It has a million people, an average temperature of 82 F, mountain ranges on three sides, a rapid growth rate, and a median house price of $150,000. In fact, the cost of houses has actually eroded in the past year. Last winter (normal February temp, 64 F) the average home was changing hands for $177,500 – 15% more than today. Indeed, prices have crashed $15,000 in the last two months.
And unlike Vancouver or Toronto where a shortage of listings means higher real estate values, in this city the number of houses for sale is on the decline – off 10.5% in a year – while prices crumble. Moreover, mortgage delinquencies have recently doubled, while the number of properties taken over by lenders for non-payment of loans is up 75%.
This city’s moribund housing market is also at odds with the economy, which is supported by a massive university, a famous military base on the edge of town, and companies such as Raytheon, Texas Instruments, IBM, Intuit, Universal Avionics, and Bombardier Aerospace. There are so many optoelectronics companies that the area’s called ‘Optics Valley.’
So, why is Tucson so cheap?
I mean, they have bargain mortgage rates. It ain’t a one-horse town, like Detroit. It’s in a desirable sun belt state. The unemployment rate, at 8.2%, is two points less than the US average, and the same as here.
Paradise, it’s not. Actually, it’s a desert. But why does a house in Toronto cost $450,000; in Vancouver $750,000; and in Tucson $150,000?
The best explanation is probably investor psychology, since Tucson (like Phoenix, Vegas, Stockton or Dade County) is a place where people don’t believe in real estate any more. Sure, there are still multi-million dollar palaces with soaring mountain backdrops, but the average family doesn’t look at a house the way a Canadian does.
Here, we see real estate as (a) a social statement about our inherent worth, (b) a retirement plan, (c) something to lord over your relatives, (d) a ready pool of accessible capital, (e) a perpetual money machine and (f) a place to put the kids at night. In the majority of American cities, houses are in the same category as cars – useful assets which may or may not appreciate in value, and therefore should not be slobbered over.
It’s valuable to bear this in mind. Our two countries share many things. So when the US middle class went delusional over real estate, created a bubble and now – five years later – still reels from the gasbag blast, maybe we should pay attention. Real estate is now judged by 72% of the American population as being a poor place to invest money, Meanwhile last week’s RBC survey showed 92% of Canadians swear to just the opposite.
Perhaps the emotional pendulum swung too far in the States after the bubble burst. Maybe people are just irrational and bitter after being bitten so hard and losing so much. But by the same token, there’s little doubt when 9 of 10 Canadians lust after a house at its highest recorded price, we’re equally nuts.
As I have said before, this basic disconnect between the two countries poses one hell of an arbitrage opportunity. Sell Canada, buy America. Markets here are vastly overvalued as they are vastly undervalued in US. Both have but one direction in which to go.
Dollar at parity? Our national bird should be the vulture.
172 comments ↓
The thing to remember about Tucson is that it is a desert, and, like Phoenix, it is overbuilt with sprawling suburbs. And, it has little water. The Southwest US will be hard-hit with climate change, as they run out of water. Even with people not watering lawns, Arizona has not planned for its desert environment very well. Count the number of solar panels on rooftops.
the thing to remember about tucson is that it had realtors along with bug eyed sheeple
This post is actually about Canadians. — Garth
Great post for a Friday night.
Canada still has old world values, while the rest of the world has moved on. US has all the high technology it needs, this is true value. Other countries are already leap frogging us. What does Canada have? Only RE and Oil Sands???? lol
This post is actually about Canadians. — Garth
That’s exactly my point, our bubble is the same as their bubble, cheap money, over-priced homes used as gambling commodities, realtors, mortgage brokers and sheeple, same game with the eventual same result.
The 52nd parallel means little in this game except that our cheap money arrived later than theirs.
And as you say, delusional home buyers are both equally nuts
#4 squidly77…. the 52nd parallel does mean little. The 49th is the one that counts
Garth,
Do you have any concerns about the water issues in these desert cities? could be huge property tax bills in future years…
nearmilton@yahoo.com on 03.12.10 at 9:07 pm
Great post for a Friday night.
Canada still has old world values, while the rest of the world has moved on. US has all the high technology it needs, this is true value. Other countries are already leap frogging us. What does Canada have? Only RE and Oil Sands???? lol
—————————–
wtf are you talking about? The US manufacturing share of GDP has cratered, it’s < 15% now. And the gap is shrinking by the day for value added high-tech against South Korea and the rest of the east. They have been a net importer of high tech goods since Dubya's 2nd term started.
For a country like ours with horrible productivity, our natural resources are a saviour.
I think I'd take my chances with an extraction based economy and a solid currency then rebuilding the US economy with their gov't debt and totally corrupted political system
……. and this is irrespective of our real estate bubble.
Garth, now your saying prices will go up? I’m confused? I thought they were supposed to start declining this yr.
Also why is there a shortage of listings? Does anyone know what the ratio of sales to prices is in the Vancouver area?
I stated a few months ago that some immigrant parents were practically buying new homes for their kids by giving them incredible sums of money for their downpayment (i.e., $250K). Now, my dad says some parents have taken this process a step further and decided to have their cake and eat it too. They are now transferring all of their cash assets to their kids. In return, the kids buy their dream home with an inlaw suite (or something close to it to accomodate an extended family), and the parents move in with them. In this way, these parents then claim they have zero income, and the Canadian government provides them with a Guaranteed Income Supplement of $20K per year. Unethical, maybe, but it is working.
#4 squidly77…. the 52nd parallel does mean little. The 49th is the one that counts
Whoops, Friday night cold beer brain freeze, the point of my post was that there really isn’t a lot of difference between us and our neighbours down south, houses were regarded as a money making commodity and not as a family home.
I see there is a new Canadian loonie out this year that shows the bird attempting liftoff from its long float on the pond. Maybe if the loonie goes above parity they’ll finally get that bird in the air!
I saw alot of comments everywhere but I just want to let you all know that the stats does not shows about this one where it is happening alot in the GTA area oftens now : You will see alot of homes sold within a few days once listed but no one living inside that home and few weeks later, another agent is listing that house and resell at a higher value (few 10 or 20 K’s more) ..I start to think are they weed house or drug lab … But it does not seems to be. I started to research and I finally understand why we are not seeing prices collapsed in the GTA but alot of people still can afford to buy. I have read articles about how people in China manipulating real estate as source of wealth and how to maintain this as squeezing up the market in bubble prices. Many people I am seeing nowadays who are willing to scoop up properties are South East Asians (immigrants, investors, flippers, speculators). They are buying houses like they were in China’s or India’s style, it is where they are willing to port in the cash instead doing stocks or mutual funds as in Asian countries, people distrust these kinds of assets but as houses, this is the basics of making money by trading it like commodities, some people would also like double or triple or quadruple leverage inside that house (dont ask where are these monies coming from because I know they do have alot of non-ordinary source of funding or newspaper advertised 10 or 20 % yield in lending to real estate inv. club in some free newspaper that targets Asians only). These people usually not selling or renting it or even willing to live in it, these people are mainly manipulators in real estate in GTA nowadays with agents or brokers involvements also. They do not require CMHC funding as they know they can find other private funds that would let them lend up to 95 or even 100 % of the property value. These people will wait until prices goes up and up for 20 or 50 K or even 100 K more, they will sell it. If you all understand, who are the buyers and who are the sellers at first ? Will they know each other to manipulate the prices first and load off that home in bubble prices to a true buyer ? These people usually repeats the same cycle again and again, this will never failed them at all as prices goes up and with more capital captured, they can do that every single time and as first time homebuyer or bubble takers will be taking on mortgage debts from these Asian house launderers…
Buy a ranch without leaving your couch.
http://www.sunsetranches.com/home/index.html
I have also emailed FM for these matters and advised them this has to stop, I got a message confirmation from his correspondent and news came out a week later on this matter…I feel FM is not doing enough at all and targeted the wrong people. Today, its the speculators who are trying to destroying the market with piles and piles of cash crashing in from overseas and swallow most of the RE’s in the metro areas. Look at the waves of peoples who are willing to line up when a new site came out (Markham, Scarborough, Richmond Hill and etc…) I am seeing places in Markham are selling close to 500K for 1600 sq ft. Whos to blame ? These developers are all happy gangsters in the end because who is lining up ? 100’s of SE Asians are pouring in and clean off the whole site (merely 100’s of ready-to-build homes) in 3 days…Another condo building at Kennedy and 401, ready in 2012, Asians behaviors again, cheque book’s ready (means loads of cash in the bank) and long line ups with people rushed to hand these cheques to the seller and few Asians are so worry that they cant buy that or this unit at close to 300K each..they all said prices are too good to be true and expected to double when it hits 2012…Another Asian around age 55, planning to retire, spoke to the re agent as he said he would like to load up few units (250K or 300K target) and try to rent out to homeless (without a purchased home) and willing to setup his own retirement REIT fund with his own home sold off and has over 600K in the bank’s short term GIC and willing to persue a FEW 75 % mortgage to the bank and his cheques bears a large British owned bank with “Premier” on it..Feel free for comments and these are not from stats but you all should feel the heat and watch the heat to learn more of these people’s behaviors (which I think now it plays a major part of the RE market in the Urban areas in Canada) instead of waiting for prices to collapse..
Re 9 — Joseph, you were absolutely correct, this also leads to real estate in bubble prices in major urban areas as I went to these site launches, Asians parents are tended to give large sums of monies for downpayment (does not matter will they be looking for a job or not because parents tends to feed them very well) to their sons or daughters or newlyweds so they can live well in a dream home and friends from their parents or their own can be very proud of the new homeowners as homes are always a STATUS QUO for Asians as compared to BMW or Mercedes BENZ, the more of these exotics you owned, the more the LI-Ka Shing you are…!!!…
Is it possible to buy a house and gift it to a family member?
Then have that family member sell it and split the profit? Say a new wealthy immigrant family from asia,india, middle east with 4-5 children?
Does legislation allow for a one time gift?…Not sure if its possible?
Any thoughts?
Garth I think this guy from Canadian Business follows your blog.
More compelling arguments how a house is not a good investment.
Interesting study is mentioned:
A home usually needs to appreciate about 15% in order for the buyer to recoup all of the transaction and maintenance costs.
http://www.canadianbusiness.com/managing/strategy/article.jsp?content=20100315_10019_10019&page=2
…Meanwhile last week’s RBC survey showed 92% of Canadians swear to just the opposite…
Wow. If this isn’t a sell signal I don’t know what is. What is the old motto? Sell when others are buying.
A favorite tactic of politicians, Conservative, Liberals and New democrats alike, is to pass the problems forward, so that today’s problem becomes somebody else’s problem in the future.) The bonds issued today by Govt to support CMHC and other government debt will have to be repaid by future higher taxes on people who own houses. That is why government is encouraging home ownership. The contrarian thing to do as Americans are doing is to not own houses so that they will not be taxed.
Garth this guy has been writing about this for quite awhile too. Worth checking out- oftwominds.blog
#12 GTAInsider,
Wow , I’m ALL scared.
I think you should leave that posting for Halloween’s days.
Do you, seriously, have considered how much money the RE agency, the government and many others take from the seller and buyer in every transaction ?
Do you really think that even 30K appreciation in a house would offset all the “expenses” in buying a home in GTA ?
Even if you are a first time buyer.
Please, give us a break !!!!
House Price Up 20% IN 2009???
I see this number posted ALL the time by bull and bear alike.
BUT put it in perspective – the 20% increase in 2009 gets us just barely back to 2008 prices.
So any Bulls claiming they are up 20% in 2009 must have bought in Jan-March 2009 – not likely.
Most are just getting back to where they were 2 years ago.
Prices up 20% follow-up
Of course Bulls will claim there is no bubble if prices are only at 2008 levels.
This misses 2 things:
1) prices were already out of control in 2008
2) a whole new wave of people have been suckered in at 2% rates in the last year that will not be able to afford 6% rates.
Sell Canada, buy America.
****************************************
Yes for number one–no for number 2–
You say rates are going up in the US and yet you say buy?
Have you looked at number of re-sets that are coming–not to mention the state and city budget deficits that can’t be met–the number of unemployed–if you look away from skewed BLS government stats–and take into account the people that “want/need” to work full time but can only find part time–
Re-sets–
http://1.bp.blogspot.com/_nSTO-vZpSgc/SiLR2rE2f1I/AAAAAAAAGMg/P1q7Rki8Iu8/s1600-h/mm8.png
http://3.bp.blogspot.com/_nSTO-vZpSgc/R_HlCECrufI/AAAAAAAACZE/E1WPLRuaWmY/s1600-h/Mortgage-Rate-Resets-1.png
unemployment–U 6
http://1.bp.blogspot.com/_nSTO-vZpSgc/S0dgMy2YVqI/AAAAAAAAHk8/fkcmmXZhE6E/s1600-h/table-a12-2009-12.png
I sure as hell wouldn’t buy into all that–
But that’s just me –
Water won’t be an issue for Tucson. Under NAFTA they will simply sue us if we deny them our water for free trade violations using the U.N as the global court/judge. Housing on average has dropped 40% in the states, some places a little lower and some like Miami and Las Vegas , as much as 70%. There is another wave of option Arms that will begin resetting at the end of 2010 so another leg down of 20%-30% is coming. For a person to buy a house in the States when , after it bottoms , may bounce along at that level for the next 2 decades doesn’t really make sense. Why would you freeze up your wealth is something that will be taxed to death, may never appreciate, in a country that has 20%+ unemployment for years guaranteeing a crime rate that will make Columbia look like a Monastery?
