Sell Canada, buy America.
Many months ago I wrote those words convinced that Canadian housing values would decline and that American ones would eventually resuscitate. Since then real estate sales in this country have plunged and prices commenced their crumble. The Bank of Canada is warning citizens of a dramatically slowing economy and the dire consequences of their crushing household debt.
The HST has infected consumer spending. The prime rate, and the cost of variable rate mortgages, has increased twice. Realtors, mortgage brokers and bankers are growing cobwebs. Developers are having cows. Sellers have flooded the market with listings which are now sitting for months.
So, it’s started. For reasons I outlined here in the last few days, this is the beginning of a swampy multi-year market which will attack the net worth of those who worshipped the gods of HGTV. The way to build wealth now is through financial assets, not real ones. The way to get creamed is to be illiquid.
So, sell Canada – if you still can.
As for buy America, some argue the US empire is a teetering behemoth which will disintegrate into a smouldering pile of unfilled IOUs and worthless currency. Maybe so. But not in this lifetime. Despite a $1.5 trillion deficit and a $13 trillion debt, despite an actual jobless rate of 17% and the realization the American president is mortal, the US now constitutes a generational opportunity.
After all, this one country is still the largest economy and accounts for 27% of global production. Its intellectual capital is staggering. The concentration of wealth in America was largely unaffected by the recent financial crisis. In fact, banking and regulatory reforms now taking place will strength the US system and speed recovery. Even in the aftermath of Wall Street laying an egg, US dollars and American bonds are considered the safest places on the planet to put wealth.
So, what do we make of the American real estate collapse? The inevitable result of a capitalistic excess and asset inflation. House porn remorse. Unbridled greed, bad regulators, unethical lenders, immoral investment bankers, obsessed homebuyers – it all added up to an orgy with only one possible ending. And as with all booms, when it ended the pendulum did not stop at ‘normal’ but swung wildly into ‘bust.’
So today American families make about what we do. Mortgage rates are about the same. Employment levels are roughly equal. Even our currencies are close to par. And yet the average US house costs $170,000, while the price here is $342,000 (or $428,000 in Toronto and over $600,000 in Vancouver).
US home prices have been in steady decline since mid-2006, falling about 8% a year. In some areas (Phoenix, Las Vegas, southern California, rust best states, Miami) prices have declined as much as 50%-70% from the bubblicious highs of 2005. Almost a third of all American families with a mortgage are now in negative equity, owing more than they own. Many of them cannot afford to sell, since they’d have to write a huge cheque to close the deal, so they’re simply trapped. And since Washington’s idiot program of giving people money to buy houses ended a month ago, the market has tanked again.
In short, this is not a correction. It is a fundamental shift in public sentiment. After all, prices are back to 1999 levels in many cities and mortgage rates are at the lowest point in history – making this an excellent time to get a house. But because real estate is now viewed as a dangerous destroyer of middle class wealth and a trap for the young, it is shunned.
So, how could this be clearer? The same asset. Two countries. In one it’s priced at the highest point in history. In the other, it sits depreciating and unloved. In one, the public drools over hardwood and crown moldings. In the other people cannot bail soon enough. In both countries real estate values have only one direction in which to go – and they are polar opposites.
The American market may have bottomed in certain areas (New England, NY, Chicago, Houston), but the trip down continues in Nevada, SoCal, Florida. The window remains open for a few more months. Perhaps a year. Then the climb back begins. It could be spectacular. Or the only chance in your lifetime to buy a sunbelt home at fifty cents on the dollar. Or simply a place to invest money sucked out of a Canadian home at its apex.
How many times have you heard, ‘sell high, buy low’?
How many times has it been a slam dunk?
Next: How to do this.
277 comments ↓
Yes, I want to know how to buy property in the US, especially how to get a loan, hahahahaha! I could pay cash for a house down there, a nice one, but should I? Would I not be better off investing that money for a return then pay off the house when it can make me as much or more than div paying stocks? I don’t really want to rent it out(I suspect there are a ton of tax issues with that option), it would be nice to actually live down there for 3 to 4 months of the year. As an aside, does anyone know after 6 months of living in the US if you just have to transit over the Canadian border then you can go back for another 6 months?
American house price rises “could be spectacular”?
Or your $170,000 could just sit there for ten years, earning nothing, eating up mantenance costs, taxes, and expenses…
Why will there be a “climb back” anytime soon? It’s a generational change in attitude, coupled with peak credit, long-term structural unemployment, ever-rising taxes, price inflation in the necessities of life and deflation in paper and debt-dependent assets.
Those last probably include still overpriced housing.
Oh god, I can just see the uninformed immediately looking to flip and make some $ south of the border now.
So glad you posted that the next installment will be on how to do this. I am sure you will mention how some of the States tax foreign homeowners differently. You stress how important it is to use tax efficient investment vehicles preffereds/dividends), and buying a home in some States is more tax efficient than others.
Canada is Bizarro World. A twisted reflection of the reality south.
In the last few days, even Mark Carney is saying that levels of debt in Canada and the U.S. are starting to cross over…..I guess we have just collectively run up the beach after everyone else has come and gone, and rung the bell in a gesture of “me too-ism”.
I’m currently in the process of buying a vacation home in Hollywood, Florida (Fort Lauderdale), they’re selling at 70% off 2006 prices and if you should need a mortgage through a Canadian bank its easy to obtain, prices may drop a bit more yet but now’s a good a time as any, as the selection is, well, staggering.
Agreed, Americas super power status will not go away for decades to come, and please continue to stomp the Gold bugs, the only good Gold bug is a @@ad one.
Seriously listen to the blog author, buying a home in the U.S. now is a deal of a lifetime, your kids, kids will vacation at that home that you’ll buy for virtual penny’s on the dollar.
http://moremoney.blogs.money.cnn.com/2010/07/15/what-if-the-housing-bubble-never-happened/
Interesting article. It discusses what valuation several markets in the US would have if the bubble never occured. For example, Florida is still 7% overvalued.
Hmm!
The only thing which concerns me is the property taxes we pay on dwellings in the states being non residents, and we know that taxes are surley going to be on the rise there . Personally I think we will get fleeced down there, maybe not now but once we have bought and been there a year or two.
Another issue being American Politics . THEY SUCK. The people in general are OK, but they are not very well liked throught the whole world in general.
I have travelled alot and have actually seen Americans with Canadian flags on there napsacks, interesting.
They are sticking there noses into a lot of places where they don’t belong on this so called TERRORIST CRUSADE. Alot of people are starting to see through this fassad.
Remember what goes around comes around. Me personally I will bank on smart real estate moves here in Canada, can still make money here. Just have to look abit more, be more competative.
Most of the world still thinks pretty highly of us here, with the exception of HARPERS BULLSHIT POLITICS, being a little puppet to the U.S.
Thanks but no thanks. The U.S made their bed , now let them lie in it or correct it. Theirs enough well of to do people in the U.S. let them buy up those places. If I want to I can still holiday down there without having to own a place. Will be cheaper in the long run than buying down there, paying through the nose in
property taxes then trying to dump it. Have friends who bought down in florida and they are regretting desicion, getting killed on taxes.
I have been exporting made in Canada products to the US for the past 15 years. Anyone thinking the US is finished or somehow mortally wounded from the current recession is a fool. Why is it that Canadians tend to think that somehow we’re better? Always quick to jump on the anit-American bandwagon when they’re over a barrel. I agree Garth, dump Canadian and vulch on US real estate.
#1Jody-No-it is less than 6 mos out of the last 12 (slightly more complex calculation than that-google for details).
irony that the enablers (BOC) are warning about crushing debt loads!
the US accounts for 27% of the world’s production?
#2Tax-Yes-residential real estate prices can only rise spectacularly (after their long drought) following a spectacular rise in sales volumes. There definitely isn’t any hurry on that one.
my personal theory about the price differential between USA and Canada is that on average, a Canadian family will have several thousand dollars more than their us counterparts (money not spent on overpriced health insurance) so our banks and governments figure ‘hey, that money belongs to us, lets expand our base of debt slaves and create yet another real estate bubble.’
some pay to an insurance company, others pay to a bank, but everybody pays
With all of your discussion of buy American, do you have a property in the US and if so if you don’t mind sharing, where? If so what were the issues you faced and what advise can you pass along. Cheers
As I indicated, I’ll discuss process and pitfalls in the next post. — Garth
Does anyone know of a good source of information regarding taxes and insurances costs for buying property in Florida?
I have been following the Miami market for over a year now and the prices keep on droping. However I have never been able to find a reliable source of information on what is the most efficient way to buy property there.
the US accounts for 27% of the world’s production?
i wonder if this number includes the goods American companies have manufactured in China – Paul Craig Roberts claims this is how the USA calculates their GDP…
As well, this number would include a mountain of toxic assets like CDOs, SIVs, etc…
This number does not impress me – I remain bearish on the US economy.
..”the state of New York has close to 250,000 resident Canada geese” …sorry birds but it’s a no brainer. Not too many pilots can land a plane on the Hudson.
http://cityroom.blogs.nytimes.com/2010/07/23/state-plans-to-eliminate-170000-canada-geese/
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Coin Dealers Flipping
Starting Jan. 1, 2012, Form 1099s will become a means of reporting to the Internal Revenue Service the purchases of all goods and services by small businesses and self-employed people that exceed $600 during a calendar year. Precious metals such as coins and bullion fall into this category and coin dealers have been among those most rankled by the change.
http://abcnews.go.com/Business/gold-coin-dealers-decry-tax-law/story?id=11211611
The total credit market (all government, business, and household) debt in the USA is approximately 55 Trillion$
The gdp of the USA is approximately 14.5 Trillion$
The following link is a chart of total debt versus gdp for the USA over the last 60 years.
http://market-ticker.denninger.net/uploads/2010/Mar/debt-to-gdp.png
According to Richard W. Fisher (President and Chief Executive Officer, Federal Reserve Bank of Dallas) the unfunded liability (over the infinite-horizon) for Medicare and Social Security in the USA is 85.6 Trillion$.
The following is the link to a speech he made on May 28, 2008 on this topic:
http://www.dallasfed.org/news/speeches/fisher/2008/fs080528.cfm
The great debt fueled party is over and a very painfull hangover (the deleveraging process) is underway.
#6 squidly77,
“Agreed, Americas super power status will not go away for decades to come…”
Would you believe anyone who in 1989 tells you that Soviet Super Power status will crush to dust in just 2 years? And still, in less than 2 years this huge country, with huge industry, (may be not as efficient, but still…), huge resources and tremendous military might (both nuclear and conventional), will be lying paralyzed, powerless, and scared of its own shadow?
I know, you will give me dozens of reasons why US is different, but I remember what Benny Bernanke said to Nansy Pelossi in October of 2008 when, during the $787 Bln stimulus hearing she decided to stop the late Friday discussion to flight home for weekend and to return to the topic on Monday. So, Benny quietly said: “Madam, on Monday we may have no economy…” (By the way, the way it was said scared sh*t out of the audience and the bill was passed within few hours!)
History of civilizations is full of examples of catastrophic collapses. Many times, standing at critical crossroads, countries and empires faced difficult decisions, and these decisions pretty much determined their destiny. Romans made very difficult and brutal choices, including expropriations of property, food and wealth, and at the end they pulled themselves from the Hannibal-induced disaster. Chinese were staring in the abyss in 1989 and made very difficult, unpopular and bloody decision that allowed them to embark on controlled D-tour toward the market economy (could you imagine what kind of train wreck China would be if they balked then?) And facing difficult decisions Russians balked (remember coup attempt?), and the rest is history…
So, about today’s America… They are facing very difficult choices, and looking at how things are unfolding down there, I don’t like what I see…
Exactly who is going to go ripping down to the US to buy real estate? Perhaps Garth, you should draw up a profile of someone that suits this prescription. You know, approximate net worth, liquid assets, real estate commitments etc… lest we start thinking you aim your advice at the top 10% only.
I’m not so sure that it is a good time to buy American houses. I keep reading more and more articles suggesting that things are much worse than most people understand. The following article points out an example of this.
http://www.realestatechannel.com/us-markets/residential-real-estate-1/real-estate-news-home-buyer-tax-credit-federal-housing-administration-loan-guarantees-fha-realtytrac-home-foreclosures-highend-home-repossessions-bank-reo-sales-2868.php
.
Garth, at this time of turbulence; what do you think is better investment Corporate bonds, stocks, or just wait and see if the market craches again? I really will appreciate your comments.
Thanks in advance.
If US border agents ever find out that you have a criminal record no matter how minor or that it happened fifty years ago when you were still a confused teenager; your chances of crossing the border ever again are slim to none.
And the border agent couldn’t care less if you own property in the US or not. Remember we live in a post 9/11 world. Just a heads up before investing there.
It could be viewed as a slam dunk if the economic cycles are still functioning and we’ll get to ride the crest yet again out of this trough. But what if it is a shift as in middle class people being reduced to just trying to survive, let alone acquiring assets. Is there anything on the horizon to resuscitate economies and fuel rising house prices here, or in the USA or anywhere else for that matter? Or is it programmed thinking, that things will get going again because they always do?
Some can see the Horsemen have begun to ride. Most are oblivious, and still others don’t care. Even for the religiously inclined some will say, “Sure maybe some day, but it’s not today.” After all, we’d know wouldn’t we? It’d be on the news….
Oh well, pass the stainless and the granite. And don’t forget the bank stocks, either. OK, who’s hiding the tin foil.
OK,
where are the best places to buy in the States? What’s the best way to search for houses when you don’t know the cities or neighborhoods and you can only get so much info from the net? Is it generally better to buy a single family home, or a townhome that may be easier for someone to look after?
Tom
http://www.cupw.ca/index.cfm?ci_id=12411&la_id=1
Comments?
Love this Movie.
Signs; A family living on a farm finds mysterious crop circles in their fields which suggests something more frightening to come.
Very appropriate Garth.
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Doesn’t matter to me. If I did have spare change — enough to buy a nice second home in the US — I would prefer Malaysia, Vietnam or somewhere quiet.
Links which show the not-so nice side, plus changes are in the offing.
VAT
Tax Increase
Economics 1
empty Office Space
Selling out the US.
Knickerbocker Glory I’m becoming thoroughly confused by the sovereign debt wotchamacallits.
Well, it’s the weekend, most markets are closed and things start again next week.
Healthcare “While Obama and the Democrats are moving us toward the identifiable failed Canadian system, the Canadians are moving toward the free market and longer lives.”
Not so fast! I dont’t think this thing is over yet. I would give it another 4-5 years. Sure, there are deals already to be had. But, there are still too many overpriced homes left on the market.
Patience, is still needed. It’s not over yet! The rest of the world economies are slowing, and will have impact on the US in the coming months, and years.
That’s what we should do here in Vancouver… tax foreign homeowners at much higher rates and give the people who actually live here a break!
It would seem the best places to look at would be the sunny retirement places. They could be used for vacation or a typical Canadian snowbird winter abode for 6 months. If you wanted to sell, your market would be not just Canadian boomers/retirees but also American ones too. Possibly European markets as well. Hopefully global warming won’t turn these sunny places into Hades.
Garth, could you add a spell/grammar check to this blog somehow, please?! My computer monitor is getting all marked up with red pen reading the comments.
Very humbling. I think we all know what is happening in Canada over the next couple of years in housing. The part that sucks is that we all know someone that will be affected by it – family, friends, co-worker etc. Many of them were innocent as it truly looked like if you did not buy a house between 2003 to 2007 you would be forever locked out. Many people were greedy but many were not. They were just trying to have a roof over their heads. A lot of my friends do not have granite or stainless steel. They just have in many cases a 30 year old home that needs plenty of money just to reduce heating costs… Anyways I wish the best to everyone and that we can all learn something and move ahead in a positive manner. Canada is still a great place to be and with people like Garth trying to help the masses we will get through this.
Be very, very careful about investing in US real estate.
I like Garth’s general idea here: sell Canada and buy the US.
I’m not so sure about investing in US real estate.
It might be OK for someone with a high income/net worth, but the average person should be very, very careful here. If you want to get a sense of why I’m saying this, spend some time over at Mish’s blog. The state and municipal debt situation in the United States is truly scary. When you invest in real estate, you’re buying a house, in a community. (Singular)
When you buy an ETF such as XLE or XLP you’re making a macro bet that’s relatively diversified compared to buying a house, in a community.
If you were born before 1965 and are at or near retirement age, US real estate might be well worth the time, effort, and due diligence if you’re planning on spending a lot of time in the warm, sunny southern US. If you were born after 1965 and are nowhere near retirement, IMHO you’re better off looking at large cap dividend payers in the consumer staples or energy sector.
Buy low-Sell high. The maxim is a good one.
So why would anyone consider buying a product that is clearly in decline? Us real estate is a good example. As I have pointed out before, if Americans are not willing to buy in their own markets yet, what arrogance on our part should encourage Canadians to take that plunge?
Do we think Americans are stupid or broke?
Then be a good Canadian. Wait until the asset recovers and is vastly more expensive – then buy. Your choice. — Garth
#113-sauga blogga from Tough Job yesterday
boy–angry rants from the last of the RE bulls–unfortunately you’re somewhat misinformed about the future prospects of RE because you don’t have a clue what your talking about
i’ve been posting my so called “handful of poach-worthy properties” for several months–where have you been? and there are many, many more than just a handful–many owners already underwater and many more approaching negative equity (factor in RE fees and mortgage costs) and don’t forget the now added HST on the RE fees
300k sale=approx $1200 (say 6%-2% comm)
and no, i don’t waste time in “search activity”–my realtor sends me everything i need in the way of new listings, sales, price changes–it’s an easy way to track the decline in the market in the tri cities and takes no time at all–i suggest you try it –you’ll soon change your tune when you get the true stats
I can see where you get your info from ” the realtors i speak to” –blah blah blah–(do your own homework) and the RE market is on solid ground—about as solid as Richmond will be in the forthcoming earthquake–check Mad Vlads’ past posts for that
those few listings from yesterday didn’t include any forclosures but i have one for you today
mls v825319
3707-1178 Heffley-Coq.
bought May 08–415k
5 price changes down
now 344.5k–could be a great buy–if it doesn’t work out and the market drops farther you could always jump–i’m not a vulture but like most on this blog don’t want to buy into a declining market and want something a little more reasonably priced. so we wait and watch and get informed–by god i guess i am a vulture–our time will come-maybe sooner than some think
and for renting vs owning– that’s been done to death several times in the past on this blog–we’ve done the math — whatever works for you
here’s a couple more for you, just to show you that prices didn’t rise 25% everywhere after the downturn in 08-09
mls v839956
sold FEB 08–358k
sold Oct 09–345k
sold again July 10–357k
mls v839417
sold Dec 07–351.9
sold July 10–357k
mls v843548
sold Oct 07–314k
listed now –319.9k
where oh where is your 25% increase
I have enormous confidence in the ability of Americans to solve their current economic problems. In addition, I agree that US real estate values will likely begin to climb upwards in about a year, a recovery that will stabilize the Canadian housing market and prevent us from experiencing anything other than an overall modest decrease in real estate values.
