In the darkness, I smile

Worth sharing with you. This email arrived Saturday. — Garth

Hi Garth, I’m writing to you from one of the real estate insanity centers in this country, Ft. Mac. As a follower of your blog I have noticed your frustration with the average Canadian’s reluctance to “get it”. I’m writing to you today to tell you you’re not alone.

I won’t bore you with personal details on how I got here, let’s just say I’m a northern BC economic refugee. We are many. I had the skills to get here and as such am one of the economically blessed, my children will not want. I started to read your blog and bought all your books starting in October of 2009. That month saw the end of 16 years of steady employment and a stable family life evaporate in an instant with a letter of permanent closure. In this too across this country, we are many.

I came here to this place only to be shocked by the insulation of the locals that have never had to face what the Chinese call “interesting times”. The housing market here is artificially supported by company housing subsidies and dangerously cheap mortgage rates. I arrived here with many new people from the economic wastelands of central Canada, the west coast, the east coast. I spoke to many of them and pointed them to your blog and your books, urging them to carefully consider their economic choices at present and in the future. Most would not listen, buying in to a market at top prices just to reach that middle class comfy zone that I have learned can be destroyed in an instant. However, a very few others agreed with me and rent here, carefully investing their extra funds in to the financial vehicles that you have recommended.

I have learned that you can’t convince most people of an alternate economic path that will lead to security and prosperity like what you are suggesting in your books and blog. However you can convince a very few. You have to be satisfied with that.

I would like to thank you personally for your insight and efforts. As I write, my mortgage free house in northern BC is being assessed for a HELOC loan. The TFSA’s for myself and my wife will be filled with sector ETF’s. I have an investerline account that will be filled with tax hedged investments that I will add to every month faithfully. Thanks to you, it’s now possible to live comfortably in old age and give my children a fighting chance in a world ruled by inept financial management. I’m still stunned by the short sighted policies of this country that encourages real estate speculation at the expense of the greater economy.

Keep on writing Garth and keep the faith. You might not reach all the people, but I listened and acted. I suspect that you know yourself that soon enough those of us that think this way will be many rather than few. I agree with you that the wealth destruction of an entire generation is imminent. So as I struggle in the biting cold of another –32 degree night to keep that oil going I look south, and in the darkness I smile.


Jim

119 comments ↓

#1 sk76driver on 11.27.10 at 10:36 pm

You mean it ain’t just me????

#2 Investorfriends mom on 11.27.10 at 10:41 pm

It sounds to me like Jimmy is a hypocrite, criticizing people in FT.Mac for buying into RE while he owns an overpriced home in an equally delusional place, BC. But after all BC is different, just ask DA.

#3 Wicked as it seems on 11.27.10 at 10:50 pm

One can only imagine the hell it must be to live and work in oilsands country, your true quality of life is lost to being a slave to the machine. And to loose your wealth to one misguided asset purchase in this environment would be a terminal hit. Location ,location think palm trees and warm beezes.

#4 T.O. Bubble Boy on 11.27.10 at 11:10 pm

Here’s a dilemma for Fort McMurray residents:

Let’s say you are looking to have real estate holdings of $1.4M.

Do you buy 2 single family homes for $700,000 each, or 1 golf course on kijiji?

http://fortmcmurray.kijiji.ca/c-housing-housing-for-sale-WANDERING-RIVER-GOLF-COURSE-W0QQAdIdZ185098065

#5 Bill Grable on 11.27.10 at 11:31 pm

Ah life, ain’t it grand. Minus 32, but at least this gent has something. Many will rue the day that they were NOT reading Mr. Turner. Many are in deep water already and only these baloney rates are keeping their wee nose above the waterline.
Not much longer, Mr. Smee.

Nice letter.

#6 Debt Free in the U.S. on 11.27.10 at 11:35 pm

Wonderful column, and proof there is at least one smart investor, home owner in B.C. though I am certain there are more.
Yes, the same sanity is needed here in the U.S. to keep from making unwise investments, though many have already made the unwise expensive home purchases. Some insist on making unwise Gold, and commodity purchases with too high a portion of their “Investible Assets” They will be the losers in the investment game, as were the no money down, interest only home buyers of yore. They were “betting” on refinancing their home, AFTER it had appreciated in value….never happened …the market turned on them. So, financially they died.

Tomorrow is still not here, but wait, you can see & hear it approach.

#7 Kevin on 11.27.10 at 11:46 pm

Saskatoon has a bunch of units being pitched as “affordable housing” only because of cheap interest rates, government and city grants for a down payment.

Subprime is alive and well in Saskatoon
http://saskatoonhousingbubble.blogspot.com/2010/11/subprime-is-alive-and-well-in-saskatoon.html

“Tenants Own Your Home For Less Than Rent! Free Downpayment Available Through Government Grants. No Strings Attached. Minimum income of $35,000. Max income of $52,000 ( with children) Max income of $44,500 ( without children). Affordably priced from $224,900. Low monthly payments from $1170 a month. At last, affordable housing is here.”

The last sentence should say ” at last, subprime lending is here.” These people will definitely be house poor and it baffles me to think that the Government and the City of Saskatoon is encouraging this so called dream of home ownership.

#8 T.O. Bubble Boy on 11.27.10 at 11:48 pm

Oh, and some references for my “$700,000 single family home” comment:

http://www.realtor.ca/propertyDetails.aspx?propertyId=10068635&PidKey=1221278736

http://www.realtor.ca/propertyDetails.aspx?propertyId=10119692&PidKey=-1746801030

http://www.realtor.ca/propertyDetails.aspx?propertyId=10023771&PidKey=1061581756

Company housing subsidies or not, it seems absolutely crazy that a basic 3-bdrm / 2-bath burbs-style home is $715k.

Then again, you find the same thing in burbs like Milton, ON, and the income levels aren’t nearly as high… here’s a $650k burbs house, right next to no oil sands:

http://www.realtor.ca/propertyDetails.aspx?propertyId=10092308&PidKey=-1654485228

#9 Aussie Roy on 11.27.10 at 11:51 pm

What the writer is describing is the difference between leaders and followers. One using their own smarts and others who copy what they consider to be accepted practice by the majority.

The truth is not a democratic process. History is littered with the majority having a false belief earth is flat, tulip bulbs never go down, south seas company will never go broke, etc, etc. I suggest people read some economic history, it soon becomes evident manias have been with us since almost the beggining of time. Credit expansions have caused havoc throughout time whether it was 17th century gold smiths expanding credit through the use of paper gold receipts (the start of fractional reserve banking), yes everytime it was said this time its different. Whether most people wake up before it becomes obvious that house prices are influenced by the willingness of banks to extend credit is not important as it always become obvious when its too late for most.

As I attempted to point out to DA. Whether people like it or not at some stage in the future interest rates will be much higher, what then for current prices. At what rental return would one be willing to buy if rates where 10%, how much would banks lend in this enviroment. Where would the price to income ratio settle. Well I will let you do the math but its no where near the current ratio. Look at previous statements made here “the gap between rental return and interest paid will narrow when rates rise” total rubbish when you do the math but most people wont and dont do the math. This doesnt stop them from building their whole future price predictions on this non existant narrowing of yields. Yes that means you DA. No recognition of this just some good spin in response. In your defence maybe you still dont get what I’m saying, maybe math wasnt a strong subject for you but trust me we are all not math illiterate.

So for those who believe housing is a great long term investment have no foresight, very little ability to think about the future and have fallen for the hype. Do the math people dont just be a parrot “house prices will only ever rise because of (insert reason)”. Its a global credit bubble nothing more nothing less.

Aussie Update

http://www.rebonline.com.au/breaking-news/3483-concerns-voiced-over-property-valuations

http://www.apimagazine.com.au/api-online/news/2010/11/government-fails-to-regulate-property-investment-industry?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+API_Property_News+%28Australian+Property+News%29

http://www.news.com.au/money/money-matters/boost-in-credit-card-debt-trap-victims/story-e6frfmd9-1225962144684

http://www.news.com.au/money/money-matters/christmas-to-weigh-families-down-with-debt/story-e6frfmd9-1225961775820

http://media.brisbanetimes.com.au/property/domain/property-you-cant-always-get-what-you-want-2065956.html

#10 hobbygirl on 11.27.10 at 11:57 pm

That’s my fav pic, so cuddly-wuddly! Way better than fat people doing dumb things.

For what it’s worth, I give you some of my valuable time each day to read your blog and books whenever a new one comes out. The debates are entertaining and thought provoking.

I wouldn’t be discouraged when someone disagrees with you, like the saying goes – if two people in a room agree on everything, then someone’s not thinking.

You don’t want to be followed around by a bunch of morons would you?

#11 JO on 11.28.10 at 12:02 am

Way to go Jimmy…glad to see someone wake up and stay away from the sheep..your plan sounds good…the only major risk, beyond the unlikely complete failure of our financial system (we will likely have challenges in a couple of yrs but not full blown Ireland type failure IMO), is your friendly gov’t who will dream up ways to come after savers via taxes, fees, and inflation to eat away the fruits of your prudence. Fear not those Muslim radicals 10 K away who have a grade 2 education and hide in caves wearing sandals..it’s the boys in Ottawa wearing 5K suits you need to watch.

Alberta is probably going to do relatively better than the rest of Canada…if it weren’t the wicked winters, I would look into moving there.

Stick to the plan…and hope Jimmy F in Ottawa doesn’t lick his fingers in anticipation of coming after what you’re socking away.
JO

#12 Joseph [Original] on 11.28.10 at 12:13 am

#99 Ben got it right,

“What’s all this crap about Pensions, RRSP’s, ETF’s, Bonds, etc …I look at my retired parents and they don’t spend shit nor do they want to. ”

The last thing older folks want in their 60′s and 70′s is to embark on an investment portfolio to keep them up at nights wondering what direction it is headed. But let’s face it, this is where the majority of the wealth is, but the time for these folks being interested in investment portfolios has long since come and gone. Getting the seniors to bite and transfer wealth into the hands of financial consultants is going to go nowhere.