Garth is quite right about Tucson, and it’s not the only “nice” city in trouble. I was in Arizona a few weeks ago and it is in the same trouble as many other US cities. Bankrutcy of a whole country is not pretty to watch. If you want to see the carnage for yourself just go to http://www.homepath.com and select the state and city you would like to check out. The site belongs to Fannie Mae and they still offer 3% down!
Diane Francis weighs in, and with reference to Garth’s prediction:
http://network.nationalpost.com/np/blogs/francis/default.aspx
R E B G V Inventory
Mar 1, 2010 = 12255
Mar 2, 2010 = 12324
Mar 3, 2010 = 12459
Mar 4, 2010 = 12670
Mar 5, 2010 = 12775
Mar 8, 2010 = 13019
Mar 9, 2010 = 13244
Mar 10, 2010 = 13439
Mar 11, 2010 = 13551
Mar 12, 2010 = 13609
whend does the war start?
I know a number of people from Vancouver who have sold their investment properties here and purchased in Palm Springs and Arizona. I know another who bought in Hawaii. The smart boomer money is doing this now. This trend will accelerate over the coming months as it becomes clear that Canadian prices have peaked and are heading down.
#4 Squidly77 wrote:
“The 52nd parallel means little in this game except that our cheap money arrived later than theirs”.
This is NOT the first time in which you make such gross mistakes…
On the Bubble blog, your grammar is just horrible while on other blogs such as the reqal Estate Watch and others, you rarely make a point that is informative or unbiased.
Your “Bubble Blog” is a joke and it appears as if a 12 year old was the author; the layout is horrible, your posts rarely offer anything new or credible and Carioca Canuck is a faithful reader…
screw it ….. at 500.00 / mth rent and Shaw Cable i/c …… wtf would i want to even consider buying ?…. and no …. i am not living in Plum Coulee Mb.
I’m a gov’t worker and can tell you that the people I work with actually believe that their jobs are important and that they work hard. They’re nice folks, but they are none-the-less delusional.
Yeah, it’s tough working for the gov’t: flex days, jumbo pay, jumbo benefits, pension — and to think — most of us didn’t have to even finish high school to get this free ride!!
When I got my job with the gov’t years back after slogging it out in the private sector, I felt like I had won the 6/49. I knew I never had to worry about working a real job again. And to this day, I pinch myself … it’s a dream come true.
To all of you folks in the private sector — thank you so much and please continue to pay your tax dollars so that I can continue to enjoy my dream-job. If you start to feel sorry for yourself or start to resent us gov’t workers — stop. Instead send out your resume to the gov’t and you might just luck out and win the lottery like I did. Last month 46,000 new lottery winners/gov’t workers joined the workforce. Ain’t it great to be Canadian?
Sincerely,
Useless feeder/gov’t worker
PS Gimme, gimme, gimme
#12 GTAInsider
Lining outside of the new homes being release in Markham, and listening to the conversations of those people, this seems a very likely case…
“I don’t care about the house anyways, in a couple weeks, I am just flipping it…”
Detroit family homes sell for $10:
http://www.infowars.com/detroit-family-homes-sell-for-just-10/
Well, if you have money to invest in US realestate, which states are the most favourable towards Canadians with respect to taxation, ability to renovate, closing costs and stability?
APRIL
03.12.10 at 9:52 pm Garth,
Also why is there a shortage of listings? Does anyone know what the ratio of sales to prices is in the Vancouver area
If you’re looking for sales / price etc… go to Vancouver, the best real estate on earth!!!
http://www.robchipman.net/
One of the important things to remember is the long term implications of this on many aspects of the Canadian economy. Our largest trading partner is going through a deflationary cycle that continues to spiral downward.
I work in the new economy and we are seeing major pressure on prices because of competition from U.S. companies. When there is such a significant financial difference in affordability of such a core financial asset between or populations it ripples across our border. Salaries in the U.S. are falling in our sector and productivity is rising.
We will have to adjust by cutting costs and other expenses including salaries and perhaps employees. There is no way out. Get used to it.
Garth,
Places like Arizona have shrivelled, but what about San Francisco and Manhattan? How much have they fallen? 10-15%? Do you see parallels with Vancouver?
Vancouver is not NY. — Garth
Sell Canada and buy America? What, with the unemployment rate at 15% in California?
Sure, wait until things recover and then buy. What was I thinking? — Garth
……25% of the U.S.’s GDP supports their Armed Forces.
……25% of Canada’s GDP supports CMHC.
Nostradamus jr.
#28 Not Garth,
Wow. Quote the flood of listings. It is typical in the Spring but much of it has to be in respect to the April 19 rule changes.
Interesting.
GTAInsider
You are speaking the truth! I absolutly have experienced this sort of underhanded crap happening and our government is making it all possible!
Our CANADIAN housing market has only been for the rich international power brokers to excrete money from, at the expence of our once existent middle class.
Once we are cashed out and ringed clean, this group of worldly parasites will move on!
#16 throwstones — “Is it possible to buy a house and gift it to a family member?”
As far as I know, as long as all HELOCs / LOC / mortgages etc. are paid up, the home is free and clear of everything, a Notary Public or lawyer can arrange a transfer. Check it out, though — interesting idea.
——
#25 The BigLebowski — “Water won’t be an issue for Tucson. Under NAFTA . . .”
Yesterday I read an article that a Democrat or some Democrats had introduced a new bill to pull the US out of NAFTA.
With what Stevie’s doing to sell or transfer assets to the US and other countries, if the Americans want our water, they will take it anyway — nothing we can do about it.
This is a great reason the separation has started — there is nothing left to lose anymore.
——
Vulture or Bubble Scorpion Here is the reason why scorpions and vultures are doing so well in the desert, and sheeple not so good — Billionaires
There will be plenty who are stung by scorpions, then vultures come to feast on the carcasses or leftovers. One reason: G-R-E-E-D. Thought they had it all when they actually had nothing. Easy come, easy go.
——
Bankruptcy Goes with links on previous post. Kannaduh as well! This IS what C-H-F + many others are doing — deliberate orchestrated takedown.
Birth – Life – Death. It appears that things are weirdly wacky in the finance world! Last link is interesting. Here
CPC Death Star finally exposed — causes mass extinction now and then! Shift Yer Axis!
In the rest of the news today, nothing happened!
Are they in for a major surprise!
m$m — full frontal disinformation? You betcha!
The rats are scurrying all over!
Demonic possession is among many of Italy’s ills. With the missing 11 minutes in and the ending changed, the final 70 minutes of “The Exorcist – The Version You’ve Never Seen” is now identical except for two changes, one necessary, the other not.
It was the possessed or haunted teenage boy (vis-a-vis Linda Blair’s excellent interpretation and portrayal of 12-yr.-old Regan MacNeill), and the end when the main Jesuit priest was carted off to a mental hospital for a year or more. Happened in 1949 at that house in Maryland. Further — Exorcisms
#3 nearmilton@yahoo.com
…What does Canada have? Only RE and Oil Sands…
And copper, tin, potash, natural gas, timber, gold, silver, water, wheat, …
#9 Joseph
Service Canada’s website offers two conflicting quotes for maximum GIS payable (that’s our gov’t for ya!) but either way, it looks like it’s less than 10K for a couple.
http://www.servicecanada.gc.ca/eng/isp/pub/oas/gis/calculate.shtml
http://www.servicecanada.gc.ca/eng/isp/oas/oasrates.shtml
While I agree that it isn’t fair that some can access that supplement and others can’t simply as a consequence of timing the transfer of money, I have a hard time going after low income people in general – i.e. how dare that couple steal less than 10K/year from the country, don’t they know this government NEEDS that money to buy Olympic tickets? Seriously, the rich have been spreading their money around to avoid taxes since taxation began – avoid vs evade: that’s what financial managers are for!
The true problem with this ‘total cash transfer trend’ is that the seniors are not taking into account how long they may live or how out of control their medical bills may be in the final years of life. If the children don’t mind being sandwiched between their growing kids and their aging parents then I wish them all the best. I would rather my parents be prepared for their own needs than feel the need to take care of mine.
Of greater concern to me are the parents (and I know a few) that ‘give’ rental properties to their offspring. No capital gains have or will be paid on these properties despite the fact they have never been the primary residence of the family. I cannot fathom how that transfer is done legally and the ones I know of are $700K properties that were bought 30 years ago – the cap gains would be tremendous. That’s evasion.
8-april
i follow the market in the tri cities–from my “source” we had 230 new listings this week (mon to fri) and 78 sales for a 34% sales to listing ratio –far below the cre board of 45to75%
32 useless—you sure you’re not andrew and sam–sounds like his type of rant
i was a gov’t worker –we had a name for” workers???” like you –SLUG–sounds like it might fit here
Sounds like a last-chance escape hatch for retirees, unload the hideously overpriced home in Toronto and buy in a place without ice storms and 6 months of winter – Arizona, Florida, Nevada, SoCal. And contrary to the blod dogs, hell yes the climate is better than anywhere in Canada from November through February, BC included. The remaining $500K or more, added to pension and RRSPs, should keep a decent lifestyle for the first 10 or 20 years of retirement, property tax included. The big rub is medical insurance outside of Canada, whoever can come up with a plan to provide retired Canadians affordable insurance in the US along with the real estate will make a killing – hmmm, maybe managed care condo co-ops?
Any of you folks seen Michael Moore’s new movie ” capitalism a love story ” it’s a jaw dropper . Saw it last night . Still can’t get out of my mind .
Vancouver house prices should be compared to Beijing, Shanghai, Hong Kong, and Mumbai!!! Vancouver, Burnaby, Richmond, and Surrey are now home to more visible people than caucasians!! Therefore, a value shift has occurred. Welcome to the notion of “intergenerational real estate”! Unlike Austin, Texas.
Garth, you think it is best to buy a house in the US, or an apartment building, or a commercial retail plaza? Also, when do you think is the best time to buy? now? Sept, 2010? or late 2011 when most of the mortgages will be refinanced? Thanks in advance for your reply.
#31 Nice Plum Coulee reference…never thought I would see one here.
But American eh? Don’t think I’l buy any real estate down there….dividend yielding stocks however are another story. Next dip GE and JNJ are on the radar.
#32 Useless Feeder (aka gov’t worker)
Your attitude is not uncommon amongst many of the Government types I’ve come across and I’m smirking slightly at your egotistical self serving post. I will add that I too have worked in Government, but now work in the private sector (15 yrs) and I work three times as hard as I did in the GOV.
I feel good about my work and I know I am worth my wage. My sense of self-worth is much higher and I have become a stronger person, and much more humble on the inside.
Obviously, the cold hand of a layoff hasn’t hit you yet, but my friend, it will and when it does you won’t see it coming and all those people you think are your friends, will have back stabbed you and you will find yourself out in the wilderness without a swiss army knife.. and guess what, nobody in the private sector will look at you with a government resume.
The mere fact you could post something so idiotic and says something about your character. I do hope someday, your resume crosses my desk.
“(d) a ready pool of accessible capital”
Funny, but I kept reading that as a *reedy* pool – no matter how I tried… As in, stagnant. (can I use HTML here?)
(i)Perhaps the emotional pendulum swung too far(/i)
Doesn’t it always?
This week I put together some stats spreadsheets & graphs for the Vancouver market based on the monthly REBGV newsletter. Listings are picking up but sales are still strong so MOI is low. We’ll see what happens as the year progresses. I’ll update the data monthly.
http://vancouvercondo.info/forum/topic/rebgv-newsletter-data-charts
Raw data:
http://spreadsheets.google.com/pub?key=tiam-9xQ4qZMl8NdrUapJhQ&gid=1
#32,
“I’m a gov’t worker …”
Sure you are!
Useless Say hello to your fellow workers Stevie and Jimbo will ya.
#32 Useless Eater,
How appropriate that your screen handle was originally coined by Joseph Goebbels in his never ending attempts to fashion public sentiment, although I would wager he probably proofread his work. If I may say so, you obviously are Stockwell Day’s kind of guy. Your mastery of the English language will prove an asset as you climb the ladder at that government job you fantasize about so eloquently.
The failure of Detroit’s civic government through corruption and greed that led to $10 houses as pointed out enthusiastically in your second post (#34) will surely be realized once our civil service attains your standards of excellence and devotion to country.
Thanks for sharing.
As mentioned boomers are selling investment properties. I was told a couple of years ago 50% of the new units (Condos) were bought for investment purpose. If true and these units are being sold at to-days inflated prices there are big bucks being made. The question is will these savoy people invest wisely enough to keep the markets strong?
http://www.canadiancontent.net/commtr/death-saleswoman_693.html
Idealism Confronts Reality
It was a daunting task, like Serpico’s in staying off the take, keeping herself free of the taint of dishonesty with which all the veterans at HSBC Securities seemed to be marked. During her probationary period, for instance, she often heard the phrase “churn ‘em and burn ‘em” used to describe the ordinary business practices of the established IAs at her firm. For the uninitiated, “churning” is a term of art which describes the practice of making trades on a clients’ account for no other purpose than to earn more commission. There is uniform disapproval of churning, not only by the regulators, but by the firms themselves. There is also, however, widespread disingenuousness in this regard. Every firm uses a “grid” system for determining an IA’s rate of compensation, which all but ensures that those who earn the highest commissions from their books of business, and if it is by churning, so be it, are most amply rewarded.
There you have it, corruption in the banks. No mutuals for me, thanks !!!!
So, in Tucson the kids boomer parents aren’t telling the kids to buy real estate, but Canadian parents tell their kids that the first thing they should do when they get a job is buy a house. Thats the difference.
It never enters the parents head that they may have already got all the appreciation and there is none left for the kids.
