My pal Josh, 51, lives in a house he bought in 2005 for $515,000, has a two-year old Audi and a three-year old kid. He lost his job as an executive at a major media company exactly one year ago.
Next month, he tells me, he will have exhausted his savings and his severance, and start smoking through his meager RRSPs. The house, in an executive enclave north of Toronto, has been on the market since November. Three price reductions. No offers. If he sells now, after closing costs, he’ll clear about a hundred and fifty grand.
“Enough to retire on,” he confided to me, “for three years.”
Although I don’t have the heart to tell the guy (but he knows it already), there’s a good chance he won’t work again. Certainly not as a semi-important corporate dude making $160,000. In fact Josh smells that, after sending out over a thousand resumes and being told in a dozen job interviews that he’s ‘probably overqualified.’ That’s the way the chip-on-shoulder 35-year-old recruiters say, ‘you’re too old, Boomer.’
Economists now report we’re in a jobless recovery. Duh. The latest forecast is for the ranks of the unemployed to stay fat until sometime in 2011 or later. Of course, the big media companies – like Global, CTVglobemedia and Torstar – will probably never have another job for Josh, since that’s an industry whose day is done.
In fact, with 3,500 job cuts announced in the BC public sector, and thousands more expected in Ontario and Ottawa, along with serious long-term troubles in the auto sector, retailing and manufacturing, there’s reason to believe white-collar workers (the majority of whom are Boomers these days) will have lots of time on their hands.
So, what about Josh’s house? Three-car garage, hot tub, pool, media room, half-acre lot, paving stone driveway – on a nice street where four other homes are now also for sale. The odds of him selling this sucker without another price cut are slim. If he waits for mortgage rates to increase and the HST to add to a buyer’s closing costs, even with another slice, he’ll be in a desperate competition for potential buyers.
Meanwhile, this could not have happened at a worse time for a middle-aged father and husband. A tepid economy and a real estate bubble that passed him by mean his listing will generate no new excitement. At the end of the day, he’ll be handing his keys over to some vulture who gets the property for less than replacement value – and likely less than my buddy paid.
Worse, this economic slide and slow, painful road back means a lot of other Boomers will be doing the same – accelerating a demographic housing tsunami I started warning about years ago. The inevitability of this thing was always apparent. The events of the past year have just tweaked the timing.
Boomer properties like this – large and suburban, where it takes a litre of gas to go and get a litre of milk – are about to grow even more unsalable. Too damn bad. Because that’s where most guys like Josh have their net worth tied up. These properties are the SUVs of real estate – unloved now in a new age when buyers clamour in bidding wars for tight little urban spaces.
There are a couple of morals to this story.
First, no economic recovery takes place in the absence of job creation. That’s why this one is still faux. It’s also another reason why the current housing bubble is living off vapours.
Second, in retirement – chosen or forced – nobody needs a Boomer palace in the burbs. But we all need income. Liquidity is king. My friend’s financial descent is a reminder to us who know him that the trappings of wealth, in a heartbeat, can become just a trap.
147 comments ↓
Why is it that in one story an ugly, run down, rat hole gets multiple offers in a bidding war and finally sells for more than $100,000 over closing and that points to trouble ahead, yet in the next story a decent house has no offers in 6 months which also points to trouble ahead?
I’m certainly not trying to be a smart a**, but what exactly is the message supposed to be?
Sorry, I meant $100,000 over list, not over closing. Sleepy sleepy.
In related news housing starts are at an annualized 200,000 again.
Warren Buffettt says in the U.S. they were building 2 million houses a years but the household formations (from new young adults and new immigrants) was 1.3 million per year. Hence a glut of houses in the U.S.
Anyone know the number of household formations in Canada? I looked a bit on Google. Looks like Conference Board has the data but charges for it.
Most likely household formations are lower than the number of housing starts, hence here comes the glut…
P.S. your 51 year-old friend will eventually get a job, not likely a great job but a job. He can look forward to being a productive member of society and the workforce until he is close to 75 or so, and Junior is done College. It’s not so bad, he will adjust to it. People are resilient. You said he is a husband, well Mom better be working too and pronto.
Why call the potential buyer a “vulture”. In fact the buyer will be just buying at the market price whatever that may be from a willing seller. And the buyer takes risks too. Like that the house prices will collapse more after he buys.
“Replacement cost”???? People don’t understand replacement cost, and they don’t understand depreciation.
Depreciation takes 2 forms, based on how the asset declines in marketability. One is “exponential”, where the government gives you an allowed rate for certain assets. For instance if you are a business and you buy a car or a computer, you get something like 30%, 20%, 10% thereafter for each year until it hits zero.
The other form is “straight line depreciation”. So let’s say a house in Canada lasts 80 years before the substructure or the framing has basically had it, on average, and it needs to come down and be replaced. I think the average is actually closer to 50 years, but we are in a bubble so all these numbers get stretched.
This means you do not pay replacement cost for a 20 year old house! You depreciate it. So using 80 years, you pay 60/80 or 75% of replacement cost, and not a penny more.
If you have a builder friend and can get some info on what replacement cost is in your city (I understand $200/sqft gets you nice digs in Calgary, but if the wife wants granite on every counter top and tile and hardwood everywhere it’s not hard to get to $250, stucco and tile roofing can push it up even more.)
So what should you pay for a circa 1990 house? You pay 200 per square foot, times 75%. Add up to $30,000 for a finished basement, also times the depreciation factor for the particular home, in this case 75%. Add $5000 for a third bay in the garage, something for landscaping if it’s extensive, nothing for a hot tub, an estimate for what recent renovations might have cost, etc., and multiply the total for all those also by the depreciation factor. Add them up, and now you know what the building is worth. It’s never worth “replacement” unless it’s brand new. (Yes, recent renovations have to be depreciated to the level of the house. The structure isn’t going to last any longer!)
Once you have this total, subtract it from the asking price and you have what the seller is asking for the lot. It makes it easy to compare relative value. And after you do this calculation a few times, it’s also easy to see that the real estate bubble has been in land value much more so than in “houses” per say.
This can be seen by comparing the 1990 house above with a 1960 house. The dudes with the old house should be expecting no more than $100/square foot for the structure, but based on the ask prices clearly they think inner city land has skyrocketed in value.
Garth,
Tough story. I feel for your buddy but he is far from unique. This story is typical and will become more so in the years ahead.
We were told that if we worked hard and did it right we would be kept by the company until we retire. So much for that idea. Once your salary rises about 6 figures you become a target for downsizing. Most people lack the combination of skills and drive to start their own business. However more relevant to your friend is they need the cash flow of their job to stay current with their life.
This is the fundamental problem with debt and living the over leveraged life. One bump in the road and you end up in the gutter. If you keep your debts low and live within your means you can remain nimble and resiliant.
Josh buddy…..
Firesale the manse right now,(should you pull the bandaid off of a hairy leg fast or slow?)(either way it hurts) take the money and buy a 3 tonne truck and set up a trash masters haul away business. It ain’t pretty, it ain’t clean and you don’t get to wear a suit and tie to work, but……there is lots of money in hauling away other peoples abondoned trash from the under water abandoned houses in abandoned neighbourhoods.
(hook-up with an insurance company)
Send your wife back to work and take your kid to work with you. He’ll learn the value of real work and you’ll be able to by him shoes until he graduates dental school.
That is all, carry on.
Wake up call to all seeking to retire on the value of your house (if you can sell it). Let’s see, if you’re 55, sell your 350k house, you may be able to live to 62 before you’re flat broke at the rate that Josh burns through cash on an annual basis. And that assumes no loss in a very unstable equity/cash market….sobering.
I wish your buddy luck Garth.
From my neck of the woods… a fellows friend asking for help for his buddy.
I know many people like this, tough as nails, worked in the forests or out on the fish boats all their lives. Give you the shirts off their backs, and never ever ask for help. Your friend sadly is not alone. http://www.sportfishingbc.com/forum/topic.asp?TOPIC_ID=14564
50 and never working again?! Get real. If nobody will hire you you need to start your own business or do contract work. Stupid companies don’t want you on payroll, but they will pay for expertise. They need it one way or another. If you have valuable skills (overqualified?!) then you shouldn’t be out of work.
Job creation can only take place in a situation of demand for goods and in which debt levels are manageable.
Well, Canadian goods are already rather unaffordable to most of the rest of the world. And debt is only going to grow as so much of it was taken on with the assumption the real estate prices would be forever rising.
More layoffs are necessary. The citizenry don’t like to hear it, but Canadians are too expensive to hire and the goods they produce are too expensive to buy. For a long, long time North Americans (and their governments) have been living far in excess of what their productivity could support. And they’ve been sustaining their lifestyles with borrowing and debt…
Now it’s time to forceably lower Canadian standards of living. It won’t happen evenly, or fairly. Some will do better than others, and some will be able to snap up comparative bargains.
But don’t blame it on “the banksters”, or even on that nice Mr. Carney or on Mr. F. and his government. They were only the enablers and abbettors: the middle-classes, the Boomers, the deleriously optimistic made the decisions.
Just curious…how long DO bubbles typically run for? 3 yrs? 10 yrs? 50 yrs? If it runs past a threshold amount of time, is it really a bubble?
I lived in Vancouver for a year in 2004 – six years ago (I’m in the GTA now). Back then there were the same perma-bears saying wait just one more year, it’s gotta burst. Now 2011, maybe 2012? And the same bulls saying buy now or be out forever. Six years is a long time.
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this is actually a great question. In my opinion the length of the bubble depends on what the market is. If we’re talking a specific sector in the stock market, the bubble may blow off much quicker. The reason being, the stock market moves much quicker with a lot of bright people always trying to gauge valuations and continuously trying to determine if the current price is a buy or a sell. The real estate market is very mainstream. If you have mania in real estate, someone who never even considered earning money from an investment or was never interested in learning about earning money from an investment, would see gains in their principal residence that they bought for shelter. These people benefit from the run-up in price and so they conclude that they have a grasp on sound investing – real estate.
The blow-off in a real estate bubble takes longer because an absurd amount of people in the bubble cannot detect or understand investing nor do they consider valuations. The top of the market isn’t detected by these people, so the sell-off is slower. When the decline builds steam, this triggers fear and with major declines comes panic selling.
One thing you can expect after a real estate mania is that those same people that bought a home for shelter, that had equity gains fall into their lap, will be reluctant to jump in again. These people still won’t understand investing, and so real estate will be deemed as a bad investment because of the decline that “came out of nowhere..the market was great”.
