I thought you might like a summary of my new book. This is page one. The next 300 tell you what to do about it. — Garth
Money Road
January 2nd, 2010 | Book Updates | E-mail this blog post to a friend
January 2nd, 2010 | Book Updates | E-mail this blog post to a friend
I thought you might like a summary of my new book. This is page one. The next 300 tell you what to do about it. — Garth
128 comments ↓
Completely and utterly true and based upon human psychology and the madness of crowds……except when the underlying premise of the entire economic structure has been gutted.
ergo….Peak everything……:)
11 Nostradamus Le Mad Vlad on 01.02.10 at 1:27 am (last post)
#74 kc (from prev. post) — “Social Unrest and Global States of Combustibility 2010″ — Would this have anything to do with it?
Exactly!!! If the trouble isn’t where you expect to find it, the Americans will make it happen to justify the means and causes.
Just a thought – according to Mr. Soros, the graph should be asymmetric – boom/mania lasts longer than bust/desperation. Statistics show bull markets lasting longer as well. Not sure if the Great Depression was an exception.
AgAu
Very true! Looking forward to the new book release.
My investment broker has sent his clients a similiar chart several times in the last decade.
Did it work? — Garth
Garth, on what part of the chart are we at?
Mikey
Depends which market – real estate, stocks, gold, oil, hockey cards. — Garth
Garth – could Vancouver start to implode prior to the Olympics?
What, and spoil Ozzie and Bob’s excellent adventure? — Garth
Ontario road fines increase
It now could cost a whole lot more to break the law on Ontario road fines have tripled and in some cases quadrupled.
As of January 1st, the fine for red light violations increased to $325 from $180.
Drivers without seat belts or child seat violations will now be fined $240 up from $110.
The most drastic fine increase is for failing to stop for an emergency vehicle, it’s now $490 dollars up from $110<<<<<<<<<<< no tax increases BUT….a sign of the times….buckle up and keep your lawn mowed–who knows what that could cost
Garth, Real estate!!
Mikey
The one wild card in all of this is the price of oil. If oil does hit 100 and then 200 what will that do to normal, as in what we are accustomed to, business operations and living arrangements? I don’t have any idea about specifics but it is surely going to change things dramatically!
“Could Vancouver start to implode prior to the Olympics”
Very possible, a review of past real estate markets that have held the Olympics suggest a drop in prices starting prior to the event.
This is possibly due to people’s attention being shifted from real estate to the Olympics along with the completion of the venue. After all, the value of real estate, especially in a bubble, is all perception. The people have to be constantly re-assured of the value of their properties. When the MSM’s attention is diverted to another event, that constant and necessary stroking of the home owner’s ego dissipates.
This happened in Vancouver just prior to Expo 86 and in Victoria just prior to the Commonweath Games in 94.
All bets are off, if Flaherty gooses the market – again.
-Thoughts from a west coast real estate appraiser who considered this market over priced in January 2006.
Vancouver has already started to self immolate.
The people that have been paying ONE THOUSAND a square foot, for a Condo the size of a Matchbox Toy are going to get a rude awakening. My top Realtor insider says things have changed = LOC’s just went up and those cheapie teasers aren’t fooling as many rubes.
If you are thinking about buying a Revenue Property….wait until the Book comes out – and save yourself multi grand.
Got your TFSA yet?
Happy New Year!
I predict the air starts to come out of Vancouver post Olympics but doesn’t gain real steam until the fall. If either 5/35 mortgages are done away with or interest rates come up before June it will begin. Otherwise the HST will be the trigger that starts it. Eventually all 3 will kick in and the bubble will burst.
When I read this I had in mind all the Vancouver RE perma-bulls who claim ‘rich Chinese’ will keep prices inflated forever:
China Property Bubble May Lead to U.S.-Style Real Estate Slump
http://www.bloomberg.com/apps/news?pid=20601109&sid=arp0XyPoRxW0&pos=10
Try to fit Garth’s graph to the January 1977 to October 2009 Real Estate Board of Greater Vancouver Statistics.
It seems to me that, far from being a predictable, repeating pattern, as implied by the tidy sine wave, we have a far more volatile market. To my eyes there are, over 32 years, four points we could try to fit to the “Euphoria to Capitulation” pattern. However, the time scales vary widely.
We have 1981-1982, but then the “capitulation” phase lasted several years and a new cycle arguably didn’t begin until about 1986. Five years.
There is a 1989-90 blip, with “capitulation” at circa 1991. Two years.
There’s a 1994-95 peak, after which we see a slow decline out to 1999 (or is it 2001–or would that be considered a minor instance of the cycle)? Say seven years.
Then there is 2007-08. One year.
What happens now? I think things are far less predictable than this cute little graph would suggest. I sincerely hope we see a more severe version of the mini-correction from last year, but I wouldn’t bet on it.
Gosh. You mean it’s different this time? — Garth
Love the graph but please level the “Optimism” labels. Having “Optimism” at different levels gives me a cognitive dissonance headache.
Massive overspending in the micro and macro economies brought on by Government policies can only lead to a massive re-set of both sectors in the economy. Japan found out the hard way, but oh yes, “that was different,” or so we have been told.
We are at ‘Euphoria” from what I see, at least in 4 out of 5 of the markets that Garth refers to in #6 above. Governments are using stimulus dollars to fund all of their pet projects while consumers gorge themselves on real estate, HELOC funded automotive “jewellery” and the latest electronic toys for every member of the family. The country is in a feeding frenzy spurned on by BoC and government interest rate and mortgage policies.
I don’t see any level of financial self control or restraint being shown by consumers or the government.
Garth- we need the play book! NOW!
Garth:
You used to predict real estate trends for the coming year.
Why not this year?
Done daily. — Garth
T. J. What does LOC stand for? Who does ‘rube” refer to? First time buyers?
I don’t see a link to place an advance order???
Soon! — Garth
#14 arisuseless
Indeed. If you read James Schouw’s article in today’s Sun this was pretty much the argument. If you break it down he pretty much says that RE stays high because of demand – none of which comes from inside Canada. The usual – rich Asian money will keep pushing our market up regardless of what residents do.
T.J. I’ve got it. LOC refers to line of credit.
Garth drew a puzzling picture of some funny funky lines, akin to “For every peak, there must be a corresponding valley, for each up, a down”, etc. Where the hell are we? Duz anyone know?
——
#2 kc — The US. Ahhh yes, the Last Bastion of Free Anything, most of which costs too much.
As The October Surprise from last year was the trillions / billions in debt which taxpayers are left to pay (no one bothered to tell us about it, so just charge it to another country), this could all be precursors to The Spring Surprise. Curious how politicians from one country can speak so authoritatively about other countries’ positions. Russia and China have already stated they won’t agree to Iranian sanctions.
Comment from wrh.com says it better, so: “Venezuelan officials understand that the minute they shoot at any American aircraft violating its airspace, the US will use that as a pretext for attacking Venezuela to effect ‘regime change’ against the government of Hugo Chavez. Remember: half the oil the US uses comes from South America.” We cover all sides of a flat world! If they’re not covered, we’ll bomb them to kingdom come!
Now where have we seen these two before? Do the numbers 9-11 ring a bell?
More Spring Surprises all over the place! “Israel is about to attack someone and wants to convince their population they will be safe from counter-attack.” Courtesy wrh.com.
Keep in mind: “All war is based on deception.” — Sun Tzu, The Art of War
——
Chinese rare earth. — “Neodymium is one of 17 metals crucial to green technology. There’s only one snag – China produces 97% of the world’s supply. And they’re not selling.”
