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The shocking truth about the value of your home

New evidence shows that Canadian prices could go down, and stay down, for a decade


 

The shocking truth about the value of your home

There are still people out there who don’t believe Canada is about to be hit by a devastating housing crisis, but Riaz Kassam isn’t one of them. For him, the crisis has already arrived.

Last July, he made an $80,000 pre-sale payment on a $1.5-million penthouse condominium in Vancouver’s tony H&H Yaletown building, just a few blocks away from where he lives. Kassam, a 42-year-old computer analyst, who’s married with no kids, expected to move in by the end of 2008. But when he put his current apartment on the market, he didn’t get a single offer. He thought maybe he had priced it a little high, so he knocked a bit off. Still, no offers. He lowered it again, and again, until eventually he was offering his apartment for a full $120,000 less than his initial asking price. That’s when he realized he was in trouble. “We reached the point where we couldn’t drop the price any more,” he says, “or we wouldn’t have enough for the down payment on the new property.”

He was caught between a rock and a hard place. Nobody would buy his condo, and therefore he didn’t have enough money for the down payment on the condo he’d already agreed to buy. “We told them that we can’t complete, we can’t sell our place, and we’d just have to forfeit our $80,000.”

ALSO AT MACLEANS.CA: What kind of house can $500,000 buy you? and Attack of the condo craters

Painful enough, but it was only the beginning. Kassam discovered that even if he had sold his old apartment, his bank “wouldn’t even consider” giving him a $1.5-million mortgage for his new place. Prices in Vancouver had been plummeting, and in just a few months, the assessed value of his new place had fallen to roughly $1.2 million—and his bank wouldn’t issue a mortgage for more than the property was worth. Meanwhile, the condo developer was finding that it couldn’t sell its units either, at least not for anything close to the $1.5 million Kassam had agreed to pay. So it held a “blow-out sale,” offering units for as much as 40 per cent off the original listed price. Kassam’s unit wasn’t one of them, but the sale made it clear that his penthouse was worth even less than $1.2 million. Shortly after Christmas, the developer told him he was liable for the difference. He had signed a pre-sale agreement saying he would buy that condo for $1.5 million, they reminded him, and they reserved the right to pursue him for the drop in that condo’s value. Which means they’re probably not just going to keep his $80,000 deposit. They’re probably going to come after him for more than $300,000.

Kassam thought he’d be settled into his gorgeous new penthouse by now, but instead he’s still at his old place, facing a long and expensive court battle with the Bowra Group, owner of the H&H Yaletown. He’s planning to strike first, with a lawsuit alleging that the developer didn’t deliver his unit on time, but he’s not sure he’s going to win. If he doesn’t, “our nightmare begins,” he says. “It’s going to be devastating if we have a judgment against us.”

Kassam is just one of thousands of people getting buried in the rubble of Vancouver’s collapsing prices; a dream market has turned into a nightmare, faster than anyone thought possible. For over a decade, the real estate industry has pumped out glowing reports, detailing the latest surges in prices and transactions, and predicting nothing but blue skies ahead. The heady combination of a strong economy, urban renewal and low interest rates triggered a stampede into houses and condos. Now the boom is shifting into reverse, and economists are warily backing away from their sunny predictions, and grappling with a question no one has posed for 20 years: how bad is it going to get? It’s becoming increasingly likely that the answer to that question will be “even worse than you imagined.”

The H&H Yaletown has now sent out several warning letters to buyers in retreat. Another developer, the Onni Group, is actively suing at least 20 purchasers of its Aria 2 development in Port Moody for backing out of their pre-sale agreements. Real estate developer Amacon is suing seven purchasers of its Morgan Heights development in Surrey for the same. Condo fire sales are raging—the Onni group has been taking out full-page ads in the local papers trumpeting “Vancouver’s largest real estate liquidation event”—and John White, a Vancouver lawyer representing several retreating buyers, says he now gets about “two or three calls a day” from people who have issues with their contracts.

“No one even came close to realizing the impact of this crisis,” Kassam says. Back when he signed the pre-sale agreement, he was following the news, and “they said the real estate market was slowing down, but they were only predicting maybe a one or two per cent drop in property values—nothing to this extent.” But Kassam has learned that you shouldn’t always believe what you read in the papers and what the economists say on TV. Especially now, because despite the carnage in Vancouver, many economists and real estate groups are still predicting that we’ll have just a little stumble—maybe a drop of three to eight per cent in prices—and then the market will roar back to life by the end of the year. But new data on the plunging housing market suggests that those relatively upbeat assessments are wrong, and Canada could see a 20 per cent drop in average house prices between now and late 2011. If sophisticated investors are correct, it might be close to a decade before we once again see prices as high as they were last summer.

A bout a year ago, Simon Côté, managing director of property derivatives at National Bank, had a bright idea. He noticed that the market let investors bet their money on oil futures, bond futures, even canola futures, but there wasn’t a way to bet on the future prices of Canadian houses. So he decided to launch a whole new market, one that, among other things, would allow investors who think they know where the housing market is going to put money on it. If they thought house prices would go up by five per cent in a year, while others thought prices would go down, they could buy a contract saying so, and if they were right, they could rake in huge profits. The market would also be useful for investors who wanted to hedge against falling house prices. By buying contracts that paid out if house prices declined, they could help to recoup any money they lost in the housing market.

In conjunction with the forward market (like a futures market, but with contracts sold over the counter), National Bank also launched the Teranet-National Bank House Price Index, which tells us where house prices are at right now. The index uses data from Teranet, a respected but little-known company that manages the land registry database for the government of Ontario. Because every house sale in the province must be entered in the database by law, and Teranet has agreements with other provinces to access their data, Côté says the company’s numbers are much more “robust” than the house price data economists currently use. Because much of that current data comes from the real estate industry itself, the Teranet data can boast of coming from a more unbiased source as well.

When the Teranet market started up in December, it immediately predicted a shocking drop of 20 per cent, followed by an excruciatingly slow recovery that might not see prices return to last year’s high for seven years, or longer. It’s still young and thinly traded, but the Teranet market outlook is startlingly different from what most economists see. Last week, for instance, the Canadian Real Estate Association (CREA) predicted a drop of just eight per cent in 2009, followed by a speedy recovery that would see prices starting to edge up again in 2010. Most banks and investment firms (with the exception of Merrill Lynch Canada, which predicted a more significant drop followed by a slow recovery) fell into line with similar predictions of drops between eight and 12 per cent.

Just six months ago, the Canada Mortgage and Housing Corporation (CMHC), the government agency that insures billions of dollars worth of Canadian mortgages, predicted that we would actually see an increase in house prices of almost three per cent in 2009. It has since backtracked dramatically, issuing a new forecast three months later predicting an increase of just 0.1 per cent. Another revision was scheduled for last week, but the agency cancelled the release at the last minute, saying that the data needed more analysis than expected. They set a new date for the release, but they missed that date too. “Conditions in the housing markets really have been changing,” CMHC’s chief economist Bob Dugan says. “So we’ve been doing a series of revisions to our forecasts.” He says their latest figures now show that housing prices will go down in 2009. But that doesn’t mean he sees any real cause for concern, despite January’s largest-ever single-month job loss figures and our faltering GDP. “When I look at the economy as a whole,” he says, “I don’t really see the smoking gun.” He’s been scanning the numbers and just can’t see “the big scary indicators that say things are going south really terribly.” So he also predicts just a little dip followed by a quick recovery. “We think that house price growth is going to catch again during the year,” he says. “So year over year, you’ll see a decrease when you compare 2009 to 2008, but we think that during the year, prices will start to increase again.”

The sunniest forecast of all comes from Royal LePage, a national real estate company. In a recent release entitled “Correction, not crash for Canadian real estate market in 2009,” Royal says there will be a minor slip of three per cent, then “consumer confidence is anticipated to recover, prompting real estate activity to pick up once again in the latter half of 2009.” Phil Soper, the CEO of Royal LePage, says when you look at both prices and the volume of houses being sold each month, the market has already been declining since the end of 2007, so we’re due for a recovery soon. “We’ll hit bottom in about mid-year,” he says. “We believe that things will flatten out in the third quarter, and the recovery will begin for housing towards the end of the year.” He rejects the idea that the industry burnishes its predictions. “I can say absolutely that it does no one in the real estate industry any good to forecast home prices higher than the reality.”

So who’s right? The economists predicting a brief setback, or the futures market investors who see years of decline? Robert Shiller is an economics professor at Yale University and an internationally acclaimed expert on housing markets. He is one of the creators of the S&P/Case Shiller Home Price Index in the U.S.—one of the world’s most closely watched measures of real estate values. He says it looks like we’re in for the long decline. “I’d go with the futures market,” he says. “That’s called putting your money where your mouth is.”

Shiller says that when the U.S. market peaked in 2006, he saw the exact same situation we’re now seeing in Canada. Like us, the U.S. had just launched a futures market, and it was telling a drastically different story from the one the economists were pushing. “At first our market specialist thought the market would go up, but he immediately lost a lot of money,” says Shiller, “because the people trading on the market kept predicting declines. And ever since then, they have continued to predict declines.” Meanwhile, the economists were still talking of increases, or at worst, a minor correction. “The National Association of Realtors had economists that were boosting the market all the time, and doing everything they could to get people in,” says Shiller. “Their chief economist, David Lereah, even wrote this dreadful book called Are You Missing the Real Estate Boom? He wrote that in 2005, just before the peak.”

Shiller says that futures markets are better predictors because while the predictions made by CMHC, for instance, represent the opinions of one or two economists, the predictions made by a futures market represent the combined best guesses of many investors who are so convinced of their forecast, they’re willing to literally bet money on it. As New Yorker writer James Surowiecki detailed in his bestselling book The Wisdom of Crowds, such prediction markets tend to be more accurate than individual predictions, both because they are less biased and because the collective wisdom they draw upon is more powerful than any one economist’s best guess.

Even when you look at the quality of the underlying data itself, the Teranet numbers come out ahead of what the economists are working with. The National Bank’s Côté says he originally didn’t want to produce a housing index at all. If there had been a reliable source for Canadian housing data already, he says he would have likely just used that. But it turned out that the only comprehensive data for resale home prices in Canada came from CREA, the national organization supporting the real estate industry.

Unfortunately, the CREA numbers had problems. “There was a lot of cleaning on their data to be done,” he says. “Their data is actually physically inputted by real estate agents as they sell the houses. And obviously, as a real estate agent, it’s in your best interest to show that prices are not falling too much because that’s how you make your living.” He was also nervous about the fact that CREA depends on the co-operation of real estate boards across the country to gather the data, and some weren’t thrilled about taking part.

So, he went with the Teranet data instead, and then he one-upped CREA, which did not respond to interview requests from Maclean’s, by adopting a more rigorous number-crunching methodology too. Like the Case Shiller index, the Teranet data tracks the resale prices of individual single-family houses in selected metropolitan areas, while CREA uses Canada’s Multiple Listing Service (MLS) to add up all the money spent on houses in a given area, then divides it by the number of houses sold. Côté says the real estate industry’s data can be misleading because cities that have a higher level of sales activity have a disproportionately large influence on the national average. In other words, if there’s more sales activity in Calgary than there is in Ottawa one month, then the higher prices in Calgary will tilt the numbers up, even though there are roughly the same number of homes in each city.

Beyond the quality of the data, Shiller says there’s another, more common-sense reason why you should trust the futures market over what the real estate economists tell you: the Teranet investors aren’t trying to sell you houses, and the real estate agents are. “The predictions from those guys are very biased,” he says. “They know that in a declining market, the volume of sales falls dramatically and real estate agents lose their jobs. So they don’t want to say anything that could be seen as contributing to a falling market. If their economist predicted a decline in the market—and then it happens—that’s deadly. The guy would have to watch out for his life.”

That’s part of the reason why David Lereah, the chief economist for the U.S. National Association of Realtors (NAR), kept pumping out the optimistic outlooks. He has since complained publicly about the pressure he was put under by his bosses at the NAR to toe the line. Now the U.S. is mired in the worst housing crash the country has ever seen, and Lereah has been discredited. He’s left his job at the NAR, lost millions in his own real estate portfolio, and he has been largely ostracized by his former colleagues.

We shouldn’t smugly assume that the same couldn’t happen here. One of Canada’s top economists, who spoke on condition of anonymity, says that he questions a lot of the numbers coming out of the real estate sector in Canada. “There’s clearly a lot of spin,” he says. Even the CMHC, which promotes home ownership and depends on home sales to sell mortgage insurance, has an interest in seeing the market prosper. “There is quite a lot of uncertainty regarding the market in general right now, and there are too few uninterested parties who are giving any sort of reasonable analysis on that outlook.”

That leaves just one question: if the Teranet futures market is right, and house prices are about to embark upon a long, slow decline followed by an anemic recovery, what will that mean for Canada? On the positive side, it will mean thousands of families who can’t currently afford houses may gradually see them fall within reach. But the negative fallout will be painful, long-lasting and will touch us all. It will mean more lawsuits against people like Riaz Kassam, who get trapped by tumbling prices. It will mean a huge drop in the wealth of millions of Canadians, as their biggest investment slowly sinks in value. It will mean consumers clamping down on their spending because they feel poorer, contributing to the general economic decline.

Shiller says it’s the inevitable end to a truly wild ride. “We’ve never before had this all-pervading belief that I can buy a house in any city and prices will just keep going up,” he says. “This cultural change helped to bring on the world’s largest housing bubble, and that outlook has invaded Canada, just as it has other countries.” It’s time to brace yourself, he says, because that bubble has popped. Over the coming years, houses will cease to be speculative investments, and will simply become places to live again. Shiller says it’s a necessary correction, but that doesn’t mean the process will be a pleasant one. “We may be in for a bad recession,” he says, “and we may not see the markets perform well for a long time.”


 

The shocking truth about the value of your home

  1. I realise this is the business section, but just once I’d like to see an article saying something like “Bob and Martha thought they’d never be able to afford their dream home, but the recent fall in housing prices means that life is awesome for them” or something. It’s not all bad all of the time, after all!

    • Direct quote, penultimate paragraph:

      “On the positive side, it will mean thousands of families who can’t currently afford houses may gradually see them fall within reach.”

      With the caveat, however:

      “But the negative fallout will be painful, long-lasting and will touch us all. It will mean more lawsuits against people like Riaz Kassam, who get trapped by tumbling prices. It will mean a huge drop in the wealth of millions of Canadians, as their biggest investment slowly sinks in value. It will mean consumers clamping down on their spending because they feel poorer, contributing to the general economic decline.”

    • Can’t agree with you more. When anything else drops in price, everyone celebrates. When housing drops in price, it’s all doom and gloom. Why? Because the authors, analysts, and journalist are all home-owners. The reality is this: house prices are simply returning to reality.

      Only people with blinders on will claim that a Ponzi scheme must go on forever, and that social housing must be cheap but regular housing must always remain ridiculously expensive.

      • “Only people with blinders on will claim that a Ponzi scheme must go on forever, and that social housing must be cheap but regular housing must always remain ridiculously expensive”

        The author, in my view, isn’t all doom and gloom. He’s simply chronicling the human impact of this. His use of a software developer losing out on his ridiculously priced condo mihgt not have been the best heart string plucker, but it is a unique twist I hadn’t heard of before – suing someone who has already had to eat a significant chunk of change.

        How about the elderly couple just about to finally leave their home of several decades, whose retirement has essentially exhausted their pension, and who now need to move to assisted living? Canadian markets may not have plummeted yet – yet – in most markets, but say they do. There’s an unfortunate situation. I guess, though, that they should have been as smart as you, and seen that last year was the year to leave it all behind.

    • Well Lord Bob, it’s about to get a whole lot worse than anyone ever dreamed. Ya aint seen nothin’ yet.

    • Greedy Politicians, Corpoate CEO’S PAST AND PRESENT and rediculous TAX CUTS to these companies that aren’t passing on the savings they save to the hard working employees. So than to add to that we get taxed harder to pick up their slack .
      If you can’t keep the circle of money moving it STOPS EVERYWHERE. The industries are reaping the profits and tax cuts, not sharing it with the employees with wage increases so everyone goes broke while they hoard! Now no one has two cents to rub together they bled us dry and everything has come to a halt.
      The Americans can’t stop printing money like it’s a gameboard game of monopoly or payday.
      Our PRIME MINISTER IS NO WHERE TO BE SEEN!If OBAMA hadn’t come for a visit I still be waiting to see him. This country needs to get off it’s but and start making some noise! It’s not rocket science .
      GOOD LUCK TO ALL.

    • Greedy Politicians, Corporate CEO’S PAST AND PRESENT and rediculous TAX CUTS to these companies that aren’t passing on the savings to wages to the hard working employees. They are a contributing cause to our economy failures. To add to that we get taxed harder to pick up their slack .

      If you can’t keep the circle of money moving it STOPS EVERYWHERE. The industries are reaping the profits and tax cuts, not sharing it with the employees with wage increases so everyone goes broke while they hoard! Now no one has two cents to rub together they bled us dry and everything has come to a halt.
      The Americans can’t stop printing money like it’s a gameboard game of monopoly or payday.
      Our PRIME MINISTER IS NO WHERE TO BE SEEN!
      If OBAMA hadn’t come to visit I’d still be waiting to see him.