I work for a large company and talk to these young kids right out of university, buried in school debt and lusting for a house and a new car within 6 months of starting the job. They don’t for one second, stop and consider, how much the payments will ball and chain their life to the job for 30 years at 6 times their pay. Many are still barely getting by on the pay cheque 15 years later.
Debt slaves with no life – but they are keeping the prices up, and the cause of their own demise.
I still can’t believe the banks loan out so much money to them.
Hi Garth
We sold our house in Aug 09 and now waiting & living for free with my mom for the RE market to cool off.We have $550,000 in cash.
I am thinking about making some quick cash by buying and selling the US dollar.
What do you think? Is it risky?
Is this a trick question? — Garth
Re. GTAInsider’s posts:
I think what we are witnessing is the export of inflation, mainly from China, as a result of the massive credit expansion and money printing in response to the global financial crisis. New money created in China benefits those with preferential access to that money – regional officials and their relatives, business people with the right connections, etc. These people are buying real estate in Canada for the following reasons:
1. Flipping for quick profit.
2. Relocating and diversifying some of their assets out of China while they still can. They know how policies can change literally overnight in China. Who knows how much further the gravy train will run?
3. As part of 2 above, relocating their family, especially their next generation, out of China. It’s very logical to buy a house for the kids to live in while they attend college.
4. Culturally, Chinese like real estate, because it feels “real” to them in comparison to paper wealth like stocks and cash. That’s why Chinese also love gold.
5. Compared to sky high real estate (mostly condo) prices in Shanghai, Beijing or Hong Kong, a 2,000 square foot house with a yard selling for under $1M in Vancouver or Toronto is a bargain to them. Of course there are better bargains to be had in the US today, but our relatively more “lax” immigration policy makes it easier for someone from China to emigrate to Canada.
What next? I think it will depend on China’s economic and social progress over the next few years. If China continues to be relatively stable and increasingly prosperous, we may actually start seeing people move back. Witness people who moved from Hong Kong to Canada in the 1990s who had returned when they realized the sky did not fall after the take over in 1997. Deep down, ironically, I think most Chinese may find Canada a tad too socialistic and sclerotic when it comes to opportunities for the individual to prosper.
Yep. You heard it here first folks. Hurry on down to a failing torture state and get your self a piece of the pie. A magical land where skyscrapers dissolve into dust before your very eyes because of bogeymen in Bananistan and bamboozling bankers get bailed with trillions of Bernanke bucks.
If you act fast you to could be eating gold covered macadamia nuts with Kevin O’Leary on the government airwaves.
…Friends…. those of you who have sold your homes and invested in Bank stocks for their dividends and share price appreciation had better hope the RE Market doesn’t crash across Canada….because these investments will crash right along side…
#100 Vancouver Rocks
Your post should be reread by all the Ontario/Quebec “Centre of the Earth” fools on this board who have ignored Vancouver for > twenty years…and who still can’t see the forest from the trees.
Toronto population 4.5 million
Vancouver population 900K
…You forgot to add…
Iranians/Persians to the Asian and East Indian Vancouver population…..come to think of it, I know many Quebecer’s who have lived here long before I came from TO twenty two years ago…..shhhhh
paraphrased….
“”"1/ …..Million dollar pads with two solid incomes…. the trade up buyers who have been in the market for years that buy those homes. They accumulate a lot of equity after a 7 year bull run.
2. Vancouver has the highest percentage of young adults by government definitions (18-30) living at home in Canada. Much of this is cultural, where members in certain communities (Asian, East Indian, Iranian)…. Greeks and Italians in Toronto are now a minority…do not leave home until they are married as renting is a huge waste of money in their eyes. …….people are getting married later, you have a situation where FTBS come to the table with very very large DPS that more than offset the high cost of houses. They do not need massive salaries to afford their home.
“”Garth says….Vancouver is not New York…Uhmmmm, thankfully, nor is Vancouver Toronto.”"
3. Many FTBs also have large DPs from “unconventional” living arrangements by “traditional” living standards. In many communities, houses are bought by groups of immigrants who live 3-4 families to a house. Once that house is paid off, they facilitate migration of other relatives to purchase the next home, and repeat the process. When you have 3 extended families living together, all of which are committed to paying off the house, “average 2 person family incomes” are meaningless. These types of living arrangements also are more absorptive of economic shocks, as they do not rely on a sole breadwinner.
It is not rocket science. Posters from other parts of the country fail to realize that cultural attitudes and practices play into the market, and that you cannot simply use deterministic economic models to assume a crash will happen. The era of leaving your nuclear family home when you are 18, renting for many years trying to save a DP, and buying a house when you are married and settled career wise is dead in this city. That era still exists in other parts of the country, but not in two key metro areas – Vancouver and Toronto. That is why there is some truth to the statement all RE is local, and why blanket statements of universal crash are coming are meaningless. Many of the experts fail to see this…if you live here then you would see this and you would adjust your expectations of an impending crash accordingly.
Some Vancouverites posting on here will try to refute this, but they know that this is an accurate portrayal of the RE landscape.”"”
…Since the Olympics, My partner, who is an employee of a large > 100K employee US public worldwide company, has received dozens of messages from peers around the world stating they are planning at some point to visit Vancouver.
Nostradamus jr.
Forgot to add…
1/
Canadian Bank profit’s and success rely hand in hand with their Canadian mortgage portfolios folks.
2/
Garth, for a bunker loving dude, you overlooked Vancouver Island, the Sunshine Coast and the Gulf Islands…all enjoy superior weather anywhere east across Canada…including BC’s mainland.
Nostradamus jr.
VI Funcanuck here….
While I NORMALLY don’t react to blogs, I gotta tell ya, #32 seems like a “PLANT” to instil negativity against gov’t workers. Talk about promoting stereotypes.
My belief is that 32 is not a gov’t worker but someone who wants us all to think like he/she does.
I work very hard for the pay that I receive and I “am” able to switch to the private sector and get FAR more money. Let’s not overlook the pay/benefits for private sector managers (multi-national corporations…).
I-along w/ colleagues of mine often put in overtime w/o pay as gov’t managers. We very frequently go way beyond the call of duty. Better stop now, as I’m sounding like an armed forces commercial (I also served for my country by the way).
SHAMELESS FEAR MONGERING IN NANAIMO OF UPCOMING HST BY A REALTOR:
This is what I was going to write. Took a tour of some awesome waterfront townhouses/condos lately. While I know the HST will add to the cost for these new units, the pandering/fear mongering by the realtor was a little over the top.
The implication was, “buy now!”
-Don’t question the asking price, don’t question the fact that the “assessed” value is lower than what’s being asked for.
-Don’t question whether the ridiculous low strata fee will rise considerably once the strata council realizes they can’t afford to maintain the facility at the present rates.
-Don’t question whether the odds are already slanted against you re: rentals by the existing strata council.
Buy Now!
Prices go up, prices go down for a variety of reasons. I’ll buy over the next 5-10 years, thank you very much when it’s HALF THE PRICE and it’s known what the strata costs truly are.
There will be “some greater fool” likely buying it though. When you walk into these units and see the seawall at your doorstep and a fabulous ocean view, it’s hard not to let emotions get in the way.
Garth,
Pardon my ignorance, but are you recommending investing in US Real Estate?
If you know the dangers and procedure, have the cash and go there anyway, duh. — Garth
#12 GTAInsider — I hear this so much, “Vancouver market is boosted by rich Asians and that’s why it’s different here.” Seems you’re saying the same re TO. I would really like to find a study that actually proves this hunch – that’s what it is, a hunch, a guess, speculation – other than your personal “knowledge,” of course.
Easy money equals expensive real estate. Interest rates have no where to go but up, which makes real estate expense pretty much everywhere. I would not purchase a “bunker” in Tucson.
#25 Big L, agree! Let’s not forget Commercial, ongoing Auto and Student Loans. Trillions in the shadows!
RE ownership as an asset to loose it’s lustre during the GREAT GLOBAL RESET!
Toronto Star March 13 th 2010
http://www.yourhome.ca/homes/realestate/article/777893–what-they-got-march-13
Milton: $490,000
Derry Rd. and Bronte St.
Asking price: $479,900
Selling price: $490,000
Previous selling price: $390,894 (2009)
a reminder to all. Just like home prices can go above the 3 – 4 times average household income, they can also overshoot below. I see the Toronto market being 34% over valued. Since the market got manic on the upside, we may see prices drop more than the 34%.
38/39 Tom – see the demographia studies oft referred to for the latest affordability ratios (not absolute prices). These ratios have dropped in both SF/NY to about 7+,
(still extreme) while Van is over 9. As these are not
actual prices, what it really tells us is that people living in
Van want to live there just as badly (a little worse actually) than people in SF/NY/London want to live in their cities. If Van drops to the same ratio, that will be a 20%+ correction. Seems thats where it was headed in
08-09.
Regarding moving to the states, there are lots of things to consider aren’t there? It sounds like you would be in the same situation as me – wouldnt quite have enough to retire, so gotta work if you moved down there.
A great on-line tool for finding Vancouver house prices (HPI).
http://www.rebgv.org/housing-price-index
# 9 Joseph.
Thanks for the tip. I may just look into that
General Comment
If anyone has no doubts and no fears about buying residential real estate now, I would suggest that there has NEVER been a more speculative time to purchase a home than now, especially for that reason. When people feel subjectively that there is no possibility for loss, we are often at the peak of objective true risk.
I say this because ALL ASSET MARKETS INOLVE RISKS! The time to buy in any asset market is when all risks are knowable, quantifiable and manageable. Today’s RE market price acceleration and liquidity in all major cities and centers of population in Canada indicate risk levels at wild speculation and many unknowns.
I do believe that this ‘crack-up boom’ in Canadian RE may be resolved only by massive inflation which may or may not be able to be engineered by the BOC. Short of that, there is no way I can see prices holding as we advance into the creeping depression.
We conservative upper management /CEOs are so useless and lazy that we have ruined the worlds economy and asked the taxpayers to bail out our mistakes to the tune of TRILLIONS. We are glad some of you who’s lives are ruined or face financial hardship thanks to us the conservatives . We hired some of you working poor last couple of months so we can fool the weak minded puppets that we are doing well. The fact is we can not wait until we distory Canada with a majority. Tory times are hard times always have and always will be. Once we get Canada we will sell all the taxpayers assets for pennies on the dollar to our conservative buddys and we will spin it as a good thing for taxpayers. Right now we have our eyes on Toronto where we will sell every asset they have to our buddies and make everything private which isn’t good for the taxpayers. we need it to be par like the US so when we merge NAU no one can complain. We can not wait to make slaves out of all of you. You people please complain about the worker and not us upper management/CEO’s who will make you all poor as we CONservatives get even more rich.
Thank-you stupid working slave taxpayers.
P.s Complain about the working man not us. LOL
I can laugh in your faces and you’ll never understand reality.
If you have the money to buy R/E property for investment, then by all means buy US.
For people like me who get a paycheck on Friday and back to ground-zero on Monday morning, it’s only a pipe dream to invest in US property.
Oh, I shall wait for the next R/E depression…
All this talk about rich people buying in the GTA is garbage. Why would they over spend here when they can buy 10 houses in the US for one crappy house in Canada for what can only be a small gain in an obvious bubble. The house crash is here and now. Enjoy
“The auctioneers know how to whip up bidders into a froth.”
“Portland condo prices down 30% in February from original list prices”
=http://blog.oregonlive.com/frontporch/2010/03/john_ross_once_symbol_of_condo.html
The City of Portland had pledged millions of taxpayer dollars for roads, streetcars and the aerial tram to turn the largely vacant industrial district into a high-rise neighborhood. As part of that deal, Portland developers Mark Edlen and Homer Williams agreed to build hundreds of new condos in the area.
They sold out the first project, a pair of towers at the Meriwether and quickly started work on their second project across the street — the 303-unit John Ross.
With just an e-mail alert in July 2005, brokers at Realty Trust City attracted about 225 potential buyers willing to put down deposits within just six days.
“This level of sales is unprecedented in Portland, and very rare anywhere in the United States,” Clark of Realty Trust City said at the time. “In the past, it has taken other projects months if not years to reach the same level of sales.”
But by the time the John Ross was completed in 2007, the world had changed.(no kidding!)
=
…when the housing bubble burst in 2007, Right Placco-founders Rob Porter and Earl Ricker continued to take in millions of dollars from an expanding network of investors. In November 2008, Right Place abruptly ceased all monthly investor payments and laid off the bulk of its sales organization. The company ceased operations in February 2009, leaving behind at least 42 unfinished condo-conversion projects. Many of the units were uninhabitable, investors said, and several were in pre-foreclosure because of unpaid property taxes.”
======================
‘Dirt bond’ default wave sweeps over Florida | StAugustine.com10 Mar 2010
What about investing in RE in the US, Florida in particular.
Is it a good investment?
#32 Useless Feeder(Gov’t slacker)..
Your a disgrace!
#30 Army Guy
What you say about squidly’s blog is true but you must enjoy the frequent postings of pig photos and realtors being butchered?
Don’t let his poor grammar and spelling and “52nd parallel” put you off! I’m sure, absolutely sure, that everything else is accurate.
Facts…no emotions.
HST will kill new construction in BC & On.
Renovation in industry will replace new construction in BC & On.
This recovering renovation industry will grow in TO & Vancouver the most…because that’s where the people are…. that’s where the jobs are…and that’s where Govt Services will concentrate.
Don’t invest in Bank Stocks because if you believe the RE Housing Market in Canada will correct…Bank Stock’s Share Prices will also correct…Banks lend mortgages to Homeowners…duhhhh
People are investing in homes vs gold because you can’t eat gold.
