‘It doesn’t love us back’

It took one pathetic ad to push them over the top.

“So much for the early 30′s couple debt free and with combined net income of $98,000,” she wrote.  “We are leaving Vancouver and moving to Ladysmith on Vancouver Island right after New Year. My husband is an engineer and I run my own clothing line startup. We have to leave.”

She calls it the smartest decision possible, moving across the water where house prices are half. Wants you to know that.

“We love Vancouver but Vancouver doesn’t love us back. We have to leave.”

And here’s the ad, from realtor James Lam, flogging a piece of crap on a 33-foot lot that looks ready to condemn. A Vancouver special – bedroom and kitchen in the basement, and don’t disturb the tenant. He bites. For about $800,000.

Ironically, the Royal Bank’s latest bouncy report this week made much of an improvement in the ‘affordability’ of homes in BC, thanks to a modest price drop and some declines in long-term mortgage rates. To the bank it’s great news that across the country owning an average house now sucks off 43.6% of a family’s total pre-tax income – down from 48.9% earlier this year.

Of course, that’s just to own the house. Not to buy it. For that the bank based its ‘affordability’ numbers on a down payment of 25% (the average across Canada at this time is 7%), and a 25-year mortgage (90% of new mortgages are for 35 years).

What does that mean? If the Vancouver couple making $98,000 (about $15,000 more than the average), bought the junker above with 7% down – $55,300 would be needed, resulting in a mortgage of $735,000. At 4% for a five-year term, and 35-year am, the monthly would be $3,257, or close to $3,800 with taxes and insurance. Congratulations! That’s 46.5% of family income. RBC loves ya.

Of course, if they rented out the basement ‘suite’ for a grand a month, that would help with cash flow, making the bank even happier. Now the couple can afford a Royal LOC. A new Lexus would look bitching in front of that place.

The point, of course, is that anyone taking a $735,000 mortgage when interest rates are close to an historic low, and house prices in Vancouver (or Toronto) are at an historic high, which costs 46% of pre-tax income (that’s 63% of take-home income), is an idiot. The nob on your head gets even larger when the mortgage is one with a 35-year payback period, which means after making $195,433 in monthly payments over five years, you still owe $681,728. Yes, that’s right. Over $142,000 in interest, pissed away. So much for home ownership in this world of RBC affordability.

And what kind of a world is it, I hear you cry?

Well, one in which the Canadian economy, outside of the delusional housing market, is a swamp. We already heard this week that our trade is in massive deficit with the rest of the world as imports swell and exports wither. Since the autumn of 2008 there have been eight quarters. Guess how many of those we have run a trade deficit. Yup. Eight.

And Tuesday we get the latest GDP number for the last few months – measuring economic growth. It will be as impressive as the return you get on, oh, a RBC high-yield savings account.

Meanwhile that thing beside where William and Kate live – you, know, Europe – is unravelling. As one analyst put it: “Europe continues to crumble under the weight of their escalating debt crisis. As this has moved from a sovereign debt issue to a major crisis of confidence, it has become increasingly difficult to quantify and forecast the snowball effect.”

And the prescient but controversial Nouriel Roubini now warns Spain is about ready to go pointy-side-up. As he reassuringly put it: “There is not enough official money to bail out Spain if trouble occurs.”

Of course, a debt contagion sweeping through Europe would goose bond rates as investors headed for safe havens, jacking five-year mortgage money across Canada and making anyone spending $790,000 on a two-storey collection of orange crates, particle board and duct tape worthy of endless ridicule on this pitiless and unremorseful blog.

And don’t get me going on the structural unemployment rate in Canada, BC’s vanishing local economy, the certainty of higher federal taxes, unsustainable household debt or the fact our major trading partner is on its knees and electing yahoos and whackjobs to Congress.

Risk augments. Common sense fails.

Believe it or not, kids. There was a time banks paid interest and earned respect.

208 comments ↓

#1 LH on 11.30.10 at 12:23 am

gentrification at work!

#2 Soylent Green is People on 11.30.10 at 12:31 am

Oh tonight I started to read GT’s Sheeple in Caucus book, it’s really GOOD! Harper is more of a menace than I can even imagine. And to think most Canadians are asleep at the voting booth, never have I wanted more to move to Switzerland. It’s Switzerland still a safe place? Maybe just head straight to Mexico and just hide out at the beach.

Sheeple: Caucus Confidential in Stephen Harper’s Ottawa
http://www.amazon.ca/Sheeple-Caucus-Confidential-Stephen-Harpers/dp/1554701791