So you can expect flat real estate prices for many years after its major decline.
Beautiful, Garth!
We are now sitting on the edge of the cliff!
We are about to pay the piper!
God help us all!
Munch
150 clear will last him 3 years? Sounds like he needs to watch his spending habits. That should last at least 5 years.
Jobless “recovery”? Impossible. No jobs = no recovery. Had the economy been fixed properly after the dot-com bust in 2000-2001, we would not be in this mess. An entire decade of engineering grads, at this point, unless they’re involved with oil and gas, or construction, is unemployed or underemployed. Industry has ground to a halt. The bankers are sucking the life out of most people who just desperately want to make this country great.
So today is 1 year since the Stock Market hit bottom and bounced back up about 60%. Guess what the driving force behind this gain was. For your interest here are the gains made by the bank stocks over the past year from their lows on Feb. 24/09: BMO – 136.5% BNS – 98.8% CIBC – 83% CWB – 205% NA – 88.3% Royal – 117% TD – 109.8%. Now we hear that BMO has just dropped their 5 yr rate to 3.75 from 5.25 to entice people who can afford a mortgage with a 25 year amortization and get in on the spring rush ahead of the other banks. We should see the others follow suit with rate drops in a competition for market share. Wasn’t it just a month or so ago that we read that the CEO’s of the big banks were concerned that the housing market was getting a bit frothy and they figured the government needed to tighten up on the mortgage rules and Mr. F did tighten the rules a bit and the BOC kept the rates at their historic lows. Now the same people who claimed to be concerned about the bubbly market are the same ones who plan to keep the bubble party going and attempt to lure the last of the “greater fools” into the housing trap. Way to go guys. Yep, this party is not going to end well. Wonder who was buying up all those cheap bank shares back in February 09 since the herd was on the sidelines after bailing out in the fall of 08 and who apparently were still there until the beginning on this year. We know one person who loaded up back in February and that was the RBC CEO who invested 2.5 mi of his bonus into his own bank stocks. Wouldn’t surprise me if the banks were all gobbling up their own shares when they were down 50% back in February last year since most investors by that point were scared spitless of anything resembling equities and even the banks so called Financial Planners were terrified to recommend us buying anything more risky than GIC’s and Money Market Funds. Makes you wonder doesn’t it? Should probably be concerned for some major short selling in the Financial Sector I would think. I think I will wait awhile before I buy into the bank stocks again cause the big boyz are gonna want to take some of those profits out soon I would expect. Next couple weeks or so should be interesting.
When Garth and I kept repeating that TO was in a bubble, people should have listened sooner.
Nostradamus jr.
Meanwhile, this could not have happened at a worse time for a middle-aged father and husband. A tepid economy and a real estate bubble that passed him by mean his listing will generate no new excitement. At the end of the day, he’ll be handing his keys over to some vulture who gets the property for less than replacement value – and likely less than my buddy paid.
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This is what Governments trying to control the markets by manipulation of interest rates–ie–currency devaluation and fractional reserve banking have done–
Not only has those peoples wealth been snatched from them-but-
their lives have been stolen–
Sure–it was their fault for not seeing the picture clearly and understanding–that the wheels would come off–
When you find a Walmart greeter living in a 1/2 million $ home with plans to buy a 40′ boat next year–
You have to know–it’s over–
Better to be out–3 years early–then 5 minutes late–cuz
When this shit show–gets cooking–
Garth will look like a genius–
Still disagree on rates–
If the market has another mean leg down–
Watch Carny slam overnight rates–to zero-
This way-Banks can borrow at zero and buy the long rates down and still make out like bandits on the spread differential–
It will be called several things–
It will be said that the “emergency” rate cuts will be–so banks can lend to consumers and small business easier- – –haha–lend to who?
By being the only ones who can borrow free money at those rates–banks will gain big from the spread-
It will also encourage banks to invest in speculative trades–with the knowledge that–even if they lose–the tax-payers will backstop any losses–
Sweet deal–
Feel bad about the family–
I feel for the guy, I really do and not just him but thousands upon thousands in his position that are either going through the same or about to.
A house isn’t an investment, it’s a speculation and I understand now why Garth tells us no more than 40% of our net worth should be in a house, it’s just simple DIVERSIFICATION of assets.
“First, no economic recovery takes place in the absence of job creation. That’s why this one is still faux.”
We do get this point very much, but after reading Garth’s book over again we are still confused if Garth says “Buy into the stock market now (via his suggested areas) or “don’t buy into it now and time it better”… Garth?
Ah, the problem with being a fundamental investor rather than a technical one.
Mike
I hope your buddy sells his house to someone who thinks it’s different this time.
At least now he knows it isn’t.
As one of the first gen x-ers I know that I won’t be counting on an inheritance.
There is no bank of Mom and Dad.
And that’s just the way it is.
I’m fine with that.
My eyes are wide open and I know I have time left to take of myself and my own family.
And that’s more than people who have two houses because they can’t sell the first one without losing money.
Well said Garth…for those of you dreaming of continued low interest rates, no increase in taxes, healthy job market, continued rise in RE and oh yeah, being able to retire before your 75, you will be wrong on all counts as when the Boomer shoe drops they all do.
I’ll be ready to hunt with double barrels of liquidy!
When will be the right time to buy RE in North America or UK or EUROPE or our DownUnder friends, maybe not for a decade, and even then it will be only to own the house and not treat it like an ATM.
From the Kiwis to the Munch’s in RSA will the negativity be felt. HK, SING and all flying high Asian destinations to take a beating.
I would challenge you to think further out to exactly what Garth says about jobs, which I again see as a leading indicator to why liquidity is key. BOOMERS WILL RETIRE and THEIR JOBS WILL RETIRE WITH THEM.
Big Time incomes DONE! Family disposable will drop dramatically! When you have no money to support yourself you better find a new destination that will support you.
Burgernomics
http://www.economist.com/daily/chartgallery/displaystory.cfm?story_id=15210330
GREAT GLOBAL RESET!
“Best Picture Award” …… this says it all. Sorry to hear the story but as mentioned we here have said less is more and to think “Buddy” had a chance and could be sitting of very good nest egg with a little future hindsight ….. the million dollar question is: “Is it too late for you” ?
Economics aside, that kid is going to be 17 when he is 65. Is he out of his freaking mind?
Garth this is a second marriage for your friend right. He married a younger woman this time and she wanted her own family.
I know loads of guys in their 50’s and 60’s like this, coming up to compulsory retirement with young kids still at home. Why they didn’t think this scenario through in advance I don’t know. Nothing destroys your financial plans like supporting two or three families throughout your adult life.
Learn from this blog dogs – keep the original old lady.
Oh yes, Abu Dhabi is wonderful, 28 degrees today!
How many wives do you have there? — Garth
We hear it or read it in financial planning books all the time. Live within your means. Life very rarely goes according to plan, but I guess most of us think we are the exception and won’t get sick or lose a job.
I have to think emotions are partially playing into this individuals continued downfall. Its probably hard to accept the fact that you are no longer an Exec, and look for lesser work, but to actually have to downsize and move into average middle class neighbourhood must be harder to accept.
I have to think there he has more financial issues than just selling the house. A lease on an Audi isn’t cheap and one has to assume he may have a few other expensive toys or hobbies. (Golf club?) I agree with a previous post that $150k should last more than 3 years, but who knows what other type of financial obligations the family has.
Your 50 yo buddy may be overqualified for a paper pusher job but surely he has the qualifications and experience to do something productive and interesting (to him) with his life.
If he was able to make 160K before he can do it again if the money was deserved in the first place. And even if he only makes 80K he may just find that he enjoys his new work better.
My mom got laid off at 55, years ago. Best thing that ever happened to her in the long term as the new job she found was miles better in terms and conditions and salary.
Hey Garth,
Like the first poster, I’m not following why the huge difference in the story today versus the one yesterday. Sounds like for less than that pile of garbage was sold for, someone could pick up this same upscale house that Josh is trying to sale. Doesn’t make a lot of sense to me unless we are taking about two drastically different locations (i.e outport Newfoundland versus Urban Toronto).
On that note, think you might be able to do a piece on where you see property values here in semi-urban New Brunswick going? My 6 year old, 2.25 acre, 4 bed/2.5 bath dream home cost me roughly $250,000 three years ago and is worth probably closer to $400,000 today just outside Saint John. I can’t see property prices going down here much, even if interest rates start to rise as compared to many markets, as we are still undervalued compared to may markets.
But then again, I’m not an expert on all the factors that go into what should be expected for housing prices for different areas.
Some blood pressure-raising reading for our resident Neandercons -
http://www.winnipegfreepress.com/opinion/westview/socialism-for-the-rich-is-tory-way-87204607.html
Josh should borrow a couple of hundred thousand and invest it. Then when he has to take money from his RRSP he will be able to claim the interest and reduce the taxes.
garth, Tell your freind to contact these people they will find him a job. http://www.funnelsearchgroup.com
MIkey
I am trying to persuade a young Vancouver couple (2 young kids, self-employed) not to buy a house in Kingston, Ontario this spring, but to wait till the fall.
They can’t afford to rent let alone buy in Vancouver, so they’re getting out. Good idea. Kingston is very affordable with a great quality of life. But the 5/35 mortgages and low interest rates mean even houses here are inflated.
Because they’re in Vancouver, they think a midtown house is a steal at $250,000. I can’t persuade them they’re out of their minds, and they’ll see that price drop $50-70G over the next two years.
This is one of the other bad effects of overheated big-urban markets. They bring their warped perspectives here and mess things up everywhere!
I don’t get it? So he missed freedom 55 by four years and stands to reap a huge tax free amount on his house. The guy should be thanking his lucking stars not sulking. Needless to say when you retire with too much the government takes back virtually everything unless you’re poor so i still don’t get the point.
Since when is $150K a ‘huge tax-free amount’? Most people (like Josh) have no pensions and little savings outside of their homes. His predicament underscores many years of poor choices – replicated by most people. Sad. — Garth
Garth: I work very hard to figure out what’s best for my clients and, generally speaking, I agree with you. Don’t paint all Realtors with the same brush, Dude.
If people need their equity, I tell them, “get out now”. I tell people not to buy this market…at least, not for the wrong reasons.
BUT…you know what? Most days that’s like bangin’ my head off the freakin’ wall. People [most of 'em] do not wanna hear this. I feel like Schleprock – that cartoon character with the cloud over his head.
We are not there yet – your Buddy needs to get real on his price or find another sales rep.