I made a mistake in my recent post about the unfunded liabilities in the USA.
In his speech Richard W. Fisher said the unfunded liability (over the infinite horizon) for Medicare in the USA was 85.6 Trillion$, and the unfunded liability for Social Security (over the infinite horizon) was 13.6 Trillion$, for a grand total unfunded liability of 99.2 Trillion$.
At #13, RickOshea:
Yes, the U.S. accounts for 27% of the global production. Now, take that it is a population of only 365,000,000 or so, and you do the math. That is a staggering output per capita compared to any other nation on the planet. They’re not going away anytime soon (remarkably rhobust economy, exceedingly high knowledge and human capital, and entrepreneurial spirits)… And, if they do go away, we’ll all be living in a hell we can’t imagine (whether you want to believe it or not). We owe them perhaps a little more respect than we’ve demonstrated for the last decade- the same respect they’ve always displayed to our country. I can’t imagine a single American friend of mine that wouldn’t give me the shirt off his back, even if it left him naked. As for their politics, I agree they have their problems, but their pretty much the same problems we have in our’s. One key differentiating factor, however, is they have the ability to do fact checks unlike other nations as they do, for the most part, have much greater transparency than most other nations. We sit back and suck it all in whenever we’re told the sky is fucia.
I have a theory – I believe we Canadians act so snide and superior because, in fact, we feel inferior to Americans. And why? What the hell have they ever said or done to make us feel this way? The answer is NOTHING. We’ve done it to ourselves and we do often wish we could live there. Why the hell do you think the vast, VAST majority of our population live so close to the Canadian/U.S. border? Our perspective of Americans is about two or three decades outdated (which actually demonstrates to me how far behind the times we are).
I believe that WE HAVE TOO HIGH A SENSE OF NATIONAL PRIDE. Yes, we are prideful people, and for little reason beyond that of our neighbors to the South. We put a god damned maple leaf on our McDonald’s signs. Seriously? Are we that concerned with letting the world know that it is a “Canadian” McDonald’s? LOL. It really is quite pathetic and narcissistic, and it is a testiment to just how ridiculously high we think of ourselves. Let’s deal with this little bubble problem like adults and stop pondering the multiple outcomes of what COULD happen. Instead, let’s be truly objective and realize we’re in a bad situation (as is evidenced by the rest of the globe) and we have to start dealing with it like adults.
When you vultch U.S. real estate .Ask yourself where are the millions of families living that have been turfed out of their homes by the banks . Ask also where are the John Steinbacks [sic] of the grapes of wrath . Ask also where are the photographers that show the ugly face of this depression . All the lipstick that garth etal put on this pig can not turn it into a recession . You cannot pretend otherwise. Pigs get slaughtered . I hope all the pigs in canada buy in the US , good riddance .
Its such a simple saying.
Everybody knows it, but very few actually are individuals enough to do it.
Buy low, sell high, buy low, sell high.
You need to think for yourselves, understand what your doing and make your decision and do it.
At present it is still easy to jump in with the crowd and do what they are doing which is buying high and selling low. And yes every week across Canada, you see them buying into massively overpriced real estate.
Seeing that the wage & dollar value is almost on par with the US it’s really showing how BIG OF A BUBBLE we’re coming out of in Canada! It’s scary to see the market going off a cliff here in Edmonton. Inventory is piling up like I’ve never imagined. There’s about 10,000 total houses and condo for sale, and close to 10,000 ads for rent for condo, houses or shared places on Kijiji which is getting really popular in Edmonton since a lot of people are having financial problems.
Calgary is supposed to have THE MOST consumer debt of any city in the WHOLE G-20! I don’t think Edmonton is that far behind looking at the foreclosures and bankruptcies in the city soaring!
Sorry Garth, but I’m doing just the opposite.
I’ve just sold my American Home of 19 years (in Santa Cruz, CA , the 2nd least affordable community in the U.S. – 7.5 times avg. income IIRC), and will rent for the next year or so until we move to BC. We are sick of the corruption of both major parties, and look forward to living in a country where most of our tax dollars aren’t gobbled up by illegal wars (including torture and wiretaps), bank bailouts, and corporate welfare. We know Canada isn’t a Utopia, but it will be Heaven compared to the insanity going on the past 10 years.
We are already landed immigrants, and are just waiting for our daughter to graduate college, and for us to find jobs (in the health professions) before moving and becoming renters in the lower mainland.
In the meantime, our over $300k USD from the sale of our home will remain liquid and available for the day when Canadian RE becomes more reasonably priced. In a few years, We hope to pay cash for a home, and have no mortgage.
As for those who hope to buy American, there are definitely good deals out there, but more may be on the way. There is a huge backlog of foreclosures, and isn’t there a huge wave of Alt-A (you pick payment/interest only) mortgages about to reset in late 2010? I don’t think we’ve seen the bottom in the U.S. yet…
Lastly, we are completely debt-free and loving it!
(we may take on some small strategic debt- secured Canadian CC- in order to build credit in our new homeland)
If buying in the U.S. please just be careful in the areas you select. There have been first hand accounts of disgruntled american citizens sabatoging the investments of canadians buying up their forclosed properties. Call it sour grapes or what have you but it has led to certain individuals introducing jars of roaches, rat containers, and the like onto (and in some cases-into) the property causing full blown infestations for the unsuspecting new homeowners.
Obviously, there are some very hard feelings down there. This isn’t wide spread but something to consider.
….Despite a $1.5 trillion deficit and a $13 trillion debt, ….
Plus some $60 trillion in unfunded liabilities. The US is bankrupt and will have to inflate its way out of this mess. Bad for anymore holding the US dollar or assets short term. Great for US RE long term
We get it. You are an anti-American fanatic cheering for its collapse so your gold will increase. — Garth
squiddly, you live in NE Calgary. Your giving real estate advice is like satan offering catechism lessons.
…The window remains open for a few more months. Perhaps a year. Then the climb back begins….
With a new wave of mortgage resets coming in 2011, more shadow investor, and possible massive layoffs coming from the public sector there will be plenty of time to come to the table. I would wait until the debt of California and most other states has to be bankrolled by the Fed until action.
You have absolutely no factual evidence to support such a statement, which is as irresponsible as it is wrong. You gold zealots who wish for financial collapse are greedy, destructive and myopic. Buzz off. — Garth
How about 400 hundred years of financial history?
I could go on and on about this topic but what is the point, you just shoot everyone down that does not buy into your “Big Government”,”Big Bank” model. Garth you babble about the same crap like an old broken record. Get a new song, gold is a metal nothing more nothing less. It’s all just a big game, stock market patterns and cycles have been repeating for hundreds of years. You along with your bank cronies will be widely discredited when all of this comes crashing down……like it always has in the past. Read a few history books, maybe read Bob Hoye’s letter. You might actually learn something useful!
Yes, I will go and study the 17th Century now. I am sure it will explain everything I need to know about globalization, joint international monetary policy and capital requirements. Your rooting for Armageddon is as vile as it is misplaced. — Garth
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isn’t there somewhere in the middle that you guys can agree? Both bring up valid points. Garth obviously knows Canadian banking and government involvement with Canadian banks thoroughly. Why would you argue with him? He’s already told you that the banks have passed on their debts to us the taxpayers.
Bullion Bunny, I believe a lot of what you have to say about gold and financial history. I do believe that we can learn from previous manias and busts. Technology and fashion change but human emotion is and always will be the same. If herds of people were greedy in 1820, their emotions wouldn’t differ from greedy people in 2005. The asset may be different but the emotions are the same. The same goes for economic busts.
I do believe that in the next few years a lot of companies will be reporting unattractive financials which will push people to look into more profitable sectors. I do believe, and there is proof, that commodity prices have been dropping since 2007. Gold in relation to these commodities has been rising. This gives gold mining companies the opportunity to mine gold at a cheper price. The market will recognize this and this will drive up gold mining stock prices.
My opinion is this: Canadian banks aren’t going to go bust. They’re not going to cut their dividends. I also believe that if you have strong proof of a bull market surfacing, grab the bull by the horns. Maybe some will see it as too risky, and if you’re unsure, do more research. If your continuous research reaffirms your belief of a bull market, heck, take some chances.
” Even in the aftermath of Wall Street laying an egg, US dollars and American bonds are considered the safest places on the planet to put wealth”
Ya, just like teck stocks in 1999, US housing in 2005, and subprime in 2006. American bonds are the biggest bubble waiting to find a pin. Not safe for long.
Cue the parade of the terrified. Man you guys are tedious. — Garth
#10 Jon B
…Anyone thinking the US is finished or somehow mortally wounded from the current recession is a fool….
However they do owe about $700k per taxpayer. Yes that is right. It will be a while until they bounce back. First they have to save, then pay down debt, and then rebuild the manufacturing base. This one is going to take a while.
#6 squidly77
“please continue to stomp the Gold bugs, the only good Gold bug is a @@ad one”
Oh look at that! 5 fold in 10 years! Trend is still up and going to get better once the debt fear moves onto Spain, the Port, then Ireland, Italy, UK, Japan, US … .
Garth: “Then the climb back begins. It could be spectacular. Or the only chance in your lifetime to buy a sunbelt home at fifty cents on the dollar.”
No. That dollar was the bubble price, and the US bubble is long over. House prices haven’t over-corrected given the current economy, and the climb back will slow and long.
Oh the ignorance of Canadians.
As an American I cant understand the attraction Canadians have of “vacationing” in the USA. Other than the warm weather in the southern states, what is the draw there?
Expensive health care, insurance problems, guns, the list is endless.
Other than housing being a total joke rip off in Canada, that is the only draw back.
Good luck investing down there, why bother?
I thought you said that real estate was never coming back? I think I’ll defer to Brian T on that one. If you think that New york has hit bottom then knock yourself out.
Of course real estate will revive. — Garth
3:48 am? My clock says 5:06.
It is sensible to look at buying opportunities south of the border. Personally I would recommend a great deal of due diligence and caution before taking the plunge. House prices are still declining in many US markets due to high unemployment and a weak economy. There is a great deal of shadow inventory still sitting on the banker’s books that is not currently listed, but remains bank REO. It is pretty much a long term buy and hold with respect to the USA. The bubble will not be coming back anytime soon so speculation is not a good option.
http://www.oftwominds.com/blogjuly10/REbuyers-evaporating07-10.html
“Canada is waning citizens”
The unintentional inference of that made me lol.
just returned from the eastern states. it feels strange to see boxcars for miles on sidings. truckstops are empty and nice looking homes are going to seed.
help wanted signs on vacant buildings. there are a lot of for rent signs also. in florida a few months ago there were for rent signs everywhere.
i would not consider florida until this gom disaster is fixed.
Taxhaven your right: In usa the talk of recovery pervades insider thinking. The major media worldwide plays the same refrain. This is a desperate attempt to befuddle the public with misdirected propaganda to preserve confidence in a system that is in a state of collapse. The residential real estate collapse is still collapsing with no end in sight. That has been joined by a commercial credit crisis, which has forced banks, Wall Street and corporate America to keep two sets of books . Whait until the + 7 millions house come in the market, inventory will be 3-4years for selling a house!
good article by charles hugh smith.
http://www.oftwominds.com/blog.html
The housing purchase subsidies are gone, and real estate sales and prices are again falling. Even with interest rates near 4-1/2% for a 30-year fixed rate mortgage there are few takers in the hottest sales period of the year. There are four million houses in inventory for sale or 1-1/2 years supply. That figure could be 5 to 6 million by yearend, as builders’ build 545,000 more unneeded homes. More than 25% of mortgages are in negative equity. Excess mortgage debt is $4 trillion and headed much higher. Government is so desperate that they have begun to take punitive action against those whose homes are under water, but they can still make the payments, but are bailing out. What a disincentive for anyone to buy a house. Will debtors prison be far behind?
HGTV should produce a few episodes of House Hunters International where they have Canadians looking for property in the United States.
What one has to appreciate with the US real estate world is that a owner’s interest portion of the mortgage amount is tax deductible. Also a 30 year term can be had at 4.0% right now…
Squidly77 is buying a home in Florida? I doubt that as he cannot afford a home for his children, according to himself.
Garth,
You state that sales are sinking huge in key markets, but is that in line with the usual seasonal decrease of summer or worst still?
Looking for honest opinions on this:
Somebody please tell me what’s going to cause US housing prices to go back up in the next two years.
The biggest challenge Canadian RE faces is rising interest rates which seriously affects how much house a family can afford. Interest rates in the states are also at a historical low, and if we expect interest rates to “inevitably rise” then I can’t see property values coming back soon, unless the jobs come screaming back?
Another thing, do you see the CAD-USD being on par or close for quite a while? Back in 2007 the big hedge was on currency, I don’t know if we’ll see that kind of strength in the USD in the near future again.
Thanks
Somebody please tell me what’s going to cause US housing prices to go back up in the next two years.
———-
More than 10% of mortgages are delinquent. It’s even higher for more expensive homes.
For the last couple of years, people have been living “rent free” in their homes without fear of being “evicted” because banks did not want to take possession or write them off. Why would they when government is distributing bailouts? Better to wait and see what they would get .
But this dance can not go on forever. Over the next couple of years, homeowners will foreclose and homes will finally hit the market. Much of the excess inventory will be picked up for cents on the dollar , some will be bulldozered (i.e. detroit, California…)
Now the question is who will be picking up these millions of homes? My guess is that it will depend on coming social policies, on whether bankrupt households will be able to get mortgages to pick up these cheap homes or not. If they do, they’ll be laughing as they will be buying back their homes for cheap and fixiong at low rate for 15-30 years. Meanwhile, here in Canada people will be renegotiating their mortgage rates on their balloon loans.
The 4 trillion dollar question is who will be picking up these homes? Will it be households or deep pockets buying up entire neighborhoods transforming America into a nation of renters à la European flavor?
Considering the millions off broke boomers, my guess is that the ownership rate won’t be going up quickly. But nevertheless, the excess inventory will get picked up quickly.
Although opportunities abound in the US for strategic buyers with cash, I am not convinced that buying a US property using equity on your overpriced Canadian home is the best decision.
I could not agree more on the United States ability to recover even as dismal as things look right now. They never became a super power without being innovative.I can only imagine how stupid they think we are when our Government promoted the very same policies which resulted in the mess they are in…… my bet is that when they are recovering we will still be sliding down……….. History will remember Garth how our situation could have been different if they had listened to you!
I bought a little place in 2001 on the East coast of Florida in a fairly high end area. The taxes and maintenance (gated etc) were the worst part…our dollar was at 62 cents or something for part of that time so maintenace was almost $1000/month – and that was for EVERY month of the year – even August. We rented it out through the management for a good price for most of “the season” which helped a lot but of course, meant we could not use it during that time.
Anyway, the dollar improved and we decided to sell in 2004 – which we managed to do for about $50,000 more than we paid so we about broke even. We were relieved to sell – particularly because there was a rash of hurricanes the summer following and damage was sustained in the area. Now the prices seem to be about the same as 2001 – though these are asking prices. We might buy again but think that we would go freehold – something that needs some work (Mr grouchpeach is skilled) and have some local contacts keep an eye on it for us. There are definitely deals to be had (we are here in FLA right now for a few days actually) but after selling our large GTA home (we close in mid-August), I am feeling a little gun-shy. We have found a place to rent in our Ontario city and I am feeling a lot of relief about being non-owners for awhile. I think that there is some time to think more about Florida.
A few things about buying FLA come to mind – one, I financed some of the place with a HELOC at my Canadian bank. Because we rented the place out sometimes I could claim the interest payments. Also there is a 30% withholding payment when you sell your Florida place as a Canadian. This does not apply (or at least it did not in 2004) if the property sells for less than $300,000. Property taxes are high for Canadians (and other foreigners) though. We cannot qualify for any discounts in that area. Also you will need insurance and if you are on the barrier island like we were, this means both wind and flood and they are steep.
Counterpoint to carpetbagging south of the 49th, though the discussion around China rapidly decoupling seems a bit wild it is a pertinent summary nonetheless:
http://neithercorp.blogspot.com/
58 Pascal R on 07.24.10 at 5:17 am
Taxhaven your right: In usa the talk of recovery pervades insider thinking. The major media worldwide plays the same refrain. This is a desperate attempt to befuddle the public with misdirected propaganda to preserve confidence in a system that is in a state of collapse.<<<<<<<<<<<<< hmmmmmmmmm kinda sounds like whats happening here but on a larger scale after a longer period of time… the consequences of our countries actions are just starting to be felt……oh but wait!….."were different here"
The 4 trillion dollar question is who will be picking up these homes? Will it be households or deep pockets buying up entire neighborhoods transforming America into a nation of renters à la European flavor?
——–
My theory is that over the long term, the real estate landscape will converge toward the European model. More renters that is. So parents have been right in saying that the best investment is real estate but the thing they forgot to say is to make sure you could always afford the monthly mortgage payments until it was fully paid off.
The US has become what its founders fled, a system based on the Magna Carta. Today, there clearly exists a class system in the US. Americans don’t want to admit it but upward mobility died a couple of decades ago. Exactly when debt levels started to explode.
When the America was founded, newcomers could put a stake on a piece of land and it became theirs. Today, all land is owned, so either you pay rent to a landlord or a bank.
Generally agree, looking forward to your take on process & pitfalls.
Having said that, what you’re talking about Garth is timing, which we all know is a crap shoot. Just as Canadian real estate has appreciated 50% or more since you started predicting a decline, US real estate might fall significantly further before it recovers. Who knows?
So one needs to be careful & lucky to make this equation work. If one really covets a US property, and can afford to have dead money for a few years, go for it!
This is a no brainer, think about it…
Depressed US prices + Appreciated Cdn dollar = success
The way to build wealth now is through financial assets, not real ones.
This is what the average person sees and has experienced in the past. Turning our hard earned dollars over to an illusion created by others. The financial industry shows and continues to show it cannot be trusted. I trust you though.