Stephen Harper’s authoritarian style of doing politics and handling communications is well known, Turner who basically didn’t shut up when told so, merely lifts the veil from inner sanctum of the Conservative caucus.
http://kristianklima.blogspot.com/2009/04/why-garth-turners-sheeple-matters.html

~~~~~~~~~

Still working to democratically unseat HarperCon. CRUSH (Canadians Rallying to unseat Harper – 5,500 members) have raised more money from it’s members to publish anti-Harper ads in newspapers across Canada. Trying to wake up the Sheeple.

Our Vaughan Citizen ad, Sunday, Nov. 28, 2010
http://www.facebook.com/#!/photo.php?fbid=467136129141&set=o.292671928599

Here is the page from the Winnipeg Free Press.
http://www.facebook.com/#!/photo.php?fbid=10150104258287316&set=o.292671928599&pid=7441787&id=549382315

#3 Soylent Green is People on 11.30.10 at 12:33 am

You’ve been hit by the ►►►
.
|^^^^^^^^^^^^^^^^^^^^|
| tiny.cc/CRUSH Truck | ‘|”””;.., ___.
|_…_…______________===|= _|__|…, ] |
“(@ )’(@ )””””””””””””””*|(@ )(@ )****(@ )

C.R.U.S.H. – Canadians Rallying to Unseat Stephen Harper
Discussion Group of 5,000+ People
http://tiny.cc/CRUSH

CRUSH Website / FAQ
http://www.canadiansdefendingdemocracy.ca

http://www.rightoncanada.ca/

http://pushedleft.blogspot.com/

CRUSH / unseat Harper Ad Campaign
http://tinyurl.com/unseat-Harper
tiny.cc/unseat_Harper_ad_donate

http://tiny.cc/Channel_CRUSH

http://www.youtube.com/user/unseatstephenharper

http://twitter.com/unseatharper

http://www.youtube.com/watch?v=cwa60YpWiOM&feature=player_embedded

http://www.cafepress.ca/Looney_Left

http://tiny.cc/CRUSH_tear_off_flyer
http://tiny.cc/CRUSH_url_cards
http://tiny.cc/MP_petition
http://tiny.cc/Trash_Civil_Liberties
http://tiny.cc/G20_Tear_Off_Flyer

Write your outraged letters to Canadian media:
http://tinyurl.com/MSM-List

Punch in your postal code and a list of your neighbours will pop up.
http://www.canada411.ca/search/address.html
Call them. Ask them how they feel re politics. Listen to them. If you get a chance, tell them about HarperCon and how we’re all headed to hell in a handbasket unless we mobilize.

▌♥ ▌

#4 T.O. Bubble Boy on 11.30.10 at 12:37 am

Mortgage Brokers are just a wee bit mad at Ed Clark (CEO of TD) for suggesting that mortgage amortization limits should go back to 25 years at some point (23 comments so far):

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/11/td-ceo-supports-25-year-amortization-maximum.html

#5 Jsan on 11.30.10 at 12:38 am

Hey the ad states great “Investment” property so it has to be good. That one word is the bait in the trap that has probably sucked more people into overpaying. Over the last decade, it seems like the Real Estate industry has caught on that if you stop calling it a house and start calling it “An Investment” you catch more suckers. After all, if it’s “An Investment” it has to be a smart buy that will only grow in value as that’s what ‘Investments” do right? Calling it for what it really is, a money trap, a finance destroyer just doesn’t have the same pleasant ring to it.

Again, I remember the comments that I heard over and over again on the US media as proud new bubble priced home owners declared one after another after another, “It is allot more than we had intended on spending but we’re not worried because it will only increase in value”. The same mantra chanted by the same extremely naive buyers while their proud Realtor stood by smiling from ear to ear thinking of the hefty commission they just bagged.

#6 Waiting Patiently on 11.30.10 at 12:38 am

Vulture in waiting……

I love these particular blog posts.

Let it hang it!!!!!

#7 Burnt Norton on 11.30.10 at 12:42 am

“We have to leave.”

Uh, no you don’t.

Figure out what you can afford and then choose from between a few different neighbourhoods. If you can’t or don’t want to buy a place, then rent. How hard is that? From the sounds of it, there’s no illness or family crisis or job loss here and so no life-stress curveball is forcing you to move. Blaming “the city” is just lame.

Speaking of lame, this mentality of housing entitlement among the 20-40 year old crowd in Vancouver is pathetic. If you want to live in a place that you can’t afford then figure out how to make enough money to be able to afford it. It’s like: “I’m Canadian and I pay high taxes so I’m entitled to free health care and public services as well as housing in the city & neighbourhood of my choice”. Do we also have to pay for your morning double-double and Timbits?

You should be glad that you are a citizen of about as much of a meritocracy as there is to find on this big blue marble in space.

#8 Hosehead on 11.30.10 at 12:46 am

Great blog post today as usual. Who would buy that Vancouver dump even if it was $590?

#9 Billy Bob on 11.30.10 at 12:48 am

Canadian mortgage rates, down payment requirements, the health of the economy, unemployment rates, the Canadian/US exchange rate, and the percentage of family income required to carry a home DO NOT MATTER in Vancouver.

Yes, in normal times they would matter. In normal times, Canadian real-estate would be dragged down by the US recession and US housing crash.

But practically all the high end homes and half the mid-level homes in Vancouver are being gobbled up by seemingly endless masses of Asian immigrants and investors. As a result, there is a trickle-down effect in low-end pricing.

So there is only one relevant factor to consider and track… China. If/when China implodes economically, Vancouver real-estate will implode. It\’s that simple. All other analysis is a waste of time.

Please provide evidence of the gobbling Asians. How many sales? — Garth

#10 BC Demographics on 11.30.10 at 12:49 am

If you happen to live in BC,
here’s a chart you may want to see

https://sites.google.com/site/bchousingmarketshift/

#11 Soylent Green is People on 11.30.10 at 12:51 am

In a column Don Martin wrote:

It’s incredible and inexplicable why a government under Prime Minister Stephen Harper, which wraps itself in the uniform of aggressive law and order, would vote repeatedly to deny RCMP officers access to the spot-light when they were willing to risk their careers telling a disquieting truth . . . there’s no sensible explanation for why Conservatives, who usually act in unison in committees, would circle the wagons against RCMP insiders seeking to blow the whistle … (6)
This was a very serious situation. We have our national police force getting involved in an election campaign, essentially winning it for the Conservatives. And we have those same Conservatives breaking every rule in the book to make sure that the head of that police force does not have to answer to serious allegations against him in both a torture case and the possible misappropriation of funds. (7) Things like this happen in third world dictatorships, not western democracies.

And where is Giuliano Zaccardelli now? Someone obviously pulled some strings because he is now a senior official with Interpol in Lyons, France, heading its “OASIS Africa” program which aims to help African police forces more effectively combat international crime.(8) Unbelievable.

http://pushedleft.blogspot.com/2010/10/politics-of-opportunity-election.html

#12 Jsan on 11.30.10 at 12:55 am

One thing is for sure. Whether you believe that this housing bubble was engineered by the government for the banks, the banks will make an absolute killing on it. They have been allowed to give outrageous mortgages to practically anyone with a pulse all the while handing 100% of the risk over to the Canadian tax payer. When interest rates and mortgage rates inevitably head higher, the banks will make an absolute killing. Do the math, an average 1,000,000 dollar house at 6, 7, 8% mortgage. They couldn’t have planned this better themselves, not only have they locked a generation of new homeowners into mortgages, they have guaranteed themselves huge annual interest payouts for decades to come.

Stephen Harper and Flaherty have been very good to the bankers of Canada, there is no doubt about that.

#13 TheFirstRick on 11.30.10 at 12:58 am

Please follow up on the couple in a snit moving to Ladysmith. I just wonder how long it will take them to realize the average LS resident thinks an Engineer drives a train and a clothing start up is the new shipment at the Sally Ann. Good luck, none the less.

#14 Painted Toenails on 11.30.10 at 12:59 am

BC Demographics – good graph. Pls check the bottom of your site url to erase email information available when clicking on bottom links.

#15 Another Albertan on 11.30.10 at 1:01 am

“A new Lexus would look bitching in front of that place.”

More literary gold from Garth… “bitching”. I haven’t heard that word used in that context in almost 2 decades. I might have to re-integrate it into my lexicon again.

Aside, this is the paraphrased commentary from the business conference that runs in parallel with the World Cup ski race this past weekend at Lake Louise:

Two Chinese speakers passed on the following tidbits to the executives in attendance – “We do billion dollar deals around the world all the time. We would do a 20 billion dollar deal in a second, but your governments won’t let us.” and “Up to this point, we believe we’ve been quite polite with the West in terms of our business dealings and manners.” That clunk was the collective sound of jaws hitting the floor as business leaders realized that the comments were extremely serious and not tongue-in-cheek.

David Dodge, former head of the BoC, indicated that the Canadian economic recovery was going to be lumpy and protracted.

“This” ain’t over my a long shot. In fact, “this” has just started.

Everyone else’s mileage may vary.

#16 dude where's your heart? on 11.30.10 at 1:03 am

Hey #7 Burnt Norton, you sound like someone who has owned real estate for a while and can’t understand why people who don’t already own a place feel shut out. Not one of my friends could afford to buy their house at today’s prices. What does that tell you? Could you afford to buy your house today?

Maybe you’re actually Devil’s Advocate? Your comments sound just like something he’d say. “why, back in the day, blah blah blah, we saved and blah blah blah”.

Did you actually read the post? Even if they can find a cheaper place prices are still insane these days especially in Vancouver. I didn’t get the sense that they’re entitled…just that they want to buy a house. So they’re leaving in order to do so.

And you’re going to berate them and mock them for rejecting that POS?

Dude where is your heart?

#17 Jsan on 11.30.10 at 1:06 am

#9 Billy Bob on 11.30.10 at 12:48 am

Canadian mortgage rates, down payment requirements, the health of the economy, unemployment rates, the Canadian/US exchange rate, and the percentage of family income required to carry a home DO NOT MATTER in Vancouver.

==================================

I don’t buy the “Asian” argument. Why aren’t house prices booming in Seattle, Portland, San Francisco, Los Angeles? Other very desirable places to live with huge Asian populations. Every single Bubble has an excuse for it’s existance, you never have Bubbles without the engineered explanation as to why the extremely over inflated prices are normal and not a Bubble. Those excuses do drive many to naively buy in a panic to keep from being priced out forever. Once the excuse and the panic buying runs it’s course, the bottom falls out.

#18 Utopia on 11.30.10 at 1:10 am

You sound angry today Garth.

And you should be. Our pristine lilly-white innocent and secure Canadian banks are acting despicably. Like a bunch of boorish thugs raping the ignorance of the average Canadian.

I am disgusted beyond words with the agenda and the lack of responsibility shown by our good stewards of financial prudence.

All to boost earnings for shareholders and prove solvency. All to be both the first and last in line when it all hits the fan.

They are greedy stupid pawns of a failed system who are no longer worthy of any respect from any Canadian.

Let the F*ckers rot if it all goes South!!! And the Royal first amongst them should fall before the hatred of the average Canadian. I support them no more.

I have lost all sympathy for our pathetic greedy banks over the last few months and am ashamed of the way our towering institutions of (former) responsibility and care are behaving despite all warnings to the contrary.

Pure Fricking bollocks.

Bring on the the pitchforks. Dump those fuckers and invest elsewhere. I will have plenty more to say about them in the coming weeks and months. None of it good.

They have lost my support altogether. For good!!!

#19 Freaked in Vancouver on 11.30.10 at 1:15 am

#9 Billy Bob…
“Canadian mortgage rates, down payment requirements, the health of the economy, unemployment rates, the Canadian/US exchange rate, and the percentage of family income required to carry a home DO NOT MATTER in Vancouver.

Yes, in normal times they would matter. In normal times, Canadian real-estate would be dragged down by the US recession and US housing crash.

But practically all the high end homes and half the mid-level homes in Vancouver are being gobbled up by seemingly endless masses of Asian immigrants and investors. As a result, there is a trickle-down effect in low-end pricing.”
- – – – – – – – – – – – – – – – – – – – – – – – – – - – – -
Glad to see somebody else gets it. Hard to understand how any locals wouldn’t get it. Time for the government to seriously toughen up on immigration requirements. I’m mad as hell and want something done about it. Not politically correct? Who cares! Even some Asians are admitting the system is being abused. Check out Real Estate Talks B.C. website.

#20 viewwest on 11.30.10 at 1:17 am

Driving around various neighbourhoods in Vancouver this weekend, we were noting the huge quantity of “for lease” and “for sublease” signs on vacant commercial properties – from small storefronts to offices to light industrial – everywhere you look, it’s for lease with a lot of competition. We’re also starting to see “reduced rate” signs stickered over those leasing signs too. I haven’t seen so much for lease since the big recession in Toronto back in the 80′s.

And, the condo we’re renting (we sold our house last year after reading your book Garth) is on the market for sale. It’s a gorgeous 1 year old building (granite and stainless whoopee), in a great neighbourhood, built with specs designed specifically to target affluent Asian buyers (even the street number is the luckiest number) and after many months on the market, there have been barely any showings. Did I mention the listing price is substantially lower than units were selling for a year ago? There doesn’t seem to be any stream of offshore money rescuing our landlord.

#21 Burnt Norton on 11.30.10 at 1:21 am

#16 dude where’s your heart? on 11.30.10 at 1:03 am

Like I said, lame.

#22 HouseBuster on 11.30.10 at 1:28 am

I thought Asians were supposed to be smart. Who in their right mind would buy that piece of crap for more than 65K ?

#23 UrbanCowboy on 11.30.10 at 1:29 am

“Just who in the hell do you people think you are, you are very very dangerous people indeed”

I think this might have been posted already, but definietly worth watching Nigel Farge address the European Economic Union. Sounds like whats brewing there could be worse than the 3rd Reich if it succeeds. If not civic war and economic collapse sounds immenent:

http://www.youtube.com/watch?v=Fyq7WRr_GPg

#24 Jeff Smith on 11.30.10 at 1:30 am

Garth, dude, I see you are alluding to a potential rise in interests rates. I had to disappoint you, but in a deflationary environment such as this, it aint gonna happen. We have been predicting a rise for close to yaer and half now, hasnt happened. It wont.

#25 chris james on 11.30.10 at 1:32 am

i understand that the euro area bonds will spike higher(yield), will not the flight to safety buying the yankee bonds, usd and i guess the cnd bonds will participate also. so shoudn’t we see yield drop here while this mess get’s straighten out??

#26 SophieZombie on 11.30.10 at 1:36 am

For those who are not from Vancouver, this little game give you a great idea of what you could buy for a million dollars+ . None of the houses are sea view, maybe close to a funky part of town.. if healthy statistics closer to Botswana than Canada = trendy for you (most houses are close to downtown eastside) enjoy the millionaire slum! http://www.crackshackormansion.com/

#27 Debt's Dark Embrace on 11.30.10 at 1:41 am

Interest rates will stay relatively low here for quite a while yet. As the poop hits the fan in Europe investors and savers will run back to the American dollar for safety and will accept 1 or 2 % on American bonds and rates will stay low and the BOC will follow suit. Yawn……….maybe in 2014 or 2015 rates will rise significantly.

#28 mousey on 11.30.10 at 1:47 am

The Vancouver Special
As hard as it may be to imagine anywhere outside of Vancouver, that box on a lot featured in your piece isn’t all that bad compared to some of the “crap” they’ve been flogging for the last 6 months. If you want to really have a laugh (or cry) go onto the realtylink for the west side of Vancouver and search the entire area for 3 bedroom houses under $1,500,000 and see what comes up. Have your phone handy because you will want to phone your friends to have a laugh. It’s the catchy realtor phrases that get my eyebrows in a twist. For example, the “perfect for the young family” (of what? bats) or “mostly lot value – build your dream home” (with what the fifty cents you have left?). Anyway, searching the Vancouver west side market on the realtylink site is at least as entertaining as Comedy Central on an average night, but cheaper (as long as you don’t go over to the dark side and “buy now!)

#29 Aussie Roy on 11.30.10 at 1:48 am

Garth its the risks that arent seen by people which are the most dangerous.

DA this will be the 2nd last time I write to you as your education is just about complete.

Before I start you make the comment of well rates arent going to rise any time soon. You might be right but you miss the point. A price risk assesment is about subjecting prices to all known influences (cycles of known economic historical conditions) and measuring the results. Its NOT a predicition. Anyway you do agree that interest rates are a risk and this assesment proves prices are unstable at higher rates due to prices being a high multiple of annual income. EXCELLENT. Thats the inflation high interest scenario.

Lets now do the easy bits I should not have to explain anything about the deflationary scenario just look south. I would guess you would also agree with the risks to high annual income prices in that enviroment.
Deflation scenario – check

Finally what drives price well sorry folks have to write this once again but this time lets see if its correct.

House values are driven by wages – check the inflation scenario proves this to be true.
House prices are driven by credit (cost and willingness to borrow) and emotion.
Current and recent market conditions continueing – check.

Lets take a look at the second part of that statement. If this is correct then there should be a strong correlation between rising debt levels and house prices. Well I’ll be a “Roo’s joey” the correllation is 0.97 here in Australia.
http://en.wikipedia.org/wiki/Correlation

So here is a tip for you watch the quarterly info on loan applications if its going up you can breathe easy, when it starts to fall (and it may have started already in some areas) then prices will be directly impacted.

By the way your comments on ah interest rates arent going up anytime soon misses the point of risk assesment and goes directly to Garths point today. You cant dont and maybe wont see the risks thanks to your current beliefs and some would say delusion. I sure am glad you are not a plane engineer designing planes for those lovely sunny still days (the way you currently see the risks) the first bit of rough weather it would be curtains.

Good luck my friend hope it all turns out for you and private debt levels get to 1000% of GDP houses are 20 times annual income. Unfortunatley the math tells me if any of the above happen your delusion of ever increasing house price appreciation will be smashed. And of course its impossible for debt to get that high.

So what is the overall risk assesment, unstable prices, price well above value as assesment shows. Sorry but its not time to buy but time to sell. Someone wake me up when the risk assesment is different, I just might buy few properties again. Nuh probably better to stay asleep delusion this strong could have the tragic result of spreading this repricing closer to value over many many years. Slow melt anyone….

