Danger: economists

Pierre and Alison have a problem. He works for the feds, and they bought a nice little house across the river from Ottawa. Being Quebec, of course, real estate is half price. Some day I’ll explain why.

Alison pines for her home town of Toronto, wants her kids regularly shucked under the chin by grandparents, and Pierre’s willing to relocate. After all, happy wife, happy life.

But afford a house in the Big Smoke after selling one in Gatineau? Fuhgeddabodit, he says. Way too expensive, even if the bank thinks they can carry a half-million-dollar mortgage. So Pierre has written for comments on three options he’s arrived at. Here they are:

1) Live in Hamilton. I know that Hamilton has an unfairly bad reputation and I believe it to be one of the most interesting cities in Canada. I have also researched the current political climate within the city with a view to diversifying its economy and restoring some of the downtown districts. My wife and I both love the idea of living in an older home within the city and aren’t scared of putting in some elbow grease if necessary. The equity we have in our current house would allow us to have little or no mortgage there, or have a small mortgage and highly diversified investments.

2) Rent in Toronto in the short-term. My wife has a psychological issue with renting, but it’s not insurmountable as some cases, in that she’s open to looking at the calculations and going with it if it makes sense (which, of course, it does). However, even a small SFH in a less-than-great neighbourhood would cost more to rent than I pay in total mortgage/taxes/repairs here. Not much more, but the house wouldn’t be as nice either. I’d pay less income tax but higher car insurance, so it’s basically a wash otherwise.

3) Keep waiting for the bubble to burst. I’m not under the impression that the Ottawa/Gatineau will come out of the housing bubble unscathed. A lot of federal employees have started second jobs climbing the housing ladder and I don’t think it will end well, especially with the looming danger of budget cuts. But even then, I think it will likely come out ahead of Toronto. So with a few more years of paying mortgage and building up our investments, if decreases in Toronto outpace Gatineau decreases, we might be able to move into Toronto proper without overly compromising our finances. Advice?

Actually, Pierre, today I’m on strike. I intend to hold out until my non-negotiable demands have been met by the cheap overloads who frequent this pathetic site, or until Parliament passes back-to-blogging legislation. So I’m going to slip this one out to the pack, letting the blog dogs chew on the Hamilton-rent-wait conundrum, and respond.

But, let’s all be aware of how fast the rules of the game are changing.

The heretic, antisocial and vaguely sexual financial views espoused here seem to be going mainstream, which I must admit scares the hell outta me. This week CIBC economist Benny Tal penned a report, for example, which makes the case for real estate being a lousy investment over the coming years. Given current trends, he says, your house is probably going to lag behind other kids of assets in terms of appreciation. He’s right, of course, but the fact a mortgage-spewing bank is saying stuff like this is remarkable all on its own. It would not have happened a year ago.

What’s changed is the amount of new debt Canadians have chowed down in a year (most of it to sate house lust), coupled with an economy which is once again running out of gas. Household balance sheets suck, the savings rate is non-existent and home ownership is at saturation levels. I mean, why would houses rise in value unless enough people are horny and delusional?

But Tal also says this: “Glancing at popular metrics such as the price-to-income ratio or the price-to-rent ratio, it is tempting to conclude that the housing market is already in clear bubble territory and a huge crash is inevitable. Tempting, but probably wrong.”

And just when he was doing so well…

Benny says for a crash, we need a drastic rise in rates, similar to what happened in 1991 (mortgages topped out at 14% a year or two later). He also says there are not enough equityless young homeowners, who would be wiped out in a shock-rate scenario, to tip the market. So, he concludes, real estate will gradually decline as rates gently rise.

Crap, says Capital Economics. Canada has a housing bubble because real estate is out of touch with economic fundamentals, and house prices will careen lower by 25% over the next three years, it claims. The big reason: consumers are debted out.

“Relative to disposable income per capita, our calculations suggest that housing is around 25 per cent overvalued, which is approaching the level of excess that the U.S. market reached at its peak in 2006.”

