Well, blah, blah, blah.
Sure, the latest index of consumer sentiment in the US just hit the wall, skidding markets. The world’s biggest carmaker is imploding. There’s new worry deflation will make an ugly comeback. Yeah, interest rates will rise, the HST arrive, mortgage screws tighten, taxes increase, public finances collapse and blah, blah, blah.
So what? Just stop reading that damn blog!
(This arrived yesterday:)
Hi Garth: My spouse reads your blog religiously. Here my problem… you keep saying don’t buy!!!
We have over $200K+ as a down payment, no debt, have been married 10 years, have stable jobs, great educations, and have a 3 year old, so we’re busting at the seams in our little “home sweet home/ one-bedroom rat hole”. We live well below our means, but frankly, I want 4 walls and small backyard. Small bungalow or even semi is fine!!!
Any chance you can tell him to buck it up, buy a home and live in it for the next 25 years and eat the inflated prices? Pretty please. Because saving money is addictive and protects against job loss, but sooner or later a man needs to part with some money in exchange for some peace and harmony in the home 
Any chance you might provide a little advice to my “better half” to let go of the reins and jump in (even 2-3 months down the road or sometime before our kid goes to university????).
Signed, Desperate for 4 Walls and a Small Patch of Grass
Dear Desperate:
I have no idea who your husband is, if he posts on this site, is a regular blog dog, or just furtively reads on his laptop in the bathroom with his wireless turbo stick. Whatever. I feel for you. He has learned his lesson well.
But let’s put this in context. There are countless husbands addicted to stuff, who view a massive home as proof of success. Especially in Calgary. They mortgage to the hilt, buy $1,800 stainless barbeques and Escalades in a colour to match their soffits. The garage is jammed with a quad, a Harley, a fast sled and a cigarette boat – all used once.
Meanwhile the investment account is empty, RRSPs have dry rot and monthlies consume every cent of disposable income. This, Desperada, could be your lot – a future of nothingness, full of guy droppings.
In contrast, you have prudent, careful, saintly saver. If somebody loses a job, you’re covered. When the Escalade guy in Calgary goes bust, you’re still okay. If Obama chokes and the global economy staggers, you can watch it unfold in safety. You owe nothing and bow to nobody.
Your tightwad, clutchy husband has put you into a unique class of Canadians – those who actually have freedom of choice without financial fear. It’s a select group with no need to moan about runaway property tax bills, rising mortgage rates, cracked foundations or earwigs. Enjoy these carefree days of unbridled happiness that this blog has brought into your life!
Ah, did you say two hundred large? Ten years in a rat hole? A child trapped in there with you? Threatened marital Lysistrata?
I am so proud.
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163 comments ↓
Great email… but if only they’d bought 10 years ago!
I just asked my wife if she wrote that story… were in a similar situation… 31yrs old, 330K saved, living in a basement apartment in Ajax… waiting for the market to crash so we can buy a house in Whitby for cash… my wife has given me until July 15th to make the purchase regardless of whether the market is going up or down… let’s keep our fingers crossed!
“Threatened marital Lysistrata”
You sure can write, mr Turner. Two-thumbs-up-and-a-half!
cute puppy!
Garth, I see you censured my post about Danny Williams telling us that he gets HIS healthcare from the US since it’s better there.
What animal do you think Danny Williams would play in the Animal Farm classic? I’ve got an idea but don’t want to upset you again and get censored.
I wish good recovery to Danny and hopefully he can get most of his expenses reimbursed by the Canadian taxpayer once he sends in his receipts!
Why not just rent a house with a small patch of grass in the meantime? Surely there is something in between renting a rat-hole and buying a house.
My 2 cents…I know the pain of seeing your family outgrow your present domain. I’m sure a lot of people here do. But I’d say wait until interest rates go up another 2% and that will flush a lot of buyers out. Your $200K will go a lot further. You’ll be able to buy your kid a real backyard. If you’ve gone this far, you can last another year or so.
Surely you can afford something a bit better.
I’m just waiting for the next post. “Hmm, hi Garth, my name is Max. My wife & I live in my leased Toyota. It’s non stop comfort. We have 500K saved up… do you think I should buy now, and if yes, which model??”
The real problem is, no matter how responsible you are with your cash, the rest of the morons and their spendhappy ways can still sink you!
As you scrimp and save, they borrow their eyes out. And when the sh!t hits the fan, guess who loses? The people who had no skin in the game to start with and borrowed more than they could afford? No!
You guys lose – your $200 will take a very large hit, because in this game the guv has stacked the cards against you.
How many others are in this “select group”? A minority of the population I’d imagine.
Garth is not saying not to buy, he’s just saying that if you are buying now, you are overpaying.
Will you be overpaying if you buy next year? In two years? Three? who knows… but right now, there is no justification for these high prices other than easy money from the BoC.
Why not just buy a house in the states? For the price of a rat hole on the outskirts of a dreary canadian city you can get a McMansion on Florida with a few acres…. For 450k you can get water front on an inter-coastal.
Yes, some peoples wives…and I’m the first to say mine is right on board with staying on the sidelines but after owning multiple homes, making a stack of cash on every sale and been renting for some time, hopes to be in her own home again.
Here’s the secret, dont go home shopping when you get that urge, go rental shopping. Hit neighborhoods where you presume you would love to live and try renting there.
Use it as a try before you buy tactic with her! She gets more house, better neighborhood, all looks great emotionally and you get time to sit in your bluff waiting to take $500K homes for $300K for cash.
The rental will run likely 12-24 months just good enough to lock you down from buying and just enough tiime to see the downward play.
Note the downward play is 2-5 years duration so once she sees the downward momentum building and that you can lower your rental fees at the same time, she will applaud you brother for saving the family significant grief but also put you on side of the few who GET IT!
Good Luck…stop being manipulated and start manipulating the situation to your benefit!
It took me renting a $2M house for $4500/m but all worth it long term.
#6 Ryan the Twentysomething — Agree with Ryan. Rent a 3-bdrm. townhome or similar and put the two hundred smackers into dividend-paying stocks, increase your net wealth.
——
Debit and Credit cards suck.
Re: #65 disenchanted — “. . . . working under the table or bartering for goods.”.
This from wrh.com: “This could well be a good time to go back to a cash-based way of doing business, wherever possible, spending only what one really has to, and getting credit cards paid down and off.”
If I were in your position, I would do the same and try to avoid paying taxes legally altogether. The feds. and provinces are not our friends. Speaking of the feds. . . .
Could be one reason why Harper chose to skip work.
Another war to happen (as if there aren’t enough already).
Retail feeling the pinch. If people are unemployed, they will not be in a shopping mood.
No We Can’t! So much for change we don’t believe in!
Further sovereign defaults. Who cares anymore?
If you intend to live in a house for 25 years or more, then it really doesn’t matter if there is a housing correction in the near future. She wants to buy for stability and permanence, and that’s a different kettle of fish than someone tying up all of their net worth in a house they intend to sell in a few years.
Seriously, who lives in a house for 25 years any more? — Garth
Nice Dog, son of Milo? (The Mask)
Hmmm… I once did a house for a family who’s husband was …well an idiot. They had bought the land and built a “house”and were living in it. It had tarpaper stapled on the outside. The inside was insulated and polyed all the electrical was working.
The bathroom was drywalled. The kitchen had a sink on a sort of work bench.
The bedrooms were curtained off.
Hubby didn’t want to go any further because he wanted to buy a Saab so he was saving for that.
(This was a few years ago and no building permits were required in that area.)
The guy was an utter moron.
Is your hubby like that?
Have you discussed at what time in your lifes you would “generally” like to buy?
Does it make sense to buy right now? Well does it?
You think its tough living in a little one bedroom? Pffff.
I grew up in a two bedroom house, 4 boys in one 10×10 bedroom. One kid (my sister in her own 7×8 bedroom.) Mom and Dad on a hide a bed in the living room. The bunk beds in the 10×10 bedroom measured 5 feet long each.
When I got too big to fit in my bunk I ended up with a bed in the closet. My bunk was turned into the clothes closet.
Sounds to me that you two need to communicate and work together. I agree a house would be nice.
Wouldn’t it be much nicer to pay a huge chunk of it off on the downstroke.
Or are you going to be one of the little debt slaves that the banks and governments love?
What happens if you buy and the SHTF?
Are you going to whine then to?
You two need to work together, are we getting the whole story? Does he….leave the toilet seat up?
It is hard to rent a rat hole, when you have cash to put over 50% down, We waited after a move near Edmonton. After shopping for 6-8 months we bought and got somthing nice for 430,000 where 3 years ago it sold for 520,000. Hoping the downside is minimal, but are happier in the new place. I could of waited a bit longer a year or two, but the wife could only wait so long. Comparbles now that we have cleaned up the place a bit, run 460-499,000. So hopfully we vulched enough on this one. It was not a POS but a forced sale.
The sad fact is that the rental stock in Toronto sucks. Try finding a decent single family home for under $2200 Month. It is not an easy task. Most are dumps. So your options are an older (and larger) apartment for a reasonable rent or a postage stamp condo that you couldn’t swing a dead cat in.
$200 000 in 10 yrs is good however lets look at another example.
-$50 000 invested in first home in 2003 (when everyone said market was over priced, Purchase price
=$210 000.) And yes the down payment was earned not given to us by family.
-Wait five yrs until higher end homes start to tank in Fall 2008 and buy dream home in dream location
=$585 000
-sell first home for $376 000 in fall 2008 and pump $220 000 of equity into 2nd home.
-ride the 20% increase in equity on the new place from fall 2008 to Dec 2009. Current equity = $370 000 in 7yrs as opposed to 10yrs. Current “Bubble value” of home is $725 000 to $750 000. Yes I have multiple recent sales to back up thoes #’s.
-sure things will retract as its all on paper until I sell but I plan to be in this place for at least the next 30yrs and it will be paid for in 13yr or less.
-First 5yr mortgage was 4.54% fixed and renewed in 2008 for 1.75% fully open mortgage.Parents and Grand parents could only dream of such rates when they were in their late 20’s and early 30’s.
I agree that this market is currently way to hot for its own good but it still would have been better to get in 10 yrs ago.
@Diane B
If you intend to live in a house for 25 years or more, then it really doesn’t matter if there is a housing correction in the near future.
Sure, over 25 years it’s pretty unlikely that you will lose money on real estate, but that isn’t even remotely the same as not mattering. Dunno about you but I would vastly prefer to be up significantly over 25 years rather than breaking even. How long you are staying in a house has nothing to do with whether it is overpriced or not.