Webmaster’s Commentary: “Get ready for a Chinese crotch-bomber, followed by the invasion.”
——
Who Marc Faber? / Lost Decade of the Decadent! / Further.
——
For travelers through airports (not me).
Real Estate? It’s just Another Brick In The Wall Part II! Because what happens elsewhere will have an effect, either positive or negative, on RE over most of the planet.
Post #8, John M
Calgary media joins in with the Vancouver media in the RE-pumping stories. Gotta love the headline: “Calgary housing market crawls back from depths of early ’09″
…. crawls back form the depths – is this some action hero we’re supposed to be cheering for?
http://www.calgaryherald.com/business/Calgary+housing+market+crawls+back+from+depths+early/2389895/story.html
Post #8, John M
Same thing in BC — two and three fold increases in alcohol and traffic related fines, the reason being an alleged recent increase in drunk drivers. No percentages or numbers of any kind (except for the fine increases) mentioned in the clip, but just this claim on the increasing trend.
Of course they won’t call it what it really is — a cash grab based on a false premise to make up some of the budget shortfalls.
Where is Canadian RE on this chart? Euphoria!
Where is US RE on this chart? Between Fear and Desperation! Stimulus on put a false bottom under Panic & Capitulation!
2010 for CAN RE – Eurphoria changes to Denial and Doubt, 2011 – Fear, 2012 – Deperation.
See…still a 5 year cycle…both kept in check by stimulus!
Sorry…still a 5 year gap between US and CAN.
Garth- I was just wondering if you have any predictions about the real estate situation in Fort McMurray? I would love to chat with you sometime (if that would be possible?) about Fort Mac as I have a lot of questions that you may be able to provide some insight on the crazy going on’s in this bubble here. It so often seems this place is like it’s own little world with it’s own set of rules! Thanks, if you have taken the time to read this.
As an economist specializing in modelling credit markets, I made a killing shorting the stock market with LEAP derivatives starting in late 2007. I agree 100% with Garth’s predictions of a housing bust and have sold all of my non-recreational properties. Even those of you reading this who are not financial experts should be able to easily see that a “double peak” that has formed in the real estate chart for virtually every city in Canada. Soon you will see the infamous “head and shoulders” pattern which marks the penultimate moment before the crash. Good luck to all those holding 0/40s and 5/35s.
The only thing that I disagree with Garth about (if I read it properly in a recent post), is his claim that the collapse of the derivatives market won’t cause a depression. As a buyer and seller of derivatives I see first hand how that market operates every day. This market has a notional value of $640 Trillion dollars. How is it possible that all these bets could be correct? Even if one percent of them are bad, how would a cascading failure be prevented? Certainly the money supply can be expanded ad infinitum, but that will erode the assets of the boomers through inflation. People 55 and older own 85% of all assets… if inflationary forces of any origin (supply constraint inflation, monetary inflation, etc) come into play after a period of deflating property prices… boomers will retire hungry.
#12 TJ — “…LOC’s just went up and those cheapie teasers aren’t fooling as many rubes.”
Teaser rates? I was offered prime + 5.75% on a personal line of credit the other day. Please, tell me where I can get a teaser rate! On second thought, maybe 8% is a teaser compared to 13% in December of 2010.
If one was to jump into the market now—-what would you consider a reasonable down payment if one can affored a property of $360000(EDMONTON)
and were does one see intrest rates in 5 years —-I know that is real long term
Is there any stats to see how many morgages arecoming up in June/July of 2010
#24 T.O. Bubble Boy,
Indeed. It feels like a coordinated effort. No doubt it will continue to drive fence sitters into the market and prolong the alleged recovery. However it cannot change the fundamentals.
The middle east is a powder keg. Yemen is now in the news. The terrorists there are trying to force the USA to either “go big or go home”. The middle east has oil which the US needs badly. However, securing this oil has become a very expensive undertaking.
In my opinion the US would like to secure the oil fields in Iraq by setting up permanent bases there and Afghanistan. Allowing the majors to pump oil. All the talk about bringing democracy and helping the locals is just a side show.
The best-laid plans of mice and men oft go astray. If that happens well…….I am going to check out Grandma’s old recipes on squirrels.
T.O.Bubble Boy: every time I read Mario’s screed my B.S. meter goes into the red zone.
” Garth:
You used to predict real estate trends for the coming year.
Why not this year?
Done daily. — Garth”
C’mon……………
You had a breakdown per city for the past few years.
Do it again….
Vancouver to Halifax.
Tell us.
Do people really think that at this point and time the olympics still drive RE prices in Vancouver??? Ignorance is bliss. It’s a 2 week affair happening in less than 2 months. I didn’t realize tourists were posting here.
Two min. comedy clip from a cartoonist called Mark Forne (I think). About the new S C R E W U credit card. We all pay a monthly fee even if we don’t have it!
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An e-mail on Mish’s site (link), but it’s from a soldier and how they view an unwinnable war, so here is the last part entitled “Why Do They Hate Us”.
“They hate the US because … * We have troops in 150 countries * We support corrupt regimes * We needlessly meddle in the internal affairs of other countries * We have a one-sided policy on Israel * We are hypocrites on free trade and human rights
“The more we keep troops all over the world, the more enemies we make. Eventually it will bankrupt us. The only sane solution is to declare the war won and leave, not just Afghanistan, but 149 other countries as well.”
If this were made public by the m$m, open across the ‘net how soon before public sentiment turned violently against Obama, Harper, Sarkozy, Brown etc.? Not long, I guess.
Also, the link on Friday, about a slew of wars — this is in addition. Big Dick Cheney, Blackwater, Halliburton etc. are being mesmerized by the dollar signs raining down upon them.
——
Some info. about our dearly-beloved PM and what’s happening on Facebook.
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The UK and US are broke, as they are financing the Wars on Terror junk while using the pretext they are trying to prevent terror, so it’s time for another false flags.
Hey Garth,
Would you say Vancouver’s at the “Thrill” “Buy Now or Buy Never” stage of the cycle?
Or at what stage do you currently see the Vancouver market at?
Thanks,
Sam
Garth, on what part of the chart are we at?
Mikey
Depends which market – real estate, stocks, gold, oil, hockey cards. — Garth
———————————————-
real estate – denial
stocks – excitement
gold – (works in reverse. People buy it when fearful as apposed to to buying other assets during states of “euphoria”
oil – depression
hockey cards -depression (not sure we’ll see that mania like we had in the 90’s for a while)
Graph only applies and is accurate in a closed system to describe bubble behavior. Present RE prices are no doubt extremely high in historical standards but they are due to ever increasing demand and govt policy changes. 500,000 people per year added (via immigration/foreign money) at the crest changes this with regards to RE. The graph doesn’t apply because it ignores increasing demand from abroad.
Yeah. it’s different this time. And you are still making that figure up. — Garth
Also, Garth, please refrain from the demeaning comments on my posts. I just can’t see why you can’t acknwledge my point of view on the real estate market?? I am not trying to pump it up…i just see it the way I do…and the majority of posts havent altered my view at all. That is why i post…convince me otherwise.
Why? — Garth
“Hongcouver”
…..our city’s nickname speaks volumes…..Doesn’t it….
…Hongcouver’s Home Ownership’s Debt to Earnings has averaged 60% for the last twenty years…
…Earnings set to continue rising in Hongcouver…
Nostradamus jr.
Garth, on what part of the chart are we at?