Properties serviced by WELL in TREB’s North districts, Year-over-year, SOLD >$500k, Feb 1 – March 10:
2009: 13 sales; median days on market 54; median taxes $8197; median price $850k; median 94% of asking.
2010: 51 sales!!; median days 45; median taxes $5938!!; median price $700k; median 95% of ask.
That’s just a quick synopsis…”Just FYI”…
Keep up the good work…
VanRenter: “Demographics” – re-read the past few weeks and you’ll see the pattern. If you and you don’t, I’ll be happy to point it out, but you’ll learn more if you find it yourself.
robert: sometimes “stuff happens” – be careful not to pre-judge.
#33 GTA Realtor,
Not all realtors are the same. I give you that. It is good to see many do understand and have a consience.
Friend of mine is visiting from Europe right now. Two of his old friends are realtors here in Vancouver so he met them over the past few days. Completely different attitudes.
One is hustling young people into 500K slum shacks telling them it is the best time ever to buy. He has several slum shacks of his own and only sees up side. He thinks I am crazy for my view and I think he is going to end up hurting a lot of people.
The second realtor is totally realistic and agrees with me that the market is about to fall. He tells people it is the worst time now to buy unless you have a very good reason.
I don’t think the first realtor is a bad person he is just very naive. He really believes his hype. I think this is the most common realtor even for the bad ones. Unfortunately this also makes him more effective because he really believes now – and always now – is the best time to buy.
Jane 54-
Right on Jane. Nothing will sap your wealth faster than divorce and a lot of times even 2 divorces. New familes, new homes, new furniture, alimony, child support. It all goes hand in hand. Poor Josh, he should have stayed with his first wife.
David Rosenberg agrees with your jobless recovery and is cautious of what is to come, as a jobless recovery can only fool the public for so long:
http://www.theglobeandmail.com/globe-investor/investment-ideas/features/experts-podium/beneath-the-us-jobs-data-signs-of-rot/article1495775/
Jeff Rubin on the decline of US oil consumption, and the increase in cost for oil in the US:
http://www.theglobeandmail.com/blogs/jeff-rubins-smaller-world/looking-for-oil-demand-in-all-the-wrong-places/article1494934/
It’s an unfortunate situation and a wake-up call I sincerely hope people heed, here’s another one. Drinking my coffee this morning, about to make a few phone calls and I look out our front window and see a red 4×4 at the end of our driveway…..a woman (sixties/seventies) was going thru our recycles. I kept watching as they went down our street, stopping at everyone’s driveway and taking the wine bottles. Can’t help but wonder if her husband spent his career at Nortel. My heart goes out to these people.
#1 VanRenter
Why is it that in one story an ugly, run down, rat hole gets multiple offers in a bidding war and finally sells for more than $100,000 over closing and that points to trouble ahead, yet in the next story a decent house has no offers in 6 months which also points to trouble ahead?
3 reasons….
LOCATION, LOCATION and LOCATION.
Hey Garth, don’t stoke the fire with the gen x and boomers. As a gen X and recruiter i have no problems hiring a boomer however their salary expectations are the problem.
Higher interest rates – the bank expects a jump of three quarters of a point – make Canadian bonds and other investments more attractive and raises demand for the loonie.
http://tinyurl.com/ykyrkwu
Quick, pull your pants up variable rate lovers.
…Food for thought…
If Canadian R E prices drop 25% to 50% across Canada,
…Canadian taxpayers unfortunately remain on the hook for the guaranteed CMHC mortgage principal defaults.
…Careful what you wish for…
Nostradamus jr.
#42 smw,
Indeed. The bank has made it pretty clear that this is going to happen. One of the spring/summer hurdles the RE market has to contend with. Even marginal rate changes will be enough to send prices down. The only factor that could change that would be wage increase and those are simply not materializing in any sector of the economy.
Frankly, I question the wisdom of moving ahead of the Fed. I also worry that our rising dollar will really hurt the recovery. We could end up with a made in Canada recession like in 2002.
I tend to agree with #1 and #2.The cost of real estate seems to be inflating in most of the country yet your message is “stay away”??
#16 Ronaldo – A Bank is a business. If RBC would decide there was a bubble, and would stop providing mortgages, its competitors would just pick up the slack. So – it only makes sense that RBC goes for the business.
This story frightens me enough to buy your book.
Add some forums to your website already!
Just what this blog needs – less discipline. — Garth
sounds like a nice house. got an MLS listing #?
#20-G
I too am a Gen Xer. Have no inheritance or bank of mom and dad, graduated highschool into the recession of the early 90’s, got hosed in the student loan extortion scam by the banks in the 90’s, finished school as the dot com bubble was bursting. Found employment which paid enough to keep from being homeless, but not much more. So saddled with debt, defaulted on some student loans as a result-just as the government made changes to bankruptcy and insolvency act of Canada, so they will remain on the credit report even if I declare bankruptcy; and as a result of having funds owing to the Government they keep all tax returns and GST cheques to apply to the outstanding loan. Furthermore, my employment insurance has run its course. Remaining pro-active I continue to seek employment while designing business plans, but with credit for the business plan not being available, (due to credit report with lingering student loans). Any savings or rrsp’s are drying up faster than a rain drop in death valley.
The future is promising though; like you said G..”my eyes are wide open and I have time left…”
As for Josh?…What a bummer! Don’t worry about your kids dude! We Gen Xer’s will get it right.
CIBC forecasts Bank of Canada will raise interest rates before the U.S. Federal Reserve.
http://www.businessweek.com/news/2010-03-10/cibc-forecasts-canada-dollar-above-parity-with-u-s-by-sept-.html
#42 smw on 03.10.10 at 10:26 am
“If as we expect, the Bank is out in front of the U.S. Federal Reserve by a couple of quarters, a higher Canadian dollar will help tighten monetary conditions. It’s easy to see the Canadian dollar running a few cents through parity after the first hike.
Since the Canadian economy is recovering more strongly from recession than the United States, inflationary pressure are building more rapidly north of the border than in the U.S.
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Amazing how clueless these so called economists are–
Every call they make–is based on recovery–
Based on world demand for commodities–
Based on rising job demand and increasing employment growth–based on stimulus actually working–lol
Look what 20 years of deflation and un-countless gobs of stimulus has done for Japan–
http://4.bp.blogspot.com/_nSTO-vZpSgc/SQAN5Sk414I/AAAAAAAADm0/q8J0vQd_9CA/s1600-h/%24nikk-monthly.png
How about-what happens if world commodity demand shrinks and our economy takes a nasty downturn?
Which it surely will-when this credit bubble pops–
That is “not” an inflationary event–
Canada will not step ahead of the Fed–imo–
It’s “all about” having the weakest currency–
The race to the bottom–
Notice how demand from our largest trading partner has been steadily decreasing–
http://4.bp.blogspot.com/_nSTO-vZpSgc/Spo8A6IYPrI/AAAAAAAAGxA/QzGXHoU4b6A/s1600-h/balance+of+trade.png
Which explains why US Treasury demand from foreign purchasers has shrunk–
Not–because they think the USD is ready to implode–but because “demand” for all goods–is shrinking–so naturally–less foreign demand for treasury’s–
http://3.bp.blogspot.com/_nSTO-vZpSgc/Spo27uAsAHI/AAAAAAAAGww/YOl3R4ZD0lk/s1600-h/foreign+purchases.png
Easy to see the shrinking trade balance and then see where hundreds of billions in stimulus-gave a bit of life to it–but–now what?
http://www.tradingeconomics.com/Economics/Balance-of-Trade.aspx?Symbol=USD
yesterday we get a story about a bidding war on a shack and today we get the story of a nice 3 car garage that can’t sell. this must be very confusing for the renters out there.
people lose their jobs, get divorced or sick etc etc and fact is when this happens your not prepared! most people (renters for sure) live month to month. this is very dangerous. no job is stable so why not prepare?
think about it. do u control cpp or the rules for rrsps? the gov can change the rules for both so you really have no control. thats why some of my income is taken out with dividends. that way i dont have to pay so much into programs that i have zero control of. our gov owes billions and with that said, perhaps we will see new rules on rrsps and cpp. perhaps geared towards income and age. cpp may not be available at 60 or 65, but perhaps age 70 or 72.
rrsp plans may see a tax on them. i say all this to get you thinking about where you are in your life and what your doing. if you are in a high paying job (not income splitting with spouse) and just putting in $$$ for rrsps and hoping cpp will be there when you retire. your in trouble. you need to rethink! create new ways to increase monthly income. just dont bank on your job, the stock market, rrps, cpp or your landlord. if you do you are banking on others and these others control your money not you! you have time to change all this. start today!
#23 Robert
My hubby’s twin bro is 54 and has a 6+ YO son & an 18 YO stepson. He lived common law for 18 years with someone 9 yrs. older. I really disliked her, to put it mildly, and dreaded when they came to visit for several days. I put up with her & said nothing because of my BIL. It’s a long story. I’ll add that she took advantage of him, financially, etc . He married a woman 9 years his junior who wanted to have a child with him. He loves his son dearly and is happy. You only live once and each to his own as the sayings go. I’m 9 yrs older than my husband so there’s 18 yrs diff between us, but I love my SIL. They’ll be visiting us at Easter, if the weather is kind.
At least they’re house debt free and he has as secure a job as one could have in this economy. Sorry for your friend Garth.
Agreed that not all RE agents are the same.
The one we work with has been in the business since the mid-1980s. She has told us to stay out of the market (Toronto) and rent for a year or two before buying. Her words (after telling us about a $600k Etobicoke fixer-upper she recently sold to some first-time buyers with 5% down): “In 25 years in this business, I’ve never seen it this crazy”.
In searching for rentals, we’ve dealt with a few other agents listing properties for rent on MLS. They are almost always young (20s or 30s) and express bewilderment at why we aren’t buying now. “It’s a fantastic time to buy, there’s never been a better time. Interest rates will never be this low.”
Unlike our RE agent, these people have never seen an RE down-turn and seem to believe that they therefore cannot happen.
The moral of the story is that the “housing only goes up” myopia applies equally to young buyers and young RE agents. Age and experience bring perspective in this case.
#27 Joe
You and I don’t live in the really hot markets and I say Thank Goodness, even though our property taxes increase at the same percentage points.
Yeah. Raising taxes ‘on the rich’is always the answer. There is no waste in gvt therefore nothing can ever be cut.
Yawn. Nobody believes this leftist union bs anymore.
Yawn.