#2 steve on 02.23.10 at 9:08 pm
“31yrs old, 330K saved, living in a basement apartment in Ajax… ”
Why do majority of people go for extremes? What is the point?
Ah, married life. Isn’t it wonderful?
Why not rent something larger? The main difference between renting and owning is a matter of cash flow and who pays for the new roof.
Plus there is a whole philosophical question here. Some people (like the people over at MarriageBuilders.com) think a married couple shouldn’t do anything unless both spouses whole heartedly agree. Others think “marital blackmail” is a fair way to get what you think you want.
Either way renting is not a bad choice. If you practice marital consensus it’s easy to move to larger homes as your family grows and marital bliss ensues. If you practice marital blackmail it’s easy to split into 2 households when the marriage inevitably fails.
Walmart is creating 6500 jobs according to the news.
Now let’s hear them report how many local stores will now be closing or laying off as a result of this. Of course in the short term, the impact is not felt but when benefits run out, where is the net benefit?
I also read the news that they are worried about whether the contractors can handle the stimulus program. If a sector cannot handle it because of capacity issues, why are we putting money in that sector to overheat it?
Why is the investment not pointed to the future rather than constantly benefitting the construction sector. How will that help us compete with others globally? When will China be exporting its construction workers here so that out dollars can be stretched?
Let’s see the construction sector open to global competition! Just like other sectors.
Yeah, then we’ll realize why the middle class will be destroyed.
#8 CalgaryRocks – No kidding! You can’t take it with you folks. You also don’t get back the best years of your life (and here’s a hint, those years generally are NOT between the ages of 50 and 100). You can live those years in a basement, or you can enjoy them a little. The choice is yours.
Garth,
We are going through the same problem. The thing is I have been waiting for some time to get a good deal. It seems to me the hosu prices won’t be comming down some time soon. The govt and the realtors have always planned their game well ahead…
I’m in a similar position, it’s usually the wife who wants to buy as they have more of the nesting instinct. Renting or buying; as long as we are in a decent place I don’t care. I’ve been both an owner and a renter and they both have their pros and cons. But I expect we’ll be buying again in the next year or so. At least prices won’t be any higher by then…
For some reason Garth is pretty sure hyperinflation is not coming and all saved cash will be ok. But wait, Garth, how can you be so sure and how do you know what are those goldmansukers are planning to do with green buck?
I read; 4 walls and a small patch of grass.
Conclusion, Escalade & a cigarette boat will follow (high probability), so watch what you ask for. Say what? I just love reading this drama.
Your tightwad, clutchy husband has put you into a unique class of Canadians – yes it’s called paranoia.
“….You owe nothing and bow to nobody…”
Some day we ALL understand the real meaning of FREEDOM.
“When the Escalade guy in Calgary goes bust, you’re still okay.”
lol …. Poor Escalade dude, goes bust and ends up in a rat hole right next to yours. But you are okay as you’re already there (can’t go any lower) and you’ll still be there to watch him – few years down the road – get out the rat hole and treat himself to a new electric Escalade, a new Harley, a new sled …. poor guy.
Buy a house, make it your home and never look back .(well maybe buy an Escalade as well, WTH).
7.5 out of 1000 Escalade owners end up in a rat hole. With Alberta a rat free Province, therefore no rat holes, maybe I should say 7.5 out of 1000 Escalade owners end up in a 4 Walls and a Small Patch of Grass, but only for few years, until they get back on their feet and once again purchase that 4000 sqf Alberta starter home, “built for men” … only in Alberta.
Garth, you just threw a hand grenade into the husband’s life! You don’t really think you changed the wife’s mind, do you?
That guy now needs to be scouring the rental adds in time to get into a decent SFH by the weekend or face some serious divorce-induced misery. A few hundred $$ more a month to keep his wife and bambino happy is chicken feed compared to the looming legal costs for staying put. His third, and only slightly better than divorce, option is now giving in and buying (ugh). Dude, you are the anti-Anne Landers!
I can totally relate to this situation. I have a child on the way, and we are going to bunker down in our condo for a year or 2. After that, crash or no crash… we are moving to a bigger place!
Which is a bigger investment? Your house or your child? Prioritize accordingly. Just my 2 cents.
I remember 12 years ago when I had saved to buy a home and my wife didn’t want to take the risk. I told her we will be fine and everything will work out.
Well we jumped in, put 25% down and accelerated our payments. We now we have a nice home with NO mortgage, in a great location, lots of RRSP savings and have already put 2 kids through college. The key for me was I made sure it was affordable and I resisted the urge to trade up to the monster homes my friends were doing.
Why does it seem that women don’t get it.
Great points Tony! Dan, thanks for the nice comments.
Dave says: actually, I’ve been in real estate for my whole life, with plenty of properties. I don’t think you pick real estate better than me and you obviously don’t pick stocks better than me.
Dave, if you have been in real estate your entire life and can’t make it then I think I am better than you at the real estate game, and you should try another gig.
Call me lucky if you wish, but the fact is you have been in the real estate game alot longer than me and have failed. LOL, JR stocks. LOL.
Glad to hear you investigate (read what others say about different markets) and plunge your money into JR stocks off other peoples advice. The only control you have in your stocks is to buy or sell. The CEO controls the company and you have NO say! Thats a sure way to be noticed as following the herd Dave.
Unless you are willing to share with us the stock you purchased in 2009 that went up 1000%, i would suggest that you are full of moose shit! While we are at it questioning your integrity, SILVER does have more upside than Gold and your little stats are very comical. OOOH and Dave, I think I will sleep in tomorrow morning as I am out of the 9-5 rat race thanks to my smart real estate purchases while not being in the real estate game my whole like.
Glad to hear your Xwife did her homework and investigated. She was smart to leave you 10 years ago as you just don’t want to listen and learn.
===============================
Andrew, it’s funny that you’re now posting as “Sam”. There are people on here that know the stocks I’m talking about. If you were in the sector since the spring of 2009, you made killings. Yes, over a 1,000% on some companies. It’s quite simple – look up the stocks for the leading rare earth and lithium companies and look at their charts. There are the gains I’m talking about. Unfortunately, I now sound as arrogant as you. I’ve had discussions with people on this blog about this sector before the boom.
I haven’t failed at real estate. I’d also bet my left eye that I’m a lot younger than you – don’t feel bad learning from me though. My RE involvement has been with immediate family and my exposure came at a very young age with many properties. I don’t have anything against real estate or any asset in particular. I’m going to have an exit strategy for any asset that I feel is inflated though. The stocks that I was talking about, I sold big portions of my holdings as that sector was getting manic.
I haven’t called you lucky. You’re discovering now, since 2005, what I’ve been doing since I was a child. I have a lot of colleagues like you that are now “experts” – it’s quite comical. I love real estate, just not now. This whole discussion is unfortunately turning into a “who’s c$ck is bigger” challenge.
Yeah, I will investigate. I will read what anyone has to say. Anyone. I value opinions – all types of them. I’ll read dozens or hundreds of different opinions. This increases my chances of making wise choices. This may open my eyes to faults in a company, property, sector, or country that I wasn’t aware of. The day I don’t value other people’s opinions on investing is the day I should completely give up investing. Reading opinions might give me insight into things I didn’t know or understand. I never understood stocks years ago. I heard the same thing you perceive – careful of stocks, they can drop like a rock. This was until I really dug with every ounce of me, to find as much information as possible.
My gold and silver stats are completely accurate. I don’t want to be arrogant, but there is no one on here that can prove that after a post bubble contraction, silver rose in relation to gold, because that hasn’t been the case for over 300 years. Maybe you should consider having a gander at the gold/silver ratio which sits at close to 69 today. Before the mention of the Greek crisis February 4th, it was at 59. It’s just as I’ve stated, whenever there is credit concerns, the gold/silver ratio goes up – meaning, gold goes up vs. silver. When Lehman Brothers collapsed in Nov of 2008, the gold/silver ratio hit 91…yet again gold flew when measured against silver or any other commodity. Every credit mania eventually resulted in collapse which resulted in higher gold prices vs. all commodities including silver.
All one has to do is very very simply. Do some google searches on gold / silver ratios and look at the ratio during credit contractions. The price of gold increased much more than silver. This tells me you’re talking out of your a$$, and are just assuming. This is exactly why I disregard investment opinions from someone like you, because you come with arrogance and assumptions. You’re no longer prepared to be the student, because you think you know everything.
I come on here and learned a whole lot from Garth. His statistics on Canadian real estate is 2nd to none. His insight on dividend paying stocks was something I needed serious brushing up on. There’s countless things I’ve learned from him and other bloggers on here- and I’m grateful for them. There’s areas I’ve done exceptionally well in but there are things I know NOTHING about too, and there’s always room for improvement and more information.
Again, I hope you buy a property a day for the next 8 months.
Looks like the USA is nearing the bottom (not quite there yet… and with 11.3 million homes in neg equity, it’s not going to be a great year for home owners down there either)
http://www.calculatedriskblog.com/2010/02/housing-price-to-rent-ratio.html
Our turn is coming soon. Looking forward to the RE crash so I can vultch some Canadian bank stocks when everyone’s freaking out. Of course we know the govt has got them covered just fine (other than their exposure to US CRE). Nice dip in mining stocks today. Seems I’m a contrarian at heart!
Glad to hear your Xwife did her homework and investigated. She was smart to leave you 10 years ago as you just don’t want to listen and learn.
——————————————————
I was coming out of my teenage years 10 years ago. Not sure what you’re talking about with the ex wife.
#2 steve and all basement dwellers …
Get a life. No wonder you other half wants to move out. I too have cash in the bank but I rent a nice apartment ABOVE GROUND. If have to spend a bit to be comfortable.
Still waiting… Sold in July 2008. Family and friends think we’re crazy. You gotta have conviction. The fall that was slated for late 2008 is about to happen, I think. I’m thinking a long, long stumble. We’ll likely get back into a house sometime in there. You make your choices and you live with them. Love the blog.
The husband is right–
The wife is right (by doing the investigating)
Here is your future buy signals–listen for them–
MSM saying–
Never buy a house-
Never borrow money–
Never invest in the stock market–
Deflation will never end–
#2 Steve
ever hear of Craig’s List?
“This 2000 square foot townhouse-condominium is located in Ajax within close range of the 401. It is comprised of 3 bedrooms, a spacious master, and 2.5 bathrooms. The basement is finished with hardwood floors and a direct entrance to your 2 car underground heated parking spaces. Amenities include fridge, stove, dishwasher, washer and dryer and air conditioning. This home is located near various shopping centres, all within walking range or a 5 minute drive. The rental price for this space is $1600 + utilities and is well worth a look.”