Aussie Update

Gee whats this the RBA gov encouraging deleveraging.
Carefull what you wish for Glen it might just come true.

http://www.heraldsun.com.au/business/save-before-you-spend-urges-stevens/story-e6frfh4f-1225962929465

#30 Bill on 11.30.10 at 1:51 am

I don’t buy the asian buyers thoery either.
There is a great shear in the buying power of China’s currecy. You see many Chinese won the current auctions all over the place. Why? Because nothing, absolutely nothing they could invest to keep up with the exploding inflation within the country. Some short money may come to Van for a ‘safe’ gain, but these speculating buyers are bunnies who are also the fastest dumpers and most ruthless exiters. They will for sure damage the local market and for a very long time after collapsing.
There are always greater fools. There are always end buyers. Bless those who gets in now.
There may be truth, but who is listening?

#31 Patz on 11.30.10 at 2:01 am

#9 Billy Bob,
(you don’t act do you?)

I guess the rich Asians buying up Vancouver story won’t go away until it goes away, i.e. when the market commits sepaku. Meanwhile Bobby Bill or whatever, read this—math’s just not there: http://tiny.cc/pgk5a

#32 Utopia on 11.30.10 at 2:02 am

OK, I will be the first to say I lost my temper after reading your article today. I have been on “simmer” for some time now though and have grown increasingly frustrated as the Canadian housing and debt experience has grown from a small issue into a problem that threatens our national solvency.

Will we be Ireland in five years time if this does not stop?

Will we be enslaved by the cartel of banks in this country under the auspices of the CMHC and Conservative Government policy?

Will we say “NO” to this manipulation or just sit back and take it until we are as a nation thoroughly indebted to a sick agenda that puts us all into debt slavery?

F*ck them all.

A conversation needs to be had about abandoning debt. We need to discuss walking away and saying “I will not pay you,….EVER”.

Consolidation is what they want…but…
Bankruptcy is a better option.
Or make an offer. Five cents on the dollar. Maximum.
And if they don’t take it then hand thenm the keys and say “bugger off””in no uncertain terms.

Bankruptcy is total freedom from debt tyranny.

#33 TheBestPlaceOnEarth on 11.30.10 at 2:05 am

Great deal on that property. Will get snapped up quick

#34 dark sad person on 11.30.10 at 2:09 am

#184 Taxpayer like everyone else on 11.29.10 at 10:03 pm

162 Shawn – oh don’t be modest. I’m surprised this simple concept is mis-understood by so many people,
including many regular posters.

I’ve attached this little tidbit for an example:

********************

Good that you found a bank that did lend responsibly-there were quite a few that did and they should have been allowed to go to the front of the line and be the future leaders-but-we know what happened instead-
The Governments (in their wisdom) propped up the one that needed and still need to die and the sound ones were punished-

Your view is too microscopic though-in the broad scope of things–

For instance–you can see that the savings rate was for years in severe decline-until TSHTF and has only recently reversed-
Also-keep in mind that “defaults” are counted as savings-because it is balance sheet positive-
That is typical of high Inflation-when people thought housing always went up and provided a constant supply of HELOC cash-
The reversal is typical of Deflation-when savings become important again and this is a good thing-

http://research.stlouisfed.org/fred2/series/PSAVERT

Here is a comparison to the enormous size of the Credit market compared to actual cash money supply-
(look at the left side of the charts-for the amounts)

Credit supply

http://research.stlouisfed.org/fred2/series/TOTBKCR

http://research.stlouisfed.org/fred2/series/TOTALNS

http://research.stlouisfed.org/fred2/series/RSBKCRNS

Money supply-

http://research.stlouisfed.org/fred2/series/SBASENS-

You can see the credit outstanding dwarfs cash money supply-so how on earth could there be a dollar “somewhere” for every dollar of credit issued?

Now i know you could point to these charts and say-”saving deposits” have been climbing steadily for years–

http://research.stlouisfed.org/fred2/series/SVGCBSL

http://research.stlouisfed.org/fred2/series/WSAVCBN

This is a false reading-pay attention to what happens in about 1994–
The reason that chart shows an explosion in savings rates is because of a little known Banker trick called Sweeps-
In the US–they do have a reserve requirement of 12-1
and with that “nasty” little obstacle in the way of Bankers issuing credit at will-
Sweeps were allowed-
This was introduced (deregulated) by easy Al Greenspan in 1994
What they do-is allow Bankers to take the money from “checking accounts” (nightly) and Sweep it into savings and Presto-
http://2.bp.blogspot.com/_nSTO-vZpSgc/R055UiyjvhI/AAAAAAAABo0/6bjtpLgtI4s/s1600-h/demand-deposits1.png

Lots of room to expand credit at 12-1-
In Canada-we don’t even have a reserve requirement-

************
Since January 1994, hundreds of banks and other depository financial institutions have implemented automated computer programs that reduce their required reserves by analyzing customers’ use of checkable deposits (demand deposits, ATS, NOW, and other checkable deposits) and “sweeping” such deposits into savings deposits (specifically, MMDA, or money market deposit accounts).

Under the Federal Reserve’s Regulation D, MMDA accounts are personal saving deposits and, hence, have a zero statutory reserve requirement.

Retail sweep programs have substantially distorted the growth of M1, total reserves and the monetary base, as Chairman Greenspan noted in his July 1995 Humphrey-Hawkins Act testimony to the Congress.

http://research.stlouisfed.org/aggreg/swdata.html

ZAP!

#35 nonplused on 11.30.10 at 2:09 am

“Believe it or not, kids. There was a time banks paid interest and earned respect.” – Garth

Um, I respectfully disagree.

Historically, no bank survives. Even Lloyd’s of London (ok, more of an insurance company, but long history) went down.

Banks are Ponzi schemes, that take their deposits and lend out 10 times as much money. They make great profit when the loans get serviced, and ALWAYS, (sorry to shout), always go broke the first time a borrower defaults.

Next to governments that borrow money, banks are the most immoral institution on the planet. They take money from people who trust them, lend it 10 times to people who can’t pay it back, and then expect the insolvent government who supports them to bail them out and still pays bonuses.

Banking = corruption. Always did, always will. Banks are by their very nature corrupt. They lend what they do not have. They used to be fairly nit-picky about who they lent to such that they would get paid back, so the scam that they never had what they leant would not be discovered. But in their greed they went far beyond that now. They will not get paid back what they didn’t have to lend and so it isn’t a simple bankruptcy (failure of a bank) anymore. It’s to the point they can threaten the whole system. We will find a way around them eventually.

Iceland, Portugal, Ireland. Italy, Spain, France, Belgium. California (but Ontario first), Detroit. Germany, China, the USA. Then Australia and Canada. Dominos. Do not invest until it’s fixed, but don’t save cash if you have a physical thing you can buy and store, and might need. Don’t have a can opener? Get one. More money and no chainsaw? Trip to Revy. No generator? Well buy that too, and one of those storage tanks. Food? Cans and seeds. This stuff isn’t going away.

#36 Nostradamus Le Mad Vlad on 11.30.10 at 2:13 am

-
The two Sumo wrestlers look remarkably like the Japanese version of the TSA — Please Fondle My Bum!

“Yup. Eight.” — Stephen Harper has done a masterful job of quietly destroying Canada, the same as Obama has done south of the border.

The elite are taking care of Europe, so Chindia / Russia / Iran are within striking distance of assuming the position of being The Big Cheezies.

Of course, there are minimal benefits. If Europe ends up in complete anarchy, followed by North America, the end of the Euro could potentially happen, with each country returning to its original currency, and with the NAU / SPP in place, a new currency can be introduced.
*
4:46 clip Austerity coming to the US (then here?). As said earlier, North America is headed to Third World status.

Food Crisis One and Food Crisis Two.

4:53 clip Note the term “. . . in the very near future . . .” — possibly a few months, maybe sooner.

Gold Sell all the gold for a tidy profit, then stock up on silver!

Merger Two bankrupt countries; two almost-bankrupt airlines.

Socialism It helps enormously that Obama and Soros have both studied Marx.

Corporate Bonds are falling.

Pensions Getting a little strained?

Kamakura: Wealth and death traps.

Wikileaks This would be right for Soros and the CIA. Here too.

Accurate, is not somewhat melodramatic.

The Policeman of the world is fading away.

#37 The Original Dave on 11.30.10 at 2:16 am

#159 Lonely Limey on 11.29.10 at 5:40 pm

Greg W from Oakville, everyday you post an “artical” for Garth to read. It is spelled “article”.

………………….

If you’re going to be the spelling police might I point out you should have written your last sentence ” It is spelt, article”
=========================

sorry dude, only in Limey country is it “spelled”spelt. In Canada, spelt is a grain.
_______________________________________

hahahaha, Limey was busy reading the “artical”

Greg W, for the love of God, every post, you post a link with an ARTICLE but spell the word wrong everytime. It’s an ARTICLE it’s not an artical. Soon people on here are going to be swayed and convinced that your way is right after seeing it so many times.

#38 Midas on 11.30.10 at 2:17 am

Re China, from the Globe:

“Lui estimates that up to 80% of recent sales in this price range [$5M] have been going to buyers from mainland China. ”

“At Wesbrook, a high-rise development on the University of British Columbia campus where units typically run $1.5 million to $2 million, some 40% to 50% of buyers are from mainland China, according to George Wong of Magnum Projects, which markets condos for Wesbrook’s builder, Aspac Developments.”

http://www.theglobeandmail.com/report-on-business/rob-magazine/is-vancouver-in-a-real-estate-bubble/article1808967/singlepage/#articlecontent

#39 Anon on 11.30.10 at 2:21 am

Ladysmith is full of Metro Van runaways. Welcome!

#40 The Original Dave on 11.30.10 at 2:24 am

* every time

#41 Tre on 11.30.10 at 2:30 am

I hope they like bottoms because when this housing bust is done, the greater fools will be hurting.

#42 Marco on 11.30.10 at 2:36 am

Garth,

I’m an immigrant from Europe, fresh off the boat, coming over under the “federal skilled worker” program.

Before arriving, I sold our house in Europe and consolidated all our savings except for the pensions which are invested in a balanced portfolio.

I secured a job paying $170k base / $ 350k on target in Vancouver and moved into a rented house. I am 42, my wife 40 and our kids are 7 years old and 10 months old (yes a gap).

We moved here for quality of life, leaving higher earnings in Europe behind (and it looks like the timing was impeccable).

So I have about $500k in cash and when I went to see my bank, they were drooling at the thought of turning that into some form of leveraged debt. I resisted, deeply enjoying my new found position of liquidity.

I am 100% debt free, bought a car in cash (call me a cheapskate, but I have a self imposed limit of a max $25k spend on a car every 5 years, never on credit and never a penny more as it is a depreciating asset – so no Lexus/Merc/BMW for me).

I’m holding the ca$h for a vulture moment in the future, or not as may be the case.

I have also just received your book, but here is a short question: Have I got enough of a foundation here to build a life, or am I fooling myself into believing a 1 year ski vacation is a new life? Everyone around Vancouver seems to be an asian gabillionaire and I am wondering if I should follow that very nice couple you wrote about all the way to Victoria (p.s. I have deep respect for the very skilled Engineers and admire anyone who sets up their own business whatever it is – Clearly Vancouver is worse off without them as they constitute the fabric of what makes up a local economy).

If you can help me out with a “got enough to make it providing you do X.Y.Z” or “sorry pal, enjoy skiing and take a flight back when the snow melts”…

Thanks very much for being a voice of truth!

M

#43 Hans on 11.30.10 at 2:50 am

I lived in Vancouver, close to the 22 street sky train. We bought a 1940′s house for 250,000 (1300 sq feet, no garage, leaky roof. The tax return said the house was worth $15,000, and the rest of the value was the land.
This was in 1994

The point is, nothing has changed in 15 years. People then complained bitterly that prices were super high, and “they cant go much higher” Duh. As long as there is overseas investment, and huge immigration from India and China, prices will stay higher than “normal”. Ya, it’ll drop, but not over a cliff. People have been complaining about high prices since the 1985! Give me a break. Get over it, or move out. We moved out to Alberta, and bought twice the house.

#44 rory on 11.30.10 at 2:53 am

SGIP …

Hey girl …now you are being respectful and can be taken seriously …not that my vote is going anywhere else …lol

#45 Tim on 11.30.10 at 3:07 am

The median house price in Seattle is now down to $385K. Same climate, same proximity to the ocean, friendlier people, even though some are Republicans…Home of Microsoft and Boeing… Vancouver is going down. The Millenium weasels are now in trouble for over 70 million for a condo development in North Van. Rennie, the condo weasel is pimping these units and Olympic Village lol!

#46 RE Bear on 11.30.10 at 3:09 am

#8 Hosehead on 11.30.10 at 12:46 am
Great blog post today as usual. Who would buy that Vancouver dump even if it was $590?

Who would buy that house even if it was $1? The property taxes would be $700 a month, and I could most definitely rent a nicer place for half of that a month.

#47 Tim on 11.30.10 at 3:13 am

RE#2
That’s putting it lightly. To quote Danny Williams “The worst thing Canadians could do would be to give Stephen Harper a majority, that would be the worst thing ever in Canadian politics” Harper has managed to inflate the deficit by fifty percent! A conservative-my ass! An opportunistic, mean-spirited weasel who will do anything to remain in power, while weakening our public institutions in the process

#48 Tim on 11.30.10 at 3:17 am

RE #11
You forgot to mention that for years Harper ranted about reforming the Senate, and now he’s done completely the opposite by stacking it with his right wing pals, who have just overturned a bill…democracy…

#49 Conspiricy Guy on 11.30.10 at 3:59 am

Once the banks allocate all those suckers willing to bet the farm on Real estate.

They will somehow start an inflation scare, allowing them to increase interest rates and like Vampires, suck every last once cent from the great fools who bought into into the real estate pyramid scam.

Just like global warming, the same group of people are orchestrating this low interest allocation of Debt
to screw the average working man. And what is real bad is the lies and contradictions which CREA and the Vancouver sun keeps on publishing.

Remember you don’t own the house, the Banks do. If interest rates start rising, the banks will own the house and your family.

#50 realpaul on 11.30.10 at 4:08 am

The global institutions as already charging Ireland and Greece a rate far higher than in Canada’s ponzi scheme economy. 5.75 is the going rate from the IMF…the EU is at 5.5%.

The artificially ‘emergency’ Canadian intrest rate deception is a fiction written by our finance minister desperate to keep the Loon below the ever plunging USD.

He’s willing to pile on massive debt by selling ‘bonds’ to us the taxpayer that he creates in the basement of Sussex Drive. This is debt that Canadians will have to pay for with intrest . It is the cushion that we will not have when our cousin to the south is forced to raise rates and we cannot pay ourselves back. The strategy keeps the currency from rising…but it beggars the nation with debt for generations. The Americans won’t wait until the Canadians are ‘able’ to kcik our little Bernake doppelganger in the nutz. Following the insane policy of low rates to save a dwindling number of dinosaur jobs in Quebec and Ont for the sake of cheap goods in the USA is going to prove our undoing.

As rates rise around the world our ability to borrow on the open market will be zero…the national debt will force our ratings down and force our rates up. Taxes can only skyrocket. The taxman, already a rabid dog, will become a gestapo kicking down doors with police force powers of restraint and confiscation.

Flaherty’s folly can only end badly. Without an independant economic policy we’re f**cked. The debt we’re piling into to support a ‘coordinated recovery’ in North America isn’t survivable. The US can recover..they are the reserve currency with unlimited power to print money…we are not. The US has 300 ++ million people to generate economy and tax…we are a pimple on their ass. For Flaherty to ‘support’ US economic policy is insane, grandiose, the product of a man with a Napolean complex.

#51 Devil's Advocate on 11.30.10 at 4:22 am

#194 Jen on 11.30.10 at 1:01 am
“On average I would say we paid about 8.75% interest over the time we had a mortgage. But that was on a $77,000 principle amount which over time remained constant while the actual property value increased.”
Thanks for taking the time to respond. My question, however, is this: Are you still maintaining that value of your current home is *9 times* what we paid for the first 28 years ago?
I’m assuming you paid off your house in 25 years, so, with an average (quoted by you) rate of 8.75% over that time, you paid:
$77,000 for the principle, about $110,500 in interest costs, not including all the money you spent on maintenance and renovations over the years. So, your house is worth about ….$1.7 mill, then? If it is, I’m very impressed. Good for you.
“Now if you think property is NEVER going to rise in value again then I would have to agree ownership is not such a viable option.”
I don’t recall claiming that…

Oh Jen now you don’t really think you are going to trip me up like that do you.

Here’s the deal Jen:

It’s like buying a car vs. leasing a car. Neither are particularly good investments. But buying a good car that lasts and holding it long term greatly reduces the monthly expense associated with your transportation costs even if you have to finance it initially.

Buying is not for everyone. For many leasing makes sense. I, for example, lease my business vehicle for a number of reasons none the least of which is the tax implications. Our personal vehicles, which average about 17 years age now and are still going strong, we own.

On the matter of the interest we paid the bank on our mortgage – that is opportunity cost the bank gave up by lending us the money – opportunity cost we would otherwise have paid a landlord were we to have rented all those years.

Again Jen, when we bought our first “home” we knew it to be an expense even when some day it was bought and paid for just as those old cars we currently own demand maintenance gas and oil so too does our “home”. But in the long run they all have served us well and we think more than paid for themselves. In fact, in accounting terms, our book salvage value might be said to be currently nil as our home has paid for itself even considering the interest expense, as have the cars.

And no I don’t lease a bright shinny new BMW for work. I drive a very non descript reliable below the radar sedan.

#52 Devil's Advocate on 11.30.10 at 4:35 am

“Of course, that’s just to own the house. Not to buy it. For that the bank based its ‘affordability’ numbers on a down payment of 25% (the average across Canada at this time is 7%), and a 25-year mortgage (90% of new mortgages are for 35 years).” – Garth

the average 7% down payment figure applies only to first time buyers who finance their purchase. It does not include move-up, move-down or those who buy all cash with no mortgage.

#53 Aussie Roy on 11.30.10 at 4:38 am

9 Billy Bob on 11.30.10 at 12:48 am

Canadian mortgage rates, down payment requirements, the health of the economy, unemployment rates, the Canadian/US exchange rate, and the percentage of family income required to carry a home DO NOT MATTER in Vancouver.