      This country needs to get off it’s butt and start making some noise! It’s not rocket science .
      GOOD LUCK TO ALL.

    • Life may be awesome for Bob and Martha now, but if there is data that suggests that the current slump will be longer than the industry and the financial press first predicted, that is real news. Bob and Martha’s current emotional state is not.

      There are several lessons here:

      1) Do not trust the pronouncements of the real estate industry, even if they are printed in the Report on Business. It’s always a good time to buy real estate in the opinion of these people.

      2) Do not trust the financial press. As a professional accountant with graduate degrees in finance, I think I’m qualified to say that much of what appears in the financial media is shallow or even downright wrong.

      3) The times can change quickly and you should be prepared as possible. A small change in interest rates, for example, can have a dramatic impact on your mortgage payments. What was affordable when you bought your dream home may not be when it’s time to renew.

      • VERY EXCELLENT ADVICE ! THANK YOU

    • no its not all bad its worse….housing has 50% left to go down…you think our banks didnt give ninja loans…check rbc balance sheet and what assets are backing these loans…whatever ,,,,how naive are we….people never want to hear when their doing it wrong..take great offense to this i dont give a shit…funny thing is i dont take pleasure when you look at equity and have that deer in the headlights look.. nobody wants to hear this ….i know but i cant really stand by and watch people step off the curb when that bus is coming…i sold my house this week 319g..last year it was 409gs…bought it 3 years ago 208g….moving to mcmasion 1.5 mil rent is 3400 ….buy it for maybe 500000 in 2012 if that….get off ether….sit down….think…listen to harry dent…..naw you wont if you did there would be a shortage of butt plugs to replace where your head is

  2. It would be nice to see Kassam’s builder tear up the contract, but I doubt that will happen. As a former realtor I’ve always advised people to do a reality check. Are you prepared for your puchase to go sour?You don’t see people giving back money if the property they buy becomes a windfall, but they sure whine if the contract they freely sign goes south.

    • I think the decline in pricing needs to be seen as a correction, not a collapse. For the past several years, we’ve seen gains of 10-20% in some areas. Anyone can understand that that type of growth is unsustainable. From what I’ve read, housing should increase with inflation, or rise with increases in income. What can you typically expect for those numbers, 2.5-5% per year?

      If long-time homeowners can adjust to the fact that at the end of the decline their house is worth what it should have been worth all along had there been normal growth over the past decade, we’ll all be fine.

      Unfortunately, people who have just bought their homes get the short end of the stick, but like any free market, those are the risks you take.

      Anyway, well written article. Good information.

    • Given his situation why should Kassam be on the hook for anything beyond his deposit?

      • because Kassam would have been lording it around Yaletown braying and bragging about what a real-estate mogul he was had the market gone in his favour. He’s a big shot, ISN”T HE? He should take the rough with the smooth and acept that he has a legally binding contract to buy the penthouse for $1.5m. Just because it doesn’t suit him anymore isn’t a valid exit strategy.

        At least a real real-estate mogul like Donald Trump takes his lumps and declares bankruptcy when his gambles go sour.

        • Kassam is a big speculator. He has at least 4 units for short term rent in downtown Vancouver all listed on Craiglist. If you go to vancouver condo info website, you can see all his ads. No one should have any sympathy for him.

          • Please click the website to see all his ads.

          • It’s pond scum like that who create bubbles, can we deport him?

  3. The question begs to be asked; How could Kassam afford that second condo even in the best of times? Something seriously stinks with Vancouvers market and for may of us, we will be glad when the rot is over and prices return to acceptable levels.

    • Amen. Where are our kids gonna live, under a bridge, they’re already pretty crowded?

  4. One quibble I have with the article is that it pits one forecasting voodoo for another, claiming the new voodoo is much better than the old voodoo. I think that’s doodoo.

    The new Teranet casino – sorry, “market” – depends on exactly the same braniac dynamics that brought us the latest burst bubble. Only now, it’s predictably forecasting doom and gloom because markets are all about perception and emotion. No matter how many times we get to do this over, we always get booms followed by busts.

    I woud be far more interested in looking at the fundamentals of the market for real estate – what is the cost ratio of the average house price against average income over time, compared to now? What is the number of dwellings available per potential homeowner? There are probably other indicators and people smarter than me who can think them up.

    Those are the indicators the smart people use when they are in the markets – real estate or stock or otherwise. The smart people got out of stocks and real estate in the face of pundits and the markets. I want to know what the smart people use to make their decisions, not the so-called collective wisdom of the entire market.

  5. I’m wondering why it is legal for organizations like the National Association of Realtors or CMHC to be publishing false and/or misleading “information” about the state of real estate markets given the financial havoc we’re seeing. Why aren’t we seeing boatloads of subpoenas, indictments, arrests and a procession of perp walks?

    • Because that wouldn’t be cricket here in jolly old Canada don’t ya know? The only place where financial malfeasance by Canadian shysters like Conrad Black, Alan Eagleson, Bernie Ebberts is ever prosecuted is when they cross the border and go on with thier usual shenanigans Stateside. Authorities there seem to take a much dimmer view of them. The Canadian elite is a cosy little club and they look after one another. Canadians are in for a massive suprise as the legions of unemployed run out of saving and credit. They will be stunned at what their properties are really worth. Prices peaked early last year. I was very lucky, had payed off my home and sold it just when things were starting to go downhill. Many others will be screwed.

  6. National Bank has a managing director of property derivatives? Can I be the managing director of racetrack derivatives?

  7. party is over ladies and germs..if you thought that your house was an ATM, well here is the rude awakening that most feared but never thought it would happen. What is Kazam doing buying a 1.5million property on a programmer salary to begin with? this guy aint too smart obviously..

  8. Vancouver house prices dropping? Who could have guessed. I heard it is the best place in the world to live! People were warning these idiots that it was a stupid unsustainable bubble for three years now.

    I think that it will be over ten years before we see these retarded prices again and that will only be due to infation after the central banks have pushed us into hyper-inflation.

    Best article I have seen on the housing market this year. Good work.

    • I am glad you are happy renting. Home ownership has been a great wealth generator for over 100 years, All markets cycle up and down, You only loose if you buy high sell low. as long as you don’t NEED to sell, you just keep paying rent to yourself.

      Sensational headlines and usless statistics are worth as much as last weeks loto numbers.

      National Average price is Useless, Increased number ov listings or decrease in sales.. worth less In January there were 1000 Transactions per day! in Canada.

      Contrary to what most people think Profit is made when you buy a house… not sell and if you can find a seller who NEEDS to sell (like Mr. Kassam) you will profit.

      If anyone believes that Vancouver prices will drop after the eyes of the world see us you deserve to be a tenant.

      I don’t know why it makes sense to consumers to buy when there is a lineup of purchasers fighting over “no-subject” offers, instead of when they have time to do due diligence, inspect and take advantage of “vendor finance, and the lowest interest rates in history.

      Tenants tend to see the price instead of the cost.

      It is a good time to buy and prices will go up. When ? Who knows, they don’t ring the bell when a market hits the top or the bottom, but Population increases, and It is the best place on EARTH to live, and soon half the world will see it.

      Yes I am a REALTOR.

  9. 20% less than what? The peak of the market? That’s not much of a decline in pricey places like Vancouver. A million dollar place becomes an $800K place I still can’t afford.

    • They are wistling past the graveyard. Those stats are sooo fudged. 20% is just the beginning.

      • I agree, when median prices are approximately 4 times median household income it will be time to buy. What’s that? Another 40-50% off?

        • I think you mean 3 x median. The peak in the US was 3.8 and on average here in Canada we are around 3.9

          • The historical norm for Vancouver has been 4x income. Vancouver has always had the most expensive housing in Canada (excepting Toronto from time to time) and that will continue. Just not as absurdly expensive as it has been for the last few years.

  10. Blame the real estate industry for something that the media such as McLean’s is causing and feeding into. Shame! Real Estate is a market that is set by the consumer, not the real estate agent. It is the price that a buyer is willing to pay in the given market. If the media keeps reporting that the sky is falling, it will do that eventually. These people that bought when prices sored, well i certainly feel for them, but what goes up must come down and that is called economy.
    How does one predict prices will stay down for a decade? If that is the case, why didn’t anyone predict a market and housing crash….no one has a crystal ball!

    • Sorry Jason – the argument that “no one” predicted a housing crash is a false statement, one which is being touted by the realtors, real estate associations, and banks in order to cover their failed forecasts.

      For years, people like Garth Turner, Professor Shiller, and Peter Schiff have all been accurately predicting the collapse of the housing market. In fact, in 2005, Professor Shiller noted that Vancouver was the bubbliest city in North America, and in 2007, Forbes Magazine noted that Vancouver was one of the top three bubbliest cities in the world. And despite the fact that these individuals often did receive mainstream media attention, these realists were not accorded their due respect because they questioned our false assumptions that everything is great, and that prices will continue to rise eternally…

      If people actually took the time to look at economic fundamentals and research when making the biggest purchase of their life, rather than listening to hype and emotions, we would not be in this mess. It still amazes me that the largest investment most people make is informed primarily by emotion, hype, and a realtor who has a 6 week training certificate!

  11. Anyone remember when a home was about a place to live and raise a family? A mere place to eat and sleep in warmth and privacy? Apparently now we live in investment vehicles that should be traded and sold at hopes of bigger and better. My little old farm house needs a lot of TLC but it’s home and it’s restful.

    • Good for you mate. At least there are a few people out there with common sense. Cheers

    • i’ve been saying this for years. i lived in vancouver from 1989-2006, and watched rental prices and home prices spiral out of reach before i even realized i wanted a home of my own.
      i never wanted an investment, just a home i could work on, grow a garden and then die in someday, free from the yearly increases in my rent, despite wages that never kept pace.
      i have a close friend back in vancouver, who makes what i would call a decent average persons wage, but who struggles with keeping herself afloat, as he rent goes up every year to the max allowable, while she receives sometimes not even a cost of living increase in her salary at UBC. argh.

  12. This is an excellent article exposing the vested interests behind the so-called expert forecasts and predictions of industry shrills. While it is common sense that a salesperson (i.e. realtor, mortgage brokers, real estate associations) will always present a rose-coloured picture of a market, unfortunately, far too few people conduct their own due diligence when purchasing property. It is about time that the media (who can no longer count on large revenue streams from real estate advertising) finally exposes Canada’s regional housing markets for what they are: great big bubbles (i.e. Vancouver, Toronto, Calgary).

    Should I feel sorry for Kassam? Absolutely not! If prices had kept going up, he would have branded himself a financial genius for leveraging himself to the hilt. Now that prices have tumbled, he is learning that there are TWO sides to risk, and that he is not the Donald Trump he saw himself to be. I for one am glad to see these speculators get burned. I am enjoying this real estate crash on the sidelines with my bucket of popcorn, and further await the massive “corrections” taking place in these regional bubbles.

    PS. I sold my Vancouver place in Spring of 2007 when it was apparent to anyone with a shred of common sense that prices were way to high when compared to basic economic fundamentals (i.e. income to mortgage debt multipliers, rent vs ownership costs, etc). I will jump back in after another 30% correction (we have already seen a 14% fall in prices from the peak in February 08).

    • here here

  13. A 20% reduction in the Teranet HPI will bring the index back to what it was three years ago.

    • Does anyone know the ticker symbol for ‘Teranet-National Bank House Price Index’?

    • Great link. A perfect example of the claptrap that helped fuel the bubble.

  14. Maybe you should have done some more research on the real estate market in Canada. You should have done a range of properties available and did an average.

  15. I’m always amazed that no matter what people make they always have to spend it all and then some. I read that a New York Yankee ball player making 13 million a year has a morgage he cant pay because he was caught up in the Maydoff ponzi game and the feds froze his accounts. Could someone explain to me why someone making 13 mill a year needs a morgage? For God’s sake has everyone lost their minds? I bought one house and vowed to be morgage free before 40. Did that. When I burned the morgage the bank assumed I would now be taking out a morgage on an even bigger home and couldn’t wait to loan me the money. Why? Who the hell am I supposed to be impressing? Sold my home last year before the crash. Renting a modest place. Have money in the bank, peace of mind and don’t owe one cent to anyone on the planet. For years “experts” were telling people like me I was crazy to follow this financial plan. Well, guess i’m stupid, old school, whatever. Well at least I didn’t put down 80 grand on a condo that didn’t exist yet and agree to pay the contractor 1.5 million for some property, no matter what it was actually worth.

    • Very impressive…..how old are you now? 41?

      • Halley, sorry to take so long to get back to you. Comments are so extensive this part of the thread got thown onto the “back Page”, so to speak. I thought it was all deleted. Anyway, just a bit older than 41…lol but not by to much. Why do you ask?

    • I’m proud of you Wayne. The only thing I’m a little curious about is why you didn’t buy a small piece of land out in the country, that you could see in about 15 years or so, become part of a new sub division and was in an excellent location? You would have to use most or all of your cash or, if you only had a little, buy a new starter home near a new University, in an up and coming area, where you could see new developments popping up where farmland had just been sold. You could rent a place out to pay the mortgage. (Or, if you had the cash just for the down payment, by the time the house was finished the price would increase by at least ten thousand dollars, which you could never save in a bank account.) You owe no one, and it will get you more interest.

      (My husband and I were in just that position as part of our Last Long Term Goal. We knew that this University was being built, and a Well Known Builder was starting to buy up farmland near the school, I could see the writing on the wall, but my husband was nervous and said no.) We do have a nice little raised bungalow, but it was my plan to move just one more time, so that we could have a home that perhaps would be worth more that I could leave to my children. It’s just a shame to see you giving your hard earned money to someone else Wayne, when you can be making it work for you. Do you know that when there’s an economy like this, a lot of the wealthy buy property? It’s the best time, when you think about it. The prices are low, and many people have to sell their homes. The Banks own them and they just want to get rid of them, so a lot of times, you will get a really good price for a house. Then all you have to do is wait, and those house prices will go up.The only time you’ll have a problem is if your haven’t done your homework and buy a home in a location where it would be quite hard to sell if you had to,(eg.no shops, transit, restaurants, an airport, or highway, etc. to close to the property.) Our Economy, and our neighbours to the south of Canada will always be changing. And there will be difficult times. It’s just this time, we have to wait a lot longer because we have a major problem. The people responsible for this mess, waited until it got really bad before doing anything about it. We are only responsible for this in our own way. If we got into credit debt when we knew that we we’re not in a position to pay back what we borrowed. Everyone knows or at least they should know, how a house budget is run. But any big problems after that point is beyond our control.

      We have to trust that we are protected just in case something like this major ecomonic mudslide starts to rear it’s ugly head. I believe that this could have been stopped before it got to this point. But it wasn’t, so now as usual, the middle class taxpayers have to be the ones who take the brunt of the problem. Let’s face it, there are more billionaires and trillionaires in both of our countries and in other parts of the world than there ever has been been since the very first Banker opened up his shop. I’m definitely not saying that these people should be the ones to fix this problem. But we all know, for a fact, that people with extreme amounts of money are found, time and time again, through random audits of their funds, not to have paid ANY of their taxes, many times to the point of the amount owing being a larger amount than the particular house involved.If these people were audited more often and heavily fined, do you know how much money this alone would help the economy?

      These civilians are not the only people doing this. We also know that there is rampant fraud that is present in our Country alone. I will not speak for others. This type of behaviour goes on all the time, and because it is not regulated, it will not stop. We are very lucky to be living in a Democracy, and I believe that it is our duty (and will make Canada a better place) to teach every one of our children what a Democracy means. I feel very strongly that because we so often, actually almost never get the opportunity as Citizens of a Decmocratic Society to Vote on every single subject that would affect us Economically, Socially, or in a matter of Security. The reason I have written such a strong statement, is because I really do believe that Canada would be such a richer, respectable and proud place to be a part of, if it was ran the way it is supposed to be. And the only way this can happen is for all those people who sit around at workplaces, in bars, at vacation spots and at family parties and spend their entire time COMPLAINING about many things, that if changed, endorsed or enforced would solve so many things. I imagine some of you who are reading this are saying to yourself, we are talking about a poor economy here, and this woman is going on and on about other things. Well, if you would just read over and think about what I’m trying to say, I would hope that you see that if all of the items I was mentioning about budget, be it at home, or at City Hall, or in Ottawa were carried out in a more stringent, and serious manner, it would indeed affect our economy and make it one of the best in the world. But my point is, as I have already mentioned, whether it’s the way your son or grandson is being treated at school or at a soccer game, we will get no further ahead if we just sit on a bench at a game, or change the subject and make light of the fact that your son is being bullied at school, NOTHING WILL EVER CHANGE, IT WILL JUST GET WORSE, AND EVERYONE WILL HAVE NO ONE BUT THEMSELVES TO BLAME.WE MUST SPEAK UP AND PROTECT OUR CHILDREN AND OUR GRANDCHILDREN. They are our responsibility, and they are the FUTURE OF WHAT CANADA WILL END UP BEING WHEN WE ARE NO LONGER HERE TO HELP THEM. I believe that now is the time for the Leaders of Canada and the U.S. to fix what went wrong and then put in place safe measures so that this never happens again.