Mikey
Depends which market – real estate, stocks, gold, oil, hockey cards. — Garth
———————————————————-
Nice cop Garth… lol
wow … you are ahead of deadline … I believe you had said February? I wish you would write a book about how you manage your time …
researching and writing books, contributing daily to a successful blog, going on speaking tours, staying on top of your investments and the economy … accomplishing so much in your professional life must take a lot of energy and discipline
The book will be in Chapters Feb.1, but blog readers may order here from the 15th, with shipping a few days after. Thanks for asking about my time management, Earthling. — Garth
#42 Nostra Jr.,
Earnings set to rise? Really? By how much?
I did read some stats lately that said that 65% of the companies who did not give raises last year planned on giving raises this year – averaging 2% increase. However they all qualified that by noting that was conditional on the recession abating. That kind of increase does not even cover the GST.
You will see overall deflation in wages in B.C. this year. The Olympic stimulus is pretty much over and there is virtually zero construction slated for the back end of 2010 so prices will fall through the floor in that industry. Add in the forestry sector with dropping prices and many other sectors and we are probably looking at a dip this year.
Didn’t quite finish – I’m sure you realize Garth that 90% of the readers on this blog are just looking for validation of their own beliefs. Your books happily take advantage of that fact.
The book you comment on has yet to be printed. So, in your case, you are 100% correct. — Garth
#22
((Remember: half the oil the US uses comes from South America))
wrong
From October 08 to Oct 09, Canada, Mexico and Saudi Arabia exported 9952 barrels of crude and petroleum to the U.S.A.
During the same time period, Venezuela, Columbia, Ecuador, and Brazil — the top suppliers in SA — supplied 3522 barrels.
data source:
Crude Oil and Total Petroleum Imports Top 15 Countries
Garth.
I read that TD economist Don Drummond stated a few days ago that housing prices in Canada will continue to rise in Canada in 2010. Why such a disconnect between what you are saying and what he is saying. Whose interests would he be pandering to to make such claims? I thought Don Drummond was one of those up and up, no pretense kind of guys in the industry?
He’s a good guy but it’s hard to argue with your paycheque. — Garth
An Englishman’s home is his castle, if he can get one
“Our housing situation, both private and public, is a shambles. Homes must be built, and prices slashed”
http://www.guardian.co.uk/commentisfree/2010/jan/03/property-prices-house-building
Garth.
The other thing I wanted to mention which may taint “housing affordability” numbers in Canada is the role that parents are playing to facilitate the purchase of homes for their children. I know literally dozens of parents (immigrant families but not mine unfortunately) that have given between $50,000 and $250,000 to their kids so that they can buy their dream homes. One parent I know, an Italian immigrant who has worked as a plumber his whole life, purchased a home for each of his kids for their wedding present. Three of the four homes were purchased before home prices started their steep ascent in 2000. The last one he purchased was in 2005. He is still working, pushing age 70 in order to “take care of his own financial needs” now. So are these “housing affordability” numbers really relevant if you have these parents offsetting a hugh portion of the debt costs up front that these first time buyers are leveraging?
Apologies if this article has already been posted, but it was one of those that made want to reach through my computer screen and throttle the Scotiabank guy.
http://www.torontosun.com/news/canada/2009/12/27/12280366-qmi.html
He decided to say this little lie: “The rate increases will be there, but the affordability of housing is very favourable because we’ve not had those big jumps in house prices in Canada,” said Warren Jestin, chief economist for Scotiabank.
I’m sorry, what?
Affordability of housing is very favourable. We haven’t had big jumps in house prices!!??
I can’t believe he can even say that with a straight face.
Majority of the average families in this Toronto (those that still have jobs) are so priced out of the market right now, it’s beyond a joke. 350K is the ‘low end’ of semi-detached shacks that are selling around the industrial parts of town. Very family friendly. Never mind Vancouver. Vancouver is another planet right now.
I was watching a Property Virgins marathon on HGTV and episode after episode I saw young couples (people my age) with these lunatic budgets dropping 400K with less than 5% down. And I just sat there thinking “Thank you, you complete morons for being a part of this problem.”
thetruth #40
You are living in a fantacy bubble land which will pop in your face. Most immigrants are POOR. Many come to this cold land for free health care and welfare. A buddy of mine rented one of his places to a mexican “refugee” new immigrant who is living for “FREE” as Canada is paying this persons rent. Majority 95% are poor immigrants who come to Canada for a better life. No one would leave their own country if they are well of and rich. Keep dreaming 5/35 thetruth as reality is going to slap your face so hard you will be BANKRUPT “soon”
#51 Grey,
I agree. Affordability is going to be the key issue in 2010 that sends the prices in other direction.
Even the most optimistic mainstream economists are only predicting a rise of 4% of GDP this year. Employment lags GDP rise by months and sometimes years so our unemployment rate will not change much. Looking South of the Border it could even increase this year. Overall wages will be flat for sometime and we may even see deflation in many sectors.
Meanwhile costs are going up including taxes such as the HST, energy, etc.
Even a modest increase in interest rates would send prices down 5-10% all things being equal. I really don’t understand how it could be otherwise.
a correction and a question
In post #47 I screwed up the numbers I posted re barrels of oil imported by the U.S.A. from Oct. 08 to Oct 09
First off, I should have added that the numbers were based on thousands per barrels per day.
Secondly, to get my totals, I added up numbers from YTD 2008 instead of YTD 2009 (from the U.S. EIA table)
The point that I was disputing — that the U.S.A. imports 50% of its oil from SA — still stands though.
I am not really a numbers person so could someone please explain why the YTD numbers on the EIA table are smaller than the numbers for the previous two months? I thought YTD was a cumulative number representing all preceding months, and assumed the ‘year’ in the table was from Oct 08 to Oct 09.
#42 Nostradamus jr.
…Hongcouver’s Home Ownership’s Debt to Earnings has averaged 60% for the last twenty years…
60% … wow. Like a house of cards. I wonder what is going to happen when the baby boomers need to eat, pay of meds, and simply live. Like boomers everywhere else they don’ have much of a pension, therefore, the house will serve for that.
#29 Islander…..it is nice to see views that are at least in the same world as my own…..
Question for you…you did not sell your “recreational properties…pray tell…why?
I am looking at buying an agricultural property but it is currently “valued at 3 times its production value” in the chillcotin region of BC……In your opinion will properties well out “back of beyond” lose value over the next 5 years? I know it is a wild out there query but what the hell right?
So many classic obvious signs of a blowoff mania top in Canadian real estate. So few who comprehend. So many vested interests in seeing ever ‘hot’ markets. So many who can’t comprehend the above chart.
Humans are just clever, not smart.
Governments at all levels will be on the revenue warpath, you’ll have to pay a fee to pay a fee. Taxes will rise, while services will be cut, yet oddly bureaucracy will increase. Deficit spending at all levels has run amok.
Guess who gets to pay for all this? You, you lucky taxpaying public.
Welcome to the new decade. Just be thankful you’re in Canada, it’s worse in other countries.
#46 Downsized and Delighted,
There is an ample amount of psychological literature to support your contention. Most people filter information in order to confirm their existing beliefs as opposed to challenging their beliefs. For example, many studies done on Democrats and Republicans find that people very easily dismiss a situation – such as infidelity – if involves their party member but hold it against the opposite party. This is true.
I, for one, seek out as much information as possible on all matters. It is very important to challenge your beliefs.
I was drawn to this blog because I was looking for contrarian opinions on the state of the industry. I was was qualified and getting ready to sign up for a 5/35 mortgage in Vancouver for an amount approaching 7 figures. I was not scared but I found myself challenging the “conventional wisdom” because I found it so shallow and self-reinforcing.