Mate thats the best laugh I’ve had all day. I think Garth should replace todays photo with one of yours. Hey do you own a calculator that you know how to use.

#54 Thetruth on 11.30.10 at 4:44 am

#17 Jsan

A question for you. How many people (excluding tourists) moved to Canada permanently and temporarily (hoping to get permanent) last year? Seek and you will find the answer.

#55 Devil's Advocate on 11.30.10 at 4:59 am

Ya know what Garth and the Pups… the world really does SUCK. There is no hope for the future, absolutely none what-so-ever. Even if you do manage to save a few shillings for your retirement the angry Gen-Y is going to toast your sorry ass for all the hurt you dumped upon them as they toil day after day, night and day to pay off your accumulated public debt. Their lives are doomed to be more miserable than your own. You bet their gonna be pissed and want to take it out on someone.

Country after country is going belly up…

Living costs are going through the roof…

The banks are conspiring to fleece the last cent from your pocket…

There is a conspiracy by the super rich to herd the shepple…

Greater fools are being led to slaughter…

There is no hope… none… your future is as bleak as the worst of an Eric Arthur Blair novel.

Might as well end it now… take a shotgun, cover the barrels with your mouth, pull those triggers and blow your brains out so they can no longer control you. Splatter them against the cleanest wall of your rented basement bunker as some crimson abstract art in retaliatory protest. That’ll send them a message loud and clear.

It’s that or continue to live a miserable life of servitude to “the man” being repeatedly exploited like the prison pillow you are.

#56 Europa on 11.30.10 at 5:04 am

Live from Europe…

Yes, Garth is 100% correct, VERY unfortunately, Europe is in a very serious situation. A situation that will affect all countries of the world (maybe not Vancouver, it’s not on Earth).

The Irish gov’t hasn’t passed the austerity bill yet, (but were supposed to before last Sunday), now the Irish gov’t is FAVORING the failing of the Irish Banks vs taking a bailout. (Who says Gov’t banks can’t fail?).

The surprise in Europe last night was how fast the problems are developing. Now Italy’s bonds are shooting up as well as Portugals and Spains. Talk of the end of the Euro is on the Tele and 50% of Germans want out of the Euro. Germany is the strongest economy in the EU but Germans do not want to bail out all of the EU (who would).

Europe today and yesterday have been hit with a big snow storm, shutting down businesses, rail, transit and roads making the situation that much worse.

If you are an investor in Europe, you might want to get out while you can. In fact, I’d suggest getting into cash and out of investments anywhere in the world right now till this major crisis blows over.

#57 Europa on 11.30.10 at 5:07 am

$790k Vancouver shack.

To be perfectly honest, I’d be ashamed to rent it.

#58 Chappy on 11.30.10 at 6:04 am

Just started reading this blog a couple of days ago. It’s already helped me from buying a hot tub on credit. Thanks! Also, can we expect a large drop in mid-range housing prices in Calgary area? Say, $300K range???

#59 mark on 11.30.10 at 7:04 am

oh look it’s the shortage myth, gone in 8 months

http://tasmanianrealestatetrouble.blogspot.com/2010/11/silence.html

#60 Aussie Roy on 11.30.10 at 7:23 am

Marcus Aurelius

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.

Thank you so much for the kind words, its been a few years since my math Phd also,so anytime you consider my theory or calcs not to be correct please do let me know. We Aussies if nothing else have a thick skin (is that too Aussie – it means not easily upset but has the right attitude to constructive questioning).

#61 Thetruth on 11.30.10 at 7:37 am

This week, Taiwan joins the growing list of countries whose people do not need a visa to come to Canada.

Wait until the restriction is lifted off China and India.

#62 Yo Mama on 11.30.10 at 7:44 am

Let me get this straight… Banks in Canada actually permit up to 48% of pretax income to go toward a monthly house payment? If this is the case, then my suspicions are confirmed that Canada will suffer a much worser fate than the U.S. Even at the peak of the housing frenzy and making of subprime loans, U.S. banks would rarely if EVER lend beyond 31% of pretax income to be made toward a house payment (including home owner’s dues, principal, interest, property taxes, and mortgage insurance if required). Nobody, and I mean NOBODY, is going to lie to me and tell me Canada will escape the fate of the U.S. Also, nobody is going to candy-coat the situation and tell me we’re going to come out of this unscathed. Pride cometh before the fall, and the fall is just beginning. Our own banks won’t come out with it and come clean. As Garth points out, our own banks create scenarios that simply aren’t the “norm” in order to paint a picture of Canadian responsibility. It is nothing more than smoke and mirrors and the Canadian people are being lied to. Wake up and demand truth in lending.

#63 Pr on 11.30.10 at 8:01 am

Coumpond interest, one of the greatest scam in human history, now the slave have to feed him self and pay is roof for half is life. Plus no more wip , TAXES replace the wip. So now work work work in your j.o.b ( Just Over Broak).

#64 dd on 11.30.10 at 8:24 am

#39 Anon

“Ladysmith is full of Metro Van runaways. Welcome!”

Can’t be. You only have a tim hortons.

#65 dissin on 11.30.10 at 8:30 am

In australia our bubble is almost ready to pop. Sold my house a year ago. Paid off debts and have $200k in 6mth term deposit @6.5%. I have rediscovered the long lost art of SAVING and not spending. Renting is much easier. Its all in the mind. We have been conned by media, banks, govt & RE companies. No more.

Im doing what i want to do. Not following others anymore.

im doing what i want to do. Not following others anymore!

Suggest you look in the mirror.

I choose to have a happy life with family anyday over materialism

#66 David B on 11.30.10 at 8:32 am

And don’t get me going on the structural unemployment rate in Canada, BC’s vanishing local economy, the certainty of higher federal taxes, unsustainable household debt or the fact our major trading partner is on its knees and electing yahoos and whackjobs to Congress.

——————————————

And to-day is day one for the new lame duckers to do what? Find a route to give the top 2% a tax break!
—————————————————-

And just to confirm what Garth said in para one above this is brewing in the real world.

By Mark Brown and Eva Szalay

Spanish and Italian bond spreads over German bunds rose sharply to new highs, as did the cost of European sovereign debt insurance, while the euro continued to tumble, as euro-zone contagion fears continue to roil currency and debt markets
——————————————

By CHARLES FORELLE and STEPHEN FIDLER in Brussels and TOM LAURICELLA in New York
BRUSSELS—Financial market pressure on Europe’s weaker economies intensified Monday as a weekend rescue plan for Ireland and the outlines of a bailout fund failed to quell investor nervousness about possible government defaults.

Borrowing costs for Portugal, Spain, Italy—and even Belgium—jumped, even though European finance ministers meeting in Brussels did have some good news for bondholders: The size of a loan for Ireland was finalized at $89 billion, some repayment deadlines for both Ireland and Greece were extended
——————————–

Fear not here in Canada because King Steve is here and boys oh boys can he spend money.

Just look at the amount of extra money he wants to spend on those F-35″s … Canada is rich

http://www.bloomberg.com/news/2010-11-01/pentagon-said-to-see-higher-f-35-costs-delays-up-to-three-years.html
————————————

#67 Burnaby Boy on 11.30.10 at 8:35 am

Hi #23 Urban Cowboy
Not to go off topic too far, although war does affect property prices, can you, or anybody else, name a successful multi-cultural civilization? Maybe it is different here. I hope so.

#68 Aussie Roy on 11.30.10 at 8:43 am

62 Yo Mama on 11.30.10 at 7:44 am

Let me get this straight… Banks in Canada actually permit up to 48% of pretax income to go toward a monthly house payment? If this is the case, then my suspicions are confirmed that Canada will suffer a much worser fate than the U.S.

Gee only 48%, yes thats very bad. Have a look at this video from our little cousins in NZ. To be honest he could be talking about Australia, after all their our banks. Pause the video 1 minute in take a long hard look at that graph. What is their solution, a new loan product I didnt know whether to laugh or cry.

http://www.youtube.com/watch?v=oG2pxFRv1Qk

Aussie Update.

Auction clearance rates have been sliding since April
No need to be concerned.
http://www.theaustralian.com.au/news/executive-lifestyle/hammer-comes-down-on-the-rush-to-auction/story-fn6njxlr-1225960973648

Perth property price plummet continues. Gee this is our biggest mining state. Many thought its different here, many still do.
http://www.watoday.com.au/wa-news/perth-property-price-plummet-continues-20101130-18en9.html?from=age_ft

#69 pbrasseur on 11.30.10 at 8:51 am

Regarding Spain I think QE is inevitable in Europe, in the US QE2 was a luxury, in Europe it will be a necessity.

As for Canada this trade deficit does not bode well for the $CAN, sooner or later the “insivible hand” will wack us behind the head…

Wonder what this means for the US dollar, after all maybe the USD was a safe heaven during the crisis for a reason.

I wonder also what those 2020 lunatics are saying now!

#70 bigrider on 11.30.10 at 8:54 am

All this hate on for people who drive BMW’s and Mercedes.
Same logic applies as does to housing. If you can afford a BMW or Mercedes, if it represents a relatively small portion of your net worth , say, less then 10%, then buy one and enjoy.
Actually, so long as you are saving and investing at least 20% of what you earn yearly without fail, buy whatever turns your crank.

#71 T.O. Bubble Boy on 11.30.10 at 9:05 am

Least surprising news of the day:

Olympic village condos to return to market at significant price cuts

I wondering if the new marketing campaign will focus on wealthy asians?

#72 DARLENE on 11.30.10 at 9:39 am

T.O. Bubble Boy on 11.30.10 at 12:37 am
Mortgage Brokers are just a wee bit mad at Ed Clark (CEO of TD) for suggesting that mortgage amortization limits should go back to 25 years at some point
*****************************************

I did a google search for this yesterday after you first posted this. Thanks so much for posting this. I’m no expert by any means, but I always felt the lengthy amortizations were the problem.

Back when Ian Lee was commenting on this blog he mentioned that he thought increasing the down payment to 10% would help alleviate the problem and also he mentioned about Mark Carney stating that if interest rates went up 3% it would cause financial difficulty for a large number of people.

That got me started and I went to play with the numbers on a mortgage calculator. I used a purchase price of $350,000 and changed the down payment from 5% to 10%, left the 5% down and raised the interest rate from 4% to 7%, and then did a calculation with changing the amortization from 35 years to 25 years.

I found that increasing the down payment doesn’t effect affordability that much, considering most people consider payments as their affordability factor. But if you change the amortization from 35 to 25 years the payments increase as much as a 3% increase rate, which drastically effects the monthly payments.

I wonder if Ed Clark was reading that day? About 2 weeks later he comes out with this, makes me wonder if his thought process is the same as mine. LOL

#73 MikeT on 11.30.10 at 9:53 am

GDP numbers are out. Prior quarter (ending in June) growth was 2%, the survey of top Canadian economists said they expected it to be 1.5% for last quarter, the real number is 1%.
Economy coming to a halt?…

#74 Junius on 11.30.10 at 9:58 am

#49 Conspiracy guy

You said, “Just like global warming, the same group of people are orchestrating this low interest allocation of Debt to screw the average working man.”

How in the world can you compare the global warming to the banks pumping people with debt. If anything, it is the opposite.

The global warming denial crowd is the same bunch of corporations and elites who who want everything to remain the same so we keep spending too much on oil and allow them to poison our food supply, water, etc. in the name of short term profits.

You being manipulated dude and you don’t even know it.

#75 BDG-YYC on 11.30.10 at 10:02 am

Hey D.A. …

So close but no cigar. The basement dwellers are fine. However, your advice is altogerthert mistargeted and redundant since it is likely more appropriately targeted toward the people owning the basement dweller’s humble quarters and occupying the upstairs residence. You really need to get out more and look around … most of the “prison pillows” you refer to have already placed both barrels in their mouths and have been walking arround that way for some time. New fashion style. Just a matter of time ’till triggers catch on something.

Keep at it though … good effort – you’ll get it right yet :-)

Cheers

#76 BoomersEarningCash.com on 11.30.10 at 10:08 am

For the life of me, I just don’t understand why a so called “educated” public doesn’t understand what is happening with all this debt that is floating around and the implications that it has.

I am completely baffled as to why the Baby Boomers do not seem to realize the hard times that lie ahead.

#77 Junius on 11.30.10 at 10:09 am

#20 viewwest,

I see the same signs here in Vancouver. Lots of locally owned businesses going down. For lease signs on main roads inside the City of Vancouver are increasing. Just wait until the New Year. The next wave will hold on for the holiday miracles that are not going to come.

I was driving around yesterday with a good friend who was in from LA. He is an accountant with a diverse practice mostly in the entertainment field but includes a large number of individuals and small businesses.

He said he now saw the signs of where Vancouver is headed. It is LA 5 years ago as the market dipped and then crashed.

He gets to see the human side of what happens to people and their families. Many of his clients in their 50s who thought they were near retirement found much of their savings destroyed. Others had their grown children move home, often with children. Many lost their jobs and are virtually unemployable now because their industry has shrank and they are too old to start again. Divorces and break-ups are rampant as stress destroys the fabric of the relationships.

Coming to a Canada shortly. Yes, even Vancouver.

#78 MikeT on 11.30.10 at 10:11 am

From Globe and Mail:
“If “buyers from China” answers the “who” question about Vancouver’s unique real-estate market, the follow-up question—“Where is this leading?”—is harder to answer. The torrid affair between eastern Asia and Vancouver real estate, now in its third decade, is actually a love triangle from which each party derives very different things. When wealthy Chinese immigrants buy property in Vancouver—and they utterly dominate the top end of the market—they’re actually buying a form of insurance. What the federal and provincial governments get out of these newly minted Canadians turns out to be a modern form of the infamous head tax that was imposed on Chinese migrants in the 19th century. And what Vancouver gets is an economy that boasts a lot of froth, and not much substance. From all three angles, it feels like a relationship that is built not so much on Commitment as on enjoying the good times while they last.”

Link: http://www.theglobeandmail.com/report-on-business/rob-magazine/is-vancouver-in-a-real-estate-bubble/article1808967/

#79 CTO on 11.30.10 at 10:12 am

Trade deficite

How could anyone be suprised that we would have a trade deficite with the US:
C$ @ or above par to US$
2-3 times the mortgage payments for Canadian houses, specificaly metro areas heavily dependent on manufacturing (T.O, Montreal, Van) our cost of living requires our cost of doing business so much higher.

Any other trading partness are zippo compared to the trade we had with US and for years everything was in our favour, but not now!
How could anyone comfortably load up on mortgage debt when we are faced with this?
Even worse…US has huge trade deficite with the rest of the world, especially east asia.
Good luke Canada!
We can end this debt binge now or it will wipe us out later, and later is coming…

#80 BZ on 11.30.10 at 10:15 am

I think we should establish trailer camps outside Toronto and Van. for those waiting out the bubble. I still hate paying rent…

#81 Junius on 11.30.10 at 10:17 am

#72 Darlene and TO Bubble Boy,

I guess Ed Clark didn’t get the memo to ride this gravy train into the ground along with the rest of the pumper industry.

The reaction of the mortgage brokers just shows how fragile things are right now and how much they KNOW it. His suggestion to return to 25 year amorts would just bring us back in line with historical and more prudent lending standards. Yet that leads to an out cry.

Reminds me of the group of mortgage brokers from the Island who objected to the first set of CMHC rule changes back in the Spring.

It should remind all of those pumpers that as quickly as the tide comes in it can go out when forces change things. Like, perhaps, when interest rates rise. A mere 2% raise would be more than enough to send the bulls and the rest of the pumpers to the showers for another generation.

#82 yt on 11.30.10 at 10:18 am

Well did it! I put in an offer of $850,000 on my dream house after Garth posted it. Location, location, location. Just hope no one scoops it on me. The best part is I amalgamated my credit cards a month ago so now I have enough room on them to borrow a down payment. Just think, soon I can call myself a home owner like everyone else.

#83 CTO on 11.30.10 at 10:22 am

#72 DARLENE

Agreed, it’s not difficult to figure out why the housing martet has been supercharged here and was supercharged in the US before…well you know.

Do some math and figure how much principal is payed off the 1st 5 yrs in a 35 yr am. I think Garth kind of demonstrates above that these types of home owner are renters of money with a 35yr lease.
If rates reset at 2-3% higher in five years along with all the other higher costs in taxes, utilities…many big spenders now will have the poo squeezed out of their sunshine heavy behinds!

#84 john m on 11.30.10 at 10:23 am

Unbelievable! I can not even in a booming economy imagine anyone buying that piece of crap. To say nothing of the crime rate.

#85 garthfan on 11.30.10 at 10:34 am

garth wrote:

Believe it or not, kids. There was a time banks paid interest and earned respect.

Nope. Don’t think we should tell children this anymore. It’s too much like saying “Jack the Ripper’s mother loved him too.” While she might have at one time, it kinda becomes a moot point once the bodies begin to pile up.

Actually, the more I read through Wikileaks docs, the more I am considering trading in most of my squirrels to invest in vast quantities of tin foil. Apparently, we Americans should have been making those damn hats all along, but we let the scoffers talk us out of it. I personally believe there will soon be an even bigger market for lead boxers and briefs though, because the TSA is even more interested in scanning our family jewels.

Got Bank?
http://blogs.forbes.com/andygreenberg/2010/11/29/an-interview-with-wikileaks-julian-assange/

I know, I know… this has nothing to do with preferred shares, but I am seriously allergic to the idea of sticking my shoes into the fire while simultaneously betting that the arsonist sitting next to me will toss in that can of gasoline he’s holding.

My grandfather had a saying that he always told the youngsters, “You’re shoes are on fire. Do you care?”

#86 David Rosenberg Pleasantly Surprised on 11.30.10 at 10:50 am

Hi Garth,

Any comments on David Rosenberg’s comments on housing below?

Did Canada experience some type of housing bubble? “We are worried about looming default risks but have been pleasantly surprised by the fact that the real estate market has eased, rather than busted. Be that as it may, a more pernicious turndown in real estate values cannot be ruled out, especially if the Bank of Canada follows the market and resumes in its rate-hiking program early next year.”

http://www.ctv.ca/generic/generated/static/business/article1817503.html

#87 OttawaDaddy on 11.30.10 at 10:50 am

http://www.williamgairdner.com/journal/2010/11/5/shock-sheet-on-canada.html