Buy U.S.
Not real wise suggestions unless the select few people you are communicating to are in good health and will use the place. If things change (health) it is very difficult to sell. Health insurance has gone through the roof for many.
#63 NOBODY
Sales in Vancouver are at the same level they were in July of 2008. That’s the slowest pace in more than 10 years and down almost 50% from 2009.
IMO anyone driven to buy US real estate at this time should buy for cash. You will lower your risk and end up buying a cheaper property than you otherwise would. Should the market recover in the future you could always move up-RE markets which have been brutally crushed never turn around in 5 minutes-this isn’t day trading.
This house initially was $799K a month ago, now it’s $60K less.
http://bit.ly/buaL46
The U.S is a doner, no industry. I fail to see how this country will get out of their mess. Their manufacturing is being sent off to chindia on a daily basis, along with IT jobs.
Foreigners are the only hope for the U.S, without foreign money this country is collapsing and fast.
Buying anything U.S as an investment is high risk; of course it can pay off or just go to 0, at this point its not even investing its gambling.
On top of all this, property needs to be taken care of, dealing with bad renters or even worse, squatters. Many in the U.S are now living free without paying mortgage and who knows how many are living without paying rent as well. If their Landlord laws are anything like Ontario, run or you will be decimated.
I think you need to travel more. The US has a greater number of manufacturing jobs per capita than does Canada. It has more investment capital than any other country on the planet. It is not full of financial derelicts and squatters, and of the 108 million households in the US, an estimated 1.5 million have elected to stop mortgage payments because of negative equity. The ignorance and prejudices this comment showcases is startling. — Garth
One other thing-be wary about buying a property in any American town where a city paper pusher earns $800000 a yr with a $600000 annual pension for life-you will be funding it
That is a newsworthy case because it is the only one. Kind of like living in a country where the federal government spends $2 million on a fake lake for the G20, eh? Get some perspective. — Garth
I see American real estate markets as nearing their floor in this more recent cycle. I have seen this before and how it affects Canadian real estate prices. Iy is much like how the Toronto and Calgary and Vancouver markets affect Kelowna.
When there is an economic downturn in Canada’s economic centre (Toronto), if it is prolonged it eventually works it’s way out West; Calgary/Edmonton then Vancouver and then, if things haven’t yet improved, it eventually works it’s way to Kelowna. So too is this the relationship between the two economies North and South of the 49th.
If the leading economy, that which is ahead on the track, begins to pick up steam often the economic failings never do materialize in the following economy. So it has always been in Kelowna where we are early to feel economic good times but the effects of failing markets tends to be delayed in working it’s way here. I suggest so too I’d this true of the relationship between the US and Canadian economies.
My point is, if Garth is correct and I have no reason to believe he is not and the US housing market is near it’s floor then quite possibly so too us Canada’s. Oh sure there, I expect, will still be Canadian price drops while that of the US rises, but I expect there to be a working toward an equilibrium between the two as there clearly are in so many other things as Garth just pointed out. That is to say neither will move in their respective directions as quickly as so many believe.
Comments?
Nostradamus Le Mad Vlad “Doesn’t matter to me. If I did have spare change — enough to buy a nice second home in the US — I would prefer Malaysia, Vietnam or somewhere quiet.’
Would never think of living or even going to the US. All the smart people are leaving the US and going as stated above. Even if the US would be ok one day who would want to goto police state USA?
Garth,
The head of the Chinese rating agency just declared the U.S insolvent. I read a few doomer sites. The Automaticearth, Zerohedge, Kunstler. I just don’t understand your confidence in the U.S. economy. You don’t explain how the U.S is going to resolve its debt crisis. You are aware of all the negatives then proceed to say buy America. What if the U.S empire/economy is on the verge of collapse, such as occurred in the Soviet Union. It could happen.
No it could not. But if it did, Canada would become a large area of firewood and fresh water. — Garth
Sorry for typos etc iPad on the water
As a US citizen who moved to Canada, the banking system and real estate were NOT easy to figure out. I am still suprised by the systems idiosyncracies.
I can only imagine it’s as/more difficult going the other way.
Personally, I haven’t bought American real estate while living here because the geographic areas I’m familiar with are so incredibly far away from where I live now (approx. 3,000k). I’m not confident in my abillity to manage properties from this distance.
However, I suspect that the person who is willing/able to overcome these issues will do well. I also suspect that the people who are able to do it are realitively small.
@ 62 nobody
I never quite understand what the mortgage interest being tax deductble argument was from a Canadian perspective. Tax deductions exert upward presure on prices. Even with this presure, prices are low because of all of the other idiocy running around. In fact, none of the incentives designed to put upward presure on prices are having any effect at all because peole are simply not buying (out of choice or because they are bankrupt).
How does this have any effect on a Canadian buyer who recognizes a market at its low point?
Hmmmm, Land locked Albertans….
- Where should we retire Marge?
- I dunno Bill?
- Say Marge, maybe we can retire to Vancouver Island? Great weather and the golfing is great year round…plus the ocean. I don’t really feel comfortable buying in the US either, even if it is cheap. Lets see what deals are like, OK.
- Sounds good, Bill…Let’s look into it.
http://www.edmontonjournal.com/business/lower+prices+beckon+landlocked+Albertans/3317273/story.html
“Or simply a place to invest money sucked out of a Canadian home at its apex.
I think Garth is about to surprise us all with a simple investment strategy that is safe and ensures liquidity. Too many of you are making complex assumptions.
#44 dd
“We get it. You are an anti-American fanatic cheering for its collapse so your gold will increase. — Garth”
I am not anti-American. But I can do a little math and read the writing on the wall.
You buy when it’s low. But the problem is nobody rings a bell to tell you it’s the bottom. US real estate is obviously in the “low” zone. Could it go lower, sure. But I think with declines you have seen, it’s pretty safe to say it’s close. In the end, that’s all you can do.
Otherwise do the real smart thing and wait for a recovery and buy then because you’d be a genius then.
I also think US equities are a bargain, especially with our strong dollar now. Those that think the world is going to disintegrate, let me tell that it won’t. If you’re telling yourself that “this time it’s different”, that’s a tell tale sign you’re an amateur investor and should hire a professional advisor. You’ll get killed in the market and/ or won’t make any money with that type of thinking.
You make your money when you buy, not when you sell. When the markets are low, it’s like you are buying in a fog, you never really now how it will recover, but you know it will.
The world will be a better place 10-20 years from now, the economy will recover (it always has), we will work our way out of this mess (we always have) and prosperity will afforded to all that have the courage to step up and take it (at their lows mind you.) If you don’t believe this, you have no business in the markets. Just stay at home a cry yourself to sleep as the rest of us try to get ahead in literally the best place on EARTH!
The cost of money dictated by the BOC should be at a normal level.This discourages greed and encourages savings,which canada desperately needs.Looking back over the past ten years or so low interest rates accounted for a great deal of the financial problems of today.
#80 tf
“What if the U.S empire/economy is on the verge of collapse, such as occurred in the Soviet Union. It could happen.”
TF, don’t know if it is on the “verge”, however, the largest purchaser of US debt is the Fed. The dollar and treasuries are going to go down.
It is categorical and wholly unsupported statements like that which unfortunately leave you devoid of creds. — Garth
Developer ‘Affordability’ Spreadsheet
“To think that they’re now encouraging secretaries and coffee baristas to take out loans for $175,000 blows my mind!”
A reader who borrowed 2.3 times annual income to buy in Kitchener, Ontario, in 2006, marvels at how locals here in BC are being tempted by developers to borrow 5.8 times income in 2010.
http://wp.me/pcq1o-17e
Garth: Re California local and state government salaries and pensions, the problem is actually quite widespread.
So what? Owning a piece of US real estate for five years during the recovery process is more like foreplay than marriage. — Garth
So, what do we make of the American real estate collapse? The inevitable result of a capitalistic excess and asset inflation. -Garth…
With manipulated interest rates and private control of the money supply Capitalism never existed. The Greenspan then Bernanke via the Fed artificially suppressed interest rates over the past decade punishing savers and causing excessive risk to be taken in various markets. The housing market bubble was a byproduct of a larger manipulated market. Bubbles are inflated and popped by private central bank intervention. If this is Garth’s definition of Capitalism then he needs to get his money back from where ever he bought his dictionary.
The American market may have bottomed in certain areas (New England, NY, Chicago, Houston), but the trip down continues in Nevada, SoCal, Florida. The window remains open for a few more months. Perhaps a year. Then the climb back begins. It could be spectacular. -Garth
Stay liquid, is that the mantra repeated on this blog ? Well the most illiquid thing a person could do right now is buy a house in a country that they are not a citizen and don’t even live in. Trying to catch a falling knife with such a chunk of money is crazy. Looking at a graph, sure the U.S housing market has come down. But to adjust to the long term trend of income to housing price, another 20-30% must be shaved off. Then you have a country spiraling ever further into the debt black whole, and a government looking to increase taxes on anything that moves, or doesn’t, like housing. With no feasible end to the economic collapse in sight, except for higher taxes, lower employment, more government control, falling wages, and another war on the horizon: A person would have to be nuts to tie up there money in a market environment like that. Add to this a housing market that to drag itself along the bottom for the next 15-20 years and you have essentially guaranteed yourself the most illiquid asset on the face of the planet. Not great advice if you ask me. The bottom in housing isn’t going to come as a V shaped recover in the next few months as Garth alludes to. Timing is not going to be an issue this time around. Unless a person can put all the pieces together as to what is happening, they are just stabbing in the dark and thinking things will turn around just like before. Well I have news for people like that. The time around it is different. Its the deliberate takedown of the global financial system to bring in a new system run by the IMF and the U.N. Do you really think the entire world could sink into an economic collapse all at the same time by accident? If you do then I can’t help you. The SDR (Special Drawing Rights) is another digital fiat currency that they are trying to position as the new global currency. To give them full control of the money supply it must also be backed by another scam that they can manipulate. Carbon credits is the Bankers choice of banking since it is intangible and can be created and traded out of thin air. Essentially bags of nothing that countries will be scrambling to buy and sell via the private central banks. Its the perfect scam and gives the IMF total control of the money supply globally.
But for this to occur the U.S and the U.S dollar must be discredited and taken down as the reserve currency. We are in the middle of this process happening. Now, does a person really want to time the purchase of a house in the U.S during such an environment? Like I said, until you can accept the whole picture, nothing makes sense. So when Garth says no brainer, do you really think he is addressing the bigger picture of whats really going on?
“The time around it is different. Its the deliberate takedown of the global financial system to bring in a new system run by the IMF and the U.N….The SDR (Special Drawing Rights) is another digital fiat currency that they are trying to position as the new global currency. To give them full control of the money supply it must also be backed by another scam that they can manipulate.” You are 100% certifiable. Get some help. — Garth
I have been a closet blog reader for the past 8 months. A friend of mine turned me onto this blog and I can not get enough. A little description of me, I am married with no kids. My wife and I are both in are our early 30′s with a combined income of $150k+. I think we are the demographic that Garth continually disses on this blog
We sold our home in March for a tidy gain and have been renting since. I am expecting this market to burst and will look to pounce once prices become much more affordable. However, this discussion is about US real estate and I will share my experience.
In 2008, the wife and I purchased a small home in Orlando to use as an investment property, so I believe I could speak about this particular topic. At the time, RBC (US) was specifically targeting Canadians to come down and obtain mortgages. Unfortunately, that practice has now ended. The process itself was relatively simple. I asked my Remax agent here, to find me an agent there. When she did I contacted her and asked to get on a regular email link so I could visually see the property. My asks were a house/townhouse/condo between $100 – 200 in a ‘good’ area preferably near a college or university. I couldn’t believe the selection.
When I was finally convinced I needed to see these places, we took a trip down to Orlando to check them out. We found several that were affordable so I put together a spreadsheet to determine what the monthly costs would be (including taxes) and how much rent we could get to determine if we would be cash positive on each house. The key is to never get emotionally attached and make a decision based on the math. After speaking with the RBC mortgage rep she gave us pre-approval for a $175k mortgage, which was more then enough. We put 25% down on a $160k home and have not had any issues since then. That was two years ago and prices have still dropped, but I have been unable to find someone to lend to Canadians. I am currently looking at the Miami area.
I really enjoy Garth’s writings and I think he has a lot of knowledge within the financial markets. For those of you who are ‘thinking’ about purchasing a US house I would strongly suggest you do all your research but don’t get swayed by someone who doesn’t know what they are talking about. I don’t think we are any one special (i.e. very wealthy) but still managed to do it. Do your research and make a sound financial decision and I don’t think you’ll regret it. One other piece of advice, if you do decide to purchase an investment property, make sure you keep ALL your receipts when you travel to the city of your purchase (e.g. flight tickets, hotel, car rental, meals & entertainment, etc…). You will need to file a US tax return and those receipts will be used on your P&L. In fact you’ll be able to take a trip to your place of investment every year you own it and are using it for investment purposes, and the entire cost of your trip will be tax deductible. It is another positive benefit of owning a property in the US for investment purposes.
There is a huge unseen shadow inventory in the US that has not been priced into the market yet and even if this is bottom for “some”areas-I don’t see any rush to buy-
Maybe some of you-who somehow see a reversal here-can explain what in hell your seeing-that will move house prices back up-this sudden V shaped recovery thing is BS–
***************************
O.C. has 13 months of unlisted foreclosures
February 19th, 2010, 11:51 pm · 94 Comments · posted by Jeff Collins
Irvine-based John Burns Real Estate Consulting Inc. made national news this past week with a study showing that a new wave of foreclosures will hit the U.S. housing market in the next few years.
According to the Wall Street Journal, Burns Consulting’s study forecast that despite loan modification efforts, the nation has a “shadow inventory” of 5 million units that will be added to the housing market as their delinquent owners lose their homes. This shadow inventory is equal to about 10 months supply of homes.
http://lansner.ocregister.com/2010/02/19/loan-mods-wont-halt-foreclosures-study-shows/56801/
Well me too. Unfortunately, the US government (both parties) has been hijacked by people that have no interest in solving these ‘problems’.
It really isn’t a problem to them that the middle class is disappearing and with it, it’s ‘tiresome’ demands for wages that you can live on, paid overtime etc…
Nor is it a problem that the government outsources wars to their private corporations, feeding them billions upon billions.
Did I stumble into a Socialist International rally? — Garth
Canada’s debt>>Year Gross Debt in Millions [1]
1961-62 $14,825
1970-71 $20,293
1980-81 $91,948
1990-91 $377,656
1996-97 $562,881
2001-02 $511,946
2007-08 $457,637
2008-09 $463,710
2009-10 (projected) $492,437
2010-11 (projected) $522,337
2011-12 (projected) $535,237
2012-13 (projected) $542,537,<<<<<<<< we are already over 534 billion ….so much for the misleading propaganda
Interesting article in today’s Ottawa Sun: http://www.ottawasun.com/newhomes/2010/07/23/14804271.html
Talk about a wolf in sheep clothing. A retired woman with equity in her home, cottage and rental unit is having a hard time adjusting to her lower retirement income and paying her mortgages and credit card debts. The mortgage broker she saw described her as asset rich and cash poor. The broker’s solution: use the equity in her real estate to re-mortgage everything so that the the woman can pay off her credit cards, fix up the rental unit and buy a new car. I kid you not.
The broker goes on to state that the woman was a bit upset at the 25 year mortgage terms, especially given that she is currently 62 years old. But hey – what can you expect when the so-called expert that you sought is getting paid a commission based on the total amount of money that he can convince you to borrow? You don’t really think that he has anything but his own best interests at heart, do ya?
Low income is mow income. And retired at 62 with little options to increase said income, it would have been more advantageous to sell the assets, instead of refinancing them to lower monthly costs and use the money to buy appreciable assets.
Guess dear old F. didn’t do enough to stop some folks from using their homes as an ATM.
#89 dd
“It is categorical and wholly unsupported statements like that which unfortunately leave you devoid of creds. — Garth”
Ya right. Nobody is left to pick up the tab – except the rest of the world through higher commodity prices.
The housing purchase subsidies are gone in the U.S, and real estate sales and prices are again falling. Even with interest rates near 4-1/2% for a 30-year fixed rate mortgage there are few takers in the hottest sales period of the year. There are four million houses in inventory for sale or 1-1/2 years supply. That figure could be 5 to 6 million by yearend, as builders’ build 545,000 more unneeded homes. More than 25% of mortgages are in negative equity. Excess mortgage debt is $4 trillion and headed much higher. Government is so desperate that they have begun to take punitive action against those whose homes are under water, but they can still make the payments, but are bailing out. What a disincentive for anyone to buy a house. Will debtors prison be far behind?
There certainly have been strategic defaults, but not as many as government would have you believe. Twenty-five percent of all borrowers are stuck with negative equity, which will worsen. That could mean a wealth loss of some $4 trillion. Obviously, homeowners are hoping for higher prices. If that does not happen you can expect more walk-away foreclosures. There are already four million homes for sale and many more could be on the way. Plus, more than 500,000 more new homes are being added to saleable inventory annually. Next year will be another bad year for builders. Some will fail and others will merge. Government is having ongoing meetings with three major builders in an effort to nationalize the industry, as they will do with banking. Government is doing the worst thing possible. It is a form of Sovietization. The only thing government has going for it is that underwater homeowners usually do not default until they are down 62% from equity, but that could change. Interest rates at 4-5/8% for a 30-year fixed rate mortgage should keep them in their homes for now, but if interest rates rise that plus could become a negative. That leads a person to believe interest rates will stay that way for a long time. As a result the Fed must keep interest rates at zero for a long time to have millions of mortgages kept from falling into foreclosure. Now do you really think this is the best place to invest one’s hard earned money.
But being certifiable is a bugger in this day and age.
The above, with the exception of the absurd fiction about nationalizing the building industry, are some of the reasons why an investment makes sense. Buy low. This is low. If you can’t stomach the risk, then don’t. How hard is that to understand? — Garth
#36 POCO
“mls v839956
sold FEB 08–358k
sold Oct 09–345k
sold again July 10–357k”
Sold 3 times in 2.5 years. At least the RE agents likely got paid, the flippers sure didn’t!
Garth, what do you think of Denise Savoie’s (NDP MP from Victoria) private member’s bill to amend the National Housing Act that would limit CMHC’s Mortgage Insurance Fund’s capitalization to 150% of the minimum capital test recommended by the Office of the Superintendent of Financial Institutions and have the excess allocated to the provinces to provide affordable housing for low income families?