The younger adherents on this blog may have the instinct to do so, but don’t have the money. I suspect when this age group reaches age 65 and finally have their own wealthy nest egg, they too will not want to touch it. This reality is played out in my local church. Every time there is a major need, the pastors have now said openly that they turn to the elderly folks in the church for help because they have all the money. When we needed a new church to be built for a price tag of $12,000,000, the younger and middle class earners donated squat, the elderly folks stepped up to the plate and paid off the $12 Million cost of the building in two years time. They didn’t need us, and I suspect they don’t need financial consultants either.

But I will also close by saying the wealth that the older generation managed to acquire is exactly how a previous blogger called it; namely living in a time period (1977-1991) where they were earning 10 to 15 percent interest for a decade and a half. My banker told me that in the last number of years, a large number of seniors had their 25 year locked-in GICs mature between 2006 and 2008, paying up to 18% compounded interest annually. Those old folks who invested their money wisely and didn’t piss it away don’t need financial consultants to try and tell them how they can make a better rate of return. They have plenty.

There were no 25-year GICs. What a load. — Garth

#13 JB on 11.28.10 at 12:22 am

“As I write, my mortgage free house in northern BC is being assessed for a HELOC loan.”

Guy is getting a HELOC to go shopping for stocks, ETF’s, etc.

I personally find it stressful to use the house’s equity for stocks. Even if the interest is tax-deductible. To make it worse, the TSX is moving up/down like a yo-yo. How can people sleep at night?

#14 bridgepigeon on 11.28.10 at 12:31 am

amen brother

#15 Crash Callaway on 11.28.10 at 12:33 am

Great email from Ft.Mac Jim.
One smart dude whose outrunning the finite amount of sand in the hourglass.

#16 Cory on 11.28.10 at 12:42 am

I agree with Grth on alot of things but ETF’s are definitely not one of them. They are underperformers compared to investing in individual companies. All it takes is to perform some chart comparisons and it is very clear.

Will this be posted?

Why would I not post such a dumb comment? — Garth

#17 squidly77 on 11.28.10 at 12:43 am

Fort McMurray is busted, it is home to the greediest of the greedy, they will now reap what they have sown.

I still enjoy (suffer) with a well paying job, the transplants suffer more, I get to fly out every ten days, while the transplants experience Hotel California syndrome, due to massive real estate debts, they can never leave.

Its so damned cold up there.

#18 dark sad person on 11.28.10 at 1:15 am

Fort Mac–

Colder then a gut shot bitch wolf dog with 9 sucking pups-dragging a #4 trap uphill in the dead of winter in the middle of a snowstorm with a mouthful of porcupine quills- (tom waitts)

Lamentation to the sky coyote of the great north-

Old black Raven-
I’ve heard it said-
That you live off the entrails-
Of the dead-
You love to gorge on rotting bowel-
Which makes you unfit-
For table fowl-
With wings that could carry you-far and wide-
Why is it-you choose to reside-
With me-in this frozen land of death-
Is it cuz-no one else-
Can stand your breath?

#19 virginhomebuyer on 11.28.10 at 1:39 am

“As I write, my mortgage free house in northern BC is being assessed for a HELOC loan.”

Guy is getting a HELOC to go shopping for stocks, ETF’s, etc.

I personally find it stressful to use the house’s equity for stocks. Even if the interest is tax-deductible. To make it worse, the TSX is moving up/down like a yo-yo. How can people sleep at night?

———————————————————-

Sure, great advice to use the equity in your property to invest in stocks, especially when the market crashes like it did in 2008.

#20 Larry on 11.28.10 at 1:52 am

Townhouse across the street dropped 10K today. Canada your time is coming.

#21 Nostradamus Le Mad Vlad on 11.28.10 at 1:58 am

-
One of the best posts yet. Not overly hard to take a common-sense approach to life. Nothing like having a bucketful of plain old, honest-to-goodness truth taken like medicine.

Main thing is the immediate family understands how to live within their means. Figure those that don’t know are the sheeples who don’t come here regularly.
*
1:36 clip Mike The Engineer — Nov. 8 may well have been a tipping point, considering all the jargon going on now between the Koreas. Remember the unidentified missile? No sound, but read the type — it links a lot of events together.

The Big Lie in selling a war with North Korea (and thus China) to everyone.

Lead pic is good (and accurate).

Rigged? Investors think so.

Moolah What’s a little debt between friends?

Dec. 7 Bank Run “The simple act of removing all of our money from the banks, and doing so in mass on the same day — December 7th — would put a huge scare in the financial barons.” Akin to Gandhi’s non-violent resistance?

History rhymes and repeats. The US, then Canada with the G20. We’re being dumbed down. Also — Ridding ourselves from big business.

Privatization of Cdn. Hydro? No doubt as the NAU / SPP are quietly bought in.

Smells like the US banking system all over again, except in India.

Ratings Not movie ratings, either.

#22 Burnt Norton on 11.28.10 at 2:06 am

Hey DA, here’s a little example of integrity in business that I encountered yesterday:

Although somewhat unusual for November in Vancouver, I needed to fire up my gas fireplace the other day, only the remote controller wasn’t working. Replaced the battery, no dice. So, I called a few heating places to see if anyone stocked a replacement controller. Nope. Then I called this small heating outfit across town and the guy took 15 minutes with me on the phone, walking me through all the potential problems. It turned out that there’s a little remote controller receiver inside the fireplace and that was what needed new batteries.

So this guy, in a crappy economy, who could easily have charged me the flat $150 service call fee, plus or minus any charges for parts and labor (depending on how much putzing around and “oh well this and that will have to be replaced” he could have come up with) just plain did the right thing and now 4 AA batteries later we’re both happy, although he is out by 15 minutes of his time.

DA, you boast about being an ethical & altruistic realtor, so why get all excited just because I called out some lame ass who posted about how great it will be to declare bankruptcy and keep all the proceeds of his credit-gone-sour?

Seems like maybe I touched a nerve, n’est ce pas?

#23 Just Buy! BoC free money on 11.28.10 at 2:07 am

If anyone is thinking of buying just do not put any of your money down. Like Peter Schiff told Americans 2005-06) if they do choose to buy (which he was against) they should not use their money. If you are thinking of buying now you should only use credit and none of your money. I`ve worked hard for my money like everyone else so not going to gamble with my money. Why should I care about going bankrupt when no one else does. Been waiting and took the jump which most likely means it`s the top. If the BoC wants to screw me over then why can`t I screw then over. Buy a home on credit and save your money (outside of a bank) and if worse comes to worse go bankrupt and leave Canada. Can you imagine how empty Brampton would be if those immigrants with no money go bankrupt. If the housing crash happens in Canada you will see hundreds of thousand of immigrant leave. Just buy a home but not with your money. Thanks mark for the free money.

#24 Moneta on 11.28.10 at 2:09 am

But I will also close by saying the wealth that the older generation managed to acquire is exactly how a previous blogger called it
———-
My grandfather had a grade 7. He retired in 1981 and died 2 years ago at age 93. In 1982, he took half in savings and invested them. Took the other half and bought 2 annuities (just in case 1 co. went bankrupt). Participating.

1. He contributed probably less than 15 years and got more than 25 years of government benefits. My grandmother is now 87 and still getting hers.

2. He got his annuities at peak interest rates.

3. When insurance companies demutualized he got shares, basically benefitting from 100 years of over reserving.

Over the least 2 decades, we’ve been getting returns of 8-10% with inflation of 2-3% gives. Real returns of 5-8% are an aberration in a mature economy.

#25 Agio on 11.28.10 at 2:14 am

Jim,
As an Albertan I had a warm fuzzy feeling that you might’ve felt raising the temp up in Mac until I read this:

“As I write, my mortgage free house in northern BC is being assessed for a HELOC loan.”

#26 Taking Stock on 11.28.10 at 2:39 am

You’re right JB. Our home is paid off and we will keep it that way. We are retired and living off a pension that was very healthy 3 years ago. I think the majority of retirees caught in the crash are doing exactly the opposite now. It’s not the little guy that runs the market. Globalization has changed everything!

#27 Jody on 11.28.10 at 2:48 am

http://www.lewrockwell.com/rep/murphys-laws-of-teotwawki.html

I like number 31, Hahahaha!

#28 Marcus Aurelius on 11.28.10 at 2:51 am

#9 Aussie Roy – “It’s a global credit bubble nothing more nothing less.”

You’ve hit the nail on the head with that comment. As someone with a PhD in mathematics (and therefore unable to correctly count change at the checkout!) I am amazed how difficult it is for people to do the simple calculations with their money and investments. It goes to show what emotional creatures we really are.

Thanks, Aussie Roy, for coming to this blog. I read this daily, and when there are almost 200 comments I often skip down until I see your handle.

#29 Vik on 11.28.10 at 2:58 am

The BBC on squirrel stew -

http://www.bbc.co.uk/news/world-us-canada-11834184

#30 dark sad person on 11.28.10 at 2:58 am

LMNV–

Iceland is better off than Ireland.

************
Yes-
In fact Iceland is better off then all of us-
The Icelanders said FU IMF and today as tough as it is-the people and their kids are looking ahead to the future-with no slime ball Bankers debt collar hanging from their neck-

Love the People who have the guts to say FU to the war mongering greedy Neo-cons and their puppet Politicians and by doing so-have given the future generations a chance and some hope for a fair shot in life-
Go Iceland!

#31 Joseph on 11.28.10 at 3:13 am

I find this letter quite ironic.

If Garth allowed us to scan over all his posts, he on multiple occasions actually has referred to Fort Mac as being different (no sarcasm).

To the guy who says should you buy two houses in Fort Mac or a Golf Course…

Are you dumb or something? Buy the houses in Fort Mac in a heart beat. Garth is bang on when he talks about oil prices going up over $200. Its almost a foregone conclusion. I’ve been a believer in Peak Oil since at least 2005 and I’ve found the shift in the opinion of the IEA striking.

Garth will know what I’m talking about. They have been ferocious opponents of Peak Oil for as long as I can remember, along with Yergin at CERA.

In the last year or so there has been a marked shift in their tone. They are increasingly acknowledging that conventional light crude production peaked in 2006. Twenty five years from now the oil fields where we get 2/3 of our oil won’t even be producing anymore. And we’re NOT finding the fields to replace them. If Gawar in Saudi peaks then the world peaks and oil prices are going higher.

