GreaterFool.ca -predictions of a canadian RE crash

greater-fool-coverthumbnail.jpgMP Garth Turner has a new book out called “Greater Fool – the troubled future of real estate“.   He argues that the Canadian real estate market is due for a collapse similar to the one currently happening in the US.

He recently started a blog at greaterfool.ca that looks like yet another source of negative news about real estate markets in North America.

The following is an excerpt from his book blurb:

The timing couldn’t be better for Garth Turner’s newest book on real estate and its impact on personal finances. At a time when the US is clearly heading for recession, stock markets roil, a global credit crunch overwhelms banks and a climate crisis lurks, can the Canadian real estate market withstand the threat? Do we really think we’re immune?

More than 400,000 US families lost their homes last year and more than a million more are threatened. House prices have collapsed as much as 30% in some markets, amid predictions of another 25% slide. New home sales are down over 40%. There are 20,000 new, empty houses for sale in Phoenix, streets of foreclosures in California and desperation in Florida. What happened? Will it hit here?

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Drachen
Member

Is it just me or is there a subtle irony at play here? MR and Krrish debating whether Gold or Real Estate is where you should put your money…

rofl

cashisking
Guest
cashisking
Just moved here from Toronto but grew up and went to University here. I have been in finance since I left school. I bought my first house in 1993 at the age of 26. It was a good time to buy b/c my mortgage payments + the interest on my down payment (ie cost of capital) was less than rent. Also the headlines in popular media were questioning whether you should ever again own realestate. My father who dabbled in realestate pointed out that these were the exact headlines in popular media back in the early 80's and anyone who bought at that time had made a killing. The smartest guys always roll there eyes when they hear "it's different this time" – which is interchangeable with "it's different out here". It's not. It never is. Realestate prices are out… Read more »
scullboy
Member

Drachen:

Did you see the Doctor Who episode where the Daleks met the Cybermen for the first time?

trackback

[…] a new book out called “Greater Fool” as reported by Vancouver Condo Info (see “Us housing market problems to show up in Canada?). It’s all about the coming crash in housing prices in Canada. He’s also started a blog […]

krrish2
Guest
krrish2

Sure Micheal, your graphs are above the shoulders but feets I mean base is over sand. do you live in richmond?good luck micheal.

Michael Randallbard
Guest
krrish2
Guest
krrish2
Micheal Randallbards, Please do not try to stand on silly point just one cover drive and your helmet will blow up in the air and your teeth's Ohh and please don't try to bat infront of me otherwise this left handed fast pace bowler will deliver a bouncer on over pitch that will blo your bat,pad,and ofcourse your helmet again and please don't try to be on bowlers side otherwise this left handed batsman going to shoot the ball in the air over boundry line that would be definitiley sixer on extra cover boundry.Anyway….. SMART US & EUROPEAN CANADIAN ASIAN INVESTORS BUYING IN VANCOUVER – STILL CHEAP! Micheal Rendalbards why don't you take a shower today every body knows that you are residing over sand. Micheal be careful don't let the gold slip away while you tumble over sand.Oh ho… Read more »
Michael Randallbard
Guest

GOLD HIT $1,000.00 USD TODAY

Here's the kicker….if the BoC cuts rates and the CAD drops against the USD but still drops against the Euro what will that do to Gold priced in CAD?

Michael Randallbard
Guest
Irish banks may need life-support as property prices crash Last Updated: 12:48am GMT 11/03/2008 The Dublin government appears to be almost powerless to prevent a severe downturn. Ambrose Evans-Pritchard reports The Irish banking system faces acute strains and may require a phase of temporary nationalization as the property slump leads to a wave of defaults, according to a leading Irish economist. Morgan Kelly, of University College Dublin, said the government is almost powerless to stop the downturn becoming a severe slump. "We're in a classic post-bubble recession, yet we can't do anything that a country would normally do in this situation because we're inside the eurozone," Prof Kelly said. "We can't cut interest rates, we can't devalue, and there is a lot less room for fiscal stimulus than people think. We're stuck. "We have a domestic recession now colliding with… Read more »
blueskies
Guest
blueskies

when Vancouver sneezes a lot of people will be covered in wet phelmgy sticky boogers….. now that's funny! 🙂

just had the distinct pleasure of jaywalking across Hornby Street at the same time Bob Rennie was…. of course he was going in the opposite direction….as usual

scullboy
Member

Ex-van,

They'll be a laughing matter all right… the question is more who will me laughing, and who won't.

Raincouver
Member
Raincouver

You guys are allowed to have whatever point of view you have. The time will tell, and you guys can keep repeating the same topic day after day while the market goes it’s own way. hahahaha…..

Perhaps someone will bookmark this comment as one of the more ill-informed opinions posted on this blog. Probably not, though, there are just too many of them.

References to this type of nonsense, made in the future, won't be a laughing matter.

Anonymous
Guest
Anonymous

“when New York sneezes, the whole world catches a cold”.

it's been long time since new york got loose motion but haven't feel any sign of downturn in decades to come here in Vancouver.I would like to read statement from any opponents.Anybody?

andrew
Guest
andrew

You guys are allowed to have whatever point of view you have. The time will tell, and you guys can keep repeating the same topic day after day while the market goes it's own way. hahahaha…..

evergreen
Member

Remember if you can’t say something nice..

Good move, Pope! After all, it’s just an opinion.