I think it will fail to pass. — Garth
IMHO there is absolutely ZERO chance of any capital appreciation on a long term (>10 years) US RE investment.
In 20+ years you might see some, but, any gain you make will be offset by capital gains taxes, decades of carrying costs, and RE commissions. So buy US property for a vacation home, not a RE investment.
The US market has been in decline for almost five years. Within five more it will be substantially recovered, representing the potential for significant capital gains. — Garth
“I think you need to travel more. The US has a greater number of manufacturing jobs per capita than does Canada. It has more investment capital than any other country on the planet. It is not full of financial derelicts and squatters, and of the 108 million households in the US, an estimated 1.5 million have elected to stop mortgage payments because of negative equity. The ignorance and prejudices this comment showcases is startling. — Garth”
Prejudice? hardy, I do read info from other sources, not just from here, they project a different outlook with some excellent back up info, what makes your writings gospel?
Are you begging for a thunderbolt? — Garth
Of course it will revive, but aren’t you basically calling the US RE bottom here? There is still massive unsold inventory overhang, analysts are estimating it’s at 2-3 years right not, some even more. How are prices set to recover in such an environment, where banks will be trying to get ANYthing for those houses they own?
http://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245206147429
http://useconomy.about.com/b/2010/04/18/option-arm-loans-a-new-wave-of-defaults.htm
No I did not say this was the bottom. But it’s probably close. By the time you research, finance, travel and purchase, it will be closer. Buy low. This is low. — Garth
#26 Paul
“Oh noes! private companies are gonna take over government monopolies and provide worse service and run it into the ground and poison us and take r jerbs!”
Typical drivel.
People, they don’t ring a bell when it’s the bottom. The best you will get is close. Even if it goes down 10-20%, if that even happens, it’s still better than the 70-80% loss you would have felt if you bought early, which is what most people do. Point is all you get is close to the bottom, before it starts climbing again.
You don’t make money waiting for everything to return to normal. That’s why it’s called “investing”. This is true for equities as well.
To all those that think “this time is different”, I grew up in the 80′s with nuclear armageddon as a daily headline, 18% interest rates, double digit inflation, double digit unemployment. Yes this is bad too but come on, the world was going to end on a dime then too. We got out of that mess and we’ll get out of this one too. It’s called capitalism and it’s the best system going. It naturally cleanses out excess and creates abundance and prosperity for those that seek it. The world will be a better place 20 years from now.
Don’t know how we’ll get out of this, but know we will. Don’t really need to know plus I will never figure it all out and those that “think” they know, really are disillusioned. If you did, you wouldn’t be on this blog, but sipping a margarita on an island you own in the middle of the Caribean. Until then, I am a buyer of other people’s misery (stocks or real estate). Investing is about acting, not yaking.
The US market has been in decline for almost five years. Within five more it will be substantially recovered, representing the potential for significant capital gains. — Garth
What if priced in U.S dollars there is capital appreciation due to currency devaluation ? But when converted back into Can dollar terms the price has remained flat or even gone down? This could easily happen as QE round two is put in motion and anther few trillion are pumped into the economy to keep the U.S from sinking into a deflationary depression.
There will be no mandated US currency devaluation. You are making this up. — Garth
you are very inconsistent. First, you tell people to be liquid. But then you advise people to invest in US Real Estate when americans themselves won’t touch it
Did I recommend putting all your wealth into US real estate? Of course not. I suggested taking equity out of inflated assets here and putting some in deflated assets there for diversification and capital gains. Are you saying my advice to sell a $700,000 bung in Vancouver and buy a $100,000 home in Phoenix, while investing $600,000 and getting an income stream of $3,000 a month to live rent-free is capricious? — Garth
The common theme today appears to be that any rational analysis of the US real estate market is actually rabid anti-Americanism, prejudice,cowardice,paranoia or all of the above. Compared to other countries, the US has a lot of great real estate (overall probably the best on the planet) and the country is broke with a rapidly contracting economy (the productive economy is back to 2002 levels). The emotional approach struggles to reconcile these two realities.
The US is not broke. Your basic premise is wrong and certainly not rational. — Garth
“Buy low. This is low. If you can’t stomach the risk, then don’t. How hard is that to understand?” — Garth
With all due respect Garth, I really think you’re out to lunch on this one. How many bottom-callers actually get it right? You sure seem confident….
All I ask is that you back up your claims and beliefs by disclosing what you actually due with your own coin (where in the US you purchase, when you do it, and how much you pay for it). Thanks and good luck.
Don’t worry about me. But I’m touched. — Garth
Garth,
Before telling people to buy cheap real estate in the USA,
maybe you should also tell them to check out who is living in this now cheap neighborhood…I can assure you that in secure neighborhoods,price are not down that much from 2005-2006.Did you really do your homework
on this?
People in trendy parts of Toronto step around homeless folks in the morning. Do we have a better class of disadvantaged people in Canada? — Garth
$170,000 is not steal for a house in the United States; it’s a balanced price based on the economic conditions there — jobs and wages, and the uncertainty of future income. I agree with Garth that that USD is far from finished, but the US middle class is sinking. Just do a quick search on YouTube of the abandoned communities and commercial real estate. Who will be buying these properties in a few years time for twice or three times the value? The relationship Canadians have to home ownership is so out of whack that we look thousands of miles away; I guess Vulture House Porn had to start sometime.
Why would you anyone buy into an abandoned community or empty commercial real estate? Get serious. Purchase a nice place in a desirable location which is both rentable and enjoyable for your own use. Additionally (as I wrote) family incomes are about equal in the two countries, yet our real estate is 200% more expensive. The fact you need extremes to prove your point shows you don’t actually have one. — Garth
Interesting article for those ready to buy real estate in the US
http://www.realestatechannel.com/us-markets/residential-real-estate-1/real-estate-news-home-buyer-tax-credit-federal-housing-administration-loan-guarantees-fha-realtytrac-home-foreclosures-highend-home-repossessions-bank-reo-sales-2868.php
People what’s the ROI on property: that should be the sole deciding factor on whether you buy something or not, US or here.
Factoring in vacancy, costs and property managers, if you can get north of 10% NET, than it’s worth taking a look at. If the cashflow ALONE makes you 10%+ (not factoring in capital gains or losses), than what’s the problem. I it still 4 times what I make at the bank.
Ex. If I put 40k down on something and I net 10k a year, who cares where the property value goes in the short term, as I get all my money back in 4 years and going forward it’s all profit.
Garth, you got a bunch of virgin investors here.
Garth et al:
My opinion on Florida. Stay away from it. The Gulf has an oil Volcano that is belching out unknown filth into the water. The oil is currently washing up on shore. Sorry Garth MSM is not doing a good job reporting this stuff. Also VOC counts are now very high in the states along the Gulf. Not good for asthma, or breathing.
Wait til 2013, see what happens there. Anywhere but Florida or as they are saying on the alternative media “more than 200 miles from the gulf”. Why buy RE and find out the ground water is contaminated with VOC’s or other toxic stuff. The talk I hear is that there will be a so called “no man’s land” in some states along the gulf by the time this is all over.
Personally I would go Nevada. Nice condo in Vegas, etc.
But hey, I a could be wrong. But I would rather buy once the bottom has been established, and just started to rise again. Anyone with access to the RE charts will see the trend immediately.
If the RE in Florida gets contaminated, it should go to near zero. The ultimate buying experience. But if you think I am 100% wrong on this one Garth. Jump in an prove me wrong, buy some and lets track your experience. Oil is already on shores in Florida. Gulf stream has been disrupted. Chaos is surely here.
#108 TheBigLebowski
“There will be no mandated US currency devaluation. You are making this up. — Garth”
Of course it will not be mandated. Devaulation is the only way to hoodwink the public out of future obligations. It is the only policy tool left.
#110 BrianT
…The US is not broke. — Garth…
Well they do have a problem with tax revenue covering expenses at the moment (like many countries). Former Comptroller David Walker says that the US is in trouble.
http://www.youtube.com/watch?v=xjmCiDB_72g
Great Interview
David Walker former top accountant of US government:
http://video.google.com/videoplay?docid=-7461407498377956300#
#7 Squidly “buying a home in the U.S. now is a deal of a lifetime”
You sound worse than a realtor. Buy now, buy now, buy now….
Are you the same guy who predicts 645 sales in Calgary for july?
How are you feeling about that prediction today?
Calgary’s already got 655 sales with 8 days to go.
Is this the same careful analysis which leads you to predict a $270,000 drop in Calgary’s house prices?
re #35 – And you think they were smarter to buy at the top of the cycle?
any idea why savings rates haven’t risen for any of the 5 big banks? Canada hasn’t raised rates .50% and no change since.
According to the latest reports, the US housing market is no where near bottoming out. In fact there are more houses in foreclosure on the books of US banks than are currently for sale. They reason that they would exacerbate the already weak market by putting millions of ‘ghost inventory’ houses on sale. The real reason of course is that the bankers have their fingers crossed and don’t want to lose as much money per unit as id currently on the books.
http://www.realestatechannel.com/us-markets/residential-real-estate-1/real-estate-news-home-buyer-tax-credit-federal-housing-administration-loan-guarantees-fha-realtytrac-home-foreclosures-highend-home-repossessions-bank-reo-sales-2868.php
The example of the Quebec woman buying a $50,000 unit in FLA is a good example.
Purchase price $50,000
Property tax $750 p/a
Strata $3600 p/a
Hurricane ins $4200 p/a
Total $8500 per year carrying costs.
(Lets not forget that she must pay a property manager because if she gets caught cutting the grass, collecting rent or painting she would be subject to deportation)
If the property doesn’t double in 5.8 years she has lost all her money, if it does she breaks even with no benefit from the opportunity cost of the investment. If she rents, she has to pay income tax ( she’ll have to pay cash as she can’t get a loan from a US bank and so no mortgage write off)
Buying US property should be very carefully looked at.
Garth’s argument is reasonable for someone with major equity. His example of selling a $700,000 house and putting $100,000 house in a decent area in the US, does not offer much downside risk and a potential capital gain.
I understand that Garth has considered the risks present in the US economy and feels that these issues are lesser than the potential for capital appreciation in real estate. For example, he views the US as the worlds largest manufacturer, while others consider the 5.5M manufacuring jobs lost since 2000 as an ongoing process of lost middle class employment that will never return. Garth suggests that the US is not broke, while others scratch their heads as to who is buying all the US debt. For example US government account figures show large increases in “household” purchases of US treasury bills, in a country with a very low savings rate generally, at a time of massive job losses. The US was previously the worlds largest creditor and now they are the largest debtor nation. The majority of US states are unable to meet expenditures and need a bailout or massive austerity. What will happen to public services in those affected areas? If you own a house in a city that experiences layoffs of police, fireman, ambulance drivers and city workers, what happens to your quality of life as these middle class positions are cut back?
The US does account for 27% of global production, however 70% of their GDP is personal consumption, based to a large extent on debt. This debt is no longer sustainable and we are just starting on the unwinding of the largest credit bubble in world history.
Rothschild said: “The time to buy is when there is blood in the streets” Basil Fawlty asks: Is there blood in the streets yet?
The US is not broke. Your basic premise is wrong and certainly not rational. — Garth
Very close to it Garth. Why do you think they are at war in various” Parts” of the world. They do this everytime the economy goes into the shitter to take the peoples minds off the real problems at home. Been doing this for a long time.
Did news of Nine Eleven not make it to Peterborough? – Garth
At #19: Bingo, you sound like you want it to happen to the U.S. Can you explain your position? You’ve provided only previous examples of empires that were raping the world and depressing it’s people. The U.S. couldn’t be farther from that, regardless what propagada you read/hear
At #26: Paul, GREAT POINT! Just another reason to demonstrate the way Canadians are consistently and constantly lied to or the truth is wetheld. This is why our perspective of the truth of the matter in the U.S. is so f*cking skewed (that’s a nice way of saying we’re just plain stupid)
At #29: Mel, you’re right! And those forces are going to screw Canada even worse. So, Garth is right in saying sell what you have in Canada NOW (it IS going to be worse here than in the U.S.). Or, are you one of those NIMBYs?
At #33: Cattle Country, well said!
At #37: You’re absolutely correct. The U.S. prices will indeed start rising sooner than later (probably in a year or so). When properties cost LESS to buy than they would to build them, even in a down market, then it only makes sense. People the globe over will start to buy the U.S. RE and they’ll be back on top eventually. It is still the most desirable country to live in on the planet (generally speaking). So, to Garth’s point, the pendulum has swung the other direction for the U.S. into territory where values are actually UNDER valued now… This too will correct itself in time. This is what happens in ALL crashes.
Garth – Haven’t yet read the comments. Been busy helping hubby tiling the main bathroom. I’ve watched a lot of those HGTV shows, most of which originated from the US. I wonder how much of the lower costs for homes in the south and south west can be attributed to cheap, illegal Mexican labourers who are working under the table. Thoughts anyone. Oh and don’t forget that gyproc (wall board) from China.
#15 Eddy…
Thankyou Eddy!
I have pointed out this IMPORTANT difference before and it goes largely ignored by Garth (obviously because it does not fit into his argument)
Health care costs can single handedly account for a huge part of the difference in Canadian and American home ownership costs.
Talk to Americans, a family of 4 can pay $12,000 a year in health care premiums. That is $1,000 in AFTER TAX income that a Canadian family has that an American does not. That is HUGE.
Its already been well established that Canadians and Americans spend almost 100% of their income. So the Canadian family has $12,000 more a year to spend, and what are they going to spend it on? Its going to equate to higher house prices as that typically constitutes one of the most expensive and most important purchases for a family.
And what does $1,000/month mean in terms of a mortgage? At 5% and 30 year ammortization, about $180,000. And what did Garth say was the difference in average prices… walaa $170,000.
Irrelevant. Most Canadians purchase with cash. — Garth
#39 Consider This on 07.24.10 at 12:50 am
Yesterday, my browser hit the weeds and submitted the comment before I finish writing my post
I tried to re-submit but it’s not showing up.. I’ll try one more time.
I am quite sure (see economist Paul Craig Roberts) the USA counts the goods manufactured in China for US companies in the US GDP numbers and not China’s – which is intellectual fraud.
The USA also counts billions/trillions in worthless junk investments like CDOs and SIVS in their GDP numbers…
The real picture is not as pretty as the pundits try to make it.
It gets less pretty as time goes on and the Americans sink into their neo-liberal economic dreams.
I have problems sleeping during the wee hours of the night. So I turn on the TV. If I can’t find a good PBS, BBC, or Brava show I check out others such as Slice – all those obnoxious, self-centred, nouveau rich housewives from wherever. Seems they too are suffering from the economy – foreclosures, etc. Schadenfreude anyone. I don’t like to see people suffer, but most of these people deserve it.
A Florida Property….hmmmm
1. Not being a home steader…therefore exceptionally high property taxes…fact
2. Sale of US owned properties by Canadians = capital gains taxes as this is not Canada dude…fact
3. Poor and dangerous construction practices…i.e., Japanese drywall for example….fact
4. Expensive if home insurance rates especially if you can even get hurricane insurance…btw State Farm pulling out of Florida as they did in Alaska…fact
5. Buyer Beware…..
Just my educated opinion [I'm also a real estate broker...one of those categories of folks that Garth tars with the same brush...you know scum, use car sale types...uneducated....final caveat...I'm also well educated...PHD TO.]
You have a doctorate, and you’re a realtor? By the way, it’s Chinese drywall, doc. More in my next post. You might learn something. — Garth
-
#19 Bingo — Precisely. If we can’t even forecast the weather correctly, how is anyone able to predict the futures of economies?
The USSR slid under the water a lot faster than the Titanic, and all dogs have their day. Sooner or later, it will happen in North and Central America.
It’s all fine and well for Garth to write columns and for us to opine, etc. but does anyone bother to take into account the possibilities of what may happen, could send economies countries into positive or negative territory?
Iceland, Latvia, PIIGS and others went down PDQ.
#40 Debtfree — Good post and a reminder of what we may be headed into.
Taking advantage of others’ misfortunes is not necessarily the greatest blessing.
#65 jgg123 — FWIW, stay outta RE (Cdn. or US) for the next five – 10 years, as a bunch of us boomers will be looking to offload RE in a declining market.
If you have money, follow Garth’s advice in Money Road, plus use a monthly system whereby you contribute to RRSPs
#77 mobdeep — “Their manufacturing is being sent off to chindia on a daily basis, along with IT jobs. Foreigners are the only hope for the U.S, without foreign money this country is collapsing and fast.”
Good point, and partly explains why the US wants / needs 50 mln. plus illegals to keep their bloody wars going ad infinitum.
Their own folk are rebelling against them. They are losing the mfg. / IT industries, along with others. As long as they keep the present bunch of dingbats in office (both parties), they (and us) don’t have a cat in hell’s chance of progression.
#80 pete — My bro. and sig. other and a friend here in Kelowna have vacationed in Vietnam, last year and this.
The friend here said good meals cost around $5, rickshaws about $4 for a half-hour and the country is very inexpensive and people friendly.
Bro. and better half spent three weeks climbing mountains and exploring. Said they have never seen a nicer country.
#87 dd — “. . . read the writing on the wall.”
Something’s about to blow, maybe this or next year, but it’s gonna blow.
Re: gold discussion (sidebar). Good column by Bill Gibson in today’s The Okanagan Saturday on buying shares of gold companies rather than holding precious metals.
There are some advantages, such as being able to cash out, paying taxes and reinvesting the net profit in bonds, bank preferreds and dividend-paying stocks.
It would have been nice, looking back, to buy $100K of Bre-X at 50 cents a share, sell at $250 / share and retire rather well off!
The only natural force that can prevent Death Stars.
Apparently we are not alone. In stupidity, we are.
Separation between rich and poor is becoming greater.
Edvard Munch painted ‘The Scream’ because of this.
The Last Farewell Rolling Stones — one more then they’re gonzo!
23 July 2010
Kosovo central bank chief arrested in corruption probe
…
You have a doctorate, and you’re a realtor?
———————————————————
Yes Garth. Hard for you to believe given your rather jaundiced view of the profession. But not worth the effort to explain further…. BTW not all politicians or finance ministers are idiots and fools either. So much to learn…..LOL
I think if you review my postings you will find little in the way of derogatory comments about realtors, other than questionable statements about market conditions. You comment here shows you have a lower standard. BTW, I’m not a politician, nor am I anonymous.– Garth
Did news of Nine Eleven not make it to Peterborough? – Garth
——————————————————————–
Hey Garth , alot of people are starting to realize that 911 was an inside job.
