Real-estate stocks increase your cash flow which you can use to accumulate money for your kids studies.

Or, you can move 1h commute away from the Core to cash in on house gains. Enjoy the 401. I’ll stick to my 15 minute commute.

#65 Unhinged Loon on 07.21.15 at 10:05 pm

This is very enlightening. Thanks Garth, I’ve always heard talk of the early 90s recession, but no literature to really document the causes and progression.

#66 TurnerNation on 07.21.15 at 10:08 pm

How cute. Today’s couple has sold their future labor and the income stream to their bank. Let’s say a 25-yr avg. 6% stream of cashflow to bank?
Living the Ream.

#67 dosouth on 07.21.15 at 10:25 pm

Westside of Kelowna is on fire but….,“It is business as usual, I’m looking out at the lake right now and it’s not affecting people’s daily activities,” said Kelowna realtor Lora Proskiw.

Neither fire nor smoke nor evacuation could ruin our sales stats…..pulleezzee!!

Just put the damn things out

#68 White Crock BC on 07.21.15 at 10:28 pm

Apparently, the US now produces more oil than Saudi Arabia.

Strangely, the collapse of oil prices has not affected the US one bit.

Matter of fact, along with the collapse in oil prices, they have an $18.3T debt ($61T total) a half trillion dollar deficit, horrible ($40B/month) trade deficits, have been just printing money wildly for years and just for fun, 50 million of their flag waving citizens are on food stamps.

Yet for some inexplicable reason, the greenback is the place to be.

#69 Capt. Obvious on 07.21.15 at 10:31 pm

In my experience with my own Boomer parents, they just discount what happened in the early to mid 90s. The funny part is I remember houses in our hood close to doubled from low 200s to 400s in the late 80s, then plateaued and languished in the 1990s. The same houses sold in the low 300s then. Subsequently things went crazy in the oughts, and (if you can find one for sale) houses in that same area are probably over 700k. However interest rates are not going to 0 again, so I’d say this is the high point for the ‘ol hood.

#70 Doug in London on 07.21.15 at 10:32 pm

I don’t know why most boomers appear to have forgotten about the housing bust of the 1990s. As a 54 year old boomer myself I remember it well, even though it didn’t affect me much personally.

WHEN (not if) the next housing bust comes, when will it be time to buy? I don’t know, but a good clue is when it seems everyone is bellyaching about what a lousy investment a house is. That happened in the United States in the first few years of this decade. In the mid 1990s I read some article that said: a man’s home is his hassle, and gave many reasons why that is so. How’s that for a clue?

“I have clients that lived through the housing crash in the 90’s and are under the impression that housing crashes are a thing of the past”. Quick, put in your foam rubber ear plugs, and put earmuffs over your ears because the warning sirens are screaming at an ear blasting 200dB noise level!!!!!!! That should be a sign that it’s time to take a defensive stance NOW. Similarly it reminds me of something I read in about 2006 that said something like: “the economy is so well managed nowadays that recessions are a thing of the past”. Again, good thing I had my foam rubber ear plugs and earmuffs nearby. The next day I moved more money out of equity funds and into bond and money market funds.

The one thing we learn from history is that most people learn nothing from history.

#71 Ronaldo on 07.21.15 at 10:34 pm

#5 JSS -here are the returns for the SP500 from 1973, this should answer your question.

http://moneyover55.about.com/od/howtoinvest/a/marketreturns.htm?utm_term=stock%20chart%20history&utm_content=p1-main-1-title&utm_medium=sem&utm_source=google&utm_campaign=adid-c3219ea5-4a0c-4fa3-80fa-3d427d314bbe-0-ab_gsb_ocode-5949&ad=semD&an=google_s&am=broad&q=stock%20chart%20history&dqi=tsx%2520price%2520history%2520chart&o=5949&l=sem&qsrc=999&askid=c3219ea5-4a0c-4fa3-80fa-3d427d314bbe-0-ab_gsb

#72 IHCTD9 on 07.21.15 at 10:34 pm

Maybe it’s because I live in Ontario, or perhaps because I work in manufacturing; but I see the hyperventilated RE markets in Canada commencing their respective declines in response to a wimpering economy. A steady stream of extended bad news can pour cold water on irrational exuberance pretty quick. I think the likely news of GM bailing out of Oshawa next year will effect the GTA folks more than another 25 point cut in the benchmark. Once they take note of something big like GM heading south, they’ll start to notice all these other plants closing, moving, or filing for protection from their creditors. All that has to happen is for them to notice it, read about it in the MSM, and talk about it within their socials circles. Then the unease will set in as they exit the RE cloud 9 stage left, and join the rest of us who have been watching this happening for years. Eventually, some flippers and RE “investors” will decide to play it safe and liquidate their positions, and so it starts…

#73 Santa Clausewitz on 07.21.15 at 10:39 pm

#160 Andrii on 07.21.15 at 6:19 pm
151 Sheane Wallace US can not take on China and Russia at the same time. And China will not abandon Russia. And Russia will not bend
Only ask USSR , tovarishch …”

On the eastern front,

US has lined up some pretty big allies, incl. Japan, S Korea, Taiwan, and other countries further south.

In the south, count on Australia, India, etc

On the west, the NATO alliance….

Looks like all the bases are covered, bar the Arctic….

#74 Last one out close the door on 07.21.15 at 10:42 pm

Garth,

As a self-proclaimed patriotic Canadian, what do you recommend to stop the generational brain drain….looks like all the boomers will be spending the golden years in their $1 million crack shacks, while the young’uns head yonder to seek their fortune….geeks to SoCal, petrol-heads to Middle East, etc. looks like a good percentage of the voters will be gone soon.

#75 Ronaldo on 07.21.15 at 10:43 pm

#60 TurnerNation on 07.21.15 at 9:37 pm

”Another article on couple with 100k gift from parents purchasing an old 800k semi in a so so area.
Mum on bidding war though.”

Fools. The parents pass on a good chunk of illusionary wealth to their kids as a downpayment on a house that is probably only worth half what they are paying for it. When the inevitable correction occurs the $100,000 in illsuionary value disappears into thin air along with a few other hundred thousands. Mommie and Daddie are ok because they never had that wealth to begin with since it was all illusionary. What will be real though is the mortgage that they were able to secure with this illusionary (monopoly money). That will not go down with the price of the overvalued house. And the other thing that will be real is the increase in interest rates which will double over the years causing their payments to double on a house that has reduced in value by half. What a trap.

#76 Musty Basement Dweller on 07.21.15 at 10:45 pm

I remember well when things died in those years. Lots of friends of mine got caught in the eastern real estate spiral as they desperately tried to get back to the west coast. Vancouver is artificial enough with its present bubble but the fact that Toronto is so high now with so little to offer should cause some serious waking up and reality checking with all of us.

#77 cramar on 07.21.15 at 11:04 pm

CBC National tonight had another feature on the hard times in Alberta. This time the increase in use of food banks. Someone mentioned that it is better to cut back on buying food and use a food bank, than giving up your house and becoming homeless.

At the end of the feature they said that foodbank usage across Canada is already up 25% over the recession of 2008. Doesn’t bode well for the future.

#78 TurnerNation on 07.21.15 at 11:09 pm

I’m saying watch for a trend of local prefecture city planners and mayors becoming as heros following rushed plans restricting our living.
Calgary has one. TO Life made one.

Central planners are valuable. Why A. Speer was spared with only jail time back then. I’m on trend looking for them.