Synthetics are the only answer, and that mean oil sands. As Alberta production over the next 10-15 years approaches 5 million bbls/day and oil prices are over $200, what do you think that will mean to Fort Mac’s economy (and to a lesser extent, but still significant the rest of the province).

Do some calculations people, say $50 out of $200 are taken in royalties by the province, that will equal almost $20,000 PER PERSON. We won’t even need income taxes let alone sales taxes in Alberta.

Central Canada is done, give it up. Manufacturing is dead/dying. Saskatchewan will do well, B.C. ok, Manitoba ok, but get the heck out of Ontario and Quebec. The Maritimes will continue to be the debacle that it is.

Not being an arrogant Albertan. There just happens to be oil here.

#32 Patz on 11.28.10 at 3:53 am

Sometimes small things aggregate into bigger ones. Was out to dinner at a relatives beautifully located condo in dt Vancouver tonight. AFAIK his unit’s paid for and he’s enjoyed a substantial appreciation in the past 12 years. The condo was built by the developer with the reputation for quality in the lower mainland; no leaky condos on his resume.

That’s the good news. The bad news is that the building envelope is beginning to deteriorate and they’ve had a couple of large assessments and he’s expecting more. I think they can handle it but it’s not what you want in the 5 to 10 years before retirement. Maintenance costs will rise; taxes fees and other stuff will get more expensive. And as a 13 year old building it lacks the gloss of the newer ones, hurting resale value.

There are probably thousands in similar situations in this city. Some people can handle it, lots won’t. It’s just another nail, especially if you’re a boomer.

#33 Deliverator on 11.28.10 at 4:05 am

It sounds to me like Jimmy is a hypocrite, criticizing people in FT.Mac for buying into RE while he owns an overpriced home in an equally delusional place, BC. But after all BC is different, just ask DA.

Actually, it sounds to us like you lack some reading comprehension, or you would have noted the part where Jimmy mentioned that as he wrote his “… mortgage free house in northern BC [was] being assessed for a HELOC loan.”

That’s Garth’s advice to those who own their homes outright, repeated many times on this blog.

#34 Timing is Everything on 11.28.10 at 4:17 am

#13 JB said – “How can people sleep at night?”

Zopiclone…Got pharma?

#35 Dade on 11.28.10 at 4:30 am

Great letter and keep trying!

I’ve moved out of GICs and into a diversified portfolio of equities and income funds. I’ve also initiated the move of my TFSA account to an investment brokerage. A couple of months ago I found a brand new condo renting a couple blocks from my home in Toronto for 300 less than I was paying and using the money to accelerate debt repayment.

Garth’s advice reminds me of what I learned when I lost 35lbs. No magic pills or crazy diet is necessary, just a sensible diet, exercise, a little patience and persistence.

I’ve brought up this subject with my friends. Most have substantial savings hidden in mattresses (or equivalent). Some followed the advice of their banker and invested in mutual funds outside of any tax shelters and also have TFSA savings accounts. One has been bitten by over-contribution fees for not understanding how the accounts work and is now fearful of them.

My friends who own (mortgage) their home do have some equity, but also substantial debt in their HELOC from renovations. Every one of them wants to buy, or already has, a second property to rent out as an investment. A discussion about diversifying into anything but GICs is heresy. Garth is wrong about real estate: this isn’t lust, this is dogma.

Meanwhile in Alberta, my boomer parents are working themselves to death and aiming for bankruptcy. They are self employed with no RRSPs or material savings. The bank allowed them to refinance a large amount of LOC and credit card debt due to a harsh couple of years. They own a house, a large collection of industrial equipment and commercial property. The house is worth far more than they paid, and far larger than they need. So you can guess that they find the idea of selling the house offensive, investing in anything outside of real estate and CSBs terrifying, but they are are trying to figure out a way to buy more property.

Thank you Garth! Your book and this blog have been a welcome oasis in a world filled with fear and ignorance.

#36 Thetruth on 11.28.10 at 6:09 am

POLL

Average SFH price in 2020?? If 2010 base is 100.

Vancouver 120

Calgary 105

Toronto 125

Montreal 108

Predictions??

#37 Europa on 11.28.10 at 8:11 am

#13 JB “As I write, my mortgage free house in northern BC is being assessed for a HELOC loan.” …”Guy is getting a HELOC to go shopping for stocks, ETF’s, etc.”

I agree 100% with you JB, if Jim “Bets the House” in the stock market, then well, there is a reason this financial expression is over 100 years old:

“NEVER BET THE FARM/HOUSE”

HELOC on the house to bet in the stock markets? Must be the oil sands fumes.

— 25 year GIC

I found BMO sells a 20 year GIC today:

BMO Guaranteed Investment Certificate (GIC)
6 months to 20 years

http://www4.bmo.com/termproducts/navigator/0,4739,35649_25138242,00.html

but I assume you have to ask for it specially as rates are not listed. So a 25 year GIC in the 70′s is possible, why not. You could also get a GIC for 17% as well, something a person today would say was impossible.

#38 Love this Blog on 11.28.10 at 9:07 am

Asdiscouraging as it must get, I hope Jim’s e-mail keeps inspiring you to do what you do Garth.

#39 Brian1 on 11.28.10 at 9:17 am

My mistake. Yes, bonds are debt and preferreds are equity. Thanks Garth.
I have an idea for those who were able to find a greater fool to exonerate themselves from guilt. After the deal is done send your victims some copies of Garth’s books and explain in private your real reason for selling. I say in private in a public place so as to avoid any legal ramifications.

#40 squidly77 on 11.28.10 at 9:22 am

Alberta is one insane place to live in. I have better predictive talents than Garth. Home prices must immediately cut by 50% in Alberta NOW! Fort mac is a joke. I want all new home owners to be under water and to default. that way my 2 boys can buy a home.my boys are renters now. they need a nice condo by the bow for $75.000 tops. like back in 1975: only when prices were sustain.

#41 bigrider on 11.28.10 at 9:36 am

We pay more for housing here in Canada than our U.S counterparts. We pay more for everything from fuel to identical consumer goods like cars ,cellularl, travel and on and on.
The great ripoff of Canadians continues.

#42 BrianT on 11.28.10 at 9:45 am

#31Joseph-Oil depletion is interesting-you mention Peak Oil to the average person and either their eyes glaze over or they mumble Conspiracy Theory. The usual response is “THEY will figure out something”, and the understanding of the strong link between oil supply growth and industrial growth just isn’t there.

#43 BL on 11.28.10 at 9:56 am

http://www.saskatoon.ca/DEPARTMENTS/Community%20Services/PlanningDevelopment/NeighbourhoodPlanning/Housing/Pages/MortgageFlexibilitiesSupportProgram.aspx

Good link. Here’s a Canadian city using tax money to encourage no-money-down home ownership. This does not end well. — Garth

#44 Aussie Roy on 11.28.10 at 10:05 am

20 Marcus Aurelius on 11.28.10 at 2:51 am

Thank you, I was kinda hopeing the Aussie update thing didnt bore too many. What I find fascinating is how everyone can see what happened in the US and other countries and despite all the “things” in common, cheap interest rates, the buying mania, the historically high appreciation over the last few years, squeezed rental yields and the list goes on. Most cling to the differences, whether they are location, cultural or some such other “special thing”. Our countries have been lucky so far. I just wish some people would crunch some numbers with various interest rates to see for themselves that current prices are just not sustainable once you reach a certain point. Its all about how many years annual income it takes to buy a house, I must say Garths comments on this subject was the reason I first started reading this blog. Ah someone that gets it….

28 Thetruth on 11.28.10 at 6:09 am

Doing a bit of fishing are you. Well how about you look at average household incomes for each of these cities, average rental yields and of course current price. Now do the same if interest rates where 10% today. Once you have done this “price risk assessment” convience the unwashed house prices are rock solid and prices aren’t driven by low interest rates. Its all about holding costs and that my friend is determined by, you guessed it interest rates.

Sorry but I dont do predictions

#45 jman on 11.28.10 at 10:07 am

I agree with those who are hesitant to leverage their home equity to build a portfolio. While it is good for diversification and I agree with owning things that provide a yield, it’s all about risk tolerance and comfort level. We just cannot do it. In fact we set up a second LOC, this one joint, last summer. The banker suggested a HELOC which I rejected due partly to the fees but mostly because it would have only saved us 3/4%. So I said why would we put the house at risk for a max saving of $750 per year. We risk the potential $750. Plus we don’t intend to use it and have not We’re debt averse and build with cash. Yes, we’re giving up potential gains by not using leverage as a wealth building tool but we cab sleep and it’s great not to be owing anyone. Just wish we could tax shelter more.

Your comments go to the heart of the issue: the misinterpretation of risk. The risk most people reading this blog face is running out of money when they most need it, at the end of their lives. Be aware your irrational fear of losing money earlier can yield the worst possible consequences. — Garth

#46 Devil's Advocate on 11.28.10 at 11:06 am

#9 Aussie Roy

Are you suggesting that as interest rates rise the rental return to the landlord falls and they can not possibly keep up in order to maintain the return? Because if that is what you are saying of course you will get no objection from me. Even if you buy the revenue property free and clear with no mortgage you must consider prevailing interest rates in the opportunity cost of the money you have invested.

This is part of that supply/demand thing Roy… It is a one of the catalysts of a market ”SHIFT”… ”SHIFT happens”. When it does people react; landlords increase rents within the maximum tolerance of the Residential Tenancy Act while the tenant is resident and when the tenant moves exorbitantly so to play catch up. And if they can not catch up they dispose of the properties to mitigate losses.

Yes sometimes foolish people enter the landlord game and they fail. But overall Roy you must admit if there is no financial incentive to buy and rent out a property there will be no supply of the product… It’s a supply/demand thing. Don’t get caught on the finer irrelevant nuances. We understand what you are talking about… you are splitting hairs to create a silly trivial argument.

People need houses Roy… Your God did not create enough caves for this many people. Who’d have figured? Approximate world population one hundred years ago 1.5 billion world population today 7 billion. Do the math Roy, do the math…

Of course our domestic growths don’t come near mirring that of China or India… do you think that means the rampant growth of those populations will never impact that of our own? Whether we invite them or they come by some other motivation eventually they will. It’s not that big a planet Roy and getting a whole lot smaller by the day.

