We’ve all done it. Drive by a house you owned a decade ago. For sale sign on the lawn. You slow, look at the realtor’s number, call it on your cell, ask the price, and guffaw. What idiot, you wonder, would pay that much for it? Then you wish you were selling it again.
Without a doubt, housing prices in cities like Toronto, Calgary and Vancouver have inflated excessively. In fact, to the point where homes are severely unaffordable according to international standards. As this blog tries to remind, asset values never rise without end. Prices always find their mean. All booms end badly. And this market’s overdue for correction.
But how about a longer comparison. Say, a generation or two?
How does an average family’s buying power today compare with that of a family six or seven decades ago? Are the same houses more or less affordable than they used to be? And, if not, how and why are prices continuing to rise?
A day ago I received a delightful note from a woman in Toronto who apparently hangs around here this viral hellhole. “Instead of wasting our precious time slamming our head against the wall, we’ve rented a fabulous big apartment which we got at a steal as it was a renters market and negotiated hard,” she reports. “We have trips planned this year to South America, Vegas, the UK and Iceland. I’m probably taking my Mom on a cruise as well to celebrate her retirement. Better that we are off making memories with loved ones and doing what we love than lining a banker’s pocket. Seriously, your blog was exactly the wake-up call I needed. It freed me from the emotional and very real financial chains I would have put around myself.”
But she goes on to say something more profound, recounting one of those moments which should make us reflect on what we have done to modern life:
“I saw my grandparents old house on Gladstone Avenue in Toronto was for sale. It’s the house my Mom was born in. I wasn’t considering buying it, but I did for one brief moment feel a bit of “what if …. ” It was listed for $429,000 – 3 bedrooms and from the pics, very poky living in it. It sold for $531,000.
“My grandparents were people of modest means and this was their first house. My grandad worked for CP rail and my grandmother worked at home to raise their small family.
“Flash forward 60 years and their dual-income, well-paid, debt free grandchild can’t afford their poky west Toronto semi. Well, actually the bank would give me the money, but that is not affording it.”
It’s hard to see how anyone’s better off when homes are unattainable or debts stretched through an entire adult lifetime. In the last 12 months, Toronto prices have increased 19%. Wages have risen 0%. Household debt’s surged dramatically. Mortgages have crested.
You can walk down Gladstone and touch the same bricks, be shaded by the same trees, as families did a generation ago.
And if you listen closely, you might hear a distant echo of the middle class.
170 comments ↓
Yup…a trip down “memory” lane, thanks to the BoC.
The mismatched roof and paint makes the house in the photo especially appealing.
Interesting isn’t it, I wonder how many of todays Bulls understand that their actions only serve towards pricing their own kids out of the market forever, unless of course they have no kids, if they do have a few then I have no idea how they get by financially in these completely unaffordable areas.
It was nice to see “F” point out on CBC that we never had anywhere near the financial crisis that the US and UK saw, I was praying for the interviewer to ask him why then did we impose the same emergency fiscal measures! sadly Peter Mansbridge let me down on that one.
And if you listen closely, you might hear a distant echo of the middle class.
My wife’s grandfather worked for CN. In the thirties, CN moved his job from Bellevile to Toronto so he moved with it and took a 10% cut in pay. My grandfather had a hard-scrabble farm in Parry Sound. He was able to make economies such as cut his own fire wood and milk his own cows. My grandfather’s generation had to be tough and resourceful to survive. They had to be lucky too.
So today many expect that real estate will bring them wealth. As if it is their right. Take-a-Breather says that real estate would have brought him wealth and maybe it would have but look at what’s happening in the US. Millions are looking at their mortgage and credit card bills and see financial ruin. Ruin without the conditional tense.
Short term there are going to some like Take-a-Breather but long term there’s going to more who lose their real estate and the hopes that went with it.
GARTH,
reading this blog for about two years I am not sure that you are correct in your RE predictions. “In the last 12 months, Toronto prices have increased 19%. ” – SO if prices will be reduced by 20% as you say we will go back to 2008 level. But this is not correction ! I am not getting the point you make. RE should fall by 40-50% to be reasonable to buy.
Pay attention. A price decline of 20% will be an initial event. It could be followed by a gradual loss of much more, as I have detailed. — Garth
Some bedtime reading in case you need stimulus for nightmares -
- Michael Moore, from an interview at http://www.theyoungturks.com/story/2010/3/3/04014/30136/Diary/Michael-Moore-Interviewed-On-TYT-w-Transcript-
…
Old guy on the block is 80 years old bought his house in 1950 for $9000; worked at mill took in a border and paid it off in 1952. He retired as an engineer from the mill in 1994.
The house will be listed soon for $252,000. Its a time capsule. The wiring has been upgraded, to meet code, but that is it. Still uses a combo wood heat and oil burning furnace. You gotta see it to believe it.
According to well-known Vancouver financial planner and media pundit Lori Pinkowski, Canada’s 4 th quarter growth which represents 5% yr/yr puts to rest any lingering doubts that the recession is over. She even stated that it was “driven by the rising housing market.”
Boy Garth, I sure hope you’re wrong. I mean otherwise a lot of people who take Lori’s advice could get hurt, right?
Lori who? — Garth
Why is the old order of GIC’s ending if interest rates will increase?
#3 Cheese Greater Fool,
I am not sure it is the fault of the Bulls. I don’t think in most cases they are malicious or believe they are counselling people to harm themselves. Most of them simply believe prices will keep going up because that is all they have seen for a long time. Others want to believe they will go up because if they fall they will be poorer.
I grapple with this issue all the time. In counselling people to beware the bubble am I acting in my own self interest or not? What is my motivation? I would like prices to stay high so I can sell my own place in a few years for more money. However I came to believe long ago my own little voice wasn’t going to change much in the grand scheme.
Ironically it is probably people who want the market to crash who should be encouraging buying. The greater the pool of new buyers the market bubble grows to its eventual conclusion. The market then corrects further on the way downward giving “Mattress cashed up hibernating Bears” their best opportunity.
My personal opinion, for what it is worth, is that truth is the only approach. Call it “enlightened self interest” but I believe the more people who think twice about taking on too much debt or buying a house they really can’t afford the better off we all are.
We have been badly manipulated by our financial institutions to take on debt that our forefathers would have gasped at. Bankers are the worst criminals of our age. Our politicians run a close second as their protectors and co-conspirators. Our society will not survive unless we call them both out and do something about it.
I pondered the issue
I wish someone would do a study showing the composition of the costs built into the things we buy.
In particular, I want to know how much banking, insurance and lawyer fees are built into things.
At least with the GST you pay the net of the value created along the supply chain, but with these three, they take their cut every single step of the way.
Hey Garth, what time would we have to be at chapters in Kitchener to get seating or standing room? And will you have some copies of Money Road with you? Would like to get 2 or 3 more copies to give to friends. Have been reading you since ” 2015 After the Crash”. By the way you are to valuable for politics. Whatever you have up your sleeve will be better than what “F” and “H” have up thiers. “Then we fight.” Let’s get to it.
There will be lots of room, so see you @ 7. Lots of books, too. — Garth
I think the bloggers on here who say they don’t think home prices in Vancover will drop are not basing their opinions on solid information or evidence of what’s to come. Some, who criticise Garth for his beliefs on RE, are probably afraid of a price drop in their property.
Could an average townhouse possibly increase $90,000 in 3.5 years in Ottawa? This sold for $233,000 in the summer of 2006:
http://www.realtor.ca/propertyDetails.aspx?propertyId=9197336
Time to add Ottawa to the list of bubbly cities…
#3 Cheese Greater Fool
why then did we impose the same emergency fiscal measures!
Because otherwise our dollar would be worth $3.00 USD and Canadian manufacturing areas would make Detroit look the promised land.
I’ve think you’ve eaten way to much cheese and your arteries aren all plugged up and no blood is getting to the brain. Layoff the cheese…. Please.
Garth et al,
I certainly find the current real estate mania and our governments’ fiscal policies disturbing but something happened to me recently that I’m regarding as a possible ’sign the apocalypse is upon us’
I ran into an acquaintance of mine the other day and she told me she and her husband had just purchased a second home – a 6 bedroom property that they are going to rent out to university students.
Now what really floored me was what she claimed their reason for buying was – she said “we were bored”. Yeah, bored, and these are full-time working people raising a family.
Could this really be so, in which case maybe Garth needs to add Boredom to Fear and Greed as the emotions that motivate peoples’ behaviour? Or is it just greed disguised as ‘boredom’?
Man, I don’t know, but I think I hear the four horsemen approaching.
Reminds me of my years growing up in Toronto. My parents bought a row house on Dovercourt Road for about $9K in 1963. No, that’s not a typo – $9000. My Dad was a factory worker back then making about a buck an hour. My Mom was a stay at home mom during the day ( taking care of 6 kids) and worked part-time at night cleaning an office building. Through their hard work and many sacrifices they not only managed to pay off the mortage in 8 years, they also spent considerable bucks upgrading the place. Man, how times have changed!
The story is misleading.
60 years ago,
how many people in Toronto ?
What’s the Dow Jones Index ?
How much per ounce for Gold?
You can buy a house cheaper in Buffalo or Detroit than 60 years ago.
You hit the nail on the head Garth: “Cui bono?” Who benefits from astronomical house prices? The sheeple seem to think they do, but in reality they lose bigtime.
Imagine if every house cost $10,000. You could buy one no problem, never pay rent, never pay a mortgage. You would have so much extra money to enjoy life. Instead, we ENSLAVE ourselves for the majority of our most productive years of our lives to pay for shelter. Insanity I say.
But banks and corporations… they benefit BIG TIME from your self inflicted slavery.
And if you listen closely, you might hear a distant echo of the middle class.
That is the “crisis” in a nutshell.
F-wad and Harper have as much chance of getting a majority as the Leafs have of winning the Stanley Cup.
I hope that’s not the real reason this budget was so pathetic, otherwise those two are not just stupid – they’re evil.
Being a home owner I’m torn, in one hand I hope prices stay some what firm. Yet I hope they become cheaper because I have 12 nieces and nephews from grade 10 to just about to graduate from U of A that will need home prices in a reasonable range for them when they go to buy or rent in the coming years and start there own families.
But how about a longer comparison. Say, a generation or two?
How does an average family’s buying power today compare with that of a family six or seven decades ago? Are the same houses more or less affordable than they used to be? And, if not, how and why are prices continuing to rise?
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Seventy years ago–1940
Average price of a new home— = $3,920
Average family income/wage/yr = $1,725
Average house price to Average wage ratio = 2-1
http://www.thepeoplehistory.com/1940.html
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2010–
Average price of a new home = $315,000
Average family income/wage/yr =$70,400
(assuming no increase this year)
house price to wage ratio today = 4.5-1
http://www.scotiacapital.com/English/bns_econ/retrends.pdf
http://www.muchmormagazine.com/2008/07/average-canadian-family-income-now-70400/
Buying power based on household earnings–has decreased by over 100% from 70 years ago–
And that’s with 2 people working as opposed to 1–
This is what inflation/credit expansion does to us–
And the reason this is possible–is–
because our currency is backed by Fu–k heads–like– Fahlerity and Steve and not by Gold–and–
bankers are allowed to engage in “fractional reserve lending”–
Which means–if we all go to get our money out at one time–it ain’t there–
cool huh
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For the much maligned Goldbugs here–
Found this while trying to sort through the gawd-awful mess–that is– “Statistics Canada” financial data–
Check out the date 1922–prior and after inflation rate–
Seems gold was trying to force deflation on us for our insane military adventures–in Europe–the “great” war–
Seems some Greek Royals cousin was assassinated and the US passenger ship the “Lusitania” was mysteriously sunk and German subs were blamed–for torpedoing it-
Germany–was a kick ass-industrial powerhouse in them days–she was a threat–to the world–industrially–
Definitely worth a war and millions of lives–
Maybe this is a bit too goldbuggish for some here–
1922–Genoa Italy–Word bankers gathered and with the stroke of a pen–doubled the price of Gold to pay for WW#1–which increased the world money supply–by 100%
The first manipulation of the great “Gold Standard”
The new money supply and the new access to margin- kicked off the Inflationary “roaring 20’s”
Stocks were trading as high as 100 times earnings–until-
1929–then–well–ya know
And here we are again–same shit–different pile–
If you want to find the answers to why–we have these horrendous boom bust cycles–
where only the bankers win–
read about the history of Gold–
(real cloak and dagger stuff)
for the folks who like thrillers–
Some great books–
Gold Wars–Ferdinand Lips
Goldbug–formerly (The invisible crash) Jim Dines
Oooops–the link for goldbugs for the above drivel–
http://canadabubble.com/charts/521-canada-inflation-rate-history.html
“On progress . . . You can walk down Gladstone and touch the same bricks, be shaded by the same trees, as families did a generation ago.”