#79 NoOneOfConsequence on 07.21.15 at 11:19 pm

Well….my step-dad, my partner, and my partner’s sister all have very upscale ‘revenue’ properties. They have been ‘landlords’ for years. The cities involved are: Vancouver, Delta (Greater Vancouver), Regina and Calgary.
For the last three years their rents have been static -NO INCREASE. They are afraid to raise rents because they have ‘good’ tenants and don’t want to risk losing them.
For the last three years – ALL the rental houses have been subsidized from $200-$400 per month. Meaning…the rent doesn’t cover their monthly costs.
For the last three years, they have all spent in excess of $5000 for maintenance in some fashion.
They all want to sell…but are now afraid to list their homes. They worry that the ‘good tenants’ will leave and they will be faced with huge mortgage payments with no income – vacant rental syndrome.
In the last three years – property and or property related taxes have increased in all cities. (either property tax, water, school, etc).

So…while I appreciate everyone talking about their ‘income generating rentals’…I see a completely different reality.

People who are 55 – 65, carrying huge mortgages, frozen in indecision, too nervous to raise the rent or list the home. Massive stress…contstant worry knowing that if a renter leaves, and they can’t get another…it’s two months to disaster.

But when they calculate their ‘net worth’ on paper…they are all millionaires. Whoa! Exciting times!

So when people talk to me about leveraging their existing home to ‘buy a revenue property’ I just shake my head sadly.

It’s way harder than people think.

#80 Steve French on 07.21.15 at 11:21 pm

Canadian and Aussie real estate….

it’s a trap!

https://www.youtube.com/watch?v=4F4qzPbcFiA

https://www.youtube.com/watch?v=mNLuq0lW50k

#81 raider on 07.21.15 at 11:27 pm

For those that don’t want to google hard.

Bank of Canada had a nice piece of research how the 90s were like.
http://www.bankofcanada.ca/2001/01/canada-economic-future-what-have-we-learned/

Best of all:
“Because of these deficits, public debt was accumulating at an unsustainable rate, and foreign and domestic investors were becoming very nervous about holding Canadian government bonds. As a result, significant risk premiums were built into our interest rates.”
… so where will all that supposed HAM go, when you actually will need it, with the NDP ruling Alberta, Liberals in Ontario, and Conservatives on shaky ground for the next election.

#82 Seth Cohen on 07.21.15 at 11:35 pm

To #31 sheane Wallace

Negative equity and upside down real estate is coming soon to Canada.

QE or anything else they do will not work. It did not work in the U.S. because it is still not over.

Wait for another downturn coming to a life called reality near you.

As for negative interest rates, I would rather let my dog eat then pay them.

#83 Karma on 07.21.15 at 11:37 pm

Totally debby-downer day at the G&M

http://www.theglobeandmail.com/life/home-and-garden/real-estate/equity-generation-squeezing-retirees-savings/article25566893/

http://www.theglobeandmail.com/news/national/alberta-food-banks-under-strain-as-rural-towns-bear-brunt-of-oil-slump/article25619759/

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/as-oil-prices-plummet-calgary-reaches-record-levels-of-unleased-office-space/article25610756/

#84 Yessss! on 07.21.15 at 11:40 pm

GO, Donald baby!
D. Trump will be PREZ! Ya’ll heard it here first!

http://www.zerohedge.com/news/2015-07-21/gop-enters-panic-mode-des-moines-register-calls-trump-withdraw-presidential-race

Then T.O. will probably just be annexed to Detroit (sorta like most of Ont is now) to solve all of its overinflated RE price ego problems…

#85 Smoking Man on 07.21.15 at 11:41 pm

#66 TurnerNation on 07.21.15 at 10:08 pm
How cute. Today’s couple has sold their future labor and the income stream to their bank. Let’s say a 25-yr avg. 6% stream of cashflow to bank?
Living the Ream.
……

Jesus Christ man, turn in your obidance certificate, can’t you spell, it dream not ream.

Sad day when a dyslexic has to be a gammer Nazi.

#86 Waterloo Resident on 07.21.15 at 11:46 pm

For anyone who bought an investment property in Arizona; I would sell it as soon as possible, because soon Arizona will be 100% cut off from water supplied from the Colorado river.
Just imagine what will happen to house prices without water to flush the toilet, take a bath, or anything ? It won’t be pretty. You see, Arizona gets most of their water from a very large aqueduct called the ‘CAP’ (Central Arizona Project) and in 1968, when Congress finally authorized the CAP, California’s political muscle forced Arizona’s delegation to give California first priority and the CAP last priority to river water during any shortage, and right now the river levels are almost at the low level mark where Arizona will be cut off from all water supplies from the Colorado.
( http://tucson.com/news/local/is-california-trying-to-take-our-water/article_9f374f9e-5045-58b7-9e3b-3af65e86f4aa.html )
Yes, Arizona does have enough water underground to meet 20% of their needs, but that’s nowhere near enough to keep house prices at their current highs.

So if you made a good profit from buying a Phoenix Arizona house some time in 2008 to 2010, you better sell now before the taps run dry.

#87 Ron on 07.21.15 at 11:58 pm

Here in delusional LaLa land Vancouver the media occasionally tells us that the worst decline in real estate was 20 – 30% in 1981 to 1984. So many people in this city think that is no problem as my house has gone up substantially more. The cold hard reality is that it collapsed 60 – 70%. The media is right in there with the real estate industry pumping up the market with false information. I lived through the collaspe and it was beyond brutal. My next door neighbour listed his house for $315,000. 3 years later he finally sold for $105,000. Another friend bought at the peak for $690,000…..yes it was an incredible house. He had to sell when his financial life started to fall apart. He finally sold in desperation for $180,000. I had other friends declare bankruptcy when they bought a new house before selling their old one. 60% WAS THE MINIMUM DECLINE!!!!! It is amazing to me that this city is so full of lies and nobody ever corrects them. When I tell younger people my stories they think I am a crazy old man who has lost his marbles. In a year or 2 we will all see who is crazy and who loses his marbles. Thanks for the great work Garth, Unfortunatley as you know we both face an uphill battle.

#88 S.Bby on 07.21.15 at 11:59 pm

The ghost town of Bradian BC is for sale once again after being bought by Chinese investors who have now decided they can’t make a go of it.

http://www.huffingtonpost.ca/2015/07/15/bradian-bc-ghost-town_n_7805222.html

#89 Ronaldo on 07.22.15 at 12:01 am

#13 S.Bby on 07.21.15 at 7:06 pm

”In YVR we’d need a 50% haircut before prices would even begin to approach affordability for the average resident.”

Absolutely. And even then, the average price of a sfh would be 9 times average family income. They would need to fall another 50% to get back to historical ratios or wages would have to double from where they are now. And this is at current interest rates. There is a rude awakening coming.

#90 AnneK on 07.22.15 at 12:18 am

In my office of about 12 , everyone owns a house. In the past few months at least 3 have bought recently. Everyone is congratulating each other.
Here is the latest.
On of my coworkers,bought in Scarborough in a bidding war. His agent advised him against a home inspection because he would not stand a chance in being the successful winner.
So, now he moved in. No home inspection prior to purchase.
He finds mold in the basement behind the panelling.
Big expense.
On top of the huge mortgage he will be paying.
Idea: if you want to sell a defective house , price it super low, start a bidding war. No home inspection. Your house is sold! You got rid of a problem home.
The buyer beiieves he is the winner of a home. Is he really in this case?

#91 saskatoon on 07.22.15 at 12:28 am

the housing market “crash” of the early 90s didn’t really go away.

it was just postponed.