And here’s economics professor Stephen Gordon dissing central banker Mark Carney this week. The prof’s argument is that house prices have done a Kirstie Alley simply because a small drop in mortgage rates of a couple of points had a massive impact on borrowers’ ability to leverage. So, on the trip back down, small increases can cause equally dramatic results.

“Probably the biggest reason why Mr. Carney did not mention the possibility of a bubble (in his recent speech) is that its presence isn’t a necessary condition for warning Canadians about the importance of preparing themselves for a significant decline in housing prices in the medium term. If small decreases in interest rates can produce large increases, then small increases in interest rates — and such increases are inevitable — can also generate large reductions in house prices.”

Oh yeah, and the Globe’s personal finance columnist wrote a piece a few days ago on why renting is a better choice than owning for those hideous wrinky people we call Boomers.

So, there you go. Pierre wants words. Give him a few.

I’d have written something today but, like Greece, I’m revolting.

188 comments ↓

#1 SK Driver on 06.29.11 at 10:01 pm

Before my Grandfather passed away recently, he gave me words of wisdom. They were very wealthy in the old country when the collapse hit. It was brutal he said, vast fortunes gone, people went from well off to paupers virtually overnight. He taught me much before he passed. The main point that stuck was his emphasis that I must get rid of my debt. Debt was what killed the majority of the people’s fortunes he said. I hope he looks down at me and is proud because I listened to what he said and did as he taught. It is obvious at the state of debt in the world, so since we did not learn, history is about to repeat itself.

#2 Medic on 06.29.11 at 10:08 pm

Enjoy the Hamilton-TO commute.

#3 Tony on 06.29.11 at 10:11 pm

Yo Pierre. Driving to work, up hill both ways, and in traffic, sucks. Rent a place close by.

#4 happygolucky on 06.29.11 at 10:11 pm

Sorry, but I could not make it past the picture without losing all capacity to comment: except, please Garth do not lose sight of the soul sucking capacity of our spouses – sell your soul for a happy wife in the GTA? My advice would be, maybe its time to change wives…..

#5 Lvl 85 Orc Warrior on 06.29.11 at 10:18 pm

Nice to see you posting pictures of Orc females Garth!

Keep up the good work.

Blood and Thunder!

#6 45north on 06.29.11 at 10:18 pm

so what kind of car is it? I mean the orange one?

Pierre: my wife and I came to Ottawa from Toronto many years ago and raised our kids here

I’d say give your wife two choices: stay or go

if you go you will rent the house as close as possible to your in-laws (after all that’s the whole point of moving)

if you stay, you will stay in your house and in your job (not a bad idea) and take your vacations in Toronto (but that’s what you do now)

her call

#7 Cory on 06.29.11 at 10:19 pm

This is all so simple. Govt worried about household debt? raise interest rates like the rest of the world (minus the US who we try to emulate) is and has been doing.

The real estate push from the consumer side will die extremely slowly, if it ever does, Why? It’s simple too!! People, being as financially illiterate as they are (by design of our edu system), see their house as an investment and most important a STABLE investment, even though this is complete bull. The stock market is a very very volatile place. It’s controlled by hedge funds/ High Frequency Trading, anonymous trading, crooked too big to fail banks, brokers, etc.

So the “my house is my safety net investment” is very entrenched by the masses and will be incredibly hard to break even as credit tightens and interest rates rise.

#8 Mr. Lahey on 06.29.11 at 10:25 pm

#1 Sk Driver Yes, debt is the great killer when it is consumer debt. Debt, properly handled as investment debt has made individuals fortunes throughout history. As a billionaire once said, “if you are not born with money, you have to borrow it”.

“Randy, sell the trailer before it goes down 25% and get into liquid assets. The economic shit hawks are gathering momentum Randy”.

#9 Patz on 06.29.11 at 10:27 pm

Over on yesterday’s blog Abitibidoug said he doesn’t buy my contention that middle–class wages stagnated in the past 3 decades because lots of people have bought lots of wheels and flat screens. What an astonishing grasp of economics you have Abi. I guess you got me there.

And CrowdedElevatedFartz just can’t wait for the Harper scythe to sweep through the public service and cut them down to size, rooting out the benefits of anyone left over. Yup that should fix things. Much better than working people standing up for each others’ rights.

