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Toronto’s housing forecast according to Garth Turner, the Dr. Doom of real estate

Bubble Boy

Turner outside his Caledon home, a former inn built in 1855

If the Toronto real estate market has nine lives, so, too, does its most famous prophet of doom, Garth Turner. Over a 40-year career, Turner has worked as a journalist, a broadcasting entrepreneur, a newspaper chain proprietor, a hotel and restaurant operator, twice as a federal MP (including a stint in Kim Campbell’s short-lived cabinet), a PC leadership candidate, and a financial author and speaker (or, as his critics put it, “seminar shill”). Most Canadians still know him best as the rebellious member of Stephen Harper’s government who was kicked out of caucus in the fall of 2006 for blogging about party business, then crossed the floor to join the Liberals.

Turner, you may be surprised to learn, is also a self-professed real estate junkie who over the years has bought and sold—very profitably—about 50 commercial and residential properties; he moved four in 2011 alone. But as he has watched prices and consumer debt levels soar, especially in Toronto and Vancouver, he has come to see the housing market as a grossly distended balloon that will—any day now—explode, raining debt and misery on the Canadian populace. Each delay to the inevitable reckoning, he argues, more deeply entrenches our delusion that the real estate boom—“the biggest bubble economy in history,” as he puts it—can continue forever, and leads a few thousand more naive young couples to sign five-per-cent-down mortgages on wildly overpriced fixer-uppers in Leaside or Riverdale. “The real estate correction will hurt,” he warns, “and the longer this thing goes before it tips, the more pain there will be.”

His fans gobble it up. His blog, greaterfool.ca, clocked an impressive five million visits last year, and the number keeps growing. Those who comment—the site elicits 50,000 comments a year—tend to be regulars, even addicts, who gleefully offer sentiments like “We are so screwed!!!” He’s written 14 books, most of which are largely devoted to the real estate mania. His speeches—he once gave 200 a year—regularly draw standing-room-only crowds. Last fall, when Turner advertised a speaking engagement in Toronto on his blog, 1,200 people packed an airport Hilton. He relishes the opportunity to meet his readers. “They’re cynics,” he says—people who distrust the MSM (that’s “mainstream media”), and especially what he calls the real estate industrial complex. “They’re a tough room.”

But they do trust Turner—even though he has been unsuccessfully calling for a housing slump for years. In 2008, it looked like he’d nailed it when the release of his book, Greater Fool: The Troubled Future of Real Estate, was followed by a steep drop in prices, including a 10 per cent plunge in the GTA that October. By the following spring, however, we had shaken off the jitters and piled back in, sending home prices higher than ever.

Turner is bound to be right one day—many economists agree on that. In fact, when you look beyond his bluster and often piquant language, Turner seems downright moderate. That’s because he recently entered a new phase in his evolving career, becoming a partner in Turner Tomenson and Associates Family Wealth Management. Now that he’s betting other people’s money on his views, accuracy is much more important, and controversy, long a boon for his career, has become a liability. Self-serving hyperbole and a huckster image could torpedo his newest venture.

There is a striking disconnect between Garth, the online crusader against excessive debt, and the Hon. J. Garth Turner, PC, investment advisor, as his current business card reads. Striding into the boardroom of his dark-wood-and-pleather office in a business park on Yonge Street, just south of the 401, he resembles a small-town lawyer: slightly rumpled suit, shaggy hair, amiable manner. While on his blog he rails about “dumbass [interest] rates” and “the whackjobs in the Tea Party,” here he speaks in measured tones about the importance of diversification and taking a “holistic approach” to your portfolio. But he still indulges in the naughty analogies he knows play well with his public. And, at 62, he seems to find his new job a hoot. “Money is more important to people than sex,” he says with a mischievous smirk, his voice lowered to a stage whisper. “It’s incredible how intimate they feel about their finances. They tell me everything! I’m like Dr. Phil.”

Although he has long been proffering opinions about managing money, he’s only been licensed to advise individuals for less than two years. Wealth manager Scott Tomenson met Turner in March 2010, and decided he could use a business partner with “marketing capability.” That he got: since Turner and his partner launched the firm a year and a half ago, assets under management have grown to $150 million.

People seek him out because they think he tells it like it is, and the first thing on their minds is usually real estate, and whether they should sell. Turner makes one thing clear: there is nothing wrong with home ownership per se. He owns a home in Caledon, a former inn built in 1855 that he and his wife restored at a cost of hundreds of thousands of dollars. (He calls heritage properties—“musty old buildings full of mould and creatures”—his personal fetish.) “We all need a place to live,” he observes. “But we have allowed that one asset to overwhelm everything else. All of a sudden, people wake up and 90 per cent of their money is in one thing.”

  • Smoking Man

    You goofs forgot to talk about the great one, the only one the GREATEST PREDICTOR OF THINGS IN THE WORLD

    THE GREAT SMOKING MAN

  • John

    Mr. Turner has been wrong more than he’s been right… or, at best, he was right too early. My wife and I bought a home in 1996, in one of Mr. Turner’s supposed “Demand Areas” here in the heart of Toronto. 18 months before we bought it, it was listed for $580K. We bought it for $325K. And we know several other couples who benefitted from this major house price correction in our neighbourhood, again in what Mr. Turner calls a “Demand Area”, where corrections are supposed to be minimal. We recently sold our house for $975K, three times what we paid for it sixteen years ago. We know many, many couples in our neighbourhood who have fared far better than we have. Had we listened to Mr. Turner and sold our home in 2008, 2009, 2010 or 2011, think of the money
    we would not have made on the sale of our home. Literally hundreds of thousands of dollars. Literally years and years of money to put toward our rent, here in the same neighborhood, while we design and build our dream home in the country. Our advice to others is stop listening to supposed market gurus and analysts. Their timing is always off. And, more importantly, stop incurring debt. Stop it! Good luck to one and all!