#43 Nostradamus jr.
…Careful what you wish for…
Wish in one hand and XXX in the other and see which hand fills up first. This is about excess. And people have this dumb belief that house prices will always increase.
#17 Nostradamus jr.
…When Garth and I kept repeating that TO was in a bubble, people should have listened sooner…
Well Garth is saying that Vancouver is in a bubble and you are saying it is not! Oh, who should we listen to now?!
Garth, your friend must be a total loser if you don’t think he’s ever going to work again. Maybe he can learn the banjo, live up in the hills and make moonshine. People do have will and drive you know. Corporate skills must have some lasting value. Maybe you could start a Kevorkians R Us sight for all these losers that have absolutely no value whatsoever to offer to society with the rest of their lifetime. 51 is soylent green age? That’s a young man with a lot of good life left to get on and get productive and 3 year olds are durable and adventuresome. They’re carry on size. He’ll be fine! Don’t pimp him to whore a story.
#41 smw
“If as we expect, the Bank is out in front of the U.S. Federal Reserve by a couple of quarters, a higher Canadian dollar will help tighten monetary conditions. It’s easy to see the Canadian dollar running a few cents through parity after the first hike.” – CIBC
I can’t see Canada moving its interest rates ahead of the U.S. by 2 quarters. If the BoC moves its rates ahead fo the U.S., the obvious will happen, the loonie will shoot past par and depending on how sustained the pop lasts, it will be bad for Canadian manufacturers and potentially commodity exporters.
So the question that begs to be asked is why we have rates so low now? Well, its to keep the dollar below par more than anything so why would the BoC intentionally drive the dollar higher with an uptick in rates ahead of the U.S.? It doesn’t make sense. CIBC’s argument of inflation… as the loonie rises against other currencies, our buying power increases and we have deflation in imports. Where’s the inflation coming from?
Lets think for a moment what Mark Carney is really trying to do here. He says he’s adamant on a CPI inflation target of 2%. The biggest factor in inflation is not so much a growing economy as it is the cost of imported goods. If the dollar goes up, we experience deflation of imports. If the dollar goes down, we experience inflation of imports. Hence, if Mark Carney is after a target rate of 2% (or higher) with a growing economy, he’s after a dollar that stablizes or better yet falls and that means he can’t raise rates until… the U.S. does.
I can see interest rates budging in Canada past this summer, for sure but it won’t be Canada that leads the way. (when the U.S. is done their massive “quantative easing” campaign, we’ll see interest rates pop) It will be the U.S. going first or the U.S. and Canada raising their rates simeotaneously. Ideally, it would be good to see the U.S. raise them first for Canada, but its likely they will both raise their rates together. What can I say? CIBC gets it wrong again.
As an aside, this link does make one good point. Foreign takeovers of our corps do send the dollar higher. If this Conservative government was at all seriously interested actually running Canada effectively, it can please explain why our feds want to sell off our crown corps and raise current restrictions placed on foreign owership of our airlines, uranium, telecom and banking sectors. If the Conservatives go ahead (or Canadians let them) with raising foreign owership of these sectors and start selling off our crown corps, it will most definitely shoot the dollar higher at a time when its most unwanted by all concerned. Such actions if done all at once would shoot the dollar higher until Canada’s export industry is in shambles, causing recession. But then… since when did this government ever truly act in the best interests of this nation?
For me, its been 4 years and I’ve yet to see them do much of anything right. Why would they stop now? Stupid is as stupid does. I see stagflation coming, thanks to them. I see inflation of imports (a lower loonie in the next couple years as I expect a U.S. dollar recovery solidified by higher rates coming there as well as Euro woes, combined with a falling loonie under pressure created by massive Canadian governmental debt) and I see the deflation of hard assets, beginning once interest rates rise in Canada, likely the 3rd or 4th quarter of this year. This government has had a major hand in both running massive federal deficits and rapid asset inflationary policies through negligent CMHC regs.
Stagflation is whats to come and it only comes through corrupt, inept, incompetant governments that are far too blind and hypocritical to see it coming. Well readers… we’ve got that kind of government. Its down to damage control now. Replace the bums that got us here and hope there’s time for a soft landing (there isn’t much), or go with this bunch of misfits we’ve got and brace for a hard landing. Personally, I’d expect a crater by the time this one is over considering how educated voters are in Canada.
#46 Will
Right answer wrong reason – RBC wouldn’t stop providing mortgages because they don’t carry the risk – CMHC does. Moral hazard.
No freeze on spending for PM’s own bureaucracy
Privy Council costs set to rise by $13M
“The very day the Speech from the Throne delivered a tough message of restraint to curb a $53.8 billion deficit, the government released financial estimates showing that the budget for the Prime Minister’s own department is expected to spike by 21.9 per cent – or more than $13 million.”
http://www.thestar.com/news/canada/article/777567...
Nostradamus Jr. #17 and #43…
What alien or robot has taken over Nostra Jr’s body??? Two posts and not one mention of West Van???
Sad story, something I don;t understand.
Maybe boomers can chime in on the blog.
How is it possible that these well educated boomers who have been in senior management posistions for many years, posistions that require them to manage company resources, cannot even manage their own meager resources?
Im sure that as a VP of a media company, he climbed the corporate ladder and held down great posistions for many years paying 60-80-100-120k etc… And to only have one year of living expenses saved?
This is really bad news because if a boomer in the top income bracked cannot save, then what about the boomers who where working in factories?
Our service sector/consumer economy needs people to consume, people like Josh will never again consume at the same pace they once did. times that by millions and think about what that means for our economy 5-10-15 years out.
#27 Joe
Hey Joe, i don’t know if this helps, but my biggest roadblock in recent months to starting to preserve wealth was my “it’s different here” blinders. It’s taken me almost a year of stubborn denial that “my properties could never possibly go down”. It was the travelling and research that opened my eyes to the macro situation around us. It’s a big world economy we’re chained to, and the slack’s about used up. Anyway, if i have any advice it comes from a friend who bought investment property in and around St. John about 2 years ago – thinking the Irving refinery expansion was a sure thing. As a bunch of investors capitulate, it could have a fairly large effect on a small undiversified market.
Q. If interest rates start to move up, is this GOOD news for the banks (their stocks will raise, profits go up) or BAD news for the banks (reverse)?
Mike
Calgary Rocks,
yea, “trickle down” economics for universal prosperity, just like in the States.
#54 JW,
I agree. It is sad that the entire group under 40 whether they are Re agents or buyers have no clue about what will happen. This is why the opening up of the 0/40 and 5/35 loans was such a bad idea. If the gov’t had lowered interest rates but had tightened the lending rules it might have made sense but what they did was deceitful and cowardly. A sad vain attempt to get the younger generation to stoke the economy, claim victory over the recession and head to the polls as heroes. Then watch the roof cave in.
An entire generation is going to learn a very harsh lesson over the next few years. It is terrible how deep these scars might run.
#1 Van Renter
I think Garth has used these 2 stories to show
The buyers of the Leslieville home are likely first timers or moving up from a condo, maybe starting a family.
They are the ones who are feeding the market, and their ability to buy is due to the low interest rates.
The boomer in the ex-urbs is at the other end of the market. Normally a buyer for his home would be someone moving up from their second or third SFH.
But he can’t sell it, because there is a link missing- there are no buyers moving up into his home’s price range.
So all the activity in the market is FTBs, fuelled by low interest rates.
The juxtaposition is intentional- it seems illogical to you because it is illogical.
Mr. Boomer needs someone who is moving up in life and is secure in their employment, an no one really feels that right now.
The Leslieville home is pure emotionally-driven behavior by young families tired of living in a small space and fearful they will never get out of their condo.
sorry- the sentence should to read
“to show that the market is indeed in the last stages of pre-pop bubble. Those who need the liquidity most can no longer get it”
Andrew ( SIMW )
“most people (renters for sure) live month to month ”
********************************************
I take exception with your generalization. I actually live for the 15th and 30th of every month. Make the money, stash some in the market, contribute to CPP and company pension plan AND have my RRSP maxed out.
In your esteemed judgement I probably should live month to month … why ? because I am a low-life renter perhaps ?
Why aren’t we talking about the y/o/y decreases (for the month of January):
Yukon: $14,000
Yellowknife: $30,000 (or were these numbers reversed by mistake?)
Edmonton: $2,000
Saskatoon: $8,000
Regina: $14,000
Halifax: $1,000
PEI: $10,000
Source:
http://www.crea.ca/public/news_stats/statistics.htm
Josh- you need to get into survival mode -NOW!
Suck up, swallow a little of that $160000/yr. ego and go into full damage control. Cut expenses to the bone.
Rent a room/ basement in the mansion. Rent out those 3 bays in the garage to a car collector. Stop the cash hemorrhage. Ditch that Audi. Start free lancing. Start 2 businesses. Until you get them up to full speed, start cutting grass or providing a service in that upscale neighbourhood. Drive a school bus and look for opportunities in the downtime between runs. Apply for entry level jobs everywhere. Look into possibly of instructing at a college/university or put together an 8 night/ 2 day session to train others perhaps in medium and small businesses.
Colleges, universities and schoolboards pay people $35-40000 a year with a full benefit package to mop the floors. If that’s what they offer you, take it!
“I’ll be glad to work straight nights and every weekend too.”
Go get’um and good luck to you!
(Garth- See ya at Chapters in Kitchener tonight)
#38 X
Jeff Rubin was stridently calling for $200+ oil when it was $147.
His “analysis” of China consuming its way to proving his thesis? Laughable until average wages there grow just a tad beyond $2US per day and the people are actually able to provide a domestic market and afford some of the shite they make.
Jeff Rubin = commodity zealot = broken clock = zero credibility
#35 Kurt, #53 Live Within…
I’m judging no one and yes, accidents do happen. But to 51 year olds? Please! I’m 53 and have a teen and a 20 year old in residence. I love em dearly and don’t really care if they are still living here when I’m 65, times being tough and all. But would I want to deal with the teenage stuff then on a full time basis? Not a chance.
Have you read Rubin’s book? You might judge the man differently. — Garth
For those who saw on TV there’s a global recovery underway, try this 1 page assessment of where we really are Is This A Real Recovery?
“You can’t borrow your way out of a financial crisis….”
Covers the global economic situation with laser like clarity. Highly recommended. Great charts and graphs. No wasted words from this Aussie, a quick read.
If you are interested in trading and technical analysis there is a ton of free info on that site, and some of the clearest written explanations I have read. I use StockCharts, but Incredible Charts have the global data if you trade the ASX or other global markets, and it costs about half.