#10 Think tank on 06.29.11 at 10:29 pm

In the last three years hundred of people from Toronto are taking advantages of the house pricing in Hamilton. Sale your overpriced bubble house or condo and buy a bigger, classy victorian mansion in Hamilton in good part of the city, your monthly payment with all the expenses will be less than any rent of small condo in the downtown overpriced TO

#11 Kevin in Winnipeg on 06.29.11 at 10:30 pm

Capital Economics was the same group who cried the same thing in 2008 as well. We all know how that went.

#12 Think tank on 06.29.11 at 10:32 pm

Oh I love the Go buses…

#13 Joe on 06.29.11 at 10:33 pm

Ottawa isn’t all that far from the grandparents.

Weighing in on Hamilton own v. Toronto rent, it’s not just about mortgage, tax, etc, it’s also the cost of maintaining a car that drives that distance five days a week, and the toll on you spending time in the car as opposed to at home with your family. If you lived downtown you could make do with one or no cars, Hamilton you’ll need at least one car, probably two because your wife won’t want to be stuck at home with no car during all those hours you’re commuting.

#14 Hashnugs Inthebong on 06.29.11 at 10:39 pm

I suggest divorce the lady, then meet some of the MILFS at your kids school. No wife,happy life.

#15 disciple on 06.29.11 at 10:40 pm

You cannot get rid of debt. All fiat money IS debt, that someone owes someone else. You continue to use fiat money, you continue to deal in debt. There is no escape unless you get off the farm.

#16 JB on 06.29.11 at 10:40 pm

My ladyfriend always poses a question when we get into the “should we buy a home now” argument… Her side is, like the northern states where housing prices did not get “out of control” (Montana, North Dakota) SK will remain with a growing economy due to our resource diversity and this is what the new world needs, fuel, food and fertilizer…bla bla bla

She claims that if I am right and the housing market turns that home prices in Saskatoon may only drop a max 10%… I know 10% is approx 30k on a avg home in Saskatoon… She says whats the diff? What are the chances shes right?

#17 GTA Girl on 06.29.11 at 10:43 pm

If Harper intends to cut many jobs in next few years why would you risk your seniority to relocate? Unless it’s a Conservative party job, I believe it would be too risky.

However, if your skills are of value and to relocate to Toronto would open up more possibilities career wise, I’d risk it and rent outside Toronto. But not as far as Hamilton. Could you really stand 4hours of traffic everyday?

In the end, liquidity is important. Balanced with having your kids close to their grandparents. That is a value we take for granted.

#18 Tripp on 06.29.11 at 10:45 pm

Garth, unfortunately real estate in Gatineau stopped being half the Ottawa price years ago. Even if it didn’t it would still be severely overpriced. The single component that keeps the housing industry alive is geography, precisely the close proximity to fed jobs.

Otherwise the town would be just another post-industrial dump with few jobs (other than some services), horrible infrastructure, poor public transit and with little to offer on the cultural/artistic side of life.

It should not be compared with Montreal or Ville de Quebec, there are significant discrepancies between various areas of Quebec.

#19 Andrew on 06.29.11 at 10:46 pm

Commuting from Hamilton, that’s just a horrible commute, 1 hour plus each way by car/GO train/GO bus, don’t do it. Commuting in general is expensive, time consuming, stressful and bad for the environment, never ever accept a long commute. Also the distant suburbs of Toronto are a terrible place to live, there is absolutely nothing to do and you can’t walk anywhere. (You can walk in downtown Hamilton, but do you dare?)

If she wants to live in Toronto, would she be willing to live in a rental condo (as opposed to a house)? A nice 2 bedroom rental condo goes for $2000 in most parts of Toronto (anywhere on the subway line outside of downtown). If she needs more space a rental townhouse is also an option. A single family house is probably too expensive to rent, and buying is out of the question.

Otherwise I would say stay in Ottawa. Housing is MUCH cheaper there. Housing prices may be inflated there, but it is not the severe housing bubble that Toronto/Vancouver is.

#20 Stevermt on 06.29.11 at 10:46 pm

Pierre, Hamilton is the best choice.