I will admit that if the housing situation in the U.S. had not turned so badly I might have questioned my own second guessing. However I was compelled to ask the fundamental question – why are we different? I am still looking for that answer and cannot find it – at least in a satisfactory explanation that takes into account all factors.
I should add that there is also a large credibility gap right now as I think it is clear the government is aimlessly hoping that we can have an entirely consumer led recovery.
Meanwhile the RE industry is completely dependent on people like me being prepared to bet our entire financial future on interest rates being relatively low in 5 years AND prices rising enough in the long term to justify the risk. Sorry but “it is different here” without a compelling explanation doesn’t cut it for me.
Wow, this “Canadian subprime lending company was one of the decades darlings. Of course, our government has no subprime issue here as they have put it in a different bucket which is CMHC…. read on. I still think that unless there is a clear warning/threat to bond markets in US, there will be low rates for as far as they can take it. Hopefully, the tipping point at the top will have a steep inflection but generally does not happen in real estate as it is a illiquid asset. So, those 1st timers may have to wait for years to buy without being on a negative cycle.
Home Capital Group (+1,942%)
Given the subprime mortgage disaster in the United States, you’d think a company that bills itself as “Canada’s leading alternative lender” would be about as popular with investors as a boil on their backside. Wrong. Home Capital (HCG-T41.850.852.07%), which caters to customers who don’t meet the lending criteria of the banks, has been doing just peachy, thanks, as low interest rates pour fuel on the sizzling housing market. The stock’s recouped all of its losses suffered in the financial crisis and its dividend keeps rising. Great, now let’s see how they do when the housing boom ends. J.H.
Garth,
One of the more consistent arguments for continuing gains in prices continues to be immigration or offshore money coming into Canada to stoke demand. An article that ran in the Vancouver Sun yesterday by a local developer essentially rests his entire case on the uniqueness of the Vancouver market and its continued attraction for foreign investment – particularly from Asia.
This argument effectively negates the affordability issue for Canadians as well as making interest rate increases less an issue for the market.
Do you address this issue in your book?
Thx
Vancouver has one fifth the immigrants Toronto receives per year, and house prices are double. The argument is bogus. — Garth
Check out the Fannie Mae “Homepath” website to see why the company is basically now fully funded by the US taxpayer. You take foreclosed homes and sell them to new buyers with 3% down. Their downpayments can be pretty much anything and the mortgage can be interest only. Isn’t this what started the problem? I hope our delightful and insightful politicians don’t let CMHC go down this path. Still wondering.
http://www.fanniemae.com/homepath/financing/index.jhtml
Vancouver is a gambler’s city, whether it be Mahjong tiles or condominiums.
All you have to do, is be creative in your statement of income, and borrow the 5 percent down and live off your credit cards for the next two years. If things improve refinance your home with an equity lender. If things go bad, stop making payments, rent your home to a drug dealer, declare bankruptcy and join the underground economy for the next few years.
There used to be a stigma associated with bankruptcy, this time it really is different. To be 25 years old and owe a million dollars is a status symbol in Vancouver.
I know of one fellow who in the last decade has turned a million dollar bank account into 65 million dollars in debt. And people call him a successful investor?
But, as long as people are making money the roulette wheel spins, excitement is high and people line up to take a chance. The longer you play, the bigger the odds of losing. Eventually, the lights come on, with the only true winners having left the casino an hour before. And your left with a pile of non redeemable chips at the closed cashier window.
What, and spoil Ozzie and Bob’s excellent adventure? — Garth
hahahahahaha (LOL).
Le Mad Vlad…
Some very good points by about American foreign policy.
The “Crotch Bomber” has provided us an unprecedented view into how civilians are considered expendable and are sacrificed for the “Greater Good”.
The CIA, British Intelligence, American Foreign Office, knew about the “Crotch Bomber”.
Apparently what the father of the “Crotch Bomber” should have done was take out a full page ad in the New York Times and warned the American public about his kid.
Now the Americans can go into Yeman under the pretense of the War on Terror and Squeeze the Sauds from the bottom. Beauty.
The naked truth. The machine is caught with it’s pants down. Look out Yeman, it’s time for your 15 minutes of fame, and you’re so much more accessible, just a quick drive through the India ocean.
Better keep the civilians focused on something else.
I know, let’s hook them on real estate. Yeah, that will work. When we blow that up, we’ll hook them on retirement products. Yeah, good one. Beauty.
I hope page two has a few more words on it. Here’s a little bit of a bottom in the UK …. I wonder where on your chart they are .
http://www.bloomberg.com/apps/news?pid=20601102&sid=arGRJz9FqqJQ
this graph is a sine wave. i recall the early to late 1990s as a kind of flat line and I expect more flat lines. The ‘big line’ (which contains fluctuations like this graph) goes in one direction-up, but it works over decades. 40 years from today the average TO house will be 8 million, if history and inflation repeats itself. anyone who sold in TO a year ago and has been sitting of cash waiting to buy back into the market may regret the decision.
#26 Onemorething
#29 Islander
Are right on the money, if you look at the technical indicators we are just about to blow off. Keep an eye on the markets, I am seeing less and less holdback offer demands from realtors.
If the Con;s bring in their 10/30 mortgage rules, its done.
For those that think they won;t, remeber the income trusts??? That was their core political base they screwed over, don;t think for a second that they won;t bring in 10/30 mortgages.
I can;t wait until after the budget, after they introduced 10/30 year mortgages to hear the “posistive” spin that realtors will put on it. honestly, its the right thing to do.
Looking forward to your new book!
Dan # 52
I wouldn’t say most immigrants are poor. Many people from my country ( Russia) came to Canada with sufficient amount of money middle canadians have never seen in their life.
Bought a house in Victoria in 2000 for $235,000. Same house is now worth a bit more than double that 10 years later, providing about a 7% return strictly in terms of asset appreciation. I think this is above the historic growth rates in housing prices, but surely not an unreasonable rate? I feel like the problem is that earnings have not kept pace, and most of my friends even now, 10 years later, are unable to get into the housing market based on their wages.
Does this mean a bubble? When houses are priced too high in relation to incomes? Because in terms of historic growth rates, I don’t think that 7% is outrageous…
Of course it is when inflation is 1% and wage growth is zero. And last year was not 7%, but more like 20%. — Garth
Garth,
If real estate is at its peak here in Ontario and you continue to stress for blog dogs to sell now. Why are you holding onto your rental properties? They must be cash flow producing properties that you are holding?
And why are you telling people to rent while you are living in a paid for home? Is it cause you have no mortgage? But what about the LOC on your home, was that used to purchase other assets?
Do you do as you preach?
My investment real estate is sold, dude. Cash in the vault. And I couldn’t care less where or how people live so long as real estate in total does not exceed 40% of net worth. And you? — Garth
Garth, slightly off topic but quick question.
Now that we’re into 2010, can I make a $5,000 deposit into my TFSA account? I made my 2009 deposit for $5,000 last fall, and want to top it up with another transfer.
Is there a date where eligibility starts?
Two days ago. Go for it. — Garth
My investment real estate is sold, dude. Cash in the vault. And I couldn’t care less where or how people live so long as real estate in total does not exceed 40% of net worth. And you? — Garth
Thanks for asking Garth. I have several rental properties providing a ROI over 26% and putting $10K monthly cash flow in my pocket, all the while the tenants are paying the mortgages. Not selling and don’t care if market dips 20-30% as I don’t plan to sell.