More than one-sixth of all immigrants to Canada return to their native countries for good within a year, and one-third within twenty years. About 40 percent of all professional male immigrants leave Canada for good within a decade of arrival (p.414-15). Statistics Canada reports that the earnings of immigrants are lower than those of Canadian citizens, and “continue to deteriorate.” (p.414).

#88 T.O. Bubble Boy on 11.30.10 at 10:52 am

@ #81 Junius:

Agreed.

The most ridiculous part is that people are arguing that 35-year amortizations are “critical” to the mortgage market… yet these didn’t even exist until 2006!!!

What – was there no mortgage lending before 2006?

#89 garthfan on 11.30.10 at 10:53 am

Sorry, hadn’t read the commentariat yet to see that Nostradamus Le Mad Vlad already gave wiki-links. Should have guessed as he/she apparently has an endless supply.

#90 Devil's Advocate on 11.30.10 at 11:20 am

#80 BZ on 11.30.10 at 10:15 amI think we should establish trailer camps outside Toronto and Van. for those waiting out the bubble. I still hate paying rent…

Evidence yet again that a very large contingent of the pups and poodles impatiently lays in wait of economic circumstances to fall in their favour rather than getting off their trailer trash lard asses and doing something about their pathetic lot in life.

Sorry I just can’t help but be critical of such pathetic behaviour.

#91 Aussie Roy on 11.30.10 at 11:26 am

Here is a little calculator from Forbes.

Pretty straight forward to use insert the mortgage interest paid in the other estimated annual costs.

Fill it in it will tell you whether its a buy or a sell.

Wonder whether any properties in the whole of Van based on current price and rental return would be a “RENT” not “SELL”.

http://www.forbes.com/fdc/rentorsell.shtml

SSSSh dont tell the rich Asians – LOL

#92 Yo Mama on 11.30.10 at 11:26 am

At #69: Pbrasseur, the USD will continue to gain strength as the world economies melt around us. The USD lost value, sure, but the U.S. was also ahead of the entire pack with transparency to their situation, the ensuing correction, and policy to stabilize their economy and banking regulations. The rest of the world has been too focused on the U.S. and its faults, but not any of their own shortcomings. For this, they will suffer. Notice how much the USD has gained in the past three weeks? This trend will continue as the European Union falters on the edge of collapse with its Euro (and YES, it is on the edge regardless of what others may want you to believe). The USD IS still by far the safest currency in the world, despite all the challenges the U.S. has seen in the past few years.

#93 Junius on 11.30.10 at 11:26 am

#86 Comment on Rosenberg,

Like most of us Rosenberg is “surprised” at the easing rather than bust but clearly the last part of the paragraph is telling, “a more pernicious turnaround in real estate cannot be ruled out.”

It doesn’t matter to most of us if it takes a week, a month or a year or more for the market in Canada to begin its slide. The point is that there is no way out for the Canadian real estate market in the long term. We are in for a long, slow recovery which will see affordability shrink as interest rates and other costs rise.

It is not about if, just when. It could be the same as now for a few months or more but it can’t go much further than that.

#94 househunter on 11.30.10 at 11:31 am

Vancouver west side sales in the last 4 weeks have been quite good. I’ll ask my realtor for the list/sales prices and post them here. I am a vulture and I was really sad to see the bloody properties selling for more than asking again. Sheesh. Rates are low, banks are telling everyone that its more affordable to buy… I feel like this crap is never going to end and I’ll be renting for at least 2 more years. With the bulge of listings at the end of this past summer and the rates (were) rising I really thought November (already come and gone) was going to be the start of the correction. Forget that. This train is still running and the economy is under performing, US is …well, the US, Europe might suck for the next while; there is no way BoC will raise rates while all of this is happening. Its going to be a buying free for all. TD bank is going door to door asking people if they considered buying “another” palce. I talk to people around me and they all think I’m doom and gloom when I say 10-20% correction coming in Vancouver. Maybe I got addicted to being a bear? Sigh.

#95 Paolo on 11.30.10 at 11:32 am

I love this part:

“…anyone taking a $735,000 mortgage when interest rates are close to an historic low, and house prices in Vancouver (or Toronto) are at an historic high…is an idiot. The nob on your head gets even larger when the mortgage is one with a 35-year payback period, which means after making $195,433 in monthly payments over five years, you still owe $681,728… Over $142,000 in interest, pissed away”

Does anyone actually ‘do the math’ when they get into these mortgages. How is this an “investment since home prices always go up” when you piss away tens of thousands in 5 short years. And on a POS house that needs thousands in renos.

It is quite the “perception gap” many people are buying into like dogma from the church of Real Estate.

How does this end well again?

Was it the immigrants and the fact that everyone wants to live here?
Or is it our conservative banking system with strict rules and regulations?
Or because we don’t have subprime mortgages or our government won’t ever let “it” happen?

Like I’ve said before, like watching a train wreck unfold over months and years…

#96 Makeorbreak on 11.30.10 at 11:32 am

http://www.theimproper.com/15639/sheryl-crow-crushed-by-real-estate-crash-photos?source=patrick.net#post-15639

#97 househunter on 11.30.10 at 11:34 am

#90 Devil’s Advocate – BZ is probably joking dude. A lot of people want to get back in at 40% of their net worth. Nothing wrong with that.

#98 ex-farmer on 11.30.10 at 11:39 am

Who is to blame?

#99 Timing is Everything on 11.30.10 at 11:42 am

#24 Jeff Smith – “Garth, dude, I see you are alluding to a potential rise in interests rates….We have been predicting a rise for close to yaer and half now, hasnt happened. It wont.”

Disagree…Pateince and timing. You just starting waiting too early.
Just because something hasn’t happened ‘yet’ does not mean it won’t…That is illogical. Your timing is off, that’s all.

#100 tired vulture on 11.30.10 at 11:53 am

Got tired….no buble burst, I dont think so. In two years or three we are going to say the same: interest will rise, houses wont go up, canadians are in big debt…..ufff…

#101 BrianT on 11.30.10 at 12:02 pm

#88TO-Currently, there is almost no mortgage lending in the USA without taxpayer support-that might be where we are headed. These Ponzi schemes are not pretty when they unwind.

#102 wetcoaster on 11.30.10 at 12:05 pm

“Divorces and break-ups are rampant as stress destroys the fabric of the relationships.

Coming to a Canada shortly. Yes, even Vancouver.”

With the chances of divorce within the first five years let alone those in their 50′s hanging on til the kids leave, the RE media machine never ever states the impact of this. There are no stats to prove that the majority of young divorced couples will most likely not be able to afford even a condo and will be renters for a long time.

The single dad’s child support payments will go against his income and reduce what limited borrowing power he has left. As this bubble begins to blow apart in the coming months, this will be a huge catalyst. Been there, done that.

#103 BrianT on 11.30.10 at 12:05 pm

#87Ottawa-you are not supposed to mention any of those facts in polite company-it shows you are a bad person.

#104 GregW, Oakville on 11.30.10 at 12:18 pm

Hi Garth, Thank you.
re: improvement in the ‘affordability’

If it wasn’t for your blog I might have been duped by the corporate run mass media into thinking this was actually a positive sign.

Isn’t the corporate run mass media function to manufacture consent of the masses?

FYI, there is a book, movie and interview with the author that can be found (for now) on the web
Manufacturing Consent: The Political Economy of the Mass Media (1988), by Edward S. Herman and Noam Chomsky, is an analysis of the news media as business.

#105 JenC_T on 11.30.10 at 12:19 pm

@ Devil’s Advocate

Your answer, again, was very nice, and I don’t even diasagree with most of it.

Again, however….are you still maintaining that value of your current home is *9 times* what you paid for the first 28 years ago?

Yes, this is the last time I’m going to ask.

#106 GregW, Oakville on 11.30.10 at 12:43 pm

Hi Garth, fyi, (Still flying? Still believe our Canadian PM/Government is working for us?
Are you on any lists for speaking up?
What if the PM had a majority now, were would we all be?)
Article

Canada Surrenders Sovereignty and Privacy to U.S. Secure Flight Program

http://www.infowars.com/canada-surrenders-sovereignty-and-privacy-to-u-s-secure-flight-program/

“If necessary, the TSA analyst will check other classified and unclassified governmental terrorist, law enforcement, and intelligence databases, including databases maintained by the Department of Homeland Security, Department of Defense, National Counter Terrorism Center, and Federal Bureau of Investigation.” With many well documented issues surrounding the accuracy of security watch lists, U.S. mistakes could further prevent more Canadians from flying to foreign destinations….”

“So far, the Canadian government maintains that they will not institute aggressive TSA-style pat-downs, but another incident could change that. The new airport
security measures can only be described as

intrusive and degrading

with some critics also labelling them as ineffective.”

(Sound like it might not be long before you are allowed to fly you will have to ether submit to more radiation exposing. When did more radiation start to be a healthy thing, and have your naked image stored.
Or be sexually molested with unsanitary reused gloves. And if your on a list, don’t even think about any freedom to move about. I feel safer already, not!)

#107 GregW, Oakville on 11.30.10 at 12:51 pm

Hi Garth, fyi, is Canada very far behind this type of insanity?
Will common sense prevail?
Common sense isn’t always that common.

Teacher Bans Pencils from Class, Cited Potential ‘Weapon Making’ (sixth-grade class).
http://www.infowars.com/teacher-bans-pencils-from-class-cited-potential-weapon-making/

#108 Joe Q. on 11.30.10 at 12:58 pm

#52 Devil’s Advocate on 11.30.10 at 4:35 am: “the average 7% down payment figure applies only to first time buyers who finance their purchase. It does not include move-up, move-down or those who buy all cash with no mortgage.”

I am trying to find the reference — I believe it was the Canadian Mortgage Brokers Association — but my understanding of the “7% number” was that 2010 mortgage signings had an average loan-to-value of 93%. No mention of first-time buyers.

#109 wetcoaster on 11.30.10 at 1:01 pm

When you have mortgage brokers saying this crapola, you know we are now at the end game. Funny how they won’t admit that 35 year mortgages have only become the norm the past few years, used by people who cannot afford 25 year. Disgusting mortgage brokers at work fleecing the last remaining sheeples.

“In almost all cases, people who take 35-year amortizations plan to pay off their mortgage much quicker. In fact, the average Canadian gets rid of their mortgage in 1/2 to 2/3 of their original amortization, according to insurer sources. In other words, due to pre-payments, people pay off their 35-year mortgages in far less than 35 years.”

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/11/td-ceo-supports-25-year-amortization-maximum.html

——————————————————————————–

#110 GregW, Oakville on 11.30.10 at 1:01 pm

Hi Garth, Is your Blog next?

Google & You Tube Ban Alex Jones
artical, see the 5-1/2min video if it’s still up?
http://www.infowars.com/google-you-tube-ban-alex-jones/

#111 Drake on 11.30.10 at 1:04 pm

Hope I’m not taking this too off topic, but I’m still perplexed about preferred shares. Can I go into my HSBC online investment account and buy them? Or arrange with my Premier Advisor and have her do it for me?

This is where I think you keep loosing people, they don’t know how to get from a to b. Does Money Road provide full details that you’re not providing here?

Thanks.

There is a myriad of preferreds, many unavailable to retail investors. Consider hiring an independent, no-commission, fee-only advisor. This ain’t like buying an HDTV set. — Garth

#112 CTO on 11.30.10 at 1:19 pm

All of you dreamers thinking that interest rates will stay low long enough for you to pay off the bulk of your mortgage either havn’t been around long enough or have your heads in the sand.
Like everything else, since the begining of time, everything has its season. Interest rates had their LOW season in the last decade. This will change as sure as the setting sun!
The question is when. Considering that they have reached bottom, I think we have a clue to the answer. For those with the 5% downs and 35yr ams I don’t think it matters weather it is this year or next…or even 5 years, …they are sooo screwed!
After a decade of borrowing, there will be a huge demand for cash from all governments (large and small) and in order to attract investment they will need to make it worth while by charging higher interest rates.

#113 Got A Watch on 11.30.10 at 1:33 pm

You can only imagine who would live in the basement of that place. Never mind pay $790 K for it.

“But practically all the high end homes and half the mid-level homes in Vancouver are being gobbled up by seemingly endless masses of Asian immigrants and investors.”

Yes, and there are words to describe them: the stoooopid money. Leaving Asia for North America 40 years ago – good idea. Leaving Asia now for North America – bad idea. Buying real estate after a 10+ year Bull market, before it corrects – bad idea. Stupendously bad ideas. Asia has it problems, and won’t escape the contagion in the near term. But it is also the region where a huge amount of growth will occur over the next few decades. Emigrating from a growing lower-taxed area, to a declining higher-taxed area = ‘Greater Fools’ migrating. Which means they will fit right in Vancouver’s real estate market.

If they are buying them as “second homes” but will continue to live in Asia, I would point to Florida or Arizona, or any ‘beach/cottage/resort’ area, where a large part of their formerly ‘booming’ real estate market was made up of buyers from far away. When a crisis erupts at home and ca$h becomes tight, they, wait for it, sell the “second home” because it is a frill, not a necessity, and it is still far away. A few may choose to sell the primary residence and move to the “second home”, but they won’t prevent prices falling in that area anyway, they already own it. Study what happened in Florida, and comprehend, it really is not all that difficult.

#56 Europa – thanks for the on the ground update. Please continue to comment, a viewpoint from someone who is actually there is worth much more than 100 breathless MSM “reports” (spin). Most Canadians tend to be insular, they don’t often step back and look at the wider global picture. I present our real estate bubble as absolute proof – we live next to the USA, their real estate bubble burst in ’06/’07, and most here did not even notice. I still had some idiot say the other day to me, “real estate always goes up!”. Too dumb to even read a MSM newspaper, where they have finally acknowledged the obvious, as usual about 2-3 years after it happened.

DA – “Sorry I just can’t help but be critical of such pathetic behaviour.” I suppose you have never heard of the word “realism”. That is, seeing the world as it is, not as you wish it was. If I, or Garth, or most here, thought the Canadian real estate market represented “never a better time to buy!”, we’d say so. We didn’t wish this Depression to happen, it just is, like the weather. One day, things will start to improve in a significant and realistic fashion, not a false “green shoots recovery”, and then I’ll say so, and I am sure Garth would too. The only thing pathetic here is you. If you are so “busy”, why is it exactly that you feel moved to “comment” (I use the term loosely) more than anyone else here, day after day. You must have a lot of time on your hands then, for a “busy” guy. There is nothing wrong with being optimistic, but not self-deluding.

Ottawa Daddy – thanks for injecting some realism here.

The facts speak for themselves, spinners spin, liars lie.

#114 Devil's Advocate on 11.30.10 at 1:38 pm

#91 househunter on 11.30.10 at 11:34 am

#90 Devil’s Advocate – BZ is probably joking dude. A lot of people want to get back in at 40% of their net worth. Nothing wrong with that.

And I want to win the lottery tomorrow.

No seriously dude… I want to win the lottery tomorrow.

#93 Timing is Everything on 11.30.10 at 11:42 am

#24 Jeff Smith – “Garth, dude, I see you are alluding to a potential rise in interests rates….We have been predicting a rise for close to yaer and half now, hasnt happened. It wont.”

Disagree…Pateince and timing. You just starting waiting too early.

Just because something hasn’t happened ‘yet’ does not mean it won’t…That is illogical. Your timing is off, that’s all.

Yes indeed, timing has a lot to do with the good outcome of a rain dance. Point is; Do you know for sure when it is going to rain so you can well time that rain dance? (Insert Vancouver joke here ;-) )

#94 tired vulture on 11.30.10 at 11:53 am

Got tired….no buble burst, I dont think so. In two years or three we are going to say the same: interest will rise, houses wont go up, canadians are in big debt…..ufff…

And this is why it is different this time. In a word “apathy”. More and more people I talk to say they’ve given up on the impending financial Armageddon. The more people who take that attitude the more likely it is never to happen – well not in the more immediate future anyway.

Check out the malls. Check out real estate stats. No really check out real estate stats – nothing at all embarrassing there. No the numbers aren’t what they were pre-recession (what recession? Pre-shift more like it.). Not only is the government spending us out of recession or away from it in the first place so are consumers.

Yes it’s slowed… Go figure? WTF do you expect after a party like that. But I wouldn’t call this a “recession”, maybe a “break”?

#99 JenC_T on 11.30.10 at 12:19 pm

@ Devil’s Advocate
Your answer, again, was very nice, and I don’t even diasagree with most of it.
Again, however….are you still maintaining that value of your current home is *9 times* what you paid for the first 28 years ago?

Yes, this is the last time I’m going to ask.

Our current home has a market value of two times what we paid for it in 2003. It has a market value something just south of 9 times what we paid for our first home in 1982. Our current home is our 5th family home since that first. I know the first very well and to be fair it has a market value less than this most recent. I would say that our very first home has increased in market value just south of 7 times.

I think the point you are driving at is that housing has increased too much in that time? I don’t disagree. As I have said we never bought our “home” for the anticipated equity gain which is certainly more than we thought it might be.

Now this current home at the peak was probably closer to 10 times what we paid for that first back then. The market has definitely shifted and I do believe it will continue to. I suspect it will be interest rates which bump it most next.

As I pointed out in my earlier response we don’t care if this current home falls to the price that we paid for the first. All that will mean is all others have similarly fallen in value as well. It is our principle residence – our “home” – a roof over our head. Right now we are enjoying the return on our investment as we consider the “home” long ago paid for itself.

It’s like the leasing vs buying thing I likened it to… I lease my business vehicle We own our personal vehicles. We bought good cars which are strong and reliable and they have served us well long ago paid for themselves and are now continuing to provide a good return on the initial investment. They don’t owe us a thing. They are insured and do have value but as far as we are concerned they have long ago provided us the utility we expect of them everything now is bonus use and if we sold them it is “bonus” cash. Can’t do anything like that renting a house can ya.