      There is no way way that JUST the MIDDLE CLASS TAX PAYERS should ‘bail out’ these different people, whoever they may be. We are not respnsible for what has happened both here, and in the U.S., and will of course not start to get better until the rest of the world economies have the confidence they once had in us before this happened.

      There is an extremely large part of the population that live by very different rules when it comes to taxes etc. We all know this happens, and we also know that there is really nothing we can do about it except keep complaining. I’m a very strong believer in doing what you can, no matter how small it may be, instead of spending 20-30 years complaining about it.

      Did you ever stop to think about the HUGE abount of money that changes hands in this Country alone when people get paid, when bills are paid, taxes are charged, and then they are SUPPOSED to go to a certain place each time it’s collected? Just the GST alone is an ERNORMOUS amount of money. I was under the impression that the GST was supposed to be charged just until Canada’s Deficit was paid off? Then it was supposed to be removed. What happened there? When asked, we are brushed off with a hurried answer that the money is needed elsewhere. I believe that there are three reasons why we and other Countries like us ended up in the shameful and unfair situation that we are in. The first is that we need a much more stringent group of people who’s only purpose is to take care of the money, put it where it belongs when it comes in, and pay it out to whoever it belongs to when the time comes. And, as well, the people who are responsible for this HAVE TO BE ACCOUNTABLE to a higher group of people who’s job it would be to make sure that every dollar goes where it should (this would eliminate MISAPPORIATION OF FUNDS, or the money ending up somewhere other than where it was meant to be. By doing these two things alone, BILLIONS of dollars would not get MISAPPOPRIATED, LOST, OR GOD FORBID STOLEN ON A REGULAR BASIS!.

      When I was working there was an excellent system used to prevent theft. It went something like this. 1. $1,000.00 was put in an envelope by one of three high ranking people. Of course, if the amount is very high, a counting machine would be used. 2. Before the envelope was sealed, the money was counted by all three individuals, and then initialed by each one after it was sealed. 3. After all of the envelopes for that shift period were taken care of, two individuals would take all of the envelopes which had been put into whatever was decided was necessary for that amount of envelopes, (either briefcases, or carts), and taken to the next location where the envelopes would be taken into a separate room. 4. The three highest in command for that area would then open each envelope, and the moneys would be placed where they belonged. At this point the two people who had brought the money into the area, plus the three who had been with them would sign off EXACTLY where every amount belonged. If this system was followed for example at your local City Hall, all monies would be accounted for and end up where it belonged. The final, and most wasteful rituals (there are two), that have been going on for many, many years, is the amount of money that is allowed for people both in Canada’s Provincial and Federal Levels, to travel out of town for totally unnecessary conferences, ‘working lunches’, tests, gas milage allowances,not using their own cars, I could go on and on. Of course we know that some of this is necessary, but most isn’t.Our Government Officials’ workplaces have everything they could possibly want right in the buildings they are working in. The only thing I could see that would asisst or be necessary at times, is for employees to travel from one of their own workplaces to another one, and it should be for a very good reason. Remember, WE are paying for all of this through our TAXES. I think you get the picture.

      Another extreme loss of funds is people claiming personal ‘bankruptcy.’
      Believe me, they knew what they were doing. It’s like the credit they are giving to young people these days. They get married, hoping all the guests will give them enough money as gifts to help them put a down payment on a home. Then the Banks give them enough credit to purchase a home that is going to make them ‘house poor’ (all they usually have money for is their mortgage, taxes and food.) Then they apply for more credit to buy all the beautiful things they have, knowing full well they don’t have the money to pay it all back, so they go bankrupt. What a great life eh? Now people say, why would they do that, they won’t get credit for the next seven years!! But, so what! They have all the furniture and appliances they wanted, they can wait it out. So, in the end who really pays for the beautiful home, the furniture, the beautiful cars, and who knows what else? WE DO! I think THE BANK SHOULD TAKE BACK THE FURNITURE, ETC. LIKE THEY USED TO DO IN THE OLD DAYS.

      How many years have we seen people who were in a lower tax bracket buying houses and cars and furniture, going on trips, having the best clothes? It was like a bubble was hanging over all these people’s heads, and it was slowly getting bigger and bigger, and then one day Bang! It had to happen. And, Wayne, you were asking why these people who made millions needed to have a mortgage? Well it’s a tax write off for them. This ‘thing’ has been a long time coming. Now, people like you and me have to wait longer for things to get on an even keel. There’s nothing you can do, except buy a little gold if you can, and hold on to what you have. Also, have you checked out the Big Bank Stocks lately? If you just follow them back to last year,one share of a certain bank was selling at about $69.00. The price has been that way for many years (up and down, but not by much). If you can afford to put some money into something, and have just past your thirtieth birthday, or even a little older, you can buy any Big Bank stock, and believe me it will go back up. These are the kinds of things you buy long term, sit back and watch them slowly go back up. Assuming you don’t need the money you use to buy the stock, in about 20 years when you are thinking about arranging for your pension, believe me, that little piece of land you bought, and those few stocks that only cost you $35.00 will be back up at around $70 a share again. This is when you sell them!!The same thing goes for Gold. It can’t stay at $1,000 an ounce forever. Remember it was selling for $300 an ounce not too long ago, and it was pretty consistent. That’s when I wish we had of bought some. We have a very different set a Regulations in Canada, so we are on firmer ground regarding this economic problem, but, because our neighbours to the south had such a hard time of things, we have to wait until they have “stood up, wiped off their bootstraps, and got things straightened out.” (I think that’s what the new President said.) And I believe he’s absolutly right. We may not like it, but we all must come together, and things will get better. After all, we were a part of the problem also. For the past 15 – 20 years, so many people were given an extremely high amount of credit. And before we knew it, people had very large, homes, TWO beautiful high cost cars, and everything else that went with it. Now we have to pay the piper as well. Of course there’s always the lottery!!

      Unfortunately I got hit by a tractor trailer, was seriously injured with a broken neck, and can no longer work. I’m still an employee on Long Term Disability, however when I got hit 13 yrs. ago, the salary I was making at the time was frozen and will never go up, and I won’t be able to take advantage of any new stock options etc., Because I am already 54, and it is manditory for Long Term Disability Employees to retire at age 62, I will never have enough time to recoup the losses my company went through due to the unfortunate economic problems that both Canada and our neighbours are going through right now. If I had not had this accident my children and grandchildren would be much better off.

      So, my story is a little different than yours Wayne. You have more time to get into a better financial situation due to your age. I truly wish you the very best of luck. I remember starting my job straight out of high school and each day as I walked under the five big towers on my way home each night, just a young girl of 19, looking at all the nice clothes, and shoes I’d love to buy that were in the stores. I was oblivious to all the people who were standing to the side, watching the ‘ticker tape’ flash by with all the stock prices on them, little did I know that one day, just a blink in this big world’s eye, a tractor trailer driver would be down on the pavement desperatley calling ‘lady, lady, are you ok?’ as I lay on my side, my eyes flickered for a moment, and all I recall, was him saying, ‘Thank God. I thought I killed you,’ coming from some echo in my head. I’m 54 years old, and too ill to return to work, but you Wayne, are in a different situation. You are a lot younger and that’s what you have on your side. Because I’m on disability pension, I can do nothing about buying more stock, or believe me I would. My whole life changed when that truck hit me, my marriage, friends, so many doctors that the insurance companies hired to hassle me, trying to get me to go back to work. I was 42, and my 17 year old daughter was followed one day as she skipped down our front steps and took our car to the local mall. Well, she was followed by someone the insurance co. hired. She noticed that this guy was right behind her, came back home, locked her car doors,and called her boyfriend. Well, he, plus a few other friends had this guy surrounded. He was so frightened, he rolled down his window a bit, showed his ID, and said he was following the wrong lady on hehalf of an insurance claim. How could this guy not know the difference between a 17 yr. old girl, and her 42 old sick mother, who barely drove, walking to her car with her cane, in obvious pain. (I had a titanium plate and part of my hip fused together,and put in my neck, along with many other difficulties, and the shock of the accident had turned my hairline white.Let’s just say you could definitely tell the difference between myself and my daughter. I hardly went out anyway. These are the kind of people we pay car insurance companys for to follow people who they think are ‘cheating’ for their benefits.

      Back to my point. Stocks are good if you buy a well known, usually safe one (let’s face it, the economic times we are in don’t happen very often, and yes, things will get better.) If you’re young enough, you just hold on to the stock and it will go back up, and so will the land you bought. The thing you have to remember is..never buy these things unless you are prepared to lose the money you are investing. It’s like going to a Casino. We never went often, but when we did, we brought an amount of money we were prepared to lose). We have a new President next door for one thing, and whatever they do, we will always be involved. I like him very much. I think he’s just what everyone needs right now. For once, I wish people would look on the bright side. A lot of these people who got themselves into trouble were either greedy, or were living ‘above their means’. My situation is not the greatest, as I could never return to my company, and I can’t invest like I could before, because even though I still belong to the company, I don’t get the benefits that the others do. I wear a pain patch, take other medication, I have been seeing doctors since the accident, and I talk to a Therapist every week. I haven’t slept more than 4 hours a day since 1995 due to the night terrors I experience from the accident, but I can use my cane, and my scooter if I can get in the mood to go out.

      We must also realize that for a great many years, there has been lots and lots of money spent for the Military. All my life I’ve prayed for peace. There has always been trouble somewhere. But this is something we have to do. But something does puzzle me. If everyone in the United Nations (or most, I don’t remember well, because of my illness). Anyway, I believe that every Country that says yes to sending troops to where ever, then ALL OF THOSE COUNTRIES WHO SAID YES, SHOULD SEND TROOPS. That way I think we could achieve peace, and find the people we are looking for. Why is it that Just the U.S. and Canada that has troops down there? Shouldn’t all the ones who voted for this in the United Nations send their troops as well? I thought this was what The United Nations was for. I’m not sure. I just so depressed and pray for everyone.God Bless Them All.

      Whoever asked about why that guy with a certain job was purchasing such an expensive condo, was right to mention something about that. But if people are going to lend you all that money, knowing full well that you really can’t afford it (and have 2 beautiful cars to boot), they are the ones to blame for the big mess we are in. I have two beautiful children, who are now adults, and if I could, I would try harder to fight for what I think just isn’t right so that they could have a better life.Because of my accident, even though I had been working for over 20 years, my husband and I were just getting to the point of being able to start to invest just a little more, but now we just have to wait, and hope that our children have listened to us, and don’t ‘live beyond their means’. We also have two beautiful grandchildren a boy, almost 5, and a little princess who is 4.I’ve always taught my children to have short and long term goals, and to ALWAYS SAVE MONEY FOR A RAINY DAY. I’ll never forget the perplexed look on my son’s face when he said “Mom, what’s a rainy day?” Let’s just say he knows what it is now. My husband and I had planned on taking cruises, and buying that ‘last’ house that we could leave for our children when we are gone. But these were both parts of our last ‘long term goal’. Like they say, take a few chances in life, never live above your means’, because from one bright second to the next dark moment, you just might think you’ve started another great day, and in one quick flash, you get hit by a truck! Good Luck to all of you, and please try and look on the bright side. There’s are things called “Karma” that will get those bad people who don’t care if you lose your shirt. But also remember, when one door shuts, another will open. I’ve always tried to think of these things during my 14 admissions in hospital for clinical depression, and to learn how to try and control my pain. Remember, just because someone who is sitting across a desk from you, who you can tell has never missed a good meal in a long time, and has a $100,000. car parked outside, tells you that you can afford a $700,000 home, think of that ‘rainy day’ I mentioned, and say, ‘thank you very much, we’ll have to take some time to think about it.’ And, I’ve got a little story for you. It was just around the time when gold was $300 an ounce, there was a patient who got a few of us together to talk, while I was in hospital once. He was desperately telling us to ‘buy gold, please buy gold! I’m telling you, if you have the spare cash, buy as much gold as you can, because I can guarantee you, it is going to go up to over $900 and ounce, and that’s when you should sell it!” Now you tell me, Wayne,who’s going to listen to a patient in a hospital who had a condition called “manic depression”? I wish I had of just borrowed the money from my mom and bought 3 or 4 ounces. My husband was completely against the whole thing, and like most of the others, didn’t believe this man for a minuite. I did. He and I talked often, and he had a financial background, and because I did too, and I got to know him quite well after a few months, I trusted him. There are many people in the workforce who have this man’s disorder, and have very hight paying jobs. It’s just that most people don’t believe that this is true. But all they have to do is read the literature about this man’s disorder, and they will see that it’s becoming more common, especially around people with high stress jobs like nurses and ‘Stock Brokers’.Before I go, I do wish to tell you Wayne, I am in no way trying to tell you what you should or shouldn’t do. I was just trying to explain my situation, and give my opinion. You are probably a lot smarter than I am. Also, I’ve always tried to perk people up when things aren’t going well. I know there are a lot of people who have been through some hard times like I have. Life is funny isn’t it? God Bless you all, and hang in there, as I always say to my daughter ‘look at the glass as half full, not half empty’. Thanks for listening. Best Regards, Mary

  16. I’m shocked.

    I was under the impression that housing prices only go up, faster than the rate of inflation, faster than the rate of population growth, faster than economic growth, forever and ever and ever and ever.

    Buy a house! Better yet, buy two! You can’t lose! Right????

  17. This is a fantastic analysis. I wish we had something similar and of the same standard here in Australia

  18. If you guys Google the person Riaz Kassam, you’d realize he’s no victim at all.
    His part time profession might be computer programmer, but he’s actually a full time real estate investor owning at least 4 condos.

    • For Riaz Kassam to be buying a $1.5 Million property, he SHOULD be earning at least $400,000 since it sounded like he was planning a mortgage for the full amount; and that’s assuming he’s free and clear on the other properties he owns.

      If he doesn’t have that income, then he SHOULDN’T have EVEN CONSIDERED a $1.5 MM property !
      Otherwise, this was pure speculation and time to take your lumps.

  19. There is still no new housing crisis…the problem with Vancouver is that the home ins the GVA have been overly enflated for many years now whereas the rest of Canada that has not necessarily been the case.

  20. The plight of the rich is so heart-rending..sniff…

  21. The only data in this article pertains to Vancouver — which is not ALL of Canada. And a 1.5M property is atypical. While it is true that Vancouver real estate is dropping, similar to US West Coast real estate — to broaden the effect to all of Canada — and the amount of decline — is pre-mature. Areas that have risen and since fallen in the US were due to speculation. I suspect areas in Canada which did not have widespread speculation have not been as adversely affected.

  22. Great. When can I move to Vancouver?

    • Vancouver is a beautiful place, but what kind of person would pay 1.5 million for a condo???
      We have people living on the streets and some who can hardly make ends meet.
      I am a middle class, hard working white collar from Southern Ontario. I have absolutely no sympathy for
      this individual.

      • For someone who would buy a 1.5 million condo, he should be a very rich guy. This guy named Kassam is only 42 years old and he could afford such a condo. No need to have any sympathy for him, he is much richer than most Canadians.

      • I keep asking myself that same question. You would have to be crazy or have inherited a lot of money and want a second home downtown. From what I have read, most are owned by out of town wealthy people and speculators. You can drive around downtown Seattle at night and see lights on everywhere in all the Condos. In Vancouver, 3/4 of them are dark.

    • Come now & buy as many condo’s as possible in Vancouver. You will be helping those who are desperate to sell.

  23. This is the condo market in LARGE cities. If we dont have a recession, the media will create one to sell papers!

    • The market was crazy for the past 10 years. The increase in income was nowhere near the raise in price of real estates. Did you get 2X the salary??

      If this is not bubble, then I don’t know what to call this…

    • Wrong. Prices are going down everywhere and for God’s sake the media didn’t create the economic world meltdown. In fact, they were almost a year late reporting it, the same way they were late reporting the decline in housing prices that started early last year.

  24. If you buy a house & get CMHC insurance then your property value drops 20% can you make a claim for the loss in value?

    • Why didn’t everyone listen to Garth Turner (Including Macleans) instead of the ‘Pumpers.”

      http://www.greaterfool.ca

      • Garth Turner is an idiot who doesn’t know his a– from a hole in the ground

    • If you buy a house & get CMHC insurance then your property value drops 20% can you make a claim for the loss in value?

      mmmm let’s think about that question for a moment…if you buy a car and insure the car and the car’s value goes down can you make a clain for the loss in value :- these are all very good questions.

    • CMHC insurance guarantee that the lender gets its money back. It guarantees nothing to the homeowner, who is personally responsible for the entire loan.

    • Are you kidding? When your purchased property drops in value, that is your problem.

      Ask yourself, ” If my purchased property has increased in value, am I going to share the profit with CMHC insurance when I sell it ? “

  25. As a Realtor in the 4 seasons resort area of Collingwood, I would despute the fact that house prices are dropping 20%, at least not in our area. A recently published statistic from our Board indicates that our prices are only down 3.3% when rumors were flying that we are down 10-15%. The media can kill any industry (automotive, real estate etc.) with one fell swoop of the pen. Perhaps in these difficult economic times it would be more responsible of the media to report on some good news stories, like small town Ontario where perhaps the markets aren’t as bad. Remember, it’s better to invest in the real estate market where your house will still be standing 10 years from now, then the stock market, where your stock has the potential of dropping to $0.