Garth,
Next thread, Why is there so many quiters and retirees at the BOC on the Cusp of a housing collapse!!!
If above link does not work:
http://www.incrediblecharts.com/tradingdiary/2010-03-09_economy.php
#43 Nostradamus jr.
Not only are the mortgages back by CMHC, so we as taxpayers will all be on the hook for the defaults.
BUT the government will also be dishing out billions in programs to help all those poor fools that will be underwater on their mortgages.
Hmmm …. maybe we BEARS should put all our assets in our kids names and buy houses with big fat mortgages. Then we just sit back and wait for our share of government relief.
#74 robert
..Jeff Rubin = commodity zealot = broken clock = zero credibility
Funny, he called the $50 and $100 price right on q. Ya we are not at $200, however, in nominal terms oil is the highest it has every been in a recession; the deepest recession since the 30’s. Imagine the price of oil when (not if) the world comes out of this mess.
Rho-oh. Helena’s not in her seat behind Harpo for question period.
#74 Robert,
I find Jeff Rubin to be lucid and compelling. I thought his book was very good. If he is off in his predictions it will not be by much.
I have also been to China. His analysis is far from laughable when you drive the highways around Beijing or Shanghai.
I would be careful about how strident you are in regards to his opinions.
Not all boomers are created equal. Your friend is a back end boomer, these are the people that paid the high prices that fed the front end boomers and their parents.
#78 omg on 03.10.10 at 2:11 pm
#43 Nostradamus jr.
“”Not only are the mortgages back by CMHC, so we as taxpayers will all be on the hook for the defaults.
BUT the government will also be dishing out billions in programs to help all those poor fools that will be underwater on their mortgages.
Hmmm …. maybe we BEARS should put all our assets in our kids names and buy houses with big fat mortgages. Then we just sit back and wait for our share of government relief.”"
…..That CMHC (Canadian taxpayers) are on the hook for any mtge defaults across Canada seems to be an overlooked point on this blog.
…You are the first here to recognize this.
Nostradamus jr.
History about to repeat?
[from the TORONTO STAR archives, author Maureen Murray, Date: Dec 31, 1991; Page C.1, Section: BUSINESS TODAY]
Harry Stinson and his partner, Brad Lamb, said many of the people who suffered losses during the real estate slump of the past two years stretched themselves too thin and purchased properties they could not really afford.
“Unfortunately, people forced to sell had to accept 1991 deflated prices.”
For instance, Stinson real estate recently sold a penthouse for $299,000 – a couple of years ago it would have reaped $450,000 to $495,000.
Star photo (BERNARD WEIL) BOOM TO BUST: Harry Stinson, left, and his partner, Brad Lamb, feel the collapse of the condo boom returned sanity and stability to the market. chart Condo sales pattern (SOURCE: Greater Toronto Home Builders Assoc.)
#60 daystar on 03.10.10 at 11:57 am
Stagflation is whats to come and it only comes through corrupt, inept, incompetant governments that are far too blind and hypocritical to see it coming. Well readers… we’ve got that kind of government.
*****************************************
Agree with your call on Government–no question–
Stagflation i don’t think will happen–
btw–i use US data because they are so far advanced in their credit unwind–and i think we mirror them–
all the way–jmo–
I can easily see why it looks like stagflation right now–
At this point-my view–is hard to defend–
Once again unemployment (world wide) is what makes me think–that deflation will be the outcome–
Prices are sticky here–because of stimulus and government trying to prop them up–
But we know stimulus must stop–at some point–
When it fails and it will–
Prices can hang above the market clearing level for only so long–
If unemployment levels continue to rise –this will be a drag on purchasing volume–
Producers “must” sell—or cease to exist–
If inventory’s pile up–prices “must” be reduced to the point that buyers step in again–
This is a normal market condition–
This is the free market–forcing prices lower–
Which is a good thing–yet–
We have the government spending billions of our dollars- holding prices higher–
This will fail–it always does–
(btw–food and oil–always an anomaly)
I would agree with stagflation if unemployment levels don’t rise and housing doesn’t completely flame out-but-
I think unemployment will continue to rise and housing will do what the market wants it to do–and that-is reprice–much lower–
The coming loss in peoples net worth–is “deflation”
This lack of spending power by us (global)peasants–can have no other final outcome-then lower prices–imo–
The longer governments interfere–the more painful this will be–
US 30 yr–
In stagflation rates are normally higher-
if markets tumble–I think rates will go lower–
“If”–Markets tank–
I think we’ll know one way or the other–
in the next few months–
http://stockcharts.com/c-sc/sc?s=$TYX&p=W&st=2001%2001%2011&en=%28today%29&i=t59134475322&r=7170
At 46.89 today–
We are still–in a low rate down channel–
which is consistent with deflation–
http://1.bp.blogspot.com/_nSTO-vZpSgc/SRnGNw6Gt-I/AAAAAAAADuc/4Bz2qb3GU5c/s1600-h/%24tyx-monthly.png
#83 NDS Jr.,
Everyone has been talking about the CMHC problem for months now. Where have you been hiding?
This is why so many people – like myself – are angry and Harper and Flaherty for relaxing these rules. The banks have been lending because of the CMHC guarantee and we collectively face more than a trillion dollars in guaranteed loans.
This is fundamental to the Angry Bear mentality. Once F went off the reservation and relaxed the rules he put us all in a collective state of high risk. It was irresponsible and it is going to turn into a multi-billion dollar problem over the next few years. It is the Canadian version of the subprime loan scandal and it is coming to your tax bill soon. Yes – you – even in North Vancouver.
#64 Kitchener1 – “Sad story, something I don’t understand. Maybe boomers an chime in on the blog”.
As one of the leading edge Boomers, a grade twelver, not a university grad, I can say fairly confidently that one of the things with people at every level in our society is that we tend to live up to our incomes. If you make 30 grand you live up to that (not very well I might add), if you make 50 or 100 grand, you live up to that. If you make millions like CEO’s of banks and corporations you live up to your earnings. The thing is that there are basic costs in life that have to be covered and some of these costs represent a huge part of a persons income at the lower income levels such as housing. For a person earning 30 grand and paying say a miniumum of 1000 for rent this represents a large percentage of their earnings. The middle income and the higher income earners could also rent that same suite but they don’t because they can afford more. Same goes with food. Those at the lower end eat kraft dinner cause that’s all they can afford and the next one eats hamburger and the next one up eats steak and on and on it goes. For those at the lower end, saving for retirement is next to impossible. Those in the middle its difficult when you consider that for 20 years of their lives they are generally paying off a mortgage and at same time raising children as I did. Saving for retirement unless you were in a gov’t job with a good pension or stayed with a company for your entire career and able to retire with a pension, is extremely difficult even if living conservatively since saving does not generally start until the kids are out of the house and that can be in the late 40’s or early 50’s depending on when you started a family. Those who went off to university after high school put off getting married and raising a family whereas those of us who went to work straight out of school ended up getting married, buying a house and raising a family shortly after. Those who went to university came out with huge debts that had to be paid off unless they were born with a silver spoon in their mouths. I didn’t know many of them who were. Most boomers like myself worked very hard their entire lives but there are so many unforseens that can come along when you least expect it and throw the entire plans out the window. A couple stock market crashes wiping out half your retirement portfolio, housing bubbles crashing the value of your home (one more to come soon) and one that is not mentioned much on this blog is the marriage breakdowns and the drastic effect that has on any retirement plan. Double expenses, remortgaging of homes to payout spouse or selling and renting, alimony, etc. And when you read that the percentage of marriages between 50 and 65 that end in divorce or separation is up near 50% its no wonder that we have a retirement crisis in this country. The other thing to keep in mind is that many jobs that boomers without the university education held were seasonal as in the logging, construction and fishing industries so unless you were good at budgeting, it would have been difficult in the months on layoff to even consider putting much away for retirement let alone going on lavish holidays and fancy cars. I see more of this with my own children and children of other fellow boomers. I wish sometimes that I had the cash that all the toys sitting around their yard and the big new vehicles (usually two) represented. They are behaving more like the “War Babies” (the blessed ones) did than the post war “Boomer” generation. The “War Babies” were also very hard working group but they were the ones that mostly got into the “toys thing” and “the new car every year thing” but they were also the ones more likely to have stayed in one job and one company their entire lives as their parents did and there was nothing wrong with that and they enjoyed the benefits as a result. The boomers I believe were more restless and changed jobs more often as jobs were very plentiful when they came on the scene. It was not uncommon for them to change jobs every 3 or 4 years but the problem with that is you don’t end up with a pension at the end of the day, only what you are able to put away for yourself which in my experience is far from adequate. An individual attempting to stash away the same cash value as some of these pensions that some corporations and gov’t agencies hand out to long term employees would be almost impossible to match as an individual. You could put away half a million but that would only cover about 10 years living expense (assuming it didn’t get wiped in a stock market crash) and you would not be living lavishly at that either. Problem is, for most people saving a half million is near impossible even with the best of efforts. I hope this helps to explain some of your thoughts on this Kitcher1. Ronaldo
http://www.torontosun.com/news/torontoandgta/2010/03/10/13178011-torsun.html
Unemployment has now peaked and the province will create some 223,000 jobs this year — with 40,000 of them from infrastructure alone, says the Conference Board of Canada.
Those jobs will shave 1.3% off the unemployment rate, according to the board report to be released Wednesday.
…..
Government infrastructure spending in Ontario is estimated to have supported 182,897 jobs in 2009; this will rise to an estimated 223,268 jobs in 2010
….
#60 daystar
I can only assume that for a rise of that size, that the BoC sees a more agressive advance by the fed in the near future and that they are trying to alleviate any pain to Canadians in smaller increments then what the fed will unlease.
The current government at least understands that the days of cheap export labour are all over.
So has our dollar really gone up in value or has the American dollar tanked? Thats retorical because we know the answer.
I really don’t think following the American dollar down is a good policy so that in turn we can accumulate more depreciating American dollars for our commodities.
The offset of a higher valued dollar has given Canadians more purchasing power and I can see that but selling off certain assets, private or public(especially public), we’ll get more bang for our buck.
Commodity based currencies such as Austrailia and South Africa have moved rates forward, possibly another reason why the foreseen future of such a hike in Canada. (Although I haven’t pondered why that would be)
In order for the Canadian dollar to drop at this point, investor confidence in commodities have to bite it hard such as the 90’s.