You think “housing” is the issue Roy… far from it my friend… “Housing issues” are but a symptom of the real issue.

In the meantime I’ve got a life to live and it makes sense to me that my chosen vocation as REALTOR/Landlord will be a long lasting one as the rest of you are busy pumping more and more demand out of those factory uteruses. Pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop.

Hey where the hell is Dan when you need him Dan I think you were on to something!, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop.

Do you honestly see any end to the demand? I do… but we don’t really want to talk about our ultimate and unavoidable destiny do we? It’s unavoidable for “it is intellectually dishonest to speak of environmentalism without discussing population control” War, famine, desease, or a black swan meteor… pick your poison.

So don’t give me any ultruistic crap about this or that. We’re all in this together none more irresponsible than the other. We are each just like every other living thing on this planet; living a life and then dying. While we are, apparently, at the top of the food chain, our placement there is relatively short lived as there are checks and balances which prohibit any species from reigning too long within the finite constraints of their limited environment.

And that folks is my “happy thought” for today… if you think about it… it is a happy thought… GET OUT AND ENJOY YOUR MISERABLE LIVES

#47 Devil's Advocate on 11.28.10 at 11:14 am

#23 Just Buy! BoC free money on 11.28.10 at 2:07 amIf anyone is thinking of buying just do not put any of your money down. Like Peter Schiff told Americans 2005-06) if they do choose to buy (which he was against) they should not use their money. If you are thinking of buying now you should only use credit and none of your money. I`ve worked hard for my money like everyone else so not going to gamble with my money. Why should I care about going bankrupt when no one else does. Been waiting and took the jump which most likely means it`s the top. If the BoC wants to screw me over then why can`t I screw then over. Buy a home on credit and save your money (outside of a bank) and if worse comes to worse go bankrupt and leave Canada. Can you imagine how empty Brampton would be if those immigrants with no money go bankrupt. If the housing crash happens in Canada you will see hundreds of thousand of immigrant leave. Just buy a home but not with your money. Thanks mark for the free money.

Hey… at least hes got a plan but more than that the guy is happy!. And really who are you to argue with that. It’s his life and he is happy. Heck, he even admits he “took the jump which most likely means it (the real estate market) is at the top”.

You could wait forever for the timing to be just right.

Life is what happens when you are making plans for the future.

Nobody is right and no body is wrong. “Take a position and defend it… it will make you smarter” S. Goodin (today)

#48 Blitzkrieg on 11.28.10 at 11:21 am

Cory,

You must be referring to double and triple leveraged ETF’s not designed for holding rather short term trading. Typical ETFs are designed to mirror an index/sector and they tend to diversify risks by investing in 30-50 companies within a given sector. Low fees add more benefits

#49 Investorfriends mom on 11.28.10 at 11:34 am

Delivarator,

Actually, you need to start thinking and quit assuming, mortgage free or not, he still owns and overpriced shack in a delusional place, hence; he is a hypocrite, that was the point, hopefully you got it this time around.

Some people spend decades by scraping by to pay their house off through low wages, why would they risk their HOME in the casino through a heloc? The point again, its not for everyone as you suggest through the voice of Garth.

“Why would they risk their HOME in the casino through a heloc?” Most people have real estate equity and virtually no liquid assets. That makes them not only undiversified and extremely prone to market risk, but virtually ensures they will have inadequate retirement income. The attitude so prevalent in the question you pose above will be the financial death of our society. By defining anything non-real estate as fraught with risk you have pretty much sealed your own fate. Good luck. You need it. — Garth

#50 Devil's Advocate on 11.28.10 at 11:37 am

#109 Burnt Norton on 11.27.10 at 10:22 pm
#102 Devil’s Advocate on 11.27.10 at 8:53 pm
Hey DA, good question bud. Why do I care?
I care because it’s worth me spending a little of my valuable time to suggest to anyone interested in reading that, in the end, for pretty much everyone, the accumulation of material wealth AT THE EXPENSE of values like honesty and integrity will likely lead them away, rather than towards certain goals espoused as worthy in this blog, namely: freedom, happiness and satisfaction.

#110 Burnt Norton on 11.27.10 at 10:34 pm
#102 Devil’s Advocate on 11.27.10 at 8:53 pm
(prev post should read “away from…”)
Hey DA, I also care because I’ll be one of the sucker taxpayers who will be footing the bill for the dufus defaulters. You’re welcome.

It starts with someone telling off another because the other is not living a life the teller thinks they ought to. Yet the other is merely taking advantage of a system, all-be-it poorly thought out, to their best benefit. If it is indeed a “poorly thought out system” and enough take advantage of it – it will then become apparent that it needs fixing and it will be fixed. In the meantime who are they to criticize they who use what has been built for all perceived public good?

But I digress… my point is it starts with some telling others how to live and escalates from there to some forcing others to live a certain way not doing this or doing that.

Seat belts, helmets, lawn darts… pretty soon your going to have to wear a bubble wrap suit before they will let you enter a bank.

Hey I got news for ya… stupidity reduces stupid people and I do believe we are all in agreement that if there is one thing we need fewer of it is people and we might as well start with the stupid ones. So STOP protecting an endangered species no one cares about. Bring back lawn darts!

#51 jess on 11.28.10 at 11:46 am

…”According to court documents and statements made in court, Chatfield pleaded guilty to filing a false tax return for 2003 in which he failed to report that he had an interest in or a signature authority over a Swiss financial account at UBS. He also failed to report income earned on this UBS Swiss bank account. In or about 2000, with the assistance of a UBS banker, Chatfield opened a bank account at UBS Bahamas Ltd., in the name of nominee entity Alder West. Chatfield deposited into the account approximately $900,000 in untaxed securities and cash that he received in 2000 from his consulting work, which included advising private companies seeking to go public.

In August 2002, Chatfield closed the Alder West account and with the assistance of his UBS banker and others, formed Iberia West Ltd., a Bahamian nominee entity. Chatfield then opened a new Swiss account at UBS in the name of Iberia West and transferred into that account securities and cash previously held at UBS Bahamas Ltd. In August 2004, Chatfield closed his Iberia West account and transferred all remaining assets to an account at another large global Swiss bank headquartered in Zurich, Switzerland, also held in the name of the nominee entity Iberia West. In 2008, this other Swiss bank told Chatfield that it was closing all accounts held by U.S. taxpayers. Chatfield closed this account in 2008.

Chatfield admitted to filing false tax returns from 2000 to 2008 that concealed his interest in these various offshore accounts and failing to report any income earned from these accounts. Chatfield also admitted that he never filed any reports of Foreign Bank and Financial Accounts

(FBARs) disclosing his interest in any offshore financial accounts. As part of his plea agreement, Chatfield agreed to pay a 50 percent penalty for the one year with the highest balance in his Swiss UBS account in order to resolve his civil liability for failing to file FBARs, Forms TD F 90-22.1.

“This is part of a continuing effort by the IRS and Justice Department to combat international tax evasion,” said IRS Deputy Commissioner Steven T. Miller. “These actions send a clear, unmistakable message to anyone who tries to use international borders to evade federal taxes.”

In February 2009, UBS entered into a deferred prosecution agreement under which the bank admitted to helping U.S. taxpayers hide accounts from the IRS. As part of their agreement, UBS provided the United States government with the identities of, and account information for, certain U.S. customers of UBS’s cross-border business, including Chatfield
Friday, November 19, 2010
California UBS Client Indicted for Hiding Assets in Secret Swiss Bank Accounts

#52 Aussie Roy on 11.28.10 at 11:53 am

46 Devil’s Advocate on 11.28.10 at 11:06 am

People need houses Roy… Your God did not create enough caves for this many people. Who’d have figured? Approximate world population one hundred years ago 1.5 billion world population today 7 billion. Do the math Roy, do the math…

I have and I can, what will be needed by these people are homes which they can afford whatever the interest rate. Why is it that people never think about the cost over a range of interest rate scenarios. Too busy pointing to pointless supply and demand at ANY cost. Supply and demand my dear friend is about the market “number of houses for sale versus number of willing able buyers”, did all other house price crashes teach you nothing.

#53 Moneta on 11.28.10 at 11:53 am

Not being an arrogant Albertan. There just happens to be oil here.
——–
Ever heard of the Dutch Disease?

“In the 1960s, Holland discovered vast deposits of natural gas. When exported, the natural gas created a sudden increase in wealth and increased purchasing power exponentially, consequently leading to high inflation. It also caused the local currency to increase, making it easier to import and harder to export non-oil products, which resulted in the economy slowing down.”

#54 Devil's Advocate on 11.28.10 at 11:58 am

“Its all about holding costs and that my friend is determined by, you guessed it interest rates.” -#44 Aussie Roy

Duh.

And what affects (long term) interest rates? The bond market. And what affects the bond market? Supply and demand. So what affects interest rates? Supply and demand.

What affects rental rates of return? Interest rates. What affects (long term) interest rates? The bond market. And what affects the bond market? Supply and demand? So what affects rental rates of return? Supply and demand.

What affects property values? Rental return rates. And what affects rental return rates? Interest rates. And what affects (long term) interest rates? The bond market. And what affects the bond market? Supply and demand. So what affects property values? Supply and demand.

#55 dark sad person on 11.28.10 at 12:11 pm

Peak corruption- and Canadians by being silent and compliant-are up to their elbows in innocent peoples blood–

Watch these criminal bastard Neo-cons go into “cover your ass” mode-

********

The US rejected talks with the whistleblower website WikiLeaks, which is expected to release confidential US diplomatic cables from American embassies abroad and the State Department, including frank evaluations of foreign governments and political figures.

Warning friends and allies

The US was in diplomatic overdrive over the weekend to prep its international allies for the release of the documents.

State Department spokesman P.J. Crowley said in a tweet that Secretary of State Hillary Clinton has been in touch with leaders in Germany, Saudi Arabia, the United Arab Emirates, Britain, France and Afghanistan, while separately adding that she has spoken by telephone with Chinese Foreign Minister Yang Jiechi about the potential contents of the release.

Diplomats have also warned leaders in Israel and Canada.