    • Whereas attempting to kill the investment industry is perfectly valid.

    • As a realtor, you would dispute it. Of course you would.

    • Sheri: As a resident of Collingwood I hope that you are right. We have a condo at Lighthouse Pt. and would like to sell it. What do you think the chances are?

      • Sheri: do you really think that the media is responsible for the collapse of the real estate market, North American automobile industry, and the global financial crisis? Really? It wasn’t greedy bankers and bad economic policy fueled by mortgages that should not have been granted?

        I think the real estate board in Vancouver posted a similar stat about housing in the area – forecast a drop of 9-13% in 2009 from highs. In fact, we were at that point in November of 2008, and have gone down more since then. Real estate boards have a vested interest in keeping price drops (or reports of price drops) to a minimum – if they report too much of a drop, their business goes down. So, take their “forecasts” with a grain of salt. Frankly, the nice thing about this article is that they actually interviewed ECONOMISTS (not realtors or real estate board members), who were not affliated with any real estate board and therefore could actually give unbiased viewpoints on where they think the economy is really going.

        And as for investing in real estate vs stocks – I personally advocate neither, at least right now. The only asset not falling in this economy is cash.

        • Our PM is an economist and he predicted a soft landing!!!! I never put any faith in the word of an economist(s).

    • Sherry,

      It is so typical of you as a realtor to deny, deny and deny. To be frank, realtors are the reason real estate in Canada have reached a level of unaffordability with false speculations created in the past by realtors. Personally, as a renter, I hope the housing market crashes to a reasonable price level so that my middle class family can afford to buy a home.

      • Marcus,
        You sound so hostile… where do you get your information about realtors…. those are some pretty harsh and generally untrue speculations…

        • Christine,

          I think Marcus is right. If you are a realtor, don’t take it personally. Who wouldn’t want to increase their incomes? We consult realtors who advise us on the selling prices. Realtors have a direct incentive to increase the selling price. Even if they are not a willing participant individually, collectively this has been the net effect.

      • as a realtor, I hope you’re right, Sherri.More younger, lower income level will be back into the ,market. Don’t assume that realtors want a strong, high value market. Au contraire

      • Marcus, so you think realtors are the ones who have bought all the homes over the past decade and brought the prices up? Nonsense.

        We (I am a realtor in BC) do not drive the prices up or down. When will the public realize that it’s the buyers and sellers that are driving the prices. Our job is to protect your best interests when you decide to purchase or sell. If a seller won’t take less, that’s his decision and so it should be, it’s their home they are selling! What a buyer is willing to pay is ultimately the buyers decision also. Our job is to show our clients the most recent sale prices and advise accordingly, but ultimately buyers have a top line and sellers have a bottom line. Sometimes they meet and sometimes they don’t.

        The way prices go up is; Homeowner A decides to ask $100,000. Buyer B pays him $95,000. Next door neighbor, Homeowner C thinks his home is worth more than his neighbors, so he asks $110,000. Now Buyer D comes along and pays $100,000. Next homeowner says, well if he got $100,000, mine must be worth more and then he asks for $120,000 and then you have another buyer who is willing to pay $115,000. That’s how prices go up! In a rising market, a seller can ask more and get it. That in turn drives the price upward. And we all know some sellers have gotten greedy over this past decade!

        I have always felt my job as a realtor is to provide information and knowledge to my clients so they feel empowered to make a good decision. I don’t make their decisions for them, especially on the purchase of a home, which may be one of their most important decisions in their life.

        We are each responsible for our own actions no matter what decisions we make in life, whether it’s buying a home, a car or whatever. It’s very unfortunate how much equity people have lost on homes, including myself, but there is nothing I can do. I will have to ride it out the same as everybody else and I’m not looking for sympathy either. Real estate has typically been a long term investment, so hopefully those that can hang on for the long term will be able to. Here’s good luck to all of us!

    • As a Realtor in Waterloo Region I agree with Sherry. The media is kicking the crap out of the market and it is completely unfounded. Prices were getting too high too fast in 2007 here. Things are much more balanced and still fairly strong. I have yet to see a property that is worth less than what is was 2 years ago.

      • Jill,

        The Housing Futures is a leading indicator. It is of things to come. What about the prediction of the US Futures Market in the US in 2006 that was not in line with what the industry was saying? On average housing prices will fall. How far, it is hard to say. Some areas will be hit harder than others. In any case, I think that a maximum prediction of price declines in Canada should be less than that of what is being experienced in the US becasue our fundamentals are better.

      • “I have yet to see a property that is worth less than what is was 2 years ago.”

        Come to Vancouver, there are plenty.

      • In my neck of the woods (Vancouver) the media were pumping the crap out of the RE market, long before they started kicking it. Their due diligence on the subject was restricted to verbatim quotes from vested economist talking heads (all of whom are now backpedalling at Mach 2). Here, prices are moving beyond where they were in February of 2007, and they have a lot further to go.

    • As a realtor, you should know that you may be one of those who helped to create the existing property bubble.

      If prices could shoot up 100% in the past , why can’t they fall by 20% now ?

    • yeah, who says housing wont go to zero?????

    • I would find it funny if it wasn’t so tragic for so many families, listening to more hype from someone in real estate. Newspapers are not inventing this meltdown. What would you have them do, pretend prices are still skyrocketing? I didn’t hear you complaining when they were gleefully promoting this, no downside, with no end in site, prices will rise forever, better get in now, even if you have to leverage your first born. From personal experience selling a property early last year prices were starting to go down somewhere late last spring. Newspapers said nothing about this until reality could no longer be ignored. Down 3.3%? Ya, right.

    • RE agents and their industry sure didn’t have problems with the media and the hype of ever escalating prices.

      And no, it’s not always better to invest in the real estate market.
      Are you willing to guarantee the value, or the availability of your clients to get a mortgage when their initial term expires and come renewal they are ‘under water’ where the mortgage surpasses the property value and the financial institution is unwilling to lend more than it’s worth ??!!!??

  26. A reminder: While the one example they used in the article was of a speculator in the Vancouver area, the statistics, interviews and predictions based on the real-estate futures were of a national scope. Let’s not confuse apples and oranges folks!

  27. I love how the article told us that we should not listen to the 2 economists that work for the CREA but that we should be following the wise actions of the all those smart investors (gamblers) of the derivative market??!!??

    • It could be a more acurate indicator because they are the one with the money to invest. If they believe the price will go down, they will hold off buying and therefore put a downward pressure on the selling price. If you believe the price will go down, you would hold off buying, wouldn’t you?

    • Well countless new buyers followed the sage advice of “industry” experts (i.e. realtors, real estate associations, CHMC), with vested interests in ever increasing prices…..and now they have, or shortly will have, negative equity! I’ll trust the university educated economists, who have the ability to understand market fundamentals, and are putting their OWN money were their mouth is.

  28. I think it’s interesting that this guy has been used by the media as THE example once again.
    It kinda stinks. lol
    I mean, who cares if this guy walks on his deposit. Boo Hoo. 1.5 mill for a condo is goofy anyway.

  29. I sold my condo located in Mississauga in July of 2008 for $186,000(listed for $195,000). Since then they have fallen by $20,000. I was about to purchase a townhouse for $320,000. The Townhouse has since dropped to $289,000. I’m now renting and feel great since I have no condo fees, money from my equity in the bank and no worries!

    I’m renting until it bottoms and then I’m gonna buy. I’ve already realised $31,000 difference since July that would have been financed.

    Therefore if you are renting now you will be in a great position to buy when things get worse! and they will!

    • I am renting too after selling my house in 2007 & put the proceeds in a bank to earn interest. Interest earned is more than enough to pay my present rent. Hohoho…… Won’t buy now.

    • Financially it may be better to rent but I did not choose to buy my house for only financial reasons. After a landlord stole from me I had nightmares every night about any landlord using their key and stealing from me again. Also I do not live in Ontario and it was a huge problem to find housing where I could keep my two cats. I was worried about even hanging a picture on the wall for fear of not getting my security deposit back. Landlords can just find some renovation reason to evict you as well!

      I found there was no peace and security when renting and I was constanly worrying about things. To each their own. Buying my house was the best thing I ever did. I pay an amount similar to what renting would cost for a similar property. I do not think of my house as a bank account.

  30. Goooood, I hope the bottom falls out of the housing market. House prices in Ontario are absolutely stupid. How can you justify a 3 bedroom house that’s about 1000 square feet that costs $250 to 300 thousand dollars. Stupid, stupid, stupid.

    • Agree with you George.

    • What would you say then, when in Vancouver a 600 sq ft condo costs 360,000 and up. Completely ridiculous!!!!!!!

  31. This is a rare case. Who in Vancouver (let alone in Toronto would pay $1.5Million for a condo and put only 10% down. I have to agre3e with Sherry. Being a realtor in T.O I can safely say that the markets here and in the GTA have taken a moderate 3 – 5 % drop. Media needs to focus on more positive issues, which are out there. Perhaps you will get more ratings MEDIA if you reported some postive issues (try standing out from the flock of sheep)

    • you as a realtor, of course you would dispute it.

      It’s funny that most of the realtors are blaming the media for the falling of house price in Canada. The home price in GTA is going down and will go down hard over the next few years…..at least by 25-30% when it’s all said and done…..stop lying to the public in trying to get people buying during the recession so that you can get your commission!

      the so-called “market analysis and forecast” done by the real estate industry groups are simply not reliable.

      • Blame the realtors for the unrealistically high property prices. They are partly responsible for the highly unaffordable home prices in Vancouver. Many can hardly afford to eat after paying their mortgages and bills. Wonder why some still say Vancouver is the best place on earth to live. So many in Vancouver are living under the poevrty line. It is ridiculous.

        • I agree. After mortgage payments a middle class family is left with very little to live on. The prices need to go down.

    • Mike,

      Yes, lets focus on the positive because its that darn pesky media that is causing the collapse of regional housing bubbles with all of its negativity (aka – facts). Housing prices were already falling BEFORE all this darn media attention.

      In Vancouver, the housing market peaked in February 08, and prices were falling thereafter, independent of the current economic crisis. The media did not report on the price falls in earnest until the fall, after the downward decline was already well established. After all, once it became so apparent, they HAD to report it despite compromising their revenue stream from the RE advertising.

      Were prices falling because of negative media stories? Absolutely not – they were falling because prices were no longer in line with simple economic fundamental (e.g. income to mortgage multipliers, average family incomes, rent to own ratios, etc). When the average family cannot afford the average house anymore, eventually the bubble will burst.

      I love that when prices were ballooning, nobody came out and said, lets focus on the “negative” to try to stabilize the prices so that the average person could afford a home. For 6 years, the news WAS all positive, full of pump, hype and spin by real estate associations. Nobody complained on the way up, when ever increasing prices helped line the pockets of realtors.

      But I love how on the way down, realtors tell the media to be more positive, to focus on the good aspects of real estate, all the while telling their clients to turn off the 6 o’clock news because its so depressing and not representative of market “realities.” Yes, thats right, bury your head in the sand and convince others to do the same. That sage advice will help lead countless new buyers into negative equity as they ignore the FACTS that prices are dropping, and that they will eventually revert back to their historical norms.

      • I agree 100%.

        Also, realtors NEVER spoke out against the 0% down, 40 year mortgages. Yet another way that the real estate business could get Canadians even more OVER LEVERAGED on their home and inflate the housing bubble even more.

        They NEVER speak out against RE-LISTING homes (that were on the market for a long time) at a lower price and then when they do sell they report that they got the seller 96% of the asking price when in reality it was much less. Example, house sits on the market for $400,000 for 3 months, realtor pays small fee and “re-lists” it at $350,000 the next day and eventually it sells for $325,000. Realtor NOW reports that the sale price is only $25,000 off of asking price when in actuality it’s $75,000 off of asking price.

        They NEVER speak out against all the HOUSING PORN shows out there that do nothing but hype up housing and inflate the bubble even more.

        There are NEVER calls to investigate ‘ghost’ buyers who happen to put in a competing bid on a property that you want just so both agents can drive the price up. Never happens you say?

        Lot’s of different ways to measure if housing has gotten out of whack with reality. The one I like though is the average house price to average income ratio. This ratio SHOULD NOT BE more than 3 or 3.5 to one. So if you and wifey make $100,000 combined, you should look at a house worth no more than $300,000 to $350,000.

        In an environment where huge job losses are occurring, what does that do to the average income? What does that do to consumer confidence? Three of my co-workers are on indefinite layoffs. They won’t be buying a house for the foreseeable future, but guess what, if I need a house I wouldn’t be buying one either because I could be next to be laid off. And if you think things are bad now, wait six more months when even more people are laid off and the E.I. starts to run out!

        The declines in real-estate prices largely started last quarter 2008. This was BEFORE the large layoffs started and the world economy really began to sour. Housing WILL NOT BOTTOM until after the economy does and then it will be flat for many years to come. Just look at the early 90’s recession. After it ended, housing stayed flat or increased very slowly for quite a few years after. This is simple, prolonged large unemployment coupled with tighter credit environment (no more 0/40 mortgages!) will keep housing down for a long time.

        Hold on to your seats, it’ll be quite a ride!

    • Haha… you’d be surprised. This city is FULL of off-the-planet-out-of-their-mind people like dude in the article.

    • More baloney from a real estate type with a vested interest in keeping the hype going. You would have to have rocks in your head to buy anything while prices are in freefall. Once again, you didn’t complain when media was bought into the never ending rising price hype. Media was late by about a year telling people just where housing prices were headed.

  32. Thats funny because I actually view this scenario as a POSitive thing. Unfortunately the same cannot be said for you numb skulls who bought a house recently. If had actually done your research instead of listening to a real estate agent, you would not be in the bind that you are.

  33. Well the lesson here is that you should always get financing pre-approved and sell your existing place FIRST before buying another place.

    Buying a new place first is financially dangerous… even in good times. Back in 2006/2007, I personally knew of two people who bought places first and then had trouble selling their existing places for the price they wanted and in the time frame they wanted.

  34. I find it quite curious that realtors are slamming the media for their “negativity”. Pick up the real estate section of any daily newspaper and you will be inundated with editorial that amounts to nothing more than free supplemental advertising for the real estate industry. For years realtors, developers and advertisers cheered as a spiraling real estate bubble put homes out of reach for more and more Canadians. Still others found themselves condemned to a lifetime of high mortgage payments to live in tiny, shoddily constructed homes. Newspapers were filled with quotes from realtors and their support organizations trumpeting “sound fundamentals”, “wealthy foreigners” and a host of other spurious bases for the price rises. Even now, the media primarily seek the opinions of persons with a vested interest in a sustained upward real estate market for their editorial pieces.
    The wage inflation of the 70s that eased the burden of payments for homeowners then is unlikely to recur. Mortgage rates are at historical lows which means that at some point people will have to refinance at higher rates. House prices are completely out of line with local incomes. To quote Dubyah, “this sucker’s going down”.

  35. I don’t see housing prices dropping at all in Ottawa. I’ve lived here for 40 years and I don’t ever remember that happening. Perhaps it’s because it’s primarily a government town with stable jobs (note to flamers… I’ve worked in hi-tech for the last 10 years and have been laid off 5 times). We don’t seem to have the rampant condo speculation that exists in other cities. There’s a condo on Rideau Street that was going to build twin towers but there just wasn’t enough demand to build the second one. 25k per parking spot?!! Most people here say “screw it” and buy in the burbs.

    • real estate is highly regional, “national averages” tend to be pretty meaningless. I’ve also heard that Ottawa may not see much of a drop – however, AFAIK there was not much of a rise over the last 7 years either (correct me if I’m wrong). In Vancouver however, where I am, the last 7 years has seen real estate values more than double from trough-peak (2001-2008), a large part of which has been fueled by specuvestors. Plenty of room for prices to collapse.

      25K for a parking spot? Pretty standard here in downtown condos, and people buy them because they believe that they can resell them in 2 months time for a 10K profit. Sad.

      • Ya, I’d agree with that.

        Housing prices tend to be pretty stable here.

        For example… I bought a freehold townhome in 1990 for 118k and I sold it last year for 215k. Not much or a “profit” per say, but I’m not interested in that. I just want a roof over my head.

        I’ll let Donald Trump speculate on real estate (note… he’s declared bankruptcy… again). This is the reason that we’re in this mess anyway… people trying to get rich off houses that they couldn’t afford and that weren’t worth what people were paying for them.

        Didn’t Calgary’s housing market get crushed in the 80’s?

        Anywhere where the market swings up wildly is a disaster waiting to happen unless you get in just when it crashes.

  36. It’s good to see that these Realtors(TM) commenting are wise enough to understand that their local market is different, and that housing rent-to-price and income-to-price ratios will not return to earth there as they are doing globally.

  37. I think the real estate industry has a lot to do with the crazy prices of houses, after all the more they get for the house, the bigger the commission.