I know there must be a veiled trap within your question JenC but it is just as simple as that. Throw all the accounting voodoo you want at me it doesn’t negate those facts. If it is that you think that which we did can’t be done under the current circumstances, think again. Might take a tad longer although over 25 years things will have proven more the same than different.
I’m confident a first time buyer, even today, following that same philosophy we did will in 25 years find themselves not in dissimilar circumstances – a bought and paid for home that then is providing ongoing utility at minimal cost.

Also JenC just so’s you understand that while yes we are discussing our situation ending advantageously on a peak and that of someone else disadvantageously starting out on a peak, I would suggest you look at the economic conditions of 1981/82 and you will realize it was not unlike today. Garth may disagree but he would be speaking of the underlying economic mechanics. Trust me, even he would have to agree, things were a lot tougher then than today… but I think we will get there.

BTW… my previous post… the one about the shot gun… I personally know a few who did just that back in 1981/82… so don’t tell me it was a better time… it SUCKED BIG TIME!

#115 Europa on 11.30.10 at 1:45 pm

#109 “(End of the 35 year mortgage) and bring back the 25 year max”

Thank god they are looking to remove the 35 year mortgage. A borrow might say… “But I can’t afford a home without going 35 years”, but think about it, if all you could get was a traditional classic 25 year mortgage then home prices would fall, then the same borrower could get a 25 year mortgage, pay the same amount and save 10 years of debt.

#116 brainsail on 11.30.10 at 1:49 pm

#108 Joe Q.

#52 DA

Here are two references.

“Throughout 2007, the average Canadian home buyer who took out a mortgage had only 6% equity in their home. The 6% equity is or equals the national average downpayment for all mortgages including home buyers who traded up to more expensive homes.”

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

“Thanks to this stimulus in 2007 the market radically changed. Historically high home prices continued to gain steam. High risk borrowers flooded the real estate market. Throughout 2007, the average first time home buyer who took out a mortgage had only 7% equity in their homes.”

http://americacanada.blogspot.com/2009/07/cmhc-and-our-government.html

#117 SwampLily on 11.30.10 at 1:52 pm

Good thing that couple aren’t headed to Victoria. That Vancouver shack would cost half a million here, and would be in Victoria’s armpit (Burnside area).

#118 GregW, Oakville on 11.30.10 at 2:11 pm

Hi Garth, fyi artical, and a link to science based info web site.

Blaylock: Fluoride’s Deadly Secret
http://www.infowars.com/blaylock-fluorides-deadly-secret/

Looking past the so-called conspiracy connection;

The science information that is available that fluoride is toxic if you drunk it, I think is important.
I read the 2006 NRC report and attended a week-long University of Toronto “World Fluoride Conference, it’s effect on the Brain and Soft Tissue of the Body” (your body!)
I no longer drink and cook with fluoridate water! (Brita will not remove it!)
I have been convinced water fluoridation need to stop now for all the right reasons.
You can find lots of science based info, links to the studies and reports, see 29min info video and read the new book free at google books, ‘The case against fluoride’.

http://www.fluoridealert.org/

Don’t take my word for it that being forced to drinking fluoride is no longer a good idea,
read the science yourself, see the 29min info video as a start. Give your Medical Doctor a copy of the video and ask them if you should be concerned!

#119 dont be sad on 11.30.10 at 2:14 pm

It is not uncommon for wealthy Chinese to own 2-3 apartments. The Chinese believe in real estate more than stocks. This is not universally true, but it is generally true.

The Chinese who are buying RE in B.C. are wealthy. In China, the law requires 30% down to buy your first property, 50% down to buy your second, and 100% down to by a third. This is markedly different than Canada and the U.S.

The Chinese who are buying in B.C. are not your typical Chinese. They are far wealther than the ‘median income’ individuals in Canada that this blog sometimes brings up. This is why all-cash purchases in B.C. are as common as they are.

It is likely that the Chinese won’t be able to prop up the B.C. real estate market, but to say that they are not significant buyers would be naive.

In addition, this blog post talks about Canada’s trade deficit. There is no documented correlation between a country’s trade deficit and its real estate values. Canada has run trade deficits for decades before.

In addition, this blog is talking about europe like it talked about Australia when Australia hiked it’s interest rate. Again, no documented correlation or relevance to Canadian real estate values.

Don’t be sad that a person in Vancouver will reap $800k from selling a home that is not worth of your perception of what $800k should be worth. What your perception of worth is also irrelevant – if that is the price that the market will bear, then that is all that the seller cares about.

#120 F on 11.30.10 at 2:16 pm

Garth, you make too much sense. I’m not sure how 98% of the population sees high house prices as a good thing.

#121 Devil's Advocate on 11.30.10 at 2:17 pm

#108 Joe Q. on 11.30.10 at 12:58 pm
#52 Devil’s Advocate on 11.30.10 at 4:35 am: “the average 7% down payment figure applies only to first time buyers who finance their purchase. It does not include move-up, move-down or those who buy all cash with no mortgage.”

I am trying to find the reference — I believe it was the Canadian Mortgage Brokers Association — but my understanding of the “7% number” was that 2010 mortgage signings had an average loan-to-value of 93%. No mention of first-time buyers.

Peruse yesterdays posts it was all covered there including a link to the CMHC site which does indeed qualify it as “first time buyers” alone.

#122 Debt Free in the U.S. on 11.30.10 at 2:21 pm

Yesterday, my boss, President Obama, suggested my pay be frozen for the next 2 years. OK., I guess, but you can BET I shall work hard to ensure DEFLATION is a realty in my world.

Let’s see just HOW Low those home prices can get? I can afford to BUY a rental, or two for something virtually unknown in today’s world of finance, CASH!! Of course, the money will be made at the buy, say 40-50% OFF asking prices which are melting by 1-3% each quarter… Hey, if I am buying rental property I want a solid margin to the current market rents. I think there might be an influx of crappy credit renters looking for basic shelter, after their overpriced mortgages go belly-up. Not in any hurry, here. There will be more distressed property coming on the market it might be coming faster if we let banks suffer a percent of loss before we bailed out their asses. What am I saying, the “unofficial” troubled Bank numbers are the highest since the S&L crisis of the 1980′s. Well, anyhow some foreclosed inventory is not making it onto the resale markets yet….

The other divident paying stocks, preferreds etc are all well above current treasury rates, and bond prices are likely to fall when long interest rates start moving higher. It is beginning….

I don’t need to buy anything right now, so I can, and will delay discretionary purchases til the prices melt a bit further. No debt here, it is a wonder to behold, oh I , lied there is that 2 yr car note I just took on that 2010 Ford. Not to worry though, I have the cash invested elsewhere if I really HAVE to get at it.

So, Boss do your damdest with the age FREEZE…I’ll be working to ensure there is a PRICE freeze to match.

Oh, about investing… would YOU invest in the US or Canada? NO. What makes me think my returns would be better here than lots of other nations around the world, who are not up to their navels in debt, with no clue as to how to extricate theimselves?

Bring of the Depression…..2008-2012 should be about the real bottom. GREAT time to buy that rental, then.

We have defective government in the US, don’t wory Canada, you’re next. Hope we enjoy the ride

#123 Macrath on 11.30.10 at 2:24 pm

What is Building 7?
http://buildingwhat.org/

The inside job that brought you—

THE USA PATRIOT ACT AND CANADA’S ANTI-TERRORISM ACT:

http://www2.parl.gc.ca/content/LOP/ResearchPublications/prb0583-e.htm

#124 Confused in Victoria on 11.30.10 at 2:33 pm

I am trying to convince my husband to move his company elsewhere. We are used to big expensive cities but Victoria is a small expensive city and just not worth it. I just can’t figure out how people pay these mortgages. There really is no industry here. Is there something going on that I just don’t know about.

Toronto at least has higher incomes to support their insane RE. Victoria does not. Where does the money come from?

#125 Chaos on 11.30.10 at 2:44 pm

518 East 18th ave.

Between Main and Fraser intersected by Kingsway.

YUCK!

#126 Devore on 11.30.10 at 2:49 pm

#7 Burnt Norton

Speaking of lame, this mentality of housing entitlement among the 20-40 year old crowd in Vancouver is pathetic. If you want to live in a place that you can’t afford then figure out how to make enough money to be able to afford it.

Where’s the entitlement? You don’t think there’s a problem when an entire city is off-limits to first time buyers and young families? When the whole city gives you the finger, you get the hint and get up and move somewhere else.

The only one entitled here is you, to high house prices.

#127 Alex on 11.30.10 at 2:56 pm

Once forclosures start piling up and CHMC runs out of money, government should just let CHMC go bancrupt. Then all
5 banks will need to be bailed out directly by government (as there is no more CHMC) essentially nationalizing them. I believe it is totally legal and politically correct.

#128 TheBigLebowski on 11.30.10 at 3:25 pm

When you mention the U.S electing yahoos and whackjobs to congress, who do you refer to ? Not like the old batch was any circle of saints with Barney Frank, former gay brothel owner and sexual devient and . and Congressman Hank Johnson who thought the tiny island of Guam would flip over if they sent more marines there http://celebrifi.com/gossip/This-is-NOT-a-joke-Congressman-thinks-Guam-will-Flip-over-2089145.html

Ya, the old batch was so much better.

#129 arctodus on 11.30.10 at 3:26 pm

Garth is, as most, misunderstanding the true nature of what is going on in the Canadian economy and indeed worldwide.

While Canada may well be seeing “deflation” in a few things at least (consumer goods) we are poised for massive inflationary pressures.
Anyone that honestly cannot see the hyperinflationary event building the western world economies have not only got blinders on, but have an entire burlap sac wrapped around their craniums.

Monetary easing is in full swing…the US dollar is in collapse (along with the euro). Just because Canada (along with Oz, NZ, Sweden and Norway) may have a delayed onset of terminal stupid (from the resident population viewpoint at least)…it does not mean that our currency is safe.

The hitting the peak oil wall (now admitted to by the EIA…which basically tells the world we are so f…ed) in 2005/2006 was THE EVENT of modern times…

That reality spelled the end of all modern economics and is the absolute harbinger of endless depression worldwide (first debt denominated mild deflation…then massive hyperinflation….then retrenchment to local hard currency or ultimately barter economics).

Most modern pundits simply cannot see reality because it is completely out of their worldview…..it seems to be science fiction to them…….

The best case scenario now involves trying to avoid WWIII…..do not be optimistic…..hyperinflationary events often lead to them….

#130 Leanne on 11.30.10 at 3:28 pm

Thanks for the artical, Gregw. Oops, was that spelt wrong?

(if you can’t beat ‘em, join ‘em).

#131 UrbanCowboy on 11.30.10 at 3:37 pm

#94 househunter

Yeah it sucks to wait longer to have your own place, I’m in the same boat, but the longer the rates stay down and inflate the bubble the bigger the bust and sharp decline will be.

#132 Leanne on 11.30.10 at 3:41 pm

I just spoke with a lady from India (welcome to TD Customer Service) who told me she gets 10% interest on her chequing account there, but her mortgage is 12%.

Guess the grass is always greener on the other side.

#133 GregW, Oakville on 11.30.10 at 3:54 pm

Hi Garth, fyi. (I once totally believed that global warming was man made. The ocean PH change is concerning. Peak-oil and population on one earth is also a concern.
But what is actually going on? Not intending to muddy the waters but,
This article and 2 video links (21min worth) I found interesting to hear. You might also?
I hope it’s not so, but whom to believe. Who will be allowed to be heard if the web is censored even more by a few!)

Climate Alarmists Push Forced Relocation At Cancun Summit
http://www.infowars.com/climate-alarmists-push-forced-relocation-at-cancun-summit/

#134 Aussie Roy on 11.30.10 at 3:58 pm

118 dont be sad on 11.30.10 at 2:14 pm

Far too many words, next time just write “its different here”.

The lucky ones are the ones cashing out with 800k, you got that bit right.

#135 GregW, Oakville on 11.30.10 at 3:59 pm

Hi #130 Leanne, It takes all kind to make the world go round. Spelling just isn’t what I can do well, even with spell check. ;)

#136 Joel Toronto on 11.30.10 at 4:07 pm

The Bank of Canada should introduce multi generational mortgages. 100 year amortization.

#137 Increasing that 1% on 11.30.10 at 4:13 pm

Sorry, for sake of accuracy, must correct,
Re: #162. Increasing that 1% on 11.29.10 at 6:03 pm

‘Yukon’ should be NWT-Fort Norman (later it was Thorhild), Erik was an MP in Yukon.
–Thank you for your response, Garth,
what a web we weave
—————————————————-

Lonely Limey and hobbit, from yesterday; you sounded like my relatives
——————————————————
Ok, DA, back to you

#138 $froma$ia on 11.30.10 at 4:17 pm

Garth,

You absolutley have to do a seminar in Richmond B.C.

I would advise you spend a few days absorbing the community. You will come to understand that a large part of the housing market is being propped by asian immigrants!

Regarding the $790k Van home…. Well if the bank is willing to load you $600k all you need is to come up with is $190k.

$600k is the float from the bank… Call it hot air?

$

#139 GregW, Oakville on 11.30.10 at 4:18 pm

Hi Garth, fyi (Is our Canadian Government really much better??? Is the Food Safety Act actually about the safety of our food or the profit of a few or something more? Were is your family going to get nutritious food in the near future?
You have heard about ‘Codex’ haven’t you!)

Hapless Senator Admits Obvious: Political Process a Rigged Game
http://www.infowars.com/hapless-senator-admits-obvious-political-process-a-rigged-game/

#140 GregW, Oakville on 11.30.10 at 4:23 pm

Hi Garth, fyi CNBC 7min video Nov 29

Europe’s Debt Domino Effect
“Insight on Europe’s debt debacle.”
http://www.infowars.com/europes-debt-domino-effect/

#141 Pr on 11.30.10 at 4:24 pm

129 arctodus
…The hitting the peak oil.

Its a farry tail! Theirs is enought oil for the next 1000 years.

#142 dark sad person on 11.30.10 at 4:28 pm

#129 arctodus on 11.30.10 at 3:26 pm

***************

Hyper-inflate against “what” exactly?

You say people are blind to this-
I say people who call Hyper-inflation have no idea how floating/competing currencies perform-

Until you see Credit expanding like we did from 2001-08 and start seeing the “current” Credit contraction reverse-forget about Hyper-inflation in fact-forget about even mild Inflation-
Not that the two are related-just the point of excess dollars showing up in a time of “scarce’ money supply-falling assets-falling wages-high unemployment etc. is not realistic and is in fact totally assbackwards to what is really happening-

#143 canuckfilly on 11.30.10 at 4:28 pm

Help #10 BC Demographics, I don’tquite understand that graph Wheres “4″ and what does the bottom line of the chart mean 4,8,etc While I agree with the statements something seems to me missing or is it just me?

#144 canuckfilly on 11.30.10 at 4:29 pm

Help #10 BC Demographics, I don’t quite understand that graph. Wheres “4″ and what does the bottom line of the chart mean 4,8,etc While I agree with the statements something seems to me missing or is it just me? Interpreting this graph seems difficult.

#145 nikon_d40 on 11.30.10 at 4:29 pm

To #123: Don’t forget that Victoria is the Capital of BC – all those high paying government workers live there.

#146 GregW, Oakville on 11.30.10 at 4:37 pm

Hi Garth, fyi Still think the USA Government is looking out for the people? What about our PM?
I wonder if this guy can fly now if he wanted too?

Mark Ruffalo ‘added to terrorism watchlist’ over Gasland
http://www.infowars.com/mark-ruffalo-added-to-terrorism-watchlist-over-gasland/
“Actor Mark Ruffalo has reportedly been placed on a US terror advisory list after campaigning in support of a documentary highlighting the alleged dangers of natural gas drilling.

Ruffalo attracted the attention of Pennsylvania’s Office of Homeland Security when he organised screenings for Gasland, which won the special jury prize at this year’s Sundance film festival, and said he was concerned about the impact of drilling on water supplies…”

#147 jess on 11.30.10 at 4:38 pm

person take back the “hood”

…”Fracking has been demonstrated to be a threat to surface and groundwater, and has been blamed for fatal explosions, the contamination of drinking water, rivers, and streams. Because it disturbs rock that’s laced not only with methane, but with carcinogens like benzene and radioactive ores like uranium, forcing the mix to the surface adds to the dangers…..
corporations have already purchased leases to drill there, including under area parks and cemeteries.
“With this vote we are asserting the right of the city to make critical decisions to protect our health, safety, and welfare.” -Councilman Doug Shields
The ordinance sponsor, Pittsburgh Councilman Doug Shields, led the charge to ban drilling, and was later joined by five co-sponsors. During the months leading up to today’s vote, Shields passionately advocated for the ordinance, saying that the city is “not a colony of the state and will not sit quietly by as our city gets drilled.” He sees this fight as about far more than drilling, saying “It’s about our authority as a community to decide, not corporations deciding for us.”

Provisions in the ordinance eliminate corporate “personhood” rights for corporations seeking to drill within the city, and remove the ability of corporations to override community decision-making.
Communities like Pittsburgh are coming to the conclusion that it’s up to them to stop practices they disagree with. Their efforts are not just about stopping the drilling, but about who gets to make decisions for the community—corporations empowered by the state, or people and their communities.
As Councilman Shields stated after the vote, “This ordinance recognizes and secures expanded civil rights for the people of Pittsburgh, and it prohibits activities which would violate those rights. It protects the authority of the people of Pittsburgh to pass this ordinance by undoing corporate privileges that place the rights of the people of Pittsburgh at the mercy of gas corporations.”
Real People vs. Corporate People: The Fight is On
Provisions in the ordinance eliminate corporate “personhood” rights within the city for corporations seeking to drill, and remove the ability of corporations to wield the Commerce and Contracts Clauses of the U.S. Constitution to override community decision-making.

Pittsburgh sits atop the Marcellus Shale and corporations have already purchased leases to drill there, including under area parks and cemeteries.
“With this vote we are asserting the right of the city to make critical decisions to protect our health, safety, and welfare.” -Councilman Doug Shields

http://www.yesmagazine.org/people-power/drafting-natures-constitution

#148 TheBigLebowski on 11.30.10 at 4:39 pm

As I have stated many times before for people who still possess their god given discernment ability. We are heading to a meeting similar to the Louvre Accord of 1987 or the Plaza Accord of 1985. Where all nations will get together and revalue/devalue currencies against one another and default on 2/3 of their debt. Why could i rant about this over 2 years ago ? Because I study history and read the documents released for public consumption. You won’t hear about this on American Idle or Dancing With The Stars, so most people have no idea what I am talking about. The 6 o’clock news won’t tell you either because its their job to lead us down a linear path, shape our opinions, and make us believe they are our own, not tell us the truth.