Here’s a tip for the new parents… the school near the place you purchase and hope to live in for 25 years may not be all that great. Can you say municipal taxes?
A lowly renter has freedom… much like the debt free.
Rent for a architectural gem in Calgary $3,500/m
Assessed value for our rental “rat-hole”: $1.5M
Happy wife and big wad in the bank: priceless
We rent our square of grass!
Why don’t they just get their house built?
We all know the junk builders are throwing up, is’nt worth the sticks and mortar X40.
So find a small private builder, dangle some cash in front of him, and get it done…
Unless their looking at a 1.7 million dollar home to impress their friends?
which btw only cost 400k 3 years ago to build…
“”….interest rates rise, the HST arrive, mortgage screws tighten….???
Garth, if mtge rates rise….fewer home sales…fewer HST taxes collected.
…aint gonna happen…
Nostradamus jr.
Wow all this talk and throughout all the stories I keep hearing, “well my wife this….” and “my wife needs..” . Give your heads a shake, what the hell would your woman do without you? Who woulda thought the “nesters” may be behind this mess after all. If they keep nagging you after 20 or so years to go blow your cash your not ready to, what’s really keeping you around anyway? You can’t tell me it’s the sex, come on buddy it’s 20 years! Food for thought.
The house we are in now is cramped and we have been thinking about trading up to a bigger one (in the Ottawa area) for a few years now. We held off in 2006 because we thought the prices were too high, having gone up dramatically since 2002. We though we were close to a peak back in 2006. I am not sure I would have believed it if I was told that prices would go up another 25%. That’s the thing with asset bubble, you can’t predict when it is going to end. This is something I have finally learned (having never experienced anything like this before).
I am too young to really remember the oil price bubble in the 70s, but am old enough to remember the crash in prices that followed. The overall trajectory was downward and it was relentless, going on for years. Same thing with Japan equities starting in the 90s. I remember that well. Twenty years later there is no light at the end of the tunnel, despite numerous predictions of a turn-around over the years.
In a meantime, in the US, 25% of all mortgages are now under water, and national prices are down another 2.5% last quarter. No end in sight. When you have an asset bubble this is usually how it ends. Just as prices continue to defy prediction and astonish on the way up, the same thing happens on the way down. Once the unwinding process really gets underway, there is no stopping it.
http://money.cnn.com/2010/02/23/real_estate/underwater_rates_rise/index.htm
One paragraph caught my attention in the Bloomberg piece on deflation provided by Garth:
“Bank analyst Dick Bove of Rochdale Securities says banks are “unsure of the rebound in the economy” so “they’re keeping an unusually large form of liquidity on the balance sheet in the form of cash.”"
So, if the banks are really sitting on cash, are we mere mortals going to be better off by investing ours in the stockmarket?
Deflation + uncertain recovery = double dip ahead.
Seems to me the big money knows this.
I guess I should go out on the weekend and shop for a bigger mattress…
It’s the emotional tie and buy that the big players are counting on within the masses.
30 years of stimulus has for the majority changed our way of thinking about money, investments and now bailouts!
So bad that people even contributing on this blog have given the decision over to others to work it out for them. There may be some relief coming but only from total carnage via a short window.
This slow calculated downward spiral will still have the same end but through human conditioning.
Bread lines will be acceptable in 5 years if you let them!
Get a grip!
And to think some of the females who post here got upset when I said the female nesting instinct was hormonal and irrational.
#10 Jon B………
My wife and I for a start.
We’re happy and debt free renters…….with a great view from atop this ever growing pile of cash.
Canadians have $1 trillion in liquid assets in the banks apparently…….$1 trillion that the stock brokers and realtors want to get their commission hungry hands on.
Tell her that in the Valley of the Blind the One-Eyed Man is King. Banks in the U.S. reported today that they had their sharpest decline in lending since 1942 – that is 67 years. When credit dries up Cash will be King.
Wait until the Fall to make a decision. If the market has not started moving downwards by then we will know that Black is White, Up is Down and Hell has frozen over.
Medium double double and DRIPs to go!
Location of the next big one is anywhere you want it to be!
Pound for pound, it’s all a bunch of baloney!
Kinda runs with the link a day or two ago, about Britain being in such bad shape Phoney Tony Blair may back Israel for a strike on Iran, to remove the thorn from their own eyes and hope that Brits don’t notice. Seems Japan is in worse shape than Greece.
Normal lunacy reigns supreme.
Garth I have a ticket to your talk in Langley on Sat Feb 27. I believe your on at 2pm. Do I need to be there at 0830?
Thanks
To clarify #17 what I meant to say was if I arrive later than 0830, say lunchtime, will I be allowed in and will I get a seat?
Yes. — Garth
http://www.globalresearch.ca/index.php?context=viewArticle&code=MAR20100222&articleId=17736&source=patrick.net
Oh no!
Dear desperate:
If you live in a small town where homes sell for less than $200 K, go for it. If you live in a large city where 4 walls and a plot of grass fetches $500 to $700+, prepare to lose your 200 K by way of falling RE values over 5 years (40% haircut, I’m actually being hopeful here and what I’m really trying to tell you is that if you are thinking of buying a half a million dollar home plus, 200K isn’t enough. Oh, for the banks it is but its not when one buys at a market peak, you’ll need more cash to take a risk with a purchase of these numbers). By the way, I’m being, you know, optimistic. I’m just not into rocking the boat or wanting to cause a panic or anything with what I really think will happen.
If your pursuit of “home security” or “status” that comes by way of home ownership is worth the high risk of watching your RE investment devalue the equivalent of your first 10 years of savings (200K) over the next 5 years with the potential of not revisiting current valutions for another 10 years following, then buy all means buy the wealth trap. (200K, it would have set up your first boy with everything from his first marriage to university, ah, maybe you both don’t need this, jobs are secure, your both healthy, you both can just earn more right? The future is so certain)
Just remember you will be buying in at the peak of a RE market. The status seekers of today get buried with debt and lose it all tomarrow. The ones who actually have status tomarrow are the ones who avoided taking on so much debt today (or sold out over the last 3 years and are sitting on the sidelines). My guess is one big reason why you married the man you married is because he’s smart with his money. So whats changed?
“My spouse reads your blog religiously.”
From The Gospel of Garth:
And I say unto you: if a man bought a house at the top of a bubble, does that not make the man a fool? But, if the man put his assets into tax-sheltered investments, do they not mutliply; and has he not saved?
By the way, I received my autographed copy of Money Road. Thank you very much! Enjoying the read and setting things up as I type.
I honestly don’t know how to respond to this woman. Is the “nesting instinct” so bad that she is willing to destroy any stability they have in order to owe money to people? If her present rental is a dump – GET A NEW RENTAL. You would not believe the places you can get for a Song right now. Don’t give me that “better to own” crap. It’s four walls you live in, that’s all. As for 25 years in it, my ass; she sounds like the type that will pull a “Suzanne Researched This” and trade up every couple of years because she wants Granite counter-tops and whatever the latest house-porn craze is. If you get too insistent missy you may find that’s $100K for you and he’s in Cayo Coco with some bimbette on one arm and a drink on the other. . .
my 2 cents
don’t read any blogs ‘religiously’
don’t take real estate buying advice over the internet
listen to your wife
Garth,
Your description of those toy/debt laden households is fitting.
Got a Watch- I just got back and had a scan through the last couple days of blogs and I must say that I do enjoy your rants but the hyperbole you employ sometimes hinders the accuracy of your analyses. While I do agree with the main thrust of your ‘beef’, there is little credibility behind your characterization of the top three (Ig Nobel) Dynamite prize winning economists as Keynesian. Well, perhaps Summers, but really, after reading Keynes and Minsky on speculation, do you really think that they would endorse the repeal of glass-steagall bank separation and/or the deregulation of the financial derivatives casino? Stiglitz and Krugman are more like Keynesians, not Summers, at least not by the reasons outlined by the prize committee. As for the other two, Greenspan and Friedman can hardly be called Keynesian; rather, they are steeped in neoclassical economic approaches, no? Steve Keen (who btw had a hand in starting the Ig nobel prize I think (?) explains very clearly the difference between these neoclassical economists and those he considers as the genuine torchbearers of Keynes’s ideas. The main reason for expressing my minor difference of opinion is that I think there is a misplaced blame on what ideas actually caused the GFC. I do acknowledge that Keynes’s ideas have been perverted and that only parts of his general theory have been adopted into later economic thinking, but I don’t think the prize winners have much to do with these ideas. David Harvey’s ‘Brief History of Neoliberalism’ does a thorough job of shedding light on the shift in economic thinking from Keynesian to neoliberal that happened during the 1970s.
So….if you do have a hand in setting up some type of paramilitary death ‘einsatz gruppen’ or something of the sort, are you going to just zero in on the keynesians of all different stripes, or are you going to dig the pits deep enough to fit most of the academic economists-mostly neoclassical-as well?
Wife didn’t say what city they are living in, but for some reason I picture Torana.
My advice – Leave the GTA. If you come here to Kingston, you can buy a lovely 3-bedroom bungalow in the centre of town for $250G. There are lots of affordable cities where the housing prices are only 10-20% inflated.
In a small city, you don’t have to make near as much money to be just as rich.
Where you live is a financial decision. Living somewhere expensive is like marrying a shopaholic. It’s no place to raise a family!
To Diane B.
If you buy a $700,000 house and put down $300,000, then you have a $400,000 mortgage. If again the house declines in value to $500,000, you still have a $400,000 mortgage. Thus your $300,000 down payment has become $100,000. You burned the other $200,000. Garth you are not getting through to these people.
By the way did you whisper in the hear of the C D Howe by any chance?
steve #2
This is interesting! Actually it sounds like you want the RE dream so bad you are willing to live miserably for years in order to access it. Not sure you are that different from people who over mortgage and live miserably, only after… Both want the ownership dream badly and will suffer for it.
I would favour a more balanced approach, rent a decent place, save some and when/if the occasion arises make a move on a property you can really afford. Meanwhile enjoy life.
I am fascinated by the ability of so many of the folks who write Dear Garth letters, to amass small fortunes by the time they are 30. Frankly if your “stash” was built by way of financial asceticism, discipline and shrewd money handling why the need to seek affirmation or advice? You should be giving it to others for a price.
Sorry but those who have acquired the work and savings ethic necessary to accumulate the six figure sums so cavalierly bandied about are not suddenly beset with money-burning-a-hole in pocket crises of conscience. On the other hand, inherited wealth after a life of steadily living beyond one’s means, can be pretty hot to handle.