The more things change (progress), the more they stay the same (stay put). Confused? It’s an upside-down, inside-out and back-to-front wacky world!
——
Damn I luv conspiracy theories! May go with the gold / silver link. The latest concerns the rebirth of the Amero, backed by Cdn. and Mexican gold.
With Fort Knox supposedly being full of emptiness, they would have no choice but to use other countries’ resources to bring it into effect.
In order to do that quietly, quickly and efficiently, the govts. have to let US troops have free access to their land (US and Cdn. troops already switch countries).
This brings in the NAU, which may be done away with, but is there a bigger elephant to replace it with?
This may have something to do with the link I posted on the previous thread about the UN minting new gold and silver coins as the new one-world currency and from another link — that of “Are the elite losing power in America?”, it implies that power (at the present time) is shifting back to Brussels and further, that it is heading back to China.
In any event, the Americas are pretty much gonzo. Not much to see here, just a little teaser — stock up on gold and silver coins!
Smart ideas starting to blow forth, but the elite won’t like it — they WANT countries broke, to demoralize people. Then they use their (former) wealth and resources.
A-H1N1 — This may be The Full Monty. False flags have to start and happen somewhere!
Empires — Canadiens, Maple Leafs, Canucks etc?
Re: the ‘quakeshakes over the past two days. Japan has cozied up to China recently; guess that’s why the Japanese automakers have suddenly come under a range of problems.
From YayaCanada, a para. (following the maps) says it better: “You can draw a straight line from Wash. DC that will go through Miami, but you can’t extend it all the way to Port Au Prince, Haiti (earthquake Jan 12/10), and then to Chile (earthquake Feb. 27/10).”
Combined with the ‘quakeshake program from below, these come from above.
What happened to the middle class, I wonder? What happened to the days when one parent could stay at home with the kids while the other went off to work to pay the mortgage on the SFH in a decent neighbourhood? They didn’t know how lucky they were! These days it’s such a sad life, 2 parents working to pay the mortgage, kids in full-time daycare (well, I guess they don’t really need a SFH since they’re only there to sleep and eat one meal a day anyway!) But doesn’t anyone notice that somewhere along the way we’ve lost our standard of living, in return for working longer hours, buying more junk at the mall and putting your kids in daycare for 50 hours a week? Hello? Anyone notice this? What a terrible way to live. But I’m only 30, what do I know anyway. I guess this is how it’s supposed to be in our consumer-driven economy.
screw F …. screw H …what was the phrase …. ahhhh yes……..” a fool’s paradise” …I’m Out………..fellow Canadians … pleaseeeeeeeeeeeeeeeee bring me back
an infamous us bank robber was once asked why do you rob banks . In a puzzled look he answered …. because that’s where the money is . Garth I know you said we would see municipal taxes go up in a big way ,well how about 19.99 % welcome to the future .
http://www.bclocalnews.com/news/85742407.html
Garth, do you have any idea on average mortgage sizes of people across the country? I’ve been trying to find those numbers out for some time.
Progress? With our current PM ruining our international reputation with the intended torture of Afghan detainees how are we progressing as a nation?
Harper’s govt has censored the documents relating to Canada’s treatment of the Afghan detainees. He suspended parliament to avoid the issue, despite the fact we are in the worst recession in over 20 years. He claims he did this to ‘recalibrate’ What did he recalibrate?
Federal Govt documents suggest that Canadian officials wanted some Afghan detainees to be tortured to gather intelligence. If this is proven true, then some Canadian officials will be guilty of war crimes and Harper is doing his best to cover this up.
Looking at my home town in England I came across a link with help for first time buyers. Info on Morgages @ 6X earnings and 50year terms. I think it would be a good read for the blog dogs like me.
http://www.findaproperty.com/displaystory.aspx?edid=00&salerent=0&storyid=10482
On the radio I have been hearing this “cutesie” retire your ride propaganda commercials that we the tax payer are supporting from our dollars being spent by the powers that be… it is bad if you drive a vehical made before 95… the planet HATES you for your choices… BLAH BLAH BLAH … just more make you feel bad for having no car payments and the govt. will “help” you retire your ride… does cash4clunkers (scam) come to mind?
Germany said today that they won’t be helping to bail out Greece…. hmmm interesting… and I see that the UK is sinking real fast in failed bonds and their long terms are being dumped, not to mention that their debt loads are catching up to the spend now and pay later plan… Then Mr. Blair is still on the hot seat defending his stance on “let’s bomb Iraq” I wonder if he would go there today if he was asked to “help” all over agian. (sure he says he would, however, my money says not)
Funny the propaganda that fueled WW2, we have to stop the germans (after they invaded poland) however, you hear no we have to stop the US after they invaded Iraq, afghanistan, Iran?… piss off enough countries and see what happens… war on terror? or a smoke screen to invade?…
All empires will crumble given time…
“Economic Recession, Depression, or Systematic Breakdown”
http://www.marketoracle.co.uk/Article17665.html
cheers
You hit the nail on the head Garth… it’s all about enticing the middle class to decimate itself with unconscionable debt, and thereby causing it to self-destruct and no longer exist.
All by themselves. All they had to do was just say “NO.” to “free” money.
IMHO, the best post in recent weeks.
Has real estate really increased in value, or, has money become worth-less?
Great line -
And if you listen closely, you might hear a distant echo of the middle class.
#6 I heard a speaker in my profession the other night he is from Detroit. Still in cash. Thinks that cheap money is whats inflating the markets. Just like the RE market a few years back in the US.
#9 Because people have no foresight. Same as borrowing for 35 years because they can afford the monthly payment.
At least someone gets the difference between ‘the bank would give me the money, but that is not affording it.”
The RE market will revert to the ‘norm’ of affordability. But it won’t happen overnight like everyone seems to think.
Well, the desperate governments will stop at nothing to glom yet more out of their subjects…
Canadian “money” is about to become plastic. And one- and two-dollar coins (already zinc-coated steel or somesuch…) will be even more debased.
I dare the governments to restore silver to the coinage. But they don’t dare…it would revalue their legal tender paper and steel crap to its intrinsic value: ZERO.
Bring back the five-cent silver piece!
http://www.vancouversun.com/news/story.html?id=2646262
affordability is an illusion. david miller is an advocate of affordable housing. my bell bill is not affordable. the elite have kept rates low to crate the illusion of affordability.
if and when the present world war (against Muslims) ends, interest rates will go through the roof
Here’s a good example…
Bought my first house in 1990, shack in South Etobicoke with no basement on 30×100 lot, all original 1920 40amp knob/tube single pane with 1950’s floor furnace, 700sq feet, for $90K.
Sold it in 2000 for $170K, with maybe 10K of DIY renovations.
The buyer, sold it in 2007 for $225K to a flipper, who lightly renovated it and sold it in 2008 for $309K. Still no basement, across the street from CN tracks that shake the house (since it’s sitting on big concrete blocks, I still remember the “Tuesday 2am’r”).
Who knows what it would go for now, but this place should never have gone over 200K for what it is.
Does anyone remember when the ZENN car met all safety regulations in the nation to sell their electric cars in all provinces and the government of Ontario absolutely refused to allow it.
Here is one reason…
http://www.financialpost.com/news-sectors/story.html?id=2618186
zenn car: http://www.zenncars.com/
A old banker I worked with, who worked with CIBC overseeing mortgages in head office said he never made a car payment as the bank gave him a car allowance (crown victoria) and gas card; he had this benefit from 1974-1999. Upon leaving the bank he was given the option of taking the car for $100 as it had 300,000 km’s on it. He bitched and moaned constantly for a full 5 weeks of owning it, he traded it for a used pontiac sunfire, saying “how the hell do people pay for this! For crying out loud, I had more disposable income in 1981 than I do now! What the hell is wrong with this world..blah blah blah…”
I had no sympathy…
Its about time we let the “american dream die”…the whole notion that if you work hard you can have a house, two cars, two kids, white picket fence and golden lab!
Its about time we evolve. Creating jobs by going green, Electric cars, wind turbines, high speed rail, energy conservation, enviromental conservation, you know clean up the mess!
http://www.winnipegfreepress.com/business/breakingnews/daewoo-to-build-wind-turbine-components-at-mothballed-nova-scotia-plant-sources-85225122.html
However, this will not be possible until we have a paradigm shift in the fundamental thinking of those that hold the power to make; or better yet ALLOW, and more importantly encourage the shift to happen.
These numbers look a bit bubbly to me–
http://4.bp.blogspot.com/_nSTO-vZpSgc/SvOw6g6QcDI/AAAAAAAAHOo/QdUEQqKw_Fs/s1600-h/canada+residential+mortgage+credit%25.png
http://2.bp.blogspot.com/_nSTO-vZpSgc/SvOv9qw-F1I/AAAAAAAAHOg/CCTcBgz69t4/s1600-h/canada+residential+mortgage+credit.png
If Gates and Buffet get their way, there will be a glut of houses.
http://www.financialsense.com/editorials/engdahl/2010/0304.html
“Centralizing”
…Eliminating/Closing Down/Replacing all three positions of a Private Sector distributorship outlet in London Ontario with one position in Toronto branch.
Are equivalent Govt. Services the next step?
Hence, London R E $$$ going nowhere…TO remaining buoyant because that’s where the jobs are?
Nostradamus jr.
Garth
Relative to Toronto where are home price values in major manufacturing cities of Germany, UK, France and Belgium?
Anyone have these statistics?
It is just sad. That is all there is to say.
41 goldenfox on 03.06.10 at 9:58 am
If Gates and Buffet get their way, there will be a glut of houses.
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http://www.youtube.com/watch?v=GPIRzu14viA
http://www.cbc.ca/politics/story/2010/03/05/flaherty-crown-assets.html
We don’t like crown corps, its too much work for us! Everything must go!!! Big sale in Canada beginning soon! All international bidders welcome! Its too much work, we’re a really great government but we can’t run a corporation to profit so everything must go!!! (What a bunch of bums)
#136…thank you….I realize that for many I am “extreme” in my views…but that in fact is how large scale systems actually work in the end….at the extremes. People in the developed nations have completely lost sight of how the “real world” actually functions. having been buffered by cheap energy for 150 years and having had relatively tough financial regulatory institutions from 1940 to 1990s people actually have come to believe the BS about “steady cycles of economics” or even better..that Keynesian economics is based upon something other than a pipe dream.
#39…your proposals (while I AM sympathetic to them) will never work in the end exactly because of the above “realities”. The free ride of energy is OVER and it was the steady table upon which we constructed our little house of cards (CDS, ARM, the entire paper dollar edifice).. Anyone notice the price of oil lately?….it is above 80 per barrel in the greatest economic downturn in history (yes I said history) The greatest superpower on earth is now so far in debt that they are finished along with virtually every other “developed” nation. The lifeblood is being turned off…..and please do not give me the nonsence about this being good for Canada.
Canada will not run an entire economy on the oil patch…esp when the rapidly cycling prices of oil (up to 100 then drop to 70 then back again) will prevent stable economies to solidify…take note Alberta!
In the next 5 years the Americans will enter the abyss…..with unemployment rates well over 30 percent and debt to GDP ratios of exactly 1 they will implode as a nation…..and Canada will follow them in.
If you want to envision a world as it will exist in 20-30 years hence…read “A World made by Hand” by J. Kunstler…as a best case scenario….
As a worst case…if we follow our human natures, with history as a guide……Go see “The Road” by Cormac McCarthy
Garth,
Love the blog and the book!
I live amongst the craziest of the crazies in Vancouver.
I would like to hear one of your talks. Are your touring days coming to an end?
I see you are in Kelowna next week, should I make the trek up to catch you there or will you be back to Vancouver again?