WikiLeaks is the brainchild of Australian hacker Assange. The first two document releases included US soldier-authored incident reports from the wars in Afghanistan and Iraq. Those documents included allegations of torture by Iraqi forces and the possibility of an additional 15,000 civilian deaths in Iraq.

http://www.dw-world.de/dw/article/0,,6273169,00.html?maca=en-tagesschau_englisch_nachrichten-435-rdf-mp

#56 Kevin on 11.28.10 at 12:13 pm

#44 BL,
great link. I did not know there were more projects funded with subprime lending in this city.

“The City of Saskatoon, Canada Mortgage and Housing Corporation (CMHC) and the Saskatchewan Housing Corporation have created the Mortgage Flexibilities Support Program to increase affordable homeownership opportunities in Saskatoon.”

Like I have said before, subprime is alive and well in this city and country. I can’t believe our governments would be encouraging this sort of thing.

#57 Aussie Roy on 11.28.10 at 12:22 pm

Your comments go to the heart of the issue: the misinterpretation of risk. The risk most people reading this blog face is running out of money when they most need it, at the end of their lives. Be aware your irrational fear of losing money earlier can yield the worst possible consequences. — Garth

misinterpretation of risk – After having a career in risk management I have to agree. Its self evident from some comments here that people just dont see the risks to house prices. I understand where it comes from, year over year rising prices, seeing others make money and the list goes on but at what point do people realise that for there to be no correction ever, prices must be robust enough to handle all the cycles the ecomony can throw at them. I guess not until its too late for most.

#58 Devil's Advocate on 11.28.10 at 12:28 pm

#52 Aussie Roy on 11.28.10 at 11:53 am

I have and I can, what will be needed by these people are homes which they can afford whatever the interest rate. Why is it that people never think about the cost over a range of interest rate scenarios. Too busy pointing to pointless supply and demand at ANY cost. Supply and demand my dear friend is about the market “number of houses for sale versus number of willing able buyers”, did all other house price crashes teach you nothing.

You are almost there my friend, just a little impatient. Supply and demand ultimately seeks it’s equalibrium. What you impatiently call for is a return to equalibrium. This too shall pass. Give it time.

And so too, thereby, shall revenue properties return to favour.

Supply and demand Roy… too many are too impatient to wait for it to work to their favour none-the-least of which are our Keynesian governments.

#59 Devil's Advocate on 11.28.10 at 12:34 pm

#52 Aussie Roy

Grasshopper; “The key to everything is patience. You get the chicken by hatching the egg, not by smashing it.”

#60 David B on 11.28.10 at 12:43 pm

One man named Jim who decided that paying off a reasonable mortgage and making sound investments to ensure a better life for himself and family now thats worth singing about eh.

#61 Aussie Roy on 11.28.10 at 12:54 pm

54 Devil’s Advocate on 11.28.10 at 11:58 am

Duh.

And what affects (long term) interest rates? The bond market. And what affects the bond market? Supply and demand. So what affects interest rates? Supply and demand.

What affects rental rates of return? Interest rates. What affects (long term) interest rates? The bond market. And what affects the bond market? Supply and demand? So what affects rental rates of return? Supply and demand.

What affects property values? Rental return rates. And what affects rental return rates? Interest rates. And what affects (long term) interest rates? The bond market. And what affects the bond market? Supply and demand. So what affects property values? Supply and demand.

Actually rates are driven by both bond investors and your central bank.

Both parties have higher expectations when inflation expectations are higher.

What affects property values? Rental return rates. And what affects rental return rates? Interest rates.

Nice to see you got this bit.
500k loan
current interest rate 5% $25k
current rental yield 5% $25k

Interest rate 6% 30k
So increase rent from 25k to 30k a 20%
increase. .5% rent up by 10%

So could your market bear a .5% rise in interest costs meaning rents would have to go up 10%? How about 1% rise or a 20% increase in rents? Thats just for net yields to stay stationery not increase.

I’m so glad you got it now, the abilty for a investor to keep his rental return from falling is a hell of a job. Im so chuffed you realise prices are at the mercy of interest rates.

#62 Ben on 11.28.10 at 12:55 pm

Dallas, TX 3,000 sq ft asking $219,000 and been for sale over half a year

http://www.realtor.com/realestateandhomes-detail/1717-Running-River-Drive_Desoto_TX_75115_M79174-42

Check this 2,300 sq ft one out, built 2010 and asking $229,000…

http://www.realtor.com/realestateandhomes-detail/830-Windham-Drive_Rockwall_TX_75087_M82006-23105

#63 Taxpayer like everyone else on 11.28.10 at 1:01 pm

…….This is just a random post to give everybody a break
while scrolling past DA’s comments………

#64 Got A Watch on 11.28.10 at 1:03 pm

Garth – Neapolitan mastiff puppy? So cute. Hard to believe they can grow up to be so huge. They get too big though, often die of heart attacks after a few years. Great dogs, very loyal, and you can’t get any better for a personal security unit.

Thanks for the compliments, but I just call it as I see it, let the chips fall where they may. I know I’m hard on the goldbugs, I just find the attitude of superiority and blind faith annoying. And I used to be a goldbug, till I realized it was too narrow of a viewpoint, and went to rehab. I will credit the goldbug websites with predicting the ‘Great Financial Crisis’ long before most others, and having the audacity to question ‘conventional wisdom’ aka MSM propaganda. I still have some physical shiny metals, in the form of a minor coin collection (mostly inherited) and jewelery, and a few small bars, nothing special there. But for trading purposes, RBC certificates are a better deal and the lowest cost way to play the NYMEX/COMEX price action. RBC is cumbersome, they just charge lower fees etc on their certificates. Buying and selling physical metals is logistically difficult and too costly for active trading for me.

I will attempt to reply to some:

-I posted links to some economics Blogs and financial websites that I read daily a few days back, and somebody replied about “insider information”. Life is unfair, then you die. We’ll never have the information that a Squidman has at his desk in some office tower in Manhattan. I live in a way rural area, I don’t know any “insiders”, and I don’t think you need to if you want to successfully invest or trade markets. Insider trading is a crime anyway, just because they can get away with today is just a regulatory failure, and evidence of systemic corruption, it’s above my pay grade. The present ‘BoA Bond sale’ scandal, ‘FraudClosureMortgageGate’, ‘expert networks’ are all just evidence of the degree of corruption. But you still have to worry about YOUR retirement, and take care of it somehow, regardless. Unless you are a lucky Phd (Papa had Dough), but even then you have to manage the money somehow. I got most of my money the old-fashioned way, I worked for it. The internet has leveled the playing field to a great degree for consumers, in a way that was simply not available 10 years ago, by providing us all with far better information than you could get before, unless you were Warren Buffet, you just have to dig it up. Google is your friend. You work with what you have, not what you wished you had. Gather as much information, and then make an informed decision. Nothings perfect.

-Dan in Victoria – I think we are twin sons of different Mothers. I always enjoy your comments.

-Macrath – “What do you think of technical analysis?” I use if for almost all trading decisions, it just works, why ask why. If you want to learn about it, the 2 best websites I can think of quickly are Incredible Charts, a great Aussie site, try the links there on the left side, best explanations of most concepts I know of; and StockCharts ChartSchool where they explain everything quite well, but not as easy to grasp for newbies as IC. I would suggest IC first, then SC afterwards.

I use about 80% technical, and 20% fundamental, but you have to have some grasp of economics, business cycles, and many other things, there are a lot of moving parts. Take it 1 day at a time, try to read as much as you can. Not enough room here to explain here, there are thousands of financial/trading/technical websites out there. I will post links to some of my favorites tomorrow maybe if I have time, I have over 1,000 bookmarked.

-Timing is Everything – you have good taste in cars. In my time, I have owned, at various times, a ’67 Mustang coupe (Texas), ’68 Mustang coupe (Texas), ’69 Charger (Arizona), the ’69 Dart GT (Mississippi), and a ’72 Javelin. But I have a friend in the business of selling them. Every time I drive by a Ford dealer and see a new Mustang Shelby Cobra GT 500 convertible, I hear a little voice calling “hey you, come on in and buy me!”. I was at the border in Buffalo last week, I saw a really beautiful ’67 Mustang Shelby Cobra GT 500 fastback on the back of a car transport, it was an Arizona car and had no rust at all, pretty much original. The guy I bought the ’69 Dart GT from now wants to buy it back, I will probably sell it to him, as it was his dream car, he only sold it because of a divorce. My own ultimate dream car would probably be a ’69 or ’70 Coronet Super Bee convertible with a big block, or a ’67 Mustang Cobra GT 350 or 500 convertible.

-Mikey the Realtor – LOL no problem

-Brian1 – Kevin O’Leary, really? I dunno, I don’t watch MSM financial TV much, or I’d have no TV, because I would have to throw a brick through it. BNN is OK, sometimes, other times not.

#65 Aussie Roy on 11.28.10 at 1:06 pm

Impatientent the opposite I hope prices hold up long enough for more of my generation and first time buyers to realise current prices are a delusion and act.

Mate if you think Im cracking the egg, I would hate for you to see me when I take the gloves off.

Too old to fight (69 next year) better just to inform. Thanks for the grasshopper bit makes me feel young.

The difference being we disagree on the info in inform.

#66 jman on 11.28.10 at 1:10 pm

Garth I agree with the greatest risk being that of running out of money and know that my wife and I have a low probability on that front based on our planning over the past decade which continues today. Our home is about 45% of net worth. Max tax sheltering every year and living well below our means. When I stated using cash to fund our portfolios that did not mean we are “savers”. Diversified portfolios is the only way to go. Yield and risk adjusted net returns. That brings me to a question. In Money Road you recommended using 100 minus ones age as an acceptable amount of net worth to have in ones home as I recall. However, in a recent article you stated it should be no more than 1/3 of net worth. Which do you subscribe to? I fully understand and believe the lower percentage the better but was just curious. For us the percent allocation to the home lowers each year and we still have 20 years of work to go before retirement. Love the articles and respect what you are trying to achieve. Thank you.

Yes, 100-minus age is a rational amount to have in real estate, given current social realities. My personal threshold is 30%. — Garth

#67 UrbanCowboy on 11.28.10 at 1:12 pm

#31 Joseph – Fort Mac and peak oil.

What if the recession deepens? And oil goes to $40/barrel. I suppose a World War to fuel artiliary might get the price up, but who wants that. Maybe the banksters.

#68 jess on 11.28.10 at 1:13 pm

Aussie:
Rent your name?