“growth” since dot-com bust has been fueled by a massive influx of debt–both private and governmental.

this not growth; and, it is not sustainable.

in other words, the current canadian recession is not a new phenomenon.

#92 K.L. on 07.22.15 at 12:56 am

#2
I think a 32% loss is pretty big. Also 32% is an average. The U.S. is a big place some areas were hit harder than others. Although big cities will always be more expensive. I wouldn’t expect something decent in Vancouver to be under $600000-$700000.

#93 Groovy on 07.22.15 at 1:22 am

#72 IHCTD9,

Bang on.

#94 family beagle on 07.22.15 at 2:12 am

Nineties memories.. Jamming on Granville street. $1 slice pizza. Street art. Grunge. Six month long flea markets at Denman and Butte. Commercial Drive was a wasteland. Northeast Calgary went bust five years earlier. Then Edmonton. Then Vancouver. Then Toronto. Economic swings between 604 and 416, between atlantic and west coast. Some in Quebec wanted out. One region was up while the other was down. Yet none of it tops the high interest carnage of the early eighties. People in debt were a sorrowful lot. People in small towns were lighting fires to get work. Nobody had money. My parents split up. Layoffs everywhere. House parties flourished, because everyone needed cheering up so they’d gather around whoever could afford beer and suck it through straws. Big hair was in. All show/no go. Cars were boring. Houses were boring. Life was boring. Seemed everybody was broke. If you had money, you hid it. Then we had Expo and the 88 Olympics. Jimmy Pattison, Eddie the Eagle, and the Jamaica Bobsled team saved us. The end.

#95 WhoLikeShortShorts on 07.22.15 at 3:12 am

Not buying this story ….

‘Home Capital no ‘canary in the coal mine’: Scotia Capital’

http://business.financialpost.com/investing/trading-desk/home-capital-group-upgraded-by-scotia-following-last-weeks-stock-plunge

#96 juno on 07.22.15 at 3:32 am

Interesting how people still think housing can only go up. After the latest lowering of the rates.

The cost of living for the average Canadian has just gone up by about 25% over the last year.
Jobs are crap andwill continue this way for at least 4 years. And yet people are still on a spending spree instead of taking a holding pattern

All I can say is you can’t defy gravity forever. One day your have to come back down to earth

#97 Sheane Wallace on 07.22.15 at 6:12 am

#73 Santa Clausewitz

I thought India is in the BRICS. So you are saying they will confront China, their neighbour and future biggest partner because of US?

What are you smoking?

Not that I like China, but I think we handle them inappropriately and it will bite us.

#98 Steve French on 07.22.15 at 7:10 am

What a sorry bunch of Debbie Downers on the GF blog today….

Is the tide finally turning on the greatest property bubble evah ?

…. IT’S A TRAP !!!!!

#99 Gregor Robbison on 07.22.15 at 7:18 am

Who was buying houses in Canada back then?
Who is buying houses in Canada now?
Did the world know about Vancouver?
Where else are the Chinese, (and the world’s financially well healed), supposed to hide the money smuggled out of China that their government is now looking for?
I can believe that there is always the risk/potential/inevitable certainty that housing will slump as this is the norm, but it is cyclical and where do “we” expect the1 million more people coming to Vancouver in the next 15 years to live?
How can a massive influx of people not affect house prices be it for SFH or properties that have been rezoned to accommodate this mass migration in a positive way?
I would not invest in a house at this time but I understand that people with money will. Houses in Vancouver are selling anywhere from 30% to 50% (quite common), over assessed values.
I understand that it is emotional and that houses are being bought with unearned monies. I believe that parents are indulging their children’s idiotic preoccupation with granite countertops and lavish lifestyles, and that if rates go up, (and they have to, even to a modest 5-7 % that their children will be hooped and that the parents will have to dole out more money to the little monkeys.
I believe that changes need to be made and that we need to know about foreign ownership of properties in Canada.
I believe that we need to consider a tax, as anti Capitalistic as it might seem on houses that are flipped in an effort to help control the market.
I believe that seniors shouldn’t be forced out of their homes, or forced to defer taxes on properties that they have lived in for a period in excess of what 10/15 years.

#100 ALBERTASTROPHE on 07.22.15 at 8:00 am

Alberta is in for some punishing times ahead. Things will be getting much worse soon, before any chance of getting better.

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/as-oil-prices-plummet-calgary-reaches-record-levels-of-unleased-office-space/article25610756/

#101 Ret on 07.22.15 at 8:11 am

Anyone who has arrived here since 1996 has only seen up, up, up. Many have gone all in in the fear of missing out.

The 1990-1996 fall and 1996-2002 rise in the GTA was an almost perfect trough when graphed. No guarantees of a repeat.

Central Florida, still a bit of a mess from the GFC. SIL’s place lost $4000 last month.
1987- 1850 sf ranch built outside Sebring in the “cars” survey. Price unknown. Postal area, 33872.
2005- Zillowed at 249000
2007- SIL purchases for 210000 (Great deal eh!)
2012- Zillowed at 115000. Ouch!
2015- Zillowed in June at 145500, down 4000 from May.

There are still foreclosures listed in her area depressing prices. She may get back to even by 2019-2020 but that will be with 210000 of 2020 dollars which will be worth a lot less than the 210000 of 2007 dollars that she went in with.

#102 SWL1976 on 07.22.15 at 8:17 am

#78 TurnerNation

I’m saying watch for a trend of local prefecture city planners and mayors becoming as heros following rushed plans restricting our living.

Calgary has one. TO Life made one.

Central planners are valuable. Why A. Speer was spared with only jail time back then. I’m on trend looking for them.

A tip if I may; Agenda 21 now has a new handle, something a little softer. Something the present and future hipsters fresh out of university can really sink their teeth into. It’s now known as Future Earth, and this will have the schooled fighting and competing over who can construct the smallest and most meaningless slave dwellings.

Also have a look at the ICLEI with their catch phrase Local Governments for Sustainability

Good to see people are paying attention

Living the ream – Now that’s good

#103 Dee on 07.22.15 at 8:32 am

Anecdotes of the American recovery… I was sitting at a campfire on the Michigan side of Lake Huron with my brother-in-law last night. He’s a tech recruiter in metro Detroit.

“I’ve got 175 tech jobs open right now. App development, infosec, ops. Cloud, Windows, Linux. You name it, I’ve got a position. And we can’t fill them fast enough–not enough talent in the pool.” He’s been a recruiter 18 years, says he’s never seen anything like it.

I said it’s cool that Detroit’s coming back that much. I was born here, but have lived a bunch of places, currently Toronto. He said it’s not just Detroit–almost every office across the US is seeing this, with huge numbers of positions with good pay and benefits going unfilled.

If you’ve got skills and no work, get yourself south of the border. I’m happily employed and love living in Toronto, but if the former changes, I’ll be doing that myself.

#104 Sacramento Northern on 07.22.15 at 8:49 am

Another fine column, Garth. A shame ‘history’ for most Canadians is who won the Super Bowl last winter or the Stanley Cup last month. Before 2010? That’s like ancient history, MAN. Was there electricity back then?

Now for some really ancient history – the housing collapse of 1979, ten years earlier, culminating in 22% mortgages in 1981 and people walking away from their homes in Calgary. Remember Dome Petroleum? Smilin’ Jack Gallagher? You would, Garth, and a handful of readers of this blog, too, but most Canadians? Never heard of them. Or that crash in 1979/80. Pity.