In May. — Garth
Wishful thinking,
If you believe the 3:1 rule (stats Can average household income; 70k x 3) will ever apply in this crazy real estate market, dream on. So that Gladstone semi should sell for 210K, not happening. Most suburban homes have 200K parked in their garage/driveway. Listen I feel for this post cause I can relate, I was born & raised in the same simple hood. Shout out to all the crew from B&G club. We can all argue “what it’s worth” until the cows come home. Oh yes it’s only worth what someone, I mean greater fool will pay.
http://www.yattermatters.com/real-estate/shining-screams/#more-11429
check it our garth
listings vs. sales continue to surge in couver
in the fraser valley there are ove 7 months of inventory
perhaps the crash is setting up to crash the party early?
We can totally relate to this post. I am just about to turn 30 and we both have good paying jobs no kids no debt and are very good with our finances. We sometimes feel the pressure from the older generations to buy a house…etc. We have recently sold our townhouse in Kelowna and no one seems to understand why we are renting now. We were lucky to walk away with our shirts on the sale of our old place only due to every weekend for the past two years visiting home depot. In the end we didn’t make any money and we won’t get our weekends back. Now instead of living in the ghetto of Kelowna (yes there are ghettos). We are living in a very upscale neighborhood with way more space and free time. When I was rental hunting it was amazing the stories I heard and the many choices out there. I looked at a 850 square apartment that was desperate to rent to us for 1,000 a month and at that price were losing over 600 a month and could not sell since they bought when it was 50,000 more a few years ago. Anyways, we are going to Europe this summer, and loving being free of strata meetings and daily trips to home depot. Oh yeah and not owing a bank 400,000 + makes for a restful sleep.
@#41 – goldenfox
Wow, that’s one of the best tin foil hat conspiracy theories I’ve read in a while! Talk about taking someone’s words out of context.
Gates was not talking about using vaccines to reduce fertility and he was certainly not talking about eugenics. Gates was saying what most NGOs say: improve healthcare to ensure that people live longer, healthier lives AND make sure people, particularly women, have access to birth control so that they can control how large their families are.
We’ve seen it across the Western world – when women can limit the number of babies they have, they do, especially if they believe that the babies they do have will survive to adulthood (so you don’t need to have lots of children to ensure that some survive). Gates is saying “let’s make sure that people in developing countries have the same access to health care and birth control as people in developed countries.”
I don’t know who this “F. William Engdahl” guy is, but if that article isn’t satire, I suspect he was dropped on his head – repeatedly – as a child. And I say that charitably, since I find it hard to believe that anyone can seriously argue that improving the living conditions of people in the global south = eugenics.
Looks like it’s 4x annual income. You can find this ratio now in Canada no problem.
So, when you go back to getting paid 1$/hour then you can get your Vancouver house for 10Gs
#8 Patz – The only reason why Lori Pinkowski might be well-known is because she has her reptilian face plastered on the back of Vancouver buses.
I’m curious to know why there’sa shortage of lisings at least this is what I’m hearing??? I would have thought people wanting to make a move would be in a hurry before the changes take place. Maybe the changes coming are not serious enough to cause a panic of buying and selling??
Maybe something else is going on like builders holding back so as not to create a supply/demand imbalance???
Anyone have any thoughts on this?
I live in the lowermainland/Vancouver area
#26 pricedoutfornow
- Great comment! Agree with you 100%. The lifestyle of the ‘middle class’ has changed profoundly in the past few decades or perhaps as Garth suggests vanished.
As the saying goes: People today are so busy making a living (to buy stuff and pay mortgage on house and then take trips – financed by HELOC to temporarily cheer themselves up because they are so stressed and depressed about their jobs and how much they owe on their mortgages) that they forget to make a life.
And it does seem to me that over the past few decades the love affair with status housing and the affordability or lack thereof of the family home has been the key determinant in the success or failure of the average ‘middle class’ family’s financial life.
This dual income Toronto woman is one of the few that has resisted the constant temptations offered by the evil banks through every type of advertising media there is. She is among a small minority of young people that will likely make out very well once this borrowing orgy subsides and the titanic debt-loads take their toll.
8 Patz – do you have a link for this quote? Here’s her
website
http://www.pinkowski.ca/
…and ten years later …those balloon payments haven’t burst,the user fees never materialized ..SO who really made the mooola here? so why would a city want to merge with that city?
“RIM Park was a lesson not just for the City of Waterloo, it was a lesson for all of Ontario,” Mavin said.
The Municipal Act was changed to forbid cities from borrowing money in ways to keep the debt off the books…
…The city has several lawsuits on the go and refuses to make public how much it is spending on legal fees, in part because the fees may cause some people to call for a halt to the lawsuits…
The payments started in March 2002 at $74,746 a month. The monthly payments increased steadily. Currently, the city pays $396,205 a month. The monthly payments are scheduled to increase in stages to $647,442 a month in the final year of the deal—2031.
The city took out $14.1 million from Waterloo North Hydro and invested that money. Along with some additional contributions, that fund will produce enough money to pay off that extra $31 million in debt come 2031.
“Our debt service costs are about $5.8 million a year just for RIM Park,” Mavin said.
“President Obama created National Commission on Fiscal Responsibility and Reform.
The prestigious 18-member commission will study and recommend ways to whittle down the $12 trillion debt the federal government has amassed.”
Obama – created $12 trillion debt.
Obama – created commission to study the debt
Commission created more debt by wasting taxpayers money.
Obama – typical soviet Politburo Head.
USA will be vanished exactly as USSR.
Very soon.
Hi Garth;
here is an example of the true effect on the real economy the so called recovery is having here in the energy hub of new Brunswick:
http://www.cbc.ca/canada/new-brunswick/story/2010/03/05/nb-saint-john-costco-jobs-400.html
We really would welcome a visit from you someday.
#55 April,
There is still going to be new listings and activity through the next 6 weeks. However most of the potential buyers have already acted.
May and June will be very slow – IMO.
My parents had a house in the beaches but the sold a bit too soon….in the 60s!!
Man, what that would be worth now.
Does anyone know of some recent -2009 – articles on wrap/pooled funds. All I can find are articles from 2001 or thereabouts. Maybe my search capabilities are lacking.
My friend RE agent just sold old house in Etobicoke – the house was listed for $ 405k, after multiple offer war it is sold for $ 466k today. The house is about 50 years old, needs renovation.
PS to my previous post. Most of the articles that I have read seem to state that most mutual fund portfolios are likely to be cheaper/or comparable to wrap programs. Any comments or suggestions re links to investing web sites that I could check, ask questions. TIA.
Here is a good history lesson and proof that things don’t always appear as they seem. For those who question why the middle class are being wiped off the face of the earth, for the answers all you have to do is look back in time.
here is a book review, X2, and a site where you can download the entire book for free and read at your own leasure. (it is worth the jouney).
“The Bubble That Broke the World”
http://www.marketoracle.co.uk/Article17708.html
download it here.
http://www.generationaldynamics.com/cgi-bin/D.PL?d=ww2010.i.garrett071009
#30 Tom on 03.06.10 at 2:14 am
When I first heard the Afghanistan detainee story break, I didn’t give it much thought. So some Afghanistans got tortured, it wasn’t us, a new government breaking into the scene made some mistakes, no big deal.
Then Harper prorogued parliament to bury the story and I thought, with the Olympics being held in Canada its not wise to deal with this kind of exposure. Right or wrong, however negligent Canadian elected officials have been on the issue, its likely better for Canada to have this issue delayed. I wouldn’t have gone through the lengths Harper did proroguing parlament to do it, but I thought he was doing this to goad the opposition into calling an election that with the media behind the Conservatives, would win and possibly win a majority. They are after all, running out of time so the move to prorogue was politically motivated in an attempt to force an election and try winning a majority. The credit expansion in housing is on its last legs and its truly a matter of months now before the economy turns to credit contraction and all it harbors and the blame game begins so Harper’s time to pursue the brass ring is short.
The story in this link changes everything I’ve thought to date thus far concerning Afghanistan:
http://www.cbc.ca/canada/story/2010/03/05/afghan-attaran005.html
The accusations are ugly and dire to Canada’s reputation going forward if true. A clip:
“Federal government documents on Afghan detainees suggest that Canadian officials intended some prisoners to be tortured in order to gather intelligence, according to a legal expert.
If the allegation is true, such actions would constitute a war crime, said University of Ottawa law professor Amir Attaran, who has been digging deep into the issue and told CBC News he has seen uncensored versions of government documents released last year.
“If these documents were released [in full], what they will show is that Canada partnered deliberately with the torturers in Afghanistan for the interrogation of detainees,” he said.” – CBC
This now reeks of a coverup. The damage Canada might take over this internationally could be immense if its true. Think of it. The Olympics was just held in a nation that partnered in terrorism. Thats most obviously not good for our reputation. Its the kind of thing that chops a tourist industries take by 20% (just guessing, but its plausible). Whether or not its relevant, it could also seriously impact trade. What will even be worse is if voters reward a government that participates in terrorism like that with any kind of governing authority going forward. This is a government that is going out of its way to make us all look like complete fools.
Maybe I’m already jumping to conclusions prematurely, but after reading this link, its time to see if indeed, Canadians are fools. If the allegations prove to be true, Canada will need an election very quickly. Canadians should make ready. The next election might not be based on the economy going forward but rather, who actually has the moral authority to govern. There could be a lot of red faces before this one is over.
This is a message from The Other Side. (I wish I had the geek knowhow to insert the old Twilight Zone music right here. Or maybe the theme from The Prisoner.) Anyhoo, I left the so-called security of the urban middle class some years ago without a qualm. It’s not so bad. For one thing, if you’re playing things at the low end there are many interesting tax write-offs/credits still available. to Canadians who make a low income. It’s all about staying below the sightline of the
I speak from a unusually secure perspective (my landlord is an ex-biker with buddy ties to the Angels). But no one is safe in an urban environment during troubled times with the miniscule exception of the very rich or very connected (same thing).
There is no middle class in troubled times. It makes no difference if you have three graduate degrees under your belt or if you didn’t manage to crack grade 11. You’re poor. Or you’re rich. Things get down to US and THEM right away.
Society isn’t going to end. But it IS going to be different. At any rate, what I’m trying to communicate is don’t hunker down in the palace with your arms over your head when things start to unravel.
The only worthwhile measure of intelligence is adaptability.
And now turn to page 28 of your history book, students. We’re at line 45, under the heading The Great Depression:
Enough is as good as a feast.
Use it up, wear it out, make it do.
Never put all your eggs in one basket (Garth already taught you this one)
If you want it, but you don’t need it, then for god’s sake don’t buy it (this is one of mine).
So stay loose. The only useful measure of intelligence is adaptability.
By the way, readers of this blog might want to consider stockpiling in earnest if they haven’t done so already. We got word last week from a number of our suppliers that U.S. growers curtailing their crops for the upcoming season. I can guarantee food prices are going to be right up there with hydro increases in another six months.
Gibbled copy, I just sent. Sorry. But the meaning is clear enough. The computer age hates lefthanders. The submit button is always on that side and it’s easy to goof up and hit it while you’re typing.
All we have left are ilusions…such as the illusion of middle class. Just because the banks with the blessing of gov’t helps people into a lifetime of debt to purchase a starter home doesn’t mean people can afford it. The letter is a perfect example of what middle class was decades ago, and why it is gone today.
It is like the illusion of democracy. Just because we have a vote, it doesn’t mean policies aren’t rammed down our throats whether we want them or not. The middle class is history and so are representative governments. All that are left are illusions.
MSN covered the Afghanistan torture story. CTV (Conservative Tele Vision) is unsurprisingly silent. Its effective propaganda, unquestionably. Don’t report it and maybe people won’t notice.
http://news.ca.msn.com/top-stories/cbc-article.aspx?cp-documentid=23587604
You can blame the bankers and RE agents all you want, but it’s our own damn greed that has got us in this mess. Obviously, there are many that aren’t but the collateral damage affects us all.
Governments should also be held accountable. They are suppose to act as referees. To ensure people don’t get hurt and play fair. I suppose much like in a hockey game.
So on this count I feel our present federal government has failed miserably.