“All this stems from the swindle orchestrated by Bay Area man Jim McConville. In the span of several months in 2008, McConville picked up those units from distressed developers and orchestrated their sale to more than 20 straw buyers — people who’d rented their identities to him in a complex scam that was the subject of a voiceofsandiego.org investigation last year.

Take Sommerset Villas. The 26 units previously owned by McConville’s straw buyers that have resold as foreclosures have sold, on average, for 71 percent less than the purchase prices in 2008. And some have been worse: A 480-square-foot studio apartment that sold for $265,000 in 2008 sold in October for $47,000 — an 82 percent drop.
=====
Vicki Jenkins stands in front of one of the five condos she signed mortgage documents for in 2008. It was the first time Jenkins had seen the condos she owned.

http://www.voiceofsandiego.org/survival/article_feba356a-9472-11df-8c76-001cc4c002e0.htmlhttp://www.voiceofsandiego.org/survival/article_feba356a-9472-11df-8c76-001cc4c002e0.html

#69 Ben on 11.28.10 at 1:17 pm

Now check out these POS boxes for half a mil + in Toronto, give me a break!

http://www.mls.ca/propertyDetails.aspx?propertyId=10128611&PidKey=-972918957

LMAO… Here’s one asking $700,000 and some dumb immigrant will pay it.

http://www.mls.ca/propertyDetails.aspx?propertyId=10016118&PidKey=241917085

http://www.mls.ca/propertyDetails.aspx?propertyId=10106389&PidKey=-1477296161

#70 Burnt Norton on 11.28.10 at 1:23 pm

#50 Devil’s Advocate on 11.28.10 at 11:37 am

In terms of ethics, your argument is full of holes, bud.

Even though we function in a broken system, there is no excuse for behaving in an unprincipled manner just because that kind of behaviour is the norm. That kind of mentality leads to fascism.

Google “Kitty Genovese” and you will read about the bystander effect – a classic example of this faulty ethical reasoning. In that case, it is alleged that dozens of people witnessed an assault and murder but nobody intervened “because” nobody else was doing anything to help. How can that be right?

I’m not seeking to impose my values on others, or to otherwise suggest any moral standard here. These are just my opinions. Ultimately, each of us will bear the burden of judging ourselves in terms directed by our own conscience.

I do agree with you in terms of allowing the “Darwin effect” to weed out those less-deserving as a result of intentionally devious behaviour. The tragedy we face is that a lot of the people who rely on the MSM and are accordingly over-extended on credit and housing will suffer as a result of ignorance and misguided trust, willful or not.

#71 McLovin on 11.28.10 at 1:27 pm

Devil’s Advocate,

I liked your writing style more before you tried to be Garth jr. Why do you think that you are the only person who enjoy’s their life? (You may be the only Realtor who does) Lastly, why do you refer to the readers of this blog as “pups and poodles”? (Clearly being belittling and rude)

I remind you of your promise to leave this blog and not come back until Christmas. Tell me its not possible that a Realtor has not lived up to his promise? My sense of well being with the world is shattered!

#72 Aussie Roy on 11.28.10 at 1:32 pm

After reading all my entries and the tooing and froing I would like to apologise to those who are suffering from Aussie Roy overload.

#73 nelson in ktown on 11.28.10 at 1:48 pm

http://www.canada.com/vancouversun/specials/websterawards/story.html?id=e2657e35-5fd2-4b3f-850f-f7444022c41f Ahh yes this is how you get a mortgage on a Vancouver house.

#74 Denisa on 11.28.10 at 2:09 pm

#72 Aussie Roy ; Don’t even respond to DA, maybe he’ll shove off if he’s ignored by everybody.

That so and so is using this blog to gather info to hone his sociopathic manipulation skills. (Buyers beware in Kelowna, BC)

#75 Bill Muskoka (NAM) on 11.28.10 at 2:17 pm

Hey! All you in T.O. and Vancouver, yeah you in Ft. Mac too…think you have the Big House? HA! How about 27 stories?

India’s Ambani hosts party for ‘world’s priciest home’

#76 OttawaMike on 11.28.10 at 2:19 pm

64 Got A Watch on 11.28.10 at 1:03 pm

Re: 72 Javelin-
Mine:Pierre Cardin edition, bought it from the original owner, my grandpa. I was 16. If I only knew then what I had.
Also more recently had a 65 Riviera , Mesa Az. car. Except for the sun damaged rubber and plastic those cars are preserved indefinitely in that dry zone. Played with a ’51 Hudson Hornet during the 80′s
Children ended my vintage car hobbies.

Thanks for the finance links.

#77 Edmonton Guy on 11.28.10 at 2:22 pm

Living in Edmonton here, and just want to say thank you too. Me & my better half have sold, exactly one year ago after reading your book. We owned our condo with no mortgage before. Now we can actually rent for almost the same price as our taxes & condo fees were. With interest on our money we are saving more each month than ever by renting! In addition I’ve seen the prices contract about $30,000 already on an average unit on the street we were on. Even if prices only slide another $30,000, we could literally buy back into the market in two years at a $60,000 cheaper price (keep that $60,000 saved for retirement in 20 years).
Or, why ever buy again?
In edmonton there is a “condo for rent” in almost every single building in the city form low end to high end. Thousands to choose from! We can go high end for a year or tow, live in a half million dollar unit (with all the ammenities)for $1500 month, or go with an older character building (although harder to find but possible) for $900 month!
Anyways thanks again Garth, I’m glad we listened! I’ve always kept an open mind, and it allowed me & my “better half” to make over $100,000 each-tax free! Otheriwse we would just be watching our no mortgage 100% house equity (net worth) contract!
I feel safe renting for now-maybe for ever, the city has some focus on creating more 50+ buildings for rent to help the seniors, in 10 yrs….

#78 Macrath on 11.28.10 at 2:30 pm

#64 Got A Watch

Thank`s much appreciated.

The US dollar did a head and shoulders in September but is now rising. Money Road got me interested in the subject and I`ve got lots of time on my hands to learn more.

I used to watch those guys drilling for nuggets, from the warmth of the wood fire in my cabin. -35 outside.
I wondered how the hell they could handle it.

Look south and dream large, I guess.

#79 miketheengineer on 11.28.10 at 2:33 pm

Garth et al:

What the heck are these guys doing?

Don’t people realize that if this manifests into something, our RE prices will drop to cents on the dollar.

Are we seeing the start of WWIII?

Why isn’t our leadership stepping in to stop this madness.

http://www.thestar.com/news/world/article/897945–us-south-korea-start-war-games-amid-mounting-tension?bn=1

We all need to pray to what ever god or higher power you believe in, to stop this, and not allow TPTB to continue with another STUPID WAR.

#80 prairie gal on 11.28.10 at 2:40 pm

#31 Joseph wrote:
Not being an arrogant Albertan. There just happens to be oil here.
___

Hate to burst your bubble but Alberta done tapped out its oil deposits. EOR may lengthen the life of some of those wells, but, for the most part, its gone.

What Alberta has is bitumen. NOT oil. And the higher oil goes, the more it costs to extract said bitumen and process it into synthetic crude. Alberta squandered its riches long ago and is left scraping (literally) the bottom of the barrel of its resource base. In order to continue to do so it must sacrifice vast tracts of boreal forest, pollute its surface waters, deplete growndwater, and emit harsh acid-rain causing chemicals and greenhouse gases.

That is not a good news story.

#81 dd on 11.28.10 at 2:48 pm

#40 squidly77

…like back in 1975: only when prices were sustain…

Back then wages in Alberta were not the top of charts like today. Make more money pay more for a house.

#82 Albertaguy on 11.28.10 at 2:59 pm

Further to recent discussion on preferred shares

2 new Preferred ETFs focusing mainly on Canada and US

http://torontostar.morningstar.ca/globalhome/Industry/News.asp?Articleid=361073

#83 Derek on 11.28.10 at 3:05 pm

Careful when mentioning the “Kitty Genovese” incident. Turns out that plenty of people reported the attack as it was going on. But a closer look at what actually happened reveals a different story from the one reported in the NYT in 1964. Try googling Kitty Genovese myth

Alas. Poor Kitty. The bystander effect exists but that wasn’t what killed her.

#84 Northern_dirt on 11.28.10 at 3:09 pm

#70 Burnt Norton
Google “Kitty Genovese” and you will read about the bystander effect – a classic example of this faulty ethical reasoning. In that case, it is alleged that dozens of people witnessed an assault and murder but nobody intervened “because” nobody else was doing anything to help. How can that be right?
…………………………………………………………………………….

Not exactly right.

http://en.wikipedia.org/wiki/Murder_of_Kitty_Genovese

Look up “diffusion of responsibility.” Still, applicable, I guess to your point. Just not as sinister as people willfully ignoring the rape and murder of a person.

#85 Macrath on 11.28.10 at 3:15 pm

#61 Aussie Roy

We need you to keep us informed !! I`m loaded up with EWA – iShares MSCI Australia Index Fund

#86 AlbertaRose on 11.28.10 at 3:41 pm

Jim, I applaud you and everyone else who makes the sacrifice to be here in Fort McMurray to make a better life for your family.

Greedy or practical? To go where the money is seems very practical to me.

I will be debt free this Christmas – beginning of year $600,00.00 debt.

I rent now, I pay cash, I sell things I no longer need, I’m diversifying, thank you Garth, and all you posters for educating and encouraging me.

Don’t trash me too badly it’s my first post.

#87 Amarillo on 11.28.10 at 3:45 pm

Quoting prairie gal, #80 “… it must sacrifice vast tracts of boreal forest, pollute its surface waters, deplete growndwater, and emit harsh acid-rain causing chemicals and greenhouse gases …

Egads, let’s get some perspective here. I could give you a helicopter and drop you off in Canada’s boreal forest and you could fly around for a month to two without you even finding the oilsands.

So we have a number of dirty tailing ponds, big deal. Those ponds are squat compared to all the filthy coal-burning plants providing power to millions of folks around the world.

However, the eco-warriors have decided that Alberta is the enemy when compared to coal, the oilsands are pristine.

Besides, would you really rather buy your oil from some whacked-out middle east extremist government like Iran?