#105 maxx on 07.22.15 at 8:49 am

#16 Bottoms_Up on 07.21.15 at 7:12 pm

“Yet 2561Yonge street is still the same building, in the same location, and now the population has also doubled.”

True, however population increase doesn’t do much good if good jobs with longevity, benefits and pensions are evaporating and aren’t coming back.

The equation most everyone is used to is broken and former pricing logic is only currently functional based upon recency/normalcy bias.

Times have changed and continue to do so. We’re in a “pay as you go” world and this efficiency is not lost on the younger crowd.

#106 LOL Canada on 07.22.15 at 9:11 am

Take a 2M Tornto home:
http://www.realtor.ca/Residential/Single-Family/15897956/39-GILGORM-RD-Toronto-Ontario-M5N2M4-Forest-Hill-North

Which a comparable home could be rented for 2500/month.

This home sold could be the equivalent of 66 years of rent, without the mortgage, utilities, taxes, upkeep, etc.

Why would anyone buy unless it is purely on speculation of houses continuing to increase in value?

That is the only reason why prices are where they are.

#107 Holy Crap Wheres The Tylenol on 07.22.15 at 9:14 am

#98 Steve French on 07.22.15 at 7:10 am
What a sorry bunch of Debbie Downers on the GF blog today….
Is the tide finally turning on the greatest property bubble evah ?
…. IT’S A TRAP !!!!
__________________________________________
You cant stop them.
https://www.youtube.com/watch?v=ctM3U1SOVQg

#108 4 AM Sunrise on 07.22.15 at 9:17 am


#85 Smoking Man on 07.21.15 at 11:41 pm

Jesus Christ man, turn in your obidance certificate, can’t you spell, it dream not ream.

Check your urban dictionary, Smoking Man, because “Living the Ream” was actually really punny!

#109 Holy Crap Wheres The Tylenol on 07.22.15 at 9:24 am

The commodity plop this gilded blog detailed yesterday is not just about crashing gold miner stocks, out-of-work engineers or the misery of trying to find a buyer for your house in Calgary. As mentioned, the Bank of Canada rate cut seven days ago was an admission of troubles. It would be really smart to pay attention.
____________________________________________
Always diversify on commodities but this one can from nowhere. Yep took a large hit on coffee, who knew, dam good year for coffee harvests and everyone’s peso against USD. Oh well you win some you loose some, nobody wins it all.

#110 Holy Crap Wheres The Tylenol on 07.22.15 at 9:34 am

There is money to be made here. Perhaps it is time to start capturing all of that wasted fresh water flowing into the Arctic. But no politician has the balls to make that move and push it through. We could own California outright. Nobody can survive without water!

http://247wallst.com/special-report/2015/06/16/9-cities-running-out-of-water/

#111 -=jwk=- on 07.22.15 at 9:38 am

“The USA housing crash was only a 32% loss? That would still make Toronto/Vancouver housing expensive”

32% was the national average. Some areas ,like vegas, phoenix and miami were hit much harder. In Florida land transactions are public, and posted online, so you can easily see the carnage. I bought houses in 2009/2010 for 65-85k that had previously sold for 250-290k. That’s a 70+% drop in value.

Today those houses are selling in the 110-120k range, which is about right is you look at Hx values. Still about 40% off the peak, but inline with rent and income levels in the area.

We just closed on a new build in a gated community, 200k, we just listed it for rent at 2000/mo. (cape coral if anyone is interested in moving!). Can’t get anything like that in Canada, not even the small cities.

In a Toronto supported by income, not CMHC funny money, prices would be 1.25 * rent. A 1 bed condo that rents for 1600 would sell for 1600*1.25=200,000. If rent drifts down to 1400, it would be worth 175000 max. Max. Think about that…

#112 Axehead on 07.22.15 at 9:47 am

I purchased a house in Alberta in 1990 for $76,000: 1200 square feet, 3 bedroom bungalow, 5 years old. My mortguage rate was 10 1/4 % and I was happy to get that. House value was approximately 2.5 x my salary at that time.

I miss those days, much simpler and more innocent.

#113 Reality Check on 07.22.15 at 9:51 am

#9 Michael on 07.21.15 at 6:59 pm

Even with oil prices flirting with record lows, home prices here in Calgary are still insane:

http://www.rooneycroninvalentine.com/spw/C4018844-536-49-av-sw-calgary-t2s-1g5/

http://www.remax.ca/ab/calgary-real-estate/na-1120-bellevue-av-se-na-wp_id119248675-lst/

______________________________________

Look, I get it. Some people think they’ve got a guaranteed lottery win under their feet. But you’re cherry picking houses that are not owned by people who live in reality.

For the same prices you’re showing me there, you can easily acquire a new inner city (think Altadore, Kilarney, West Hillhurst) infill built within the past year.

Perhaps you should give yourself a healthy dose of reality rather than running around and claiming a 94% decline is in our future. It’s not. People are still working. Many making large salaries. This is not your parents bust cycle.

#114 Reality Check on 07.22.15 at 9:57 am

#79 NoOneOfConsequence on 07.21.15 at 11:19 pm

It’s way harder than people think.

__________________________________________

No, no it’s not. Sounds like your family members are just really bad at it.

#115 Chris on 07.22.15 at 10:09 am

@jwk

I don’t get it… who would pay $2000/mo to rent a house they could purchase for $200k? It doesn’t make sense (to me anyway). Do these homes actually rent out at that rate?

#116 waiting on the westcoast on 07.22.15 at 10:14 am

Business owners in my space (consumer home services) are feeling the heat in Alberta. While the US operations are growing at ~25% and other Canadian oops are averaging 15%+, the Alberta operations are shrinking 10 and 15% respectively.

As I have mentioned on this blog before, my business is a leading indicator on consumer confidence. We saw the US market decline in 2008 six months before people were talking about it in earnest as our revenues were tanking 25-30%.

#117 Uncle Joe on 07.22.15 at 10:15 am

The comment that our low dollar is good for our real estate market is true. No one implied that Americans were moving here.

#118 Bob Santarossa on 07.22.15 at 10:19 am

Good recollection for Eastern Canada.

A history lesson of Calgary in the early 80s:

Oil and gas projects booming, lot of jobs due to skills shortage (you could quit your job, cross the street for 10-20% more the same day – I used to be a Manager at Fluor Canada then, and that was the norm), home building booming, people buying/speculating, flipping homes for % points within weeks of purchasing and oil prices rising making gasoline prices expensive in Eastern Canada.

Then came the Windfall Profits Tax, courtesy of the Liberals (over the years to follow $20 billion in then dollars, over above transfer payments, were redistributed from Alberta to Ontario/Quebec to lessen gasoline/oil prices there). Not long after, oil and gas projects cancelled with the result being large job losses. Virtually no home buyers, many sellers. The standard joke in Calgary then was: “last person out, don’t forget to turn the lights off.”

Also, there were scam artists everywhere in Calgary it seemed saying they would by your home for a $1. Many people got suckered into this thinking they could get out of their underwater mortgages or now unaffordable homes due to a job loss. In reality, these people never transferred title and clogged up the courts (Banks suing delinquent and unsuspecting mortgage holders) for at least 6 months. The scammers knew that and would rent the properties out during that period of time making themselves a tidy profit and % return (% = at least 6 months of rent / $1).

Add to the above and during the boom, a determined Bank of Canada hiking prime rates such that at one point, prevailing mortgage rates hit 17% – and still, people were buying homes.

A bit of a history lesson for the echo boomers and you too oh Eastern focussed Garth…

Does the above sound familiar?

#119 Sarah D on 07.22.15 at 10:23 am

I’m 26 years old.