Has the tide turned, is Canada now with its strong dollar poised to become an innovator again and utilize that strentgh to upgrade and improve infrastructure for industry? I don’t see really any other option than to go back to the days of telecom,aero space and simalar indutry greatness.
As for stagflation, that would be a dream, we are about to get an off-shoot of stagflation in which we have, asset deflation, price inflation and stagnation in wages. At least during the 70’s wages tried to move lock step with price inflation. If there is any sort of price deflation it will come from cheap Chinese imports.
Thats my take and I’m sure I’ll have lots of folk that disagree, but thats ok isn’t it?
#9 Dan in Victoria on 03.10.10 at 12:45 am I wish your buddy luck Garth.
From my neck of the woods… a fellows friend asking for help for his buddy.
I know many people like this, tough as nails, worked in the forests or out on the fish boats all their lives.
Dan, I just returned from North Island, (hardy area) last time I was up there was about a year ago, as things were settling in for the next wave of lay offs, 1 year later and there are HARD TIMES happening up there now. You can see it in the eyes of the people you talk to. Too many shut downs, too many layoffs.
I just rented Michael Moore’s new film, “Capitalism: A Love Story”. It is worth watching. Make sure you view the Special Features.
Who IS really in charge? The banks or the government?
Garth, thank you for posting this dose of reality. As I am near in age to “Josh”, it is a poignant reminder of how unprepared many people with major obligations are and that their lives will be impacted more than they could have imagined or wanted.
The story of “Josh’s” life and what it will become awaits all the fiscally imprudent Canadians of which there seem to be literally millions. The lessons of the past need to be relearned as this boom has caused amnesia in those who should know better and seduced those of little fiancial experience.
Canadians (and I am born in this country) have finally outdone their neighbours to the south in something, pity it wasn’t just hockey!
#88 Tim,
The Conference Board of Canada are quite possibly the most optimistic cheerleaders out there. Every report is positive. Two years ago they said Canada would not have a recession.
They are less reliable than the weatherman or an astrologer. They are front and center in the cheerleader economy – if people are optimistic then it will be so. The MSM buys it hook, line and stinker.
# 11 Tax Haven
Agree completely as no one puts a gun to your head to buy an unaffordable and unwise purchase that sinks you financially. While the temptation exists as provided by reckless government policy and complicit banks, it is, in the last analysis, up to the individual to actually consume the financially poisonous Kool-Aid on offer or not.
most people have their rrsp money in the tse and stocks without really knowing what they are doing. (well some of you think you know what your doing)… this is following the herd of poor to middle class thinking.
doesn’t anyone on this blog want to be rich? are you really happy renting? are you happy gambling with your money in stocks that you have no control over? (Nortel).
why are most of you following what the cdn gov wants you to do? that is pay into the cpp plan and put your earned money into rrsps? the only reason the gov has the rrsp program it to get YOU to invest in your own retirement. they know the cpp plan is not enough. so my question is, why does the gov have to tell you want you should be doing? should you not just look after yourself?
why do so many of you think its a good idea to have or expect that our gov will look after you when your retired?
rrps and cpp are for people that need an incentive (a push…. to be forced) into saving for their retirement years. I am afraid that we will not have enough walmart greeting jobs for all the people banking on rrsp and cpp.
trouble times are ahead for most of the people who think renting is good and for those who think renting is better than owning. my wife and i find it comical to hear those now renting waiting for some big crash to happen.
can u let us know when the next stock market crash is going to happen to? will it be sept 2010?
if any of you are enjoying my posts and are learning something, please let me know and i will continue. if not then this will be my last post trying to help others as i dont want to try to make a difference if your not paying attention.
Anrew (sam is wife)
Thanks for the lithium tip WLC it went up 3.50% today. Could i ask what you think long term about it?
DaBull: yes, location – but it’s demographics coupled with CMHC/BOC shenanigans that is changing the relative desireability of the locations. Still, as far as proximate cause goes, you are totally right: LOCATION.
Thanks for the explanation North Van Dude. There is still a bit of a gap there in my mind though…
You have the first time buyer or condo owner moving into the Leslieville house. You have the seemingly missing third or fourth SFH buyer (not) purchasing the large home in the suburbs. That certainly makes sense.
Where is the owner of the Leslieville home? Aren’t they the ones moving out of the SFH and into the larger home in the suburbs (or maybe there is another step or two in there)?
I do not know what it’s like in Toronto, but in the extended lower mainland there are currently 15,604 listings, pretty steady from when I started watching quite a while ago (has been going up and down by a couple hundred or so daily). Of that, only 151 appear to be foreclosures. I’m making a big assumption that it’s similar in Toronto, maybe not numbers wise but percent wise.
So where is that Leslieville family going? For every family moving out of a house, they are moving into one somewhere else, and the ex-occupants of that house are moving into another. With home ownership numbers on the increase renters are moving into that same pool of finite housing resources.
So again, I remain confused. If it’s truly about demographics, and the top end is being squeezed down, doesn’t that mean continued high competition in the middle band? Continued high prices, availability at similar or lower levels?
i would like to thank Garth for this blog. it shows that people need help. it is nice to see that people like Garth are trying to help those who are in need of a balance.
Garth, i read your book in a day (i guess i have too much free time) and enjoyed the read. i would have thought that you would have spent a bit more time on why investing in oil could have more upside than gold. perhaps you can get away from your real estate posts and throw a few oil, gold, stocks etc posts in the mix.
keep up the message and be true to what you believe.
Garth that picture up top says it all!
Never the less the trap you can see is no trap as long as you keep a safe distance from it.
Steven
Hold on just a doggone minute. Garth, you had stories almost identical to this in “Greater Fool.” That book is now, what, two, three years old. Are those same people in suburbia still sitting waiting to sell their houses today? I’m doubting that very much. A single case study doesn’t make a market. But thanks for keeping us entertained, nonetheless.
You too, realtor gal! — Garth
Regarding posting #11.
If the prices of goods, services and labour are too expensive in Canada and must come down then there is only one way to make that tolerable . That being a massive 90% plus collapse in real estate and vehical prices. Otherwise I think non union and non government workers need a massive 3 digit pay raise to catch up with 30 to 40 years inflation without any real pay increases. Baring that I think you will have stagflation, high unemployment and very poor home sales.
Steven
Friends, Ottawa wants an 80 cent Loonie to support what’s left of Ontario’s Manufacturing Economy.
…Interest rates will not riseany substantial amount until after the Loonie drops.
This current era is Deflationary not Inflationary.
Smart people and investors are doing so in big centres…the future jobs are not in the smaller evillages and towns.
If foreign oil costs rise….living in the big city allows for public transit.
If property values plummet across Canada, led by the so called Bubble Cities….Uhmmmm, Canadian Taxpayers take the loss as Canadian Taxpayers are the guarantors of the CMHC potential losses.
…There are two sides to every story…
Nostradamus jr
please don’t stop Andrew!
Often when i take a trading break, i cruise through the posts on here looking for some entertainment. You should give swing trading a shot for fun (channel trading). I’ll show you how to consistently make 10-15% ROI per month with some safer mid-caps (& tight stops) and rarely hold a position overnight..case of a market meltdown. Oh and careful with your ROI’s on leveraged rental property next few years, some of my best +ve cashflowers over the last 10 years aren’t looking as +ve last few months.
#95 Andrew (Sam is my wife)
Please stay…please! I need a reminder that people who think investing in real estate now is a good idea are full of s…. and themselves (and condescending to the exteme).
Thanks for keeping me in the bear camp.
#95 Andrew (My wife is Sam),
Your posts are progressively getting more and more bizarre. RRSPs are a good arrangement because of the tax savings alone. Of course the gov’t is leading us into them but so what? The number of people who do not utilize them is really the sad issue.
The taunting you give to renters is really unseemly. Most of them are working hard to save their money and are just looking for the right time to buy. If they haven’t maxed their first time RRSP buyer contribution then that is where they should be putting their money instead of over reaching into the current RE market.
Most of the Bears on the Blog own property. They simply counsel against following the herd at a time when the future of real estate is so precarious.
Look at it this way. There are people a whole lot smarter than you or me like Professor Robert Shiller who think many Canadian cities are in a housing bubble. What do you know that he doesn’t?
Nothing.
#98 the leseliville owners are moving into the nursing home. Their children split the spoils and each buy their first condo with the proceeds. Thus we have multiple first timers, and no move uppers. This is what Garth is taling about – as the boomers retire they DON’T move up, they sell and move laterallty or DOWN instead.
We looked at houses in Thornhill/Vauhgn – literally the middle of nowhere – last spring for 800k+. On a sunday afternoon it took us 50 minutes to drive to our dowtown condo. In rush hour? Don’t even ask. No boomer or downtowner is every going to move out there at those prices.
Who are the move uppers now? There aren’t any…
Andrew #99:
I agree. I’d like to here more posts outside the realm of real estate.
Investing at this juncture in history is very tricky:
Rising interest rates are a certainty – putting bonds and prefered shares at risk of correction.
Many investment managers think the stock market correction is too much too soon.
Gold is based on emotional reactions and doesn’t pay dividends.
Oil fundamentals don’t support today’s price and the run up to $80 oil is has a lot to do with forward speculation (I also am a supporter of peak oil theory but today’s prices are out of whack with current supply and demand).
Garth – Where does one invest to get ahead?
# 87 Ronaldo
Pretty good explanation of why most people don’t have much by retirement, but I think you are being a bit too easy on people. We have lived the past three decades or so without any concept of fiscal discipline in the general populace and many are to blame for their own situation.
Just look around you – people buying 3,4 or even $5 coffees daily; kids buying $250.00 jeans; $400 / ounce dope; everyone wanting BMW, Mercedes, Lexus; total lack of meaningful savings.
Hey, I like those things too and can afford them thankfully should I want them, but if you make less than 50k and live in Toronto, you really cannot afford those indulgences at all or very, very infrequently. The credit card puts these impecunious consumers on a buying par with those who can truly afford such extravagance even though they do not have the lifestyle appropriate to the level of quality or as a % of income.
The advent of widespread credit in our society, unchecked by the critical eye of self-restraint and abetted by an unearned sense of entitlement and the seemingly worldwide desire to “see me – dig me” has brought modern civilisation to its financial knees. The only exit now is government trickery, heavy taxation of those who were prudent, default or repudiation of debt or some combination of all four.
As the “One more thing” guy repeats endlessly – welcome to the great global reset! Boy is he and his father right!
Lower your expectations dramatically or perish.