    • I beg to differ George. With many years of experience in the real estate industry I for one hated working in the heated up market we experienced over the last few years. In 2006 the price strted to climb at 10 to 20,000 per month. The listing inventory was next to nil in our market on Vancouver Island and there were 3-4 buyers for every listing. The cost of a lot jumped from about 50,000 to 150,000 and the prce of materials and labour went through the roof. Everybody shared in the wealth. Did you have to hire a drywaller through this period? or a framer? They could demand almost whatever they asked. This had nothing to do with realtors. this was supply and demand. This was the public themselves driving the market. A monkey with a checkbook could have made money in this heated market. The one saving grace about all of this is the low interest rates and an adjustment of prices to more sane levels making affordable housing available again for first timer buyers. Sure some people will get hurt but they are going to get hurt due to the economic fallout. Lost jobs etc or they overextended themselves in the first place.
      People need to try and maintain a positive attitude through all of this and welcome back the more sane levels of the housing market.

  38. Bought a condo 7 months, stil the best price. There are however a number of badly situated condo properties within the GTA that are over priced. If your condo is new, next to a mall and not a highway and not in the municipality of Toronto: it’s overpriced. Why would you want to live in the ‘burbs of Toronto and not own a home with some dirt?

  39. It looks to me the article is not a regular housing buy/sale. The guy is selling his apartment. Who sells an apartment? Not unless you’re the owner you can do that. And the price of 1.5 million??? wait a minute, this sale is not within the average price of house in any level. I bet this guy is rich and wanting to buy a property for business purposes.

    Now let’s get real … families are growing, people are moving … there’s always a buyer and a seller. With these principle in mind, there’s always someone who would want to buy your property almost to the point that they wanted it cost-free.

    • Ok, first by apartment, he means a condo. And try and forget the 1.5 million part, just focus on the fact that he cannot sell his current condo without taking a major hit. So yes, there is always a buyer, but you will have to meet the buyers price and that can get ugly fast (see California, Arizona, Nevada, Florida, Michigan). That is the point.

  40. The market s finally correcting
    Also how can realtors justify 5 % fee
    You work all your life and they want 5 % of that
    RIDICULOUS

    • Agree with Peter. The realtors should get only 1% . They are blood suckers. People should sell/buy without them.

  41. Vancouver is finally going to wake up from the dream world it’s lived in. People actually believe that their 1200 sf condo overlooking nothing is worth 1.5 million. Too much greed man. I have no sympathy.

    • Bang on.

  42. What surprises me is the change in attitude of CMHC economists since 2006. One of them gave a presentation in Kingston last fall that would have been more appropriately given by a member of the RE Board. Hucksterism and hype we do not need from crown corporations. In my eyes there is a serious credibility problem within CMHC.

  43. In the UK we got a lot further to fall than you guys…you will be able to see the dent in the English concrete from Vancouver in a years time

  44. I guess it’s not a “Canadian” housing crisis until it hits Toronto?

  45. Thank you for creating more fear in the real estate market. I took a look at the Teranet index for Vancouver and it looks virtually the same as the Real Estate Board of Greater Vancouver’s index. I don’t understand why you feel you need to scare people to get them to use a different product. Wait – aaah yes – to get media attention – to sell more magazines and to help sell a new product. Your article certainly doesn’t help the poor fellow who faces legal action and other investors like myself.

    • Every newspaper could continue to ignore the FACTS for another year and it wouldn’t make a tinker’s damn of difference. People without jobs can’t buy homes! People who lose their jobs can’t stay in them! Even in staid old Halifax, where it’s all government, university, medical, DND, this market should be bulletproof. Sorry, wrong answer. We never had the insane bubble but it was going in the same direction. People were landing here from bigger cities, dropping three, four hundred grand on a property and thought it was the bargoon of the century because it had a huge yard the kids could actually play in. Well guess what, houses are sitting here now just like everywhere else and people can’t sell them. So let’s everybody ignore the elephant in the room and pretend the Emperor(real estate) agent still has his cloths.

  46. As a REALTOR it really does not make much difference if prices go up or down. The marginal difference in price makes a marginal difference in commissions. (I charge 1% or a flat fee if under 500k) I have been predicting and have seen prices drop by 25% off asking prices in my market off Vancouver Island (Gulf Islands).

    There are some things that the real estate business could do to make the real estate market a more of a transparent market. One would be to STOP the practice of re listing homes.

    Let say a house is listed at 500k and does not sell in 6 months for a $25 fee an agent can re list the home and make it look like a new listing at 450k . If the house sells for 435k in 30 days it can be said that the market is healthy and strong and houses are selling within 30 days and 3% of asking price when in fact the real stat would come out as 7 months on the market and 13% off asking price.

    The industry should adopt aggregate days on the market for all homes on the mls regardless of who has the listing. It would give buyers a more realistic look at the market.

    As a note to readers; Of the 60 odd homes I have listed in the last few years only two customers let me set the asking price. REALTORS do not drive the market we are the middlemen. If we do not list the home at what the customer wants there are usually 10 other agents who will list it for them at the high price they want. I personally give everyone my suggested price range to sell and so many people dismiss it as a ploy to sell it fast and make a quick buck.

    So before everyone slags all the REALTORS let me say most of them are hard working and do a good job but lets face it we are dealing with basic human greed at its best. I have personally seen little old ladies of 75 screaming that their house is worth twice as much as their neighbors.

    One more rant the west coast is worth more but there is a down side I had to cut my lawn today and hopefully the prices will come down and more of you can move out here and enjoy the west coast.

    Cheers from Salt Spring Island

    • Is 1% commission for properties <$500K the norm in Vancouver/BC?

      If it is, why the hell are we paying 5% in Toronto regardless of price ??!!??

      • No it is not the typical amount. The typical amount in most Vancouver areas is 7% on the 1st. $100,000 and 2.5% on the balance. That amount is split approx. 50/50 between the listing and selling agents. Commission is strictly negotiable.

    • You’re a salesman. Every real estate salesman I have met in the least 20 years has tried to pawn himself off as a “professional” or an economist when he or she was neither. A professional requires more than six months training in night-school; like a lawyer, a teacher, a nurse, an engineer, etc.

      Unfortunately Joe Canuck bought into the idea that real estate salepeople were something more than a car or appliance salesman when they are not. Every realtor I have engaged has used the same pressure tactics I receive from a used car dealer. The impact of CREA and their affiliated hucksters misleading people and cajoling them into buying more house than they could afford will be felt for years to come, so be prepared to be slagged and loathed by everyone you know who was similarly misled. It’s gonna be long and lonely times for you in non-sales social circles buddy.

      • Dan – it is unfortunate that you have had to deal with so many unprofessional Realtors in your time. As a Realtor, I absolutely agree with you when you state that many people in my profession that call themselves “professionals” are far from it. The real estate business unfortunately attracts numerous “professionals” who are not professional by any stretch of the imagination. The high pressure sales tactics, misleading advice and out right liars give the Real estate profession a bad name – especially those who run their business at the highest standard possible.

        I also agree that there is not enough training or requirements for realtors in terms of the professional standards that they must uphold. It is however difficult to regulate the business to the extent that it needs to be because of the structure of the business itself – realtors are all essentially independent contractors. I personally have a university degree, continue to broaden my knowledge, chose to inform my clients about current market conditions (even if it is not what they want to hear) and conduct myself in a professional manner. I respect my clients money and the hard work it took to make what they have. I hope that in the future you have a more positive experience! All the best.

      • Yes Dan I’m a Salesman and Yes I have sold Cars. Nissan to be exact as a matter of fact I worked at Brasso Nissan in Calgary. I’m glad I did because it has made me a better Realtor. Half the job of a salesman is to do a needs analysis and make sure you are buying the right product for you in the year I worked there I never saw anyone drive off the lot with a car they did not luv.

        No I did not go to night school to get my real estate licensee I did it on line through UBC and it did not take me 6 months I completed the course in about 45 days. I did have to write a 100 question multiple choice test which I’m proud to say scored 96. On top of that I did take a weeks training at the Victoria Real Estate Board.

        The fact of the matter is anyone can become a REALTOR it is an open business. You can work for any company. Companies are free to charge their own fee models. As a REALTOR we have to follow the BC real estate service act, CREA code of ethics, the standard business practice as defined by the BC real estate council, our local board rules and the constant and real possibility that we will be sued by any customer we do wrong to. Plus in this business we are smearing our own names all over our own communities. We do get slagged by some people but I must say that this job or profession is very rewarding (not hugely financially at my 1%) but I have had lots of hugs by great customers who have sold their old homes and moved on to new dreams. It is amazing at how close Realtors get to really know their customers and become involved in their life at a very stressful time. So go on Dan and Slag and I will keep trying to do my best and market my customers homes so they can move on to their new life. In sales you tend to get a thick skin but have to believe you are really working for the common good.

        Cheers from Scott Simmons Salt Spring Island
        PS I’m going to go out and see some non-sales social circle buddies and enjoy life today. Even though my house has gone down in price my RSP has gone down so far that I should be able to retire by 2075.

      • Also, sorry to hear you have had bad experiences and as a realtor, I’ve heard this from other clients. Myself, and others that work hard at maintaining a good reputation that results in largely referral business have to do a lot of work to make up for the ones who don’t. I pride myself on being a “soft sell” no pressure tactics here, just advice and assistance. I often caution people about spending too much and maybe adjusting their expectations. Sometimes they listen, sometimes they don’t. Many, many times I have told a buyer to walk away from a “bad” deal (leaky condo stuff largely) and that we’d keep looking until they were successful in finding a “good” home. So you see, we are not all cut from the same cloth.

        B.C. has one of the hardest real estate exams in the country. They have an approx. 1/3 drop out rate and 1/3 failure rate. That said, I am of the opinion that new realtors need to be mentored by experienced realtors with good reputations much like a trade apprenticeship.

        At the end of the day a lot of my clients call me friend and like Scott we have shared many a hug and a happy dance upon a successful sale/purchase. That’s how it should be. My friends and even casual acquaintances all know what I do for a living and often approach me for “free” advice which I give willingly. They feel comfortable approaching me because they know the kind of person I am and that their questions aren’t going to trigger hard selling pressure tactics.

        The next time around, get references (good realtors should have them). Ask friends, co-workers and see if that doesn’t work better for you. Hopefully you’ll find a good one the next time around.

        From the sunny & snowy North Okanagan.

  47. Thank god. Its bad for those people who invested in expensive condos in Vancouver, but for the rest of us suckers, this is fantastic news.

    I was making 60 grand a year and couldn’t afford to rent a decent apartment downtown. Maybe if the market collapses I could move into something with a view.

  48. I echo your comment, Scott.
    I try to be honest with sellers about list prices but I’ve even had past clients throw me overboard recently so that they can list with someone else for a higher price.
    Sellers who don’t want to face reality form the group of 90% of listings that DON’T sell each month in Victoria.
    Sellers who accept reality are among the 10% who do.

    • dex, 60k is not a HIGH salary. its above average but downtown vancouver is considered a LUXURY location. its not meant for people who make just decent salaries anyway, so it should be no surprise that the most valuable land in our city is unaffordable to rent for most.

  49. The real estate market in vancouver was hyper inflated and dosen’t reflect the market in other parts of Canada.This is sensationalism on the part of maclean’s to sell magazines.It’s really dumb to predict doom and gloom for no good reason.In tough economic times it just frightens people unnecessarily and helps to
    create a sort of self fulfilling prophecy .Think positive and be realistic instead of :

    Refrigerator sales are down in Alaska !

    Oh No !the refrigerator industry is doomed!

    • I agree. There will be falling prices in Vancouver as well as a lot of places in Canada. But as bad as it will be (and it will be pretty bad because some markets got into la-la land), we have to keep in mind that the US crash was pushed by the subprime foreclosures. All of these banks and lenders holding foreclosed properties were forced to put a glut of them on the market at low prices to salvage some value.

      Yes, we’re in a bad recession. Yes, it’s going to be a lousy time to sell and a great time to buy, but let’s not incite a panic.

    • If you are going to blame the media for the gloom and doom, then you should also blame the media for the euphoric optimism that spawned the boom. Thereby, the media should bring the prices back down to normal again.
      Yup it’s the media

  50. CREA’s selling prices are the actual amounts properties sold for regardless of whom inputs them. Sounds like the National Bank (whoever they are) is “cleaning” their data to make it produce whatever message they are trying to convey. CREA/CMHC has been doing a great job tracking sales over many years. As far as predicting the future of any commodity, their guess is as good as anybody else’s, after all they are only guessing.

  51. I don’t know where you got your information that realtors physically upload the sold data. When reporting a home sold I hand in a copy of the contract to our office conveyance dept, which shows what a property has sold for, and that is reported to the real estate board. We can’t alter a contract price between a buyer and seller. You think we have time to worry about fudging numbers or would even do that! We and I speak for the majority, are busy helping people who want to sell and want to buy. This is something the public needs to realize, realtors don’t set prices or change markets, buyers and sellers do!

    I would also say that NO ONE can predict where the market is going. We can only make a guess. And I do believe that Teranet has their own motives for attempting to be the authority on housing prices. They are looking to sell their data and make money themselves, so what is their motivation? They are a private company looking for ways to create business. CREA is an association that is in place to oversee the real estate industry, assist it’s members (realtors), and provide knowledge and information to the public.

    Your conspiracy theory is ridiculous!

    • Marilee, I couldn’t have said it better myself!

  52. I am appalled at the one-sided slanderous tone of this article.

    Let me be clear- I am a professional Realtor, but I do expect that housing prices will likely fall modestly over the next few years.

    Let me also be clear though- I am an intelligent and rational individual and I cannot stand to read this type of schlock journalism. I am infested by the borderline slanderous swipes at my industry and the twisted logic of the author.

    Firstly, let’s talk about the real estate industry’s market outlook. Sure, CMHC revised their forecast, but it seems to me that doing so is quite aboveboard. They are after all a government agency, so one would assume that there is a certain expectation of honesty and integrity. That article infers that a revised forecast indicated some sort of dishonesty in the first place. Perhaps I should remind the author that is was only 4 months ago that the federal government was forecasting a surplus budget. Things changed rather quickly on the Canadian economic front.

    In term of private real estate forecasts, yes perhaps some of the real estate companies might paint a slightly rosier picture then reality I would concede. That said, as private firms, we cannot be outlandishly optimistic or it would clearly hurt our credibility with our ever-so-finicky consumers when they realize we are sailing them down the river. The vast majourity of us in the business operate with integrity and high ethical standards with the fiduciary duty of protecting our clients’ interest always in mind. I would like to point out that some majour real estate companies (not reported in the article) did in fact forecast a significant downward trend for 2009.

    Next, let’s talk about the claim that the Canadian Real Estate Association (CREA) “scrubs the data”. I find this to be libelous and preposterous. Let me take a moment to explain how CREA data is inputted. It is not through a bunch of Realtors sitting in a room entering the sales at some head office in Toronto. The sales data is collected through each individual agent submitting sales reports to the individual mls boards. These mls boards are integrated (through automated technological processes) to upload the data to a provincial and then national level. To say that Realtors are messing around in this process is totally ridiculous. I am ashamed that my association refused to comment, but that does not infer guilt! I would challenge anyone to take a random sample from CREA data and verify it via the land registry system. I am willing to bet on the accuracy being 99.99% or higher.

    It also occurred to me that the whole basis of the “evidence” that the market will drop 20% over the next 10 years is this new futures index. Well firstly it is completely absurd and circular logic to use a speculative index as an indictor of the future and then present this as solid evidence that the market will shift. It made me wonder where the inspiration for such a detailed analysis of the Teranet futures index came from. Perhaps the author has some money invested and will benefit should the market be spooked by majour publications presenting these sorts of articles. Hardly unbiased for those who “put their money where there mouth is” to want to see a negative on the market.

    Finally, where is the neutrality? Like I mentioned at the beginning of this now lengthily rebuttal posting, I do expect the market to shift downwards. That said, we cannot simply assume that we will follow the same path as the U.S. in terms of housing markets. The author loosely makes this connection and to do so is blatantly wrong. There are so many key differences between the U.S problems and ours that I dare not even list them. Here are a few though: 1. Substantial legal differences in terms of bank repos mean that we don’t see houses being liquidated drastically by banks which in turn drives down pricing; 2. Sub prime mortgages account for about 10X as many mortgages in the US as the do proportionally in Canada; 3. We never had the extensive and abusive so called NINJA loan programs that triggered the US slide; 4. We have a vastly different taxation system related to principal residences which means we have far more equity in our homes then our American cousins; 5. Our banks are the most stable in the world and are still operating as such.

    Overall, I just hate to read an article like this and sit by idly. I hope that those that have read my posting here will agree that MacLean’s should be ashamed of itself for publishing this ‘report’. It is makes wild accusations and bases its predictions on circular logic. It is shock journalism and is founded on half-truths. It is ultimately quite biased and one-sided.

    Ultimately, I am sad to say that I no longer trust MacLeans to report fairly and with the integrity that I though I could expect. I guess from now on when I want to you’re your news, I will be reaching to the magazine rack in my bathroom, instead of to the top of my coffee table where I keep the scholarly publications.

    Sincerely,
    Scott (From St. Catharines)

    • Wow- you sound pretty pissed! Nice piece though.