By your comments, it would appear that you do not invest in cash flowing real estate and buy low it intentions of selling high / capital gains. Thats not a winners way to wealth Garth. So you have your money in a vault , doing nothing for you, I have my money always moving making money for me. How does leaving your money in a vault helps you leverage the banks money to invest. Now, i do know you have some stocks, (hopefully not Compton, lol) in the oil & gas, thats better than gold and Oil is the new Gold.
My bad, thought you still had the store / building where you live. You put alot of $$ into that.
Money is not the object. But I have enough. I’m glad you have tenants, since friends must be a challenge. — Garth
Post# 70 Steve, Please watch this video, its one hour and five minutes. Watch the first ten minutes, then sit back and think about it. Think critically, draw your own conclusions as to what will occur.
Now watch the rest of the video. It’s simple math.
Good Luck.
Sorry Steve, it wouldn’t link hopefully this time, http://www.guba.com/watch/3000053112/Arithmetic-Population-Energy
Money is the object, thats why you and I invest. We want more of it.
Yes, you do have more than enough, and that is because you have learned well.
As for my tenants, I do treat them very well as they provide me with referrals of other good paying tenants.
No slumloard here. And as for friends, You are correct, it has been a challenge as the more money you have the more friends people seem to have. With me, I am aware of this and am very selective with who I am friends with. But you could be a friend if your looking for another.
Hey Garth, Did you get my last post?
WOW, Garth, I thought you were all for freedom of speach? This is how you treat your friends?
You spoke. — Garth
Great comments BOB. Are you looking to purchase additional rental properties or are you holding and waiting for the market to burst?
I agree that Oil is the new Gold as we can live without gold but we can’t with Oil.
Garth, why you always jabbing the blog dogs?
Ennui. — Garth
If the potential budget in March that may (or may not) includes a new restriction on 10% down, and 30 year mortgages, then if there really isn’t a RE bubble there really should be minimal effect on the RE market.
Personally I think it is a very reasonable regulation to have regardless of bubble or not.
#70
Garth, do you honestly think that inflation is 1%? That may be the official rate, but please!!! Have you bought groceries, or anything else recently? I practically had to remortgage my house to pay for Christmas dinner.
Clearly the government is not reporting the true rate of inflation (based on the basic things people need to buy), no doubt so that inflation- indexed pensions can keep their yearly increases to a minimum, for one thing. There’s so much misinformation out there, it’s scary. I watched BNN the other night when they had a panel of the chief economists from the big 5 banks, and all of them had such a sunny outlook for the next year. Nothing but positive growth and everything’s coming up roses. Don’t know who or what to believe anymore. I’m starting to think that confusing the masses is on purpose. Just suck us in, with low interest rates for prolonged periods of time, to buy that expensive house, and invest heavily in stocks, and then pull the rug out from under us. Oops, I’m starting to sound paranoid.
#58 Junius — “. . . the housing situation in the U.S. had not turned so badly . . .”.
Y’ain’t seen nuffink yet! See following links.
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Life. So damned confusing and complicated! Besides all the stuff happening lately, one more idiosynchronicity to contemplate:
Is the Detroit airliner (Crotch Bomber) a false flag, designed to turn attention away from Yemen, the economy, etc., etc.?
The US and UK have closed their embassies in Yemen now, and this is usually a prelude to something bigger, and this is a reason for an increase in wars.
The BBC is on record as saying al-Quaida is a made-up figment of the imagination, doesn’t exist and the Beeb is an arm of the British govt., so one hand doesn’t know what the other is doing.
Possibly something bigger in the works. Re: the CIA — Obama
#64 Chaostrology and others — Interesting to note that the CB was given special treatment at Amsterdam’s Schipol airport.
They have full body scanners there, so would have seen the bomb (?) right off the top, hauled him off and nothing would have happened.
If he had been properly scanned, the radiation (or whatever it is) would probably have blown his nuts into next month (the reason for 72 Virgins in the afterlife?!), and would have injured or killed him, no more.
When are these govt. jackasses going to learn? Never! Why? ‘Coz they’re govt. squeegeez, that’s all!
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Comment from wrh.com is better. — “In a nutshell, for every home now in a foreclosure sale, there are 5 more in the pipeline headed for the marketplace, and when they all get there, prices will crash.” / And this.
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Those who are undecided whether conspiracy theories are true or not . . . / Speaking of same, the math should be relatively simple to on this. But under “the passage of the Symington Amendment in June, 1976, all US aid given to Israel is illegal.” Courtesy wrh.com.
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Pix and comments further down are good. Climate change? YES! Global Warming? In your dreams, baby!
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Another pot shot at us!
Lights out?
Yes, I have an offer in for two more properties. However, i am very selective in the area I purchase and yes I am waiting for the market to dip. This will not happen for another 8-9 months. The HST will only hurt NEW home sales. However, the new Gov changes to 10/35 or maybe 10/30 will hurt more. But, the losing of jobs and lack of pay raises is what will hurt the most.
Interest rate will not climb as fast as what is talked about in this blog but will start to move in that direction. 2010 will be fair, it will be 2011 & 2012 that will see both Canada & USA see huge drops.
Yes Oil is the new Gold. If you looking to invest, you missed the gold rush, but you are in time to jump on oil, it will be $125 in 2010. Cheers all!
I like the part in the graph where it says: “I’m outta here.”
This definitely takes balls, extra cash laying around and a mind-set that goes against the odds. Tough to do, but works beautifully, (most of the time).
I know a guy that use to react in the “panic” mode practically all the time. It was funny actually. Whenever he did this, most of his buddies (including myself) use to buy, while he sold.
He was our clue to the markets. He quit investing because he couldn’t stomach it anymore and kept losing money. He bought BreX, waited too long, he bought Tech stocks, waited too long. After he quit, we were on our own, oh well better off anyways. We were young and foolish. lol
Finally Xmas holidays is over, was too friggin busy around here for my liking. Good to see family and friends though, but need a to get a “pick a number” machine to keep it organized.
Now I need a holiday from the holidays.
Anyways, Happy New Year Garth!, may the new year be prosperous and bring you health and leisure.
Garth. would coal companies be good to invest in since its energy?
Mikey
Strange how some people define friendship ….. my Dad told me many years ago that if a man can go through his entire life and have one true friend he should consider himself very lucky ….. in the end all we have is family
As Garth has mentioned soon 9 million people will be setting off the new Senior Boomer generation and they will understand what many of us seniors know.
Oh crap! I just realized that in my first paragraph I forgot to mention that this was a “good time to buy”. Kinda confusing to say the least. I told you I needed a holiday, how did you miss that Garth?
Insofar as the housing bubble goes, the collective euphoria phase is past tense. Housing is on the slippery slope toward denial and doubt. The correction is long overdue and the bubble would not have inflated to this level had Carney and Flaherty refrained from juicing the market with cheap money and lax mortgage underwriting standards. A return to 10/25 mortgages sounds rational, but one should expect a concomitant level of collateral damage equal to the policy change. What will happen is that the pool of unqualified buyers will no longer exist. It is the end game for the housing bubble in Canada. House prices will simply have to adjust to consumer incomes and comparable rents. Based strictly on what has happened primarily in the US market experience one should expect much in the same way of wailing and gnashing of teeth regarding the stupidity of it all.
#50, Joseph speaks the truth. I too know many immigrants who have gotten free houses or substantial downpayments. Others lived at home rent free until they got married to add to their down payment gifts. Not all immigrants are poor. Typically those that leave the safety and comfort of their homland are ambitious, hardworking and entrepeneurial. They work 2 jobs, live like sardines in small homes with other families, and save every penny they make, all to pass onto their ungrateful children some day.