I don’t come from money.

I worked really hard to save up a good chunk of change for a down payment on a house, by myself.

I lived at home longer than I would have liked in order to save.

And guess what… I can’t afford anything livable. Because all of these kids that borrow money from their parents are driving the cost of houses to unaffordable levels.

As someone who worked hard and saved hard, having the market at the state it is is frustrating.

But I will have the last laugh, because when the market crashes, I won’t be sitting with a mortgage worth more than my house. And I’ll be able to afford something really nice, and all my hard work will finally pay off.

Soon.

#120 TRT on 07.22.15 at 10:31 am

See how many points you get through.

1. Dollar at 10 year lows and falling…

2. Oil at $49 and falling…=Alberta bust!

3. Consumer inflation lies to continue.

4. BoC cut coming to help Oil industry.

5. Snowbirds getting angry their pensions not going as far in the States. Hahaha.

6. Canada has a job shortage…based on express entry immigration stats…hahaha

7. Early election call… Jason Kenney trying to gather votes from anyone.

#121 Samantha on 07.22.15 at 10:32 am

#104 LOL Canada on 07.22.15 at 9:11 am

Take a 2M Tornto home:
http://www.realtor.ca/Residential/Single-Family/15897956/39-GILGORM-RD-Toronto-Ontario-M5N2M4-Forest-Hill-North

Which a comparable home could be rented for 2500/month.

——————————————–

Good luck renting a house like that for less than $4,500/month + utilities. Do some basic research before posting nonsense. If houses like this one, in a great location like this one,were that cheap to rent, I would be renting instead of paying a mortgage. Here are a couple of rentals in the area of somewhat similar sized houses (note the first two listings are 3 bedrooms only):

http://www.realtor.ca/Residential/Single-Family/15845968/503-MERTON-ST-Toronto-Ontario-M4S1B4-Mount-Pleasant-East – $4K

http://www.realtor.ca/Residential/Single-Family/15919032/138-ST-CLEMENTS-AVE-Toronto-Ontario-M4R1H2-Yonge-Eglinton – $4.5K

http://www.realtor.ca/Residential/Single-Family/15890428/477-ORIOLE-PKWY-Toronto-Ontario-M5P2H9-Yonge-Eglinton – $4.6K

#122 Llewelyn on 07.22.15 at 10:39 am

Let me respond to the observation that a limited number of single family houses in Toronto will support the continued escalation of market value forever by examining the real advantages of living in Toronto.

As technology reduces the need for workers to be accommodated in large office buildings it seems probable that employers will wake up to the fact that they can save a tremendous amount of cash by encouraging their labour force to perform a majority of their duties in a home office in locations where housing is more affordable.

Wage savings would be in addition to the savings realized by reducing the amount of office space required to accommodate essential operations.

If I had been asked to take a 15% reduction in take home pay in exchange for being able to perform the majority of my duties in a home office when I lived in Toronto I would have accepted immediately.

Toronto traffic is one fender bender short of chaos each day, parking rates can exceed $5,000 per year and even a Metro pass costs $1,700 per year. Add the value of time spent commuting into the equation and the advantages of living and working in Greater Toronto seem to be fading fast.

When did Canadians stop considering their quality of life and start worshipping their ‘gross’ salary as if it was the only measure of true wealth.

#123 calgary on 07.22.15 at 11:05 am

the houses i am unsuccessfully bidding on:
$100Ks in 1990s
$200Ks in 2000s
$500Ks in 2010s
clearly unsustainable.
these are developing country like price inflation in Canada. makes no sense.
and contrary to all reports, a move in ready house, price in the middle (for its stats), still sells in a week, close to asking price.
thats y i still gotta rent.

#124 Rational Optimist on 07.22.15 at 11:24 am

If anyone is interested in a laugh, Million Dollar Journey is a great site which I was just told is not actually meant to be satirical.

The latest post is a “net worth update” by a real estate agent (Karl with a ‘K’) who actually does own an Audi A9…well, kinda, he still owes $13,000 on the six-year-old car. 33 years old, and less than twenty thousand dollars. But he figures his net worth is half a million, half of that due to paper gains he personally reckons on his principal residence and a semi-detached he rents out.

Check it out: http://www.milliondollarjourney.com/net-worth-update-july-2015-karl-the-real-estate-agent-10-17.htm It’s mind-boggling, but hilarious if you don’t think too hard about the fact that it’s a real human being.

#125 SHOMI on 07.22.15 at 11:37 am

Garth, in a previous blog you mentioned millions are to be retiring soon, who will pay for this and what is your view on this?

How is Canada going to afford health and long-term care?

Health and long-term care amounts to about 40% of Ontario’s spending. With the projected number of retirees, this percentage will inevitably increase.

(http://news.nationalpost.com/news/graphics/infographic-where-ontarios-money-goes-now)

#126 Republic_of_Western_Canada on 07.22.15 at 11:42 am

#103 Dee on 07.22.15 at 8:32 am

Anecdotes of the American recovery… I was sitting at a campfire on the Michigan side of Lake Huron with my brother-in-law last night. He’s a tech recruiter in metro Detroit.

“I’ve got 175 tech jobs open right now. App development, infosec, ops. Cloud, Windows, Linux. You name it, I’ve got a position. And we can’t fill them fast enough–not enough talent in the pool.” He’s been a recruiter 18 years, says he’s never seen anything like it.

What he doesn’t tell you is that they are specifically targeting one particular version of one particular software tool (which will be fully obsolete in 18 months) in each case, as if experienced developers never wrote a line of code.

They expect to inhale and burn out 20-somethings who’ve picked up the hula-hoop software ‘de jour’. Never mind that in many cases it’s crap junk destined for a short lifespan. Most IT people don’t even bother getting a comp sci degree anymore.

#127 This Old Guy's Seen Too Much on 07.22.15 at 12:06 pm

Mike is right…real estate crashes have been a regular element of our financial history.

1) The mass crash in 1963 brought about the ‘Hippy Era’ where hundreds of thousands of unemployed youth huddled together in flop houses and produced a social phenomena now known as ‘The Age of Aquarius’. Everybody got stoned and lived day to day in raggedy clothes. Your average bung cost $12,000 and the average wage was $600 p/m. Rents for a large Victorian with 8 bedrooms was $175 p/m and ‘the hippies’ ….actually just poor people…piled in and called them ‘communes’.

2) 73′ – ’76 the market corrected again as the Vietnam War ended and businesses had no markets to sell into and instead retooled for a post war economy. We did not see the housing boom from returning soldiers as had happened in 46-47.

2) ‘The Bitter Winter of 81-83’ brought the biggest dollar value crash where houses corrected 50% and more literally overnight. A large house in Vancouver’s best districts were under $250,000 at the time.

3) ‘The Slow Flop of ’91’ through 2000 was exactly as Garth describes..a slow grinding money toilet where mortgage payments were thrown at historic debt with no return. It was only when Allan Greenspan invented the ZIRP’ that hyper inflation kicked in and has caused all prices to skyrocket to historic highs.

4) The HAM Phenomena of 2010 to Present has seen prices pushed up by hundreds of thousands of foreign nationals laundering money desperately into Canadian and International real estate ahead of Chinese authorities who are chasing them down…. and beginning to make headway on that account. Once an extradition treaty is signed with China it is the belief of many watchers that thousands of house will flood the market when China attempts to recover the stolen loot after having gained control of their far flung crooks.