Happy Wife, Happy Life.
The sooner you give in the sooner you can get back to watching tv.
Non O’
“don’t take real estate buying advice over the internet”
Right, take it face to face from someone with a vested interest in – neigh… from someone who’s very livelyhood depends on you buying it! From someone like you, perchance?
Hey Desperate …. nothing stopping y’all from renting a newer nice dig ….. and still save with no hassles. In any rate you have choices. The axe will fall soon, F. is now complaining he spent too much on the Olympics (G&M) and the bills are not in yet. Like Garth said the tax rate for y’all to look after us ode folks will be 70% by 2020, did you figure that into your mortgage? nuff said.
#51 junius
Exactly! This housing frenzy and huge debt has to end or we are in a strange, strange new world!
This is all just a big government sponsored ponzy scheme to buy quick votes!
Garth implied, but did not say, that this lady lives in Calgary. I’m going to assume that she does:
Desparada, I say unto you: rent a house.
I rent a house here, and it was a damn smart decision. There are scads of reasons for you and hubby to rent right now. Yes, tell him to get over his fears, that getting a little more space for you and junior will pay off in many ways, but there is no reason on this earth you have buy *right now*. It sounds like this would be your first house. By renting, you can explore what it actually means to live in one of these frig’n things without the financial risk and expense involved in purchasing. You can try out living in that oh-so-desireable neighborhood to see if it all that it’s cracked up to be. And my favorite: you can watch the landlord’s equity leak out faster than the rent flows in (bonus!)
I can totally relate to this situation. I have a child on the way, and we are going to bunker down in our condo for a year or 2. After that, crash or no crash… we are moving to a bigger place!
Which is a bigger investment? Your house or your child? Prioritize accordingly. Just my 2 cents.
Exactly, your biggest investment is your child. So why would you risk your family’s financial well-being by buying at the top of the market. What will happen when your child wants to play hockey? Take piano? Go to university?
Do what’s best for the child and keep saving. Here’s a bit of news that most women forget. Babies are really small. They can usually fit in a small rented apartment. And they don’t remember their early years. They don’t care if they are forced the indignity of being a lowly renter in years 0-5. However, when older, they will care when they see their parents struggling and unable to pay for their extra-curricular activities because the parents are busy feeding the monster mortgage.
Great post Garth…with 200k in the bank, secure jobs and a roof over ones head in these troubled times is far more than many have. Anyone foolish enough to sink all their savings into an overpriced property which is bound to lose will in the not too distant future remember how good life really was before they sacrificed their security. 200k IMO in the not too distant future will buy a pretty nice property with no mortgage. Look to our neighbors to the south our future is unfolding in the same manner.
My Hubby & I & 2 kids are happily renting in lovely Oakville, patch of grass & everything, everything but the fat mortgage and fat taxes and urge to renovate.
As Baron Rothschild (& others) have said when asked how they got so rich, “I sold too soon!
Find a better rental and sit tight, you won’t regret it when you are able to buy your dream home for CASH in a few years!
#26 Marina on 02.23.10 at 10:58 pm
For some reason Garth is pretty sure hyperinflation is not coming and all saved cash will be ok. But wait, Garth, how can you be so sure and how do you know what are those goldmansukers are planning to do with green buck?
******************************************
Not Garth and not answering for him–but–
The Gold Men would never destroy their lifeblood the USD–
No $ = No Fed–
No Fed = No Gold Men–
They are not citizens of any country-
They have no borders–the world is their playground-
We have one controlling our money supply–
Flaherity knows nothing–
Carney knows all–
They will destroy any country or currency that’s advantageous to them–
Case in point–notice the IMF and how they’re always 1st in line to “save” any bankrupt country’s?
They will “save” Canada eventually–just wait–
“Please just sign on the dotted line” Mr Flaherity–
The IMF can print USD’s as well as the Fed–not that it matters–they are one and the same-
Notice how there’s always a new Strawman to focus on?
Iceland–Greece–Spain–
The Gold men–coming to a country near you–
From an–”in the know”–whistle blower–
http://www.youtube.com/watch?v=jddIKAB6rXI
No, Keith, women posting here get upset when some posters call “most” women “brain dead flesh bags” and don’t recognize that many men also behave in hormonal and irrational ways.
My husband is driving me mad. He sees a house, he wants it – it takes hours to talk him down, and it usually requires constant reminders of all the things wrong with the house.
As Garth said “There are countless husbands addicted to stuff, who view a massive home as proof of success. Especially in Calgary. They mortgage to the hilt, buy $1,800 stainless barbeques and Escalades in a colour to match their soffits. The garage is jammed with a quad, a Harley, a fast sled and a cigarette boat – all used once.”
So why do the blog dogs always bark about women?
2pm eastern, BNN, See why house prices will continue to rise.
This otta be good.
Great Jo Stiglitz interview on CBC yesterday:
http://www.cbc.ca/thecurrent/2010/201002/20100223.html
He predicts a recovery around 2015, maybe if all goes well.
24% of residential properties in negative equity- 1 in 4!
http://blogs.reuters.com/rolfe-winkler/2010/02/23/corelogic-24-of-residential-properties-upside-down/?source=patrick.net
For the countless husbands addicted to stuff .
“world’s first cooking robot”
http://www.nytimes.com/2010/02/24/dining/24robots.html?ref=global
Now, if only they could make them look like Nicole Kidman.
#33 Bill
Because the females are programmed to believe in the white picket fence and fairy land from a very young age.
And, the females in the tribe are NEVER happy with the cave.
Deflection – Toyota’s accelerator problem blamed as improper front car floor mat installation.
Does everyone see the power of two countries exchanging blows to deflect an issue much greater than we can imagine.
Get used to it and buy Toyota stock in the lows for a rebound. American car builders (consumer perception) liked it as well for a 4-6 week period.
Silver platter short plays will be abundant as the manipulative sideways market deflects us from the real problems.
Anyone for a chess system but as visible as a game of chinese checkers!
To those who see renting with a sub-standard existence: that certainly hasn’t been our experience.
We’ve done both, and prefer renting. (I’d rather have my hard-earned cash earning dividends than risk it in todays real-estate casino)
The key is to rent the equivalent of what you would own — not something less, as many seem to assume. Don’t compromise, particularly on location.
In our case we rent a detached home, and behave just as we would if we owned. We take care of our home, socialize with our neighbors and enjoy life.
I suppose if a really good opportunity arises, we might buy again. But certainly not before interest rates get back to normal levels.
Garth, just out of curiousity, have you travelled abroad much? We’ve been hearing tons about the north american housing market & economy etc — but very little about the ongoing financial meltdown in Europe and how that could affect us here. Garth, are you afraid of them dern foreigners?
Compare:
Canada:
Remax warns not enough homes for buyers
OTTAWA – With new mortgage rules, a new harmonized sales tax in some provinces and the possibility of higher interest rates all set to kick in this summer, Canadian home buyers are on a tear and it is only going to get busier leading up to this summer, according to the Re/Max Market Trends Report 2010 released Wednesday.
USA:
NEW YORK (CNNMoney.com) — Sales of new homes plunged in January to the lowest level on record, government figures showed Wednesday.
The seasonally adjusted annual rate of new home sales plummeted 11.2% to 309,000 last month, compared with a revised rate of 348,000 in December, the Census Bureau said. It was the lowest rate since the government began keeping records in 1963, and caught many economists by surprise. A consensus of economists surveyed by Briefing.com had expected January sales to rise to an annual rate of 354,000.
Who could explain it?
http://www.thestar.com/business/article/770672–toronto-leads-tight-national-housing-market-re-max-says?bn=1
“… the average home price appreciated 81 per cent, it found in a survey.”
‘“While home ownership is still within reach in many major centres, levels are slipping. There is a growing sense, on both sides of the fence, that the time to act is now.”’
Eighty-one Percent!
well rent a bunglow. in Calgary NW they are going for 1400. i am in a similar situation and it is working out fine.
#72 Renting in Oakville,
How long have you rented in Oakville for? I’m not saying its different here but the town (really a city) does tend to attract an upper middle class with the $$$ to spend on housing. My family and I have been looking at selling the house and paying cash for a place in Milton but Milton does not come close to what we get here. What are the rents like in town? We may consider cashing out and setting up shop in a rental for a year or two, its just so hard to give back the 1.75% open mortgage rate.
U.S. still imploding
New home sales hit record low
http://finance.yahoo.com/news/New-home-sales-drop-to-record-rb-2868445540.html?x=0&sec=topStories&pos=main&asset=&ccode=
Bullish a Year Ago, Robert Prechter Now Sees “the Biggest Bubble in History”
http://finance.yahoo.com/tech-ticker/bullish-a-year-ago-robert-prechter-now-sees-%22the-biggest-bubble-in-history%22-429931.html?tickers=%5EDJI,%5EGSPC,TBT,UUP,SHY,JNK,TLT&sec=topStories&pos=9&asset=&ccode=
Seriously, who lives in a house for 25 years any more? — Garth
Some of us do. On my ‘older’ end of the street, in a nice neighbourhood, 9 homes, 7 are original owners. We’ll have been here 19 yrs come April – the rest 22-25+ years. None of us are planning on moving anytime soon. Sure, most of the homes have been renovated, windows, siding, etc. But, our lot sizes are 2/3X+ the size of current min. and we’re 5-10 mins. to all amenities, including lakes and parks. In 1991 we paid just under $116K, with 25% down and paid it off in 7 yrs. during which time my husband was out of work and paid $10K for a 50 week IT course. We based our purchase on 1 salary. No regrets, other than, at times, I’d prefer a smaller property and house to maintain. But where would my hubby store, work on his 2 older BMW bikes. And, Garth, he does have Harley friends. He actually owned a shop in Europe eons ago that sold Harleys.
My advice to this lady and her husband is, as others have said, rent a larger apt. or home and BE PATIENT.
Why Americans do not buy cheap houses in better climate;
but Canadians are buying as addicted gamers extremely overpriced wood craps – so called “houses” (in Canadian language) in the frozen climate?
What the difference between Canadians and Americans.
Please, Canadians, explain it (I’m not Canadian).
May be it hard to understand for foreigner?
82 Amarillo on 02.24.10 at 10:19 am
“We’ve been hearing tons about the north american housing market & economy etc — but very little about the ongoing financial meltdown in Europe and how that could affect us here.”