#88 Devil's Advocate on 11.28.10 at 4:09 pm

#71 McLovin on 11.28.10 at 1:27 pm
Devil’s Advocate,

I liked your writing style more before you tried to be Garth jr. Why do you think that you are the only person who enjoy’s their life? (You may be the only Realtor who does) Lastly, why do you refer to the readers of this blog as “pups and poodles”? (Clearly being belittling and rude)

I remind you of your promise to leave this blog and not come back until Christmas. Tell me its not possible that a Realtor has not lived up to his promise? My sense of well being with the world is shattered!

“Garth jr.” I hardly think so. If anything I have become more the anti-Garth of late. Not that I disagree with Garth – no not at all. Fact is, I think, Garths message is far better received in person than it is through his inflammatory blogs. But that may just be that the “Pups and Poodles” tend to read and take away only that which they wish to and much of it is misinterpreted to better serve their personal agendas.

“Garth jr.” I am NOT, nor do I try to be… if anything I deliberately try to push the other side of the argument but not nearly so much as the “Pups and Poodles” would have you believe. I should be more extreme and maybe will pick up that pace with more zeal.

And of “Pups and Poodles”; I was not aware one might consider “Pups and Poodles” (“pups” being those of male gender and “poodles” those of female gender) to be such a belittling and rude name to call those extremists on this blog. That name is not intended for all posters as there are some, few but some, not so extreme – not nearly so. I thought the name kinda cute… not nearly so disrespectful as a lot of the alternatives I might have chosen.

Of my promise to leave this blog… what can I say… I truly am a REALWhore. I do apologize for breaching my fiduciary duty to you by breaking that promise. Oh wait a minute we don’t actually have a contractual relationship do we? Although I am sure you might find reason to argue that such an erroneous promise could be up-held as contractual. Tell it to the judge – that judge here being Garth who is free to block my further comment. In the meantime I have clearly had a change of heart and think this blog needs an anti-Garth Devil’s Advocate point of view.

#89 Aussie jason on 11.28.10 at 4:12 pm

Aussie Roy, thanks for the Aussie updates I look forward to them!

#90 Devil's Advocate on 11.28.10 at 4:29 pm

We interupt this program for this important notice due to the lack of interest… the economic recession you all have been pining away for has been yet again postponed. Stay tuned while we return you to our regular program.

Democracy… ain’t it a bitch… You all know where your real voting power is don’t you? In your wallet. Every time you spend or don’t spend a penny you cast a vote yeh or nay. Apparently democracy is telling you a lot of people, “Greater Fools you might call them, have a way different opinion on things than the “Pups and Poodles”. But when the “Greater Fools” far outnumber the “Pups and Poodles” who is right and who is wrong. Democracy prevails, accept it you can’t fight it. All you can do is control yourself. But you too are becoming a WalMart person… kicking and screaming as you may rebel you too are becoming one of them. You know you are regardless how you fight it you are being drawn in to the vortex of idolizing all things cheap and plastic.

#91 Timing is Everything on 11.28.10 at 4:31 pm

#56 Kevin said – “I can’t believe our governments would be encouraging this sort of thing.”

Believe it. Saskatoon is a ‘work site’, just like Ft. Mac,
Winnipeg, Windsor, Oshawa, Weyburn, Calgary, Estevan, Prince George and all the rest.

http://www.photochris.com/images/Canada-Alberta-Fort-McMurray-6-tar-sand-co.jpg

#92 prairie gal on 11.28.10 at 4:36 pm

#88 Amarillo: so you are saying that because the boreal forest is so big, its OK for Alberta to destroy its portion of it for the sake of extracting bitumen? Or maybe its because much of Alberta’s boreal forest has been logged once already, so its of lesser value? Or if I can’t see the damage when I leave my front door its negligible or low-impact?

What kind of logic is that? I suppose as long as the taxpayer-supported gravy train called the tar sands keeps growing and providing six-figure jobs, the whole question of what we are doing to wildlife habitat and the watershed is moot. Dollars speak louder than clean air and water, I guess.

And nice attempt at diversion by bringing up the coal comparison. A classic desperate tar sands defense move. I agree coal is polluting. Alberta relies on it a lot for electricity generation. Its going to be hard for the province to improve its reputation with its reliance on all forms of dirty energy, isn’t it?

Don’t tell me – your next rebuttal will be something to the effect of: we are actually cleaning up the bitumen and this will improve the wildlife habitat in the future. The beavers and caribou will thank us.

#93 Burnt Norton on 11.28.10 at 4:42 pm

#84 Derek on 11.28.10 at 3:05 pm

#85 Northern_dirt on 11.28.10 at 3:09 pm

Thank you re: clarification of the Genovese incident – I’ve learned something today.

A better example of my point on the bystander effect then would be that gang-rape of the 16 yr old girl at a rave in Maple Ridge a few weeks ago that some snot-nosed brat filmed and posted on the internet.

#94 Patz on 11.28.10 at 4:56 pm

The other side of (historically) low interest rates: they make it hard—though not impossible—to save, preserve or increase monetary value. Thus people are pushed towards the bubble asset. Garth’s point is that one doesn’t have to go that route, the sucker’s game.

#95 Business Unusual - the BUN on 11.28.10 at 5:22 pm

I feel like an idiot…

I struggle with feeling like a complete idiot for ‘getting it’ BUT missing out on the greatest bull/bubble in real estate history.

I’m guilty of ‘getting it’ too early.

I’m guilty of underestimating how committed the banks, mortgage companies, realtors and government are to inflating this asset category.

Anyone else feel like an idiot?

Buy now and complete the feeling. — Garth

#96 realpaul on 11.28.10 at 5:22 pm

I’m on Jo’s ( comment #11) side

“Stick to the plan…and hope Jimmy F in Ottawa doesn’t lick his fingers in anticipation of coming after what you’re socking away.”

I also agree that real estate holdings should form an ever decreasing percentage of ones personal wealth. The future holds no guarantee’s for the real estate speculator in Ft. Mac….or anywhere, as we have seen. A portfolio should be diversified with the full knowledge that sections of it could be completely blown away by circumstances that none of us can even imagine happening today.

If you think the impossible can’t happen then just look to the experiance of millions south of the border and the millions in Europe who’s real estate, social benefits and careers have been liquidated in the tide of change. None of these people can be said to have been stupid….just unlucky. I think we can hedge against disaster by allocating funds across the spectrum of investments…..and as Jo said ‘prepare for the very possible reality that the government, which has growing fiscal problems, could reach into your stash and ream you a new finacial a-hole. Its happening around the world…don’t assume it can’t happen in Vancouver or Ft. Mac.

The CRA has become increasingly vicious in apllying the federal governments increasingly draconian tax policies. All I can say is ‘prepare for the worst’ and maybe…just maybe… you’ll be a survivor if an American or European style meltdown happens here.

I will conclude by saying that at house in Ft.Mac,,,like an investment in any boomtown real estate in history, should form a miniscule part of your ‘escape plan’. How many jobs will be lost if the ‘sands’ go nuclear? What of some other technology? Didn’t the guy who had spent years honing his craft in cooperage or buggy whips also think ‘he had it made’ and that his children would never want?’

#97 Timing is Everything on 11.28.10 at 5:51 pm

#64 Got A Watch

’65 Shelby Mustang GT350 or 1964 Ford Thunderbolt (Rare) for me. My first car was a ’64 Fairlaine 500. Agreed on the ’67 Cobra (I had a ’67 ‘Stang before). I also have a soft spot for the ’66 Goats.
But I still love my little ’64 & 1/2 Coupe (Collector). Original V8-260 with the generator system (No alternator). One of the very early 64.5′s (35,000 original miles) It don’t get out much!

Real estate…Does this get thru the moderator now?

#98 DJH on 11.28.10 at 5:52 pm

What if my son purchases a $300,000 condo (good deal – asking price $375,000)? With $15,000 down (5%) his mortgage cost would be about $1500/mo, plus taxes ($300) and monthly condo fees ($300), for a total of $2100/mo. Or, alternatively, I could purchase the condo (cash), let my son occupy it and pay the $600 monthly tax plus condo fees, and give me (retired) $900/mo – total rental cost $1500/mo. My $300,000 condo investment would thereby produce about 3.6 percent ($10,800). And instead of $2100, my son’s monthly housing cost would be $1500. Of course, he could rent an equivalent condo for $1500/mo ($18,000/year), and I could invest the $300,000 and perhaps make 7% ($21,000), but that only keeps $3000 within the family ($21000 – $18000). Or, should we wait a few years and purchase the same condo for $150,000? Ha! Isn’t life straightforward?

Why are either one of you buying a condo in a falling market, when it costs more to own then rent? — Garth

#99 realpaul on 11.28.10 at 6:06 pm

BTW…here’s an insight for those investors interested in the macro of things

http://www.benzinga.com/10/11/644853/stock-market-continues-to-demonstrate-impressive-bullish-resilience

#100 AlbertaRose on 11.28.10 at 6:58 pm

For all those fella’s out there with wives that are hooked on HGTV and dream of a Better Homes and Gardens House I wanted to share that I’m delighted to realize that now that I’m a renter and not a home owner I can afford to do more home decorating because I don’t have to budget for expenses like furnace or window replacement or repairs to the house. Now I invest in what is portable and can go with me when I move. Furniture, art, lighting, electronics, small appliances, specialty hardware, decor items. My landlord just replaced the furnace in my house $8,000.00 – I think the window replacement estimate came in at $30,000.00. It can be very expensive to own. I’m happy to rent and redecorate more often.

#101 virginhomebuyer on 11.28.10 at 7:04 pm

Garth, why do you advertise best mortgage rates on your blog? For someone who’s adamant that people should not buy real estate these days it just doesn’t make sense to me.

It’s a plot. — Garth

#102 g dawg on 11.28.10 at 7:08 pm

Garth i know how you like REIT’s was wondering what you think about NPR.UN considering the overvalued real estate of the Fort Mac and other northern work camps, Is it’s pay out sustainable

I don’t comment on the merits of individual securities. FYI, the plural of REIT is REITs. — Garth

#103 Got A Watch on 11.28.10 at 7:10 pm

Aussie Roy – keep posting mate. No worries. Ignore that wanker troll. Hoist a Fosters for us.