Since there is a migration to the big cities are growing, infrastucture…mass transportation will move people in TO & Van, not GM Motors in Oshawa.
Ottawa will not kill the Canadian Real Estate Market with higher interest rates….Ottawa has invested 25% of Canada’s GDP into CMHC guarantees.
Ottawa wants an 80 cent Loonie to support the Export Manufacturing Industry in Ontario…higher interest rates would kill it.
Ottawa is more likely to initiate new spec taxes on RE investment gains before it raises taxes.
Have a great weekend all.
Nostradamus jr.
What a giggle. Everyone attacking Useless Feeder like it is reality. I have worked in both the public and private sector and have seen many good people in the public sector who could, and some eventually did, leave for much higher wages and company perks in the private sector. And I have encountered plenty of useless executives in the private sector who manipulate their teflon path for years and years. You cannot paint any sector with one brush, but many posters here will never get that, too many axes to grind.
I like the Yattermatters site for Vancouver RE listings and summaries. Sales are strong so far and he is good at exploring any hints of impending doom. It will be an interesting year indeed.
“…Both have but one direction in which to go.” I assume you meant opposite direction: UP in the US, DOWN in Canada. if so, I totally disagree, I believe both will be going down more and more because:
- US ran out of bubbles, not more booms in sight in the near/mid future
- Many State and/or local governments already bankrupt. Hell!, the whole country is bankrupt
- Second wave of mortgage resets are coming this year & next. Commercial mortgage is about to collapse taking many banks with it…housing is NOT going up in the US for a long time
- Manufacturing base was exported to China by the traitors, oh!, I mean CEOs, that for a quick profit and to pop-up the stock price. WallStreet has done the most dis-service to the US during the last 30 years
- US baby boomers will be or already exiting the workforce in droves, with a major shift in needs and spending habits, and more conservative not chasing that 50″ HDTV or the big ass Hummers
- Millions of lost jobs aren’t coming back, the whole nation is swimming in debt at every level, interest will start rising in few years…this is a STRUCTURAL problem
Now, back to the Beaverland…since our US customer is slowly dying, so we’re in a deeper hole. we also have EXACTLY the same issues listed above albeit at a 1:30 scale since our population is about 10% theirs. Unfortunately, Canada is not, I repeat is not a dynamic nation, it cannot pickup easily if we hit a big bump because our politicians and population are slow to think/re-act, we’re soft and taking lots of things for granted specially government programs/services/aid, and above that we think “We are different” !!
Future for both countries is scary, and I hope that no crazy nuts in the US starts a big war to get them out of their endless mess… that’s how they used to solve big problems…Thankfully, US is not the only nuclear bully on the planet.
The second half of this year will be verrrrrrrry interesting…..
Post #76 LMAO Great grammar, at least learn to communicate first. Must…… not……feed…..THE TROLL……
#30 Army Guy
Stand down soldier! You are in no position to be criticizing other people’s writing skills….and who cares anyway? Dismissed!
#63 N jr. I agree, Banks entire business model is based on paper profits and an expanding economy. People at least need to consider how their largest asset on their books, real-estate, will affect the bottom line when it begins to depreciate. Dividends will be cut and their business model will be the opposite of what a person would want considering what lays ahead of us. Now is not a time to chase yields with ones money, at least not when it comes to an investment entirely based on the value of paper money. The decades ahead will be lead by hard assets and things that have tangible value, not profits entered on a ledger which can disappear up into the ether at any given moment. Companies that dig things out of the ground or produce products of value will always be worth something/ eg. mining stocks, breweries,consumer staples etc. A company that throws of dividends and actually produces something of value may be worth looking at. An example would be Goldcorp, a Canadian gold/silver/copper mining company that has been paying dividends for years, operates in only in politically sound countries, is ramping up production and has great management. They produce something of value, are expanding their business and what they produce has a growing demand for the next decade +. Just one example… And I would rather put my money to work in something like that than tie it up in Amercan realestate that will just sit there for the next 1-2 decades and require maintenance, taxes and more than likely depreciate another 30% over the next 3 years. Thats just bad investment advice in my opinion.
I disagree with GTA insider’s view of RE in Toronto. That might be the case in some very localized areas like Markham but is not the case in all the GTA.
People are buying on emotion and fear right now, interest rates are low, they are set to rise and people fear being priced out. Its euphoira at its best.
These people do not need a house, they want one, but they are getting caught up in the emotion of winning. Nobody like to lose so in bidding wars, the most emotional person wins.
When listings rise and demand drops, prices will follow.
#80 pbrasseur
If you are willing to take a hit of another 20-40% when the next wave of Adjustable Rate Mortgages hit the market in 2010. And then watch it chop along the bottom for 10,15,20 years. If you are looking for capitol appreciation, then no, its not a good investment. If you are retiring, can sell your place in Canada for 500k + a buy a place in Florida for 100k and move there then maybe. But if you want to move somewhere warm I would look at Central or South American countries. They have more open economies at this point, and the tax starved States will be looking at any and every asset to suck in revenue. You can’t just look at the sticker price of a house, you have to take into consideration how it will be taxed, and the longer term trend of the area. Florida is bankrupt and the real estate there will not recover maybe in our lifetimes. The future of the U.S economy/Government is moving towards more control,taxes and just not a place I would want to live going into the future.
#76 USELESS (that says it all)
Crawl back under the rock where you came from and while you’re there …..
………….learn to write and if you can manage it…spell!
# 32 the government employee needs a kick in the ass wtf kind of brainless comment is that to post in here.
Median Tucson household income = $36,000
Median Tucson SFH price (from Garth) = $150,000
Median Tucson SFH price (from Tucson realty board TRB) = $164,000
Price to Income Ratio Tucson
Using Garth’s SFH price = 4.2
Using TRB SFH price = 4.5
Even at fire sale prices in Tucson, SFH prices are still to expensive!!!!!. LOL
Annual Earnings per Worker, 2010 projection (EBRP): $40,260 (up 1.8% over 2009), Median Hourly Wage, Tucson Metro Area, 2008 (Bureau of Labor Statisics): $14.82. Ratio, 3.7. Toronto, 5.7. Vancouver, 9.3– Garth
60 Angie Morgan on 03.13.10 at 7:56 am
Hi Garth
We sold our house in Aug 09 and now waiting & living for free with my mom for the RE market to cool off.We have $550,000 in cash.
I am thinking about making some quick cash by buying and selling the US dollar.
What do you think? Is it risky
*************************************
Bet your glad you asked–
I don’t see much risk in it-as long as you don’t go “all” in-
Currency’s-at least USD/CAD never have-real violent moves against each other-so if the USD breaks below-I believe–without looking-74.60–then you would want to sell–so you would lose about 5%–if you bought here-
I think the USD could easily go into the 90’s–not saying it-will-for sure-but-if your sitting in cash-then it just makes sense to diversify “some”-at least–
Regardless of how bad the US financial system is in-the USD “always” catches the safehaven play–
It’s currently battling the .80 cent mark here–
You should get 10% return-if it does–so- whatever your risk tolerance is–go by that–
Everyone is bearish and short US Treasury’s right now–which–should tell you-that “if” the global stock markets have another down leg-the worlds–
“hot money” will buy the USD and there will likely be a massive short squeeze and the move up should be fairly quick–
You can buy/sell USD’s fast in your trading acc.
Everyone has been saying IR up-because foreign demand is slowing–
Foreign demand-is-slowing–but only because the US trade deficit is shrinking–so only natural–there is less then normal demand–
When the trade deficit is high–meaning US importing more/shipping dollars out–those recipient country’s buy more treasury’s so they have a safe place to hold their $–
These are “hot money flows”–and if the trend reverses fast–they can return the flows-this is just normal trade practice–
The last 30 yr bond auction–went the other way–nothing really reliable-but-goes to show–”most” are usually wrong–
The yield dropped–because US internal demand is picking up and taking the place of foreign buying–
30 yrs–is a long way out in the curve-so- i interpret that as–no inflation-yet everyone seems to believe inflation is here again–
You cannot–”fool” the long bond–
It read Greenspans BS all the way-
(the great conundrum)
Look at the US CDS risk spread-compared to the rest of the globe–
It doesn’t see much default risk with the US–
http://4.bp.blogspot.com/_FM71j6-VkNE/SbnEjCCMQDI/AAAAAAAABX0/fgFbsfq2pZ8/s1600-h/sovchart3.jpg
Just my take on it-some may have a better perspective-
Just got in from Tucson, AZ this week…
I agree Garth its a great town it has a young vibe, low crime, relaxed atmosphere and you forgot to mention spring training for the major league baseball teams. I am thinking seriously now about picking up a place down there. I’d say $150k would get you top of the line .
I have one complaint too, what is up with snubbing da rock big guy… there are 500k of us here I notice you are in on Van Isle quite a bit but dodge St John’s?
I just figured it out…. you had a bad screech in at one point and won’t come back?
Sell Canada buy American..
So Garth are we going to see you bunker in the too capitalist, too many guns and too much Holy Bible south of 49th?
No offence taken and no offence mean ‘t.
Canadians as vultures as a result of our dollar rising relative to the greenback? This reminds me of the 1920’s when Winston Churchill was the Conservative Chancellor of the Exchequer. He thought the British pound should be “strong” so he pegged it to gold. The Pound became so strong that Britons travelled the world at their leisure and this gave rise to a whole literature. Forrester’s “A Room with a view” (available as a movie) is a good example.
The consequence was that Britain’s industrial based was essentially destroyed and they had to borrow material to fight World War Two, and ended up as they are now: one of the smaller air strips in the declining American empire.
Canadians as vultures? If history is any guide, it will be Canadians as a ship of fools led by another bellicose Conservative Finance Minister who “knows the price of everything and the value of nothing.”
..”Land use is a huge issue because, in the absence of property taxes, local city authorities have to keep selling land and developing land to stay afloat financially,” one Western official told me. “Chengdu gets about 30 percent of its city budget from sales of land owned by the state or the military. The government has to keep monetizing the land through long-term leases, and of course corrupt officials want to make money by getting bribes and other gifts from the buyers.”
Arthur Kroeber, an economist, told me that as much as 50 percent of local government revenues came from land sales throughout China in 2009. “The financial interests of a lot of powerful people hinge on the real estate boom. That’s where the big capital gains are.” The real-estate bicycle is the get-rich-quick bicycle: Everyone in the game has to keep pedaling!
For Tang Fuzhen, who was estranged from her husband, the building local authorities coveted was at once her home and her factory. She derided the offers of compensation, a mere fraction of the market value. Official and market prices often bear no relation to each other in China. But the city, determined to build a road to a new water treatment plant, would hear none of her protests.
The conflict came to a head on that roof. Tang Fuzhen burned for a long time. Wei Jiao, her niece, was in the ambulance with her.
“There was no skin on her arms and face, just exposed flesh,” she told me. “Her teeth were completely black. She had no eyelashes or hair. And she said, ‘Jiao, Jiao, I just want to die, I just want to die.’ And I knew it was not the physical pain. It was the feeling in her heart of watching her family being beaten and the house she built with her labor destroyed. And I told her to try to hold on until we got to the hospital.”
Tang Fuzhen did hold on for a while. But on Nov. 29, 16 days after her self-immolation, she succumbed to the burns.
Her suicide was caught on video by a neighbor and spread across the Internet. An outcry ensued. A local inquiry found the demolition process legal, but deemed the eviction “mismanaged” and a city official was fired. Professors at Beijing University Law School wrote to the People’s Congress, in theory the highest legislative body, suggesting changes to the law to ensure compensation is adequate, that it’s paid before demolition, that violence is never used, and that owners can sue to contest eviction rulings.
These reforms are urgently needed. They would bring development and individual rights into some balance and slow the fast-money corruption machine. But the entrenched interests behind brutal expropriation are enormous.
Across China, I sensed great anger at the raging real estate game in which the party plays such a central role. On a vast half-built development in Chongqing, a dozen banners had been draped from windows: “Try to support our peasant brothers in getting the blood, sweat and tears money owed to them by the developers.”…
http://www.accountabilityproject.org/article.php?id=516
Even if houses are $150K in suburban Phoenix or $10 in Metro Detroit there appears to be no stampede of eager buyers. The data suggests the opposite. The unpleasant truths about the housing bubble in Canada will eventually be exposed and like Warren Buffet said, when the tide recedes we will find out who was out there swimming naked. The very real potential of the housing bubble prolonging an already pernicious recession or precipitating a deflationary cycle is already there.
Here is really great article by Dean Baker on this subject.
http://www.counterpunch.org/baker03092010.html
#29 Junius
These folks might also intuit that it’s a good time to convert a few Loonies to Greenbacks, considering the almost parabolic rise of the former and potentially Lazarus-like rebirth of the latter.
#32 Useless Feeder
Don’t you guys get your birthdays off too?
#93 jr
You offer some pretty sound advice for an investor who is willing to accept a little risk (in timing mostly). Funny thing is most people don’t realize it but right now the biggest risk in equities lies in expecting more upside. Law of averages, fundamentals and all. Still everybody wants to buy at the top and sell at the bottom. Nothing new under the sun. Me, I think short and hold might possibly knock buy and hold off its pedestal for awhile.
I really like your take on the US Treasury Market. That move in the 30yr following the stellar auction the other day was very constructive. Now don’t get me wrong I prefer to date this asset class not marry it but the fact that so many hate it right now makes it almost irresistible as a contrarian play. Even some of the muckety-mucks at the Royal Bank’s US operations are starting to sing its praises here:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aMEm6wcA8PPo
When this echo of an echo bubble runs out of steam is anyone’s guess but I can easily see the flight away from risk (eg. away from stocks, commodities, currencies other than US$) crushing Treasury yields. 10 year could be easily 3% or possibly much lower if the Japan scenario unfolds. I mean what are JGB 10year bonds yielding right now, 1.3%? Weren’t they 3% plus in the 1990s? Has Japan fixed anything?