#128 what bubble? on 07.22.15 at 12:44 pm

China’s Record Dumping Of US Treasuries Leaves Goldman Speechless. Or let us paraphrase: how soon until QE 4?
http://www.zerohedge.com/news/2015-07-21/chinas-record-dumping-us-treasuries-leaves-goldman-speechless

#129 gut check on 07.22.15 at 12:46 pm

@ #23 Daisy Mae on 07.21.15 at 7:35 pm

And, that’s what a federal NDP government will do –drive corporations out of Canada. And with them, jobs.
As they say, be careful what you wish for.

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

Have you been careful what YOU have wished for? Look where we are right now. Did the NDP do this?

And although there would be pain in the short term, what on EARTH makes you think we’re better of WITH corporations poisoning our environment, stripping wealth from the country, and moving jobs offshore or bringing in the cheapest labour possible to DO those jobs?

I’d say adios, amigos to the fat cats. Let them go eat their special cake somewhere else. Local economies and small to mid sized businesses which are responsive to consumers and the will of the people are the ONLY way forward.

Be careful what you wish for. Bah. You’re one to talk.

#130 Westcdn on 07.22.15 at 12:49 pm

1 of 5 Ottawa residents are a registered member of Ashley Madison. The highest concentration is in the postal code of Parliament Hill. Time for some changes to how the country is run. I find it hard to trust one of weak morals. Other than this latest revelation, my day is going good.

http://www.msn.com/en-ca/news/canada/twenty-percent-of-the-canadian-capital%e2%80%99s-residents-are-registered-on-ashley-madison/ar-AAdjpt4

#131 pbrasseur on 07.22.15 at 12:49 pm

CAD vs USD at 10 year low today

Looks similar to the period starting in the early 90s ( when the CAD was worth about 85 cents), the descent started then and lasted until 2002 where it reach 0.6179, its all-time low!

Different this time? On economic fundamentals alone I think the current period is actually worse, this nation has to deleverage massively this time not just the public sector, productivity is mediocre at best and the demographics are nothing like they were in the 90s. Only question mark is the commodity/oil cycle but even that doesn’t look very promising, at the moment it’s the opposite. All in all it looks like a perfect storm for the CAD and the Canadian economy. Could be wrong but I doubt it and frankly it should be expected because for a long time the planets were aligned to mask our weaknesses (commodity cycle, low rates just at the right time to support RE, etc…).

It think within 5 years, probably much sooner we’ll beat the all-time low.

#132 leslie on 07.22.15 at 1:02 pm

Looks like we need to keep borrowing to keep the economy going…how else is the middle class going to spend?
SPending IS the only way to keep economy going, if people just hoard money..the game stops very quickly.

People can only work so many hours, if the rich want to squeeze for more return on their investment…middle class have to borrow to make ends meet or live comfortably

#133 Renter's Revenge! on 07.22.15 at 1:12 pm

#114 Chris: “I don’t get it… who would pay $2000/mo to rent a house they could purchase for $200k? It doesn’t make sense (to me anyway). Do these homes actually rent out at that rate?”

It’s my understanding that when the price to monthly rent ratio of a property is around 100:1, it’s a good time to make the investment.

The net after expenses, after tax profit from rent on the house works out to only 4.5% of the purchase price per year. [(24k – 6k)*0.5/200k]

But, if you have 200k in investments and you want to stay mobile, it still might make sense to rent, even at that price to rent ratio.

Makes renting in Canada seem like a no-brainer, eh?

#134 Squirrel meat on 07.22.15 at 1:14 pm

Hope nobody owns Bombardier!

Still really hope they can succeed.

http://www.theglobeandmail.com/report-on-business/bombardier-shares-fall-dramatically-after-downbeat-assessment/article25628087/

#135 Smoking Man on 07.22.15 at 1:19 pm

Wynne contemplating making the HOV lanes into a toll lane, so much for tree hugging ideology. This puts more cars on the road.

She’s like a wild animal, relentlessly hunting a plotting to get her grubby hands in all our wallets.

Fire some teachers, close some empty schools…

No concept of efficiency.

#136 Sam Milken on 07.22.15 at 1:38 pm

The Canadian dollar to U.S. dollar is at 2004 year low at 0.7682.

The TSX is now 14,298 about 5% below its 2007 peak level of 15,000.

It looks like 2015 is the year of meeting record lows going back to many long yearly records.

#137 Ottawa gal with the best government job on 07.22.15 at 1:44 pm

#129 Westcdn

“1 of 5 Ottawa residents are a registered member of Ashley Madison. The highest concentration is in the postal code of Parliament Hill. ”

Hmmmmm….. Garth, you were in Ottawa for about nine years, weren’t you?

Did we ever meet online?

My AM handle was House (of Commons)Horny-Moist Virgin.

You would have remembered my threesome story with Mike Duffy. I think I remember your scratchy beard.

Then again, maybe not. Or did we………..

#138 Courage and Poo on 07.22.15 at 1:53 pm

#127 what bubble? on 07.22.15 at 12:44 pm

How dare you quote Zero Hedge here!

#139 MF on 07.22.15 at 1:57 pm

#105 maxx on 07.22.15 at 8:49 am

“#16 Bottoms_Up on 07.21.15 at 7:12 pm

“Yet 2561Yonge street is still the same building, in the same location, and now the population has also doubled.”

True, however population increase doesn’t do much good if good jobs with longevity, benefits and pensions are evaporating and aren’t coming back.

The equation most everyone is used to is broken and former pricing logic is only currently functional based upon recency/normalcy bias.

Times have changed and continue to do so. We’re in a “pay as you go” world and this efficiency is not lost on the younger crowd.”

-maxx..your posts are always spot on and reflect my reality in the GTA as well.

a slight downturn (which is an inevitability) and this recency bias goes bye bye very quickly.

Times have changed. Good high paying jobs are hard to come by. The population angle is just realtor propaganda. Everything in the GTA market is laughably overvalued.

MF

MF

#140 Bottoms_Up on 07.22.15 at 2:03 pm

#129 Westcdn on 07.22.15 at 12:49 pm
————————————————
the ‘parliament hill’ postal code also happens to cover a bunch of high-rise apartments full of 20- and 30- somethings (likely many single). Just because it’s ‘AM’ doesn’t mean you have to be married to be on it!

#141 saskatoon on 07.22.15 at 2:33 pm

#131 leslie

yes, only rich people want more from their investments?

additionally, nobody HAS to borrow.

typical commie anti-logic.

sad.

#142 Smoking Man on 07.22.15 at 3:14 pm

#136 Ottawa gal with the best government job on 07.22.15 at 1:44 pm
#129 Westcdn

“1 of 5 Ottawa residents are a registered member of Ashley Madison. The highest concentration is in the postal code of Parliament Hill. ”

Hmmmmm….. Garth, you were in Ottawa for about nine years, weren’t you?

Did we ever meet online?

My AM handle was House (of Commons)Horny-Moist Virgin.

You would have remembered my threesome story with Mike Duffy. I think I remember your scratchy beard.

Then again, maybe not. Or did we………..
………

Once you excluded children and old buggers…

Could be 1 in 3

Can see the looks spouses will be exchanging tonight at the dinner table..

But with that ratio, perhaps Mr and Mrs smith will be eating with freinds.

#143 ch on 07.22.15 at 3:16 pm

6 years to come back down, well that does it, no home for me :( (vancouver)

#144 Leo Trollstoy on 07.22.15 at 3:19 pm

The 90s were great. Townhomes in Toronto for $70k, semis for $120k and detached homes for $140k. Sale of the half-decade.