The BoC is in a box. If they raise rates aggressively it will drive investment into the Canadian dollar and our dollar will spike higher. This will smother most export business and kill the housing market, which has been juicing Canada’s GDP for the past year. It would send Canada back into a severe recession. All this would be happening while 17 medium to large countries devalue their own currencies and default on their debt. Main customers for our exports like the U.S, U.K and most of Europe would no longer be able to afford our products due to the currency valuations. This would be akin to a business raising its prices while its customer base loses their jobs. There is no way this can turn out well for Canada. Carney would have to begin to use quantitative Easing (bank speak for printing of money) to try and reign in the currency. Since currencies world wide are fiat this would turn into a competitive race to the bottom for all currencies. Either way this is not good and the world is heading into a global financial meltdown. A new world reserve currency will be crammed upon us by the IMF when everyone is on their knees begging for a solution. And the final transfer of banking power will have been handed to a small group of unelected official stationed out of Europe. The biggest EL Scammo Wammo will have been accomplished.
House rich …. cash poor …. a recipe for disaster.
We live in a consumer economy. If all the disposable income is sucked up by one commodity. All others will suffer.
GDP is rising 5% over last year at this time But, last year at this time the housing market had just gone through a sobering “correction” in prices. Only the emergency slashing of interest rates turned the market around. We need to compare GDP numbers over a 5 year period to get a better picture of what’s happening. Now, its not so rosy …… It’s interesting how the newspapers trumpet the news that Ford car sales were over 17,000 units last month and they have replaced GM as the top seller in Canada. Well GM used to sell over 22,000 cars a month in Canada. They sell roughly 13,000 per month now. Isn’t all this back slapping a little premature?
US job losses have slowed, but they are still around 10%. Thats like the first mate telling the Captain … sir, we sealed the hole and the water has stopped entering the ship … but, the entire ship is now under water”. All those unemployed Americans are a huge drag on the economies of all the states in the rust belt, California and Florida.
We are an exporting nation. Canada’s economy will continue to depend on growing debt until the US gets their economy in order. If this latest budget is any indication of where the Government is heading. A lot of public employees better start polishing up their resumes.
For generations the basic rule of thumb has been …. 1/3 of the household budget should be housing. I pity that Aussie nurse who has devoted 80% of her income to mortgage payments. Her house is her life. Sadly, this scenario has been repeated over and over again in Canada too. What a crazy situation we have created for ourselves. It now takes three incomes to afford a basic house in Metro Toronto, Calgary or Vancouver. The low interest carrot has attracted a lot of willing victims to the slaughter. It’s an outrage that the Government of Canada has endangered the future of young families across the country for a few nice headlines.
We live in a false economy built on debt. Personal, Government and more and more business debt. Tax breaks for new machinery are nice, but if you’re into the line of credit to pay day to day expenses and payroll. No tax credit can help you now. Any company finance manager will tell you …. It’s completely unsustainable.
Evil blood sucking Royal bank… not only do they charge me about $5.00 a month for having a bank account with them but they charge me $15 for every international deposit.
#6 Herb — Great link. This is what sheeple don’t even know or realize — TSHTF is moving slowly, but there is no comprehension of what is around the corner, which leads to . . .
#16 City with a woman’s name — “. . . I hear the four horsemen approaching.”
See Herb’s link — self-explanatory, but you are correct.
#32 kc — “. . . stop the US after they invaded Iraq, afghanistan, Iran . . .”
These posts are all related, as all cost money (lives don’t matter anymore). bin Laden is still a little bit dead (kidney failure in Dec. 2001).
#39 throwstones — “. . . Its about time we let the “american dream die” . . .”
It is dying very quickly, and evolution? Yes, the lifecycle will evolve and leave a lot of pain in its wake, esp. the greedy ones. Eventually the cycle will shift to China / Mongolia.
All top-notch posts. BTW, radio stations, pawn shops and newspapers here in Kelowna are aggressively advertising for people to trade in their GOLD knick-knacks for instant cash.
Taxpayer and anyone else interested: as far as I’m concerned Lori P is just another self-interested pumper trying to squeeze every buck possible out of RE and equities. My post #8 was tongue in cheek (couldn’t you see?)
The quote was verbal on CKNW last Fri. where she has a show presumably giving ‘free’ advice but is really just a commercial for her services.
Anyone who can’t see bubble in 9X median income is certifiable.
“You hit the nail on the head Garth… it’s all about enticing the middle class to decimate itself with unconscionable debt, and thereby causing it to self-destruct and no longer exist.”
Exactly, one has to look no further then the USA, with real estate in the toilet and jobs shipped to the offshore sweat shops. Is it more then a coincidence that the Governor of the Bank of Canada is ex Goldman Sachs, while we have the lowest interest rates in history?
Harper and crew decreased taxes and created a fiscal crisis that they will use to slash public services, especially with a majority.
Those who ignore history are doomed to repeat it. Try not to be one of the “Sheeple”
#22 Popeye,
Exactly how I feel man. I like the fact that I have built up some equity in my home, but I have far too many friends and relatives that cannot comfortably afford entry level housing here in Edmonton. I would definitely like to see the prices come down substantially to improve the affordability for those sitting on the sidelines. We need to push the Real Estate Reset button. Sadly, a lot of innocent people are going to get wiped out during the reset.
I don’t have an official link from the government website for this, but Canadian Mortgage Trends is reporting that the change from F that requires borrowers to qualify at the 5-year fixed rate is going to be the POSTED 5-year fixed (not the discounted rate).
http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/03/breaking-news-posted-is-the-new-qualifying-rate.html
So, anyone who doesn’t qualify at 5.39% (current posted rate at the Big 5) won’t be able get a mortgage, even if the real rate is the 1.85% variable.
#26 Pricedoutfornow,
Well said. Two incomes is now the only way a lot of families can make do. My mom probably took 10 years off to raise children full time and my dad’s average job was enough to cover the bills and pay the mortgage. Fast forward 20 years later and this is no longer an option. We have become slaves in a prison without walls and so very few even recognize it. Ironically, a lot of people would describe this very same trend as a sign of progress.
jr said
( http://www.greaterfool.ca/2010/03/04/skin-deep/#comment-64475 )
“We are in a–global competitive currency devaluation–
If the US prints 1 trillion –we must print an equivalent amount based on GDP–
Would be interesting to hear-how-we might decouple from this–
The tail (Canada) does not wag the dog (US)”
—
How to decouple you ask.
How about returning to a sound currency, as Canada had from 1938 until about 1974 (when the federal debt was 18 billion dollars).
The same sound currency that paid for WW2, the Transcanda Highway, the St. lawrence Seaway, The Canadian National Railway, the public medical system…all the generationally paid for infrastructure that has and is being sold off to pay the usury on our debts.
It would involve the government having the sole right to creat our currency and credit as stipulated in section 91 of the constitution, combined with the
simultaneous cessation of fractional reserve banking in Canada (the creation of credit from thin air at compound interest). Please understand that there is no objection to a bank that loans it’s own money, or even that of it’s depositers, should they agree.
“Banks create money. That is what they are for. . . .
The manufacturing process to make money consists of
making an entry in a book. That is all. . . .
Each and every time a Bank makes a loan . . .
new Bank credit is created — brand new money.”
Graham Towers, Governor of the Bank of Canada from 1935 to 1955
I believe that it was best said by the former Prime Minister under whom the publicly owned Bank of Canada came into being.
“Once a nation parts with the control of its currency and credit,
it matters not who makes the nation’s laws.
Usury, once in control, will wreck any nation.
Until the control of the issue of currency and credit is restored to government and recognized as its most sacred responsibility, all talk of the sovereignty of parliament and of democracy is idle and futile.”
William Lyon Mackenzie King
(1874-1950) Prime Minister of Canada
Powers of the Parliament
91. It shall be lawful for the Queen, by and with the Advice and Consent of the Senate and House of Commons, to make laws for the Peace, Order, and good Government of Canada, in relation to all Matters not coming within the Classes of Subjects by this Act assigned exclusively to the Legislatures of the Provinces; and for greater Certainty, but not so as to restrict the Generality of the foregoing Terms of this Section, it is hereby declared that (notwithstanding anything in this Act) the exclusive Legislative Authority of the Parliament of Canada extends to all Matters coming within the Classes of Subjects next hereinafter enumerated; that is to say,
1. Repealed. (44)
…
14. Currency and Coinage.
…
19. Interest.
20. Legal Tender.
…
more at http://www.solon.org/Constitutions/Canada/English/ca_1867.html
An honest and sound currency would no longer be open to the vagaries of a floating currency with compound interest that is attached and yet is never created and must be borrowed into existence (at compound interest).
It seems to me that any such currency must be backed by something, if only to curtail inflation of the currency by politicians who want to bribe the voters and the voters who are eager to be bribed.
Clearly, the governments all over the world are heading down the path of inflation. Despite the fact that to this point we have not seen any significant inflationary pressure. What this does is make everything twice as expensive and your wages stay the same or go lower. The middle class becomes the lower class and the high income earners then become the new the middle class. Of course there will be those who are connected (banksters, govey’s, TPTB et al) who take advantage of this paradigm shift with insider knowledge and become the nouveau riche!. Now we can compete with the Chinese and the rest of the world. We just printed ourselves out of the problem, let inflation take care of asset prices and kept wages the same or lower.
Problem solved
Let’s move on to the next cycle of human evolution.
Well I’m totally pi–ed off. The inlaw and his wife just bought a house. Every damn thing I told them to watch out for went out the window.
Realtor, You better make an offer right now there’s another one coming in.
Realtor, You better make it an unconditional offer, no home inspection.
Realtor, make it a full price offer also.
Realtor, don’t have much time we have to do it now, right now.
Realtor , I can get you financed don’t worry.
Realtor, you better buy right now you are going to get priced out.
You guys tell me how in the hell can someone making $13.50 an hour pay a $155,000 mortgage.
Plus property taxes
Plus heating oil
Plus maintenance
But it has a new roof, Really did you lift a couple of shingles, did you look in the attic?
But it has a new oil tank, Does it really or did someone paint it?
Geez I told them too at least make sure they could get some income to offset the bills.
Oh well we’ll see how this story plays out over the next few years, I really hope they make it.
I have my doubts, something tells me its going to be hammer and saw time.
listings in Vancouver have doubled.
saanichtonian, sympathize with you…
Even though what you say about currency, fiat money and the creation thereof is central to an understanding of the current financial difficulties, it will go
—”Whhhheeeeeeee!” S-P-L-A-T—
over the heads of 99.75% of Canadians as well as most commenters here.
They simply haven’t a CLUE, as they play the “How can I best diddle the system and get more stupid over-priced real estate” monopoly game that is such a hot topic of discussion here…
“Canada to switch to plastic bills next year”……..in a plastic credit fueled economy..how appropriate..:-)
#74 The BigLebowski on 03.06.10 at 3:20 pm
**********************************************
I really don’t see a world currency-coming from this–
Or an Amero–
It just wouldn’t fly–imo–
Changing the color of ink at this point would be Political suicide–
The USD will reign supreme as WRC–until it dies–
When? who knows–
Deflation has a positive–not a negative effect on “money” –people find it scarce–so perceive it–
as valuable and will do most anything to get some-(demand)
TPTB (GS) are doing great–they are scooping up money and increasing their power–
They have no reason to change the money system–it’s working great for them–
If currency was changed–big trouble–
Gold would destroy all and any type of new currency at warp speed–
A “seemingly” working–medium of exchange–is all that binds the planet-
We’re all too complicated to be “one”
Besides–if people realized it–if they have some gold–they already have the “world currency”–
Tell me where gold is not accepted–
TPTB have much power–but–only as long as–
we all stay sleeping–
Look at tiny Iceland-Today–the people are giving the corrupt and powerful IMF–the big FU today–
If they’re successful–we should all take to the streets in celebration–
THIS–would send a message–that would be heard around the world–
MSM–says little about it–
Who knows about it?
A few people who spend the time–tapping out messages and questions on blogs like this–trying to become informed–
We’re so tiny–without our herd–and–
TPTB–will try not to wake them–
#83 Sanichtonian, how we take care of the currency issue is to back the Canadian dollar with gold. We would have the go-to currency in the world. Our currency would trade at a considerable premium to world currencies. Gold back currency would make Canada the destination of capital and our house prices would double once again. Of course this would not serve the govey’s or TPTB interest. Printing money whenever you need it is fashionable, covers all mistakes and keeps the population taxed and under control.
If real estate drops, virtually everyone benefits directly or indirectly except those who have recently bought.