And American households are actually becoming savers and net accumulators of Treasuries, albeit at a glacial pace, but this is exactly what you prefer to see as an investor, cautious toe dipping not madly rushing in (like so many seem desperate to do in equities, commodities and houses right now).
The issue that I have with hard core ideologies … Privatize Everything vs Communism for All, is that neither can be trusted with control.
Somehow & somewhere people, who these systems were designed to SERVE get left out of the picture and become only SERFS to those in control.
Canada’s medical system is about 60% private and 40% public, something I wish folks like some of the blog dogs would understand. I do not wish to have either in control of a 100% private capitalist system or a 100% pure communist system.
I want a balance, somewhere in between, where the general public, hopefully through elected officials, can exercise some control.
What set me off on this mornings rant, came from the US, how the cost of education down there has been skyrocketing, mostly driven by for profit, private colleges and trade schools.
Got to love a corporation that finds a government teat.
http://www.nytimes.com/2010/03/14/business/14schools.html?hp=&adxnnl=1&adxnnlx=1268510420-69qLnrnz7EL/PE0Sd04Chg&pagewanted=print
#99 not sure what stats you are referring to, but the Fed monitized 80% of new treasury debt in 2009 under the title of “Household”. If you think the average American who is broke and under water in their mortgage bought 80% of that garbage then I can’t argue. Asking the average person to time the currency or commodity markets is crazy. You might as well tell them to take a trip to the local slot machine. The average investor isn’t emotionally equipped to deal with following these markets, they are too volatile. My advice is to discover a trend and go long and stay long.The U.S dollar will probably lose 30-50% of its value over the next 2 years. Short term it might go higher, but it might go lower also, who knows. I would rather see these people put some of their money in gold/silver which is in a long term bull market and has been the best asset class for the past decade. Fiddling around in the currency markets, for the average person is not something I would suggest.
#63 Nostradamus jr. — “. . . invested in Bank stocks for their dividends and share price appreciation had better hope the RE Market doesn’t crash across Canada….because these investments will crash right along side…
– and — #59 Alister — “I still can’t believe the banks loan out so much money . . .”
Guess when the FDIC (US) and CMHC (Canada) both go belly-up, that is when Nosty Jr.’s words come to fruition, and Alister’s point as well — when CMHC fails, banks start falling like dominoes.
So sheeple who take on vast mortgages may be free, as there won’t be any banks to pay the money back to, and people who worked to pay their homes off will be in relatively good shape as well.
So the banksters are left holding the bag! Revenge is sweet, even better when served on a large plate as the main course of decadence! Play your fiddle Nero, and continue Caligula!
#85 Sphinx — “Millions of lost jobs aren’t coming back, the whole nation is swimming in debt at every level . . .”
By connecting all the dots, one sees this is fast becoming a sewage-filled cesspool. North America is deteriorating to a third- or fourth-world continent.
“. . . crazy nuts in the US starts a big war to get them out of their endless mess…” — It’s not govts. that start wars, it’s the ones behind the scenes who orchestrate everything, thus pulling everyone’s strings whether they know it or not.
War is a very profitable business, and the US, along with many other countries are broke so it makes fiscal sense to raise tensions starting WW3. We are expendable, no more than cannon fodder.
If the link I put in earlier is correct, at least the Rothschild’s are now broke as well!
#96 Caron — “The consequence was that Britain’s industrial based was essentially destroyed and they had to borrow material to fight World War Two . . .”
Precisely what the western world has now — mfg. and industry gone along with the jobs, so as WW2 conveniently came along at the right time (to take people’s attention away from the economic ills), so WW3 is coming soon to a country near us!
May like to check Prescott Bush, dubya’s granpappy who financed Hitler and the Third Reich. Hitler’s one thousand year reign barely lasted a dozen years or so.
Annual Earnings per Worker, 2010 projection (EBRP): $40,260 (up 1.8% over 2009), Median Hourly Wage, Tucson Metro Area, 2008 (Bureau of Labor Statisics): $14.82. Ratio, 3.7. Toronto, 5.7. Vancouver, 9.3– Garth
Now we are using estimates of estimates? 1.8%, that’s pretty good wage growth through a recession.
Prove it wrong. — Garth
Here is an interesting clip featuring two trustworthy politicians, Harper and Bush. Harper get’s caught in a lie at 5 minutes in. Bush gets caught in a lie every time he speaks.
http://www.youtube.com/watch?v=K8f7eLZls3o
Interesting thought by #76 about the dollar reaching parity and how convenient that would be for the introduction of a new currency. Of course this is all conspiracy stuff.
Here is another classic Harper video if any of you are deprived of entertainment tonight.
http://www.youtube.com/watch?v=peRyoUmvLVs
For those of you who still think Stephen Harper answers to Canadians, think again. The script has been written. Enjoy the show.
#99 robert on 03.13.10 at 3:15 pm
And American households are actually becoming savers and net accumulators of Treasuries, albeit at a glacial pace, but this is exactly what you prefer to see as an investor, cautious toe dipping not madly rushing in (like so many seem desperate to do in equities, commodities and houses right now).
********************************
Good take on it Robert–risk/greed in the market is losing its allure–which is not good for equity’s and commodities–
Buying/gambling in high risk/equity/commodity plays is exhausting itself–
Of course the big Quants/GS can push the indexes up with concentrated black box/high frequency trading -but–Volume speaks loudly-and markets spike down hard-when the buying frenzy withers-
I’ve been wrong on this thing many times since last March–
Hard trading-when suddenly-out of nowhere-a trillion or so gets thrown out–one of these times–
I should be right
People like Angie–are in a fantastic position here–by being in cash–as–his/her actual buying power will increase merely by holding–as asset values decrease in the next few years–but–
You have to believe in deflation–first–
Best plan–imo–wait til the smoke clears–very few will be liquid-which means–cash-will be king–
(I like gold as a form of liquidity too-but-touchy subject on this board)
jmo on it–
This confirms your call-on US savers–
(running away from risk)
http://news.yahoo.com/s/ap/20100311/ap_on_bi_go_ec_fi/us_net_worth
i see toronto home prices up 34% this year rather than down 34%. pass the pipe dave.
101 The BigLebowski on 03.13.10 at 3:47 pm
******************************************
I’m not sure i follow-what your saying–
For some one to be in cash–all in one denomination is riskier then being in two-one of which traders believe will be the “last” to croak–ie–USD–
The good thing about it is–you can switch easily–it;s a very liquid trade–simply phone the broker and say “transfer”–poof–its done–
I really don’t “like’ any currency–but–its all we got to work with–if the USD blows up–they all blow up–then we’re all hooped anyway–
Even anti-gold Garth-says have “some” gold–
I prefer lots myself and I’m “always” long gold–but I’m also hedged off here–because i think it might “initially” fall with equitys and i think it could touch the 900 area if it does-so-imo–there’s more risk in that-then transferring USD/CAD around-for the average person-
You know that emotion “thing” if you wake up and gold is down $80–just after you buy it–
I like what Mark Faber has to say about buying Gold–
“Don’t look at the price–just buy “some” every month-forever–
Here is the USD on a trade weighted basis–
It would be almost impossible for it to blow up-in a floating/competing fiat regime-against others–that are even more rotten–
http://1.bp.blogspot.com/_nSTO-vZpSgc/Rc9q-ABPcYI/AAAAAAAAATA/dmOQX6CMw4c/s1600-h/US%24-Index-Makeup.png
They will eventually-all-go to zero-but-what else do we have-at this point?
Also–a lot of those treasury buyers are businesses that are gathering cash pools up and not spending on further expansion-they are draining already allotted credit lines-in case banks tighten borrowing even more and buying US treasury’s and making nothing in return-
Just holding for safety–
Re: Investing in Florida Real Estate:
I am in Florida now (been in both the north and south). It seems like 1 in 3 properties on the A1A highway (East coast beside the beach) is listed for sale. The number of half vacant new condo complexes in Jacksonville is mind boggling. Prices likely have further to fall in Florida.
However, to Garth’s point, one could likely negotiate a further discount off already reduced prices in a neighbourhood where listings are swamping demand. The average / median price may fall further, but that could be already factored into a well negotiated discount!
Just watch out for the Chinese Drywall…
#107 jr, maybe we agree to disagree, not sure. Pension funds, Pimco, and the Fed are the only real buyers of size in the treasury market, all acting on the mandate of the U.S government. Pick any currency in the world, its up to you, and look at the gold price for the past decade. To me that is the currency a person should be holding.
…claw back?
a person who defaulted on a small–business loan in 1995, for example, and who is receiving Social Security could be notified that his benefits may be reduced each month until the debt, with interest, fees, and penalties, is paid. The Treasury can withhold 15% of the benefit, though it can’t be reduced to below $750. Tax debts have no floor.
The change will add more than $6 billion to the $75 billion in delinquent debt individuals owe the government, according to the Financial Management Service, the Treasury’s debt collection unit.
A Treasury spokesman says the new legislation “allows Treasury’s Financial Management Service to collect older debts and levels the playing field so that all eligible debts, regardless of age, are subject to debt collection. Treasury expects this legislation will result in increased collections of $10 million per year in delinquent federal non–tax debt.”
#63 NDMS,
Wow. NDM and VR together again. I think my head is going to explode.
#78 why buy one condo in Toronto instead of 3 homes in Tucson? Becasue Fortress America is closed to foreigners and Canada is not. Money can’t pour into Tucson because the people with money can’t get IN to to Tucson!
And now they are charging 10bucks at the border to get into america! TO ‘encourage’ tourism?!?
#49 TheTruth,
That’s right. No point in comparing Vancouver to North American cities with similar populations and demographics. We are much more huge mega cities in Asia. Silly us. What were we thinking? It all makes sense now.
Come to think of it Calgary is like Cairo because is starts with “C” and Vancouver Island is Iceland because….well…it is an Island and some blond people live in both places and they both will tell the English where to go if given a chance. See. I am getting the hang of this.
You should change your avatar to “TheReach”.
#106 Home Prices to Rise,
Is this crystal ball gazing or is there some analysis to go along with the prediction?
What could possibly continue to drive Toronto prices up with wages flat, costs going up and possible interest rate changes? Please tell.
I was summarizing a business summit speech here by the Dragon’s Den guy ,Jim Treliving about a month ago.
One thing I forgot to mention from his keynote address was his recommendation to buy distressed US real estate now.
He basically parroted what Garth said in his latest entry.
This is coming from a great Canadian now living in the USA, Texas. Other dragon Kevin O’Leery is also an expat living in Florida.
Ottawa has such a shortage of entry level townhouses and SFH’s that realtors are now knocking on doors asking if owners want to sell.
Bidding wars are becoming the norm in the entry level category. A good friend is mulling over an unsolicited offer on her investment condo this weekend.
Funny how the agent still demands 4% on a double ended deal.
No worries though because Ottawa is different and has a nice stable market that never goes down. Or so goes the OREB(Ottawa Real estate board) unofficial slogan.
Instead of buying a house in Tuscon, which seems somewhat tricky for those of us who don’t ever plan on being in Tuscon, wouldn’t it be easier to just short commercial real estate companies?
Oh, and did you hear? It’s a great time to buy!
http://www.nytimes.com/2010/03/14/business/14every.html?ref=business
(a fairly straightforward article from the NYT)
Why hasn’t Garth invested in the US?
hmmmm…Because Garth knows the US may one day actually Nationalize all foreign owned US investments.
Nostradamus jr.
109 The BigLebowski on 03.13.10 at 7:29 pm
#107 jr, maybe we agree to disagree, not sure. Pension funds, Pimco, and the Fed are the only real buyers of size in the treasury market, all acting on the mandate of the U.S government. Pick any currency in the world, its up to you, and look at the gold price for the past decade. To me that is the currency a person should be holding.
*********************************
Sure–but the question asked-was specifically about a CAD/USD trade–
The person that asked-Garth–but got flipped off for asking a reasonable question-has a fairly good sized nest egg–in cash–
I can’t say–trade it for gold- or even offer advise because I’m not qualified- and even if i was sure that gold would move up from here-i can’t suggest anything-
Just give my personal opinion with some data-to back up my claim–take it or leave it-sorta thing
I think gold will go higher-but it could go lower first too-
Even Faber–who is a believer in eventual hyper-inflation-say 5-15 years-before the dollar hyper-inflates and he bases that on a hunch that the Fed will keep printing–
I can’t say-he’s right or wrong-that far out–
So–I try to deal with the crises of the day-
ya know–one disaster at a time–
Pimco etc are no doubt buying for clients and they are likely fully hedged-in fact the buying could be just hedging against TIPS or similar-since its looking like the inflation play is waning and the price might fall when their delta is met–who knows-
But-people in the US are shedding debt-paying or defaulting–which is essentially savings–and others are gradually seeking “perceived” safety-in treasury’s-for now–this is all deflationary-
but–like you–I’m a goldbug–
tune for ya dude
http://www.youtube.com/watch?v=5Br-NSgwoSE
# 120 jr, ok fair enough, I have looked at everything and the only safe place to hide is gold/silver. The Can dollar will make out better than most but all will fall verse gold. This will be a time for wealth preservation. As you know weather its inflation or deflation gold will make out better than anything else. Deflation would see everything drop while gold maintains or even moves higher.