#145 Bottoms_Up on 07.22.15 at 3:21 pm

#123 Rational Optimist on 07.22.15 at 11:24 am
———————————————————-
Perhaps he updated his post but I didn’t find it to be that crazy. Sure him and his wife are overweight in real estate, but they have accounted for all of their debts, and are aggressively contributing to TFSAs.

#146 Steve on 07.22.15 at 3:21 pm

#139 Bottoms_Up on 07.22.15 at 2:03 pm
#129 Westcdn on 07.22.15 at 12:49 pm
————————————————
So, there is this online site for people who, by using that site, have already established themselves to be engaged in deception, and you (both) seem to think that they used real postal codes?

That seems comparable to the idea that realtors are the right professionals to help you with your financial well being. Since I saw it on TV, should I consider it the truth? House Hippos anyone?

There are lots of reasons to be concerned about ethics in Ottawa, and most more important than this one.

#147 sentry on 07.22.15 at 3:25 pm

Garth,could you please explain the comment you made in june ,”take your CPP early,always”.What is the upside of taking a lesser amount sooner,and the downside of waiting for the full amount at 65 ?Thanks.

This has been explained in detail previously. Pension rules can change (and already have for OAS). The premium for waiting is small and outstripped by gains made if you invest the CPP in growth assets inside your TFSA. You could die. Bummer. So why would you not want to have $48,000 in hand, and growing (the average CPP is $800*60 months)? Everybody should take it early. — Garth

#148 IHCTD9 on 07.22.15 at 3:32 pm

Have a look at this place down the road from me:

http://propertyguys.com/property/index/id/86058

This must seem like the deal of the century to you Toronto/Vancouver folks. It’s been for sale all summer, and just recently had the price slashed by $51,000.00 trying to move it. Originally, it was up for 550K, and was touted as “under appraised value” then (which I certainly believe). I can’t believe this has not sold to someone yet. If I sold my place, extracted the equity (99%) for a down payment , and got a highball fixed rate of 5%, I could move into this place for 1600.00/month. Most of the people I know could move right in if they felt like it.

Something is going on in Rural Ontario. Out my way, if your house is up for 400K or more, it seems this year it is going to sit. Two years ago, these kinds of houses were the only ones moving, now it’s the 150-250K places selling. It seems the move-up buyers are sitting on their wallets…

FWIW, I’m not buying it simply because I don’t want to jump into a mortgage again.

#149 NoName on 07.22.15 at 3:42 pm

#95 NoName on 03.16.13 at 10:02 am
Just got home Fromm sunny and worm Atlanta GA. Real estate is definitely picking up steam there ;) single digit increase year over year, trend is definitely there.
And peace of hwy real estate formerly known as hi-occupancy lane, is now express toll lane. I wander how long before “we” adopt same on our hwys…
http://i49.tinypic.com/104ncpx.jpg

am I good at predicting or what?

#150 Ponzius Pilatus on 07.22.15 at 3:54 pm

#77 cramar on 07.21.15 at 11:04 pm
CBC National tonight had another feature on the hard times in Alberta. This time the increase in use of food banks. Someone mentioned that it is better to cut back on buying food and use a food bank, than giving up your house and becoming homeless.

At the end of the feature they said that foodbank usage across Canada is already up 25% over the recession of 2008. Doesn’t bode well for the future.
——————
Would not worry too much.
Not enough parking space for the Mercedeses in front of the food banks.

#151 Frank on 07.22.15 at 3:56 pm


What he doesn’t tell you is that they are specifically targeting one particular version of one particular software tool (which will be fully obsolete in 18 months) in each case, as if experienced developers never wrote a line of code.

They expect to inhale and burn out 20-somethings who’ve picked up the hula-hoop software ‘de jour’. Never mind that in many cases it’s crap junk destined for a short lifespan. Most IT people don’t even bother getting a comp sci degree anymore.

You either aren’t in the industry or aren’t good at your job. There isn’t a shred of truth to the crap you spewed. Name one technology that’s become fully obsolete in the last 18 months.

#152 Broke Dick on 07.22.15 at 4:10 pm

#146 sentry on 07.22.15 at 3:25 pm
Garth,could you please explain the comment you made in june ,”take your CPP early,always”.What is the upside of taking a lesser amount sooner,and the downside of waiting for the full amount at 65 ?Thanks.

This has been explained in detail previously. Pension rules can change (and already have for OAS). The premium for waiting is small and outstripped by gains made if you invest the CPP in growth assets inside your TFSA. You could die. Bummer. So why would you not want to have $48,000 in hand, and growing (the average CPP is $800*60 months)? Everybody should take it early. — Garth

==============================
Average CPP for new beneficiaries at 65 is $618.
If one was to take this amount and calculate the reduced rate for taking it early it would then be 618*64%=$396/month, not $800.
Sorry Garth your numbers don’t add up.
http://www.servicecanada.gc.ca/eng/services/pensions/cpp/payments/

You are correct, of course. The average benefit is $618 at age 65 and $420 if taken at age 60. Taking it early means you will have collected $25,200 by age 65. If you routinely invest that money in a TFSA in assets earning 7%, it will be $30,664 by the time you reach 65. The choice seems simple to me. — Garth

#153 Bottoms_Up on 07.22.15 at 4:18 pm

#145 Steve on 07.22.15 at 3:21 pm
————————————
The postal codes are linked to credit card acounts, that may be stolen but can’t easily be faked (if you want your credit card to work).

#154 JimH on 07.22.15 at 4:24 pm

#127 what bubble? on 07.22.15 at 12:44 pm
“China’s Record Dumping Of US Treasuries Leaves Goldman Speechless. Or let us paraphrase: how soon until QE 4?”
============================
Tyler (the sky is falling) Durden strikes again!
So, China is “dumping” US Treasuries is it? Damn! Too bad he doesn’t seem to want to ever really understand how these auctions work! Then again, “dumping” looks so much better in a sensationalist headline, doesn’t it?
Where do you think China “dumped” these assets? In mid-pacific? Down an abandoned mineshaft?
China has been selling US Treasuries regularily since 2011; and accellerated sales with US Fed tapering.
But the keyword here is “sales”. The treasuries that China sold were rather eagerly snapped up by… Wait for it… Buyers! Yes, buyers!
With the Euro weakening and very vulnerable to collapse, at least in Martin Wolf’s ( of the Financial Times) opinion, US Treasuries at good yields are still very much in demand, despite tapering.
China has huge problems right now. They have to spend buckets of their own money on just maintaining an unstable status quo.
Forget about Q4… It ain’t gonna happen, dude! And for the love of God’s green earth, go to Pragcap.com and learn about the real world!
Unless of course, you love losing money

#155 Holy Crap Wheres The Tylenol on 07.22.15 at 4:27 pm

#134 Smoking Man on 07.22.15 at 1:19 pm

Wynne contemplating making the HOV lanes into a toll lane, so much for tree hugging ideology. This puts more cars on the road.
She’s like a wild animal, relentlessly hunting a plotting to get her grubby hands in all our wallets.
Fire some teachers, close some empty schools…
No concept of efficiency.
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Dont trust that guy at all.