Excuse me, but haven’t you been reading any of the posts and links that others do submit in here about the conditions in the EU? I am not sure what you are looking for as in EU conditions, however, to start you off you can read this…
Falling Debt Dynamite Dominoes, The Coming Financial Catastrophe
http://www.marketoracle.co.uk/Article17404.html
We rent in NW Calgary — a beautiful 3 story with a nice patch of grass (not in one of those ’so close you can share a beer with the neighbor over your deck’ subdivisions) for $1850/month. Would cost triple that to buy.
We’ve both owned and rented, and renting is easier on my brain.
We’ll buy when it makes sense. It doesn’t make sense right now. It will soon, as I’ve noticed MANY ‘reduced’ signs in our neighborhood and on realtor websites.
The Calgary Herald is paying homage to its real owners today, but judging from the comments NOBODY is buying it. The tide, she is turning.
http://www.calgaryherald.com/business/Calgary+face+very+active+spring+housing+market+economy+improves/2606685/story.html
Am in the same boat as “Desperate for 4 Walls and a Small Patch of Grass,” only I’m a little older, have less saved AND have a wee one on the way.
My desire not to see a fledgling family get caught up in Canada’s debt binge is barely holding its own against the female unit’s desire for stable home. We rent now, to a landlady with serious debt (tax) problems.
C’mon bubble. Pop already. Or, at least, let’s see things get back to something with SOME resemblance to a norm.
I have no idea who your husband is, if he posts on this site, is a regular blog dog, or just furtively reads on his laptop in the bathroom with his wireless turbo stick.
“furtively”
So thinking about the women who pushed their husbands to buy, how are they going to feel when they figure out that the mortgage is worth more than the house? That they cannot sell? That they cannot move? That they still have to pay?
Not too happy.
US New Homes Sales plummet 11.2% in January to annual rate of 309,000, lowest on record
http://www.theglobeandmail.com/report-on-business/us-new-home-sales-plummet/article1479582/
http://themarknews.com/articles/983-the-recession-isnt-over-just-because-economists-say-so
Gotta love those eternal optimistic economists!!!!! (Almost as bad as Real Estate Agents)
kaganovitch – had a long reply written, but closed the tab by accident, oops.
OK, the death penalty is a little harsh. How about life at hard labor, no parole, and a daily beating instead.
I like Keen, Minsky and a few others among the big “names”. I am of the Austrian School myself, you know, the one never mentioned in “economics class”. My favorite economist is Murray Rothbard, actually. Most of the Austrian philosophy is just basic common sense applied to economics, which of course is why it is reviled – the truth hurts. I read a while back that Anna Schwartz, Friedman’s biggest disciple, had admitted that she and him were wrong and their assumptions were mostly incorrect.
The biggest problem is that these fools train greater fools who then go out into the world to run corporations and Governments based on entirely wrong principles. They have done more damage than any terrorists.
What exactly would your prescription be for the economy? More of the same (that would be Einstein’s definition of stupidity, wouldn’t it?).
#70 Exactly, your biggest investment is your child. So why would you risk your family’s financial well-being by buying at the top of the market.
The child that Desperate has is 3. It probably means they will need to consider stuff like proximity to parks and local schools… as well as how big the living space is. If those needs are not being met, then it’s time for a move. The only thing to discuss is if they want to rent a new place or buy one.
I hear there are children actually raised in apartments in major European and Asian cities. Imagine that! — Garth
I think men and women are equally different.
Seriously, who lives in a house for 25 years any more? — Garth
My parents have lived in their home for 40 years. They have four neighbours within their street who have lived there as long.
Interestingly, in our neighbourhood (north Okanagan), a 2000sf renovated heritage home (virtual twin to ours, built around 1900) that sold for ~$450k a couple of years ago has just gone on the market again, for $410k. Sucks to be them.
http://www.reuters.com/article/idUSN2315353620100224?type=politicsNews
“The FOMC continues to anticipate that economic conditions — including low rates of resource utilization, subdued inflation trends, and stable inflation expectations — are likely to warrant exceptionally low levels of the federal funds rate for an extended period”
Hello!
And why you ask are rates going to stay low?
http://www.econbrowser.com/archives/2010/02/fed_assets_feb_10.gif
The Fed has to somehow deal with the dust under the carpet. And it’s piling up. Raising rates, crashing the market will not open up the kind of liquidity that is needed to eventually offload the balance sheet bloat at the Fed, er.. BOJ… er wait… no the Fed. Right the first time.
Get ready. TO real estate has just become Nortel common stock in 1998.
Prove me wrong.
Unrelated but worth a look.
Just called up my TV,Home phone and I Net provider and advised them I had a better deal from BELL. Without even asking what it was they shaved $36 a month off my monthly bill and beat Bells offer by $5. Not as sexy as selling the house and pocketing my 50% equity but you have to look after the pennies to make the dollars.
You have to love the internet. Information is so powerfull.
Does anyone out there have a online broker they would recommend? Looking for one with $5 or under per trade with good tools. Think it is about time I start making some $$ off the boomers and stop handing over my $$ to an advisor who has his trailer fee to think about.
http://www.youtube.com/watch?v=Ubsd-tWYmZw
when wife nags i always think of that and the resultant carnage.
He wants to stay put – she wants to “invest” all the family savings in an over-inflated asset…
He’d probably settle with moving to a large rental property… she probably won’t?
She pleads her case and her concerns on “his” blog… is getting beaten up – and is problably now real ticked that she did.
I give them a 50% chance they’ll last more than two years… sad for the kid…
I’d get a cruiser for the wife…
Good trade.
Just got a notice that they had to change the venue in Calgary to hold all the registrants. Well done!
Hey GAW… This one is for you via one of my daily reads…
http://economicedge.blogspot.com/2010/02/robert-prechter-bond-market-is-biggest.html
Ludwig Von Mises noted that the size of the bust is commensurate with the size of the boom and it was Hyman Minsky who accurately described the seven bubble stages (the following excerpt is from my book Flight to Financial Freedom – Fasten Your Finances, written during 2005/2006):
HYMAN MINSKY’S SEVEN BUBBLE STAGES
The late Hyman Minsky, Ph.D., was a famous economist who taught for Washington University’s Economics department for more than 25 years prior to his death in 1996. He studied recurring instability of markets and developed the idea that there are seven stages in any economic bubble:
Stage One – Disturbance:
Every financial bubble begins with a disturbance. It could be the invention of a new technology, such as the Internet. It may be a shift in laws or economic policy. The creation of ERISA or unexpected reductions of interest rates are examples. No matter what the cause, the outlook changes for one sector of the economy.
Stage Two – Expansion/Prices Start to Increase:
Following the disturbance, prices in that sector start to rise. Initially, the increase is barely noticed. Usually, these higher prices reflect some underlying improvement in fundamentals. As the price increases gain momentum, more people start to notice.
Stage Three – Euphoria/Easy Credit:
Increasing prices do not, by themselves, create a bubble. Every financial bubble needs fuel; cheap and easy credit is, in most cases, that fuel. Without it, there can’t be speculation. Without it, the consequences of the disturbance die down and the sector returns to a normal state within the bounds of “historical” ratios or measurements. When a bubble starts, that sector is inundated by outsiders; people who normally would not be there. Without cheap and easy credit, the outsiders can’t participate.
The rise in cheap and easy credit is often associated with financial innovation. Many times, a new way of financing is developed that does not reflect the risk involved. In 1929, stock prices were propelled into the stratosphere with the ability to trade via a margin account. Housing prices today skyrocketed as interest-only, variable rate, and reverse amortization mortgages emerged as a viable means for financing overpriced real estate purchases. The latest financing strategy is 40, or even 50 year mortgages.
Stage Four – Over-trading/Prices Reach a Peak:
As the effects of cheap and easy credit digs deeper, the market begins to accelerate. Overtrading lifts up volumes and spot shortages emerge. Prices start to zoom, and easy profits are made. This brings in more outsiders, and prices run out of control. This is the point that amateurs, the foolish, the greedy, and the desperate enter the market. Just as a fire is fed by more fuel, a financial bubble needs cheap and easy credit and more outsiders.
Stage Five – Market Reversal/Insider Profit Taking:
Some wise voices will stand up and say that the bubble can no longer continue. They argue that long run fundamentals, the ratios and measurements, defy sound economic practices. In the bubble, these arguments disappear within one over-riding fact – the price is still rising. The voices of the wise are ignored by the greedy who justify the now insane prices with the euphoric claim that the world has fundamentally changed and this new world means higher prices. Then along comes the cruelest lie of them all, “There will most likely be a ‘soft’ landing!”
Stage Five is where the real estate industry is today [2005/2006]. This stage can be cruel, as the very people who shouldn’t be buying are. They are the ones who will be hurt the most. The true professionals have found their ‘greater fool’ and are well on their way to the next ‘hot’ sector, like the transition from real estate to commodities now.Those who did not enter the market are caught in a dilemma. They know that they have missed the beginning of the bubble (gold, silver, and oil today [2005/2006]). They are bombarded daily with stories of easy riches and friends who are amassing great wealth. The strong will not enter at stage five and reconcile themselves to the missed opportunity. The ‘fool’ may even realize that prices can’t keep rising forever… however, they just can’t act on their knowledge. Everything appears safe as long as they quit at least one day before the bubble bursts. The weak provide the final fuel for the fire and eventually get burned late in stage six or seven.
Stage Six – Financial Crisis/Panic:
A bubble requires many people who believe in a bright future, and so long as the euphoria continues, the bubble is sustained. Just as the euphoria takes hold of the outsiders, the insiders remember what’s real. They lose their faith and begin to sneak out the exit. They understand their segment, and they recognize that it has all gone too far. The savvy are long gone, while those who understand the possible outcome begin to slowly cash out. Typically, the insiders try to sneak away unnoticed, and sometimes they get away without notice. Whether the outsiders see the insiders leave or not, insider profit taking signals the beginning of the end (remember who has sold their rental properties?).
Stage seven – Revulsion/Lender of Last Resort:
Sometimes, panic of the insiders infects the outsiders. Other times, it is the end of cheap and easy credit or some unanticipated piece of news. But whatever it is, euphoria is replaced with revulsion. The building is on fire and everyone starts to run for the door. Outsiders start to sell, but there are no buyers. Panic sets in, prices start to tumble downwards, credit dries up, and losses start to accumulate.
This is where you may see the “lender of last resort” who is usually the government. The government, although they were talking up a soft landing, are now forced to step in to prevent the crises from spreading to other sectors. Ironically, this is where the savvy investor who profited before, really profits now. With government backing, they are asked to step in and return “normalcy” to a now damaged sector.
http://www.financialpost.com/story.html?id=2559255
Boomers like to SKI
Great Point Garth!!