Hi everyone,
the wife just showed me the most recent [ yesterday ] vancouver courier that had 4 suites for rent that offered incentives to rent.She says she hasnt seen that for years. I had never heard of it. I wonder why they need a renter so bad? I think maybe there are some cracks in the dike, so to speak. I wonder how soon there will be an all out effort to get renters.Boy that would be nice a cut in rent.
#74 Dan in Victoria
Seen that before, but thanks for posting it. I always vacillate between thinking real estate is outrageously expensive based on what my friends and I are making, and then on the other hand actually not too bad considering historical growth rates. But I guess an average growth rate of ~7% a year is not sustainable (let alone 20% last year), and I know that things will crash sooner or later.
It’s a rental house and cash flowing nicely, but with roof repairs coming up and the upper unit in need of remodeling (among other issues) I am always debating whether I should sell or not.
#81 Freaked in Vancouver
You are right, everything they report is bs including the inflation numbers. I guess they don’t have to live in the real economy like we do.
Post#91 Steve, That’s great that you have seen that, and understand it. It’s amazing how many people I explain that too, and they still don’t get it. Troubling really.
Have you checked Craigs list and Used Victoria re rentals/vacancies, a little reset coming our way I think. A buddy of mine has a place that is sitting vacant and he is dropping the rent to try to get someone in, only problem is he’s going to be subsidizing it very quickly. Another friend took 3 months to find someone.
I would unload that puppy right now, especially if it is a profitable transaction.
I want to sell now, boy do I, but the head purchasing agent says no……. I’m doomed either way. Good Luck Steve!
If you are not angry, you should be angry. The market in Canada is nothing short of an outright manipulative attempt to prop up an economy using Real Estate as the tool. The government has made a mandate to flood the market with Cheap and easy CMHC financing to try to stimulate a faltering economy. This is their way of making themselves and their policies look good!! This has hurt those that actually have savings and are cost conscious and has pandered to those that have none or very little savings and who could care less about the long term costs of taking on mortgages as such ridiculous levels. It has pandered to Realtors, house flippers and has hurt those who actually used to believe that like the last 50 years, if you saved hard you would be rewarded with a nice place to live with minimal debt.
The government has become reckless and unlike the US subprime, this mortgage debt is being carried by us, the tax payers. Allot of us have money and savings. Savings that we have worked hard for hoping to purchase affordable housing only to see this dream hijacked by those playing Real Estate like their own little casino and by governments that do not care about affordability, but only care about their standing in the polls.
The bottom will inevitably fall out, the only problem is how long and how much more manipulation will take place while we wait and listen to the Realtors and Real Estate speculators banging their chests and boasting how prices are going higher and higher every month.
It is truly sickening how something that is a staple and vital, that being housing has become the latest get rich quick scheme in the minds of so many people.
I have sent e-mails to my politicians expressing my anger over what is nothing short of housing manipulation. It is time for everyone to get involved. Let them know, specifically Jim Flaherty that we are fed up with what is transpiring in this country. It is one thing having banks being the enablers, it is another when the government is doing it using OUR money!!!!.
Start flooding our politicians with angry e-mails. Get everyone you know who wants to buy but does not want to pay these very inflated manipulated prices to do the same. As I said before, it is one thing if the banks are doing this, it is a completely different matter when the government is using our own tax payer money through the CMHC to fund this housing fiasco. If you do not write and do not get involved, you have no reason to complain.
Here is our own made in Canada subprime mess:
http://www.rabble.ca/news/2009/10/canadas-sub-prime-mortgage-time-bomb
Jim Flaherty – jflaherty@fin.gc.ca
Stephen Harper – pm@pm.gc.ca
Just thinking:
The price for doing the right thing is too high. Increase of interest rate, 10% down and 30 years, stopping the bubble from growing.
If goverment do that, they could create something similar to what is happening in US.
I think they are working very hard to create a “solution” that does not affect the housing market and politically positive for them. Boomers support the government with their votes.
But, they will do something, not for the happiness of this blog but for THEM self.
My place is a 3 minute walk from UVic, so I am a little more insulated from increasing rental rates, unless UVic has some kind of enrollment crash. In bad economies enrollment generally rises a little, so hopefully that should lessen any impact.
I still think about selling every other day… but at the same time want to think long term as I may move back to Vic in the future and that would make a great place that’s move in ready, and the mortgage will be paid off in less than a decade.
Le Mad Vlad,
Not to derail the topic, but even wikipedia argues that at some point, al-Qaeda was simply CIA’s computer database of Afghani mujahideen. Even the word translated to english can mean “the database”.
http://en.wikipedia.org/wiki/AlQaeda#Alleged_CIA_involvement
If this is in fact the case, the “organization” can be externally expanded to include virtually anyone that needs to be dealt, with under the umbrella of terrorism. How very convenient…
I really don’t know what to believe anymore. I hope this isn’t how things really are though.
#90 bill
…I wonder why they need a renter so bad?…
1) People buying homes with cheap money move out of renting situations.
2) Net loss on migration.
If real estate drops for whatever reason, landlords may be surprised. Many of the tenants who now rent and have secure jobs may decide to buy rather than keep renting. A 2-3 % increase in a 5 yr. renewable term mortgage may not be a deal breaker if the property has dropped $100000 and the number of qualified buyers bidding against you drops to a trickle, or even zero.
High value renters, the best kind, will have lots of buy/ rent options. There will be fewer renters as many take advantage of the “buy low, sell high” situation and buy properties or, just play hardball with the landlord at lease renewal time and threaten to move. The bank’s love-in with investors and condo speculators will also be over.
Will landlords be able to take a 10-20% haircut on rents and put up with the vacancies, mortgage increases and less desirable tenants all at the same time? Will those who have the means to buy, wish to continue to live in deteriorating apartments as landlords try to meet the numbers with less desirable tenants?
Perhaps landlords need to take a serious look at what could happen, as it did in the 1990 condo market meltdown in T.O. Many investors had purchased multiple units and then leased them as prices rocketed upward. Sound familiar?
The only question that the owners of multiple units had after the condo implosion was, “which window will I jump out of?”
Real Estate Prices will plummet in Eastern Canada.
…Garth should cover the obvious futures of Eastern & Western Canada.
Toronto could easily become the next Detroit…very easily.
…and Ontario is dominated by a variety of Unions and Civic employees.
Unfortunately Toronto is also overpopulated, within a dying Manufacturing Economy.
Eastern Canada will try to stick it to Western Canada with ever growing arrays of Socialist policies to $$$ support all those unemployed Ontarians under the guise of Socialism.
…Western Canadians are not dumb…
But you’re still an idiot. I warned you. Adios. — Garth
#72
((Now that we’re into 2010, can I make a $5,000 deposit into my TFSA account? I made my 2009 deposit for $5,000 last fall, and want to top it up with another transfer.))
How will you invest it? I was not at all impressed with the the performance of my TFSA last year, under the supervision of a full service broker. I have now moved my TFSA to a discount broker and am going to try managing it myself … I don’t think I can do much worse than the broker did.
#95 Anyone,
Isn’t the salient point that at some time the gov’t will have to make a move on interest rates whether they want to or not? Right now they are doing everything they can to “prime the pump” and they have been successful in getting a whole lot of potential 2010 and 2011 buyers into the market with low interest rates and the 5/35 mortgage. However at some point – very soon – market forces will take control.
That point is the pin prick that pops the bubble.