#156 Godth on 07.22.15 at 4:32 pm

#140 saskatoon on 07.22.15 at 2:33 pm

Wow! You really have a bad case of McCarthyism. You live in a community buddy, like it or not. You’re also an individual but no man is an island, particularly today.
Exponential growth
https://www.youtube.com/watch?v=EXd66gP53fk

#157 jess on 07.22.15 at 4:34 pm

raptors

Thomas Lukin – Argentina
Iron Mountain’s suspicious fires
Iron Mountain is a leading international document storage company responsible for keeping secure extremely sensitive information.
Saturday, February 28, 2015
Iron Mountain fire deemed arson
http://buenosairesherald.com/article/183111/iron-mountain-fire-deemed-arson

A two part series on the company found allegations of tax avoidance and money laundering, as well as document storage facilities catching fire in suspicious circumstances.
Thomas’ longer piece on suspected money laundering can be found here (Spanish).
His shorter article on Iron Mountain moving companies from the Cayman Islands to Luxemburg is here (Spanish).
http://www.pagina12.com.ar/diario/elpais/1-246512-2014-05-18.html
http://www.taxjustice.net/2015/07/21/the-offshore-wrapper-a-week-in-tax-justice-67/
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capital flight scheme?
Argentina Ex-JP Morgan Executive Describes Money Laundering Scheme
Written by Elyssa Pachico
Monday, 15 July 2013
http://www.insightcrime.org/news-briefs/argentina-ex-jp-morgan-executive-describes-money-laundering-scheme
Mr. Arbizu was arrested in July 2008, and charged by federal prosecutors in a 15-count indictment with embezzling about $5.4 million from bank customers.

He remains in Argentina, pending extradition, JPMorgan said.
Thursday, May 7, 2015
Arbizu: banks work together to evade taxes

#158 Toronto_CA on 07.22.15 at 4:39 pm

Oil down another 3% today (Loonie down again with it)…I think another big round of Alberta layoffs is imminent. And no way are the Feds running a surplus if oil is supposed to be running at $60 a barrel for 2015 in their projections.

Look out below.

#159 Herf on 07.22.15 at 4:44 pm

#87 Ron

“Here in delusional LaLa land Vancouver the media occasionally tells us that the worst decline in real estate was 20 – 30% in 1981 to 1984. So many people in this city think that is no problem as my house has gone up substantially more. The cold hard reality is that it collapsed 60 – 70%.”

If the experts’ predictions are correct, the worst decline in West Coast property values is still to come, but not the way you mean. West Coast property could get really, really inexpensive in the not-to-distant future (or perhaps not in our life times) depending on when the “Big One” hits. Some folks might wind up getting the ocean views they always dreamed about (but not the way they intend – see the BBC video, below).

http://www.theprovince.com/news/Shaky+Ground+prepared+sleeping+monster+that+could+awake+time/10718851/story.html

http://www.newyorker.com/magazine/2015/07/20/the-really-big-one

https://www.youtube.com/watch?v=vEgLjgnv_3c

Here’s an idea of what’s predicted for Seattle. (Pay attention – the liquefaction modeled is what is predicted to happen in Richmond, Delta, White Rock, etc., last I heard):

https://www.youtube.com/watch?v=hos_uIKwC-c

Now, imagine downtown Vancouver and the North Shore being isolated if their many bridges collapse and/or are damaged:

https://cityhallwatch.wordpress.com/2013/08/07/earthquake-rattles-northern-vancouver-island-how-will-vancouver-downtown-peninsula-fare-after-the-big-one/

And if the earthquake tsunami doesn’t reach you, perhaps a tidal wave from a major seismically-induced landslide will:

http://geology.com/records/biggest-tsunami.shtml

https://www.youtube.com/watch?v=SCn480_TUgY

And as a bonus, you get to pay for special property insurance for the privilege of having a “view” of the mountains and ocean:

http://www.ibc.ca/ns/home/types-of-coverage/optional-coverage/earthquake-insurance

http://www.insurancebusiness.ca/expert-advice/major-shakeup-for-b-c–earthquake-insurance-174193.aspx

#160 OttawaMike on 07.22.15 at 5:01 pm

133 Squirrel meat on 07.22.15 at 1:14 pm
“Sure hope nobody owns Bombardier”
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Smokie’s all in.

#161 Vundo on 07.22.15 at 5:34 pm

#118 Sarah D: why would you take the plunge so readily even when the prices are good and you are better prepared? Read this blog and find out what better things you could do with that money. If I had enough cash to buy a house outright and I was sure that we were at the bottom of a correction I still would be hesitant if not outright hostile to the idea.

#162 Smoking Man on 07.22.15 at 5:59 pm

#159 OttawaMike on 07.22.15 at 5:01 pm
133 Squirrel meat on 07.22.15 at 1:14 pm
“Sure hope nobody owns Bombardier”
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Smokie’s all in.
………

Had some Ceasars shares too… Damn
…….

Now Mike from Ottawa…. You on the AM list?

#163 chapter 9 on 07.22.15 at 6:11 pm

#146 Sentry

The government is giving you money not time. Take the cash!!

#164 Entrepreneur on 07.22.15 at 6:19 pm

Our leaders have to keep the system going (right to the end). Water levels on all of Vancouver Island have hit Stage 3 with some to Stage 4. This is just July, late August is the usual time. Dry here and it has been dry for years. Not surprised with all the fires in B.C. Time to do a graph with record breaking weather and with, lets say, cost of a house (the controlled bubble).

Resources in your own country should be for the citizens of the country. Corporations should be taxed and hire only Canadians (for the most). After all the citizens are the taxpayers that clean up the mess or live with it or get sick or sometimes die.

As for AM, would like to see the names.

#165 George on 07.22.15 at 8:33 pm

George Yeoldis is looking for work.

#166 Doug in London on 07.22.15 at 10:20 pm

@leslie, post #132:
Looks like we need to keep borrowing to keep the economy going…how else is the middle class going to spend?
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Good idea, that’s what a lot of Greeks thought, and look where it got them.

#167 LOL Canada on 07.22.15 at 10:21 pm

#121 Samantha – Nice blog promoting affiliate links by the way. Take a minute and look!
http://www.realtor.ca/Residential/Single-Family/15922676/2—152-CASTLEFIELD-AVE-Toronto-Ontario-M4R1G7-Yonge-Eglinton

Comparable houses for similar rental prices.

#168 Balamut on 07.23.15 at 9:11 am

Sorry, but I still don’t get it… I understand that “It was speculation, house lust and greed which pushed prices ahead, encouraged people to take on massive debt and divorced real estate from the real economy.”…. But what actually triggered the housing market to fall? What was the catalyst?

As stated, an economic slowdown and the spectre of job loss. Once a market hits an inflated level, locking out a lot of new buyers, it takes relatively little for greed to turn to fear. Most Canadians err in believing we need an apocalyptic event to wound housing. Wrong. It’s all emotional. — Garth

#169 jess on 07.23.15 at 1:25 pm

Return to
a Floating Rate
(June 1970-present)
page 77 of 113
http://www.bankofcanada.ca/wp-content/uploads/2010/07/dollar_book.pdf

2001
When China joined the WTO, it agreed to considerably harsher conditions than other developing countries.[3] After China joined the World Trade Organization (WTO), the service sector was considerably liberalized and foreign investment was allowed; restrictions on retail, wholesale and distribution ended.[4] Banking, financial services, insurance and telecommunications were also opened up to foreign investment.[5]

The key turning point came in November 1999, when the United States and China signed a trade deal that was narrowly endorsed by the US Congress.

“As long as our market is open to the outside, the more economic growth we have and the better for the world,” China’s trade negotiator Long Yongtu told reporters.

super cycles – commodity /debt
How we got here: the debt super cycle mark carney speech 2011
http://www.bis.org/review/r111215a.pdf
http://www.bankofcanada.ca/2008/06/capitalizing-commodity-boom-role-monetary-policy/
http://www.bis.org/review/r111215a.pdf