Ottawa Mike – Pierre Cardin edition? Wow, never heard of that one. Did it have some expensive cloth upholstery? I guess it didn’t come with an accessory super-model, too bad. Mine had a 390, it was very fast. People used to sneer at it because it was an AMC, till I left them in the dust.

Timing is Everything – I like the old Vettes, at least the way they look visually, preferably a convertible. The ones with kingpin front suspensions ride like dump trucks though, not very nice at all. A buddy had one, I never wanted to ride in it after the first drive. ’67 Ford Fairlane is a very nice car, the convertible looks really great. GTOs are cool, but I was never really a GM guy.

Macrath – no problem, I’ll post more links later

#104 BrianT on 11.28.10 at 7:46 pm

#97Real-Yes-the Irish example is a good one-there used to be a school of thought that the socially aware politicians would focus on the distribution of the pie, whereas the more economically aware would focus more on growing the size of the economic pie. We now have the third way-politicians actively working to SHRINK the size of the overall economy. There is no possibility that Ireland should not have defaulted, if the growth and health of the Irish economy was the goal of the Irish politicians-obviously it isn’t even a secondary consideration, and Ireland is far from alone in this regard.

#105 Devore on 11.28.10 at 7:50 pm

#100 DJH

My $300,000 condo investment would thereby produce about 3.6 percent ($10,800). And instead of $2100, my son’s monthly housing cost would be $1500.

How much is that after taxes? And how much will it be after he loses his job and can’t pay you? About -$600 I would say?

Sounds like a great business plan, purposely buying an asset when it’s obviously clear to you it is much cheaper to rent it.

#106 BrianT on 11.28.10 at 7:56 pm

Davidowitz accurately and eloquently sums up Barack Obama http://finance.yahoo.com/tech-ticker/howard-davidowitz-on-the-economy-%22here-are-the-numbers-…-we’re-broke!%22-535653.html?tickers=%5EDJI,%5EGSPC,SPY,TBT,TLT,UUP,GLD

#107 Nostradamus Le Mad Vlad on 11.28.10 at 8:29 pm

#19 virginhomebuyer — Wouldn’t necessarily use a HELOC to invest if I didn’t need it, but it is clear there were fantastic bargains to be had during that mini-slide.

Ignore the m$m — if people listened to and followed basic, simple stuff, there wouldn’t / won’t be pandemonium.

#30 dark sad person — Would that we ALL had such intestinal fortitude as the Icelanders!

#31 Joseph — “Central Canada is done, give it up. Manufacturing is dead/dying.”

Nostradamus Jr. (Dad) was right all along, but few believed him.

#87 AlbertaRose — “Greedy or practical? To go where the money is seems very practical to me.”

Great post! Another reason to diversify from RSPs / RIF’s and have a maxed-out TFSA with growing investments, to make sure one doesn’t run out of money.

#108 Jacen on 11.28.10 at 8:54 pm

Aussie Roy, your a national treasure. Insightful stuff, always enjoy reading your info. As a fellow expat in Australia, I truly enjoy the links you provide as well.

DA’s condescension is not surprising. Check out any RE blog (Chris D, Bob T). It’s a familiar pattern, and the last resort of an ego in danger of being proven wrong.

#109 Nostradamus Le Mad Vlad on 11.28.10 at 9:29 pm

-
Bill S-510 Passed 74 to 25. So — First Arrest

3:45 clip When the US is midway through its barnburner, then the deluge starts.

Luck of the Irish “January 1, Americans will be hit with the largest tax increase in US History. As for the Irish, the corps are paying NOTHING and the whole punishment for the crooked banks falls on the heads of innocent citizens. THAT is Fascism!” wrh.com.

How Secure is money in the banks? Dec. 7 is when the French start emptying their bank accounts (bank run) in protest against the elite banxters.

Obama’s Last Stand? “The United States won World War 1 and 2 primarily because the USA was a manufacturing powerhouse. Sadly, that is no longer true.”

9:59 clip Global Non-Compliance — How To Start.

WikiLeaks Ending Free Speech.

BTW — “70,000 SOUTH Korean troops plus some U.S. “advisers” were taking part in an Invade NORTH Korea drill at the time.” wrh.com.

Decaying Stench of North America.

WHO says a newer, stronger version of vodka martini is here, because last year’s was a complete failure.

Norway – Coldest winter in 140 years. St. Pope of the Goracle, please pick up the white courtesy telephone for a major dose of reality! Also — -17C in UK

1912 — Year the Titanic rubbed shoulders with an iceberg, 1913 was when the US Fed became law and 1914 was the start of WW1.

IMF protest “Read the comments! The people of Ireland are furious that the government wants to starve the people to fatten the bankers!” wrh.com.

US and North Korea Politics make strange bedfellows.

Here are another six reasons to begin WW3 (other than the elite banxsters getting filthy rich).

#110 Chris L. on 11.28.10 at 9:38 pm

Yes, 100-minus age is a rational amount to have in real estate, given current social realities. My personal threshold is 30%. — Garth

You’re quite spry for being 70%.

As net worth rises, the residential real estate component should fall. — Garth

#111 R on 11.28.10 at 9:40 pm

Been here in Ft. Mac since 05. Never felt comfortable in this place but try to make the best of it as it is really nothing more than a jobsite. I haven’t really seen much in the way of realestate going down here though. I remember before 08 when a friend and I were out for a walk and seeing single family homes, nothing too fancy listed for $700,000.00. I also remember thinking to myself at that time “Where are these prices going to stop? What will the cheapest house be in Ft. Mac in 10 yrs, a million dollars?” My better judgement thought that eventually this will come to an end. We have been renting since we moved here. Our rent was $2800 just a few years ago. I had it adjusted so we are paying $2000. We came here to make money and some day leave. I can’t understand why people don’t feel the same way I do with the amount of money they’re making being here. Sometimes I wonder if those people who bought here will ever be able to leave Ft. Mac? Somehow, I don’t think so. I sure as hell don’t want to be here for the rest of my life! People can save a large part of their pay every week, unless of course they are living like rockstars and eating lobster every night. I dunno, I’ve been saving like a savage since we’ve been here and will continue to do so, then someday we’ll leave. Thanks for continuing to spread the word Garth. Many of the people I’ve spoken to about your website think I’m crazy. They may not be listening but I am.

#112 CTO on 11.28.10 at 10:42 pm

#96 Business Unusual – the BUN on 11.28.10 at 5:22 pm
“I feel like an idiot…

“Buy now and complete the feeling. — Garth”

How does that quote from John Maynerd Kanes go? “Bubbles can last longer that you can stay solvent”

Garth, in my neck of the woods (T.O), this place truely is OZ!
Huge building boom, no end in sight…Of course the fundementals are way out to lunch, but not according to the voices that matter.

When this thing starts to turn on its side, is the government going to try to reem out the asses of us prudent savers and taxpayers for one last kick at the can?

Cause then I truely will feel like an idiot!!!

#113 Devil's Advocate on 11.28.10 at 10:47 pm

#110 Jacen on 11.28.10 at 8:54 pm

DA’s condescension is not surprising. Check out any RE blog (Chris D, Bob T). It’s a familiar pattern, and the last resort of an ego in danger of being proven wrong.

Guess well just have to wait to find out exactly who’s ego is proven wrong. Actually so far, given the postponement of the great day of reckoning I’m thinking yours is not fairing so well as mine. Exactly how long shall we give it before you concede that it is not such an issue as you expected it would be?

You’ve got to be asking yourself… “Could DA have a valid point?” It may prove to be that I did when it is too late for you then to recapture those lost opportunities that passed you by while you sheltered yourself from an Armageddon that never came. Really we’ve all been sitting on the edge in anticipation how long now? Well over two years I’d say.

How’s it said “90% of what most people worry about never comes to pass”?

Almost 5,000 attended opening day at Big White ski hill last week with only a few runs open. New skis are sold out all over town. Malls are packed. Stuff is being built. Stuff is being sold. Ya… things are pretty bleek out here all right. NOT! If this is the ride down I’m wondering what the next ride up is going to look like.

#114 Charismatic on 11.28.10 at 11:32 pm

Which bank/financial institution has best HELOC terms and conditions. My bank BMO said altogether a $1000 expense for assessment and lawyer fees etc and prime plus 1 interest rate.

#115 Dan in Victoria on 11.29.10 at 1:09 am

Got a Watch @ 64
Geez, that had me rolling on the floor.
If you met my siblings you’d understand.
Basically honor roll students, arsty fartsy types but as dumb as posts when it comes to the real world.
I get the tich tich tich down the nose look from them.

Gad, I could talk cars for hours with you guys.
My favorite is a 55 chev two door post.
Among others……..

#116 TheBestPlaceOnEarth on 11.29.10 at 1:50 pm

So how is this a bad thing. The Vancouver Real Estate owner lives in his home for 4 years and makes over a half mil? The person who got out of Vancouver due to Shiller doom and gloom lost out big time
))))))
Weeks ago a friend called from Vancouver debating whether to not to sell his pokey house. He bought it for $470,000 four years ago, and after having his brained fried reading this blog, thought bailing at the top might make sense. Two local realtors confirmed it, and last week he listed for $1.23 million.

#117 pablo on 11.29.10 at 4:59 pm

Labrador Retriever pup, cute as hell, god love em. thanks
Garth.

#118 TheBestDumpOnEarth on 11.29.10 at 8:34 pm

So how is this a good thing? The Vancouver mortgage owner survives in his home for 4 years and loses over a half mil? The person who got out of Vancouver due to Shiller doom and gloom won big time
))))))
Weeks ago a friend called from Vancouver debating whether to buy or not an outhouse located at Main and Hastings. Which is prime location if you like junkies. He bought it for $470000 four years ago, and after having his brained fried reading this blog, thought bailing at the top might make sense. Two local realtors confirmed it, and last week he listed for $400000.

#119 AxeHead on 11.29.10 at 9:26 pm

Supply and Demand folks…

Housing is in BIG demand in the Fort, therefore a supply is required. Invest in Ft McMurray housing? It ain’t getting cheaper up there…it really is an exception to the rest of the ‘real world’ i.e. upper Canada.

Personally, I don’t think real estate is going down at all when oil has no place to go up and employment is going to increase…heck, they’re even thinking of building a new town from scratch 100k North of the fort?