I have been looking at new houses in Markham (North of Toronto) lately — I am technically in the market for a new house – first time buyer — but I do realize that the market as is I should probably stay on the sideline and live at home until I get married next year.
Both times for the homes, there were long lineups outside of the sales office, where you don’t even know of the prices…then in a few hours, the 40ish lots are all sold out….
I always leave a contact number just in case and both times, a week or so after I get a call saying one or more of the lots are available now…
What gives..?
#85 jr.
Right now the U.S, UK and EU are walking a knifes edge. The are all trying to co ordinate the withdrawal of money and credit from the system but at any moment could trigger a deflationary spiral by freezing up the credit markets. Over the next year to year and a half we should have increased inflation but without new stimulus the U.S economy will once again begin to sink and unemployment would move higher. The bailouts and stimulus to date has only caused the U.S to drift sideways and extend the inevitable, not a good result for 12.9 trillion. What will they do for an encore? The end game will eventually happen, that will be when governments pick a time to pull the plug and the mother of all deflationary spirals will occur which cold last for 10 years plus. With this in front of us we need to use history as a guide as to where to protect ourselves. During the last deflationary depression gold doubled in price, and Homestake mining, the major gold company at the time went from $34 a share to $630 a share. Cash was relatively safe, but it was also backed by gold, not this time around. This time their will be debt defaults between countries and currency devaluations. So its pretty clear to me what people must do…
I cannot fathom how Josh, making that kind of coin, at that age, could be so screwed.
I feel so special now…
44
Self – Employed, making half of what Josh did
No Debt (aside from small Mortgage)
No Kids
Scored an “instafamily” at 38 with the kids on the way out the door
3 Grandchildren (step obviously, but not to them)
Mtg is 1/8th house value
Sweet 1970 bunkerlo on 3 acres, yes, there’s Bass in the pond…
How?
- Self Employed Since 25 (love that 10% tax bracket
- No Delusions of Grandeur or concerns with keeping up with the Jones
- Trailer, Not Cottage, up north (pre bunker, now sold)
- Strong Aversion to Debt
- Frugal – Kijiji is my best friend
- Hard Work and Diligence
Neither Rich nor Poor, but content.
Common Sense ain’t so common….
#95 Andrew (Sam is my wife)
Forgot to mention the entertainment value you provide…
Are you still coming to Halifax April 13th. Also, where and what time. I need to book accomodations. Unless you are coming to Saint John.
Details will be announced here shortly. But no Saint John this Spring. — Garth
Seems like the differences being that one house is in the city central, the other one in the suburb. But what do you expect, it’s weird out there now. Just be in a defensive position, keep a low profile and you probably would be ok. But it’s fun to watch the hole thing though.
>#1 VanRenter on 03.10.10 at 12:11 am
>Why is it that in one story an ugly, run down, rat hole
>gets multiple offers in a bidding war and finally sells for
>more than $100,000 over closing and that points to
>trouble ahead, yet in the next story a decent house has
>no offers in 6 months which also points to trouble ahead?
>I’m certainly not trying to be a smart a**, but what
>exactly is the message supposed to be?
Post #95 Andrew. If you truly want to help people, you first have to learn to communicate with them.
First off be truthful with them. (Not saying you aern’t)
Post what you are doing, and how its working for you.
Let them digest it and go with it.
Realise that we are all wired a little diffrently and what works for one may not work for someone else. Accept that, learn from that person. What would the world be like if we were all the same. Yuk.
If someone disagrees thats fine, don’t take it personally, and go into a meltdown.
If they attack you personally go after them then. (Your an idiot, or your dumb that sort of thing)
If we all work at making this blog a “Go To” place for Canadians, and others from around the world think of the possibilities. If they know that the posters here are honest, thoughtful, and a good source of facts, it could help countless people.
Aern’t we all looking for the truth?
I hope you stay around and continue to contribute I enjoy your enthusism, and your points of view, and you may help someone make a better life for themselves.
But please Andrew, no more 24/7 infomercial.
A good example is Peter Wiener when he first came here he was a little abrasive, he changed his style and now he is one of my favorite posters, makes a lot of sense. And I really enjoy reading his thoughts.
I hope that you will take this as constructive critism.
Good Luck.
#87 Ronaldo on 03.10.10 at 4:00 pm
—————————————————
Don’t worry about the grade 12′er thing, Steven Lewis only has that and if we were all 1/2 as intelligent and caring as him Canada would definitely be a better place.
Too bad about Josh’s situation. Rather than having overextended himself so badly, he should have used the bounty of good times to advance his situation in measured steps.
“Boomer properties like this – large and suburban, where it takes a litre of gas to go and get a litre of milk – are about to grow even more unsalable.”
I have spent the past few days working in the garden in my North Saanich “Boomer palace in the burbs.” I love it. Since the place is paid for, I don’t care what happens to the price of real estate in my area. Sure, it takes a litre of gas to go to the store. That means we have to be smart about how we schedule appointments, shopping trips, and errands. We try to arrange things so that we can do lots of things on one of our infrequent trips down the hill.
If for some reason I lose my job, I am fully prepared to do any type of odd job such as gardening to bring in the few dollars it takes to pay the taxes, buy some groceries, and keep a vehicle on the road. This year’s crop of vegetables is already starting to emerge in the vegetable garden (ha ha… the inevitable obnoxious west coast gloat…blossoms and all that stuff). One of the reasons I spend a lot of time learning about gardening is to increase our self-sufficiency should the economy take a turn for the worse.
I have noticed that quite a few of my neighbours have a lifestyle similar to mine. Since there are so many who continue to live very comfortably in our fancy burb, I suspect that there will continue to be a reasonably strong demand for houses here.
Andrew and Sam
please do leave and don’t come back. your insalts towards renters are hurtful. you have no idea how the rest of us live. you may be smart and rich but to me your a bum.
#103 bullbear and #104 Reasonfirst — Good posts. When we sell our home, we will rent either a townhome or an apt., and place the net proceeds in our six Cdn. equity mutual funds and one I.T.
Last year, they rose 15-20%, with monthly DRIPs, so any further amount will be the non-registered plans (RRSPs are already paid for).
——
Welcome to The United States of Iceland! Would you like fries with that?
Would this be for the preceding?
Comment from wrh.com is better, as it applies to the western world: “You cannot save the economy until you bring back the high-paying manufacturing jobs for the working people. Any other theory is delusional thinking backed up by creative bookkeeping.”
Govt. doublespeak at its best. Look for the CPC to do the same here with CMHC.
Black Sun — For science buffs.
Suppose the US places HAARP (or whatever it’s called) to rupture this.
Spoken earlier about the shift in cycles from Caucasian to Asian. Here’s another.
Remember Bruce, the mechanical great white shark from Jaws? This is him in better days!
Politicians at work is an oxymoron — they don’t exist!
Some of Detroit’s homes are selling for $1, so this is how state govts. are looking at dealing with the problem.
This sounds like Canada:
China bubble fears mount
Concern is rapidly mounting that China may be headed for a property bubble. Property prices rose almost 11 per cent in February from a year earlier, the government reported today, adding to recent fears that the market is not sustainable. The government’s numbers come as many in China find prices out of their range. “I sigh at every fancy apartment building I see on the way to work every day, but that won’t change anything,” Yang Xuhua, a prospective buyer, told The Associated Press. “My salary increases but it can’t catch up with rising housing prices.” Read the story
globe and mail
We should all watch for the “Joshes” of the world, working at Home Despot in the tools section, angrily humming the Beatles tune, “Maxwell’s silver hammer..”
Back away slowly. Oh, and Josh, I’ll by your place, sight unseen for $250K cash. OK, maybe not yet.
so he gets wiped out financially, it’s not the end of the world. he still has his health and can flip houses in the future. it could be worse. at least they didn’t fly 747s into his living room . or use box cutters to cut through the stucco and densglass on his mcmansion and take him hostage. he should be grateful. he can live in a car.
@1
I’ve been watching the mls listings in the lower mainland of BC for a couple years and I have (anecdotally) noticed a pattern. High end real estate prices have had an upward trend but as a portion or percentage of the total value it has been less than mid – low range housing.
For example a 400000 house climbs to 700000 meanwhile 1mil real estate climbs to 1.3 mil.
Does anyone have hard numbers on this or know where to access them? Anyone have any sense of what it means?
Back to the story. I don’t relish the idea of getting my housing opportunity at the expense of a fellow Canadian without future employment prospects and a family. This situation has been severely mishandled at the expense of Canadians.
#81 Junius
If I listened to Jeff Rubin and acted on his analysis I would be broke. The most money I ever made in the this speculative casino some of you confuse with a market was shorting oil. Oil will be sub $55 and you will be broke eons before your commodity “wish upon a star” comes true.
Lucid, compelling? If you pay attention to his “analysis” any area of this country that relies primarily on truck transport for supply (that would be Alberta, Saskatchewan and Manitoba) is fecked because of his cost “calculations” for goods shipped per tonnage mile. It is cheaper to move goods by ship from Asia to Vancouver, than by tractor trailer from Van to the heartland according to Mr. Rube. If oil prices go anywhere near his silly call, the heartland will be the wasteland. Absolute piffle and tripe but please buy into it so I can maintain my batting average shorting oil.
Unfortunate for your friend that he has that size of mortgage at 51. That is an age when most people should be finishing off their mortgages and devoting their last decade of work to aggressive retirement planing. My father in his late 40s was laid off from his government job in the late 80s. Though he never had the same job security ever again, he did start his own business and found part-time employment. The big plus is that he never had a huge mortgage tying him down and he was able to not only make do, but had more family time.
Heads up Garth.
http://www.theglobeandmail.com/news/politics/stephen-harper-to-reach-out-to-canadians-on-youtube/article1496744/
Stephen Harper to reach out to Canadians on YouTube
Prime Minister to use social media to get feedback on policy – and try to connect with younger voters
To all the RE bears expecting a crash:
“Never ever think you’re smarter than the masses…the truth will eventually catch up to you.”
Translation: maybe this price rise is not a bubble, maybe try to shift your perspectives just a little bit?? yeah?
#109 Tim…
Chances are the people in line are “plants”… These people are hired by developers to create the impression of huge demand. The fact you’re getting a callback informing you there are lots available after this supposed “rush of traffic” confirms this. It’s an old sales technique…
Heard from a reliable source today that if a housing crash and foreclosures were ever to happen in Canada, the main course of action would be to REDUCE PRINCIPAL OWING ON MORTGAGE DEBT.