The average price of a SFH is 280k, at 4.0 X household income of 70K. the neighbourhoods in the west end and west mountain and Ancaster are beautiful.

We sold our house last summer in Burlington and bought a detached home here and are now carrying a much smaller mortgage. (with a mortgage payment of $400..we are overpaying by over double to pay it faster)
Sounds like you could be in a similar situation so it makes the most sense. I hear that many Torontonians are making the move down here, because the commute is reasonable and the numbers that I gave above. this city also has an amazing culture, art galleries, theatres and festivals.

A few weeks ago there was an announcement that Hamilton was named the #1 city in Ontario to invest in and #3 in all of Canada.. surely this city will experience a renaissance, there is so much potential. We will have a light rail transit system, city wide and up the mountain within a few years. The MacMaster Innovation Park is attracting scientists from all across the country. Check the Hamilton Spectator from april-May 2011 for that press release.

So good luck and come on down and take a look !

#21 European on 06.29.11 at 10:48 pm

I’ve been reading this blog for a while and it seems like what Garth has been saying is finally becoming main stream. Its like he is 8-9 months ahead of the trend, I gatta say I was sceptical but now I am impressed on his ability to predict what seems to be so obvious. Now its gonna be interesting to see what actually happens in the next two years!

#22 squidly77 on 06.29.11 at 10:49 pm

Capital Economics was the same group who cried the same thing in 2008 as well. We all know how that went.

Yes they did, Calgary and Edmonton never recovered.

Everything is building towards a mighty crash is the Wild Rose province.

#23 Abitibidoug on 06.29.11 at 10:54 pm

There are many comments already about the dreadful commute between Hamilton and Toronto. If you insist on living in Hamilton, get a house not too far from the station and take the Go Train. Oh, I almost forgot, shop around as you’ll have plenty of time while the overpriced real estate market comes back to reality.

#24 JohnnyBGood on 06.29.11 at 10:56 pm

Pierre,

If your wife wants to live in TO because her family is there, why even consider Hamilton? Have you ever been? No offence to our friends at the tip of Lake ON, but, with few exceptions, the place is a hole. I wouldn’t even want to go there to die, let alone live. But to each his own.

Take 45 North’s advice and live as close to the in-laws as possible. If they are willing to help out with the kids when needed (God bless ‘em), this can be invaluable––financially, psychologically, and for the sake of marital bliss. You need a little bliss once in a while in the evenings, right?

If a TO home is too much of a burden right now, or you are not comfortable with the risk, and you and your wife are OK with renting, then just rent. Renting for a while will also give you the flexibility to move to a different part of the city. Or back to Gatineau, if necessary. Or (yikes) to Hamilton.

Good luck.

#25 brainsail on 06.29.11 at 10:58 pm

“A lot of federal employees have started second jobs climbing the housing ladder and I don’t think it will end well, especially with the looming danger of budget cuts. ”

Are you serious? Federal emplyees have part time jobs or what ever to stay afloat? Scary. If so, isn’t that a clear enough message for what you snould do?

#26 TS on 06.29.11 at 11:00 pm

If the blogger chooses the Hammer….he and his wife can always find a home in the downtown core within walking distance of the GO Train. There are a growing number of people using the GO to commute into TO.

#27 detalumis on 06.29.11 at 11:02 pm

I don’t think its a good idea to commute from Hamilton, I grew up there and did it for six months and was gone 12 hours a day. There are people that do it a lot longer but they really have no life. The property taxes are also very high for anything decent, around 1,000 more for an equivalent small bungalow to what I have in uber-rich Oakville. Those fixer upper neighbourhoods downtown that are not hugely expensive are cheap for a reason, the poverty industry is big business and you will be surounded by some very poor people including a plethora of halfway houses, group homes, crack and rooming houses.

#28 Hovering on 06.29.11 at 11:02 pm

dude,

1. screw hamilton. she wants to live toronto.

2. yes. sell. sell now. rent. tell her you bought it.

3. see 2.

4. (there are always other options).