    • I think someone else made the same point about teranet wanting to manipulate the data too. Depsit what you said though, I think the professional gamblers bidding in the futures market are right. We have already seem double digit declines all over the west (Vancouver and Calgary specifically)

    • You are a real estate agent in southwest Ontario and you expect prices to drop modestly for the next few years…HAHAHA…you might be in real estate buddy, but you ain’t in the real world. Good luck with the rose colored glasses though. Like the rest of the agents complaining bitterly because the media is long after the fact reporting the truth, you didn’t have a damn bad word to say when the same publications were hyping the prices will rise forever line, better get in while you still can, leverage your first born if you have to and so on. Well bud, it cuts both ways. Cheers.

      • Wayne- I am not is Southwestern Ontario, St. Catharines is in Niagara. We do benefit locally by being in such close proximity to the GTA, Burlington Oakvill etc where average price is roughly double ours. This helps to insulate us from the shock because a lot of our buyers an in-migrants who are cashing out of homes double the price.

        On a seperate note- I did actually complain when the media was hyping the boom. It encourages speculative investment which is ultimately quite bad for the market.

        Overall though, I don’t really care whether prices are going up or down. Like you said, “it cuts both ways”. There are pros and cons to both markets. When prices go up my sellers are ecstatic and my buyers are frustrated. When they drop the reverse is true. To me, it makes little difference.

        The key theme of my post was not really anything to do with prices, but rather my objections to the style of reporting itself.

        No rose coloured glasses here- just reality! aka “The real world” which I am in on a day to day basis, not looking in from the outside as an occiassional buyer or seller.

        Thanks for the response though- to each his own!-Scott (from St. Catharines)

        • Slightly different locale…same problems. Canadian middle class dispossed of as unneeded in the new global economy. All the people that used to have decent jobs have now been reassigned to the burger flipping industry. To be fair that not your fault for sure, it’s just the reality. By sheer luck I bailed out of real estate(my home of over twenty years and which was paid off) mid 08. Prices were just starting to fall. Got close to what I had hoped for but found out everything else was also selling for less than listed price. Many other people will not be so lucky and will lose everything. I have worked as an independant small business person during several resessions in this country. This is a whole different ball of wax. This is not gonna turn around in 12 months. I do not remotely take pleasure in saying this. Far too many decent hard working people will be ruined before this is over. Really hope I am wrong but I just don’t think so.

    • You make a good point about the author investing in the futures. I wonder if perhpas some of the more senior people at Mcleans are in bed with the big time people involved in this fund.

    • I am a agent too and funny how mad people get at us. Like it is our fault for inflating prices. people don;t realize 2 things about agents.

      1. we generally lose a lot of business to the next agent who promises a higher price can be gotten (even if it cant)
      2. it is our job to get the most money for the seller. if we sense the market rising then we wouldn;t be any good as an agent not to up the prices. In fact, we would be pretty sleazy if we were keeping prices low to get the quick sales.

    • Scott, wake up!! This is going to get way worse before it even hits bottom, and then the recovery will take many years, all you real estate “professionals” have been feeding at the trough for way to long, soon all commissions will be reasonable, people are starting to get sick of everybody making money off poor struggling normal working class individuals, 1% commission is spreading as fast as “for sale by owner”, it is about time!!

      We are all in for a rough ride, soon a house will be a home again, proper thing!!

      • Klee,

        “Feeding at the trough”. Obviously you have dealt with someone who was given you a bad taste for Realtors. I can;t speak for all of us, but have been in business 8 years. I work hard and make an honest living. I am not ashamed to say it is a comfortable living, but I never get rich off “struggling normal working class people”. I am in that same boat. I am just an honest guy making an honest living. It is possible to that in sale you know. Especially since I consider my job to be one of service and consultation rather then “sales”.

        The problem with the real estate industry and why we charge such high commissions is that we do not get paid for the vast majourity of our work. I cannot tell you the number of times I have dealt with clients and have ended up screwed over in one way or another. Sometimes this is intential (ir: people waiting for a listing to expire just to approach the owner privately afterwards). Sometimes it is not, (peoples plans change, jobs are lost etc).

        As long as the public is not willing to commit to us on a fee based model where we are paid consistently for our time, then we will have to continue to charge large commissions for all of the work we do that we don;t make a nickel.

        I don;t like it any better then you do, but that is the way it is. And realistically the 1% model has been done and long term it is not a viable business. When the market slows these companies all drop off the map because they are simply undercutting while the going is good. In the end it is the consumer that suffers because they are probably not getting honest and ethical representation from many of these “quick buck” companies. You want an agent for life- someone you can trust and call on over and over again, not some guy who is cheap and will be out of business in five years.

        -Scott (From St. Catharines)

        PS- That’s it for now. I have to go do some work for free for a bit. Maybe I might get paid in 6 months if the people I am working for eventually get serious and stop wasting my time! LOL

        • I have to call you on this

          And realistically the 1% model has been done and long term it is not a viable business. When the market slows these companies all drop off the map because they are simply undercutting while the going is good. In the end it is the consumer that suffers because they are probably not getting honest and ethical representation from many of these “quick buck” companies.

          Obviously you should read over the code of ethics and refrain from slandering other agent and other business models. One Percent Realty is a growing company that will be around for the long term. Our low overhead and no desk fee model will prevail over the older type of agencies with big offices and high overhead and big desk fees.

          No one joins One Percent Realty to make a quick buck and yes I provide all my customers ethical representation. I joined One Percent because IMO low fees are the future of real estate…get used to it.

          Cheers
          Scott Salt Spring Island

          • Scott from SaltSpring:

            I agree and retract my comment about 1% Realty. I wasn’t actually referring to a specific company (I did not realize there was an actual brokerage called 1%). My apologies.

            What I was getting at is my opinion though that “discount brokerages” aren’t generally viable. This opinion is based strictly on my own experience in a relatively small market as I have seen numerous discount brokerages come and go. These have been both inderpendants and franchisees. One of these franchisees now works with my firm and we had a long conversations because I happen to agree that real estate fees are generally too high. It is based on this conversation and general observation that I form my opinion.

            Also, being rushed I referred to The “quick buck” companies. I was unfairly grouping discount brokerages with the private for sale companies. What I really was getting at are the private sale companies representing themselves as agents and being highly unethical in that regard.

            Either way though, my comment read poorly. I apologize for that and hope that you better understood my point upon this clarification.

            -Scott (From St. Catharines)

          • Thanks for your clarification Scott

            Two reason why One Percent Realty has been a growing company in BC and AB.

            1) prices are so high it makes since to bring down commissions (starter homes here on Salt Spring are in the 500k range)

            2) Todays customers are doing half the work. Almost all my customers shop via the internet and know every home on the mls. When I bought my first home in 1990 Marg my agent would not let me take the MLS book home I could only see it in her car or in the office. Now every customer can have access to the MLS and they usually always sort though it and find 4-6 houses that might work for them.

            In the next few years there will be a major transformation of real estate similar to what has happened to the brokerage business. 15 years ago no one would have thought you could buy and sell stocks for $8 – $10 per trade. The for fee model or low commission model is what the consumers want and is what they will get. Good agents will always be needed but how they work and how they charge will change.

            Scott From Salt Spring Island
            Cheers

      • “Feeding at the trough huh?” You clearly don’t have any idea about our overhead. For example, it costs me $400. each time I run a half page ad. Never mind my montly board dues, my gas for all the driving I do, my signs that regularly get vandalized by hoodlums and have to be replaced, my atrocious cell phone bill, my web page, my business cards, my letterhead, the maintenance for all the extra wear and tear on my vehicle, industry insurance, my bi-annual licensing fee, mandatory continuing education courses, office rental, transaction fees, and believe it or not, there’s a heck of a lot more. If we manage our money carefully we might take home pre-taxes 60% of our gross incomes. Oh yeah, and we’d better have 4-6 months income tucked away in case we don’t get a pay check for a few months cause guess what, the expenses still keep coming. Did I mention that I also have to be available 7 days a week, pretty much 24 hours a day? When spring market arrived each year I would say to my husband see you in a few months. I regularly worked 4 evenings a week in addition to the day time I put in plus Saturdays and Sundays. I haven’t had a weeks holiday in 6 years because I’m afraid to leave my client’s in someone else’s hands who might not look after them the way I like to see it done. My kids had the impression that I was always “leaving them”. The average realtor makes $30,000 per year after expenses and lasts approximately 5 years in the business due to burn out. I’d hardly call that feeding at the trough.

        YOu might then ask why do we do this? For me it is because I like people, truly believe in home ownership and want to provide a reliable service. I’m learning to balance the work so I don’t burn out. One day I hope soon I hope to take a week’s holiday without having my cell phone surgically connected.

    • What a nice warm and fuzzy view you have. Too bad I am losing thousands by the day it seems. My dinky little condo purchase used up my life savings just for the downpayment. Now not even two years later I will be lucky to come out with any equity. Looks like I am stuck for a long time!

      Too bad MY real estate agent didn;t mention anything about this possibility. All he focussed on was how I needed to buy quick before I was priced out of the market entirely.

      I dont feel badly for you people at all. You are SCUM SUCKING BOTTOM FEEDERS!!

      • Nasty.

        • Maybe a little over the top….But True!!

          • Perhaps you’d like to reveal your profession (if you have one) so others can take a generalized, histrionic, stab at what you.

      • Its OK to bash the realtors but what about some personal responsibility here. You may feel like the realtor mislead you, but buyers also have to shoulder the responsibility. Its people doing things without thinking about the consequences that got us in this mess.

        I not a realtor, nor do I particularly like them, but I find it funny that people are always looking for someone else to blame.

        • I have to agree with Andy here.
          I hate scum sucking incompetent realtors as much as the next person, but people have to start taking some personal responsibility. There are some good Realtors out there and some bad ones but none of them are going to hold a gun to your head and force you to make a deposit on a house you can’t afford. This is like blaming your stockbroker because he took your order for 10,000 shares of Nortel before the dot com bubble popped.

          This is the problem with America and with Canada for that matter….everyone likes to think that they are the victim in all of this.
          – It’s the Realtors’ fault
          – It’s the mortgage broker’s fault
          – It’s the fault of those geeks on Wall Street
          – It’s the government’s fault for not policing the system….

          I disagree…I think it’s the fault of every person who was either too greedy or too stupid to not research the micro and macroeconomic environment before making the biggest purchase of their lives. If you bought a condo 2 years ago and didn’t think what would happen if interest rates went up, or if you lost your job for up to a year, then I’m sorry to say that you deserve what’s coming to you.

          Real estate, just like every other asset, follows a normal cycle. There are up times and there are down times but if you bought a property to live in and you can afford the payments, then just live there and enjoy! Even if your property drops in value by 50%, it will go up some day. It may not be tomorrow, and it may not be 5 years from now, but as long as you weren’t pulling equity out and using your house as an ATM, you’ll be fine.

          In the mean time, people have to stop blaming others for their own circumstances. Take responsibility for your own actions and be prepared to suffer the consequences.

          • Alberta, another realtor here, when I bought my first home (and I’m only on my second) in the early 1990’s it went up about $80,000 then dropped back down again by 1999 to what I paid for it and of course, I held on and just recently sold it for substantially more then I originally paid. What I’m trying to say here is that in Alberta and B.C. we have always had an up and down trend…hang on the best you can…see if you can perhaps renegotiate a lower mortgage rate (wait until March 20th they’re going to come down again) and wait until the market returns. I guarantee you that it will.

  53. To St. Catharines Scott That was a well thought out and articulate post. I had the fortune to be in you nice city just a few months ago and was amazed with the local real estate market. A friend of mine bought a nice very nice little home for 124k. It was refreshment to see such prices. I should have consider moving there about a year ago.

    On the West Coast prices have gone through the roof. To the point of pricing people out of the market. How do you think people can buy 1.2 mil condos. The numbers are fudged….It is simply done by the developers returning cash back to the buyers after the sale to use as a down payment.

    How wide spread is this? I’m not sure.

  54. Simon Cote seems to be slandering CREA to somehow lend credibility to himself and his brand new organization.

    Shiller’s slanderous and baseless suggestion that Realtors are somehow fudging sales price numbers, because it is in their “best interest to show that prices are not falling too much because that’s how you make your living…” is absurd.

    Realtors make their living by being professional and honest representatives on behalf of the buyers and sellers they represent. Suggesting that they make their living by inflating home prices is stupid.

    Realtors rely on their MLS data, and require it to be accurate so that when they are representing either a buyer or seller they can properly advise them with reliable comparables. If Realtors could not rely on their own data than it would be of no use for them or anyone else.

    His saying that its “’OBVIOUS’ that as a real estate agent you would want to do that, says more about HIS ethics than anyone else’s.

    REALTORS are bound by a strict code of ethics, while it would seem Shiller is not.

    A REALTOR’s pledge is to be honest in disclosing property information and forthright in providing the facts needed to help customers make one of the most important decisions of their life.

    Teranet-National Bank House Price Index has been around less than 3 months from what I can tell. They are tracking 6 markets.

    CREA has been around since the 1950s…and tracks 100s of real estate markets across the country providing a wide range of statistical information –far more information than you will find from Teranet-National Bank House Price Index.

    My question…what is Simon Cote really selling here?

  55. It is important to really think about what statistic is really being reported:
    1. 2008 average prices vs. 2009 prices. This compares average selling price from all of 2008 to same from all of 2009. 2008 started with some increases in the first few months in most area, then leveled, then began to fall, so obviously the average 2008 selling price is less than the peak. The average 2009 price compared to the average 2008 price is not yet a severe decline, because of this leveling effect. So remember, that this metric will not be shocking, on the whole (except in some areas, like Van and perhaps Calgary soon). When they say that 2009 prices will be x% lower than 2008, remember that this decline does not include the 2008 decline % from peak.
    2. Current price vs. peak price. Now this metric will show a more severe decline in a lot of areas (GTA for example), and will get a lot worse before this all blows over. I would say my townhouse in Milton would sell for about 15% less that it was worth at the peak. This might be only 8-10% less than the average 2008 price.

  56. Isn’t it funny how all the realtors are upbeat about the market. I am sure it doesn’t have anything to do with the fact that if they admit to prices going down they are stuffed.

  57. Having been a realtor for 28 years and been through a few ups and downs in the market I predict that Scott will be gone real soon. Its real easy to make money in the hot market we have been experiencing for the last few years but lets see how long the discounters last, now that you actually have to sell and market to earn your commissions. Most people do not mind paying full commission companies. As a matter of fact a client upon seeing a discount company listing said if they are to cheap to pay full commission they probably are to cheap to keep up the maintainance on their home as well lets bypass this one. The discounters would rather sell one of these (OUR) listings to earn a full 1/2 commission which is more than they earn selling one of their own discounted listings. I for one will show their listings only if I have a buyers agent agreement to ensure I receive a full commission and encourage my buyer to negotiate hard against these listings to recover the difference they have to pay to me. I would also say the discounters use their discounted listings to get prospects to sell our listings which offer full commissions. Sellers do yourself a big favor, in this market we now find ourselves in ,do not be lulled into thinking you will save money hiring one of these firms. Time is of the essence to get your property sold and you want as many realtors as possible out there trying to do that for you. A discounted commission will not encourage this and with falling values what you think you might save will surely come back to bite you. good luck to all and lets weather the storm.

    • Actually Micheal I think I will be around for a while. In a hot market you could tack on a high commission and no own really balked but when prices are coming down and things are tight everyone wants a deal and resent paying someone 20 – 30k to sell their house.

      Your argument is strange because you are putting your own compensation in front of what is right for your customers. If they would not sign a agreement to bump up your commission you would not show them the house? The thing is in this day and age people will see what they want and will bypass you and call us direct. Do not forget you are working for your customer and your fiduciary duty is owed to them not your wallet.

      Competition is what is needed in any market. My customers get fabulous on line listings that make there house show well and everyone wins. Buyers pay less because there is less needed to pay out.

      This is the trend on the future and it is here now. The thought of not showing because of what you make is ridiculous. My advise would be to sell the BMW and buy a lap top.

      • Hi Scott,
        I mean no disrespect to you or your commission model. I work for my clients and put a high value on my talents and negotiating skills as well as my many years of experience. Most of my business is referrals from past happy customers. My customers do not pay me directly, I negotiate it from the price of the discounted listing. Example: A long term customer wanted to by a house from a discounter. We negotiated a price, offer – counter offer. He was happy with an arrived at price.. At my suggestion I said lets go back $10, 000 less to earn my commission and maybe save him another $5000. Guess what? We made the deal! I have a very happy client who realizes i saved him another $5000 and I also earned the $5000 he payed me to top up my commission for doing such a great job. I have had this scenario play out a few times. The home in question sat on the market for several months because most realtors will avoid it like the plague. I’m sorry but that is just the way it is.

        • Michael I can not believe what you are saying by your own reasoning if the commission payable was higher you would not try to get your customer the same great deal.

          Don’t you try and get the best possible deal every time you go to bat for your customers?

          As far as “most Realtors avoid it like the plague” may explain why such a high percentage of the general public looks down on Realtors. By your own admission they avoid listing that pay lower commissions and are in fact are not put their customers needs first.