#64 Nostradamus jr.
…Vancouver Island, the Sunshine Coast and the Gulf Islands…
Hey, weren’t you ditching the island about a month ago. Please keep you comments to North Van.
#83 Nostradamus jr.
…People are investing in homes vs gold because you can’t eat gold….
You can’t eat a house either.
…Ottawa will not kill the Canadian Real Estate Market with higher interest rates….
What? Ottawa does not control the mortgage real estate market. You really have no clue about the bond market.
…Ottawa wants an 80 cent Loonie to support the Export Manufacturing Industry in Ontario…higher interest rates would kill it….
Again, can Ottawa really control the loonie? No. People need what Canada has. That is why our buck is going up!
Re Post 33, 42, 61, 67, 89 – Thanks for your feedback with someone asking for proves, some agrees and disagrees..However, you all have to understand, more South East Asians and Asians are moving in because of our free health system, welfare structure, education standard (I can tell you Asians in China or India would be very proud if your son or daughters studied and graduated in any university or college in Canada and dont have to be top 25 or 50’s and their mom and dad in China would invite the whole street or village for banquet days and nights)…Therefore, father and mother will pour in as much as capital for their son’s and daughters (big house (of course), maybe father did not see that home or condo but s/d said I love that one…500K or 1M for 1500 sq ft..thats way too cheap as cant buy it in Hong Kong or any Asian country,..so, no problem, wired in to your bank acct tomorrow, BMW or MB GLK for 60K only..wow, thats like 50 % cheaper in China ? no problem, will wired to you the next day…) Well, if you all imagine where are these monies coming from, money printing from china and massive liquidity from chinese banks that they can take these funds out and never needs to pay back as these slush funds are stimulus money that should be spend within China but has spent to everywhere in the world via some underground source..I can tell you they wont want to send these monies into the states because they dont welcome any foreign investments…Canada or Australia would be the most popular landing on those funds..once they are here, real estate is the primary and GIC as secondary…Stocks or mutual funds…ummm..they dont care or they dont really like it..as PHYSICAL goods are always the key !!! IF you need proves like research or analysis on reports with those, wait until few years later..but if you are seeing who are caught in the scenes onto those drug labs or weed farm or pirated dvd’s..who are they ? where’s the flow ??? check the newspaper…I can tell you they will all concentrated in GTA area for now as most of these people like to gather around that area…It may not change for the next few years as alot of those unfortunate ones are still renting and giving monies to the landlords where they already own so much houses to make money from (Have you seen a 2000/2500 sq ft house in scarborough with 7/10 rooms and garage rented out with no living room inside yet ?)…and they may begin to buy when price drops a bit as support for these people will comes out…
#104 Jake — Good post. It would be nice if this clip of the comparison between dubya and harpo (along with Obama’s gobble-degook) went public. Great ad for a revolution!
The new pic on rense.com is good — a one- or two-yr.-old, sucker in her mouth and wearing a placard which reads: “I’m already $38,375 in debt and I only own a dollhouse. Thank you Mr. President”.
Sure has a great future, no?
——
Wowzers! This will give y’all a much clearer idea of why this continent has fizzled economically. Note this doesn’t include debt.
Concerns Calif. only, but add the other states then see what kind of a mess the US is in (and us).
Milking this for all it’s worth, but now running on empty.
Naughty Cdns. = Border Tensions.
Twenty signs that Big Brother is part of our lives.
Stevie is probably bringing similar changes here as well as Obama there. Following is the reason for the above here.
More on the jobless recovery. If there are no jobs, no paycheques coming in, no one is spending anywhere, where is the recovery happening? On Plato’s Pluto?
Poor little Israel. Really hard done by. Nevermind.
Instead of a conspiracy theory today, a little make-believe fun with a link at the end.
Scouts motto: Be Prepared. May or may not be something. Further link in.
Deflation = Inflation, minus StagFlation then adding HyperInflation.
Stevie’s Naughty Remember the US has increased their military in Columbia, next door to Chavez and Stevie wants to fast-track new free-trade legislation between Colombia – Canada.
Self-explanatory. Geithner may end up behind bars; video at the end.
And when the CAD goes to parity with USD and beyond against all other potential exporting nations, GDP with cease and this shoe will show no mercy!
So, I can tell you that Kitchener, Windsor, Oshawa and other cities outside GTA may not be that HOT as of yet…But if these developers need to find someone to prop up bubble prices , they will soon have to bring in busloads of rich Asians to buy real estate like buying a hamburger in McD in either one of your cities, your city will be propped up with amazing prices like GTA and if you say, hmmm…what should I do…I truly advised you all that you should offload them to these people (as they all are speculators) and let them take care of your house..I can surely tell you they dont even know a condo needs to pay maintenance fee or property taxes to keep their condo alive as they only paid 1/16 of that in their condo in China..Have you heard of department stores in New York City and other American cities has lax their visitor rules and decided to bring in busloads of rich visitors in Asian countries to keep stores alive ?
#113 Junius
Maybe you should change your avatar to I’vebeenwrongandihatemyselfforit.
Many people have become rich via RE in Canada and their kids will be thankful for that irrespective of what will happen from here on. They don’t have to feel sorry for anyone. Seems like you have a problem with that since you seem to have missed the boat. So much passion and anger in your responses…sheesh!
Cheers to you to.
Funny; no mention of MLS/CREA vs competition burea for the last month in the MSM. All talk and no action. Very predictable (as I’ve said before).
123 # dd
i think it’s more like our econ is a parachuting down from a plane as opposed to greece and US which is pretty much a free fall
whether US crashes into us remains to be seen
that is why foreign/ domestic want the CAN dollar tied to hard assets. but interest rates are not controlled by us nor is printing money
http://www.debtclock.ca/
#1
You may want to look at Cadillac Desert, a 1986 book that tells the story of water and the American western states..most people don’t want to know but it is so “in your face”, very interesting read, coming to a state near you CA..
#157 – So what happened in all 50 states to the south? Did all the renters and buyers die?
MAybe they just refuesed to pay – did you think of that?
HMM, GARTH,
Half-million-dollar skanky dives. Greedy sellers who even don’t bother rinsing curlies out of the sink before a showing. Real estate agents who collect commission for showing up. And a disconnect from reality for a commerce grad like you.
But, Alex, there is hope. This will not last. So let me get to your questions:
(1) A FAIR PRICE for a house is what people can afford. That seems to be somewhere around four times income today with these cheap rates. With normalized mortgage costs, fair value is probably a little less. The media income in T.O, is about $77K, so the average house should cost $308,000. The average now, however, is $431,500 – a $123,000 premium. Yes, Alex baby, this means the market is overvalued by 28%
(2) What comes next? Well, my view is that 2010 will be a tipping point. The combination of rising interest rates this summer with the HST, more job losses (check out Siemens), government cutbacks and buyer fatigue will start the process. Sales volumes will fall even as prices rise, then both will decline together – starting a process which will probably last for years.
(3) Stupid to buy now? Yeah, Rahim Jaffer stupid. juices. Wait as long as you can.
LETS SAY I’M WAITING AS LONG AS I CAN, FROM 2000.
IT’S OK. AND IN 2000 I HAD 62K INCOME TODAY 70K.
BUT THE HOUSING PRICES ARE DOUBLE.
AND I JUST BOUGHT THE HOUSE BECAUSE I CAN’T WAIT ANYMORE AND MAYBE YOU ARE RIGHT BUT HOW LONG AVG. FAMILY SHOULD WAIT ABOUT 15 YEARS INCREASING PLUS 5-6 YEARS DOWNFALL?
LETS SAY RENTING 20 YEARS?
DO YOU KNOW HOW MUCH SOMEBODY SHOULD WAIT FOR FAIR PRICE IN CANADA?20 YEARS…
SO IF THE BANKS TRY TO SCREW ME AFTER 15 YEARS RISING OF THE PRICES THEN I’LL SCREW THEM AS WELL.
I’LL PUT THE FIRE IN MY NEW HOUSE, I’LL SPENT 75K FROM MY CREDIT CARDS IN CRUSE CASINO AND I FILL FOR BANCRUPTCY. HOWEVER WE ARE PRICED OUT FOREVER……
Why to worry about RE prices?
Economy disastrous? Inflation rate? Mortgages?
It would be absolutely unimportant soon.
The Nuclear Attacks on New York City in 2010
The bomb will be sent by the group of Arab/Muslim nations formed earlier that year, led by Iran and Iraq. This nuclear attack marks the start of World War 3.
The explosion occurs sometime between June 1st and December 31st of 2010, inclusive. This bomb will be an actual nuclear bomb, not merely ‘dirty bomb.’ It will not be sent by a missile
http://www.catholicplanet.com/future/nuclear-attacks.htm
Poor Europe, It is becoming to be Eurabia soon,
Eurabia will fight USA and Canada
http://sioe.wordpress.com/
Vanga:
2010 – The start of WWIII. The war will begin in November of 2010 and will end in October of 2014. Will start as a normal war, then will include usage of nuclear and chemical weapons.
2011 – Due to the radioactive showers in Northern Hemisphere – no animals or plants will be left. Muslims will begin chemical war against Europeans who are still alive.
2014 – Most of the people in this world will have skin cancer and skin related diseases. (as a result of chemical wars).016 – Europe is almost empty
http://completeall.com/Informative/World-Predictions-2010-5079.html
It is always amazing to me how otherwise bright people can just continually wax eloquent about complex investment strategies all the while ignoring the massive sabretooth that is sitting beside them with a hungry look.
The world economy is now finished….period…it is going down and will continue a long term (20 year or so) downward spiral that will end at a place not even that sabretooth wants to be.
Even all the so called denialist camps are now coming on line with the story of the peaking of global oil supplies. The ramifications of this are THE STORY….all else is window dressing.
The paper economy is in freefall…and yes that means the canadian currency also……with a world wide collapse of the economy we are going to see our dollar surge…and our exports dwindle. No the chinese will not “save” us…..once they have spent as much US “monopoly” money as they can on tangibles…they will discover that they have no internal demand that can afford to pay for the goods stockpiled…..and the rest of the world cannot afford it either….
I am structuring my entire shorter term future on securing businesses in areas of the country that are “immune” in the short to medium term to this economic bulldozer……think regions whose financial stability is based upon “non traditional, underground” means of support.
(use your imagination)
Also think in terms of investments (legal) that have a FAST return and get those returns into PMs as fast as you can….
We are seeing the bull market of all bull markets in PMs…it will trash most other investment vehicles as the world moves into the “speculative” phase of the gold market and out of the “value” phase.
One should then move “profits in that venue into the truly hard asset class….ag land is my favorite long term…..
Hard times are here people and they will make the 30s seem like a summer cruise in comparison.
I sold out of Canada 3 years ago…………..
If you are going to buy real estate in Florida, or any other US State, you had better look into the property tax situation. In Florida, AFAIK, they have a “Homestead Tax” system, where permanent residents of the State pay much less money for property taxes than people who are from out of State. Soak them furriners. Many other States have similar systems, some don’t – check the facts.
I know of a guy from Canada who bought a house in south Florida, I can’t remember which town now. He thought he was getting a great deal on his SFH for about $60K (foreclosure), till he found out the property taxes were outrageous, but he bought it anyway. Then the municipality decided they had to put in sewers into the older part of the town where his house was, and he got a bill for ~$30K for that. And of course there was the insurance, so expensive that he did not buy any – paid cash for the house, not worth paying ~$6K/year for full insurance (hurricane, flood etc).
That “deal” was not so great after all. Better than paying $400K for that same house, I guess. If you can buy it cheap and pay cash you might be OK, just be prepared to be hosed on the property taxes. If you need a mortgage, the Bank will want you to insure the property, which might be as much each year as the mortgage payments.
Plus there is the mold problem. Any house in Florida that has been vacant for a while (like most of the “cheap foreclosures”) is probably full of mold if they turned off the air conditioning – which they almost always do to save money. Or it might have the infamous Chinese drywall. Either way, you have to gut the interior to the bare studs and re-do it, and keep the air on forever afterwards. Banks probably won’t finance the house if it has those problems, you will have to pay cash for the house and cash for the remediation renovation job, a big project.
If you are thinking the US real estate market has about hit bottom now: ‘Calculated Risk’ (a pretty impartial economics Blog) had an estimate I read last week that suggested real estate in the US will not reach a real bottom in price until 2013 or so. That was due to waves of foreclosures still to come ashore, and the fact that the “walk aways” by underwater “owners/owers” are increasing rapidly. The percentage of US homes underwater is rising to epidemic proportions in the Bubble States, primarily Cal, AZ, Nev, Fla.
How about Detroit, you can buy a nice SFH for $1? Now there’s a deal!
#12 TheTruth,
That’s right. I am just bitter and angry. Is that all you got? LOL! I am angry but not for those reasons as I will explain just like every HOME OWNER WITH A BRAIN SHOULD BE.
Most of us come to this blog looking for incite and opinions on matters. Not for flimsy excuses why our markets are different. If you want to be compelling try something that persuades.
My problem is with your analysis. You, VR and NDS are peddling yet another silly brand of the “it is different here” mentality. I think this is dangerous and I will explain why.
I will make it easy for you. Here is the theory that you, VR and NDMS seem to be preaching over the past 2 days versus the current Bear theory (according to me). Let people pick.
Your theory: In Vancouver and Toronto it really is different. Blessed with a high immigration population from East Asia and other countries (NDMS notes Iran) that stay at home longer we have higher RE prices. Living with their parents longer these youngsters save piles of money AND when ready are prepared to spend it all on RE in the world’s most unaffordable markets.