What Happened to my other blog, it did pertain to economics , backing The BIG LEBOWSKI”S comments
It is your blog GARTH, but at the same token what I said was not slanderous, and by the way I can back what I say with facts.
Interesting how you pick and choose what is on the blog must be hitting some soft spots. By the way I am willing to sit down any time any where for a debate. Sad thing is that it would never be televised, because of contents.
Again please try not to insult my intelligence, by allowing certain posts but not others, suiting your whims.
When you cannot express yourself with using the F-word, your comment will always be deleted. — Garth
Garth said…….”The US market has been in decline for almost five years. Within five more it will be substantially recovered, representing the potential for significant capital gains”
The fact that it has declined is indisputable…….if you can explain to me how it will recover “substantially” in 5 more years, you can also pick my lucky 6/49 numbers for me……there’s still 98 minutes left (according to MST) before the ticket selling stops for tonight’s draw.
The USA has entered a depression of the magnitude that the last 2-3 generations have never seen before in their lives, temporarily camoflauged behind a smokescreen of printed dollars and trillions in unrepayable government debt that has forced upon a diminishing and aging workforce in an economy that produces about 25% of actual “material goods” compared to what they did 5 decades ago.
They’re toast………and we’re crumpets.
just a few simple facts about the US economy in relation to ours…….in the US you can still buy a dozen eggs for 88 cents,or 10 lbs of potatoes for 99 cents or a gallon! of gas for under $3.00 ……..etc ,etc, …..so US knockers who think things are different here……….you are absolutely right….they have crashed……we are just starting to and already we are paying more(in fact double) for the basics and may God help us if we take the same slide they have..sooooooo give your heads a shake………because there is not a damn thing that will change where we are headed….but then again i’m almost 66..so what do i know?
Paul Craig Roberts and Andy Grove are not quite on board with the Pollyanna view of the US economy http://www.youtube.com/watch?v=zeWl5BC_-Pk
#68 grouchpeach
Just remember if Mr grouchpeach is working on your property in the States you can not rent it out (unless he is LEGALLY allowed to work in the US).
You can renovate your own house to your hearts content but if you rent it out it is considered a business and if you work on it you are considered to be working illegally and could be deported.
Amazing. Now I’ve heard everything… — Garth
If the US housing market turns around in the near future, then one major event will need to occur first, an increase in the money supply there.
That would indicate the big American banks will have decided, or been forced by the US Fed, to release money they’ve been hoarding (current Fed policy) and dumping it all over the countryside (no pun intended!).
After that, Americans could then look forward to more job creation, and the resulting increased demand throughout their economy for such items as more houses, thus driving up prices.
That will also see huge inflation and the resulting (planned?) dumbing down of the cost (value) of all debt there. The alternative, Depression, is so much more unappetizing, our betters have been telling us.
So, for Canadians not willing to dive into chunks of Florida swamplands, now, is there a stock market proxy for the US housing market? Would that be Lowes, or somesuch? Is there an ETF extant?
Back here at the ranch, we’ll be a sorrier lot come this fall there seems no doubt. At this time a financial staycation cannot be ALL bad? Can it?
Fiscal rectitude definitely has its pluses. But that also brings about contraction of the economy; however, it won’t be the end of the world, just the end of the world as we’ve come to know and love it, while things south of the line continue to go from bad to worse.
The more posts I see from couples with a combined income of around 150 grand the more I think we do need “combined income taxation”, some would call it income splitting.
If a family has one breadwinner, then for tax purposes the income would be split between the spouses resulting in a lower tax rate.
If a family has two breadwinners, the spouses income should be combined resulting in a higher tax rate.
This whole thing of strategic marriages usually between government type employees [teachers, health care workers, government or government agency employees] has destroyed the middle class.
We now have couples with two incomes and gold plated pensions and benefits living off the government tit paying the same tax percentage as the one income family with no benefits or pension or security.
We are now living like we did 500 years ago, when the church/government employees were rich off the taxes of the workers who actually did the work that made profit.
I forgot to mention, strategic marriages between government type employees has also diminished the gene pool.
Don’t be an ass. — Garth
“Very close to it Garth. Why do you think they are at war in various” Parts” of the world. They do this everytime the economy goes into the shitter to take the peoples minds off the real problems at home. Been doing this for a long time.
Did news of Nine Eleven not make it to Peterborough? – Garth”
Just for the record and to correct the ongoing conspiracy theory that the US attacked Iraq over 9-11. The official reason for the destruction of Iraq was weapons of mass destruction. This lie was presented to the world on national television by Colin Powell and was later admitted as fraudulent by the US government.
Where did I mention Iraq? — Garth
US is bankrupt and Insolvent…
http://www.marketoracle.co.uk/Article21293.html
Tell me something else I don’t know…
It was implied in your response to Bill, who commented on wars in various parts of the world. I thought your reply implied that these wars were in response to 9-11.
I may have missed something in the translation, which does happen when using e-mail.
#131 joseph
So, health care in Canada is totally free? There are no differences between the US and Canada concerning federal income tax rates, state or provincial income tax rates, sales taxes or deductibles for property taxes, mortgage interest or heath care premiums?
#118 Gman on 07.24.10 at 1:14 pm
Factoring in vacancy, costs and property managers, if you can get north of 10% NET, than it’s worth taking a look at. If the cashflow ALONE makes you 10%+ (not factoring in capital gains or losses), than what’s the problem. I it still 4 times what I make at the bank.
Ex. If I put 40k down on something and I net 10k a year, who cares where the property value goes in the short term, as I get all my money back in 4 years and going forward it’s all profit.
Garth, you got a bunch of virgin investors here.
*****************
Wow–what a formula to get your ass handed to you–
Don’t you know that “assumption” is the mother of “all” F-ups?
First of all–you assume you will continue to bring 10% returns-until your down payment is returned–
By your example-
The house price “must” not decline in the 4 years–in order to balance out your 40K–because-”assuming” you paid 20% down of the original sale price-would be roughly $200K-
If the price fell 20% after you bought it and “assuming” your rental rate could remain the same-it would take you double the amount of years-then what you say-to get your money back-
And–if–this trend below continues–your going to get another pounding-from being “forced” by the market-to lower your rental rate–
“If” you can even find tenants-
Don’t bet on it–not happening–because–
It is exactly–what “is” happening–
Go ahead and buy with your legs wide open-
I’ll keep mine crossed remain a virgin and save “it” for that coming “special”
http://2.bp.blogspot.com/_nSTO-vZpSgc/S4DvYkrVtCI/AAAAAAAAH4k/Z3pqpWyd56c/s1600-h/cre-9.png
http://1.bp.blogspot.com/_pMscxxELHEg/SumhP4q66CI/AAAAAAAAGq4/LqEWHNCFSEU/s1600-h/Q3RentalVacancyRate.jpg
The home ownership rate increased in the ’90s and early ’00s because of changes in demographics and “innovations” in mortgage lending. The increase due to demographics (older population) will probably stick, so I expect the rate to decline to the 66% to 67% range – and not all the way back to 64% to 65%.
http://www.calculatedriskblog.com/2009/10/q3-record-rental-vacancy-rate.html
Hmmmmmm ..well since tomorrow is Sunday and i live only 50 miles from the border…..perhaps i will head down and fill my car up with gas for 1/3 less than it costs me here…….BUT WAIT–things are better here hmmm…they are almost destitute….oh well i will make my way thru the starving people and pick up a couple of lbs of cheese for $3.50….a dozen eggs for 88 cents…a loaf of bread for 50 cents…….perhaps even some chicken for 47 cents a lb…….and what the hell ITS THE WEEKEND…might as well get 24 beer for $12 and a bottle of Canadian Club for 14$………..hmmmmmm driving back thru the border i am sure i will thank the lord to have Mr “h” and Mr “f” running our economy ..and i can proudly stand up and say we are “different here”…..and a housing crash that is already starting here “won’t be a pimple on a donkeys ass” compared to the way their basic standard of living has suffered as they have weathered the storm………i will proudly go shopping here and feel remorse that they don’t have HST there and perhaps would be better equipped to feed their families ………..ah yes things “are different here”
When you cannot express yourself with using the F-word, your comment will always be deleted. — Garth
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Give me a break Garth other people use it but I’m not allowed. Plus you could have removed the words, please don’t be hypocritical.
___________________________________________
Re the BIG LEBOWSKI’S blogs today you are correct as usual. Don’t worry about the name calling.
Garth will never admit that there are conspracies going on because his world would crumble. After all he only knows what he learned through politics , schooling … and has become somewhat successfull at it. Now he write books and gives advice to people in finances. Good advice in general, but he is missing the bigger picture.
If a private business was run the way the governments ran the world they would be bankrupt, the loans would be called in or they would be put in jail for fraud.
The Banking Cabals lend money to different countries in which they are setup in then charge interest on it to those countries. FACT.
It costs them next to nothing to print this money/ credit issued. FACT.
Does it make sense to keep printing currencies based on some bullshit formula’s , without devaluating that currency based on no tangible values? NOT ALL ALL
THE PIPER HAS TO BE PAYED SOONER OR LATER.
These BANKING CABALS keep acquiring more of our natural resourses, infrastructure, land… through other companies which they own. Governments are selling us out everytime more currencies are being printed.
By the way these same people create wars and famines and the get public worked up to donate to save the hungry, uneducated , warn torn, impoverished people. ALL THE MONIES GO TO THEIR ORGINIZATIONS.
( they double end the deal so to speak)
Now all you people who are financially comfortable, playing this game of theirs, don’t think it won’t affect you. Your currencies are the same as the middle class which they will wipe out shortly.
Now there will be civil unrest happening over here because of people loosing all they had. Granted alot of them should not have been allowed to purchase homes in the first place. The big question is why were they allowed to knowing the outcome would be financial ruin.
Our charter of rights/ constitution ‘s are slowly being chiselled away. This Patriot Act allows the government to lock you up without charging you , indefinatley, labelling you as a terrorist. IF YOU ARE A TERRORIST THEN BE CHARGED AS ONE.
NOBODY HAS THE RIGHT TO LOCK UP A PERSON INDEFINATLEY WITHOUT LAYING A CHARGE.
So you see once civil unrest starts in different regions MARTIAL LAW WILL BE IMPOSED. Now they will lock you up because the law allows them labelling you as a threat to the country.
The young people joining the armies are already being condition to believe the threat will no longer come from abroad but from within. BEAUTIFUL.
This army will become the world police, run by the UNITED NATIONS.
They will further break us down into submission through wars, famines genetically modified foods, poisonous vaccines, until our will to resist will be broken.
DON”T THINK SO , look at other 3′rd world countries around the world with puppet dictatorships.
Yeah your right , never happen here, how could it. BAAAAH.
Probably left some things out from my original blog GARTH, but if you were so concerned about the language you would have deleted those words and let the blog through like you had done before.
No conspiracies though.
You are an angry man. — Garth
Not everything you buy in life is meant to make you a profit, some things you buy are for your pleasure perhaps a snowmobile or a harly or maybe a boat.
A Florida house to me, means my family and friends will have a great place to stay for many years, as a example, I would put say $80,000 down and finance the other $80,000 using a 30 year fixed rate as low as 4.4%, the cost to me would be minimal.
Yes, U.S. home prices may go down further, perhaps 20% or more, but there will come a point when financially prudent people and hedge funds etc. will begin scooping these places up in a big way, the supply of well located homes right now is almost unlimited.
#65
Why would I buy my kids a home, are you implying that they’re useless bums unable to work ?
#21
Russia is loaded to the teath with Nukes, it never was an economic power house.
#53
Sure about that, better check the buying power of the USD
“Securitization is not the villain. Abuses in securitization are to blame,” Mr. Ranieri wrote
http://blogs.wsj.com/developments/2010/07/23/ranieri-mortgage-securities-didnt-cause-housing-crash/
http://online.wsj.com/public/resources/documents/Ranieri0723.pdf
I live in whistler and want to know your opinion on this unique real estate. Prices in whistler used to be quite a bit higher than Vancouver but then the prices in Vancouver shot up and became comparable to here. Will the prices hold here or do you see them dropping along with Vancouver.
I plan to move to vancouver island. Should i be trying to sell now and rent for the next few months?
Whistler = downhill. — Garth
I bought my 08 Toyota 4×4 when oil was $140+ barrel and the only vehicles selling were corollas and priuses and oil was going to the moon and beyond, unlikely.
Never buy anything when its in great demand, buy when people are repulsed by the product and no one wants to touch it with a ten foot pole.
Kinda sounds like Gold and speaking of Gold, lets say the Gold bugs theory plays out, the markets have crashed to almost zero there’s anarchy in the streets, governments have been overthrown, there’s no food or clean water and dodging dead bodies on the street becomes part of a normal life .
Please tell me what you will then do with your 10 Kilo bar of Gold, take it to the bank, what bank.
Bill wrote:
“Hey Garth , a lot of people are starting to realize that 911 was an inside job.”
and this has created Absolute distrust of all MSM, which has become an accessory to the cover up. So, when the latest ‘expert’ gives financial advice, people don’t trust it. the best analogy is infidelity, you can never go back and trust again once you’ve been betrayed. the media reality has become ‘dramatic irony’, where the audience knows something the actors (or tv reporters) don’t know or pretend not to know
Did anyone notice when this blog was taken over by aliens? — Garth
I get it. I’m so fixated with the coming problem of the baby boomer big drop in consumer spending that I missed this obvious opportunity. Florida real estate is almost bottom so you buy now low and likely make big profit 5 years later.
I am so looking forward to the next post.
Can you please also comment on the Case-Shiller Housing report details WRT housing prices (I have been following them closely the last few months and I do see increases in prices, even AZ, so I am confused that people see prices still dropping – this even with the discontinuation of the fed housing grant).
From Money Road, I have a whopping HELOC ready to take advantage of opportunities. No luck getting a US mortgage from the big banks, rather a smaller loan entity but at a 1%+ premium. Does not seem to be a problem, but they want 30% down. I have more than enough in the HELOC but wanted the 30 year closed mtg.
Many thanks again for the excellent learning ops.
My wife and I looked at condos in the Ft. Lauderdale and Pompano Beach area in April while on vacation this past spring. We are empty nesters with 15 years until retirement with only a few years remaining on our Burlington home’s mortgage. We looked at 2 bed/2 bath units in nice highrises that were less than 10 years old. We were most interested in purchasing and renting out the condo. We spoke with several realtors and ended up seeing about 15 units with one agent. We almost went ahead with making an offer but needed to speak with a tax professional on the implications. I spoke with a C.A. and became convinced that it would be the worst possible investment we could make. Anyone considering purchasing investment property that is not a U.S. resident should get PROFESSIONAL advice from a tax expert.
You should get it here, too. — Garth
Low income is mow income. And retired at 62 with little options to increase said income, it would have been more advantageous to sell the assets, instead of refinancing them to lower monthly costs and use the money to buy appreciable assets.
Guess dear old F. didn’t do enough to stop some folks from using their homes as an ATM.
———-
Well I’ve been reading the Financial Facelifts in the Globe for the last decade and never (maybe once when a 35 year-old had something like 2 million worth in real estate and 300K in net worth) have they suggested selling a property. It’s always about refinancing.
What if the U.S empire/economy is on the verge of collapse, such as occurred in the Soviet Union. It could happen.
——
And real estate is quite expensive in Moscow.
Deeply flawed arguments for buying US and selling CAN Garth.
1) The second wave of Alt-A (subprime) mortgages has started as of June and extends to the end of 2011. Anyone wanting to buy now is going to be catching a falling knife;
2) Commercial RE has started rolling over in the US, indicating that there are no “green shoots” except weeds. The US is in far deeper trouble than anyone will admit. CA is completely bankrupt along with a dozen (and counting) other states and countless counties who are now laying off police & fire fighters
3) The US gov’t has a 60+ year history of protectionism and will start taxing, levying and auditing any foreigner holding domestic property. This will start when they realize there are enough Canucks to tax the hell out of. Past behavior predicts future behavior.
Of all the countries in the world – why the hell would you pick the US. I love watching the RE porn show “Int House Hunters”. They had gorgeous 2500sq ft homes in Ecuador – average price per sq ft. $47!! Argentina is also gorgeous, under populated & stable. NZ & Aus will be attractive in another 5-10 years. Hell, little known Slovenia is gorgeous and cheap! I agree sell CAD – but don’t buy American.
People in trendy parts of Toronto step around homeless folks in the morning. Do we have a better class of disadvantaged people in Canada? — Garth
Garth,
With an answer like this one,I know for sure you didn’t do your homework…Why don’t you go with your loved ones,shop a beautiful house (condo) ,at half price in Florida or Arizona,and tell me about your neighbors…
Don’t think Mrs Garth will enjoy….
Done it. Lots to choose from. BTW, my neighbours at the cottage leave much to be desired. — Garth
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Quick! Where is Mel Lastman and the Cdn. troops? This is akin to spontaneous explosion of stupidity!
Cdn. govt. spending is, at best, pathetic. Of course, we pick up the tab but what do those in charge care?
China vs. Obama — who wins?
Total them up. “Whether the headline numbers, stating 108 banks have closed, or the number of banks indicated in the body of the article, 103, have closed, to have over 100 US banks fail is a pretty ominous sign for the future of this economy.” wrh.com.
First Poland lost their govt. after declaring themselves free of the IMF (their plane conveniently crashed in Russia, wiping them all out).
Now it’s Finland’s turn. Plus this.
8:20 clip GW — we’re all goldnutbars!
Is the planet about to foreclose on us? Interesting concept! Note the terms “. . . fiat and electronic currency . . .” One is fiat, one is electronic. Both are quite easily destroyed.
Who Owns BP? Answers here! 6:17 clip. Plus 2:06 clip Two more leaks in the Gulf.
China’s banks may be in a spot of bother, so a damn good WW will sort everything out!
‘QuakeBreak Shake, rattle and roll!
Shadow Banking Hardly know anything about banking!
Someone didn’t like his ramblings, but I thought Freedom Of Speech (Expression) was guaranteed by the Charter Of Rights? Maybe not.
Garth and others what is your opinion of “Brownes, Permanent” portfolio. Globe and Mail today. Is it too simplistic. The article states it suits our current climate.