I beleive our obsession with home ownership vs renting, particularly its size and location-ie. victoria vs. surrey; oakville vs windsor- perpetuates the ‘class’ structured society we live in.
In fact i have a childhood friend who immigrated from spain who lived in a three bedroom apartment with his two brothers, mother and father and stayed there for 20+ years. His parents moved to smaller apartments in the same building as the family leaned out.
Each son became a professional – lawyer, dentist, doctor. Upon asking him why he felt no need to buy a home? He said the boys lived at school-(he meant the library as it was a local university).
He then said he had saved 250k for a small house and would buy when the boys were gone. They left in 1994.
He bought his first house at age 51. No Mortgage and No Debt.
Point of the story?
Delay your gratification.
To Bill, and others thinking this is a wife issue – I am a Momma Bear, 2 kids, renting; there are some other female housing bears here; I know couples where women are the brakes on purchase — just reminding folks that women are not the exclusive pressure to own. Yeah, there’s a nesting thing that happens with some women, but it’s nowhere near universal, and it gets men in its clutches too. There’s also ‘get rich without working’ folks of both genders who think buying is smart and they’re investment geniuses. And there are those for whom owning a house is synonymous with “making it”. I imagine it depends what circles you run in, what the bubble pressure is – but the bubble’s created by a whole bunch of people blowing hot air…
I don’t understand why little darlings get placed on such high pedestals anyway. Perhaps if things got reversed to the way they were( ie. not the centre of the universe)when the little darlings grow up, perhaps…they may give a darn about their parents who provided for them, when they were little and vulnerable and needed that support… and maybe just maybe they’ll return the favour to their parents instead of turning into self centred, selfish, egotistical individuals. That’s my hormonal rant for the day….
On another note all together – has it been announced yet which posted rate banks are to use in their mortgage approval? I believe that on the day of the announcement, this was not yet clear… Is it the BOC’s posted rate, or the posted rate of the bank you are trying to qualify with? The difference is quite large.
I just make sure the spawn are aware of the facts as to why we rent:
- it doesn’t make financial sense to buy,
- it’s not a liquid asset,
- can’t overpay for a house and still go on paid-for family vacations every year
- home is a state of mind, not what we live in
A simple way to reverse the housing situation is to get rid of the duo citizenship that all immigrates are holding onto. Either you’re a Canadian or you’re not and that will make it more fair for all Canadians. There will massive returns of Canadian passports from foreign countries and Vancouver will see a wave of for sale signs in front of their properties.
One thing I’ll say about the FaceBook group CAPP is that almost never do I feel the rampant sexism that is prevalent here. Just an observation.
http://www.facebook.com/group.php?v=wall&gid=260348091419
Do I really have to mention men’s bone headed money wasting ways? Do I? Because I could go on all freaking day if I had to. Most you don’t even have proper jobs; they are more like expensive hobbies.
Not all… some.
That is all.
Re #112
If anyone needs a clear indication that the economy is headed due south, this comment hits the nail on the head. It’s been this way since the dawn of time. When the going gets tough there’s always one crystal clear solution. Blame the immigrants.
Just a head’s up: even the whitest of white men living in the bush on a steady diet of KD and possum had a family that originally came from beyond North American borders. Outside of Canada’s aboriginal population, everyone else in an immigrant. However, I think I understand who you’re talking about. The immigrants that are a different kind of immigrant than you are, right?
Ignorance. Pure ignorance.
101 Oakville owner – Reduced Cable/Tele/Internet bill
Yes – a great way for all the bloggers to save some $$$$.
Telus called me and tried to poach me with a great deal – phone, cable PVR and internet for $86/m on a one year contract.
I called my provider (Shaw) and they gave me an even better package for $77/m without any contract obligation.
Thats about $40/m less than what I was paying and I get a PVR and unlimited NA long distance.
Just call your service provided and tell them you are thinking of switching. You may have to call the competition to get a quote, as your service provider may want to know what they are competing against.
Hey, Dave…. I don’t want to hackle back and forth and cut up some of your comments. You did have a few good points but are we not running lower on silver than gold? do we not consume more silver in manufacturing than gold? example: in computers. and is silver and oil not depleting more quickly than gold? Thus / supply and demand?
It is a good start for investors to look at history as you have done with comparing gold vs silver. One could also do this comparing gold vs oil etc.
However one must not relie only on history and be a forward thinker. You have done this with your investments in lithium. not much history on lithium as in gold but i guess you based your decision to invest in it because of the move to electric cars?
Most of the bloggers are talking about renting or buying a home. This talk is about one purchasing or waiting for a correction before purchasing a primary residence. As u know this is much different then what i am talking about. The RENTAL assets i have in place cash flow rather well and i have been very careful in my planning.
Even if the real estate market takes a huge 30% hit, it would not really bother me. It would only make me more excited to purchase more. Real estate is much more predictable than stocks as its trends move much slower. A good balance is the way to go.
Underwater? Foreclosure? Problem solved!
http://cnews.canoe.ca/CNEWS/WeirdNews/2010/02/22/12987191-ap.html
My wife sounds much the same as “Desparate for 4 walls and a patch of grass”. Ours is a battle between doing what makes the most financial sense in the long run, versus keeping up with the Jones. Many of our community are jumping in with the current low mortgage rates and taking out huge mortgages (the average mortgage in our area lately is around $900,000) to purchase their dream home, whichas driven prices to an all time high. We are in our late 40’s, have $850,000 saved, our relatively new vehicles were paid for in cash, our modest recreational property was also paid for with cash. We are currently renting, but want to buy and intend to be debt free (or very near debt free) when the market changes . . . hopefully soon.
Garth, This is the semi-annual apology post for goofing on you. Just finished reading your wiki. Done a decade plus as business editor TO Sun, launching mcleans. Biggest independent producer of network TV in Canada. CEO this, CEO that, etc, etc and then of course that political stuff you do. You’ve certainly got the pedigree but come on – what’s up with the Dr. Phil content?
@ #8 CalgaryRocks: I hope it’s the Toyota Sequoia!
Facts
…# of Canadian unemployed…rising
…Bernanke states today that U.S. interest rates will not be rising anytime soon
…Loonie needs to fall to 80 cents visavi the U.S. Dollar so that Canadian exports can remain competitive
…HST will put $$$ into Ottawa’s coffers plus it will limit R E speculation
So why would Ottawa raise interest rates?
Nostradamus jr.
re #100 NotAnIssue
I can’t see how TO real estate could fall in half as quickly as Nortel did between Spring and Fall of ’98, but i guess there have been many historical cases of property values falling in half in less than a year. However, it took most areas of Japan 13 years of near zero interest rates before their real estate fell in half (mind you it did fall fast in the first few years).
Hello Garth.
I suspect the whole debate over housing bubbles ,prices and government debt could be academic if guys like Robert Felix are correct.
Any kind of an ice age that sets in will make a home in the southern US or mexico look rather attractive.
In the light of that possibility why spend a fortune on real estate in Canada?
Steven
http://www.iceagenow.com/index.htm
#70 Torquemada — excellent post, well said.
#111 Dawn in Calgary “home is a state of mind, not what we live in” — absolutely right. I’ve owned before, rent now, and am always ‘at home’ no matter where I am.
Anyone who thinks you need to own a home to be at home has been brainwashed by RE-industry marketing.
InteractiveBrokers.ca
Hands down the best. No competition. It all depends on your size whether they are cheap or not. 100 shares is 1$ commission but above 1000 shares you can find other within the same prices. But for tools. Unbeatable.
LOL. That’s easy. If you live in Canada you’re pretty much stuck in a frozen climate unless you live in BC, and we all now the prices there.
#89 Prophet on 02.24.10 at 10:57 am
Why Americans do not buy cheap houses in better climate;
but Canadians are buying as addicted gamers extremely overpriced wood craps – so called “houses” (in Canadian language) in the frozen climate?
What the difference between Canadians and Americans.
Please, Canadians, explain it (I’m not Canadian).
May be it hard to understand for foreigner?
——————————————————–
Nobody explained.
May be there are no Canadians on this blog
or may be they have no explanation.
In both case is weird.
Hello Desperate: A great letter because I can actually feel your frustration. I am your husband … but not your husband. I too am waiting, but with a gun pointed at my head. My fiance and I endured immeasurable pain in making the decision to rent … me trying to convince her and her resisting with all her heart. Take Garth’s response with a grain of salt … yes, I believe it is a crazy time to buy, but he is not in your shoes. Your husband is married, not single! Everyone’s situation is different … but most of all its your situation that you and your husband must deal with and that means negotiating a solution. Like the one comment about putting a time frame on how long you have to wait. Tell your husband that you appreciate what he is doing and will try to understand why he wants to wait, but make sure he understands that it is always not about what he wants, or worse, about being right. Be realistic and weigh all the risks, as an example, say buying a few months from now and determine whether you can deal with it if prices tank. Rent a house, buy a small house, etc. We have done this … we will wait for a negotiated period, and unless prices are even way worse, then will sit down a discuss it again. But if prices are about the same, then its time move on up, but we can do it because we have saved prudently … just like you. Good luck.
#13 Nostradamus Le Mad Vlad
The stock market is more overvalued than it was when it crashed back in 1929. Better advice may be to buy puts on the indexes.
female metaphors in a male world
handmaidens to industry
http://www.bank-banque-canada.ca/en/speeches/2009/sp09-4.html
===========little itty bits of dx
Think like the Rich? ….greed is out -the prospective mind is in.
CO2 = P x S x E x C
http://www.worldchanging.com/archives/010976.html
From yesterday, “most of my wealthy friends make much more money than i do but are taxed twice as much because they don’t think like the rich do. they will always be upper middle class and never reach it to be very wealthy.”
http://www.alternet.org/investigations/145735/exposing_the_great_american_bubble_barons%3A_join_us_in_the_investigation?page=2
High-quality friends seem to matter along with some extremely fast computing that spits out five exabytes of info/day ,simulator models that predict the favourable outcomes to THEIR favour.
———————–
This welsh place sounds like Vancouver or any city that has wondered were the new economy is.
http://www.cnn.com/2010/WORLD/europe/02/21/vbs.swansea.love.story/index.html?hpt=C1
Holy crap, you have to wear Wellingtons for these comments today.
We are another example that men want “stability” and
“security”, too. I wanted to rent until prices came down and we saved more for a downpayment. Hubby wanted to buy. I tried my hardest to convince him to rent for a year and then see where the market was at. No go. He wanted to put down roots so here we are. We bought at a downturn in the market in 2006, but still have a mortgage that is too big, IMO.