Automobile prices have dropped each year in real terms. It is rare that you see an old rusted out car anymore. Everyone has benefited because they can now afford a newer, safer and more reliable car for the same hours of work each month that they were paying for a much older, less reliable car just a few years ago. They might even have a few bucks left over to create some employment in a local restaurant or to put into an RRSP for their old age.
If RE drops 15%, thousands of new buyers will be able to spend 15% less on a mortgage. Rents would also drop by ??%. We would all be better off except for recent buyers. (Boo-hoo to them!)
The 20-30 age group could actually start to save for their retirement/childrens education early or elect to pay off their mortgage years ahead of the current 35 year terms.
A drop in RE prices would be a huge stimulus for the economy and the government would not be paying a dime for it. Current RE prices are enslaving young families and just about guaranteeing that they will never be able to save any money to educate their children or to retire with any dignity.
I am not into conspiracy theories, but you have to wonder why governments in so many countries have let this same RE scenario, arising from the over expansion of credit, happen over and over again so many times in history.
#83 saanichtonian on 03.06.10 at 5:09 pm
In general–i agree–but–like you say–
It would have to be backed by something–
What?
We have no Gold–sure–we have resources–but-
They are not hard–nothing short of Gold and or Silver would work–imo–
And if we somehow were able to obtain the gold–it would likely cause WW#3–because–
It would collapse every not backed currency in the world-as people across the world–sold down their own currency’s and rushed to safety–
This used to happen with the CHF–when it was 100% backed–for awhile–after Nixon cut Gold loose from the USD–
Uncle SAM would not be thrilled and would likely nuke us–but–
I like the concept of it–
#76 Re: Evil blood-sucking Royal Bank
You have options. PC Financial has no-fee banking. Open an account, put some money in it, and see how it works for you. BTW, CIBC bank machines are free of charge with a PC Financial account.
Five homes have For Sale signs on front lawns over the past foortnight — one has sold. The Spring GiddyAirHeads who are intoxicated by a major overdose of The Sunshine Tax.
——
#60 Prophet — “USA will be vanished exactly as USSR. Very soon.”
Indeed. Sooner than most think (and most don’t even think to start), but it also includes this country.
#74 The BigLebowski — “. . . most of Europe would no longer be able to afford our products due to the currency valuations. . . . a competitive race to the bottom for all currencies . . .”
Dare I say a new currency (see first link #25 “Damn” last night), backed by Cdn. and Mexican gold and silver)? The Amero may be having a rebirth.
Could be part of Harper’s agenda in the not-too-distant future if re-elected.
How many are in Canada (other than the leaders of groups)?
About time, for once and for all, Dimona was blown to smithereens. Millions would die, but it end the farce going on there.
Percentages The main thing in the US is that mfg. has departed — as has Canada — and jobs are disappearing even faster. Default is inevitable.
@ #15 DaBull
#3 Cheese Greater Fool
why then did we impose the same emergency fiscal measures!
Because otherwise our dollar would be worth $3.00 USD and Canadian manufacturing areas would make Detroit look the promised land.
I’ve think you’ve eaten way to much cheese and your arteries aren all plugged up and no blood is getting to the brain. Layoff the cheese…. Please.
Thank you for your detailed forensic analysis of what I said. There are things to consider that you don’t seem to have taken into account. One large part of the emergency measures used by the US and UK were bank bailouts, in late 2008 the Government of Canada gave our chartered banks 75 billion dollars and bought mortgages off them (CMHC / taxpayer insured mortgages ), this was “F” said “an efficient, cost-effective and safe way to support lending in Canada that comes at no fiscal cost to taxpayers.” and “H” added that “this is not a bailout… it will cost the government nothing.” So looking at this from my cheese induced state it would seem that the Government gave 75 billion of liquidity to the banks for lending out and at the same time dropped interest rates to virtually nothing, some might compare this to throwing gasoline on a fire in regards to Canadian real estate (what this blog is about). But hey, that’s just me looking on as a taxpayer, I could have it all wrong!
Also, it is worth a mention that in the 2009 budget there magically appeared a 64 Billion dollar deficit, really… just a few months after the $75 billion bank bailouts, hey wait a minute…. naaaaaah must just be a coincidence, right?
One other interesting thing is that “F” knows exactly what the deficit will be in 2015, surely interest rates have a huge impact on deficits, don’t they? this must mean that our fearless Finance Minister knows exactly what Canadian interest rates will be for the next 5 years, it sure would be nice if he could give us a heads up on this, ya know.. for the good of the people!!! Either that or “F” is full of “S” and he really has no idea where the deficit will be either next year or in five years!
Hmm this Cheese is good, much better than your special brownies.
http://boschendal.blat.co.za/2008/06/09/brain-food-cheese-can-increase-negotiating-skills/
#89 jr
The new currency would consist of a weighting of the G20 currency and at least a 15% gold component or nobody will accept another fiat currency. The IMF has already begun talking about diversifying away from such a reliance on the U.S greenback and the opec nations are pushing to start trading oil in a new middle east currency or Euro at this point. Its already happening, this is not conjecture, the move away from the dollar is afoot, its just the media is trying to hide this fact to keep the sheep from panicking. The Fed monitized (bought with taxpayer dollars) 80% of the U.S 30 yr treasuries in 2009. This is because the buyers know they will never be paid back at this point and refuse to participate. The Fed listed the purchases un the title “Household” lol like the average family bought 80% of that long term garbage paying 3%. The takedown of the U.S dollar and the global financial system will be clear to those who are willing to see by late 2010. Suit up and get ready cause the game is about to begin….
I heard the new currency will be tin foil. — Garth
Sorry, but I’m not living in Canada right now. I can’t understand the popularity of the Harper government…who’s supporting it? Which groups? It doesn’t seem to have anything going for it.
If the proles really knew the true state of their economic future I think it would be around 10% in the polls…
8/78 Patz. I found this link for the CKNW audio vault
http://www.cknw.com/other/audiovault.html
I checked the Feb 26 segment – 535 pm. Lori talks about the markets performance, bonds, the US discount rate, all pretty normal stuff. Her “advice” starts at about 545.
She recommends implementing a financial plan, says not to get caught up in hype or emotion, not to get overconfident, and have an exit strategy. Stuff I’m sure Garth would agree with. Maybe not the show you were referring to.
#91 Ret…
What about JOBS! Have you seen the employment rate of Gen X/Y lately?…about 20 /25%
Not to mention their student debt loads, they have to pay off first…and most don’t want to own a car.
78 Patz – found the show you referred to. Lori reports
some numbers – including GDP (mentioning housing in that context) and big bank profits. She doesnt say run out and overpay for a house. She continues with her “advice” on how to evaluate financial managers.
Would you rather she write books and have a blog? Or is it that picture on a bus? Havent seen it, nor had I heard
of her until today.
#10 Junius
I agree with you, I don’t think it is malicious or deliberate either (although some realtors have alot to answer for), I was just saying that I don’t think the current bulls can see past the end of their noses when it comes to the long term effects of their actions.
Many bulls who troll here think we are all waiting to vultch their houses and that makes us horrible and evil good for nothings. I think most posters on here are just looking at the big picture and the long term damage the government and bankers are causing by fuelling this bubble to keep the economy afloat. Garth says that a return to the median is unavoidable and history agrees with him for sure, sadly the more the Government messes in the free market the further it seems we get from history being a guiding force, from now on I think we are all going to learn a lesson with no historical reference.
The next year will be interesting as the major markets are so far away from fundamentals that buyers are now smacking their heads on the price ceiling.
Having been robbed in a break and enter on Boxing Day(Merry Christmas!). I met with the insurance adjuster yesterday to finally settle the claim.
Insurance guy has been terribly hard to get a hold of and he explained to me how his case load has been burdened by a recent rash of owner started fires. I asked what the homes involved were valued at and was told higher end houses at 500k$. He explained how the biggest mistake the arsonists almost always make is the removal of valuable personal effects and pets prior to the fire.
I suppose one could consider this an anecdotal bell weather of over extended home owners?
interest rates will stay low for the next 4-5 years. Low meaning a 5 year fixed under 8%. BOC will not allow housing slump and too strong of CDN dollar. Therefore real estate will level off but will not crash. Incomes will rise over next 5 years to help fill the gap. Too many of you renters in here telling us all how great it is to rent are too funny. Owning a home is much better than renting and you would know that if you had a home.
I have over three million in debt and know that there is good debt and then there is bad debt. I am looking to increase my debt by another 1,000,000 in rentals to i can keep up with all the renters Garth and this blog creates.
#93 blase
PC Bank has given me the worst customer service experience ever, and I deal with a lot of vendors in profession and private life..I eventually had to get the CIBC Ombudsman and several lawyers involved to clean up what was a relatively simple mistake they had made..they simply did not care and their lower level staff are completely useless, whether their own fault or someone elses..you get what you pay for applies in spades on this one
#97 tax haven
There is no credible alternative anymore..if the Libs were in power they would simply implode, which is what happened to the last incarnation..they have no leader that can come close to be taken seriously..we would be in the same pickle, more or less, it would not be any better..
Thank you Junius for responding to my query.
#97 TaxHaven
I am unabashedly a Con right now …for 2 reasons …the Libs have had the inside track in Cdn politics forever and they have consistently screwed the pouch + look at them now – pathetic.
As to the other 3 alts – the NDP, the Bloc and the Green leaves only one conclusion…. we need to give the Cons a real chance and cross your fingers, toes, arms, etc and pray like hell (am not religious) they do more good than harm.
Re: Crazy new buyers – coworker bought a house December ‘09 in East York. He was 30K in credit card debt, then borrowed another $20K off credit cards to buy the 300K house….already regretting it and scheming to dump it. They were perfectly fine renting in the Beaches before, but were seduced into buying.
Regarding Royal Bank:
I refuse to do business with them – period. I went in there in the mid 90’s just to open an account for my pay to go into. They said they’d have to run a credit check on me – for me to trust them with MY money! Just to be clear, I re-iterated that I did not want to apply for overdraft, did not want a loan, did not want their credit cards – nothing…just a plain old bank account. The utter audacity and pompousness of these I went down the road to another bank, with whom I’ve had mortgages, lines of credit, and credit cards since. Since then I’ve dropped by RBC banks occasionally when passing by, and out of curiosity ask the customer service if they still require a credit check to open an account….nothing’s changed.
Bizzaro world.
#101 Cheese Greater Fool,
I agree. If all of this was just about market cycles it wouldn’t get me so fired up. The Canadian market began its decent in 2008 and would still be going down it hadn’t have been for gov’t intervention. Ever since then the gloves were off on this issue because we have been living in an artificially stimulated (or false as Garth says) economy. The bulls always – conveniently – leave this fact out.
My concerns stem from the long term effects of this policy choice. It gave the market a sugar high for 9 months but the end result is going to be a whole lot of debt cavities that will take years to fill. Pure chicken sh** policy on behalf of F and B of C.
#97 TaxHaven … need to add more
I do not think any party has the balls to make the tough choices in the present environment …as in a 20% across the board cut in pensions and wages to all levels of gov’t …BUT if I had to pin my hopes on one party to do what I would suggest then the only alternative would be the Cons… sad but true.
#81 T.O. Bubble Boy,
Yes, it is going to make quite a difference. Few people seem to get this.
The below math was done by a poster on the Vancouver condo info blog – great name – bestplaceonmeth. I haven’t chequed the math but it looks correct. Here it is:
The REBGV benchmark house price reached $800,796 in February. The rise in listings puts us into a ‘balanced’ market condition according to the Real Estate board. Will we be able to maintain this ‘balance’? I suppose it depends on how much our market is driven by CMHC support and how new rules and higher interest rates affect those margins. Here’s some interesting math courtesy of reader bestplaceonmeth:
Based on $58,000 median household income in Vancouver using ING’s “how much can I borrow?” for 35 years (yes, 35 years – it’s what all the cool kids are doing nowadays). Also assuming no other debts (ha ha) and a conservative $250 a month for property taxes or condo fees or both.
Prior to April 19, qualifying at 1.95% variable rate:
YOU QUALIFY FOR A MORTGAGE OF $415,270 WITH 5% DOWN!
After April 19, now having to qualify at 3.89% fixed rate:
YOU QUALIFY FOR A MORTGAGE OF $313,880 WITH 5% DOWN!
Holy foreclosure, Batman! That’s a 25% haircut off current prices!