That link regarding the US is important, thanks. The whole financial world looks to that satellite, the DJIA as it crunches out the daily numbers. As they say, “when New York sneezes, the whole world catches a cold”. And I say, “When New York giggles, the whole world laughs heartily”.

Anyway, as a matter of interest, can somebody tell me who are buying those multi-million dollar homes everyday for weeks that I see on Paul’s Numbers?

VCI Admin
Admin
Remember Andrew that 'Rich Foreigners' were supposed to be driving the market in '81 before it suddenly dropped in half. They were also supposed to be driving the market in Miami up until a few years ago. Its one of those vague feel-good arguments that is always used to justify bubble prices when in the end it always comes down to speculation. If you were very very wealthy why would you purchase property in Vancouver over any other market in the world? Again, I think you should put the numbers into perspective before you rely on 'wealthy foreigners' to support the future of our market: China has a population of 1.3 billion people with about 300k of those being millionaires. The US has a population around 300 million with about 2.5 million being millionaires. Thats a big difference, there are… Read more »
Drachen
Member
Jack: "It’s like flipping a coin 100 times and playing heads or tails. If you flip 50 times in a row and it landed on heads what do you think the chances are it will be tails for the 51st time?" Are you saying that markets are random? If not it's a terrible analogy. A better analogy would be the video of the 777 from Boeing a few years back, the wing stress test (I'm sure you can find a video if you look). They stressed the wings up to the safety standard, no problem but as they kept increasing the stress it got more and more likely that the wing would break until *BAM* all at once. Nobody could have predicted exactly how much force it would take but anyone with the numbers could have given you a range… Read more »
franko
Member
franko

Agree with The Pope about personal comments, but man, it's hard to suffer that nonsense from andrew abou "rich foreigners"

As patriotz pointed out so convincingly yeasterday, they're not rich because they're stupid, and it's the smart money that will drive this market lower.

Jack
Guest
Jack
BDK, Not sure what has you so rattled. I clearly stated a point that language has no merit on how investments work. Your comments tend to make me think that you are trying to sound smarter then you are and most likely still attending post-secondary. You cannot come up with any more information other then trying to down play someones grasp on the English language. Moldcity on the other hand made a great point about Krissh and how his comments do not flow and contradict themselves. As for being smarter than anyone on this board it doesn't really make much difference if I am or if I am not. Nobody has successfully predicted the actual day of market increase or decrease. As you can see from the past Garth Turner does need to guess since he was wrong in the… Read more »
andrew
Guest
andrew

Pope

I agree with your point, however, as you say everything is tied together. It's a global economy. However, I don't think the demand of the rich (people who move over here from Asia) will decline. You don't see economy going bad influencing LV's annual sales. It's always the weak or the poor gets influenced the first. I think people who buy real estate in Metro Vancouver don't have to worry so much. It just won't hit them as hard. However, the ones live in the suburb will be influence more. So as the concept for the rest of the Canada.

I know it's a sad thing, and I don't want it to happen that way too.

VCI Admin
Admin
You think China is going to stop building? I highly doubt it!!!! Of course China is not going to stop building, just as we aren't, but lets put that into perspective. The big story with both China and India is their growth rate, not the actual size of their economy. In our excitement over the growth story lets not forget who actually buys the majority of our exports. The US economy is bigger than the next four largest economies in the world (Japan, Germany, China and the UK) combined. India has an economy about the size of Florida. Both China and India's rapid growth rate has been tightly tied to providing cheap goods to the west. With inflation driving up prices in the east and signs of a global slowdown do you really believe ANY of this demand is locked… Read more »
VCI Admin
Admin

Boy, these comments are becoming ever more personal and reactionary. What happened to civil debating?

I agree – Please lets try to keep the comments away from personal insults. I like to leave this site as an open forum and not cut stuff out, but the personal insults get boring to wade through and don't advance the discussion at all. I appreciate everyones contributions to the comments on this site, angry rants and all, but lets keep them general and stay away from the personal.

Remember if you can't say something nice..

andrew
Guest
andrew

I really don't think it's going to go up like the past few years anymore. So it might be wise at this point to try other types of investments.

The fact of the material is booming so high is really because China is buying 50% of all the construction material from the world. That's why the price is not coming down. You think China is going to stop building? I highly doubt it!!!!

Rock
Guest
Rock
Boy, these comments are becoming ever more personal and reactionary. What happened to civil debating? IMHO, Turner, as mentioned by Patriotz, has been very wrong in the past, but here he is only stating the obvious. I personally believe the crash (yes crash) in the condo market will mirror that of what is happening in the US, but with detached land, we'll see a long, deflation of prices over the next 5 years, before we see a bottom. As far as the Fraser Valley is concerned, we are definitely at the peak. But I take solace in the fact that a) we make very good money b) there are, and will be plenty of good opportunities in the stock market and we can make up the difference, and c) we're not shackled with a 40 year mortgage from buying overpriced… Read more »
moldcity
Guest
moldcity
I agree that the language issue is irrelevant – the problem I have with Krissh is the lack of clarity of thought shown. A better command of the written language makes it easier to understand what someone is saying, but it doesn't necessarily indicate a stronger intellect. You probably have to wait for the right chance… but looking at the high material and labour cost, it just can’t be cheaper to build something. The problem with this line of thought is that it leaves out a few things. The construction labor market is constrained right now which drives costs up, but like all markets this can change. The reason the labor market is constrained is that they are building a LOT of supply. Condo towers were shooting up all over Miami and were never going to go down in price… Read more »