We were debt free and I wanted to stay that way. Yes, that is true freedom! Hubby finally gets it. Lesson learned the hard way.
As Garth says, there are just as many men who want the (perceived) security as women.
#105 POL-CAN
Sums it up quite well.
Nobody knows what the heck is gonna happen here in 5 years so please everyone stop pretending like renting is such a no brainer.
Nobody knows the future at all. Renters like me have got it dead wrong and lost out BIGTIME because of that decision. It made alot of sense at the time but proved to be wrong. I am ok with that. I manage money for a living and am fine with being wrong, but the strategy on this forum is more along the lines of “prices are too high and we should wait for them to come down.” As a professional trader, that logic makes no sense.
With this logic, you can never be held accountable for your mistakes. As long as prices go higher they become more overvalued and a foolish investment. Youre never wrong. Blablabla and another year goes by that you rented and lost out.
Now what the future holds noone knows but one thing is for sure, the logic of the renters in Canada has failed miserably. We are the LOSERS. I come at this problem from the perspective of someone who has failed at timing the real-estate market. Someone who is an idiot and overleveraged themselves has done better than me. Why would I act like I know whats gonna happen if Ive gotten it so wrong so far?
A reality check is in order on this site.
http://www.cbc.ca/money/story/2010/02/23/interest-rate-hikes-cd-howe.html
Breaking trail for what’s to come?
#111 Dawn in Calgary
<>
As someone who makes a living on actual price changes of assets and not on what prices I THINK assets are worth, this statement makes no sense to me. There are two sides to every trade and I have made more money being on the irrational side then the rational in my career. So what makes no sense to you makes sense to someone else. So far they are ahead.
<>
Still does not deal with whether or not a house is a good invesment or not. It has been so far. and if you have to change your state of mind to fit your situation, then you are not truly not where you want to be. I would rather be in a house. I want a basement and to invite friends over for a BBQ and make noise when I please. These should not be considered luxuries, but they are now.
I have been squeezed and squeezed people many times on many trades but this real-estate one is a biggy. Its too big an invesment for most people. When such a big investment that everyone is in starts moving quickly it creates massive instability in entire markets. This is something that is entirely the regulators fault.
House prices should not be moving like Google stock.
But the regulators turned out to be idiots.They turned the market into a casino where to “not” gamble is not possible anymore. We are all gamblers now. You don’t like risk? Well take a good whiff. You have no choice anymore. We have all lost by renting in the form of massive inflation. That was a huge gamble. To me, to own or not to own have turned into huge gambles either way. Whoever comes out on top in 5 years noone knows. The only thing I know for sure is that if prices are higher, renters will be laughing and saying prices are ridiculous and they will wait.If prices are lower, buyers will say its an even better investment and the rebound will be around the corner.
“Which is a bigger investment? Your house or your child? Prioritize accordingly. Just my 2 cents.”
This is just emotional, estrogen induced non-sense.
Kids don’t give a crap about the size or the price of the property.
But they do care about the quality of:
1. education
2. food
3. extra curricular activities
4. parental care
etc. etc.
This is the lamest excuse I’ve ever heard.
How can a nasty patch of land called “backyard” even compare to the wide open spaces of a national park, or even a city park ?
State it as it is – your reptilian instincts are driving you to make an irrational, high risk decisions, not a child.
If you truly would like to “invest” into the kid,
you’d:
1. save his placenta in the cryogenic storage
2. set up RESP
3. set up saving plan for him
4. get him involved in the development in the early stage of life.
To #138- reading this blog for awhile (from”Planning” post)
So how do you find properties if you don’t go on MLS? You must be a realtor or know one who you puts you on to the good stuff. I would like to know some insider secrets because you’re right, most of the listings I see on MLS are junky. And if you are as successful as you say, you should write a book and let others in on what you know. I’d buy a book like that.
Bubble or not….I am not paying what sellers are asking for their homes…..until then….I stay put, and keep my $.
For some reason Garth is pretty sure hyperinflation is not coming and all saved cash will be ok. But wait, Garth, how can you be so sure and how do you know what are those goldmansukers are planning to do with green buck?
You really haven’t been paying attention have you? Garth recommends 5-10% cash, 100 (or 110 for women) – age for equities, and the rest in fixed income. Seems pretty diversified for me. Doomsday is not gonna happen. US job losses slowing down. Will take a long time to get out of sure, and Canada economy lagging by a few years. But fundamentals are returning to normal after the RE bubble. Same thing after the tech bubble. New bank/trading regs on the horizon to smooth things out.
Long view: http://www.multpl.com/
#133 Jim…….
I am sorry that you pissed all of the money away that you should have saved by renting, as opposed to buying…..oh……wait a minute……I take that back.
***There’s a lot of ‘Parent-Child’ dynamics in these relationships***
To writer in ‘rat hole’-Finding a rental you like can be well worth it, even if paying a little more- for what you can get in return
-Moving, with all its downfalls, can be worth it
-Offering to landlord to do all the work to find a new tenant for their approval, (and u pay approval fee), can be worth a try (Kijiji can be helpful) in order for you to leave before end of lease.
-With place you find that you like, landlord may be negotiable with rental amount, if they want you, and you can back up why you think it should be lower, ie: with comparables that You’ve been seeing.
It can be worth it to landlord, to have a happy tenant
The beat goes on…..
http://www.yourhome.ca/homes/article/770672–toronto-leads-tight-national-housing-market-re-max-says
GTA November 2009 vs. 2008 median real estate prices…
http://multimedia.thestar.com/acrobat/11/18/eeeb84254e8697ff1ee26a4e40db.pdf
Through the looking glass…
http://www.yourhome.ca/homes/article/619400
#37 – DD
#63 – pbrasseur
We’re actually enjoying life quite well… travelled to Thailand, Australia, Japan, Caribean x 15, Europe, etc over the past few years… and will continue to do so with our children when our house is paid in cash and we have the extra $3000 to spend each month ($2000 mortgage and $1000 in interest)… short term ‘minor’ pain for long term gain!
Hey, Dave…. I don’t want to hackle back and forth and cut up some of your comments. You did have a few good points but are we not running lower on silver than gold? do we not consume more silver in manufacturing than gold? example: in computers. and is silver and oil not depleting more quickly than gold? Thus / supply and demand?
It is a good start for investors to look at history as you have done with comparing gold vs silver. One could also do this comparing gold vs oil etc.
However one must not relie only on history and be a forward thinker. You have done this with your investments in lithium. not much history on lithium as in gold but i guess you based your decision to invest in it because of the move to electric cars?
Most of the bloggers are talking about renting or buying a home. This talk is about one purchasing or waiting for a correction before purchasing a primary residence. As u know this is much different then what i am talking about. The RENTAL assets i have in place cash flow rather well and i have been very careful in my planning.
Even if the real estate market takes a huge 30% hit, it would not really bother me. It would only make me more excited to purchase more. Real estate is much more predictable than stocks as its trends move much slower. A good balance is the way to go.
——————————————————-
Yes, there is more of a shortage of silver than gold and yes silver does serve as an industrial metal, but first and foremost, silver and other consumable and industrial products/materials are leveraged assets. In a deflationary environment, where debts have to be paid, and there’s less economic activity, these industrial goods take a beating. This is a reason why any gold/commodity, gold/silver, gold/oil index shows gold increasing vs the other good. Demand in everything has gotten clobbered. The world is about paying off debts and capital preservation. If this all turns over, (which I doubt will happen anytime soon), and there’s a sudden pick up in general economic activity, borrowing etc. then gold will fall in value versus silver and pretty much all other commodities.
My move into green energy metals was because of increased demand, dramatic increase in price of the metals month over month, China’s restriction of exporting these metals, and China’s ownership of 95% of the world’s mines – leaving the rest of the world to fight for the 5% of the remaining mines to meet the needs to produce windmills, electric cars, plasma t.v’s, computers, ipods, etc.
Okay, your properties give you cash flow. I personally wouldn’t advise a 1st time homebuyer to purchase right now. My number crunching tells me it is cheaper to rent right now. I see home prices as severely unaffordable, and a puchase would be a deathtrap to someone going in blind.
You’ve done your due dilligence, but the majority of the people that are doing what you’re doing, have not done their due dilligence – and there’s a lot of THEM. This is what I’d be worried about. They outnumber you. This is the problem with casual investors who flood a sector. They’re much more emotional and can influence a market more than you can imagine. I respect their power, because they’re emotional, lack information, and they come in droves.
In any market that is overbought and becomes manic, you have to absolutely know that the casual investors are now with you – buying and holding what you’re holding. This tells me to expect a sell-off, and not just an ordinary sell-off, but one that is more dramatic than normal.
With a 30% hair cut in prices of real estate, there will also be a haircut in rent prices. Prices of rent will fall. You know your numbers, and hopefully for your sake you’ve considered that a sell-off in real estate will also result in lower rent prices not higher rent prices. Your properties have to be able to sustain this. I’m so disinterested in real estate, that I haven’t done any number crunching lately to determine potential price drops for rental properties. This is your field and I’d imagine you’ve done or are doing your homework for the worst case scenario along with the best case scenario.
#107 Throwstones,
“Delay your gratification”?
Overheard, standing in a group of friends, at the funeral of a good friend who died unexpectedly of a massive heart attack:
“Do not delay gratification!”
#129 Tony — Noted. I erred last night when I said dividend paying shares — should have put DRIPs instead.
In ‘08-’09 when the markets slid for awhile, our RRSPs (six Cdn. equity mutuals and one IT) increased 17%. Monthly DRIPs are a much better way of utilizing the returns and increasing one’s pension plan.
It is interesting how yours and #134 Daystar’s posts relate. Good link Daystar, and goes with the post a few days ago which said that when TSHTF, it will happen so quickly most won’t even be able to keep up with the changes.
Pity those caught up in the madding crowd, as they don’t have the slightest idea of what they’ve got themselves into and what is almost here.
——
PIMCO A line from the article is good: “Countries in the fire zone are headed for hell in a handbasket.”
Not pretty.
Headline is quite descriptive.
Hey Dave, nice post!
What I have seen over the past few years is so many so called investors buying rental property that, well, well that they think is a good buy. They buy in strong markets like Toronto, Vancouver etc and try to ride the wave up and then sell to try and make a quick buck. This is not investing….. This is gambling and hoping that the market continues its climb.
I stay away from these people and the markets their in. It is tough to find an awesome cash flowing property but they are out there, just not in Toronto, Van etc.