Now let’s fast forward to the end of 2010, 4 successive 1/2 point interest rate hikes and you now need to qualify at a rate of 5.89%.
YOU QUALIFY FOR A MORTGAGE OF $244,287 WITH 5% DOWN!
That’s 41% less than 10 months ago, and we’re just getting started.
See, I told you math was fun.
Now, who wants to go out and get into a bidding war?
UPDATE: It’s been pointed out that CMHC currently requires the 3 year rate to be used, so the difference is not as extreme as the above example. DoDo1975 clarifies with this math:
A quick calculation shows that a family with absolutely zero debt making $90k a year could borrow $533,721.32 over 35 years today. All else being equal, after April that number will be $456,311.49 or approximately 14.5% less. This 14.5% is constant across all income levels.
If interest rates on the 5 year prevailing rate also go up 1.5% in the future, this translates into a 28% decrease in the amount someone can borrow compared to today.
#96 The BigLebowski on 03.06.10 at 9:07 pm
#89 jr
The new currency would consist of a weighting of the G20 currency and at least a 15% gold component or nobody will accept another fiat currency. The IMF has already begun talking about diversifying away from such a reliance on the U.S greenback and the opec nations are pushing to start trading oil in a new middle east currency or Euro at this point.
***************************************
I can’t see that happening at all–
Adding gold to a currency weighting–is like adding rocket fuel–
Who out of the G 20 could buy our products?
Every other currency would melt down–
The EUR is a good example of currency sharing–by more then 1 country–
We’re starting to see a dark underbelly to it–
They need harmonization and instead–they have discord–
The PIIGS are in deep trouble–this will weigh on the EUR–which is exactly what Germany wants–imo–
Devaluation–is in vogue–
If they let the PIIGS die–the EUR will devalue–
If the print and bail em–the EUR will devalue–
Germany needs to keep its export market functioning–
The ME makes lots of noise–about Gold about the EUR or Yaun–but-nothing happens–
The Saudi Royals know their ass is grass–if the US ever pulls out–
China holds 2 trillion in UST’s–the last thing they want–is to rattle the USD–
They’re pegged to it–
I’ll bet they lower the peg before they raise it–like the US wants them to–
The last thing they want–is half a billion unemployed–
The other thing that we can’t forget about the US is–they have deep-deep capital markets–the world bread basket–the biggest guns and the world reserve currency–that–everyone will run to–in a market crash–
Selling bonds will be no problem–
As long as the USD has that safehaven effect–
They are top dog-
People should never underestimate the US–
I think the USD is a piece of garbage-like all paper currency–but–
It really don’t matter what–i think–
Currency’s float–there’s not much anyone can do about crowd sentiment–
No one–wants a strong currency here–
We’re in the-bugger thy neighbor-phase of deflation-
“Protectionism” ie–currency devaluation–
Next–despite all the politicians BS–will be trade tariffs-
Always happens–always–
btw–I’m long USD and have been-
since it traded at sub 0.75
Wouldn’t surprise me if it goes into the 90’s–in a steep market sell off–
Gold will/should catch a bid out of it too–except later–
When/if it does–it will likely trade and compete “with” the USD–
95 Cheese
“Also, it is worth a mention that in the 2009 budget
there magically appeared a 64 Billion dollar deficit,
really… just a few months after the $75 billion bank
bailouts….”
Hmmm, had to think about that, but that shouldnt show up in the deficit. If the govt had the $$, it would just show up on the balance sheet as an asset (whether it was the cash in hand or the mortgages). If the govt didnt have the money, and went into debt, it would again show up on the balance sheet with the asset (mortgages) cancelling the liability (the debt).
Think of it this way – you make $80K a year and get a mortgage (yikes!) for $200k. If you save $5K a year after paying for the mortgage you are not in deficit but
you are in debt.
Oh and good luck vulching (vulturing?) my house.
YA …
And the real estate machine is pumping the volume up high, cutting their own necks in the process.
moar empirical evidence of overpriced housing and less NWO/illuminati/1 world currency/9-11 troothers imo
Quantitive Easing…Ottawa wants an 80 cent Loonie to support what’s left of Ontario’s export manufacturing industry.
All countries support their own Q E policy.
Wars are inevitable…otherwise, with the stroke of a pen, Obama rescinds all US foreign debt…the world follows suit.
All religions of the world are denounced too.
Afterwards we enter a new “Brotherhood of Man” era.
Vancouver is named Capital of North America.
Nostradamus jr.
Finally, we are getting some real action in selling off government funded entities!!!
It only took 1 billion in tax breaks to sell a 20 million dollar college.
Pity the company that had to take the hit …
http://www.businessweek.com/news/2010-03-04/your-taxes-supporting-for-profit-firms-as-they-acquire-colleges.html
#82 Jake
a prison without walls?
Given people are slaves to their houses, surely you are incorrect on a technicality. The prison clearly does have walls!
What was this budget all about?
Andrew Coyne does a neat hatchet job on the purported cuts in Harper’s budget at http://www2.macleans.ca/category/blog-central/national/andrew-coynes-blog/.
Interesting conclusion:
Are the media “bamboozled” every year, or are they “on message”, singing from the same sheet of corporate music as the government?
Coyne’s preceding post – “An empty, almost flippant budget” – dissects the budget and exposes all one really needs to know: it can’t work (“no double-dip recession, no aftershock of the financial crisis, no flareup of inflation or spike in interest rates, just rosy scenarios as far as the eye can see”).
So what’s the point? Political survival for another year – only to be tied to the helm as the Good Ship Canada sinks? Or do we have a skipper on the bridge who fancies himself quite the architect and thinks that he can build the ship of state of his dreams from the wreckage of the current one?
Incompetence or agenda? Corporate First Class would not be on board incompetence.
“I am unabashedly a Con right now ”
Gee, Rory, we could never have guessed. And for those reasons too! And because of the budget “cuts”!
Voting, and voting Conservative at that, is your best hope for CHANGE? Then why vote? There’s nothing even REMOTELY close to a Ron Paul in Canada…
Seems most people can’t see past the four or five major parties, can’t see the futility in voting at all.
Well, Canadians are FAMOUSLY passive, famously parochial, great believers in “security”, in trusting professionals – doctors, lawyers, firemen, cops, accountants, mutual fund salesmen – with their futures, supporters of the status quo…
They see nothing wrong with police tasering individuals, using violence, with ever more laws, rules, regulations and requirements on the books, with CCTV cameras everywhere, with attempting to evade tax, with paying public employees unsustainable wages…
They’ll sell everything and anything, even their civil liberties, to prevent or deny the reality of CHANGE.
Perhaps most Canadians are so utterly terrified of major societal and living standard CHANGE that they will kneejerk support the present system to the end.
I suggest even those Canadians safe in their gated communities and cushy desk jobs, with high salaries, nice SUVs, insured, policed, serviced and protected from the dirty outside riff-raff better have an eye on the future.
Don’t vote at all. Prepare individually. The most patriotic thing you can do – for your country, not your governments! – is to avoid, evade, violate, hide, disobey and be as generally non-compliant in every small way as far as you are able…
#76 Ben “Evil blood sucking Royal bank… not only do they charge me about $5.00 a month for having a bank account with them but they charge me $15 for every international deposit.”
Jump over to say, PC Financial. Everything is free, even cheques, but minus Money Orders.
#103 Andrew (Sam is my wife) “Too many of you renters in here telling us all how great it is to rent are too funny. Owning a home is much better than renting and you would know that if you had a home.”
Riiiight. And buying a new car and selling it every few years is a great investment too.
Actually, I have owned a couple homes and rent now. Renting is better, don’t believe me? Check out my passport for the past 2 years (I sold 2 years ago):
UK, Italy x3, Norway, Germany x2, France, Czech Rep, Egypt… All on money I saved by renting. Not bragging, just showing that renting saves you $ and gives you a life away from your home too.
Mike
Well returned from my 4 day trip to AUS. As you know RE there based on unaffordability is ranked greater than CAN. VAN takes top spot but 5 majors in AUS end up in the top 10.
Junkie old fall down around themselves Queenslanders (style of home) in Brisbane suburbs 3-4 bedrooms maybe 1400 sqft on stilts for $700 large! Wanna get to a normal SFH upto 3000 sqft, better be ready to fork out a cool 1-1.5M easy for a small boring lot and 2M for something reasonable.
They believe all is fine and actually, unlike our country seem to applaud the sanitity of thier major banks.
The problem in AUS is worse not only to the point where it has the highest ranked cities with extremely unaffordable housing but have no idea whatsover how it got there!
No idea of the false money printing and buyers loans and hidden agenda/manipulation which has taken place.
Steve Keen who is likely the most credible ecomonist in the world right now is not well known as you would think so and those who have heard of him think he’s just a perma-bear.
When asked about the future for AUS as a commodity country and currency, all said the play was CHINA.
Not one of the savy (claimed) persons this discussion took place with could tell me how much stimulus was in in play for China and risks facing this monster.
The sense was like in CAN that RE will continue to rise however for now it has stalled out significantly with listings quite abundant in my view.
Mostly, with the rate hikes, listing are up, buying is down and most are sitting back and taking a conservative stance.
The cost of home ownership in AUS vs. Renting (which btw is perfectly acceptable) really makes the case in AUS when rates were low, now with rates increasing the gap has widened significantly.
#115 Notradamus Jr.,
I see you went off your meds again, eh?
We went in to the bank this week to pay off the remainder of my mortgage. We now own the house we bought 13 years ago in Toronto mortgage free as opposed to my friends who all traded up and are deep in debt. I now have no debt, my car is paid for, no credit card debt and a small mortgage on a condo in FL that I bought years ago to spend winters in during our retirement years.
All the banker wanted to do was get me a secured line of credit for $300k. I would qualify, use the money for whatever I wanted. I told him – don’t you get it? I want to be out of Debt, not interested, he just wouldn’t listen…amazing…
If Miss Smug had stayed in the real estate market market instead of going for a “fabulous big apartment ” she would probably have the money she needs to pursue the family home on Gladstone.
By the way if we look at prices in Feb 2007 ($404,000)and smooth out the stark comparison to Feb 2008 when prices were in the midst of the recession terror, we see an increase of 6.9% over the last 2 years. Probably a more realistic commentary than harping on 19% over the last 12 months.
That is not typical, as you know. We had the greatest market and financial calamity in 80 years in the middle of your comparable period, leading to emergency interest rates still in effect, and the greatest government stimulus in history. Nothing normal here, dude. We’re in a transition period and those who think the future will repeat the past aren’t paying attention. — Garth
#117 Dan,
I was referring to debt in general in the previous post. A lot of people without homes are slaves to debt. When i went to the bank to refinance my last mortgage, the banker told me that my mortgage was less than the financing he provided for a Cadillac Escalade the week before. Get it? This goes beyond real estate. The prison walls are built upon the foundations of ideas like “you are richer than you think.” Current real estate trends are merely symptoms of the real problems, which are greed and entitlement combined with free money. The prison walls come in many forms, but very few can see them. Hence, it is a prison without walls. It is very difficult to rescue people from this form of bondage because they actually think they are free. Screwtape would be impressed by this system we have created (any C.S. Lewis fans out there?).
congrads ‘homeinboca’. Nice feeling being out of debt eh? Most in here including Garth would have taken the LOC and invested those funds in the TSX. Why have you not followed that advice?
.#115 Nostradamus jr.
…Ottawa wants an 80 cent Loonie…
What governments want and get are two different things…
Old guy on the block is 80 years old bought his house in 1950 for $9000; worked at mill took in a border and paid it off in 1952. He retired as an engineer from the mill in 1994.
The house will be listed soon for $252,000. Its a time capsule.
According to the Bank of Canada, the average annual rate of inflation in Canada since 1950 has been 3.83%.
http://www.bankofcanada.ca/en/rates/inflation_calc.html
Compound that $9,000 over those years at that rate, and that house should cost ~$86,000.
That is, if you think the BoC inflation numbers are correct… and if you think they are, I have a nice bridge to sell you.
#118 Herb,
Agreed – thanks for Andrew Coyne for actually being a journalist. I don’t know what the other lap dogs call themselves but they are not journalists.
Mushrooms, we are treated like mushrooms by the MSM. It is beyond embarrassing.
#91 Ret
I agree with your sentiments but, unfortunately, the federal government’s main priority appears to be maintaining the baby boomer and ethnic speculator votes.