Ah yes, the best investment advice is in the newspaper. — Garth
You are an angry man. — Garth
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Not angry at you Garth . Just getting pissed off at what is going on in the world right before peoples eyes.
Lies upon lies through the deceptions of a few select people. Sad thing is things will not change until the very end. Know one knows when that time will come, for it will come like a thief in the night.
At the same token I choose not to go through life with blinders on.
Thank you for your comment Garth, it is your blog so you run the show. However, I don’t accuse you of being an A**, please show me and others the same respect.
You don’t like my comment about marriages between members of the new elite called government employees. Thats fine.
I will rephrase it, marriages between government/para government employees with each other reduce the cultural pool.
Two parents living a good life off the taxes of the working class procreate children with the same expectation. It’s the culture of entitlement.
It’s the story of history.
Canadians are now living the life their forefathers escaped from.
Are you saying people who work for the government (teachers, nurses, cops, park rangers, oceanographers, researchers, garbage guys, streetcar drivers, soldiers or the chief statistician) are not part of the ‘working class’, and should be prevented from breeding with each other? You are still an ass. — Garth
Worse comes to worse, the U.S. will withdraw their troops world wide, then seal the border to Mexico, trade only with Canada the U.K. and perhaps Australia, then ignore the world.
Whats China or any other nation gonna do ?
The United States of America is Canada’s best friend, they buy from us and will protect us if necessary.
You guys dumping all over them is horrific and you should be damn well ashamed of yourselves, beating a friend when they are down is being a damn Coward.
By the way, Iran plans on burying a woman up to her shoulders, then letting the public stone her death tomorrow, her crime, adultery, anyone here ever done that ?
Damn it people the U.S. is civilized, most of the world isn’t.
Ok Garth, you need a holiday! I wasn’t asking about this approach because it was in the MSM. I was asking because it has been around for a while. Lighten up bud, it’s a full moon tonight and I’m sitting on my deck with a glass of wine gazing at it. You should be doing the same thing. Take a break man, you deserve it.
BTW the picture, I love that movie. Mel Gibson when he wasn’t wacko or at least kept it hidden from the MSM. Hopefully Garth you are enjoying a glass of wine with the Mrs, while enjoying the full moon.
Busy growing fur. — Garth
Just don’t buy one of those $50 homes in Detroit (yes there are several to choose from)! Check mls to see the lovely selection. Detroit is dead and never coming back, unfortunately.
Choose your location wisely!
I was in the Fort Myers Florida area a month ago helping a friend look at townhomes and there are some lovely townhomes, practically brand new, going for $80k. I was very tempted, but I want to take a look at Arizona first.
Nostradamus Le Mad Vlad on 07.23.10 at 11:02 pm
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Doesn’t matter to me. If I did have spare change — enough to buy a nice second home in the US — I would prefer Malaysia, Vietnam or somewhere quiet.
agreed…why I am here in Kuala Lumpur!
Malaysia My Second Home google it!
Cost Of Living – LOW!
squidly77 You have been eating to much of the US propaganda. Don’t worry about reality since I don’t think you can handle the truth. Just stay asleep.
#157.Phil. Your C.A. said that buying a property in Florida would be ‘the worst possible investment you could make’
Can you fill out this statement a bit? What reasons did the C.A. give?
Incidentally, reading the Blog this evening I wonder why so many subscribers even bother to come here. Garth’s writing seems to provoke more negative than positive feedback, there’s always this back and forth
one-upmanship.
Personally I’d take more seriously the opinions of someone who has their finger on the pulse of Canadian politics. Garth has correctly called the last few bank interest rate moves… to the day.
Having said that, there’s also some astute advice for any beginning investor.
The point is, why should one buy in US? Come on, lets put an end on this dirty crazy sell here and buy there game.
“Irrelevant. Most Canadians purchase with cash. — Garth”
What are you talking about Garth? Are you arguing that the majority of purchases right now are with cash???
Can you please elaborate on what you mean here, because in my experience the VAST majority of purchases are with mortgages which is why the difference in health premiums is very relevant.
#156 squidly77 on 07.24.10 at 6:52 pm
Kinda sounds like Gold and speaking of Gold, lets say the Gold bugs theory plays out, the markets have crashed to almost zero there’s anarchy in the streets, governments have been overthrown, there’s no food or clean water and dodging dead bodies on the street becomes part of a normal life .
Please tell me what you will then do with your 10 Kilo bar of Gold,
*******************
You sure say a lot of really stupid things huh
What would I do with a 10 Kilio bar?
Ummmm–if you were standing there?
I better not say “what” i would do-”with” the bar-
-
Menage a trois GOM / Bermuda Triangle / strategically-placed nukes on the eastern seaboard plus Caribbean — voila! 30 mln. people have just moved back to the other worlds, a.k.a. depopulation.
Infrastructure failing again.
USSA See the headlines. North America would be so much more civilized if politicos were flown to Pluto, and then left to rot there.
In case you figured there were only three of us Nostradamuses’ . . .
Orgy of debt (not sexual, but embarrassing!).
Link in. US govt. seems hellbent on stopping people from growing their own food. Would Monsanto have something to do with this?
Short article, but makes sense when viewed from dubya’s POV.
Energy from water?
On The Sidelines on 07.24.10 at 5:01 pm
You have a doctorate, and you’re a realtor?
———————————————————
Yes Garth. Hard for you to believe given your rather jaundiced view of the profession.
——–
I think Garth is shocked (like I am) that someone so supposedly learned could come off as such a tool.
Then again, I’ve met some completely inept PhDs. Piled Higher and Deeper, right? Just because you know a lot about one thing, it doesn’t mean you know everything.
9/11 CONSPIRACY: ALEX JONES PREDICTS 9/11 IN JULY 2001
http://www.youtube.com/watch?v=a8Hk1-BpXO8
To echo #160/Phil’s comment:
Be careful from a cross-border tax standpoint.
I had a good chat with my CA yesterday and he indicated a number of his Alberta clients who have bought property in the US but who followed up with subsequent additional purchases state-side. Guess what? The IRS is taking notice.
Another colleague of mine works for a cross-border tax consultancy in Calgary (frankly, it’s probably the ONLY major firm in Canada of its kind). The same tone of commentary. You do NOT want to attract the attention of the IRS in any form or manner these days.
Caveat emptor for cross-border transactions. Know what you are getting into.
#157 eddy
The media is an appendage of the government and in turn the government is simply a pawn for the global bankers. Its a complete incestuous relationship from top to bottom. All design to keep the average Joe in the dark, not by accident but by design. Many appendages of government also run their own blogs, wink wink.
Enjoy those property tax increases in the USA Garth. Most places still don’t positive cash-flow and won’t until the enormous overhang of inventory clears and prices drop far more. You’re a little premature…
SO sure the real estate market in the USA has hit bottom-now is the time to buy. But, let’s not forget Canada’s realestate is going off a cliff! When the USA Mainstream media is finally able to report that Canada’s real estate market too is plunging won’t that still make US citizens less likely to invest in real estate for awhile?
On The Sidelines
Is it not more common to write your credentials as PhD or Ph.D. instead of PHD.
You can tell us if you were just BS’ing us there or is it going to be MS (More Sh*t), PHD (Piled Higher and Deeper)
I doubt that anyone takes credentialism on a public blog with any credibility in lending support to an argument.
Squidly77 … Let me play the devils advocate here.
How many Iraqi civilians lost their lives in the US attempt to
First: Destroy the Al Qaeda Agents hiding there?
Second: Uncover the Weapons of Mass Destruction?
Third: Bring the Iraqi’s Democracy?
I do not believe the American citizens are evil, in fact I would describe most of them to be similar to Canadians … However, I do believe that their nation has been hijacked by numerous interests to the point I have trouble describing it as a democracy anymore.
Squidly 170, tell it like it is! We are on our high horse up here. We are blind.
I’m currently happily owning in USA, renting in Canada.
Seems to be a lot of seemingly reasonable posters seeming to grasp onto inaccurate or fictitious information, mostly fear not fact.
Also lots of conspiracy nuts/closet commies here who should joint Mad Vlad in getting decked out with tinfoil beanies – see photo at top of thread for example thereof.
To the posters seeming to await the imminent demise of the US economy with baited breath, which will not happen, careful what you wish for. If the U.S. goes down, Canada as we know it is toast. How fair do you think the terms of a Canada-China FTA might be? Arctic sovereignty negotiations with the Russians? How about an auto pact with Japan? Good luck with that there, you betcha!
“Did I stumble into a Socialist International rally? — Garth”
Canada and the U.S. owe their greatest successes to becoming mixed economies. Both socialism, and capitalism, on their own, are poisons to any civil society system.
Pure sodium, on its own, is a metal, and toxic. Pure chlorine, on its own, is poison. Combine them and you get table salt.
Beleiving in pure capitalism is ideological and almost religious blind faithD
A poli-sci prof of mine once posed the question: “Does capitalism precipitate peace?”, citing southeast Asia’s relative stability coinciding with its capitalist/industrial growth. I responded with a paper that basically said: ask the victim’s of the Pinochet regime. But I guess they were just the losers who don’t know how to make a buck, and now social darwinism has weeded them out (by torture, police/military rape, or otherwise), and today’s Chileans are enjoying the fruits of Pinochet’s (covertly U.S. backed) noble struggle.
Don’t know if any of you Calgarians noticed, but the front cover headline on Friday’s Calgary Sun was that the boom is over! WELL DUH!!!
To #104 I Refuse to be House Poor
How do you look up the price history and sale dates on a property?
It all seems nice but the real crisis has not begun and that is when the American baby boomer stops spending. So far he is relativly unscathed having had his investments apparently restored via the stock market. He is not really part of the subprime mess and yet I still believe the stock markets are mostly government money now. Still I do not believe in gold bugs because deflation. The coming drop in consumer spending was always a given, but the subprime should never have happened.
Garth there are no oppertunities in real estate for the working man north or south of the border untill house prices collapes down to 1960s levels or even early 1970s levels. And thats providing that wages don’t fall from their current levels.
Why you ask?
Because thats where income levels for working men are to day. The superearners, financial super gods and cheaters spent the last 40 to 50 years jacking up the minimum price of real estate so high that if god himself was a working man he couldn’t live any where near a real estate market. What goes up must come down Garth.
As for worthless currencies. How can fiat money not be worthless? It has no more value than what its made of. Can you say ponzi scheme?
If a nations currency is a measure of nothing then the value of its economy is nothing. God is against unjust weights and measures Garth. He is also against nations that number the people. Be warned the up coming scheme to chip everyone and trade with cyber currency alone shall not stand for long. Such a system would allow government and banks to play god and decide who lives and who dies financially and physically based on political and religious correctness.
Such a system is pure evil……….
Do you want to be treated like a dog or a cat or worse and to top it off go to hell for recieving the mark of the beast? I certainly hope you don’t.
Steven
#191Expat-your way of thinking is surprisingly widespread-I guess it comes from the MSM. Your “logic” is that ones predictions about e.g. the future of the USA somehow must line up with ones desires or there is an inconsistency.
#6 squidly77 on 07.23.10 at 8:56 pm
“…and please continue to stomp the Gold bugs, the only good Gold bug is a @@ad one.”
Hey Squiddy-boy. What about any historical gold chart from 2000 to the present do you not understand?
Annualized return of approx 25% since 2000.
http://www.kitco.com/charts/historicalgold.html
Oh I get it…you’ve missed out haven’t you?
Don’t shoot the gilded messenger Squiddy-boy. It’s not too late…even for a fool like you.
#189Curious-few Canadians remember that the US public swept the Democrats into power in 2006 (4 yrs ago!) simply because they promised to exit Iraq immediately. Obviously the public was lied to so two years later they elect the best liar of all ON THE SAME PROMISE. Just wait a couple yrs and what I just stated will be considered “Tin Foil Hat”.
#180Dark-to these types, it is as if the incredible gold price runup of the early 1980s happened thousands of years ago-gold cannot increase in price without Mad M ax and Thunderdome.
#196- God is against many things on this planet, Steve, but He’s obviously turned a completely blind eye since He let Himself be crucified. If not this entire planet would have been smashed to dust centuries ago. That is not to say there is a weak spiritual law that “What goes around comes around” but that law often takes centuries if not more to “come around” and obviously many perps never see the results visited upon their childrens’ childrens’ children. Which in itself just isn’t that fair, is it?
That said and done, Believe, but cover you own ass. Angels do exist (and I’ve run into a couple) but they can only do so much. And they don’t sweat the small stuff either, like survival.
pathetic !
…”The Ponzi scheme generated so much money that Rothstein didn’t know what to do with it. He bought two red Ferraris, almost indistinguishable from each other, ostentatious watches, real estate, yachts, expensive suits and invested in high-tab restaurants where he would hold parties and socialize with specially invited guests.
It all came crashing down last October. Rothstein said he didn’t have the courage to kill himself and instead fled to Morocco, which doesn’t have an extradition treaty with the United States. He decided to return home days later after intense praying.
Rothstein’s Ponzi scheme centered on investments in lawsuit settlements. He targeted friends and clients and created a larger-than-life persona as head of Rothstein Rosenfeldt Adler. He spent millions on yachts, real estate and sports cars and bought a share of a restaurant at the Versace mansion in Miami Beach.
Most important to the continuation of his scam, Rothstein bought power. He spent other people’s money buying prestige, donating to charities and political candidates, including Govs. Charlie Crist and Arnold Schwarzenegger, and U.S. Sen. John McCain.
Prosecutors said the law firm was more of a front for the Ponzi scheme than it was a viable legal business.
In a letter of contrition to the court, Rothstein wrote that just before his world crumbled last October, he stood in one of his $3,000 suits sobbing in a shower stall, pointing a .357 Magnum to his head.
Unable to pull the trigger, Rothstein said he fled to Morocco, which has no extradition treaty with the United States. Rothstein said he decided to return after days of prayer and contemplating suicide.
“As simply as I had started this life of lies and deceit I would bring it to an end,” Rothstein wrote. “But not by killing myself. That would be one more act of selfishness. I would end it by returning home.”
Rothstein said he never had the client base to expand his law firm as he wanted, so he turned to fraud to fund his ambitions.
Rothstein said he and Debra Villegas, chief operating officer at RRA, forged court documents. Villegas is scheduled to plead guilty Friday.
……..
Rothstein’s sentencing is far from the final act in his criminal case. Villegas is the only other person to face criminal charges in the scheme. There is a fight between the bankruptcy attorneys dismantling his defunct law firm and federal prosecutors over control of recovered assets. Money-losing investors have sued a slew of defendants, including TD Bank, which Rothstein used as a conduit to move his stolen millions.
http://www.law.com/jsp/article.jsp?id=1202462312492
#156 squidly77 on 07.24.10 at 6:52 pm
“Kinda sounds like Gold and speaking of Gold, lets say the Gold bugs theory plays out, the markets have crashed to almost zero there’s anarchy in the streets, governments have been overthrown, there’s no food or clean water and dodging dead bodies on the street becomes part of a normal life .
Please tell me what you will then do with your 10 Kilo bar of Gold, take it to the bank, what bank.”
You just don’t get it do you? As an investment vehicle that is part of a balanced portfolio gold has performed spectacularly. It’s not about societal collapse, it’s about balanced investing for return while mitigating risk. Gold, over the past decade, has been a wonderful way to make lots and lots of money. Your fantasy about the end of days is telling.
You continue to missunderstand and miss out on the trend.
Man I need a coffee…
‘sauga blogga’ – I could reply to your comment in the last thread, if I felt beating the mentally disabled was not really a total waste of time.
But since it’s Sunday morning, I’ll spend 2 minutes:
The study about real estate boom and bust cycles I read 2-3 years back was IIRC of 46 different real estate markets over time in several countries. Yet the outcome was always the same – prices got too high, then crashed and the time frames were very similar. There is nothing new in this, except maybe to the uninformed.
Since this is undoubtedly too difficult a concept for you to grasp, as it would involve thinking, I’ll leave it at that.
“Now the market has peaked and started falling” – yes, a market peaks when prices stop rising, and that should be easy to spot after an 11-12 year run up. And after the peak, there is the down slope on the other side – that is when the prices start to decline, as they are now, in almost every market across Canada.
If I could think of a simpler way to spell it out for you, with crayons and easy one syllable words printed really large, I would.
You seem to claim to live in Mississauga. I too was once a resident there. In 1991 some friends bought a townhouse in the Central Pkwy E/Tomken Rd area. The market was turning as they bought, the prices fell for years afterwards. In fact, the price of their townhouse did not recover to the 1991 price level they paid until 12 years later, when they finally sold in ’93 they made a small profit in the end. The only thing that kept them hanging on all those years was it was close to the wife’s work, and she had very high income, so she could afford to pay the large payments on their underwater mortgage for a decade. But making those payments like that was also one of the prime causes for their divorce in the end.
That is the real life part of the down side of the real estate market – it goes up for 6-12 years, then down for equally as long. Any place.
What part did you not understand?
At least you serve as a humorous relief valve, for those who need a good laugh, thanks for the chuckles.
This blog has attracted too many fringe thinkers.
Common Sense > The idea of Gold backing any currency has to be the most draconian measure one can imagine. IMHO, any commodity that is scarce and has the potential to be manipulated by a powerful few is worse than a currency being owned and managed by the masses. Why can’t gold bugs see this?
I’m not saying I agree w the current way the US is printing money using the FED, (Canada’s model is similar) but i daresay I would rather have a currency backed by a large powerful economy. Less chance of being manipulated by bankers. And please, I am not referring to the current status and structure of the US dollar which is clearly in the hands of a pseudo private bunch of thugs bent on maximizing their interest on the US dollar.
#198 carruthers……
Funny thing is……..I never muse about how much “gold” my “money” is worth……..
There are ways to buy in the US without attracting eggregious double taxation or prohibitive witholding tax (both on rent and sale). None of them are simple. All of them WILL cost you a fair amount of money in accounting fees if you want to set up the “single purpose” investment corps that may become necessary. None of the strategies are without regulatory risk.
Talk to a CA (who has part 1 and 2 of the post designation in depth tax course) and works in a high end position in a well recognized recognized public practice international tax firm. Your “corner of the street” CGA or CMA will not likely have this kind of minute by minute up to date specialized knowledge.
There are risks (as there are with everything). I agree with Garth that as a general rule, selling Canada and buying US is a good way to go. For me, the main risk is not property price direction.
I hope Garth fully discusses regulatory risk.
If you desire to speak to an international tax specialist (not myself), let me know (I’ll find a way to get in touch with you). Again, it will be expensive, but the savings will be dramatically more than if you just bought without any planning.