That’s because the taxpayers are on the hook for all the mortgages so obviously you don’t want everyone to default and cost the taxpayers a whole lot more! Reduce principal and keep people in their houses! Let them keep making monthly payments.
No banks here in Canada holding the mortgages…it’s the taxpayers, so principal writedowns would happen.
Not fair but necessary to save the financial system if Canada’s RE tanked.
Your reliable source isn’t. — Garth
#95 Andrew
You and Nostradamus are two of the bright spots on this blog. Thanks for persisting in the face of all the hostility. The strong reactions are very revealing.
#12 The Original Dave
Thanks for the explanation of bubble length. Your comparative sectoral approach makes sense.
#109 Tim
I’m in the same boat and am having the exact same experience (looking in Markham, Ajax/Whitby, North Brampton, Newmarket). Anyone know why the most expensive, biggest homes, at the grand openings of new builds get bought up quickly and first???
Andrew, I’m learning nothing from your posts except perhaps that you express some real bitterness regarding people who live their lives differently from you. There are a number of examples of helpful, insightful posts that disagree with Garth on this board. The impulse to help and educate is an honorable one, and if that is your intent I don’t want to discourage you. However, this is an open forum and if you write with the tone you have been using, people will simply skip over your posts. If you want to contribute, try carefully reading ten posts a day and think about the ones you actually *enjoy* reading. After a couple of weeks of this, try writing one of *those* posts and see what happens. Good luck!
120 West coaster
I have noticed the same trend. I recall reading from more
than one source that houses go up (or down
proportionally to their value. However, my previous house (sold in 02 for $111k) was listed at $264k (didnt
sell) but got assessed at over $240 – more than double
from 7 years ago. The owners had only done very minor
improvements. My current house, constructed in 02 at a
cost of $270k+ (appraised and assessed at $250k)
assessed as high as $453k, well under double for the
same time frame. Increased more than the old house, but not proportionally.
I’ve never analyzed deeper than that, but each kind of
house trades in its own market. As per Garths story
today, we may see the large, expensive suburban home drop by a larger percentage than the more modest centrally-located dwelling, simply by the supply/demand for each type of house.
I run the maintenance department in a manufacturing facility.
I recently hired a millwright, I had a pool of about forty resumes to weed through, of which all but one or two were qualified.
The majority of applicants were older than me, and I’m getting on. Guy’s who’s resumes were short, because they had just gotten let go after twenty or more years at the same place.
Made me sad doing interviews. Many of these guys are likely never going to work in their trade again.
Time before, about 3 1/2 years ago, I had one applicant.
Thanks 129, Taxpayer. If you ever come across the writing about housing prices and proportional increases let please let me know – I’m still curious about the logic of the thing.
Like you seem to suggest it probably is just supply and demand. There seem to be enough people around right now with cheap money to driving “generic” housing up to a certain point but past that point it would have little effect on high end housing… maybe a study of high end real estate would give a truer picture of our current situation.
i hope andrew and wife stays and continues to help us confused people on the sidelines. i missed the run up and am now priced out of the market. my only hope now is for a market crash. why on earth are people bashing a person that wants to help us?
i am tired of making mistakes and i come here to read and learn. andrew and wife offers a different view than garth and most of us in here and it does get me thinking about what i have or havent done.
andrew is one of the posters i scroll down to find and read. i also like reading dave in victoria’s posts and enjoy when those to square off in a friendly way.
#110 The BigLebowski on 03.10.10 at 6:56 pm
110 The BigLebowski on 03.10.10 at 6:56 pm
#85 jr.
Right now the U.S, UK and EU are walking a knifes edge. The are all trying to co ordinate the withdrawal of money and credit from the system but at any moment could trigger a deflationary spiral by freezing up the credit markets. Over the next year to year and a half we should have increased inflation but without new stimulus the U.S economy will once again begin to sink and unemployment would move higher.
****************************************
I like much of what you said–especially about gold in deflation and the fact–that it really is different–in the sense of no gold backing this time–
Gold weakened all currency’s years ago–when it was cut out–
I have a long held belief–that central bankers will be buying gold- to strengthen currency’s-before this thing is over–
For the other about inflation–
I cannot see inflation occurring–if–you mean–
Increase in money and credit supply–
If you mean price Inflation–then–yes–government stimulus will have an effect on falling prices–for a while at least–
In strictly monetary terms you cannot have inflation and deflation at the same time–one or the other–
Yes–they are inflating the money supply–while debt is unwinding–but–
Deflation is happening at a faster rate then money is being printed–
Also the new money–most of it–is not getting into the broad economy–
It “must” do this–it must circulate-to have an inflationary effect –
US data–cuz–
Canada has the most–gawd awful-money tracking data system–ever devised–ever
Here shows the base money supply and the violent spike upwards–
That is true Inflation–increasing money supply–
http://4.bp.blogspot.com/_nSTO-vZpSgc/SufrV85vfxI/AAAAAAAAHLA/hCeXqyws2vo/s1600-h/Base+Money+Supply.png
If you look at credit supply–which–
Also counts as money supply–you can see the fast deep contraction-
M1–consists of–currency, demand deposits, and M3.
http://1.bp.blogspot.com/_nSTO-vZpSgc/R4QU5HtCT4I/AAAAAAAAByw/FUA7qbH5l_c/s1600-h/m1.png
Currency in circulation–
http://4.bp.blogspot.com/_nSTO-vZpSgc/R4QUz3tCT3I/AAAAAAAAByo/W7PvdEpFsp0/s1600-h/currency.png
You can see the wicked contractions–all deflationary–and in fact is deflation–
then add onto that the trillions in debt that is unwinding and the prices of houses dropping–that we’re levered up 90-1 in the CDO market–which is causing massive unseen losses-in the now obscure level 3 bad banks–
All of it money–credit money–now–debt money–
Credit in reverse–is deflation–
Money velocity is decreasing–
in order to have inflation–
First–Credit/lending must resume–
People must have jobs–in order to get money to spend- in order to have a positive effect on velocity–
This is not happening–which is why i see only deflation ahead–
Canada has overshot the US–by a wide margin–
i think we’ll close the gap fairly soon–
yuck
tune for ya Lebowski (:
http://www.youtube.com/watch?v=yhOKhJaM1QE&feature=related
i hope andrew and wife stays and continues to help us confused people on the sidelines. i missed the run up and am now priced out of the market. my only hope now is for a market crash. why on earth are people bashing a person that wants to help us?
i am tired of making mistakes and i come here to read and learn. andrew and wife offers a different view than garth and most of us in here and it does get me thinking about what i have or havent done.
andrew is one of the posters i scroll down to find and read. i also like reading dave in victoria’s posts and enjoy when those to square off in a friendly way.
———————————————–
Andrew has also admitted to us all publicly that he’s lost his shirt in previous bubbles. He lost his shirt in the tech. boom where he bought at high prices and was admiring his gains (like he’s doing now with real estate). He claims to have lost again with Bre-X or one of those dud companies. His conclusion now is that there is something wrong with the stock market rather than his methods. He’s determined that real estate is the safe haven. It’s his investment choices that are bad. No asset is fail proof. The guy continues buying assets that are overvalued. Maybe for his sake he’ll learn after the real estate mania that he needs to rethink how he’s investing.
#136 jr. thks for the song. Just for that you can call me The Dude…. I agree inflation can’t occur with deflation, like putting a humidifier and dehumidifier in a room and letting them fight it out. But with the Euro , the Pound and the U.S dollar there is one more factor that can cause inflation. That is a loss of confidence in paper money, which could have instant and salient ramifications for all paper money.
CHMC assumed all the mortgage risks from the banksters. Taxpayers assumed all the risks via CHMC.
Do taxpayers get a cut from the profit of the RE sale?
Privatise profit and socialise loss. What kind of logic is that?
117 Peter “Since there are so many who continue to live very comfortably in our fancy burb, I suspect that there will continue to be a reasonably strong demand for houses here.”
Before all the SHTF in 2008, the big news was the “End of Suburbia” topic, a few good movies came out of that in 2007 and 2008/9, do a Google search for End of Suburbia in google vidoes.
Mike
#134 same crap different day
This is Andrew (and wife)’s IP: 24.239.7.174. This is your IP: 24.239.7.174. Good bye. — Garth
Guess somebody just learned another lesson, about how the anonymous internet isn’t that anonymous…
#138 #134- He’s afraid someone will link it to his realtor biz.
ROFLMFAO
Shills 0 – Garth 1,000,000,000
This is Andrew (and wife)’s IP: 24.239.7.174. This is your IP: 24.239.7.174. Good bye. — Garth
ahahaah oh man you just made my week Garth. (yes it doesn’t take much).
Oh and sorry Andrew/samecrap, Compton uses cable modems, one IP to a cable modem for months at a time unless they do a network change. The chances of a change happening in the middle of the day and the same IP being given to someone else in your neighbourhood who also posts the same day on the same obscure (no offense Garth) blog in support of your post is, well, one donkey hair short of impossible.
Oh my God, this is the funniest response I have heard from Garth to date, so funny!! Brilliant!
Andrew/Crap (no pun intended), how pathetic is it that you have to pretend people are liking your posts?
Even more pathetic is trying to take the moral highground with Garth after your insensitive and, let’s face it, Ignorant comments!
I love how you grasp at straws…
“Garth, I have no idea what others ip addresses are but you claim Andrew has the same ip address as mine. I don’t know enough about how ip addresses work but regardless you jumped to a wrong conclusion. I am not Andrew.
The posting of my ip address shows what type of person you really are. You are very disrespectful person.”
What a bunch of garbage Andrew/Crap…
Garth is disrespectful by simply showing how dishonest and immature you are?
Really?
Glad to hear you will be banned from commenting,
go cry elsewhere you dolt!!
I love your guts and humour Garth!
I was laid off last year from a modest paying job at a large corporation. For the first three months I moped around the apartment, played video games, and wandered around the internet looking at various things. Starting over was scary and I was avoiding reality.
Is this what Josh is doing? For a whole year?
Anyhow, after some frank discussions with my wife, I used my very limited contacts and I am now working on a part-time contract. Its not much but its a start. It just feels good to get out of the apartment and be part of the world again.
Anyhow, how could someone who worked in an executive position and who surely has endless contacts (including Garth himself), not find any opportunities at all. It boggles my mind. And no, I don’t feel sorry for him one bit. He has wealth that most people dream of. He can start his business with his own capital.
Josh, if you’re reading this, wake up, be a man.