Declining real estate prices may reduce the number of realtors/mortgage brokers which will improve the livelihoods of those who remain or are truly committed to the industry.
Lower real estate prices will also make it easier for employers located in bubbly areas like Vancouver/Toronto attract workers with families.
Lower real estate prices will provide consistent revenue streams to service industry-based businesses. When RE prices are high, cash-strapped citizens (saving or debt ridden) only open their wallets during special events (2010 Olympics) or holidays.
@Rory- Hoping the Cons will do more good than harm?
How’s that working out for you? Cause I sure as hell am not impressed. They’re doing a lot of harm.
You remember what the glib definition of insanity is, right? Hoping/doing the same thing over and over and expecting different results: ie: not learning from experience. You’re there, my friend.
It may be surprising to some, but the Conservative tax cuts did more harm then good. We wouldn’t be in the deficit hole now if taxes had remained the same as they were during the Chretien/Martin days.
I just love this blog . It’s informative and so funny . Ameros what a hoot . New bills made of tinfoil first off … tinfoil hasn’t been made since ww2 and at 8$ a pound I don’t think we can afford it but then that’s half the price of silver . It’s a bargain. I do get the point thou .The tinfoil hat crowd are never the less wearing aluminum foil hats and they don’t work as well as the good stuff . Maybe that’s the reason we can’t get through to them . Maybe we’ve hit on something here bringing back tinfoil could save us a fortune in the mental health field. lol The old cotton based bills last two years and the old ones are so dirty one should wear gloves to handle them . The new ones are slated to last ten years ,imagine how filthy they will become . We really will have to launder it.
http://agentwill.com/weekly-stats/
NostraSRdumbass
Check out the listings surge. It looks like Vancouver is starting to crumble.
Holy Crap man, this could get ugly FAST.
#122 Mike…….
Carioca Canuck from the Alberta Bubble blog here…….
My passport looks like yours. I just wish all these homedebtors who are obviously envious of us renters (because they are constantly justifying their humongous debt as equalling overwhelming happiness) could substantiate their argument that owning a home with a large mortgage is fun. I mean, after all, I spend about 12 hours a day in my rented apartment, 8 of them sound asleep, and the other 4 in the shower, cooking and eating, or in front of this computer…..for 1/3 the price of buying the same place. I could do all that in a 300′ room……wait a minute…..some countries actually live in apartments like that.
I guess it all comes down to a simple phrase that describes today’s mortgaged to the MAX homedebtors……”people who say money doesn’t make you happy, don’t f_ _ _ _ing have any”…….LOL !!!
TO #103 Andrew (Sam is my wife)
Congratulation Andrew for enjoying only pizza and wine for your dinner with your lovely wife Sam everyday in the coming 20 years!!!
(Oh btw, if Sam still decides to stay with you; otherwise, you might just enjoy it by yourself).
Good job, Andrew
The Screwtape Letters? Yes, but also Gone With The Wind.
“Mercenary? No, I’m only farsighted. . . . I told you once before that there were two times for making big money, one in the upbuilding of a country and the other in its destruction. Slow money on the upbuilding, fast money in the crack-up.” (Rhett Butler before the fall of Atlanta).
111 jr
I agree the U.S has many tricks up their sleeves to force countries to continue buying their debt to support the dollar. Just look at what the U.S government in co ordination with their media lapdog has been doing to Toyota over one recall. Japan recently elected a new government party that hasn’t had control for decades and they began cutting back on the purchase of U.S T Bills. To punish them for their insubordination, The U.S financially began attacking them through the media at their soft underbelly, Toyota, one of Japan’s largest export businesses. Think about how overblown this one recall has become, they dragged the Ceo of Toyota in front of Congress to testify and apologize. So yes they do have dirty tricks to support their dollar. But on the other hand 40 States are on the verge of bankruptcy. California, the 7th largest economy in the world is in worse shape than Greece. So is Illinois and New York. They will either have to be bailed out (Quantitative Easing) or they will take the whole country down.
Their are 17 medium to large countries on the brink of insolvency. Most are being kept alive by using two sets of books and marking to model not marking to market. Their will be meetings such as we saw in the 1970s at the Smithsonian, the Plaza Accord of 1985 and the Louvre Accord of 1987. There will be a realignment of currencies.
There is no other way out. U.S debt is over 100% of gdp. This cannot be sustained. AT the point the U.S government is run by and dictated to by the money laundering banks, Goldman Sachs, JP Morgan and CITI Group. Ten years ago Goldman helped Greece hide its debt and fudge its books so it would qualify to become part of the E.U. Goldman Sachs the turned around and has been heavily shorting Greek bonds because they new full well what a disaster Greece was in. This is why you have seen such a push in the media to attack Greece and the other PIIGS nations, because Goldman stands to make hundreds of billions of dollars by the Euro being driven down in value until they cover their short position. Then their attention will turn to other nations with Sovereign debt problems, and the U.S and U.K are at the top of the list. The Bankers have no loyalty to any country, they are only driven by profits. The media and Government dance to whatever tune these banks play, that why the banks received almost 1 trillion dollars in bailout money at the end of 2008, and Goldman has made record profits in the middle of the worst recession in 50 years. They game the system , their are no more free markets at this point. This is how the real world operates. By the end of 2010 their gaze will turn to the UP.SO and UP.I debt problems and the UP.SO dollar will be attacked.
#127 Jake
“The prison walls come in many forms, but very few can see them. Hence, it is a prison without walls.”
Jake, your analogy puts me in mind of that very large beast……….the elephant.
In captivity, part of the training includes restraining the elephant on a short chain, to break its spirit to run free.
After a period of time under this cruel disipline……the animal starts to adapt, and gives up.
Now, the chain can finally be removed, but, he still stays in place. The elephant doesn’t even realize ……..he’s free.
elle
I wonder what the think tanks are saying now about “freedom” in regard to Iceland latest vote?
“In the 20th century, Iceland’s economy and welfare system developed quickly, ….. Reykjavík, Iceland’s largest metropolitan area and the centre of the …. Iceland ranked 5th in the Index of Economic Freedom 2006 and 14th in 2008
The Index of Economic Freedom is a series of 10 economic measurements created by The Heritage Foundation and The Wall Street Journal. Its stated objective is to measure the degree of economic freedom in the world’s nations.
The Heritage Foundation and the Wall Street Journal created the Index of Economic Freedom in 1995. According to Heritage, the creators of the Index took an approach similar to Adam Smith’s The Wealth of Nations that “basic institutions that protect the liberty of individuals to pursue their own economic interests result in greater prosperity for the larger society.”[1][
Method
The Index's 2008 definition of economic freedom is the following; "The highest form of economic freedom provides an absolute right of property ownership, fully realized freedoms of movement for labor, capital, and goods, and an absolute absence of coercion or constraint of economic liberty beyond the extent necessary for citizens to protect and maintain liberty itself." [3]
Claims
The Heritage Foundation reports that the top 20% on the index have twice the per capita income of those in the second quintile, and five times that of the bottom 20%.[4] Carl Schramm, who wrote the first chapter of the 2008 Index, states that cities of Medieval Italy and mid-19th century Midwestern American cities all flourished to the degree they possessed economic fluidity and institutional adaptiveness created by economic freedom.[5]
According to Will Wilkinson of the libertarian Cato Institute, studies show that higher economic freedom correlates strongly with higher self-reported happiness.[6] According to Tomi Ovaska and Ryo Takashima, economic freedom research suggests “that people unmistakably care about the degree to which the society where they live provides them opportunities and the freedom to undertake new projects, strongly with and make choices based on one’s personal preferences.”
According to the Cato Institute, higher economic freedom promotes participation and collaboration.[7] Also claimed is that higher economic freedom is extremely significant in preventing wars. According to their calculations, freedom is around 54 times more effective than democracy (as measured by Democracy Score) in diminishing violent conflict
folks, my conclusion is this: we’ve been in a major inflation for decades. We’ve gone from 1 man in a household with a modest job supporting 3-4 kids and a wife to almost impossible circumstances – 2 working parents, working 5-6 days a week, only 2-3 kids, a home that takes 20+ years to pay, 2 cars, yet we, on average, struggle with this. Years ago, the bread winner worked 5 days, bought a home, bought a car etc. All this with a modest job. Yes, they were very watchful of every dollar they had, but lets not assume that every single “average” income earner and income home in this day and age splurges. We all know some average people that are tight with their dollars and their quality of life doesn’t match that of families of the 90’s, 80’s,70’s,60’s etc. Heck, some of us might be those people.
The crash of 2008 was the tipping point. You can take this to the bank. The cost of everything around us will be coming down as it has been for the past couple of years (except for real estate in Canada because of lending…soon to come). What we’re going to see is something we haven’t seen for a long time – real affordability. People’s dollars will be lasting longer. The inflation we’ve had via credit expansion all these decades is only sustainable to a certain point. When the bill cannot be paid, and there’s debts everywhere, the demand for goods decrease. We’re at that point locally, provincially, globally. This is exactly what the world needs and we’re going to get it. This is deflation. This is a credit contraction. The big winners will be those that are able to preserve capital. The big losers will be those that owe money, that have borrowed to purchase investments, and cannot understand what was stated above. This is The Great Deflation.
The only factor that can alter the course, is a peak oil situation. I too have done pretty thorough research on the peak oil theory, and I do believe that we will get there eventually – where cheap oil is no longer available. However, the fact remains, demand for everything will be less than 4, 5, 6 years ago. Oil included. The European and American economies are 10 times bigger than China’s. China’s increasing demand for oil in the near term probably will not trigger the dramatic price increases one would expect once we hit peak oil. We all know the situation of the Americas and Europe. Demand will be much less because of less consumption and debt obligations.
#39 Big Lewboski
Finally someone making sense on this blog. Thx.
So with all the gaming of currencies and manipulation by TPTB where does one put their money if you don’t want to be sideswiped by a currency devaluation?
Very few places to hide in my opinion. If all asset classes are going to fall, one might say gold and it’s equivalents could be a place to hide despite the fact that it too would fall in price. Real estate being a tangible (non paper) asset would fall but not as much as stocks. Cash would be king I suppose, but holding cash in a currency battle could also be problematic as we have witnessed the US$ rise, winning the best of class in an ugly contest.
103 andrew (sam is my wife)
your postings are my “COMIC RELIEF”" from all the other informative but somewhat depressing posts on this blog concerning the future of this world. The long haul does not look good.
my sympathies to your wife Sam–if she really exists — i think she might be a figment of your wild imagination along with all your rental properties
it’s ok to be bullish on RE but don’t slag the renters until you do the math –obviously you haven’t !!!
like 122 mike and
136 keith in calgary—i’m doing more travelling now that i’ve sold and am renting–disneyland/repo cruise in may
booked england/france for sept 19 days
ya i did travel some while owning but went on plastic and paid for them long after returning–now its paid for long before i go–one benefit of renting
#103 Andrew (my wife is Sam)
Wow you are loaded up on debt and who knows it may be good debt!
Your strategy worked great while we had the secular bull for the last 25 years in RE. Even if you lost money each month on your properties, you made money on price appreciation.
But if we are heading into a secular bear for RE your property values could depreciate for the next 25 years, year after year.
The only thing that could save you is inflation, but then interests will kill you unless your mortgages are locked into 10 or 15 year terms. (Remember over the long run interest rates = inflation + 2%.)
Good luck.
I have the same question as Alan (# 142).
Where do we put our money if you don’t want to be sideswiped by a currency devalution?
I think cash but is canadian currency ok?
From Air Farce … Stephen Harpers Conservative’s Love Song
http://www.youtube.com/watch?v=s-Vdydy1cVA&feature=player_embedded
#115 Nostradamus jr. — “Wars are inevitable…otherwise, with the stroke of a pen, Obama rescinds all US foreign debt…the world follows suit. All religions of the world are denounced too.”
When WW3 happens shortly, it will have been started by Crusades 4, with the ultra right-wing Christian fundamentalists (who have been hoodwinked by this ‘rapture’ garbage) trying to wipe the Muslims out, failing yet again.
This time is when Obama will have the greatest chance to cancel all of the US’s debts / deficits as you say, by the stroke of a pen, and all other countries behave as sheeples do, and follow.
Consequently, the newest and latest version of Christianity (which version do you like?!) appoints itself as the only one capable of being in charge.