5. isn’t it damn near impossibe to move from your fed job in Ottawa to a Fed job in Toronto? if you are a permanent fed already, hold onto it with both hands..

#29 Hovering on 06.29.11 at 11:03 pm

“in” toronto

#30 xyz on 06.29.11 at 11:05 pm

16 JB on 06.29.11 at 10:40 pm

Send me the 30K instead, if houses DON’T Drop I’ll send it back in 10 years.

You will lose money either way, buy the house, or send me 30K. Just less headaches.

#31 JohnnyBGood on 06.29.11 at 11:09 pm

#10 Think tank

There are very good reasons why RE in TO is so much more expensive than RE in Hamilton. For example, people actually WANT to live in TO.

#32 Mr. Reality on 06.29.11 at 11:11 pm

Pierre- mon amis — One word — patience

Give your wife what she wants. Go over the numbers and explain to her that if she is patient and waits for the correction, and you know deep down it will happen; then buy her a nice home in Toronto. Buy it at the bottom and for the right price. Patience is a virtue and it’s something that everyone has a problem with these days.

That may take years but explain to your wife that a smart home buyer and investor buys low and sells high. In the meantime rent and take her and your family on a nice annual vacation to heal the wounds of renting. So despicable it is!

In the mean time take some cash and short the crap out of the TSX!

My humble blog dog down and dirty opinion……..

Mr. R.

#33 nonplused on 06.29.11 at 11:14 pm

Pierre, what’s up in Toronto? It sounds like you are close to paying of your mortgage where you are so you must be employed. Once you pay of said mortgage you will be living large and riding motorcycles. So stay put dude.

Oh, and there is no bubble in Quebec, so if you see declines in the days ahead they will be modest and mean nothing to a dude and his wife who have paid off the mortgage.

The only thing that can make life in Quebec worse at this point is separation. If that dead dream ever came back to life the population of Quebec would drop by 25% in 5 years. PS that is also Garth’s explanation why the border makes such a big difference. It’s still perceived as a real risk, so people don’t want to own houses there.

If the French Quebecers ever loose their collective minds and actually vote to separate, Quebec will be somewhat depopulated and broke 5 years later. And they will be assimilated language wise by the Americans. Heck, the net is doing that to the young now. That is why the border makes such a difference. Anyone who can speak and read English in Quebec intuitively understands this.

#34 waterloo Resident on 06.29.11 at 11:20 pm

Hi Garth !
Yes, I know what you mean, women also tell me that I’m revolting.

I wonder if rising rates will make homes in Canada fall in value, I noticed that in Canada homes are different, in Canada home prices are “STICKY”. That means that home prices are quick to go up but when it comes time for the prices to come down they sort of get stuck up there in the clouds, they just don’t come down the way we would think or the way they do in America. First of all the home owners don’t want to lose money so they hold on for a few years hoping to get their money back. Then if the banks take back the houses the banks hold onto those houses for decades, they don’t just liquidate the homes at low prices the way they do in America. Maybe this is because Canadian banks or more capitalized so they can easily afford to carry a huge number of homes for 6 to 10 years while waiting for home prices to go back up before selling. So while homes in America crashed I get a feeling that when interest rates here in Canada go up 3 or 4 %, the homes won’t sink in value much. Sales will crash in volume but prices will simply ‘STICK’.

#35 waterloo Resident on 06.29.11 at 11:21 pm

Oh yes, by the way, I rent my house so if homes fall in value then I would LOVE that.

#36 Ralph Cramdown on 06.29.11 at 11:23 pm

The problem with hanging on to the Gatineau place: When real estate markets go to Hull, prices go down, but buyers go away, too. It’s fine to say “OK, I want to sell at today’s price” but then you have to wait for a buyer. Can sometimes be a long wait.

The G&M prof’s analysis was bogus. He neglects to note that house prices are sticky: Wannabe sellers pout and go on strike rather than accepting declining markets’ prices. Also, his price/interest rate indifference analysis would be more accurate if Canadians could lock in interest rates for the amortization of their mortgage. If I’m paying $1,500 a month for 25 years for my house, should I care whether it’s mostly principal or mostly interest? Not if it pencils compared to rent. But if I have to renew in five years at prevailing rates, I have to estimate my payment at those rates.