  • Ry

    Toronto Life should just stop writing about real estate markets. Any article I have read in Toronto Life is all substance and no fact. Toronto Life has interviewed many of my colleagues in the past, who work in the real estate industry and none of the positive/true facts have been published. I understand that fear sells media, but I would have thought Toronto Life whould have a little more class than this for the Toronto citizen.

  • John

    Ry: Remember, the media, including our good TL is in the business of created havoc, selling magazines, get people talking and create a buzz. Nothing more and nothing less. The fact that we have taken precious time from our hard day at work to write and comment on their never ending doom & gloom articles on Toronto, tells us a lot!

  • Rappy

    I dominate this article and Garth turner.

  • Reality Check

    Garth Turner’s predictions are actually quite moderate, but get painted as “doom & gloom” by everyone with a vested interest in selling real estate.

    The fact that every mainstream/Big Bank economist now essentially predicts the same 15%+ national correction in prices is proof that Garth is not some whackjob spewing out extremist views.

    The #1 message on greaterfool.ca is to have diversification — i.e. not put more than X% of your net worth into your house, and not to put all of your eggs into any one basket (including gold, houses, bonds, equities, or any other asset type).

  • Coraline

    “Any article I have read in Toronto Life is all substance and no fact.”

    Do you understand what you just said, or did you just write something that you vaguely remember hearing someone else saying? Ahhh, the fine minds in the real estate business.

  • Joe Mancinelli

    On any given day amy person’s opinion can be correct and can be incorrect.
    Let us hope he is incorrect.
    I believe in Toronto and in Ontario and I believe the “glass is half full”.
    I dont like wild swings (up or down) and hope we find a happy median.
    Joe Mancinelli

  • Benjamin

    The funniest thing about this article is that a few days later, the mortgage rules were changed to address fear of a potential housing market bubble. If it’s become a concern, we’ve already gone past the point of potential bubble.

  • samantha

    torontolife is NOT a business magazine

    it is a recreational mag , so dont put any stock in anything it or its free , that is freelance writers , say.

  • Doug

    The point Garth is trying to get across is if you buy now in an overpriced market like Toronto or Vancouver, the risk of downward price movement is much greater than up. Consider the the United States and many European countries (the latest casualty being Ireland) have had a real estate booms that went bust. Also consider that Canada is NOT immune to real estate busts, having experienced them in the early 1980′s and early 1990′s. Why should this time be any different? It’s impossible to predict how high prices will go and when during any kind of bubble (gold, tech stocks, real estate, and other assets), and it’s also impossible to predict how low they will go and when after the bubble collapses.

  • BiilE

    Garth is very reasonable and damned funny, above all. i attended his talk in Vancouver with 1200 other fans: a) It was free. b) It was informative (don’t keep your eggs in one basket i.e. real estate.) c) It was FREE.

  • Mike

    Well, I guess if he keeps saying it one day it will become true and all of his followers can say “see he was right all along.” Personally I’m not putting my money in his fund because although it seems to me he is aware of the cyclical nature of economics, he is unaware of paradigm shifts and really just fills a need for skeptics that want to feel smarter then everyone else by proposing a prediction over and over again.

  • Doug

    Given his pitiful history of bad advice, its amazing anyone still listens. Apparently people are now starting to realize how bad: http://garthturnergreaterfraud.blogspot.ca/2012/12/garth-turner-real-estate-prophet.html

  • sky’s the limit?

    Oh I don’t know about that. Fact is we have the Bank of Canada priming the pump year in and year out. Guessing that Carney will raise a .5 before decamping to Bank of England in Sept. The values are ridiculous these days. Sorry boomer, but just because you reno’d a few kitchens and baths and flipped, doesn’t mean I’m giving you a million dollars.

  • sky’s the limit?

    Joe, his opinions don’t suddenly become more or less correct day by day. His ideas are based on a macro-economic analysis of our whole economy, the global economy and our unique Canadian market. Look around: every other G8 nation has had a big correction. Why should we be spared? Or more to the point: just because folks now selling have reno’d and flipped a bunch of times in a rising market, doesn’t mean their homes are truly worth $1 mil. There’s alot of greed at work.

  • http://www.facebook.com/people/Ausaf-Ahmed/100000386104911 Ausaf Ahmed

    i am following on Dr. Doom forecasting.


    Waterproofing Services

  • Moni Raad

    As an investor in my humble opinion house prices are somewhat sustainable, condos are a bit of a concern. However at the end of the day if you are investing for the long-term you should be okay withstanding a market adjustment – if/when it happens. If you are an investor looking for a great property management company in GTA – you need to check out Buttonwood Property Management. They have a special offer going with incredibly low fees and awesome client service.
    Wish you all the best of luck on the long-term, patience is a virtue ;-)

  • molson cdn

    I cant believe that Toronto life is wasting everyones time by interviewing garth. he is being paid by the financial markets and acts as a disinformation agent to the unknowing masses. interestingly he will not allow any discussion of gold or silver. he blocks or censors any opinion that contradicts his own. his site is not about free speech towards markets. On the contrary. he slams real estate and preys on the renters to invest in reits, mutual funds, stocks, notes, etc…..

 

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