It doesn’t matter that the diaspora in TO or VAN is similar in composition to other NA cities like Seattle, Montreal, LA, SF or Miami. Our is of a different genetic variety and once they save their money they do not seek out better financial alternatives they simply keep buying Re whatever the cost. TO and Van should therefore not be compared to cities in their countries or in NA of similar sociographic composition. The better comparatives are Asian Mega cities or – a few weeks ago principalities like Monaco. It is different here and different this time. You say this is a cause, I say an effect.
2. The Bear Theory. Following their historical pattern of changing roughly 2 years behind the US market prices in major Canadian markets begin to fall in 2008. After more than six months of price declines it is clear that we have reached the end of the 8 year bull market prices will head down until they find their equilibrium.
However this decline also coincides with the worst economic crisis since the Great Depression. Gov’ts around the world are forced to borrow Trillions of dollars to flood the capital markets and stimulate the economy. One policy decision is to implement emergency interest rates and lower lending rates to virtually zero.
In Canada these rates are coupled with a relaxation in mortgage lender rules that helps increase the pool of elgible buyers in the Re market. The predictable result is that many people take advantage of these rates and refinance, move up or make their way into the market for the first time. The Re market rebounds due to this emergency stimlus.
The Canadian markets where the pool of buyers is the largest – TO and Van – respond the most. The turnaround emboldens the Re bulls who now see the market as invincible – it is really different here. Prices rise and a bubble like euphoria is created propelling the market past old highs and back to towards the stratosphere. Buy now or be priced out forever.
However, eventually – this is 2010 – the forces that propel the bubble run out of steam. The pool of buyers shrinks and price rises take away the initial sugar high of low interest rates. Meanwhile the recession lingers, gov’t spending recedes and other affordability issues from tax increases to rising interest rates erode the upward forces.
As longer term market forces begin to return and gov’ts assume other priorities and the Re market returns to its 2008 trajectory downward towards traditional affordability levels. Prices continue downward in 2011 and beyond as rates increase, affordability erodes and long term demographics come into play.
However now we realize that the policy decision of the gov’t to relax lending requirements will in fact have a long term negative impact on the RE market. The euphoria created a large number of bad loans as many people – mostly young and urban – are in negative equity because they overreached and have over leveraged themselves due to predatory lending.
Most of the loans that go bad are CMHC guaranteed leaving Canadian tax payers on the hook for billions of dollars. This fact further slows the recovery and keeps taxes higher in the long run – further eroding Re prices in the future.
Now this is a reason for us homeowners to be angry! That is why I am upset and why I argue against “it is different here”. You bulls are ultimately going to be more responsible for long term market decline than you realize. You feel invincible today but you are sowing the seeds of a future further erosion of prices. Today’s high is tomorrow’s hangover.
If I was really interested in making Re prices crash I would be acting like you and feeding the euphoria.
You pick.
I don’t know how many people here read Barry Ritholz at this Blog the Big Picture but he had a piece today on Real Estate worth noting. The discussion starts with a piece on Re agents but note the three metrics in the 3rd para:
“What they are really saying is that it is a good time to be involved in a transaction that generates a commission,” says Barry Ritholtz, C.E.O. and director of equity research at FusionIQ, a quantitative research firm. He’s also author of “The Big Picture,” an irreverent blog on markets.
If agents are always motivated to make a deal, buyers are often asking an impossible question: “Will the price of this house go up?”
Although the National Association of Realtors said for many years that home prices historically don’t fall, actually they do, and sometimes quite sharply. The housing market is complicated, and the future unknowable. Still, for clues to the overall direction of prices, Mr. Ritholtz advises buyers to look at three metrics: the ratio of median income to median home prices, which suggests whether people can afford a house; the cost of ownership versus renting; and the value of the national housing stock as a percentage of gross domestic product.
All those measures were aberrationally inflated during the housing bubble. And they still aren’t back to historical norms. We can get back to the norm in either of two ways, Mr. Ritholtz says: home prices can either drop an additional 15 percent or go sideways for seven years or so, while G.D.P. and income presumably grow.”
Good advice.
Thinking of buying U.S. real estate? We haven’t even touched on the termite problem. After a three-month absence, you decide to go visit your “cheap” house in the states, it acould all but have disappeared.
#10 Squidly
“Whoops, Friday night cold beer brain freeze,”
Why don’t you try drinking coffee instead? You could then do your stupid things faster with more energy!
#135 knucklewalker
what are PMs? I’d rather look like a fool for asking than assume the wrong acronym.
I just want to clarify one thing about my argument set out in #138. I understand that the Canadian gov’t had to drop interest rates to match the US. My issue is with the policy decision to relax lending rules.
In the face of the housing bubble crisis in the US and the harsh reality of prices crashing in the US it was short sighted and irresponsible for our gov’t to loosen these requirements. If they had not the Re market would probably have responded to lower rates but would not have created the current bubble.
What is deeply deceptive on the part of our gov’t in the face of a credit collapse is to try and stoke up consumers with more debt. In particular, young buyers who may be scarred for life as a result of this false sense of security.
What particularly sickens me is how H and F have taken a victory lap after the first period of this recession like they are bloody geniuses. If they don’t know better they are idiots. If they do, they are liars. Either way it sickens me.
Over the next few years we will look back at that policy decision and point to it as the cause of much grief and a collective tax bill we can not afford. It is the crux of the Angry Bear argument.
Tucson?
Ugh. Was there last April.
I’d rather live in Surrey.
#138 Junius
I agree with the argument you lay out in response to ‘The Truth’, and I am usually not a snoot when it comes to spelling, but i believe that you may mean insight rather than incite eg. “The latest Junius post on GF was chock full insights and thus incited his/her fellow bloggers to rebel against the conservative government and their epic economic incompetence.” Minor but quite fecund typo, no?
Like I said though, your argument is effective and should be taken seriously by everyone who is concerned with the effect of the FIRE industry on the global economies (singular/plural? who knows!).
I bought your book on Money Road and it is very well put together. However, your blogs on this site seem to be focused primarily on Real Estate. There is a small area for “investment”. Why not write more articles about investing in different things, like ETF’s, preferred shares, bonds, different stocks, and what you see to include or stay away from based on current and ever changing things in business world? If you want to invest in “real estate” buy a REIT and collect the dividends/distributions, very liquid and no carrying costs (ie. property tax, mortage, insurance, etc.).
#130 confused and a little crazed
…but interest rates are not controlled by us nor is printing money…
Printing of money is controlled by the central bank.
#106 home prices to rise on 03.13.10 at 4:56 pm
i see toronto home prices up 34% this year rather than down 34%. pass the pipe dave
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I never said prices will be down 34% this year, I said the Toronto market is 34% over valued. I calculated this by looking at the 5.7 rating Toronto had in the housing affordability study and divided by the number that was deemed affordable by that study (which I found to be very thorough). The number I came up with was 34%. When bubbles burst they often overshoot to the downside, so it is likely we will see more than a 34% haircut on prices in Toronto. If prices keep increasing this year, next year, the year after, well, then take 34% and add the gains of the rest of those years of craziness, and those are the price drops one can expect. Don’t shoot the messenger.
I’ve seen price drops and increases way more than 30ish%. I find comical that you think this number is outlandish. Too much of a party in real estate. Markets give but they then take away.
also, I’d like to say, very good on Angie (I believe that was her name), who sold her place for $550 k in the summer and is now sitting in cash. I love hearing bright people taking action on with something like this. It’s decisions like that that are life-changing events. Ask someone who sold a property in Toronto in 1990 and bought one back in 1995. For people who did something like that, it probably was their best financial decision they’ve ever made.
#135 knucklewalker on 03.14.10 at 10:03 am
The paper economy is in freefall…and yes that means the canadian currency also……with a world wide collapse of the economy we are going to see our dollar surge…and our exports dwindle. No the chinese will not “save” us…..once they have spent as much US “monopoly” money as they can on tangibles…they will discover that they have no internal demand that can afford to pay for the goods stockpiled…..and the rest of the world cannot afford it either….
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I don’t follow your logic on this–
You say the currency will go into a freefall and then say it will surge-
Also that we will not be able to afford to buy all the goods that are stock piled–
If goods are stock piled and no one can afford them-then-either we don’t need them-or-they “must” come down to affordability-that’s just basic economic fact-nothing can hang above-market clearing levels for long–
“The world economy is now finished….period…it is going down and will continue a long term (20 year or so) downward spiral that will end at a place not even that sabretooth wants to be”
There’s something that you and everyone should keep in mind-
The “market” has been around since time began-it’s seen all of this before-many times-there are people alive today-that have seen this-it’s nothing new-it’s only new to us-but we’ve been here before-people survived–
And the market will be around–long after all of us are gone–
We’re really nothing-but a blip in time-
Actually–this will be a good thing for society’s and the longer this depression lasts-the better it will be-in the long run–
It will force discipline by pain-
It will purge out the rot-that is our governments-
I don’t ignore peak oil and its effects-but what are we going to do about it?
I have Gold–I have cash/trades–I can buy land-
I have guns and ammo-
(have always had those-since a kid)
What more can I do?
As far as crawling into a bunker today and waiting for Armageddon–no thanks–I’ll stay in the daylight and continue trading and living–
I’m not afraid of the future-come what may-
Junius – I’m not trying to feed the bulls here, but I’ve presented these links before, and it does lend some credibilbity to the immigration factor.
http://gstudynet.org/gum/Publications/Immigration%20and%20World%20Cities.pdf
The above shows the huge proportion of city population
that is foreign born (not, not neccessarily foreign) for Toronto and Van. Statscan has actually recognized this influx as contributing the major component to growth in
these two centres.
The following link shows affordability ratios in many cities (not just anglophone). Many are worse than TO or even Van. Not quite comparing apples to apples, but it does show what many people in the world are presented with.
http://www.numbeo.com/property-investment/rankings_by_country.jsp
From the recent demographia studies, we can see NY/SF/LA/London have all had corrections but continue to be extremely unaffordable. Miami is more the exception.
So I think the result will lie somewhere in the middle of the bulliest and the beariest. Correction – definitely (20 or even 30%) but return to affordability? 3X income? Forget it.
In 2 days, my wife and I will be putting our Loft up for sale in Toronto. We only bought in 2006 (registered Aug. 2008), but we are selling to take out equity because it just doesn’t make sense now. The way I see it, the risks are too high.
Fact: Debt to GDP ratios are almost as high as the US before they crashed; at the very least it is not a sustainable trend.
Fact: Home prices in the GTA have climbed for 15 consecutive years, including 2008 (by about $1,000), from a mean average of $192,000 to $435,000 today. Meanwhile, wages have been flat for a decade and have maybe increased %20 in those 15 years on aggregate.
Fact: The trend towards higher property taxes and user fees is indisputable. The City of Toronto has a huge budget deficit and deficits on all levels of government have run amok. User fees for parks, trash bin collection by the bin and even toll roads will be introduced.
Fact: Despite what the media tells you, the economy is not recovering. Our job ’surplus’ for 5 of the last 6 months is because of government hires and low quality service sector jobs.
In my opinion, there’s just too much risk to own depending on your situation. Because we still have a substantial mortgage on the loft, we’re paying mostly interest anyway; and when the cost of carry rises, we’re paying little principle down on the house. So why pay property taxes, maintenance fees and other costs when were not paying down principle? If I lock in for a fixed rate, our expenses from taxes and mortgage would be round $2500 month – again with little principle being paid. Why not sell, take the capital gains, invest the $200,000K in tax free & low risk yields (i.e. low risk investments yielding %5) and rent a comparable place for $1500/month (not limiting quality of life)? Thanks exactly what we’re going to do because you DON’T want to be renting from the bank when property values are falling – just doesn’t make sense.
However, I wouldn’t necessarily be selling if our mortgage was mostly paid or fully paid since the cost of carry is far lower. Without the mortgage and heavy interest payments, might make sense to hold on and absorb the ebbs & flows of the market.
So whatever the case, it may make sense to either sell or hold in this market. But I definitely wouldn’t be buying at this point. I wish my finances were such that I could have bought in sooner than 2006, but it is what it is and were happy to take a still significant capital gain and wait 5+ years for a better opportunity to buy. I have no doubt that opportunity will come once the global financial system has been purged of exceeses & debt – but we’re only in the 3rd or 4th inning IMO.
Oh yeah, I must say I feel bad for anyone selling out when the whole financial crisis thing happend down South. Had I been owning then, I probably would have sold too. WHo knew with prices collapsing in most Western RE markets that ours would not only hold up, but thrive.
I guess it’s true that Canadian market trends always lags the US by 2-3 years. I think the aforementioned axiom is a perfect example of the trend which eventually will play out here. I think anyone with large capital gains who is still paying of lots of mortgage interest should think about locking in those gains.
Another prediction: The lower end of the housing market will do better than the higher end in the coming 5-10 years because of all the boomer retirees who will look to downsize and sell RE for cash equity. The prime prime properties will still do quite well but the $600-$1.2M homes will see above average supply.
#138 Junious.
Ok Genius, you are right. Most people are crazy. Real estate prices should be half of what they are now. Too many ignorant people out there, hey Genius?
Have you had a dose of RE reality, dude? Look around you for a change! And i will keep comparing Vancouver prices to Asian cities and not to English speaking only cities.
Immigration isn’t the RE fail-safe for those with the rose colored goggles.
Also, some of the US cities have started a small bounce up, whether that be a dead cat bounce and they fall again as per the talk of Alt-A and ARM mortgage resets coming up in the next couple years. Some cities are at their late70s and early 80’s prices, most are at their late 80’s prices. Somebody mentioned Jim T from dragons den/Boston Pizza fame, looks like he could be right, in SOME city centers.
