Garth Turner (Canada’s version of Peter Schiff?), Halton Member of Parliament, businessman, and real estate investor shares his opinions that Canada (Calgary as well) is not immune from the subprime crisis.
The must-read article brings home what bubble bloggers have been discussing over the past years about the hyper-overvalued real estate market in Canada. Overextended young buyers, double income requirements, 40 year mortgages, 0%-5% down-payments, assumables, etc. are all elements endeavouring to sustain the unsustainable. Some common marketing-machine driven real estate myths from the article:
1.) Unlike stocks, real estate is a riskless investment.
2.) Houses [always] appreciate
3.) Canadian lenders are more conservative [than U.S. subprime lenders]
4.) Industry experts are worth heeding
5.) You need some place to live anyway
6.) A house is a great investment
7.) Better to be an owner than renter
8.) Rising markets are normal
9.) Real estate profits are tax-free
10.) Canada is different
11.) Alberta is different
The addition of #11 (in relation to #2 on the list) to the list is a colloquial misconception in the province of Alberta. The hollow validation that because Alberta possesses energy resources, paying half a million dollars for an average house in Calgary is justifiable. It is not.
Garth, who is also a best-selling author recently published his new book “Greater Fool,” which examines real estate and personal finances in today’s fragile global economic state.
In addition, his new blog is also now open for business, GreaterFool.ca.
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It’s truly refreshing to have some sort of MSM that honestly critically reports on the real esate market in Canada.
Garth is just taking this opportunity to sell his book. Nothing more and nothing less!
Well sure he is.
Anyone with half a brain can see that the RE bubble in Canada is just as unsustainable as in the US.
Garth is just taking the opportunity to make some bucks and get some publicity out of it. Well good for him – maybe some people who read his book will avoid taking on a financial albatross. Well worth the twenty bucks.
If Turner had published his book 2 years ago it would have been more signifigant. I told people in 2006 I could not see the ramping up in prices continuing. All the workers coming for these mega projects get laid off when they are complete and they know it. They are not going to buy an overpriced house for a five year long job. Wait till the central banks start raising interest rates. There is talk of turfing Ben Bernanke and replacing him with someone who has more solutions to the economy than creating enormous inflation.
If mortgage rates went to 10 or 12% most of these new home buyers would be sunk.
One thing is for sure many people are over extended. They owe alot of credit debt, school loans, auto loans and have added as you said a house loan that requries two incomes. If anything happens they are not able to pay. This has happen here in US and appears in Canada also.