          Like I said in an another post most agents are great and do in fact work for their customers and have come to the conclusion that discount fees are here to stay and are in fact looking at cutting their own overhead and signing up with discount companies and giving customers what they want low fees.

  58. As a REALTOR it makes little difference if the prices go up or down.

    The people who get hurt are the people like AlbertaAmy who bought at the high. It could be years until the market goes up to where she bought.

    If the market was to go down 50% my business would be booming with all the first time buyers, who had thought they would be renting forever, they would buy if owning became cheaper than renting.

  59. Greedy Politicians, Corporate CEO’S PAST AND PRESENT and rediculous TAX CUTS to these companies that aren’t passing on the savings to wages to the hard working employees. They are a contributing cause to our economy failures. To add to that we get taxed harder to pick up their slack .

    If you can’t keep the circle of money moving it STOPS EVERYWHERE. The industries are reaping the profits and tax cuts, not sharing it with the employees with wage increases so everyone goes broke while they hoard! Now no one has two cents to rub together they bled us dry and everything has come to a halt.
    The Americans can’t stop printing money like it’s a gameboard game of monopoly or payday.
    Our PRIME MINISTER IS NO WHERE TO BE SEEN!
    If OBAMA hadn’t came to visit I’d still be waiting to see him.

    This country needs to get off it’s butt and start making some noise! It’s not rocket science .
    GOOD LUCK TO ALL. WE ARE GONNA NEED A LOTTERY WIN !

  60. Finally! Finally! Thank you Maclean’s for telling it like it is.

    I live in the Metro Vancouver area.

    I sold my one and only modest home a year ago based on the information I was reading on blogs and in the business and finance media from everywhere except Canada. At that time it was a gamble for sure for me to do that because there was absolutely no balanced information at all here in BC regarding real estate. It was all “buy now or forever be priced out” and “they aren’t making any more land you know” kind of stuff. And it was everywhere. Every politician, every banker, every real estate agent, company and board. I was scared to sell my place but it turned out to be the best fincancial decision of my life!

    The last time I checked they weren’t making more land anywhere on planet Earth! Geez!

    How could it be possible I asked myself, that in a globlal economy where everywhere else in the world the reports were of declining real estate prices that here in BC in particular it was full steam ahead! Incredible lies were being told that’s how.

    I urge anyone who bought real estate in 2008 in BC and who bought on the basis of the drivel they heard or read in the media to consider a law suit against those in the media that used the public airwaves and newstands to push you to buy. They gave you nothing but the biased bull produced by the local real estate industry and they never bothered to give you the opposing point of view so that you could make an informed decision.

    I can report that even as recently as a few weeks ago, the Vancouver Global television station’s Noon News Hour’s lead anchor was telling viewer’s to buy now because now was a good time to buy. She said so immediately after her infomercial “interview’ with a well known local real estate guru who always always pumps the real estate market on Global TV without shame.

    On that same news station the Premier’s brother no less regularly appears to tell viewers that everything is wonderful here in BC. The Premier’s brother! And guess what, the BC Premier has always been very friendly to the real estate industry starting when he was mayor of Vancouver.

    Now we have a huge real estate bubble just beginning to burst here in BC with all the same ramifications for our economy and the taxpayers as everywhere else.

    Do not believe the politicians, the bankers, the real estate industry stakeholders. They are all lying to you!

    And thank you Mr. Robert Shiller for helping us out here in Canada with your wise counsel.

    And to my fellow Canadians who own one home at a time I say beware that there are legions of so called “investors” out there who own multiple homes that they never ever live in and they use them like stocks on the stock market. They are playing all of us like dummies.

    These “investors” are ruining our neighbourhoods and our country. Many of these investor “homes” are being used by the hundreds as drug factories and the politicians are turning a blind eye to this problem.

    Don’t you ever wonder why the politicians “can’t” do anything about it?

    Remember the front page Maclean’s report about BC being world class centre for crime!

    It all adds up doesn’t it.

    • Jim I have to disagree with your smear of Micheal Campbell the Premiers brother. He host a radio show on CKNW every Saturday morning and he does have a real estate person on the show ever other week. His name is Ozzie Jurock.

      I have listened to the show for the last 8 years and if I miss a show I listen on line latter and for the last few years they have been saying do not buy condos or houses in Vancouver. It is a over heated bubble and when people line up to buy an unfinished hole in the ground it is time to look elsewhere. Mr Jurock has consistently told buyers to look at the smaller town where you can still get a deal and buy at house at a reasonable price and if you are a investor rent it out. He has stated on lots and lots of shows do not buy a condo or house and think you can make money in the Vancouver market.

      All the shows are on the CKNW audio vault and I sure if they are not they would go though and find all the shows prove they have not said to invest in condos or homes in Vancouver for long time.

      I agree that homes are just that homes to live in and should be affordable not for rampant speculation but please do not smear people who where not hyping the market. His show has consistently called the market for what it is. Tune in Saturday at 830am CKNW 9800 Vancouver and listen for yourself.

  61. Oh and one more thing.

    How about we all find out how many properties real estate agent’s own themselves!

    You would be surprised by how many real estate agents own multiple properties and are “playing the market”.

    It is ruining our country.

    • Hey jimbo..loser!

    • To the other Jim

      This is the craziest theory I have read on here yet! What are you smoking and can I have some.

  62. With many years of experience in the real estate industry I for one hated working in the heated up market we experienced over the last few years. In 2006 the price started to climb at 10 to 20,000 per month. The listing inventory was next to nil in our market on Vancouver Island and there were 3-4 buyers for every listing. The cost of a lot jumped from about 50,000 to 150,000 and the prce of materials and labour went through the roof. Everybody shared in the wealth. Did you have to hire a drywaller through this period? or a framer? They could demand almost whatever they asked. This had nothing to do with realtors. This was supply and demand. This was the public themselves driving the market. A monkey with a checkbook could have made money in this heated market. The one saving grace about all of this is the low interest rates and an adjustment of prices to more sane levels making affordable housing available again for first timer buyers. Sure some people will get hurt but they are going to get hurt due to the economic fallout. Lost jobs etc or they overextended themselves in the first place.
    People need to try and maintain a positive attitude through all of this and welcome back the more sane levels of the housing market.

  63. Question for Scott from Salt Spring, and other realtors for that matter:

    I own a house on Salt Spring Island. I bought it in 2003 when property there was for the most part pre-boom. I didn’t spend much money because I bought the ugly hippie palace on the block, but it did sit on a good size piece of land (3 acres). My assessments have been growing year over year – I expect that will stop this year.

    From a strictly value for my dollar perspective, is now a good time to sell my place on Salt Spring and take the gained equity and buy a greatly discounted place in the lower mainland?

    Great discussion everyone, thanks for the help in advance,

    Josh

    • Hi Josh

      O you have a hippie place too. The Salt Spring market is in the same boat as the Vancouver market so there would be no net gain.

      If you had sold last year and stayed in cash and then bought know you would be ahead but if you could predict that could you tell me the numbers for the next loto then I could add some new clap board to the out side of my shack.

      Cheers from Scott on Salt Spring Island.

  64. stop slagging the real estate agents ???

    for all the real estate agents who are trying to portray themselves as honest, hard working
    individuals; stop your dreaming !!!
    the real estate industry and their associations and such DO drive the market prices up.
    accept the oncoming drive for price reductions… this you cannot talk away.
    its about time the real estate industry stop stealing from the buyer and take a rest from
    their greedy agenda; that applies to both buyer and seller reps…

    stop slagging the real estate agents ???

    ITS ONLY JUST BEGINNING !!!!

    • Do you even know how the real estate business works?? You are dreaming if you think that the “industry and their associations drive market prices”, do you have a brain in your head and the ability to think for yourself? If a realtor told you to buy something would you just do it or make your own decision……guess what if you chose the later then that must mean that the real estate market is driven by the public…or buyers. Simple as that.

      In simple terms….
      When you purchased or sold a home did your realtor hold a gun to your head? Probably not. So if you made money or lost money it was your decision. Don’t blame anyone else for your lack of knowledge.

      BUT….I would love to hear your theory on how the real estate industry drives the market prices up.. ha ha

  65. Wow..this is so pathetically ultra left wing Canuckistanian! To all of you lefty loser living in someone elses basement suite, concrete coffins or are just anti anyone that wishes to better their families future etc. etc. etc. Stop screaming that “the worlds coming to an end” because it isn’t! Your all a bunch of chicken little wannabes fresh off the protest line..or some other line for that matter. If you want to be an uderachieving loser..go ahead..we live in a slackers paradise with our “redistribution of wealth” ideology already firmly in place. Just don’t even hint in any negative fashion against anyone on this earth that want to better their or their families lives financially or other wise…pathetic.

    As for all the realtor bashing taking place here in lala land (I’m not one!) that is sooooo typical once again of all the cry baby left wing under achievers that seem to plaque our nation..enough already..the rest of us are soo tired of paying your way..the same goes for the $650,000 per unit social housing..gag!

    Oh..and all the BC government would have to do to instantly have hundreds of billions of investment dollars screaming into BC would be to remove the property transfer tax..and the PST!!!!

    • Finally an intelligent post I can believe in. Thanks realist!

    • Wow, all that crazy neocon screaming… sounds like deep down just might be a little bit worried…well if you lose everything in this Communist hellhole you portray Canada to be I’m sure you can get a job replacing Rush” Limpbuger” the next time they throw his hypocticical ass in jail on a drug charge. Not only that you will be able to pick up real estate real cheep down there. Millions of foreclosed on homes down there. Seems that totally deregulated greed fest that Bush and Co. ushered in didn’t work out so well, did it? You sound like a true believer, so you should easily be able to ignore all the ugliness and reality. Don’t let the door hit you on the ass on the way out. Cheers

  66. Caveat Emptor!!! Buyer Beware!! Do your homework!! Stop drinking the kool-aid?

    All I can say is the general public has no clue what is coming. The mainstream media is massaged (controlled) and only a certain point of view gets out. There are numerous people who have predicted this fall and worse, but there not allowed on TV or Radio. The only person recently has been Glenn Beck on Fox News. Google him and watch his 3 minute video on “inconvenient debt.”

    Also,Google Alex Jones, Jim Willie, Peter Schiff, Jim Sinclair, Max Keiser , Lindsey Wiiliams and you will soon realize what you have been fed is all BS. Start doing your homework. Hint….The next shoe to drop will be commercial real estate followed by the Titantic !!!…….the US dollar losing its world reserve currency status. When this happens look out below and you will see that complaining about realtors is trivial.

    Cheers

  67. As a west coast REALTOR and strata property manager, I am involved in the daily activity of the Vancouver area market. My experience confirms that buyers and sellers drive the market, not REALTORS. The job of a REALTOR is to market a seller’s property to the best of the REALTOR’S ability; and to find the right property at the best price for buyers.

    I have worked with many sellers who are totally unrealistic about their selling price by demanding prices that are not reflected in comparable sales activity. Many sellers stubbornly hold to a listing price which far exceeds market value but they have some fixed idea in their head as to what the property is “really worth.” There is no such thing as intrinsic value in the real estate market!!! Value is based on what the general population of buyers are willing to pay at any point in time.

    Currently, there continues to be buyer activity in the Metro Vancouver market; but those buyers are being more cautious and they are looking for better deals. The recent market bubble on the west coast was driven by a number of factors, including the following: low interest rates; the longest amortization terms in history; zero down financing (backed by CMHC – your government dollars at work); pent-up buyer demand; offshore buyers (immigrants and investors); 2010 Olympics hype; and the influx of buyer and investor money from hot Canadian markets like Alberta (remember those high gas prices?). So, the bottom line is that buyers and sellers determine market activity and prices, not REALTORS. That is the reality of the market.

    By the way: if anyone wants to verify MLS sales data in British Columbia it is easy to compare BC Assessment sales data (obtained from the Land Title Office records) with the MLS Sold info input by REALTORS.

    I have never heard of any REALTOR faking a sales price higher than the actual just to make the market look better. Who cares? Commissions are important to REALTORS; not whether the listing sold by $5,000 or $10,000 more or less. In many cases, the net difference in commission for every $10,000 of sale price results in approximately $100 in commission; so there is no incentive to fake prices.

  68. What a bunch of whiners. A lot of you participated in a colossal real estate bubble. You will certainly loose a lot of money or your credit rating. Probably both. Stop blaming others for you poor financial decisions.

    Things are going to get much worse in Canada. The U.S. economic meltdown is going to hurt us. As Canadians we feel we are insulated. We are not. It’s only a matter of time. If you think the residential real estate problem is bad, just wait for the commercial real estate failures that are coming. Prepare yourselves and your families for coming global depression.

  69. The Realtor chant for the last 5 years was “Buy now or be priced out forever!”

    And a lot of you suckers believed them.

    • Not all of us were saying that. Some of us said, you know what I can’t predict the market. It is going to go up forever, not likely. Will it see a down turn…probably. When…who knows. Is it good to invest in real estate as a roof over my head…always. As an owner, at the end of the day, and I mean 20 years here you will still be far better off than if you had rented for those 20. Is it good to invest in real estate as speculatory…sometimes but generally as in all sound investments it’s a long term hold.

  70. Realist said “Feb 25, 2009 at 11:21 pmReport AbuseWow..this is so pathetically ultra left wing Canuckistanian! To all of you lefty loser living in someone elses basement suite, concrete coffins or are just anti anyone that wishes to better their families future etc. etc. etc. Stop screaming that “the worlds coming to an end” because it isn’t! Your all a bunch of chicken little wannabes fresh off the protest line..or some other line for that matter. If you want ”

    Dooood… take a chill pill. How underwater are you on your specuvestor purchases? You’ll be even further underwater this time next year. Maybe put some of that negitive energy towards dumping whatever you got before you lose even more. kisses and good luck!

  71. As a speculator Mr. Kassam Failed in many ways… overpricing his listing, not getting pre approval from a lending institution and putting only 5% down on a presale project. Most unfortunate is that he did not employ a REALTOR who could have told him that when the original builder went bankrupt, and a new disclosure statement was released, thus giving him 7 days to get out of the contract and all his deposit back. of course this vital information would have cost him nothing if he had hired a REALTOR

    • I totally agree. In addition, as a realtor I would NEVER have advised a client to commit to an unconditional purchase without first securing a firm offer on his current residence. A realtor’s services are free to a buyer and our job is to protect them from just such an incident. When people go in and deal with the developer directly one has assume whose best interests are being served. Also, it does not sound like Mr. Kassam listed his home with a realtor either (I could be speaking out of turn here since it wasn’t mentioned either way) and instead may have been trying to sell it himself. While that can be most successful in a rip roaring Seller’s market that is certainly not the case. A realtor might have advised him to lower his price immediately when he first put it on rather than chase the market down after the fact.

    • I stopped reading comments after a few self righteous people started flapping their mouths.

      First I don’t know this guy but it’s clear from the article he wasn’t only putting $80k DOWN, he put down an $80k DEPOSIT and the rest of his equity was to come from the condo he was selling. It says so in the text of the article “We reached the point where we couldn’t drop the price any more,” he says, “or we wouldn’t have enough for the down payment on the new property.”

      Furthermore, for people who think this guy is alone, you have your heads in the sand. So many people did things like this. And is he partly to blame? Absolutely. Is he solely to blame? Of course not, everyone, from bankers, to realtors, to taxi drivers, to people on the news and in the papers, etc… believed that prices would go up forever and there would always be a buyer on the other side. Well prices can only go up until people realize they’re way too high… incomes have not been going up like prices. When your housing prices are 8X income.. look out.. they should be between 3-4X income.

      • Wow. With the replies that I am reading we are definitely headed for a depression. I have never heard so many negative people. If everyone starts thinking this way well we will only have ourselves to blame. This too shall pass and if we start to think postive things will get better.
        I am also in a similar situation and feel no one could have predicted the speed and severity of this financial crisis. However my builder is willing to work with me so that we both come out alive. Not all contractors are like this one

        • Dave,
          Enjoy seeing the equity on your house melt over the next 10 years. You’ve been forewarned. You are what is called a “GREATER FOOL”. Get it?

  72. How about we take an ACTUALl look at what CREA really said in their most recent media release (before the media gets their hands on it and twists it to what sells papers and magazines). I think most would agree that they are providing a pretty realistic and accurate view of what is happening out there.