“A-Sharp”
177 Jeannie
“Garth has correctly called the last few bank interest rate
moves… to the day.”
Jeannie FYI these dates are scheduled a year ahead of time.
http://www.bankofcanada.ca/en/press/2009/pr310709.html
BOC governer Carney was also pretty clear that he would start raising rates in the late spring from the “emergency” levels that were set, ie nothing too amazing in Garths predictions. Look for a couple small hikes again, and listen to Carney’s news releases for longer term movements.
#150 dark sad person
Thanks for the vacancy stats. Love it when people prove my point with their own response. Like I said , if you factor in VACANCY, you can still project a net cash flow, albeit more donservative. An 8-10% vacancy is not the end of the world. It just means you need to find that property that works. Yes location is key as well. They are out there. I’ve seen them. Plus if I get all my money back in CASHFLOW, really what does it matter if my property goes down in value as I am still getting the CASHFLOW, year in and year out. Your math is amateurish at best.
End Game is on…
http://www.larouchepub.com/lar/2010/3728end_game_out.html
Lyndon LaRouche is a fruitcake. — Garth
#200 BrianT on 07.25.10 at 7:26 am
#180Dark-to these types, it is as if the incredible gold price runup of the early 1980s happened thousands of years ago-gold cannot increase in price without Mad Max and Thunderdome.
***********************
BT-
Some people here are totally clueless about Gold-
I have no idea why they have it in their minds that the world will have to end in a Hyper-inflation for the price to hold up or increase-
There is no question in my mind-that there will be anything but Deflation-especially in the US and Canada-
I hold USD’s too-along with Gold-
I think the biggest mistake people make is not understanding how money works in a real Deflation-
How Dollars and Gold are hoarded and how the supply of both dry up-
These people really display a total lack of knowledge and show complete idiocy in their understanding of history and economics-
We don’t have to go back 6000 years to see it–
Only 80 years ago all this happened-when the money supply was ramped up-by price doubling/manipulating Gold and the world never ended-Hyper-inflation and i doubt it will this time either-
I notice as well–none of these Gold bashers will engage in logical debate-using factual data-
I suspect-they know full well they’ll get their ass kicked and embarrassment is just too much of an ego crusher-
http://www.youtube.com/watch?v=SwGNcqYQKk8
Re #196 steven rowlandson & #204 Future Expatriate
GOD has allowed satan to run the world , for a while, till the time when HE will vanquish satan and his disciples once and for all.
When you understand this it’s very easy to choose the RIGHT SIDE. The hard part is staying true to your course , while satan tries to tempt you.
This is a battle for your soul, choose wisely, only one chance before final curtain call.
Cannot serve mamon & the LORD at the same time.
#153 squidly77
#53
Sure about that, better check the buying power of the USD
YES. Buying power of USD is going down compared to gold. Period.
“Then again, I’ve met some completely inept PhDs”
Like Dr. Goebbels?
Interesting Stuff, Already conditioning people to recieve micro chip…
Step right up, who’s next, everybody is a winner, you sir with that georgous woman by your side. Just a little pin prick…
http://nwoobserver.wordpress.com/2009/11/26/documentary-the-real-big-brother-28-mins/
#177 Jeannie
Psst… Jeannie, not that Garth isn’t smart, or correct, but he’s not clairvoyant either. He just pays attention to things most people don’t, and has a wealth of experience behind him.
http://www.bank-banque-canada.ca/en/monetary/schedule.html
How would you like to gut fish for eternity? — Garth
insolvency n. 1) the condition of having more debts (liabilities) than total assets which might be available to pay them, even if the assets were mortgaged or sold. 2) a determination by a bankruptcy court that a person or business cannot raise the funds to pay all of his/her debts. The court will then “discharge” (forgive) some or all of the debts, leaving those creditors holding the bag and not getting what is owed them. The supposedly insolvent individual debtor, even though found to be bankrupt, is allowed certain exemptions, which permit him/her to retain a car, business equipment, personal property, and often a home as long as he/she continues to make payments on a loan secured by the property. (See: bankruptcy)
Canadian Banks Leveraged 30:1….30 X more debts than assets……….the next crash will take then out.
Actually banks’ loans are assets not debts. Other than that you’re a genius. — Garth
#204 Got A Watch on 07.25.10 at 8:46 am
I couldn’t agree with you more aside from one concern I have.
That concern is that this most recent market shift might be the “big one” which is the culmination of every fiscal and monetary arsenal that has been fired at the economy since the Great Depression in order to thwart the naturally occurring down side cycles such that we might enjoy nothing but positive economic growth. That simply can not continue indefinitely as the vacuum from those naturally occuring lows continue to build away in the background I think until they have such strength nothing can prevent the economy from being pulled into the vortex.
Certainly we have had our share of recessions but I would venture to say that we have since the Great Depression enjoyed an inordinate amount of economically robust periods than we might otherwise have were it not for government intervention. I would propose that it is entirely possible that we might come to learn we did not defeat those economic challenges we merely postponed them to a later date. That later date might be closer at hand than many believe.
The real question is what interest and or penalties consequential to our postponing the inevitable might we expect will be extracted from us before a return to even a “slack tide” in the economy. Seems to me we have built up a pretty significant lock of water ready to hit us like a tsunami should the dam break.
#184 Another Albertan
“Taking notice”… what is that supposed to mean? A friend of a friend heard something and you overheard at an office party?
Gold has played the role of the yoke around the banker’s necks for thousands of years. Its not a matter of falling in love with it, its only a matter of realizing its qualities are well suited for being the canary in the coal mine. Without gold as part of a countries monetary system, the private central banks are able to steal from society through the hidden tax of inflation and currency devaluation (printing money). Gold is only a secure way of protecting ones assets from this top down theft. With a completely fiat , unbacked money system, private cabals of unelected bankers can inflate and deflate bubbles at will , manipulating markets and causing massive distortion in investment. Think back to the dot.com bubble, housing bubble and now the bond bubble. All these bubbles in the past decade has been created by money supply manipulation where the average person is robbed and the wealth is transferred to the banker insiders. Gold’s rarity, difficulty in obtaining it, and the inability of the bankers to create it out of thin air lends itself to being a stable backing to any currency system. The problem is the bankers hate these qualities as much as a vampire hates holy water. Gold would essentially handcuff them into operating in a prudent manner and take away their ability to massively inflate and deflate economies.
These are the main reasons why I support gold in a currency system. It would level the playing field for the average person and allow them to save money in their bank account with confidence it would be worth something in 10 years. The system we are on now forces people to gamble in the market and take excessive risk just to try and stay ahead of currency devaluation. You can never have free markets without a free market money. We are functioning in a casino system where the bankers hold all the aces and we are left scrambling for the crumbs. Whenever Garth jumps to the deffence of this system and trys to trash gold, he is defending a system designed to keep the average person living in a slave society. When a person is born into a system where they already owe the banks more than they can ever pay back, this is the definition of being a debt slave( Think 112 trillion dollars in unfunded liabilities in the U.S)
Gold will never back our currency. Next? — Garth
#192 BigAl (Original)
Oh yeah, that good old Pinochet… what I look up Pinochet in the dictionary, I see a picture of a petty dictator exemplifying cronyism, corporatism, fascism, militarism, torture, terrorism, death squads, and abuse of power. Apparently, the version you have had free market, capitalism, and liberty in its place instead.
Nice strawman you have there, be a shame if anything were to happen to it.
What grade did you get on it anyways, out of curiosity?
#209 Gman on 07.25.10 at 9:46 am
************************
Typical–
You obviously could not interrupt the charts and stats I provided for you–
You have the whole thing assbackwards–
Unbelievable ignorance of statistics–
To all you gold bugs who think that gold will be the functional currency in time of crisis. We actually had an instance where people tried to use gold as the functional currency recently. It was in Kosovo during the last civil war. The “smart” people bought gold thinking that when the world around them falls apart they would have the currency of power. So the world does fall apart and they try to use this gold to buy assets. Low and behold when they approach people with their gold bars they get rejected and are asked for US $’s instead. Wow what a concept, they’d rather have the real global currency that is taken EVERYWHERE than gold. Guess what happened to the gold? They were able to trade the gold bars for a couple loaves of bread. You see gold is only worth what people are really willing to pay for it. And in a country in crisis, it was worth a loaf of bread. This is a true story because I was the guy with the gold.
#217 bullion.bunny on 07.25.10 at 11:14 am
Actually banks’ loans are assets not debts. Other than that you’re a genius. — Garth
You are such a linear thinker! Yes nothing can go wrong! It’s different in Canada…………you are so arrogant! Mr Market & Mr Margin are going to teach you a lesson!
#216/Devore:
It means that the IRS is becoming aware that non-resident foreigners are doing transactions – either un-incorporated personal or incorporated commercial – and are acquiring assets that can generate income and/or capital gains. The IRS wants their share of the taxation they believe the US government is entitled to.
From a discussion with my CA this past Friday, a number of his Alberta-based clients have received notices from the IRS to start filing US government paperwork. The simple version is that buying a house in Arizona for personal use is one thing, but buying an adjacent property for rental – or renting out your personal property when you’re not there – is verboten unless you start making declarations. Individuals might wonder what is the big deal about a thousand here or a thousand there, but the Internal Revenue Service begs to differ. They want their cut and they will use whatever means required to claim and bank it.
But, hey, if you’re such a stickler for details, why don’t you just google for Moodystax in Calgary, call them up and get a more expert opinion (with the associated hourly rate).
#210Bruce-what is hilarious is that it was less than 2 yrs ago when the MSM told us that the global financial system was having a heart attack that could only be avoided by transferring trillions of dollars to inside players. To read the common wisdom being spewed now one would think the event had happened 200 yrs ago. Now anyone who isn’t a “fruitcake” understands that stability is permanent and inherent. Classic.
#214 bullion.bunny
The original premise makes no sense even. If loans are debts to a bank (liabilities I assume), why would taking them off the books be a bad thing? Seems like a case of repeating something you don’t understand fully.
For a bank, loans are assets. As are reserves. Checking accounts are liabilities, it is money they owe to depositors, they even pay interest. A loan produces income. That’s an asset.
When you deposit money, you are in effect loaning the money to the bank. The bank must put that money to work immediately, because your loan must be serviced. You also have the right to recall your loan, or portions of it, at any time. That is a hard balancing act, but is helped by the CDIC, which promises to make depositors whole, and effectively removes a bank run from the equation. It could still happen, it’s just highly unlikely, because the CDIC is such a trustworthy institution, so no depositor considers doing it.
Incidentally, for a central bank paper money is a liability. Read the printing carefully; it says “note”. As in a promissory note, promising to deliver… something. A long time ago it was a quantity of gold. Just like for you a check you write is a liability. Their assets are typically long term government treasuries, US treasuries (which give a non-USD currency most of its value), and gold, though many countries central banks have very little or none, like Canada. More recently, many central banks took on less “desirable” assets onto their books in exchange for money. (Unfortunately, they took them at face value, hence things like “audit the FED”.)
So then for a bank, when their loans are written off, that is bad for them, because that is a reduction in their assets, which are now not balancing their liabilities. Rule #1 of double-entry bookkeeping: assets must balance liabilities. That is why banks keep reserves, borrow from each other (or central bank) “overnight”, and have insurance on their loans.
A little simplistic, but hopefully gets the point across.
And Garth, I’d rather come back as a slug than gut fish for eternity. Put in a word for me.
Rowlandson: God is against unjust weights and measures Garth. He is also against nations that number the people.
well he is against unjust weights and measures
Amos Chapiter 8: then, we can make the bushel-measure smaller and the shekel-weight bigger, by fraudulently tampering with the scales.
numbering the people: God directly told Moses to take a census.
Numbers Chapter 4:
1 Yahweh spoke to Moses and said:
2 ‘Take a census by clans and families of the Levites descended from Kohath:
The census ordered by Caesar August is the backdrop to the birth of Jesus. The assumption is that this was just government.
Luke Chapter 2:
Now it happened that at this time Caesar Augustus issued a decree that a census should be made of the whole inhabited world.
My interpretation of 666 from studying the unix operating system is that it gives read and write access to the user, the group and the world. So in the language of the internet, 666 is its number because unlike television it gives read and write access. However the internet is not a human being. Not. I have said before that to a large measure judgement will be carried out through the internet.
Revelations Chapter 13:
16 It (the beast) compelled everyone — small and great alike, rich and poor, slave and citizen — to be branded on the right hand or on the forehead,
17 and made it illegal for anyone to buy or sell anything unless he had been branded with the name of the beast or with the number of its name.
18 There is need for shrewdness here: anyone clever may interpret the number of the beast: it is the number of a human being, the number 666.
Now I need a scotch. Large. — Garth
I lived in that area for a few years. I prefer the east coast of Florida around Ft Lauderdale. It’s way more alive.
”GOD has allowed satan to run the world, for a while, till the time when HE will vanquish satan and his disciples once and for all.” #212 Bill ( Peterborough)
Looks like I will then be out of a job?
”When you understand this it’s very easy to choose the RIGHT SIDE. The hard part is staying true to your course, while satan tries to tempt you.” #212 Bill ( Peterborough)
Ya that’s it blame it on the Devil… It’s always the Devil. “The Devil made me do it” Can’t you boneheads man up to your own mistakes?
”This is a battle for your soul, choose wisely, only one chance before final curtain call.” #212 Bill ( Peterborough)
So your religion says. Others profess that such acts as you might condemn would send them to their god. Are they wrong or are you?
Cannot serve mamon & the LORD at the same time. #212 Bill ( Peterborough)
Sure ya can… where do you think those tithes to your church come from?
Don’t get me wrong, I’ve got my “religious” beliefs too (my day of religious exploration is Wednesday for example. Why? Why not? Wednesay is a good day and it was available) but I’m not about to try spoon feeding them to you. Really is this the right place to be promoting your or anyone’s religion?
Gold will never back our currency. Next? — Garth
——————————————————————–
Absolutely Garth. Most countries no longer own their gold reserves in their own countries. The Banking Cabals own the gold. The countries are just nice enough to keep it safe for them.
Their, in my opinion, is not enough Gold out their to back all the fiat currencies in existance already.
Since most of the currencie’s out their is done electronically through debt / loans, the next logical step is a one world currency, with a correction putting the whole world on the paperless electronic chip, Gold Standard.
Only problem is; our debt ‘s would not corrected to the same proportion .
I would not want to be holding any gold papers issued by any finacial institute . The real bars if you please.
#149 brainsail…
I never said that health care costs in Canada are free, however in response to your question about taxation the bottom 50% of Canadians are taxed at roughly the same rate as Americans. Its hard to generalize because state taxes vary and some cities have sales taxes etc. but they are on average similar at the lower half. In Canada are upper income tax people are much harder hit.
All I am arguing is that the health core premium cost I suspect plays a major factor in the difference in home costs. Garth argues that the majority of purchases in Canada are “in cash”, while at the same time a post a few weeks ago by Garth pointed out that the avg Canadian purchase now less than a 5% downpayment.
I don’t see how those two statements can both be even remotely accurate. I am not one of those stats nerds who will point out Garth being off by a few percent here or there on some figure, but there is no way those statements can both be even close to reality.The worst part is no one even questions him on this board. I haven’t seen one comment here in response to Garth stating that most Canadian purchases are with cash. The whole point of this website is to criticize over leveraged home purchases, and then Garth states that the vast majority of Canadian purchases are with cash. Huh?!
#222 dark sad person
Like I said, this is called “investing”. What you do is sit behind a computer and prognosticate a future that no one can predict. And if you really could, you would be so rich you wouldn’t be on this blog. But instead you research and research until you scare yourself to do nothing.
But last time I checked, you have to be in the game to play. Not saying you should jump in, far from it. If the numbers make sense and you have protected yourself on the downside, then why would you not act. All I’m saying if you wait for a recovery, you will have missed the opportunity. Cut this post out, put in the cave you hid your gold, and go back to it in 10 years.
As for gold, do know what the price of gold was in 1981? $900. Today $1200. Wow that’s an amazing 30 year return. S&P500 was at 100. Today it’s 1200 (not including dividends, which would have added another 75% to your return.)
If you want to be the water boy the rest of your life go ahead because we need people like you. When you are ready to play with the big boys and grow some, the opportunity of a lifetime will have passed. You see it’s people like me that eat you for breakfast.
FYI; some Kelowna market stats
This month to date (as at July 24, 2010) there have been just 87 single family sales in Kelowna
Last (2009) year for the same period there had been 191 SFD units
The year before (2008) for the same MTD figure was 121 SFD units
But price is up…
Average sale this MTD = $640,702 compared to $500,403 last year (2009)
How could this be?
Well, of the 87 homes sold so far 10 were for over a million (average $1,9 mil)
Yep… the income gap is growing I’d say
Granted there is more to it that that brief analysis but it does say something.
all I can say… it’s been so nice reading the blog recently without Nasty Jr.’s comments.
I actually pretty much read it now, from top to bottom.
207 “A-sharp” Accountant
There are ways to buy in the US without attracting eggregious double taxation or prohibitive witholding tax (both on rent and sale). None of them are simple. All of them WILL cost you a fair amount of money in accounting fees if you want to set up the “single purpose” investment corps that may become necessary.
——————-
Absolute rubbish. It’s very simple. If you have US income you file a non-resident tax return and pay tax on your net. When you sell your US real estate you will have 10% of the proceeds withheld until you file a return calculating your capital gain. If the tax due is less than the withholding, you get a refund. Otherwise you pay the balance due. Spend $75 on TurboTax and skip the high-priced accountants.
Population Greater Kelowna area (Winfield (Lake Country down to Peachland) Central Okanagan Division) = approx 160,000
Single Family Units available for sale on MLS = 2,340 (405 priced over $1mil)
830 Active REALTORS®
Month to date sales July 2010 (@ 24th) = 87 Single Family Units Sold
Do the math…
@196 In the beginning man created god.
Religion can’t start a war without it.
Seeing vs. Doing
By GRETCHEN MORGENSON
Published: July 24, 2010
“WHAT did they know, and when did they know it?”
http://www.nytimes.com/2010/07/25/business/25gret.html
FINRA Fines Deutsche Bank Securities $7.5 Million for Negligent Misrepresentations Related to Subprime Securitizations—7/21/10
I am known as an expert on precious metals and I can state with certainty that gold will not exceed its recent highs.