One more, Washington DC, which was once touted as safe because of government(or New York because of finance and immigration) have both been hit hard.
USA Population Growth
http://www.numbersusa.com/content/maps#?subject=1&type=2&topic=4
A couple examples, Florida and Nevada are both high growth immigration areas. The first graph have some links to other cities below FYI.
USA Housing Graph
http://mysite.verizon.net/vzeqrguz/housingbubble/
Las Vegas
http://mysite.verizon.net/vzeqrguz/housingbubble/las_vegas.html/
Orlando
http://mysite.verizon.net/vzeqrguz/housingbubble/orlando.html
For those in the Atlantic Canada, check out Portland, Maine.
http://mysite.verizon.net/vzeqrguz/housingbubble/portland.html
#116 OttawaMike
It was you talking about Jim, good stuff. One thing about your above post you mention the lack of units to sell, I think that reinforces Junius’s post about “Barry Ritholz” in which the reason some agents are reaching out is because they aren’t moving $600K+ as there are minimal buyers. This screams unaffordability.
The more entry level housing the more commission…
Just another note, if you watch the Lang and O’Leary exchange from Friday, Patricia Croft was on, she gets the award for the most aggressive interest rate increase prediction, possibly up 1.75% end of year.
Go to 16 minutes…
http://www.cbc.ca/video/#/News/Money/ID=1439458908
Of course many of the same personalities missed September 2008, you should still take note and not just poo poo them.
#142..PMs (Precious metals..gold, silver, palladium. platinum)
#150…its is all relative….paper currencies the world over are falling in value as the electronic printing presses surge to try and shore up the illusion of “wealth” that is fast dissappearing as the paper dollar economy is vaporized under the flatlining of the petrocurrency supply.
The canadian paper currency is only “safer” in the time sense that because we have a supposed “petro currency” it has shored up the relative value of the canadian greenback relative to say the US dollar or the euro….
in the longer term they are all going down
“the market” in the modern sense is a very very new concept…globalization (despite sailing ships and the spice trade) is essentially a 20th century phenomena.
World currency speculation is like wise very very new…
The market of the future…..in the face of failure of world oil supplies (say 20-30 years hence) will be a very much constrained one…….
the world is about to become a much bigger place once again…and much quieter also…..
We are entering perhaps the most turbulent period of all human history as measured in overall human death….the seeds of massive famines and open warfare are now planted and beginning to sprout…..
Peak oil and climate change are the crops that we are going to reap over the next 20-30 years …and they will be devastating for humanity…..
I am not heading for a bunker…that would be foolish and counterproductive…….I have a child and a very very complicated life……I am trying to make intelligent economic decisions for my sons future given the reality that I know we face……
and no…buying a house in Canada in this market is not one of them
# 138 Junius et al bears
…You bears still have difficulty accepting the fact “the Game completely changed” when Ottawa initiated cheap interest rates for the Canadian Real Estate Home Market Landscape…and sunk 25% of Canada’s GDP into CMHC guarantees.
…This 25% supports Canada’s Banks who provide the mortgages.
…Canada is a country of only 35 million citizens… the two key cities of TO & Van of only 4.5 million & 900K populations.
If push came to shove….Canada can easily become a self providing nation
What is the Population of the U.S….European Alliance….Russia…China or India?.
You bears can’t fathom that the world looks at Canada as an gigantic, paradise oasis…few people, tons of land, overflowing natural resources.
You bears missed the boat and simply keep applying Einstein’s theory of insanity….doing the same thing over and over again and expecting different results.
…Vancouver has been quietly appreciating for thirty years running and now been showcased to the world thanks to the Olympics.
Nostradamus jr.
http://www.nytimes.com/2010/03/14/business/14gret.html?pagewanted=1&ref=business
Private Equity’s Trojan Horse of Debt
By GRETCHEN MORGENSON
Published: March 12, 2010
“The private equity industry always pitches how constructive it is as an investor force to create jobs and growth,” says Mr. des Pallières. “But there are private equity funds that get rich by breaking companies and making others poor — whether they are creditors, states or employees.”
===============
Report Says Big Buyouts Are Likelier to Default
By JENNY ANDERSON
Published: November 5, 2009
…..
“In the go-go days of easy credit, private equity firms could borrow more money at cheaper rates, enabling them to buy bigger companies, which they then saddled with more debt. During the height of the boom, Cerberus bought Chrysler for $25 billion; Apollo and TPG bought Harrah’s Entertainment for $31 billion; and Goldman Sachs, Kohlberg Kravis Roberts and TPG bought the Dallas-based power producer TXU — now named Energy Future Holdings — for $42 billion. ….
The report concludes that private equity firms invest virtually no capital in the companies they buy, especially those in distress. …
It warns that many of the companies owned by private equity face significant refinancing risks in the next one to three years as more debt comes due. “
Knucklewalker … I quite enjoy your posts.
My background is in physics and about 5 years ago, I started to realize we have a serious energy SHTF crisis heading at us.
Now, for investing, I am curious about the blog dog comments on Bill Laggner … Quite successful on his predictions on where things have been heading.
http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/3/13_Bill_Laggner.html
flipper’s are not just confined to houses . Recall for e.g. simmons -didn’t this flip 6x’s
http://video.nytimes.com/video/2009/10/05/business/1247464988115/the-simmons-flip.html
#136 Keith in Calgary
“I sold out of Canada 3 years ago…………..”
Another way of saying it: “I was irresponsible, I went bankrupt, and let other people pay my bills. Now I’m leaving town.”
I make $65,000 in a reasonably stable gov’t job. My debt payments (mostly student loans) are $500 per month. My bank says I can take out $300,000 mortgage. There are entry-level houses in my area that could be had for about $210,000. To rent the equivalent would cost about $1200 plus utilities.
I have a dog so I need a yard. My partner, who is a student, can pitch in $500 per month.
My observations of the local market tell me that the extremely tight rental market is opening up (3x more listings than a year ago – although 3x of ten is still only 30) but it is still a seller’s/landlord’s market. Some new developments coming to market this year may suppress price rises but there is still healthy demand and price/rent is not totally out of whack.
Think I might pull the trigger and buy this fall after paying off my consumer debt ($9,000). Is this wise?
Are you asking if you should buy a $210,000 house when you have no money? — Garth
Dick Fuld’s Greenwich Bunker
http://www.businessinsider.com/houses/fuld-bunker
#157 knucklewalker on 03.14.10 at 4:35 pm
…its is all relative….paper currencies the world over are falling in value as the electronic printing presses surge to try and shore up the illusion of “wealth”
****************************
That ‘illusion” of wealth-is now debt–
And yes-they are trying to make up for the vast gap-that is quickly widening-between paper and “computer entry’s”–neither of which are “real money” like Gold-but-they are “believed” to be money-by the holders of it-so it “is” money and until “faith” is lost in it–it will be money-simply because–it “acts” like money-
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The canadian paper currency is only “safer” in the time sense that because we have a supposed “petro currency” it has shored up the relative value of the canadian greenback relative to say the US dollar or the euro…
*************************
All our currency’s float–they are anchored to nothing-other then belief in governments guarantee’s-that they will stand behind it–
We are in a currency devaluation race to the bottom–
This-like you say–will end at zero–but-what is happening at this time is–a “coordinated devaluation”
If the US prints 5% paper–relative to say GDP-then we have to-then Europe-then everyone–
This way-they all die-in more or less sync–invisible to the masses-
I think we will eventually end up in a world debt default-
Which should have happened in October 2008-when we woke up and realized the world was insolvent–
I also believe that Von Mises was right–
‘There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.”
Our currency’s were weakened the day the Gold Standard was first manipulated–
Gold stood between the people and the governments-it gave the people-the power to control governments–
It stood between peaceful people and governments engaging in foreign military adventurism-for the benefit of corporate bankers–”the few”
I know that you understand this–
I think that Gold will be what saves our currency’s–
Once the contagion of lost faith starts to infect the majors–Central banks will have no choice-but to buy Gold to strengthen them–to restore the faith–
When or how long from now–who knows–
So in the meantime–I have to play the cards that are dealt-
*******************************************
World currency speculation is like wise very very new…
The market of the future…..in the face of failure of world oil supplies (say 20-30 years hence) will be a very much constrained one……
******************************************
Not really new–this is what took place in the 20’s–after the price of gold was artificially repriced and interest rates were brought down and investing on margin was introduced–
Paper gold–the birthplace of the derivatives–1922–
This sounds quite familiar to me–looking around today–
The market is a fast adapting forward looking mechanism–
It is light years ahead of us-in our thinking–
It doesn’t care how many country’s or people are involved–it discounts the future before we even arrive there-which is why we’re so wrong all the time–
Look at Kondratieff -and all his study of economic cycles and what happened?
A little pinhead named Alan Greenspan foiled his cycle theory-
http://photos1.blogger.com/hello/101/3984/1024/K-Cycle-Interest-Rates.jpg
Note how he deflected/postponed the winter bottom with his easy money bubble blowing–
Another example of trying to see the future is Malthus and the Principle of Population-
He couldn’t see the discovery of oil and how it would transform our food growing capacity–
I don’t know what 5 years from now will be like–maybe another technological break through–in energy–maybe a world war-maybe not–
So-i just have to carry on–trying to stay prepared for whatever and stay-one step ahead of the game–
What else can we do?
Intrest rates set to riise faster here than in the US, anyone taking out a heavenly mortgage today at 0 down 35 is just digging thier own grave.
135 KW. True the blow off top in the PM market is a long way away. We are entering stage 3 of a 4 or 5 stage bull market. When the blow off top that occurs it is time to roll those assets back into real estate and ag is a good option. PM will peak when all else has bottomed and that is the time to make a shift. In the last bull market the average PM mining stock went of 40x that of bullion and bullion went up 24x so you can see where the money will be made. But also where wealth preservation will occur.
Another way of saying it: “I was irresponsible, I went bankrupt, and let other people pay my bills. Now I’m leaving town.”
This is my plan. if the housing bubble doesn’t get bigger and I can not sell my home for more money then I will spend spend spend (credit) until I go bankrupt. Canada has left me no other option. Canada is a stupid country thanks to CONservatives who lend people without money money to buy overvalued housing. If I go bankrupt I will leave Canada in financial ruin.How many other immigrants will do the same. Thank you CONservatives for the free lunch.
Today’s pic. on rense.com has a large yellow banner with black type:
Why Pay Taxes
When They Can Just Print Money?
Indeed, why?
——
No link, but quote from Ron Paul (the sensible, realistic politician):
“They are building a New World Order where they have complete control over everyone and they will own everything. They control the world’s media and own the central banks in almost every country. They use these central banks to create paper money from nothing and lend it to governments and individuals and charge interest on the new money they created.
“The base of the New World Orders power is the extreme wealth that they have been able to obtain by a monopoly of credit.
“They have created a world wide banking system in which they can create money from nothing and lend it to governments and individuals.”
When it suits them, they will deliberately crash the economies of the world. After all, they are the ones who are, and will profit from human suffering. Depopulation?
——
Middle East wrh.com says it better: “The man is absolutely correct on this. Israel does not want peace; it wants territory, and by any means necessary.”
Greece presently has riots plus country-wide strikes. Now, Italy chimes in. Can y’all smell the napalm?
Interesting to note that the spiritual hierarchy refers to this planet as the “ashcan of the universes”, as this is no more than a very good classroom for all of us. But this is where all the garbage happens.
Bankquakes Variation on regular or extra-crispy ‘quakes.
Global cooling — 1:15 clip. She is right. Last year struggled to reach normal, not hot temps. Ocean currents changing?
‘Quakes-a-plenty. A few days ago I put a link up which stated that Japan may have the next big one. This is the third in three days, plus Indonesia to boot.
Where is HAARP when it is needed? — OR — Is this payback time for the RC Church? The pope has been embroiled in cover-ups of priests, mainly because he was hiding them and deflecting attention away from them when this was happening. Nuns as well. Benedict
What goes around comes back around. Negative karma is a bitch, but all debts incurred during one’s lifecycle must be paid for. That’s why reincarnation was created! Of course, the karmic pace of time has gone beyond the soound barrier, it’s moving so fast now.
As a mid thritysomething I wonder if Canadians have always been like this, so eager to pay so much more over what everyone else across the world pays. I see it in more than just house, in food, clothing, travel etc. I always here the excuses, “we are a big country,” “we don’t have the population,” “we need to protect our culture,” etc. Why are we so stupid? Is it all to protect us? I doubt it, I for one am sick of Canadian content first, doesn’t matter if its the radio, books, clothing, food, mobile phone companies, TV, I’m fed up, just open the markets up. As for protecting Canadian jobs, what jobs? We pay more because people at the top want to protect their monopolies plain and simple, same with the housing market. The worst part is we’ve nationalized our bubble, passed it onto the tax payer. Like so many times in the past, the average taxpayer is going to get screwed. You know, I really would like to get rid of the Federal government, what a waste of money. We don’t need them, no commies are going to come marching over the tundra to send us all to gulags, lets dump the Feds and in turn dump the CMHC, good riddance.
Oh, and on buying real estate in the US, you can only live there for 6 months of the year and property taxes are VERY high, for example – your looking at $12,000 a year for a house in New Hampshire, ouch. It’s less in New York but that state is going all commie, now they want to ban salt in New York city. Here’s a house in Syracuse, 700,000 people, great university, this place would fetch one million in Calgary no problem.
http://www.movesyracuse.com/propertysearch/propertydetail.aspx?o=ViewDetails&MLSNumber=S215649&MLSMarketCode=SyracuseNY