Hey Garth that graph is pretty cool but isn’t it useless from a practical standpoint? These things are almost impossible to predict. In hindsight it will look that way, but the magnitudes and durations of the moves noone knows, otherwise we’d all be billionaires.
AngryRenter
I feel and know your anger. The government is punishing those who work and save and rewarding those who spend more then they work. Right now I am trying to think of ways where I will get as much debt as possible ( so far $50000) and spend it all only to go bankrupt while I hide my money(take it out of the bank slowly). I think I may even jump into the market(housing) and see how much debt I can get before I go bust or sell to a greaterfool. Why should I work and then save when people with NO MONEY and lots of DEBT are winning while those who understand financial matters and markets get punished? My sister bought in 2006 with NO MONEY……..NO MONEY?? can you even believe how stupid and crazy that sounds while I worked and saved since I wouldn’t want to be upto my eyeballs in debt. She is having trouble paying the mortgage but the house value is more then she paid and she risked NOTHING. She flat out said she will sell it for more money and if she can not then she will walk away while maxing out her credit cards. What kind of a stupid world we live in where these people win and those who have money and work lose?
With obvious bubbles going to break, with interest rates going to rise with unemployment and an increase in taxes and lowering of wages all is inevitable.
All it takes is one shock to the system to take the legs out and what will it be?
The safe bet is boomers exiting what is left of their equity in homes to finance their so-called latter years to retirement and so on.
The boomers hold all the cards and direction of RE in the future. The next decade will absolutely murder RE prices in the West and East in VAN and TO with many looking toward housing in small cities in towns.
I would also predict the suburbia will be the foreclosure band band between big cities and rural comunities.
Thrift will be the new trend…money to be made in enviro, agri, oil, commodities, pharm & farm!
We are not going to pay for the stimulus provided for the last decade but the money printed over the last 3 decades so get ready for the long haul now.
@ #85
http://www.smartcompany.com.au/industry/resources-and-energy/36495-20100104-Perth-mining-giant-Griffin-Coal-collapses.html
The credit crisis is not over yet.
#73 – Bob – Garth has book sales to help with his cash flow. I will be doing my part come February, and with the help of my Christmas Chapters card.
Also, absolutely nothing wrong with buying low and selling high when it comes to anything.
#101 Evangeline
How will you invest it? I was not at all impressed with the the performance of my TFSA last year, under the supervision of a full service broker. I have now moved my TFSA to a discount broker and am going to try managing it myself … I don’t think I can do much worse than the broker did.
Like you, I also use a discount broker (TD Waterhouse) for my TFSA account, and same goes for my RRSP account and regular margin account – all of which I self-manage.
At this point, I’m actually sitting on 95% cash across all these accounts. I held some agriculture stocks and energy ETFs last year and decided to sell off and lock some profits but ever since then I’ve been hesitant to jump back in – So will wait until some kind of pullback in the market and then get re-invested. I’m not a market expert so likely go back to specialized ETFs and perhaps a few select equities.
By your comments, it would appear that you do not invest in cash flowing real estate and buy low it intentions of selling high / capital gains. Thats not a winners way to wealth Garth. So you have your money in a vault , doing nothing for you, I have my money always moving making money for me. How does leaving your money in a vault helps you leverage the banks money to invest. Now, i do know you have some stocks, (hopefully not Compton, lol) in the oil & gas, thats better than gold and Oil is the new Gold.
My bad, thought you still had the store / building where you live. You put alot of $$ into that.
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spoken like a true disciple of Don R Cambell…lol
Graph only applies and is accurate in a closed system to describe bubble behavior. Present RE prices are no doubt extremely high in historical standards but they are due to ever increasing demand and govt policy changes. 500,000 people per year added (via immigration/foreign money) at the crest changes this with regards to RE.
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not even during peak immigration in Canada, 1966, did we see 500,000 people coming into this country.
Your number needs a 50% reduction. Thanks for coming out though
Yes, he does have cash flowing in off his book sales and he should, as he writes a good book. I will also be buying his new book as I see it as a sound investment.
When the housing bubble finally bursts in late 2010 but more so in 2011 & 2012, it will present smart investors with additional assets to buy. New & More renters will be moving over to the rental market, renting from investors like me. I don’t own any investments in Toronto and if I did, i would sell like Garth has done. My properties are in two markets that should fair well in a down market. I hope to write a book someday as well.
I agree that Oil is the new Gold as we can live without gold but we can’t with Oil.
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the world doesn’t care what you think we can or can’t live without. The fact remains, the capital costs of mining gold has been reduced by 30-50%. Go buy oil. Ridiculous or not, people, governments and companies will buy gold and at the end of the road are the miners who are extracting gold and making money hand over first for themselves and shareholders
Yes Oil is the new Gold. If you looking to invest, you missed the gold rush, but you are in time to jump on oil, it will be $125 in 2010. Cheers all!
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you’re wrong. Don’t listen to this guy. Yeah, there will be rallies and pullback in bullion, but read what I wrote about gold mining and capital costs. Fear still exists and so does U.S debt and with that comes gold purchasing across the board. The big big winner is the mining companies though
Garth. would coal companies be good to invest in since its energy?
Mikey
================================
you can invest in coal, however it is a dirty source of baseload energy. The big winner is nuclear. Uranium prices are depressed. Hundreds of new nuclear power plants will be coming on stream. In 2012, the world loses 50% of its uranium supply – which comes from an above ground source – old Russian nuclear weapons. The money going into uranium mining companies will be out of this world. Only a few governments are wisely panic purchasing uranium
All of us suffer from cognititive dissonance to some degree. When faced with facts and logic that are in conflict with our dominant beliefs we tend to rationalize our beliefs by trying to find some kind of data that supports them ….that is why so many current home buyers are falling prey to the spin being generated by the government and real estate industry….and that’s why the real estate bubble is growing again.
Before making financial decisions (or any kind of decision for that matter) it is critical to list the assumptions we are making in our decision making. This step alone usually gives us pause, since we soon realize that our thinking is terribly muddled and we are not even aware of our assumptions… most decisions are made on emotion and little else.
When given ‘facts’ be extremely skeptical and check them out yourself. Examine the source of the facts and ask yourself what that organization stands to gain by publishing the data. I commend Garth for quoting sources of the data he posts. Many posters here seem to invent numbers and pass them off as facts. This is nothing more that being intellectually lazy.
I had to smile at the poster who wants to buy and sell stocks for his retirement portfolio because “I can’t do any worse that an advisor has done.” Wow…just think about the assumptions that must be made to take that course of action.
There is no magic bullet. And, no one perfect answer. When each of us looks in the mirror we are looking at the person who has the ultimate responsibility for our financial future. To accept that responsibility each of us must educate ourselves and stay informed. Garth’s blog brings us a particular perspective…whether we agree with all of Garth’s views is a moot point. The value is in being exposed to a wide range of opinions and facts.
We pulled the cash out of all of our investments prior to the big crash and avoided the serious capital losses that have crippled the finances of many people. Since we didn’t reinvest in the spring of 2009 we missed the recent gains. That’s life. At our ages (mid to late fifties) we made the conscious choice to take a very conservative approach as we move forward. We simply do not have time to recover if we get caught in another bubble.
Angry Renter and Dan I sympathize with both of you. However, a house is not an asset until the moment in time you seize a positive capital gain upon selling or are drawing in monthly cashflow from a renter(s). Say thanks to our inept school system for not teaching Canadians this stuff. They are the real culprits that we all should be angry at!
Cover your ass-ets.