#37 Tigger on 06.29.11 at 11:30 pm

#16 JB:

Two points:
1) even were your beaux to be correct that Sask. house prices will ‘only’ drop 10% (Regina’s bubble has seen 5 fold price increases since 2002…so a 10% pull-back seems abit tame to me…) she is quoting AVERAGE housing prices which are heavily skewed by the million dollar Mcmansions. All the same 30K is 30K it takes a long time to SAVE that much, better to hold off and at least make a bit of growth (suffering GIC rates is still better than overpaying on massive purchase).

2) Saskatchewan does not have a single resource that is not abundant elsewhere;
Grains: Australia, Ukraine, Argentina, USA
Oil: OPEC, off-shore, alternatives, e-communting (not to mention majority of gas-guzzling communters are set to retire and downsize their lifestyles en masse, curbing demand for the crude jus’ a bit. And I wouldn’t count on the developing countries picking up the slack, they are learning from our energy wasting blunders)
Potash: Turkenistan, New Brunswick, Australia…
Diamonds: Arctic (i.e. Canada, Russia, Norway, Sweden, Finland)…South Africa

Cheers

#38 whiteshoes on 06.29.11 at 11:33 pm

#6 45north

Its a 1970 Camaro.

whiteshoes

#39 Tigger on 06.29.11 at 11:33 pm

P.S: Pierre,

Sell in Ottawa,
keep current job,
and rent in Ottawa

Try it for a year.

#40 Utopia on 06.29.11 at 11:41 pm

Terrific piece again Garth. I have much to add but have been under the weather for a few days. Try to forgive me. The overlording is exhausting. Maybe tomorrow.

#1 SK Driver

That was an interesting post you left. I agree with your conclusions. Do you have time to expand on it a bit more? Where was your grandfather from…and which crash?..depression 1929 by any chance…….or possibly Europe.

It is rare that words of wisdom out of the past come down to us in the present. Most of those who lived through extremely difficult economic circumstances are now gone. Passed away. Their children carry only remnants of the past memories as guidance for their own futures. This is partly the problem we all face. There is a disconnect between the facts and realities of the past and the obviously similar trials we will face in the future.

#41 Lisa on 06.29.11 at 11:41 pm

Hi Pierre,

I had a psychological problem with renting too. But I got over it. It is just is smarter to wait for prices to come down in T.O. than jump in the deep end of the pool and feel yourself drowning.
Keep readimg this blog and get your wife to read it too. It’s like a nice freezing cold shower!

#42 not 1st on 06.29.11 at 11:49 pm

Garth, still have doubts about the massive shadow banking sector out there?

http://boombustblog.com/BoomBustBlog/An-Independent-Look-into-JP-Morgan.html

Next major bank to fall – JPM = massively over leveraged.

Can’t wait to see the carnage. My cash is all in real assets (i.e. land).

#43 Cato on 06.29.11 at 11:57 pm

Pierre, I think you know the answer already but just for fun:

First, don’t contemplate buying an older house in need of a bit of elbow grease unless you have substantial amount of construction experience. This means not just handy around the house but you’ve actually built a house. Also, if you have kids be prepared to rent during much of renovation. Don’t subject your kids to health hazards of a construction zone.

Second, you work in the civil service. Doesn’t matter how secure you think your job is be prepared for change. The red ink on all levels of government is about to flow like nothing we’ve ever seen before. Governments have been wildly inaccurate about this recession – they bet big and spent big on stimulus and now everyone pays the price for their mistake. The first batch to be shown the door will be the lucky ones – they actually have a shot at getting severance.

The right answer is sell & rent. Be mobile & liquid. You never know where the winds of change might take you. Alberta oil patch, the other civil service (armed forces) – who knows where people will need to transition to in order to survive. In you shoes I’d rather be as prepared as possible, and that means ability to move within 3 months for employment.