As FINRA’s investor alert HYIPs—Hazardous to Your Investment Portfolio points out, many HYIPs have a worldwide reach: the recently exposed Pathway to Prosperity scheme allegedly defrauded over 40,000 investors in over 120 countries of $70 million. The Federal Bureau of Investigation has reported that the number of new HYIP investigations during fiscal year 2009 increased more than 100 percent over fiscal year 2008. In order to help combat this growing online fraud, FINRA will be using search engine advertising to direct online investors searching for HYIPS to today’s Investor Alert.
=
Investors can obtain more information about, and the disciplinary record of, any FINRA-registered broker or brokerage firm by using FINRA’s BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2009, members of the public used this service to conduct 18.5 million reviews of broker or firm records. Investors can access BrokerCheck at http://www.finra.org/brokercheck or by calling (800) 289-9999
Bond Sale? Don’t Quote Us, Request Credit Ratings Agencies
by Anusha Shrivastava – Wall Street Journal
The nation’s three dominant credit-ratings providers have made an urgent new request of their clients: Please don’t use our credit ratings. The odd plea is emerging as the first consequence of the financial overhaul that is to be signed into law by President Obama on Wednesday. And it already is creating havoc in the bond markets, parts of which are shutting down in response to the request.
Ratings providers became a lightning rod for criticism after the financial crisis. Their overly rosy assessments of many bonds, particularly complex securities and bonds backed by subprime mortgages, were blamed for helping fuel the meltdown of the credit markets.
http://online.wsj.com/article/SB10001424052748704723604575379650414337676.html?mod=WSJ_newsreel_business
********************
“Assets” who’s “value” is determined by these complete crooks-who are nothing more than another wing of GS–
Garth–maybe I’ll write a book titled–
“When assets become liabilities”
Then maybe we could meet in your favorite biker bar and have you proof read it-over a couple brewskies?
I’ll be the good looking guy-that rides in on an old Shovelhead-
http://www.youtube.com/watch?v=s30-oMSNbiA
“The way to build wealth now is through financial assets, not real ones.”
don’t produce something, somehow get money and put it in a zero sum game. oh thats what to do
Question:
Why would it not be considered insanity for hundreds or thousands of people to visit this blog and to read the posts from the almost always anonymous blog dogs who usually have no apparent qualifications (such as any particular sucess in real estate) and yet who post their comments?
Answer:
Unless most people are reading the blog dog’s rants purely for entertainment value then I think it is a mild form of insanity.
My grass has turned to crabgrass. The worst part is that it has changed the grass pattern and I’m no longer sure where my gold coins are buried. There are some new holes which look like gopher holes, but I suspect the IMF. They’re taking over the world, one yard at a time so that no one notices. Diabolical.
America’s Middle Class is dying
Here are the statistics to prove it:
http://www.irishcentral.com/story/ent/manhattan_diary/americas-middle-class-is-dying-and-the-stats-prove-it-99180624.html
In response to #80:
Wow, you truly are an ignorant Canadian and it is an embarassment to think you represent our nation in any way. People like you (ignorant people) are the very reason I believe our nation is in real trouble. Again, we point the finger at our neighbors to the South while thinking we’re actually correct in our facts and thinking. Americans, all the while, must think we are completely dillusional, and consequently it makes us inconsequential to them (our facts are typically WAY OFF BASE, including our statistics in many instances). In turn, you scream louder (like a four-year old little girl calling for attention) and make completely false statements, which only worsenes the matter. Again, Americans have never done a damn thing to anyone I know, yet we keep acting so anti-American and releshing in any negative “facts” we might come upon. No wonder they could give less of a rip about Canada than they already do. We only make the matter worse each year as we keep breading new “special” (yes in the retarded sense) every day.
In response to #83:
Pete, if you think the USA is a “police state,” then I am going to chop off my d*ck right now so my kids won’t be subjected to such stupidity as your’s. A statement like that is only testament to the fact your perspective is so skewed by our very own “police state” media. Our media loves to take a single scrap of bad news and skew it to “what COULD happen” situations. Well, I ate some damn good sushi last night, and I COULD shit out baby fish sometime in the future, but I sincerely doubt it would ever happen.
#223 Another Albertan
Yes, if you receive income from your US property you are required to report it to the IRS. After expense deductions you will probably owe very little or none for just one residence.
The big kicker is when you sell the house you will have to pay capital gains tax of 25% to the IRS unless you have permanent residence status and can prove it is your primary residence. You will also be required to report the capital gains to CRA.
I am not a tax expert. It is only my basic knowledge gained from living in the US for many years.
I am looking forward to Garth’s next post. It is not his style to propose financial strategies that are complicated.
In response to #116:
Of course there are abandoned communities in the U.S. Guess what?!?! It is starting to happen HERE too. Again, why the f*ck do you think our own nation won’t be facing these issues only a couple years from now? We are almost MIRRIORING the U.S. RE collapse of only a few years ago. Only, we’re acting like it isn’t actually going to happen to us. The ignorance I keep reading on this site is startling and honestly makes me ashamed to call people this stupid as my own countrymen/countrywomen.
In response to #119:
Miketheengineer, wow, another really STUPID post. Also, do you remember a little thing called the Exxon Mobil oil spill in Alaskan waters where oil hit the shore? Or, are you just too young to remember that (by the ingorance of your example, this is hopefully the case). Property values in Alaska continued upward in spite of the contamination because, although the oil is a bad thing, it does eventually clean itself up with intervention of both man and nature. Stop spreading malicious propaganda with the horrific “what ifs”
#195, “So far he is relativly unscathed having had his investments apparently restored via the stock market. ”
Stock market investors are still down substantially from levels set a decade ago, and in terms of real goods such as oil, gold, etc., stock market investors have been decimated.
So I don’t know where you get the idea that stock market investors have had their investments ‘restored’.
Nobody holds the same stocks for a decade. Your comment is misguided. — Garth
In response to #131:
Ugh, this is getting exhausting. Actually Canadians have FAR LESS expendable income than Americans do. Canadians may not have the insurance premiums, but this is because we are taxed at a much, MUCH higher rate than Americans so our government can pay for our shitty, S H I T TY healthcare. They may have premiums of $12,000 out of pocket (but this is actually deductable for them), but we lose far more than that in the additional tax we pay. Also, we have a much weaker infrastructure in general, including education system, roads, highways, traffic signals/signage, etc.
I believe by the sheer number of posts with Canadians concerning themselves with U.S. policy/politics/currency/economy (anti-American, pro-American, negative and positive) that we certainly do spend a lot of time putting our energy into them. Ask yourself why, and you’ll realize it is because we need them, warts and all. Our little world seems to revolve around every action that ensues on their side. We are overly concerned with them to the point it actually creates a case that we idolize them to some degree.
#217 bullion.bunny
Canadian Banks Leveraged 30:1….30 X more debts than assets……….the next crash will take then out.
Not according to the CBA.
.
http://www.cba.ca/contents/files/statistics/stat_banksann_db251_en.pdf
In response to #142:
ABSOLUTELY FALSE INFORMATION you speak (and I would go as far to say you are spreading a lie). What is it with the paranoid sentiments we have of the U.S. We don’t stop there with it, though. Instead, we make claims that are totally untrue and put it into writing. Where the f*ck would you possibly come up with an idea like that? I want you to back it up.
@Devore
Don’t be obtuse. The argument is not a straw man – pure capitalist regimes are very rare, and so you have to look to messes like Pinochet to see what they look like. “…cronyism, corporatism, fascism, militarism, torture, terrorism, death squads, and abuse of power” are the natural outcome of a pure capitalist society, just as they are the outcome of a pure socialist society. Mixed societies seem to perform the best and result in the happiest people. The reason is that either extreme results in the rapid emergence of an oligarchy that manipulates the entire society for its own benefit. In the end, I don’t think that the labels we apply to a society are as important as the prevalence of peace and order and the absence of oligarchy or dictatorship. Capitalism, by itself, promises *none* of these.
And please, please don’t cite the US as an example of a capitalist society, at least not until you go here:
http://en.wikipedia.org/wiki/Crop_subsidy#United_States
#217 bullion.bunny
..Actually banks’ loans are assets not debts. Other than that you’re a genius. — Garth..
Ya, and in general many of those asset valuations are being called into question.
Oh look, a shiny thing… — Garth
Number 225 Devore Says:
Incidentally, for a central bank paper money is a liability. Read the printing carefully; it says “note”. As in a promissory note, promising to deliver… something. A long time ago it was a quantity of gold.
*******************************************
Yes, a long time ago the central bank had the liability to give gold in return for paper currency.
But I don’t see how paper or electronic money is anyone’s liability these days. It’s just a medium of exchange and a short term store of value.
If you have money (say Canadian dollars) there is an entire country (even a world) full of people who will gladly give you goods and services in exchange for that paper money. (Safe in the knowledge that they can later redeem it for goods and services themselves). We will vountarily give up our goods and services in return for your cash. But we don’t gurantee any particular quantity of such goods and services. So the value of your cash in terms of goods and services can and does decline slowly over time.
Warren Buffett calls his wealth “claim checks” on goods and services.
The central bank meanwhile will be happy to exchange currency for currency but is not obligated to give you any set amount of gold, or anything other than the very same currency.
The central bank has a role in managing the supply of money and as well (and particularly) inflation and interest rates and foriegn excahnge rates. But I don’t think it is correct to say the Central Bank or the government of Canada has any liability associated with the amount of Canadian money that there is.
…Over to you now, gold nuts and currency doomers for a response…
In response to #225:
Dear Devore, actually a bank’s “reserves” or deposit base is a LIABILITY – it is NOT AN ASSET. They owe those deposits, including any interest, back to the individuals or companies that initially made them. Garth, can you PLEASE help these people?
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#175 Onemorething — Did google it. Sure looks nice from here! After watching this clip, I am tempted to take a nice vacation there!
“Did anyone notice when this blog was taken over by aliens? Other than that you’re a genius. — Garth”
In my case, I’ve taken up a second career as a shape shifter, and it is just a gorgeous experience on a hot, sunny day to turn into a large burger, covered with onions, cheese, mustard and other garnishes, put myself into a bun then eat myself and turning into a Heineken to wash myself down with after!
Y’all should try it sumtyme!
#189 Curious — Spot on! No one can serve two masters, and that is the problem at the moment.
“Lyndon LaRouche is a fruitcake. — Garth” — Possibly. Fruitcakes (covered in marzipan) are very tasty.
But again, not many seem to take a long-term view, allowing for plenty of unknowns happening along the way, into account.
Guess that is what life is for — to be on the front lines experiencing it. Malaysia, as Onemorething said, seems to be a tranquil oasis in the midst of a madhouse.
Economic Hari-Kari explained.
The children need supervision. Their lego blocks are collapsing! So much for America being a ‘free’ society.
Interesting. “More wealth has now become concentrated in the hands of the elite than in the years leading up to the stock market crash of 1929.”
Homeless in Hawaii. “Hawaii’s tourism has been far more damaged by the abuses of the TSA than by a few homeless people.” wrh.com.
Mega-Hail! Pix further down.
Science Turning the tables. “Women are sex objects and men are cash objects.” wrh.com.
#232 Gman on 07.25.10 at 1:20 pm
**************
Another post of drivel–
Disprove the data i provided
Sorry could not agree LESS about the US.. maybe NY and Boston and Chicago and some of the big players but the country is a cross roads economically. As the boomer age the production will drop and the jobs that were lost in the US will be lost for a generation or two…THE COUNTRY IS INSOLVENT PERIOD… Not only is it insolvent it is a second level insolvency… much much worse. Buy in NY if you must but unless you buy ocean front property for a song I don’t see much point in the purchase. A doubling of real estate prices. The places that have low attractive prices are worthless to Americans so how could we find them attractive. Decent places like San Fran are already off the map. If people can’t afford their homes now what will happen when the second wave of resets happen with ALT-A and Option ARMs later this year and next.
To play devil’s advocate , though, what is down will likely go up…. Garth’s basic rule of prediction … so in essence he might be right but I’ll keep my money as money right now unless I find that beachfront property for a song.
#258 InvestorsFriend (Shawn Allen) on 07.25.10 at 4:44 pm
The central bank has a role in managing the supply of money and as well (and particularly) inflation and interest rates and foriegn excahnge rates. But I don’t think it is correct to say the Central Bank or the government of Canada has any liability
*************************
Unbelivable-
The money supply is backed by exactly what then?
Gold?
The greatest asset – the power to tax. — Garth
Gman #224
“Low and behold when they approach people with their gold bars they get rejected and are asked for US $’s instead.” Did you try a coin dealer? Gold works fine in Zimbabwe.
Afghanistan war logs: Massive leak of secret files exposes truth of occupation• Hundreds of civilians killed by coalition troops
• Covert unit hunts leaders for ‘kill or capture’
• Steep rise in Taliban bomb attacks on Nato
• Read the Guardian’s full war logs investigation….
http://www.guardian.co.uk/world/2010/jul/25/afghanistan-war-logs-military-leaks
American politicians are completely out of control, they bow to corporations and openly accept bribes from lobbyists, they’re border line nut jobs, so what are the peoples options come next election, Obama or a nut job for damn sure Palin, just what are the American people supposed to do ?
The greatest asset – the power to tax. — Garth
***************
Bingo–
but–eventually-
As the Governments ability (power) to increase or even maintain tax revenues decreases-because of high unemployment and businesses not having any reason to expand and hire tax paying workers and a spend leery populace’s “ability” to avoid tax-
So goes the tax revenues along with the faith of debt buyers=Liquidity trap=Game over–
dark sad person
what am I disproving: that there is a vacancy rate in residential real estate of 8-10% and home ownership is 64-67%. That is a fact, there is no argument to be had there.
Whats’ the point other than you are stats junkie. Everybody you can always make the numbers prove any argument. Depends how you skew them. Play the game buddy.
231 Joseph – I gathered from the context that Garth was speaking of Cdn purchases of US property.
259 CT. Now consider this. If I give you $10 (cash or cheque) to hold onto, what do you have? You have the
asset, and the liability to pay me back. Your books list $10 in each column, and cancel each other out. I have an asset either by keeping the $10, or depositing it with you.
Now you lend out $9, and keep $1 “reserve”at which time you still have assets totalling $10 and the $10
liability. I thought Devore explained it all quite well.
FYI L That is Joaquin Phoenix in the above picture . Not Mel Gibson .
“Gold will never back our currency. Next? — Garth”
I agree with Garth and have a great interest in the ramifications of his statement. The real issue is not gold per se, as the currency could be backed by something else such as platinum, paladium or a certain % of rhodium @ $2300/oz.
The really interesting question is, what are the long term consequences of continuous currency debasement? If you think there are no consequences, then carry on with regularily scheduled programming. If you feel there are consequences, then start studying and thinking outside the status quo gunk presented on bubblevision as pertinent financial information.
Hello Bill @230
I found this link some time ago as I was asking myself just how much “currency” is in exisitence. Havent re-read the article but IIRC its about $4T US. Absolutely check it yourself, and then do the math using all the gold in existence (160K tons @ $1200/oz??) and – would you
believe it – there’s more gold $$ than actual printed/minted $$.
You’ve carefully qualfied your statement by noting the
creation of money through debt/credit. But what are you proposing? That I save my gold/currency until I can buy something? It wouldnt take many people saving to shut down the economy.
http://www.financialsensearchive.com/fsu/editorials/dollardaze/2009/0126.html
Thank you for all your comments, best wishes to all, may all your trades be great! I will bid you farewell.
#257 dd on 07.25.10 at 4:42 pm
Spot on brother!
#226 Devore on 07.25.10 at 12:23 pm
Thanks for taking the time to write such a great comment; I really don’t have the time or energy to get into it. Here are a few interesting books that will answer many questions for you.
Money, Bank Credit and Economic Cycles (Jesus Huerta De Soto)
Great book but a very dry read at 1000 pages, it explains banking in detail written by a University Professor in Spain.
Bulls and Bears of New York with the Crisis of 1873, and the Cause. (Matthew Hale Smith)
Also look for Professor Steve Keen on the web, great stuff.
#50 The Original Dave on 07.24.10 at 1:59 am
Dave you are right, let’s agree to disagree and call it a day. I believe that we are headed for a banking melt down in Canada. Maybe in six months, maybe in two years, will have to play it as it comes. I knew the banking mess in the U.S. was coming and sold the banks short seven months before it happened. This was the trade of my life…….thank you Bob Hoye. If you don’t get Bob’s letter, do it….its really is worth it! The market calls have been out of this world. Bob’s work is the unified theory of the financial world…….it all makes perfect sense!
#254 DaBull on 07.25.10 at 4:09 pm
Interesting article, thanks for posting it. I will read it on Monday. Sorry but I don’t trust anything coming out of the banking industry these days. If they are so smart, why did they not see 2008 coming? Keep asking why, why, why! Assets can quickly turn toxic pushing banks to raise cash to cover bad loans. I’m 100% positive that these guys have been pushing lots of crap under the rug. We shall see and only time will tell.
Number 263 Dark Sad Person was apparently yet further darkened and sadded by my post 258 which claimed that paper money is not backed by Gold, and is not a liability of the central bank or of the government.
Dark and futher saddened wanted to know what then backs the currency.
Garth offered:
The greatest asset – the power to tax. — Garth
I must agree, the power to tax is the greatest asset and ultimately backs a county’s liabilities.
As far as paper currency, I would say no one in particular backs it but we all collectively back it by using as a medium of exchange. We all gladly accept it and yearn for more of it. It’s a matter of having confidence that the value of our money will not plummet due to inflation or some crisis of confidence.
The central bank protects the integrity and confidence in our currency.
But it’s no one’s liability and no one entity really backs it in my opinion. Again we all collectively back it.
Paper currency doomers… have it, your rebuttal please.
Re #258
The central bank has a role in managing the supply of money and as well (and particularly) inflation and interest rates and foriegn excahnge rates. But I don’t think it is correct to say the Central Bank or the government of Canada has any liability associated with the amount of Canadian money that there is.
…Over to you now, gold nuts and currency doomers for a response…
——————————————————————-
WILD; Who is responsible then? With your well thought out statement could you answer that?
So now that our economy is going into the toilet no one is responsible ?
Thanks for the clarification.
Your mom must be proud of you, being a FINACIAL ADVISOR ( if thats what you are)
You must instill alot of confidence in your clients, if you still have any , once they read you blog.
So Garth, this is not the time to borrow against your house and invest in the stock market?
Best, Stephen.
Sell you house first. — Garth