I know you are excited about lithium and demand seems to be increasing. The problem I have with being too aggressive buying in stocks like TNR etc is that China’s BYD has stated that the iron battery is much better than lithium and costs much less.
here’s one article for your perusal:
http://green.autoblog.com/2007/10/09/chinas-byd-automobile-to-make-hybrid-next-year/
what I have learned over time is that being a business owner (LTD) and investing in selective real estate in certain areas have made me my money. Stocks have hurt me as well as so many other people and perhaps thats why these investors I know are now 55% in real estate 30% in gold, silver, oil, lithuim, iron (minerals), bank stocks and 15% cash.
Your thoughts?
“I am sorry that you pissed all of the money away that you should have saved by renting, as opposed to buying…..oh……wait a minute……I take that back.”
Heh. Exactly. We don’t regret not buying because we’ve amassed the difference and more in savings. Takes a prudent renter to ACTUALLY make it worthwhile.
Hope to meet all the Calgary blogdogs the end of March. There seems to be a lot of us! We should wear name tags.
#133 jim on 02.24.10 at 4:14 pm
Now what the future holds noone knows but one thing is for sure, the logic of the renters in Canada has failed miserably. We are the LOSERS. I come at this problem from the perspective of someone who has failed at timing the real-estate market. Someone who is an idiot and overleveraged themselves has done better than me. Why would I act like I know whats gonna happen if Ive gotten it so wrong so far?
A reality check is in order on this site.
************************************
Agree–that no one knows the future for certain,but if you think home prices and growth can continue higher in Canada–after witnessing the largest economy in the world imploding over the last 3 years–with the largest amount of stimulus to GDP “in history” do basically squat–then I’ll take the other side of your trade–
You weren’t wrong–Who could have known the mind boggling amount of money that they threw at this thing?
Buying incentives-zero rates–green shoots–
The sock puppets H&F–
Strong herd belief that the government can fix it-
Give it another year–bet you won’t feel so wrong–
Those that are first–always “look”wrong–
I think many on this board–are looking at reality–
What exactly do you see–that will reverse unemployment and drive our economy ahead?
http://1.bp.blogspot.com/_nSTO-vZpSgc/S2NAwc-6_TI/AAAAAAAAHtc/1UJ1cwCogj4/s1600-h/Residential+Investment.png
http://www.marketoracle.co.uk/images/US_Household_Debt_to_GDP_ratio.gif
http://static.businessinsider.com/~~/f?id=4979e68630b7d9800073dbcd&maxX=400&maxY=308
http://3.bp.blogspot.com/_nSTO-vZpSgc/SfU2C8TIKSI/AAAAAAAAF_U/D_rC5Qwmgbo/s1600-h/Total+Bank+Credit.png
http://2.bp.blogspot.com/_nSTO-vZpSgc/SpWuG563wSI/AAAAAAAAGu4/P68CFKWWkqs/s1600-h/M1+Money+Multiplier.png
http://1.bp.blogspot.com/_nSTO-vZpSgc/SRVLM8Kif0I/AAAAAAAADs8/Ad1Iwf_fPJ0/s1600-h/base-money-yoy-1.png
http://4.bp.blogspot.com/_nSTO-vZpSgc/SRVN4sw-LCI/AAAAAAAADtE/6EYg40HZUfo/s1600-h/base-money-yoy-2.png
Looks can (and often do) deceive.
Slush fund of gold bullion. Is it to be held for WW3?
Comment by wrh.com is better: “Or maybe the Chinese got pissed off about those gold bars with tungsten cores?”
First Greece, now Spain. Spain 2 Yep, it’s gonna blow!
From central and South America’s POV’s, I see their point as the US and Canada are embroiled in wars. If I were them, I’d stay tha hell away from us!
Cancers never quite go away, despite chemo and radiation.
How is CMHC doing?
Pope Oragalls of St. Al says this is entirely due to pig – bird – human – ant flu. Honest!
Even if interest rates hold at their present position, which is unlikely, Dalton in Ontario, will be applying the Supersucker HST tax this summer. Gasoline jumps 7-8 cents a liter that very day. Municipalities are also seriously raising taxes, adding new “charges” and cutting services. They spend like drunken sailors and seem surprised that the province and feds won’t give them even more money to piddle away.
Those who have saved up some cash in the good times will be able to profit large. They won’t have to wait until Christmas 201? either. Keep your powder dry and get ready to pull the trigger!
I especially admire young couples who go contrarian on the granite, luxo autos etc. Their small “sacrifices” today will reward them for the rest of their lives. It’s called survival skills.
A friend was “investing” in the stainless appliances. He was going to let the delivery guys take away his 6 year old, perfectly fine 18 cu ft white Frigidaire.
It looks great in my kitchen. He was all embarrassed when I insisted that he take $50 for it. My wife and I play on the same team, God bless her. She adores her “new” refrigerator, almost as much as her 6500 km., $850 set of Yoko Ice Guard winter tires and rims purchased on Kijiji for $300 cash. (His wife had written off her car 2 weeks after he had taken them off last spring.)
Used is often crap. Gently used and nearly new are gold!
CASH IS ALWAYS ACCEPTABLE. Always has been and always will be.
dd on 02.23.10 at 11:23 pm #2 steve and all basement dwellers …
Get a life. No wonder you other half wants to move out. I too have cash in the bank but I rent a nice apartment ABOVE GROUND. If have to spend a bit to be comfortable.
–
That is absurd. My basement has plenty of natural light and is quite comfortable. The view is also quite entertaining if you like wildlife.
All I could think of when I saw that pic was…..how the hell old is that laptop???…yeah computer nerd i know.
“Seriously, who lives in a house for 25 years any more? — Garth”
24 years and counting. AND paid off.
http://www.agoracosmopolitan.com/home/Frontpage/2009/01/15/03032.html
Canada suffers 34,400 mores jobs losses
“We’re in for a very difficult year,” Flaherty told reporters. “We regrettably are going to have to expect continuing job losses in Canada.
“We are going to have substantial job losses,” he warned.
Job loss, no money for mortgage payments, bank
foreclosures……….Deja Vu!
Calgary Rocks-
Thanks for the info.
#33 – Not only do they not get it, they have horrific taste.
Who’d have thought the number one design/decor trend of the beginning of the 21st century would be the same exact Victorian and/or worse yet, prairie farmhouse style of the beginning of the 20th?
Bleech.
Wunderbar bar graphs. A sincere thank you, Garth, for the economic logos you spread and the highly useful dialogue you inspire on this blog. It’s akin to sitting around jawing in a 17th century coffeehouse.
A house on our block that I have a dangerous crush on sold today. The chagrin faded in minutes and I feel nothing now but vast relief. Sort of like when your kid beats you to the last piece of chocolate cake. Or when your deadbeat spouse leaves for good.
I considered sending the new big mortgage holder (as you know, the bank owns the house) a thank-you card for removing the temptation, but that would be cruel.
The real decision for the couple agonizing over jumping into the housing market now is simple: Do they want to decide their future on facts or by examining the entrails of sheep?
Go with the visual, not the viscereal, people!
If it walks like a duck and it talks like a duck, then it probably is a duck (And YES! YES! I loved the now-infamous duck picture!)
Post#153 Ret. Good post. Just to add to it. Its amazing what people will sell “used” stuff for. I have a set of wheels and tires on my truck that I got the guy to throw in when I bought the truck, thankyou, $1500 free.
I have just got all new solid core doors for my house “free.” Oh those, well I guess you can have them we were going to put them in the dumpster. I don’t like them.
Our first appliances when the wife and I got married cost us 50 bucks, and I had to carry them down 3 flights of stairs.
We got 250 gallons of furnace oil free a few years ago as long as I took the tank.
It always amazes me what some people will discard.
But what really amazes me is what you can trade a case of beer for.
I know you are excited about lithium and demand seems to be increasing. The problem I have with being too aggressive buying in stocks like TNR etc is that China’s BYD has stated that the iron battery is much better than lithium and costs much less.
here’s one article for your perusal:
http://green.autoblog.com/2007/10/09/chinas-byd-automobile-to-make-hybrid-next-year/
what I have learned over time is that being a business owner (LTD) and investing in selective real estate in certain areas have made me my money. Stocks have hurt me as well as so many other people and perhaps thats why these investors I know are now 55% in real estate 30% in gold, silver, oil, lithuim, iron (minerals), bank stocks and 15% cash.
Your thoughts?
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I’m more into the rare earths than the lithiums simply because there’s more supply shortages with rare earths and there’s a lot more uses. So many uses that it’s scary. Again, China owns 95% of the mines and continues to enforce laws on exporting these elements. This is one resource battle that will get interesting in the coming years. No matter where you turn, these elements are needed.
See, you’re good at picking real estate. You’re able to sift through the garbage and find gems. There’s a lot of people that are able to do that with stocks. The problem is: when casual investors are buying stocks in droves, even good stocks pullback. The same goes for real estate. Yes, the action will vary, but you can’t assume that the gem areas will escape unscathed. How many pockets or great areas in the U.S haven’t seen declines? Like many people if the average home is $500,000 in one state and $190,000 in another, I’d consider taking my family to the state with lower prices. It’s this attitude that skims prices off the top of the great areas.
I don’t know, I like to look at things in a macro perspective. Only time will tell how this all unfolds. Maybe you generate ridiculous amounts of cashflow in ways I know nothing about. Maybe in the worst case scenario, your holdings and lifestyle remain steady.
Entry timing is everything for me. There was a blogger on here weeks ago with a great story that talked about a bull market in beef where he was buying beef for $300 and was able to sell them for $10,000 a few years later. Is beef a great buy today? I’m not sure. I’m not going to buy some just because of the run-up it had. A portfolio with 55% real estate purchased in 1995 (in Toronto) is probably great, a portfolio with 55% real estate purchased in 2007 (in Toronto) is bad (in my opinion of course). 15% portfolio in Oil, uranium etc purchased in 2007 might look ugly now, the same purchased in march 2009 probably look great.
I’m very agressive but stay in cash a lot as well. This is why I find Garth’s blog very beneficial as he gives info on the best ways to get sound and steady returns with little effort and activity.
Anyhow, thanks, and best of luck to you.
#2 steve said:
“… my wife has given me until July 15th to make the purchase regardless of whether the market is going up or down…”
I don’t respond well to ultimatums myself, but dude it looks like you’re finished… Even if RE starts sliding today, you won’t see the trough until 3-5 years from now.
As for living in a basement, don’t listen to all the wack jobs here who are telling you that it’s sinister. We’ll see who laughs last…