Mr. Tal is wrong, but then thats not surprising with most CIBC economists. We probably won’t see spike in rates, but that doesn’t mean we’ll see an orderly rate of housing declines. You see, cost of living is spiking and thats the kicker guys like Benny fail to account for. We’re already seeing consumers buckling under the pressure. Even if rates remain low inflationary pressures will give us same end result as a spike in rates.

There is now only one way out of this mess and unfortunately the cure is almost worse than the disease. God help us all when the button is finally pressed.

#44 Guy_in_Regina on 06.29.11 at 11:58 pm

Pierre, commuting is soul destroying. I say stick it out in Ottawa – commute to the grandparents. Either way, live close to work.

Garth, you forgot Lawrence Solomon reading the dawg gosphel in the Financial Puff, er, Post.

http://opinion.financialpost.com/2011/06/24/lawrence-solomon-deregulate-housing/#more-15715

The comments over at the Post are even bearish now!

#45 Nostradamus Le Mad Vlad on 06.30.11 at 12:00 am

-
“I’d have written something today but, like Greece, I’m revolting.” — Don’t be so hard on yourself; let us do that for you!

Pierre, try option 1, but rent (if possible) in Hamilton for a few years. If a really good deal appears closer to Trawnna, then it may be worth jumping in.

Use GO Train or buses to avoid headaches. My deux centimes.

BTW, the lady in the pic would have been a better choice for either ‘Unhealthy’ or ‘Leverage’.

“But, let’s all be aware of how fast the rules of the game are changing.” — Good enough reason to rent and ride the storm out, as all things shall pass.
*
#1 SK Driver — Great reminder that we can learn lots from our elders. They have been there and done that (really hard times), but the generation in its mid-20s now will pretty much take the full fury of the downturn.
*
#183 Dan in Victoria on 06.29.11 at 9:03 pm — “OMG there are some dumb people out here. Tragic.”

So true, and you’re right — all we can do is look after ourselves, and bypass the fed. and prov. govts., and bloodsuckers who always show up, wanting something for nothing.

#184 BigAl (Original) — “So I say to Greece, go ahead and default. You will be better off.”

Agreed, ‘tho it will probably take a lot more anti-govt. protests / riots from citizens to get their point across. Tell the banxters in no uncertain terms to shove their ‘bailouts’ where the sun don’t shine.
*
Russia – Iran Iran looks set to launch its nuke power plant in August, so what’s left of the US military will probably invade Yemen and S. Arabia, in order to get to Iran before then, but these exercises could lead to war in the region; Life Without Food Getting used to it; Fukushima First para. is good; Iran Remember Vietnam? They went underground, and defeated the US; BP Remember the GoM? Testosteronic Summer What will fall and winter be like? Western m$m sucks, blows and lies at the same time; Another POV to the flooding in themid-west, and this.

IEA Oil Dump = Crash of US$? Cheyenne “The secretive business havens of Cyprus and the Cayman Islands face a potent rival: Cheyenne, Wyoming.”; China’s bad debts and slowing growth (not too sure about that); UK Nightmare on High Street; Uneven Aging and Chinese local govts. default.

#46 Carp on 06.30.11 at 12:13 am

1. Money Sense rates Ottawa the best place to live in Canada.

2. Have you really been to Hamilton. A few years back, I had a consulting gig there and couldn’t run 1/2 a mile because of the stench from factories or whatever.

3. Consider schools – check out the fraser schools evals – ottawa rates very high … I doubt the same for hamilton.

4. Will your kids really strive in Hamilton versus Ottawa/Gatineau?

5. It’s not about her wishes or your careers – it all about the kids now and the best town to grow up in.

6. The grandparents can sell their homes and move to Ottawa.

#47 M.M. on 06.30.11 at 12:16 am

1.Sell the house.
2.Exchange 30% of money for gold and silver money.
3.Smoke a joint.
4.Rent wherever you want.

#48 poco on 06.30.11 at 12:16 am

#155 Squirrely–your post

#46 Pocop…….get out from under that rock……stop trying to live with yourself through denial…or stop drinking so much at the precinct. The public recognizes the police force as a wreckless lieing murder machine that lies and hides their guilt behind process. heres just one example…….I’m not your mommy…..do your own surfing…… as I said….the public meida is fillled with examples of murderous incompentance by those neanderthals who ‘made their mark; on the admission application for police work.
_____________________________________________
so a few things to get straight–no cop here but i do have much more appreciation and respect for the majority of police than you obviously do. And unlike you (i can only assume from your rants) i do not drink, but who really gives a damn if i did?