    I grabbed this from their website:

    MLS® home sales to decline further in 2009, rebound in 2010
    OTTAWA – February 9th, 2009 – National MLS® home sales activity is expected to
    decline in 2009 before rebounding in 2010, according to a new residential housing
    forecast prepared by The Canadian Real Estate Association.
    National MLS® home sales activity declined 17.1 per cent in 2008, and MLS® sales
    activity is forecast to fall an additional 16.9 per cent to 360,900 units in 2009. This would
    be the lowest level for national sales activity since the year 2000. Sales activity is
    expected to decline from levels set in 2008 in every province, led by declines in British
    Columbia, Alberta and Ontario.
    National MLS® home sales activity is forecast to rebound by 9.9 per cent to 396,600
    units in 2010, marked by an acceleration in activity in the second half of that year. The
    rebound in activity in 2010 is forecast to be biggest in British Columbia and Alberta.
    New listings on the MLS® systems of real estate Boards in Canada have been trending
    steadily lower since peaking in the second quarter of 2008, and that trend is forecast to
    continue. It is that combination of rebounding sales activity and fewer new listings that
    will stabilize the MLS® resale housing market in 2010.
    “We are caught in a cycle where consumer confidence has been eroded because of job
    losses, and consumer confidence is an essential ingredient for housing sales activity,”
    says the President of The Canadian Real Estate Association, Calvin Lindberg of
    Vancouver. “And housing activity helps creates jobs.”
    “The essential selling ingredients in today’s market are realistic pricing, marketing, and
    preparation. There are potential buyers making inquiries, but the barrage of economic
    news makes them much more cautious than before.”
    The MLS® sales forecast developed by CREA Chief Economist Gregory Klump shows
    that fewer transactions in some of Canada’s more expensive housing markets,
    combined with reduced asking prices, will continue to put downward pressure on
    average MLS® sale prices.
    The national MLS® average home price is forecast to decline eight per cent in 2009,
    with prices down most in Western provinces and Ontario. By contrast, the average home
    price in Newfoundland & Labrador is forecast to rise 4.8 percent in 2009. Prices are
    forecast to stabilize in 2010, with annual price increases of one per cent or less in five
    provinces.
    The price trend is similar but less dramatic for the weighted national MLS® average
    price, which compensates for changes in provincial sales activity by taking into account
    provincial proportions of privately owned housing stock. The weighted national MLS®
    average price is forecast to decline 6.4 per cent in 2009, and hold steady in 2010.
    Page 2
    “Increasingly cautious homebuyers and mortgage lenders means that active listings will
    take longer to sell in 2009 compared to previous years,” said CREA Chief Economist
    Gregory Klump.
    “The national housing market is recalibrating due to weak sales activity,” said Klump.
    “Supply will take time to adjust to lower demand, but sellers unwilling to accept offers
    below their expectations will remove their home from the market,” he added. “Fewer
    active listings reduces buyer choice, and in time puts a floor under prices,” CREA’s Chief
    Economist added.

    • HAHA…”recalibrating”… that’s what they are calling it now are they. Dream on. The excrament has only started to hit the air conditioning device. Do you really think all these people losing everything have the option to just take their home off the market? Well keep buying into the blather from the real estate industry. I didn’t hear you complaining when that darn media was hyping real estate long after the bubble had burst. If anyone thinks this is all gonna turn around in another 12 months or so you must also assume the millions of decent jobs that have disappeared forever from this country are magically going to reappear. People working at Wal-Mart(and that’s about the only place hiring) can’t afford to buy anything. Cheers.

  73. One of the greatest mids of economics gives you reason after reason and yet, you sheeple continue to burry your heads in the sand.

    Don’t come back on here crying about how you never saw this coming. Pick up a book and do some homework. You sheeple think you know it all, don’t you.?

    “The dumbest people I know, know it all.”

    Good luck! You will all need it.

  74. First of all, if you are purchasing a 1.5 million dollar condo, you should not be looking for a 1.5 million dollar mortgage. The 80,000 he put down is only 5%. Why in anyone’s right mind would they put 5% down on a $1.5 million dollar place. This is what got America into trouble in the first place.

    Secondly, why would anybody purchase a place firm without knowing exactly what he will have from selling his place?!?!? unless they have the ability to carry two places at the same time. Common Sense here….

    You cannot arbitrarily ask a certain price for a property basing it on the amout you require to close the next transaction. The public is well educated and will only pay the current market value for a place.

    I think this fellow dug his own hole……. This is definately not the norm….

    Come on McClean’s, don’t make a story out of this portraying this as the real estate climate in Canada. This is an isolated case of one greedy individual who obviously tried to live the high life but could not afford it!

  75. This is a brilliant article. I have been telling my Canadian associates about the problems with the housing sector. Canada is not immune from a housing bubble similar to what burst in southern California.

  76. In Winnipeg , the Provincial government, (NDP) gave the City of Winnipeg permission to re assess the housing every two years . This is not right . The City and the Province have to learn to pay their bills and live within their budgets just like the poor Tax Payers of this City and Province.

  77. “Last week, for instance, the Canadian Real Estate Association (CREA) predicted a drop of just eight per cent in 2009, followed by a speedy recovery that would see prices starting to edge up again in 2010.”

    Monkeys. When will they finally round them up and take them back to the zoo?

  78. It is still unclear to me why everybody is so concerned about Mr. Kassam. He apparently owns four more high end rental apartments in Vancouver downtown area. He can just sell one of those apartments and pay for his penthouse. It’s weird that they found just this guy to provide an example.

  79. That house prices became overheated is well known, what effect the drop in employment will have on housing will take some time to realize. One would suspect that many of the people laid off in the past three months are still able to function with EI and savings/credit etc., once the EI support, savings and credit runs out, and the new job doesn’t offer the same level of pay, only then will we know where the market is going. Logic would dictate down! For example many of the jobs being lost in Ontario (38% of Canada’s population and 41% of GDP) are highly paid and provide much discretionary income. This loss will depress spin-off jobs, leading to further lay-offs and further reduce the amount of potential home buyers. The economy will eventually stop receding, however new job creation will take additional time to kick in, and in the face of a higher Canadian dollar created by the global demand for Canada’s resources, it is unlikely that we will see a replacement for the high paying jobs lost in Ontario. As house prices reflect what people can afford, lower wages will mean lower prices. The assumption that house prices will remain flat for an extended period seems logical and most likely underscores a new reality for Canada. Given that the largest employer in most provinces are governments and these are paid for by value added workers such as manufacturing, low housing prices may be the least of our worries. My $.02

    • This is exactly the point I have been trying to make here with people who just refuse to face the truth. As I have said, economists, real estate people and other “experts” who explain very earnestly that prices will “recalibrate” in 12 months or so must also assume the millions of good jobs that have left Canada forever to be done in third world hell holes will magically reappear. Give your hear a shake. They are not. As you point out the fallout of this mess hasn’t even started yet. wait till people’s savings and EI run out.

      The larger picture here that the “rose colored glasses crowd” refuse to fess up to is the fact that to have these insane prices you need a middle class population able to pay them. Middle class and then some. The truth is, it has been a long time coming, but in the new global economy, the North American middle class is no longer required and the corprate greed heads have trown them overboard as uneccessary baggage. I’m not sure who they think will now buy their poisionous crap from China. I hear these people were just stunned when the economies of China/India have also come to a grinding halt. Considering those poor buggers working in these hell holes don’t have enough money to buy toilet paper, that leaves no one to be a “consumer” or house buyer for that matter. Cheers.

  80. So much for being able to retire on a nest egg that was founded by real estate. We were told countless times that you can never lose money on real estate. Well, surprise surprise; twenty percent this year and another forcasted fo next year. That will be almost 50% in two years- and like a bad stock people will want to dump their overly high mortgages and ditch living in Toronto for the burbs and once again add to the traffic and pollution of the commuter population and Toronto will become a ghost town of boarded up homes and multilevel rentals and turn back into the crappy neighbourhoods that had finally improved over the recent decades – when people preferred living closer to where they were working and enjoying the benefits of city living. A warm welcome to all new red necks and welfare cases and newly landed immigrants- Toronto can once again become your dicrepid, decaying playground just like it was over a decade ago. Glad to have you all back.

  81. Personally I hope that real estate prices continue to plummet until regular folks can afford to buy an ordinary little frickin’ wooden house without paying 50%-80% of the combined gross income of two working professionals just to keep up on mortgage payments. Prices in Vancouver, a city I left nearly a year ago partly because it was obvious I’d never be able to own even a doghouse there, were (and still are) completely insane. In most other cities in Canada, they’re just crazy.

    Moreover, I think realtors ought to get paid about as much as baristas on a per-hour basis for the oh-so-arduous task of driving around showing houses to people, with a small additional flat fee of less than $1,000 for getting the paperwork done on a sale. Giving them a percentage of a house sale is essentially giving them a percentage of a person’s lifetime effort at earning a living, and it’s a key cause of house price inflation (every time a house or condo flips, there’s built-in inflation of several per cent just to pay the damn realtor for doing a little driving around and paperwork-filing). The people who actually build the houses — carpenters, drywallers, plumbers — earn their pay. A guy who goes around opening doors for people and chatting them up should never get paid as much as a tradesman who does real work requiring actual skills. It’s time to replace realtors with online free listings, “key boys” and flat-fee notaries; together, such a package would allow us to get rid of these inflation-causing parasites altogether. Have a nice day.

    • The problem these days is people don’t want to do research for themselves. It is easier to just believe what those “inflation-causing parasites” aka realtors tell you. I come across so many people who believe the nonsense that the mainstream media feeds the general public. People have to learn to seek out information from sources that aren’t mainstream. It is time to wake up, educate yourself and stop blaming other people, no realtor, banker, or lawyer every forced anyone to sign a contract, it was done entirely by free will. There are always frauds and misrepresentation out there, buyer beware! Unfortunately this is the world we live in.

      Time to wake up as a society and pull our heads out of the sand. We are going to experience a financial and economic crisis that many of us have not seen in our lifetime. Don’t let the mainstream media form your opinions and beliefs, form your own opinions. Everyone acts like a bunch of sheeple (definition: people that are like sheep and follow the herd).

      • The fear mongering on this blog is mental……1982 was wayyyyy worse than this.

        We had 18% mortgage rates !

        You kids don’t know what a crisis is.

        This is nothing but a blip……if you’re worried, pay off your credit lines and credit cards….the rest will come around.

        And if you’re only putting down 5% you deserve what you get…..in any market….good or bad.

  82. I,ve been reading as much as possible on the market and its state of “well or not so well being” and what I’ve found is all the reports have a hidden agenda behind them. Now, as a layman (electrician not realtor or hot shot businessman) I agree that realtors are way overpaid. The ambitious ones are making (or were making ) huge money for doing not alot of work and they pat themselves on the back all the time when all they did was take an about 3 month course and were off. The guy I work with (and yes I’ve had thegood fortune of taking advantage of the crazy market that was) is currently calling me quite regularly to tell me about this property that “He really likes” but won’t buy himself while he sold his house and is now renting…What does that tell you?

  83. Hey Maclean’s

    thanks for publishing a balanced article. I’m sure the fact you don’t rely on real estate advertising helps, but couldn’t you have published something like this a year ago.

    Also, for anyone hassling Scott Simmons on Salt Spring, I can say I don’t know him personally, but he has been taking the same open-minded approach for a couple years, in acknowledging prices are too high in various public forums like Realty Talks. Give the guy some credit for that. Not all realtors are busy spinning the market situation to the disadvantage of the buyers – though I admit todays’ release of February 2009 numbers by the Victoria Real Estate Board full of spin…

  84. RE/MAX has taken it right back to this article.. Download the copy of the letter sent by RE/MAX to the editor….

    It is articles like this that will cripple consumer confidence and I want you to know that you have my commitment to ensure that as Canada’s leading real estate company, we will continue to challenge the media with this type of reporting. http://www.remaxoa.com/09/regional/macleansletterfeb2009.pdf

  85. canadian homes right now are a true bargain, and this will only get better for home buyers at the end of 2009.

    • No, homes right now are not a true bargain. Compaired to what? Not to worry though. They soon will be. I have just read on another site that for all intents and purposes the steel industry has been shut down in Hamilton. Bet ya homes are gonna be a real bargoon there when everyone’s saving and EI run out. Only problem is…you gotta kind of have a job to get a morgage. Oooops, guess the “experts” couldn’t see that one coming either. Cheers

      • Perhaps all those losing these “great” jobs should have considered the fact that it was relatively clear 20 years ago that the future of the Canadian economy was not in over-waged and manufacturing, but in the service economy.

        Those who I know that pursued a post-secondary education and are able to participate in the knowledge economy or those who gained a viable skill set (i.e. they can fix things that are broken) tend to have relatively stable and secure jobs. In fact, despite the doom and gloom, several of these sectors continue to face worker shortages…such as a shortage of auto mechanics in NB.

        Those who appear hardest hit by the correcting economy are those that felt they should be able to make as much or more than such workers, while investing less time and effort in their career paths. The easy fast road is not necessarily the best road.

        The others who are suffering are those that felt there was nothing wrong with leveraging themselves to the point where they had little to no discretionary income. While living pay cheque to pay cheque may have seemed fashionable, we should all think twice about such lifestyle decisions.

        Nevertheless, the lesson of the story should really be that if you need not sell right now, don’t — and if you must, chances are you will also buy a new place at a reduced price…if the value of my house has dropped by 5, 10 or 20%, so has that of my neighbour’s who I would need to buy.

  86. Its a great time to buy a home. Interest rates have never been lower. There is lots of selection and people have to live somewhere, so rent if you must but its still better buy your own place if you can afford it. Vancouver Island has the best climate in the country and our prices here are very affordable. With the downturn, we are seeing prices for modest starter homes in the 250-275000 range again. I agree it got out of hand and I for one am happy to see it this bubble pop so we can get back to more normal levels of business. For those of you who think that it was the realtors who created this think again. Many consumers benefited from the increase in equity and for those that manage their money and lifestyle well, it should not be a problem. For those that overextended themselves its now time to pay the piper. For the ridiculous insane prices of property in places like Vancouver, thats the price you pay to live in a big city. Yes I am a realtor and have been one for almost 30 years. Many, many of my clients have made money speculating in the real estate market and some have lost as well. Thats life! Get over it!

  87. Lets’s put some reason in this. We pay hundreds of thousands for houses made of wood, gypsum and paper and we still believe these are “bargains”? The Canadian house is just a glorified barn, please ask anybody who had the chance to see how Europe builds (even the East), we are decades behind and we have no clue what quality means.

  88. To the best of my knowledge no realtor or builder has ever forced anyones hand to sign an agreement to purchase or an agreement to sell. You are not mandated to use a realtor for the sale or purchase of your property. For some people they require a realtor to do the research for them, help them make an informed decision, protect their best interest, and the list can go on. For others, who perhaps have more time and knowledge, they do not require the services of a realtor. That’s fine by me.

    I am a realtor. I work very hard helping people. I will admit some transactions do proceed smoother than others but it’s not just about driving people around, showing them a few houses, and doing paperwork. On average I show each buyer approximately 30 homes. The highest amount of homes I’ve shown to buyers is 97 homes. Am I complaining? NO WAY. Realtors who are doing their job negotiate, do leg work in advance, provide statistics that are not slanted, help purchasers and sellers make an informed decision, deal with emotional people & diffuse tense, volatile situations. Not to mention take on an enormous amount of risk brokering the deal. It’s not a 3 month course to become a Realtor. More like 18 months to 2 years. Not to mention the continuing education MANDATED by real estate associations.

    I am the first to admit to all my clients that no one really knows what values are going to be in the future. We can only speculate. Presenting the positive and negative facts in an honest and non slanted way is responsible and looking out for your clients best interest. The fact of the matter is, it’s not a very nice economic state the world is in right now but there are still opportunities out there for everyone. Here in Toronto, some homes are still selling over asking price much to many’s disbelief while most are getting close to asking, and some selling for significantly under asking. There are always curve balls in every market. In my opinion, the market is doing exactly what it was designed to do, correct itself.

  89. Realtor that cares,
    that is one of the most intelligent posts of the week. I too care for my clients and work hard for them. For those people that have been slinging mud at realtors take a look in the mirror and clean off your own face. We are not to blame for the current state of affairs. Our market on Vancouver Island is doing quite fine. We are having a modest market correction but all in all things are holding up quite well.

  90. You people just aren’t getting it….. Canadian real estate does go up and down, and there always is a buyer and a seller… people buy and sell for many reasons, but they also need a roof over their head…. sell to rent, rent to save, then buy, sell for profit, sell at a loss, divorce, splitzo, separation, death, loss of a job, moving up, moving down, up sizing, down sizing, it is all the same and will be for eternity… the global mess may have an impact on the home psyche but that’s it! The world may be going to hell in a hand basket, but you still need a place to live! If they aren’t building anymore, you can bet your sorry little butt that home prices will remain relatively the same… up or down 10 or 30 percent… who cares! We are not over mortgaged like the US, and even if we were, we have less than a tenth of their problems…. and more of what the world will need from our resources: which is more than any other nation on this planet! So stop playing the harbinger, and set your personal perspective/heights in a more positive light!

    Who cares if your home’s market value is less than what it was two years ago, it will rebound! Stick it out!
    You want to rent for the rest of your life? Then you better prepay your cemetery plot now!

  91. Oh I love Albertans, especially Alberta Real Estate industry… hanging on to the 06 bubble just like Flames’ fans keep hanging on to the 04 run… Edmonton and Calgary are in MELTDOWN, like it or not. This article mentions 20% further decline by 2011, for Alberta it will be 2010. Did you see the article in March 13 Calgary Herald business section, Alberta will be the worst hit by this economic crisis, according to experts at RBC… Good luck Alberta realtors, find new work, maybe cleaning up those tar sand tailing pools up north, haha, the Sun has set this real estate market.

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  93. ohh really good site…….it really help everyone who want to know about new things …Good work continue it..

  94. You are specialize in homes for sale in tri cities. and also good thinks about people will find nature trails, a park like atmosphere, community swimming pool and much more.

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