#149 Big Mistake on 11.30.10 at 4:43 pm

this couple is making, if they are buying on Vancouver Island for ‘half of what Vancouver costs’.

My parents made the exact same mistake 30 years ago – bought a house in Ladysmith since Victoria was unaffordable. Then the economy turned south and the housing market with it. My parents lost almost everything because they stubbornly insisted on buying in one of the crappiest towns on the island rather than rent somewhere more convenient.

A cheaper house can still be a grossly-over-valued house and the economy turns south a lot harder and a lot more quickly than a large city.

They’d be better if they stayed in Vancouver – and just rented instead of bought. Or even rent in Ladysmith for six months to see if they can stand living there first before committing to buying a house.

#150 GregW, Oakville on 11.30.10 at 4:48 pm

Hi #141 Pr, You seem quit sure.

I found this show informative. Others like yourself might to. It’s has 8 parts each ~10min so it’s not a quick watch.

At YouTube
“Arithmatic, Population and Energy”
The Most IMPORTANT Video You’ll Ever See (part 1 of 8)
http://www.youtube.com/watch?v=F-QA2rkpBSY

#151 TheBestDumpOnEarth on 11.30.10 at 5:04 pm

The worst deal in history on that property. It will never sell.

#152 jess on 11.30.10 at 5:12 pm

water barons

…” some of the farmers have been selling it on the open market, frequently flipping their heavily taxpayer-subsidized water back to the government for twice the price.
Two Kings farmers last month announced a pending water sale involving nearly $12 million. Another farmer last year sold some of his state water allotment for $73 million. Up to 3,500 acres of tree crops could go out of production because of the transfers.
Read more: http://www.fresnobee.com/2010/11/21/2168987/kings-county-farmers-land-lucrative.html#ixzz16iEgpptr
http://www.insidebayarea.com/trivalleyherald/localnews/ci_12443070
=============
According to a 2003 Public Citizen report titled “Water Heist,” the Kern County Water Bank is an underground reservoir in the hottest, driest, southernmost edge of the Central Valley with a capacity of 1 million acre-feet, enough to convert the entire state of Rhode Island into a swampland one-foot deep or supply the City of Los Angeles with water for 1.7 years. The water bank was envisioned in the late ’80s by the Department of Water Resources as a safeguard against prolonged drought. During wet years, it would serve as a repository for excess water coming in from Northern California and the Sierras, and pumped out in dry years. California spent nearly a hundred million dollars to develop the underground reservoir and connect it to the state’s public canals and aqueducts, but in 1995, California’s Department of Water Resources suddenly, and without any public debate, transferred it to a handful of corporate interests
The Kern Water Bank, which was owned by the state Department of Water Resources from 1988 to 1995, is now in the hands of Kern County interests and is 48 percent owned by Westside Mutual Water Company, a private water company controlled by Beverly Hills billionaire Stewart Resnick
http://www.globalresearch.ca/index.php?context=va&aid=18374.

#153 Mr.Plow on 11.30.10 at 5:17 pm

#62 Yo Mama

No they do not lend at that debt ratio.

It is typically at the 30% range, but I think they can push it to 40% in some circumstances good credit history, good, well paying, stable job etc…

And they don’t just include mortgage payments, they include utilities, insurance and property tax in that 30%. Your entire debt servicing of your house has to be 30% of your income not just your mortgage payment.

Meaning the couple in Garth’s example likely would not come close to getting approved for that mortgage.

I remember going to University I had a professor who said if you get anything out of your University education make it the lesson that you need to question what you read, what you hear, what you are told etc… learn to think critically.

Try that in this case before you believe everything that is written here, including some of the gems on the comment section.

#154 TheBestDumpOnEarth aka Nostradumba$$ on 11.30.10 at 5:20 pm

#127 DaBull on 11.30.10 at 3:12 pm

Please tell us what is so special about Canada? I don’t remember time when Cnada was Superior to US. US was always better and way cheaper it terms of everything.

#155 Timing is Everything on 11.30.10 at 5:20 pm

#49 Conspiricy Guy said – “If interest rates start rising, the banks will own the house and your family.”

Should read [When] interest rates start rising….

#156 Joel Toronto on 11.30.10 at 5:28 pm

Canadian politicians lie just as much as American ones.
http://www.youtube.com/watch?v=iW5qKYfqALE

http://www.youtube.com/watch?v=jFVd6CKcipI&feature=related

#157 TheBestPlaceOnEarth on 11.30.10 at 5:28 pm

All your favourite local businesses could go belly up and Vancouver would continue to flourish. Unemployment 50% and China would bang down the doors. 1 billion wanting in and how many units for sale? That’s why this building boom and dream will never end. I hear all the negative naysayers about Vancouver please do tell how one will stop Asia from buying in Vancouver when they can buy with cash. I’m all ears
{}{}{}
#20 viewwest,

I see the same signs here in Vancouver. Lots of locally owned businesses going down. For lease signs on main roads inside the City of Vancouver are increasing.

#158 CTO on 11.30.10 at 5:31 pm

#118 dont be sad

Most on this blog are not sad that some can make such substancial gains in housing at this time. The sad part is housing in this country has been turned from a shelter for people into a crap shoot!
Even you have little confidence in the housing market (from your comment).
There is prudent people that would buy houses in this country but it is way too risky now.
What do you have left?…
Asians – Which i would bet are the smart money (no more investing in Canadian market)
Flippers – Who are Screwed!

#159 jess on 11.30.10 at 5:35 pm

Tax stimulus for developers, immigration policy = ghost estates

http://www.nybooks.com/articles/archives/2010/nov/11/ireland-rise-crash/?page=1

…”In 2006, at the height of the boom, construction accounted for almost a quarter of Ireland’s GDP and occupied a fifth of the workforce. Thousands of workers came from the poorer regions of Europe to meet the demand; Ireland, one of the great historical sources of emigration, became a net importer of labor. The migrants rented houses built by an earlier wave of migrants, while they built more houses that their employers hoped would be occupied by the next wave.

Taxation, for example: developers of new housing estates could set their costs against tax under a regulation, Section 23, that was originally intended to encourage the redevelopment of run-down areas in towns and cities. Property companies soon seized on Section 23 as a far broader tax-avoidance measure and local and national governments did nothing to discourage them. In Leitrim, which came late to the game, the local authority sought successfully to have Section 23 extended to the whole of the county. Consequently, O’Toole reports, one in every three of Leitrim’s houses now stand empty. Nationally, the state ended up subsidizing at a cost of about €2 billion “the building of houses whose purpose was to provide shelter, not for real people, but for the taxes of their builders.”

#160 TheBestPlaceOnEarth on 11.30.10 at 5:43 pm

Garth,

It’s not being propped up. It’s built on sound fundamental principles. Please come down and visit.
()())()
You absolutley have to do a seminar in Richmond B.C.

I would advise you spend a few days absorbing the community. You will come to understand that a large part of the housing market is being propped by asian immigrants!

#161 the greatest power on 11.30.10 at 5:45 pm

banks had more respect circa 1934 to 1974…the economic golden years–when the bank of canada created its own money, and didn’t borrow millions and millions from banks.

the greatest power of state IS THE POWER TO CREATE INTEREST-FREE MONEY.

history is rife with bloody wars about this struggle: the struggle for monetary control, between people and banks.

in both canada and the US, we need to remember history, and take back control of our country’s money supply.

if canada really does create its own money, then to whom do we owe our “national” interest-laden debt?

#162 Macrath on 11.30.10 at 5:56 pm

Canada Surrenders Sovereignty and Privacy to U.S. “Secure Flight Program”

http://globalresearch.ca/index.php?context=va&aid=22174

#163 Rich Renter on 11.30.10 at 5:57 pm

Here in Calgary, I mentioned the other day that the townhouse across the street dropped from 319K to 309K (It was 359K in July BTW) well things just got better as another replica is now listed at $299K. That’s what happens folks, house prices are local and if your neighbours sell for 400K, don’t expect to sell for 500K.

#164 Oasis on 11.30.10 at 6:03 pm

#142 dark sad person on 11.30.10 at 4:28 pm

“Until you see Credit expanding like we did from 2001-08 and start seeing the “current” Credit contraction reverse-forget about Hyper-inflation in fact-forget about even mild Inflation-”
_________________________________________

Germany’s experience with hyperinflation differs. They experienced a credit contraction (falling money supply), and massive price increases.

in fact, it’s a common misconception that you need credit to expand to have inflation/hyperinflation.

#165 Devil's Advocate on 11.30.10 at 6:08 pm

#113 Got A Watch
If you are so “busy”, why is it exactly that you feel moved to “comment” (I use the term loosely) more than anyone else here, day after day..

Haven’t you seen the commercials? “Real Estate is my life”. Actually Got A Watch my work week is a scheduled 52 hours – really. As a self employed person I have a real prick for a boss and he has a lazy S.O.B. of an employee. The 52 hours is a necessary evil. If you were a self employed person you would understand how important time management is.

And I do in fact learn stuff here. For example that average 7% down payment thing Garth mentioned yesterday… well that, as you can tell, caught my eye as a glaring fallacy. So I researched it a bit and then someone posted a link to the CMHC website and there it was clear as can be. It was that of first time buyers who financed their purchase last year the average down payment was 7.0%. Quite different than what Garth led the pups and poodles to believe by omission. Anyway we both learned something there.

I also get a good fix on the extreme right, or left depending upon your point of view, on matters of where people think real estate is headed. Fact is I don’t disagree with the pups and poodles so much as they think – although I admit I am on the other side of their “center” on the matter. But there is much we agree on and more that Garth and I agree on – although the G-Man has been a little extreme himself of late. Maybe has a warehouse of books he needs to sell still.

So got a watch my participation here is not unrelated to my work not at all unrelated to my work. I think it gives me some perspective. Just imagine if I didn’t read this BS… let’s face it – some of it is bound to have had an influence on me.

But really as the commercials say Got A Watch “Real Estate is my life”. And what is your excuse again?

#166 Lonely Limey on 11.30.10 at 6:18 pm

@ #137

“Lonely Limey and hobbit, from yesterday; you sounded like my relatives”

—————————————-

That’s so weird, his mrs said the same to me last night ;-)

#167 dark sad person on 11.30.10 at 6:19 pm

#148 TheBigLebowski on 11.30.10 at 4:39 pm

As I have stated many times before for people who still possess their god given discernment ability. We are heading to a meeting similar to the Louvre Accord of 1987 or the Plaza Accord of 1985. Where all nations will get together and revalue/devalue currencies against one another and default on 2/3 of their debt.

*************

I agree with you-in the end there is and will be no choice but to repudiate debt in some manner-
I would add to your comment that the (forbidden word) will play a major factor in those negotiations because when it comes to Monetary strength amongst these sick puppies-you know what-”will shine”

#168 arctodus on 11.30.10 at 6:23 pm

#142

forget about “credit” expansion as having anything to do with a “monetary” event like hyperinflation….hyperinflation is a governmental decision to escape crushing debt loads……either that or default…….guess which one we choose?

It does not matter how much credit contraction that you have in the system…when you have unlimited ability to generate fiat dollars governments almost always chose the hyperinflation route.

Inflation has nothing in common with hyperinflation…they are different beasts altogether. One is demand driven….ample (but slightly restricted) goods/services being chased by ample (but slightly restricted supply of dollars) it drives up prices…….

hyperinflation has to do with the completely loss of faith in a currency by a given population……in this particular case watch the us dollar implode (with perhaps momentary rallies based upon the “relative strengths/weaknesses of other currencies..in particular the euro)……..there is now a race to the bottom in worldwide fiat…cause it ain’t worth what it once was……

and all the above is because of the Peak oil event
(it don’t matter how much is left in the ground…it is the EROEI that matters…and that metric tells us that we are finished)

please return to regularly scheduled programming…

#169 BrianT on 11.30.10 at 6:38 pm

A sign of the times-FOX News is by far the best TV news channel in the USA ( which would have been unthinkable just a few years ago)- at this point CBS,ABC and NBC are nothing but pablum http://market-ticker.org/akcs-www?post=173600

#170 Pr on 11.30.10 at 6:41 pm

The number of sale for november will see a regain in sale activity, the main stream media all across canada cover the same thing; the price of a avreage house is getting higher. Plus Those interest at 2% 1 year. Taxe payers you are screw!

#171 Ben on 11.30.10 at 6:46 pm

LMFAO….. I go out for fast food lunch today with a young tech who lives in a highrise in TO. We pop into Burger King and he uses debit to pay for his Junior Wopper….. N S F
That’s the generation today, living in the sky in a zero down half mil box, 40 yr amortization, line of credit maxed, credit cards maxed, overdraft maxed….yeah baby that’s the generation today.

#172 Devil's Advocate on 11.30.10 at 6:49 pm

#150 GregW, Oakville on 11.30.10 at 4:48 pmHi #141 Pr, You seem quit sure.

I found this show informative. Others like yourself might to. It’s has 8 parts each ~10min so it’s not a quick watch.

At YouTube
“Arithmatic, Population and Energy”
The Most IMPORTANT Video You’ll Ever See (part 1 of
http://www.youtube.com/watch?v=F-QA2rkpBSY

Excellent video… “It is intellectually dishonest to speak of environmentalism without discussing population control”.

#173 dark sad person on 11.30.10 at 7:02 pm

164 Oasis on 11.30.10 at 6:03 pm

#142 dark sad person on 11.30.10 at 4:28 pm

“Until you see Credit expanding like we did from 2001-08 and start seeing the “current” Credit contraction reverse-forget about Hyper-inflation in fact-forget about even mild Inflation-”
_________________________________________

Germany’s experience with hyperinflation differs. They experienced a credit contraction (falling money supply), and massive price increases.

in fact, it’s a common misconception that you need credit to expand to have inflation/hyperinflation.

**************
You cannot compare Wiemar to today-in any way shape or form-
Germany came off Gold standard and printed money “against” Gold- in order to pay off War reparations-
Germany Hyper-inflated against “something”

http://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_germanhyperinflation.html

Today-if the US prints 10% vs population or GDP and Canada and Europe do the same thing-which is exactly what’s happening and if you look at all Currencies on a relative bases-there hasn’t been much more then wide trading ranges between all of them-

If you do not need Credit to expand in order to cause Inflation-maybe you can explain how all this money will get into our sweaty little hands to cause the Velocity that is absolutely evident in “all” Hyper-inflations-
Will they simply maill all the people a check?
Are the 43 million Americans on food stamps in need because the money they have wont buy anything or is it because they have “no” Money-or Credit?

Here’s what printing Trillions of $ did to zing Velocity-

http://research.stlouisfed.org/fred2/series/MULT

If you look at the ominous trend break in this 40 year chart and say we are Inflating now-then you have to say we were in Deflation from 1970-2008

http://research.stlouisfed.org/fred2/series/TOTBKCR

This is a 60 year chart-

http://research.stlouisfed.org/fred2/series/TCMAHDFS

Credit is contracting in all sectors-except from the Fed to the Banks and they’re speculating in the Markets and driving prices-also-China/Germany and even Canada to some extent are still in blowoff ie: people reporting rising house prices in some areas-
These factors all help in keeping price declines sticky and it’s literally crucifying consumers in the US-as they have been in Deflation for 3 years (with high prices)
When the rest of the World tips over in fits and starts into Deflation-prices “will” fall (nothing’s smooth) because of Government interference (stimulating)

So until someone can convince me “how” all this Money or Credit gets into our hands (low unemployment and rising wages) I’ll stay in the Deflation camp-

#174 celticmelt on 11.30.10 at 7:06 pm

For those who worry about climate change, you may be interested in clicking on my name above.

Climate change is here but not as explained by those who brought you the global credit disaster.

#175 Painted Toenails on 11.30.10 at 7:30 pm

Ladysmith is not a suitable substitute for Vancouver, beautiful though it is – at any price. Lots of trouble with drugs, drinking (nothing to do but drink if you’re a teen), serious issues with poverty. A previous poster was right, housing goes down a serious amount in a heartbeat when the economy looks shaky. You don’t move TO Ladysmith folks, you move OUT of Ladysmith.

#176 Timing is Everything on 11.30.10 at 7:39 pm

#123 Confused in Victoria said – “Toronto at least has higher incomes to support their insane RE. Victoria does not. Where does the money come from?”

- Retirement money. (From the rest of Canada)
- ‘Old’ money.
- Government money. Kinda like a small Ottawa.
- UVIC and Camosun College. (Student loans being spent here)
- DND (Dept. of National Defence)
- Tourist money.
- Healthcare money. (Plenty of seniors here and they need healthcare support/products)
- R&D – High tech companies.

Everybody else works here…

http://vimeo.com/13377232
http://vimeo.com/13377419

#177 FormerVanCityOwner on 11.30.10 at 7:39 pm

The best part about that ridiculous house is that it sits right on top of a peat bog. Houses in that neighborhood are visibly leaning in all directions.

#178 Junius on 11.30.10 at 7:50 pm

#157 Personmostlylikelyoncrack,

You do realize that of the billion people in China only a fraction could afford a home in B.C.?

By Canadian standards the vast majority live in poverty in China and are unemployable here.

We are talking about a tiny, tiny group of people who would have the ability, interest and stupidity to buy in Vancouver at its current prices.

#179 Junius on 11.30.10 at 7:52 pm

#160 Personmostlikelyoncrack,

How can a market be “based on fundamentals” and “propped by wealthy Asians”.

You can’t suck and blow at the same time. Or perhaps that is what got you into this mental state?

#180 doctore on 11.30.10 at 8:20 pm

http://www.theglobeandmail.com/report-on-business/rob-magazine/is-vancouver-in-a-real-estate-bubble/article1808967/singlepage/

#181 GTO on 11.30.10 at 8:23 pm

#80 BZ

I still hate paying rent…

Paying rent is a good thing, this is what I hear on this blog every time I pass through. People actually sell their home in order to rent. Don’t camp out in Toronto, just rent for the rest of your life, and feel good about doing it. Real estate is evil. you will not get any arguments from anyone here, if you are a renter.

#182 Bill Grable on 11.30.10 at 8:24 pm

People here in La La Land are BRAIN DEAD.