This is when people begin to question themselves, and understand what Polonius said: “Man, to thine own self be true”, not to exterior orthodox religions who want to control everyone and thing.
Good post.
Windows 7 has been released and is selling, but #130 Deliverator — “Compound that . . .” http://www.dilbert.com/
See? These are not sheeple! They saw what the rich and greedy were doing, and chose NOT to pay someone else’s bills!
Turns out we are no better than the US.
Bush Senior appears to have lost some money. If anyone knows where it is, please return ASAP. Reward!
Remember the Copenhagen farce? It was designed as a front for a one-world govt. and a tax imposed on the majority of the population.
#139 The BigLebowski on 03.07.10 at 12:07 pm
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I agree with most of your post–yes–GS was complicate in helping Greece hide debt through swaps–and–as usual will reap big rewards–for their crimes–
Here is what i “guess” will happen–before–
we totally f–k our currency’s–
Something has to give–and when it does–likely a currency crises affecting the major currency’s–then–the scope of the world debt and the total insolvency of every country–will be revealed–
Of course GS et al–will have scooped up most of the circulating wealth–
The fact-that we can–never–pay this size of debt off-will be undeniable–
When?who knows–but–
A global credit debt repudiation-will have to happen–
Call it forgiveness–call it what you want-but-a default is what it will be–
I doubt hyper-inflation will happen–
With high unemployment–as in now way to get money and increase wages–unless they just start giving us money–
There is no other way out–imo–
I think this will be the best we can hope for-
From there–hopefully “something” other then war-will emerge to drive our economy’s–
What happens to currency’s/USD from there-i can’t say-
I do know gold will still have value–
Gold has been here before–its seen all this–many times-
It just sits and waits–
anyone have a good TO housing bubble blog they can share? google only turns up shills
Slightly OT, but it’s part of living within or under one’s means. SO pleased with work that my hubby has done so far with reno in our split entry basement. He’s been working his ass off the last few weeks. Enlarged an office to a guestroom as well as enlarged laundry room to a bathroom with a great shower. We got someone to do the tiling and hubby helped him and learned so muchthat he’ll redo our main bathroom upstairs. He just spent 2 hard days building cabinets over the washer and dryer and saved us lots of $$$. BTW, if anyone is looking for wood type flooring for a basement check out Costco – almost 14mm with a backing as opposed to 8 or 10 mm for most of the other places. And, what you don’t use (full boxes) , you can return as Costo keeps a database of every article you buy. Even if you don’t have a bill but return something 16 mos. later – which I did with a vacuum selaer to freeze produce. I know, many things come from 3rd world. I just wish we could produce the same goods, but we can’t compete with ’scab’ labour wages.
Another savings tip, don’t buy those fleecy sheets for the dryer, just buy fleecy and put some on an old facecloth in your dryer. I buy everything in large quantities and save because we have the money to take advantage of ’sales’.
Tomorrow calling a Home Energy Evaluation co. Need to replace all windows and doors and siding. Going with Energy Star products. Too bad we bought Coroma 3/6 toilets last year and not this year.
Now if only I could find a FA that I believed was really working for us and not him/her self.
Pardon my rant.
As someone who has lived in Toronto all his life and bought and sold a couple homes, dealt with realtors before and after the so-called correction, I can honestly tell all that Garth’s view of Toronto is mild at best. From my view, with over 3-4 years looking before buying, I can see homes in areas but months ago under a million now well over a million and getting it. Dumpers close to railways or on major streets in need of new electrical, plumbing or roofs. Dodgy areas and hell I look along the 401 at all the condos going up and think, the small apartment buildings that once were there were undesireable for the proximity to the highway so why would anyone want to live in a highrise overlooking the 20 lanes of traffic and pollution. BUT THEY DO. Some call it progress. I gaffaw. In the last year I think prices in some areas are well above 20%, sad to say, in some cases 30-40%. This is a bubble of epic proportions.
As for your blogger who enjoys life and rents to live, there is always a happy medium. Not everyone can live with landlords and their shinanigans. Those that can will save themselves alot of headache. The alternative is a freehold townhome where she can have her cake and eat it. But everyone is different.
#135 Not Garth,
Vancouver will be interesting. Listings typically surge into the Spring. This year will be fascinating through April 19th.
Are the Democrats serious about Corporate Capitalism??
http://www.democrats.com/save-our-democracy?cid=ZGVtczIyOTUyN2RlbXM=
I’m trying to piece it all together….
This link from google books on “21st century economy – a beginners guide” & its helped me tie together a lot of loose ends.
I have a very low attention span, and this didn’t have very many big words to bog me down. Me likey that.
Its a must read if your in the same situation.
http://tiny.cc/FyVup
Now if I can just find one with some pop-ups and things to color in… well, I’ll be golden!
cheers
@ 112 Taxpayer like everyone else
“Hmmm, had to think about that, but that shouldnt show up in the deficit. If the govt had the $$, it would just show up on the balance sheet as an asset (whether it was the cash in hand or the mortgages). If the govt didnt have the money, and went into debt, it would again show up on the balance sheet with the asset (mortgages) cancelling the liability (the debt).
Think of it this way – you make $80K a year and get a mortgage (yikes!) for $200k. If you save $5K a year after paying for the mortgage you are not in deficit but
you are in debt.
Oh and good luck vulching (vulturing?) my house.”
The $75 billion was “loaned” to CMHC, now I don’t know how the Govvies can claim that as an asset even if CMHC is a crown corporation… if they did it would be nothing more than number fudging. So lets simplify:
We pay tax to the GOC
The GOC lend $75 bill. of our tax $ to CMHC
CMHC buy $75 Bill. of Mortgages and or other MBS / derivatives form our Chartered banks
Banks get $75 Billion to do with as they please, the funds were classed as “fungible” (I love learning new words)
GOC drops interest rates to virtually nothing
Housing rockets on Bank lending and low interest rates
We were told our banks were very strong and at no risk or failure even before the bailout, so my point is what what the purpose other than to fuel real estate and make the economy look stronger.
If all the mortgages that were bought from the banks are paid back in full then will the tax payer benefit as the original risk taker?
If the housing market tanks and CMHC takes a bath on some of the mortgages that it bought plus the overleveraged ones it has insured since then not only will the $75 bill. evaporate into losses but even more of our tax dollars will be needed to bail out CMHC.
The tax payer has been handed a massive risk (with no reward) in both the form of tax burden and wealth loss in R.E., this is in my opinion the only viable conclusion to the Great Canadian bank bailout.
I love the people of Iceland.
Yesterday, 93% of the Icelandic population who went and cast ballots, voted overwhelming to tell their government and the EU, to stuff the ICESAVE bank failure up their proverbial you know what. And they are 100% correct in doing so……..
I feel for them…..after all…..when the $600 billion (or whatever the number is) of CMHC mortgage bonds floating around the world start to come unglued, and they eventually will, I have absolutely no intention of paying higher taxes to the criminals in Ottawa that mortgaged my future away without my consent…..and nor should you.
The “banksters” in ths country can all rot in hell with the politicians…….and given the timing of it all, I may be on the beach “sans” Canadian citizenship by then anyways.
.#95 Cheese Greater Fool
Cheese you actually believe politicians have any influence on the Canadian Currency!!!, what a laugh. The only bureaucrat in Canada that has any influence on currency is Mark Carney and only when he opens his mouth and says “Interest may be going up”. You every wondered why it is that every time he even hints at raising interest rates the Canadian dollar goes up. mmmmm I wonder why that is??? So think about it, him just hinting at rising rates causes the currency to appreciate, so what do you think would have happened to the currency if he left them at pre-recession rates? Give your head a shake.
.#95 Cheese Greater Fool
“Cheese you actually believe politicians have any influence on the Canadian Currency!!!”
Of course I don’t which was my point exactly in regards to “F” prediciting the deficit in 5 years. You would have got this if you had read what I said instead of ranting over it.
#143 Alan on 03.07.10 at 1:57 pm
#39 Big Lewboski
Finally someone making sense on this blog. Thx.
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I notice quite a few on this blog–say this quite often–but–
Few-ever debate the person-who writes the post-that they “think” is so foolish–
Why is that?
Why don’t you point out–what you think-is such nonsense?
#4 45north
Hay dude, i hear ya.
It must be Parry Hoot values talkin there. I live in T.O now but i’ll tell ya, I wish i was back up north were people see things a little more in perspective and not just compare them to their neighbour.
Down here its all about bling! No substance.
Down here a lot of people have no idea what quality of life means, their minds are clouded, especially the new comers.
#159 Cheese Greater Foo
Ok I shut up, I mixed up fiscal and monetary. OOPS…
re # 103
Only 3 million, c’mon you are not trying hard enuff!
Why stop at another million, as you say its “good debt”.
Hope you feel that way when you financially disappear – count on it buddy!
156 Cheese – I dont dispute the points you make. They were debated here long and hard by myself, daystar and others months ago. I recall the general conclusion was the taxpayers were on the hook thru CMHC regardless of
who held the mortages (banks, BOC or others).
My point was simply that those funds would not show up
in the budget deficit. If the money was loaned, it remains in the asset column. That is not “number fudging”, that’s
called “accounting”!
Enjoy vulching Mr D. Bulls house……
#103 Andrew (Sam is My Wife),
Thanks for posting your assumptions along with your strategy. Those of us who feel the market is going to crash now feel even more certain in our opinion. Good luck with your investments.
Nostradamus Jr. is on to something, as this will stir things mightily up.
There’s more to Greece than meets the eye, which may also apply to PIIGS and others.
Really? “Mafia Lists ‘Adverse Publicity’ as a Potential Risk to It’s Core Business.” (wrh.com).
The CPC won 19 further seats in the last election. A trend here?
Will the GST or HST ever be applied to groceries? The Brits are supposedly going to raise VAT to 20%, now this.
#157 Iceland
I agree that the people of Iceland should stand up, as should we all, and be counted..but a sad fact is that the people of Iceland were only too happy to jump on the ride and pretend to be smart and rich..I have known Icelanders for many years in other countries and they, by and large, were hard working, industrious people, but two years ago I spent several months in Iceland on business and I was surprised at the amount of bling and snottiness being thrown around..everyone seemed to think they knew something that entitled them to act like an a##, new cars, high end clothing from Europe, vacations abroad, beautiful people doing who knows what because there is no industry in Iceland, there is, quite literally, nothing there, it is extremely bleak..young people binge drink at home and then go to clubs in drunken stupour because drinks at bars are ridiculously priced..good clean fun..oh well..but they are proud and they told the EU to get stuffed and they gave Bobby Fischer asylum when the US was trying to drag him down
Very interesting article today in the Boston Globe on economist Hyman Minsky whose “7 Stages of a Bubble” is frequently quoted. Worth reading – the most relevant line – “Success breeds a disregard of the possibility of failure.”
Here it is:
http://www.boston.com/bostonglobe/ideas/articles/2009/09/13/why_capitalism_fails/?page=full
Garth: A poignant story. Connecting to the past in comparing the thoughts and values of a bygone area is important in understanding the insanity thats going on today. A very interesting post and if I had not consumed so much wine for dinner I would have more to say. Missed you in Scarborough, but hope to connect sometime. Looking forward to prices correcting over the next year so I can make my loved one happy and buy that 2 bedroom-1 bathroom bungalow dreamhome in TO for less than $500K. The ‘burden that men take on’!
interest rates will stay low for the next 4-5 years. Low meaning a 5 year fixed under 8%. BOC will not allow housing slump and too strong of CDN dollar. Therefore real estate will level off but will not crash. Incomes will rise over next 5 years to help fill the gap. Too many of you renters in here telling us all how great it is to rent are too funny. Owning a home is much better than renting and you would know that if you had a home.
I have over three million in debt and know that there is good debt and then there is bad debt. I am looking to increase my debt by another 1,000,000 in rentals to i can keep up with all the renters Garth and this blog creates.
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wow, I’d be scared to be you. That is a huge debt load. I guess everyone has to learn their own lesson. I’ve been on both sides of being a landlord and being a tenant. Right now, it is much cheaper and smarter to rent and stay in cash or rent and invest (depending where you invest, which is a whole other issue).
I wish we could fast forward to like 2013 or 2014. Certainly everything will be revealed by then. Those that were caught with their pants down, will know it by then. Maybe it’s the renter and maybe it’s the owner. I know which side I’d want to be on