#112
((the world doesn’t care what you think we can or can’t live without. ))
I’m not convinced that the gold markets are where I want to be, but I do think that if everything has a purpose under heaven, gold’s purpose could well be to serve as a medium of exhange. I find it ironic that gold is such a beautiful substance, especially when exposed to sunlight, yet is mostly locked away in dark vaults.
#108 Colin
Thanks for the reply. I envy that you are 95% in cash. I sold off quite a bit last summer, but am still stuck with some stuff I’m not sure whether to keep or sell. Every time I sell something I sleep a little better a night. I am on tenterhooks as soon as the markets open and relax only when they are closed. I also know several people who have never ventured into the stock market and they are doing just fine. Happy New Year to you!
When the housing bubble finally bursts in late 2010 but more so in 2011 & 2012, it will present smart investors with additional assets to buy. New & More renters will be moving over to the rental market, renting from investors like me.
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before regurgitating information you got from the REIN cult, try delving into statistics and information from the worlds previous credit contractions and see how falling home prices were met with falling home rental prices. Rent prices won’t be going up.
You need to understand more avenues than just real estate to continuously win in the investment game. Keep telling yourself that rents will go up while prices of homes go down though. Wishful thinking.
#112
((the world doesn’t care what you think we can or can’t live without. ))
I’m not convinced that the gold markets are where I want to be, but I do think that if everything has a purpose under heaven, gold’s purpose could well be to serve as a medium of exhange. I find it ironic that gold is such a beautiful substance, especially when exposed to sunlight, yet is mostly locked away in dark vaults.
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I’m actually glad that you don’t want to be in the gold market (nothing personal), as it solidifies my opinion that we’re very very early in the junior gold mining buying panic. Everyone reverts to gold and its medium of exchange while I”ve insisted on here for so long that it is the simple economics in a deflationary environment that makes gold junior mining companies just about the best buy in the market for now and probably the next few years.
not all buying in the gold market is bullion and anticipation of inflation or hyperinflation.
It is said that people that are invested in an asset bubble cannot see the bubble as it is so big and its existing conditions convince people that this is normalcy and any other way is impossible. The same can be said for an asset or area that is detested and neglected. You can mention the area, try to drill it into peoples heads but they simple do not want to hear about it, care to mention it, cannot process it, or want to ask questions about it – the interest is not there. That’s how I know I’m on to something big.
So many times on here I’ve mentioned gold mining and deflationary economies. If I get a response related to my comment (highly unlikely….thanks by the way) it will always sound the same – gold is money, hyperinflation, zimbabwe, fiat currencies blah, blah, blah. This isnt what I’m talking about – this is what the herd is talking about. The anti- gold call gold a bubble, the pro gold call gold the only true currency. I’m not arguing, betting, or investing on either. The gold bugs and gold haters don’t understand the real bull market. Members of both sides will be late to the party though.
Dave, what will you do with your gold bars? Look at them everyday? You will try to sell them at some point (unless you have bad teeth). With Oil, People can use this stuff every day. Who needs your gold bars? Its a paper currency dude. So you go ahead and walk around with your gold bars dragging down your pants and I will walk around with my gas cans filled with something we all can use and need. Your funny, i give u that and hope others just laugh at your posts like i do. How much monthly cash flow is those gold bars putting in your pockets?
What you are really waiting for is a greater fool than you willing to buy your gold for more than you paid for it.
OH, BTW, I just put my rents up this year and had no-one complain
It’s nice to be able to control my assets. Don’t hold onto your non controling gold for to long and wait for others to dictate when you should sell. LOL
#115 TS
Pure genius. The path to enlightenment.
In the human mix, much transpires, some good,
some not so good.
Dave, what will you do with your gold bars? Look at them everyday? You will try to sell them at some point (unless you have bad teeth). With Oil, People can use this stuff every day. Who needs your gold bars? Its a paper currency dude. So you go ahead and walk around with your gold bars dragging down your pants and I will walk around with my gas cans filled wi
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this proves my point once again!!!! you think I preach about gold bars, hahaha. My account has skyrocketed beyond belief. I mentioned it above, I mention gold mining and the herd (99% of you) will associate me with gold bars, inflation etc. The herd always completely neglects the next major bull market and never sees it coming. Even though I say it a hundred times over, people cannot understand I’m talking about profits in mining companies and deflationary economies.
dude, I’d send you to charts of some the stocks I bought since late 2008, but I’m in no mood to give out leads on companies I worked my ass off getting.
Just have a look at the lithium sector and the gold junior sector in general. I have many 6 baggers and a few 10 baggers (that’s 1000%…try doing that with a house..lol). I’ve taken profits and have stop losses in place. They keep flying though, and the public is still oblivious to these sectors. I’ve risked little and gained tons and am going to make more.
I’ve been in the real estate game as well, worrying about leaking sinks and everything else you worry about.
You don’t have to worry about people complaining about rent prices just yet, but falling home prices will be accompanied by falling rent prices. I don’t write the history books but I try to read them
All you people need to stop fretting about real estate in Vancouver. What we are seeing is the continued recognition of a great place to live.
Vancouver needs to be looked at from a global perspective; why? because Vancouver has become a haven for internationals and I’m not just talking about Chinese who choose Vancouver for it’s similarity to Hong Kong but the reality is on a comparitive basis, the city compared to other international cities that offer all Vancouver has to offer demonstrates that the city is actually undervalued. We all need to compare Vancouver to San Francisco where real estate prices held up better than the rest of the US. San Fran has all the repo problems the rest of the US has but it still gets a real estate bid because people WANT to live there. Vancouver has a limited amount of real estate; you cannot grow Vancouver unless people want to start moving up the mountains. Supply is limited and the city has fabulous activities available to residents. Vancouverites would rather sell their cars and trucks than give up their piece of paradise. It is clean and green, great restaurants and good transit systems. YES real estate runs in cycles and Vancouver should be due for a leveling off or correction and is to be expected because that is part of the process in all asset classes. Vancouver has been through many corrections but always moved up and above previous levels. Buy and hold if you cannot afford to do this then rent until you can buy and stay the course. Remember we all need a roof over our heads anyway. Good real estate always attracts a buyer and cycles are all part of the process.
London and New York are international centres. Vancouver is a provincial capital. Get out of town for some perspective. — Garth
#58 Junius said: “…I, for one, seek out as much information as possible on all matters. It is very important to challenge your beliefs… // …I found myself challenging the “conventional wisdom” because I found it so shallow and self-reinforcing… …why are we different?”
And then you came here just like the rest of us to confirm your existing belief, which was “it’s not really different here”….
“… I’m glad you have tenants, since friends must be a challenge. — Garth” Too much fella – just about spit my coffee on the floor…lol
Now on to the real stuff:
Garth you replied to Bob #71 “so long as real estate in total does not exceed 40% of net worth.” Percentage wise, how many people do you think can afford to buy a home with the price of it being only 40% of their net worth? I’m guessing that would put at least 80% of the populations out of the real estate game.
To #76 Bob on “…the more money you have the more friends people seem to have…”. I thinks it’s best to live simple and have people believe you don’t have any money.
#104 Dan – you are right..I watch all my friends went inside the market, leverage their way off with loads of debts and maxing out evrything, turning down the furnace, save a penny from wal-mart and no frills while making mortgage payments on the house and they told me they made 25 % on their house if they sell it now, while I am the one in the sidelines and they already spread their PRIDE of home ownership with friends and telling me without a house to marry…”YOU HAVE NO ASSETS !! ASSET-LESS CLASS IS SHAMEFUL !!!”…so, who does the govt punish now ???