The cheap money that is being plopped onto computer screens by desperate Central Bankers, have turned most of the people in Vancouver into pathetic, shallow RE, junkies.

“Oh, he flips houses for a living”.

If I hear that one more time I am going to be forced to give the offender a copy of the soon to be best seller:”Stephen Harper – My Life”.

This City is unpleasant to live in at the best of times.

Don’t listen to that garbage about the greatest city on earth. The Illegals, the drugs, gangs, and pricing out of OZ, has finished me off.

Since we sold all, and are totally liquid – we are moving at the end of December.

We will never go back.

I lived in this City on and off since 1972 and it makes me sad to say, I will be so happy to get out of here.

Now, I will sit back and wait for all the Vancouver acolytes to start trashing me that I was stupid enough to take a 700% profit on my principal residence, tax FREE, and invest it.

#183 Devil's Advocate on 11.30.10 at 8:24 pm

#171 Ben on 11.30.10 at 6:46 pm

LMFAO….. I go out for fast food lunch today with a young tech who lives in a highrise in TO. We pop into Burger King and he uses debit to pay for his Junior Wopper….. N S F

That’s the generation today, living in the sky in a zero down half mil box, 40 yr amortization, line of credit maxed, credit cards maxed, overdraft maxed….yeah baby that’s the generation today.

Are you sure Ben or just assuming? Did you have to pay for his lunch? Did it the short burst of superiority you felt because his debit card was NSF negate your jealosy of his zero down half mil crib in the sky for a few short moments?

#184 Devil's Advocate on 11.30.10 at 8:36 pm

#202 Deliverator on 11.30.10 at 4:04 am#96 DA:

Um, the landlord is required BY LAW to have all defects and problems repaired professionally. The landlord doesn’t have a legal leg to stand on.

But of course they are Deliverator… ;) “Professionally” as in displacement of the tenant while major reconstruction is taking place – or self condeming a property because it is unfit to be lived in – or just taking your bloody time doing the work because of an “apparent lack of available trades”. See shitty tenants don’t really rule the roost as you might believe… now good tenants a landlord will bend over backwards to retain them.

Actually never had a shitty tenant myself though. It’s all in the screening process and understanding the market and what is in demand and what is not. Do it right and you have a whack of tenants actually bidding higher rent to compete with one another. It’s true!

#185 Dodged-A-Bullit-in Alberta on 11.30.10 at 8:49 pm

Greetings: I did some investing in the “energy and commodities ” sector today. Eight containers of Folgers coffee and 6 jugs of Quaker State 10-30 motor oil. How can a guy go wrong!!!

#186 dark sad person on 11.30.10 at 8:51 pm

168 arctodus on 11.30.10 at 6:23 pm

#142

forget about “credit” expansion as having anything to do with a “monetary” event like hyperinflation….hyperinflation is a governmental decision to escape crushing debt loads……either that or default…….guess which one we choose?

******************

I said in my reply that Inflation and Hyper-inflation are not the same-
You ignore Credit as if it means nothing-in fact Credit “is” money in a Fiat system-
It “acts” like money-it can be spent and so it “is” money and it can and did “cause” Inflation and so the contraction of it causes the opposite-Deflation

And here’s something you have missed and that is the fact that we already had Hyper-inflation-
Hyper-inflation of the Credit Money supply–

Look at the Long Bond–

http://research.stlouisfed.org/fred2/series/DTP30A28

Look at that 20 year bear trend break in 2000/01

Look at Gold-

http://www.the-privateer.com/chart/gold%20jan%202008.gif

See the exact correlation to the Long Bond after the same 20 year bear trend break?

We had been in Inflation since 1980 and both the Long Bond and Gold were dead-

Something abnormal happened starting in 2000/01
People making barely minimum wages were suddenly buying mansions and driving Audie’s and all thought they had become success stories by buying (financing) a rich persons lifestyle-

A quadrillion dollars float in Derivatives (shadow banking) of no mark to market value-

Crazy huh?
All synonymous with a Hyper-Inflationary environment-

Few understood this-
The 30 yr seen it–Gold seen it–
Now both can see the inevitable Deflation that “always” follows

Only 2 things turn both these far seeing indicators positive-

Credit risk/Deflation and Hyper-Inflation-

We had Hyper-inflation-now we have Credit risk/Default

Ben cannot print enough to Hyper-Inflate-
Ask Japan-

#187 ballingsford on 11.30.10 at 8:58 pm

#82 YT
Surely you jest!

#188 grantmi on 11.30.10 at 8:58 pm

More Shat to hit the fan!!

Fannie and Freddie asking for payback! And banks are telling them to pound salt!!

http://bit.ly/i4ymi4

Banks Resisting Fannie, Freddie Demands to Buy Back Mortgages

Nov. 30 (Bloomberg) — Fannie Mae and Freddie Mac are facing growing resistance as they attempt to push failed home loans off their books and onto the balance sheets of banks including Bank of America Corp. and JPMorgan Chase & Co.

The two government-owned mortgage companies are enforcing contracts that require lenders to buy back loans that didn’t meet underwriting standards. At the end of September, the companies reported, banks hadn’t responded to $13 billion in buyback requests.

A third of those were at least four months old and Freddie Mac has begun to assess penalties for the delays.

#189 Leanne on 11.30.10 at 9:30 pm

Forgive me Greg, I couldn’t resist. I’m sure your input is very much appreciated here.

You could stick a post-it note on your screen with the word “article” to avoid future taunting ;-)

#190 RE Bear on 11.30.10 at 10:02 pm

#157 TheBestPlaceOnEarth on 11.30.10 at 5:28 pm

The Asians! They will save us! Chinese are so rich!!!!!!! Yes Buy that House!!!!!! It will be worth 500 MILLION DALLARS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! HAHAHA YES I SO RICH!!!!!!!!!!!!!!!

Now, where are my meds? Have you guys seen my meds?

#191 Brampton RE is CRASHING on 11.30.10 at 10:06 pm

Housing crash in Brampton?

The brampton real estate board has yet to put out sales numbers? Why? I here Brampton is crashing HARD!

http://www.bramptonandarearealestate.com/2010_Residential.html

#192 Nostradamus Le Mad Vlad on 11.30.10 at 10:14 pm

-
Well, that was an exciting duh!

Record freeze in Sweden. A few days ago, Norway said it was heading for its coldest winter in 140 years. GW? Bah! Humbug! The sun, sans sunspots has gone AWOL.

Statistics – doncha jes’ luv ‘em?

COMEX default “Looks like the “buy silver” campaign worked. COMEX is stuck unable to fulfill the open silver contracts, except that the cash is pouring out of Bernanke’s printing presses and cannot hold its value at all. Plus, COMEX will cover the losses by asking for a bailout, which means sticking YOU with the losses from their fraudulent over-selling of gold and silver contracts.” wrh.com. So, when (or if) JPM goes down, do they ask for a bailout?

1:26 clip WaMu lost over 100K mortgage docs.

To spice up everyone’s life . . .

Naughty word in headline, and this is one side of there equation. Here is the other.

GoM is doing just fine, as long as people stay away from it. Thanks BP!

Don’t forget Michigan. Does it really exist?

NATo and US expanding war worldwide. Neither has anything left to offer but war. 47:19 clip.

Belgium Now that Ireland, Iceland and anyone else are broke, it’s Belgium’s turn! Plus — China “What would Chairman Mao do?”

#193 Taxpayer like everyone else on 11.30.10 at 10:20 pm

34 Dark Sad – hi, you have asked

“You can see the credit outstanding dwarfs cash money
supply-so how on earth could there be a
dollar “somewhere” for every dollar of credit issued?”

I am surprised this one is stumping you DSP. I/you/we dont have cash in our bank accounts. Just a credit that we can move around in the system via cheques and transfers. It’s worked this way for how long??

Thank you for your links to the StL fed. Do you know
of something similar for Canada? Also interesting about the “sweeps”. Believe it or not, I had wondered this myself, as I look after the money in my business. When we do larger projects, I often keep a buffer well in five figs to pay suppliers and employees regularly without undue worry while waiting for payments. Not easy with four wives. This balance can be kept in the account for days, even weeks, and I always wondered if the bank
might be doing something with it.

Also, if you want to see more CU balance sheets check here and pick a CU from their list:

http://www.credit-union.com/

Now, of course, just because the balance sheet works out, doesn’t mean they have made good loans.

#194 BrianT on 11.30.10 at 10:27 pm

#186DSP-you make good points but the USA isn’t Japan. The fundamentals are ten times worse for the USA than they were when Japan started on this road of screwing over the nation for the banks. Japan was right at the top of the heap when they started the slide-the USA was already in big trouble when they started. There are a multitude of differences but here is just one-the Japanese poverty rate was TINY when they started their slide-they had a lot of meat to cut into-the USA not so much.

#195 Dan in Victoria on 11.30.10 at 10:30 pm

Ladysmith…..was there a couple of weeks ago doing a small job. I would really think awhile about buying there.
Nice town, great views from a lot of places. Depends on what your future plans are……

But, you can buy a house there for the price of a cheap lot in the Western communities in Victoria.

http://www.realtor.ca/propertyDetails.aspx?propertyId=9981076&PidKey=1517954067

#196 RJ on 11.30.10 at 10:57 pm

Hey Garth

I need your help with a decision I need to make in the next 7 days. I’ve been let go from my Manager level job at a very well known communications company. I worked there for 9+ years, starting from the ground up. It was going to be my retirement job, it was my everything. Now it’s gone and I’m not sure what to do next.

The Bad News
-I have spotty credit and a poor score. Was working on that and according to when I bought a used car last month, I am doing well lately and there is only a couple of belmishes.
-I have 2 car payments. 1 @ $450 a month, 25K still owing, 2%int. The other was purchased a little over a month ago, $704 month, $31K owing, 18%int.
-LOC maxed out at $7500, 7%int
-No other savings

The Good News
-I was given $80K severance.
-I have $14K in a pension fund, not locked in.
-I have $2500 in stocks
-I rent with my family of 3.
-I am totally mobile now and will be moving out of Vancouver and back home to Toronto be closer to family and more job prospects.

I met with a RBC financial advisor today and the advice so far is to defer the $80K severance to Jan 1st so it doesn’t affect my 2010 earnings.(YTD I am almost $110K).
I’ve been advised to RRSP as much of the severance as possible to help with taxes.

My questions are:
-What else can I do once I max out my RRSP’s to reduce the tax hit?
-Should I buy in Ontario asap? I’m looking for an hour commute from where I land a job. Looking everywhere from Guelph to Barrie to Oshawa.
-Should I pay off my vehicles with some of this severance to reduce the monthly payments I have to deal with?

Before any judgements are made about why I have no savings or a “back-up plan” in the bank, I’ve always had problems saving money. Never a problem making it but saving is an entirely different thing. I landed in Vancouver in 1993 with $100 and now I am moving back to Ontario with almost $100K. I want to make sure I make the right choices with my money. I trust not only your opinions Garth, but also those that frequently comment here. I’ve been on this blog for at least 3 years now, never before comenting but always reading your posts and telling others about you. Please let me know what the best options are for me right now, during this opportunity I have before me.

Anyone have some advice? I welcome your comments to [email protected]

Thank-you!

Contact me, [email protected]. I need to know more. — Garth

#197 ralph on 11.30.10 at 11:08 pm

“Canada Surrenders Sovereignty and Privacy to U.S. Secure Flight Program”

I believe governments’ main job should be to protect our civil liberties, not from terrorists and the like.

#198 45north on 11.30.10 at 11:41 pm

the bank based its ‘affordability’ numbers on a down payment of 25% (the average across Canada at this time is 7%), and a 25-year mortgage (90% of new mortgages are for 35 years).

as if Royal Bank of Canada doesn’t know, maybe it needs someone like me to write some perl scripts

Europa: A situation that will affect all countries of the world (maybe not Vancouver, it’s not on Earth).

so maybe it’s not the best place on Earth

Yo Mama: Banks in Canada actually permit up to 48% of pretax income to go toward a monthly house payment? If this is the case, then my suspicions are confirmed that Canada will suffer a fate worse than the U.S.

the banks are willing to write the mortgages because CMHC insures them but still your point is valid Canada as a country will suffer

#199 dark sad person on 11.30.10 at 11:52 pm

#193 Taxpayer like everyone else on 11.30.10 at 10:20 pm

I am surprised this one is stumping you DSP. I/you/we dont have cash in our bank accounts. Just a credit that we can move around in the system via cheques and transfers. It’s worked this way for how long??

********************

How is it that it’s stumping me?

I understand very well that there isn’t enough money available in Bank Accounts- I’ve said many times if everyone or even 10% of the People tried to withdraw at the same time-they couldn’t accommodate it-
In fact-unless I’m misunderstanding what you’re trying to say-
That was the point of the whole thing-ie:
Shawn the Investor-
“There is a Dollar for every Dollar of Credit”
Well there “isn’t” and I proved it in spades-

Yes–it has “seemingly” worked for a long time-but guess what?
It ain’t friggen working anymore-
There simply is not enough “Money” to pay off Debt-
(issued as credit)

************************
Thank you for your links to the StL fed. Do you know
of something similar for Canada?
*************

As far as trying to make heads or tails out of this complete cluster fk–good luck-

http://www.bank-banque-canada.ca/en/index.html

http://bankofcanada.ca/en/graphs/a1-table.html

It’s almost like F knows what he’s talking about-when you see the inane system he has to work with-

No wonder he’s “always” wrong-

btw–Canada as well-links money Velocity to GDP–

GDP = the most skewed data on the face of the planet-
If real GDP were known-they wouldn’t be able to hide it-
They need to link to personal income levels and then the real picture would emerge-

Velocity of money = nominal GDP/M2++ (growth)

And also i agree-there are “some” sound Banks that acted responsibly-but the “big ones” the Market Makers that move Hot Money-are insolvent and have been since the paper market blew up-

#200 dark sad person on 12.01.10 at 12:18 am

#194 BrianT on 11.30.10 at 10:27 pm

#186DSP-you make good points but the USA isn’t Japan. The fundamentals are ten times worse for the USA than they were when Japan started on this road of screwing over the nation for the banks. Japan was right at the top of the heap when they started the slide-the USA was already in big trouble when they started. There are a multitude of differences but here is just one-the Japanese poverty rate was TINY when they started their slide-they had a lot of meat to cut into-the USA not so much.
***********

Well yes-the US has different demographics and circumstances are different then they were for Japan-
when Japan was in Deflation the rest of the World was in Inflation and could buy all they produced-so their Economy and Employment held up well-
The YEN went carry trade so there was high borrowing demand in Japan-

The difference in favor of the US is huge-even though they’ve squandered their Industry-they still have Natural Resources and the big one is-they are the bread basket of the world and they have a Military that can kick anyone’s ass and we/they all know it-
They have the deepest capital markets-the largest economy and-believe it or not “trust” that they will and can stand behind the $
We both know that it is garbage-but-what else would you buy here?
The EUR-the YEN-the RUP?
I wouldn’t-
USD and the CHF-but that’s about it right now-

Japan has a horrible Demographic problem as the boomers start needing pensions/health care and because of no Immigration Policies and a depleting Gen-X/Y factor-they are hooped-who can they Tax?
I think the Yen might be the first Major Currency to melt down-somewhere ahead of us-
A World Currency crises can evolve from any Major Currency collapsing and Japan is at the end of its rope for QE-
One day the JPY Bond Market will puke and game over-
They will croak well ahead of the US-imo-

#201 Taxpayer like everyone else on 12.01.10 at 1:41 am

200 Dark Sad – Hi again. It’s always good to go back and see what triggered the debate. Pasted from Shawn’s comment:

“All Debt is someone eles’ savings (all debt represents a
borrowing from someone who has that debt as an asset
as their savings or investment on their personal or
corporate balance sheet).”

So he was pretty careful in his wording, and specifically mentions the “balance sheet”. I looked at some of the replies (again) and can see a lot of different
interpretations of “savings” “cash” “deposits”
and “reserves”.

XYZ described it pretty well, but then his wheels came off a little at the end. But your last reply clarifies much. Its all “good blog”.

But we have to come up with a new name for fractional reserve banking, if there is no reserve!

#202 betamax on 12.01.10 at 2:41 am

#150 Big Mistake “this couple is making, if they are buying on Vancouver Island for ‘half of what Vancouver costs’.”

Agreed. Island town economies are being kept afloat by construction and not much else these days. When the correction comes, those economies will sink into a black hole. Good luck selling at any price when jobs are disappearing in those one-industry towns.

#203 Vancouver_bear on 12.01.10 at 4:11 am

#158 TheBestPlaceOnEarth on 11.30.10 at 5:28 pm

50% unemployment….be careful, with that unemployment ppl will start cutting throat to each other for a jug of milk. And no army or police in the world will protect ya.

#204 Oasis on 12.01.10 at 9:23 am

#201 dark sad person on 12.01.10 at 12:18 am
_________________________________________

you make quite a few mis-statements.

1. japan has not suffered a secular deflation. prices for the last 15 years have essentailly been stable. they have not collapsed.

2. the US$ is nothing more than toilet paper. nobody is standing behind it. and as for american military might, sure , beat up on countries like iraq, but let’s see them invade China. the times are changing. the US is in serious decline. they are finished.

3. all your arguments about deflation are false. Weimar Germany is a perfect example. So is Brazil, Argentina, Zimbabwe. you simply can not have deflation in todays’ fiat money system. it’s not possible.

4. you sound like a Prechterite.

#205 Oasis on 12.01.10 at 9:29 am

#201 dark sad person on 12.01.10 at 12:18 am
___________________________________________

i should add, that your definition of “money” as money and “credit” is an Austrian idea. TMS has been skyrocketing. and there is no Austrian economist predicting deflation… only rapid inflation that will border on worse.

#206 GregW, Oakville on 12.01.10 at 11:36 am

Hi #190 Leanne, Thanks, that’s good idea!
oops, it just fell off. Some tape might help?

#207 Extra on 12.01.10 at 12:38 pm

“More literary gold from Garth… “bitching”. I haven’t heard that word used in that context in almost 2 decades. I might have to re-integrate it into my lexicon again.”

Dude! Clearly you haven’t been to southern California, where it has never gone out of use. Practically a requirement for state residency to shoehorn it into conversation several times hourly.

#208 Big Mistake on 12.01.10 at 5:21 pm

#13 TheFirstRick on 11.30.10 at 12:58 am
Please follow up on the couple in a snit moving to Ladysmith. I just wonder how long it will take them to realize the average LS resident thinks an Engineer drives a train and a clothing start up is the new shipment at the Sally Ann. Good luck, none the less.

It’s worse than that. I remember living there at the age of 10 there were plenty of kids my age already into drugs, smoking and more. If there is still a pulp and paper mill operating then there’s frequently a nauseating stench in the town and if there’s not then that’s one of the biggest employers for the town gone.