Now, where in our posts back and forth do i say i support police involved in shootings?
sorry but you do not appear to absorb what you read

absolutely agree that the death of Robert Dziekanski was totally unjustified in any ones mind who watched the video and followed the subsequent inquiry. The four have recently been charged with perjury–should it have been more –probably–i’m sure more will come out at their trial

again agree with regards to the shooting of Ian Bush in Houston in late 2005–in my mind –nothing but lies–a civil suit has already occurred or is going to occur

I’m surprised, for one who seems obsessed and has so much hatred towards police in general, that you didn’t mention the Kevin St. Arnaud shooting in Vanderhoof in Dec 2004—if ever there was a case for a murder charge, i think maybe this was it. Look it up!!!

no doubt there are more across Canada that don’t get headline after headline as the three above got –but maybe, just maybe, they were of the “justifiable” type, but i certainly won’t try to convince you that this may happen once in a while

speaking of getting information from newspapers—have you noticed how you can read three different reports of the same incident and get three totally different versions of the same thing—i’m certainly glad CREA doesn’t report on these police involved shootings–i can see it now–boy that street was hot–cop knocks off 5 with 2 bullets—you get the jist!
don’t believe everything you hear or read–do your own research and yes i do lots of research and don’t “make things up.” _____________________________________________

now, what i’ve been getting to is your first post and my initial response to that post, which is………..

“Currently more citizens die at the hands of police in Canada in a year than Canadian soldiers are killed by the Taliban in the battles of Afghanistan and the ‘police actions’ around the world. Statistically it is much more dangerous to walk the streets of a Canadian city than the streets of Khandahar.”
______________________________________________
You are full of crap !!!!–where do you you get this stuff from? if it wasn’t so stupid it might be funny

and we went on and on….Do you know how many soldiers were killed in Afghanistan since 2002? And how many police involved shootings in the same time frame?

there were 155 soldiers killed since 2002 as of Apr.2011
–if you can find a quarter of that number of police involved shootings in canada since 2002, i’ll eat my shorts!!
and we won’t even include the other “police actions” you spoke of

so the whole jist of that post was –you hate cops–big deal– lots do –many like me don’t, though justice should be done when and where warranted–take a look at the Surrey Six–more ammo for your ramblings–4 of the investigators have been charged with various crimes–this, i would think, jeopardizes the entire murder case–you’ld think they would have hidden those charges –right??

so my bull crap still stands—what a waste of time this has been—i’m sure glad i didn’t call you a garrulous assh_le
away for the weekend-wait til monday if you respond

#49 husband of happy wife on 06.30.11 at 12:20 am

My wife and I live in Hamilton, but she works in Toronto. She uses the GO train every day to, and from work and loves it. She hasn’t always taken the train though. When we first moved to Hamilton about eight months ago she drove, and drove me crazy when she got home. Work stressed her out, then the drive even more. the difference between when she use to drive to now when she takes the train is amazing. Much more relaxed and stress free. Commutes are terrible when you are by yourself in a car stuck in traffic drinking warm coffee, listening to the same terrible music, sucking in fuel fumes. Then add trying to find a parking lot.. ha. She reads the paper, or a book and sits in comfort drinking hot coffee relaxed. The money decision is yours, I’m just giving you my experience when it comes to the commute.

#50 cj on 06.30.11 at 12:22 am

happy wife, happy life???? Pierre, where do you factor in to this equation? I can understand that she would want to be closer to her parents and the kids would have a connection with them. But we don’t know what your job situation would be if you do move away from your current fed job in Ottawa
Then there is the purchasing of a home. No house is worth a great deal of financial stress on family relationships. Imagine going to work each day so you can have a house in Hamilton where the commute is fairly long….so much for quality family time. Then to go into mega debt for a home in Toronto when the market is overpriced? Now that’s big time stress
The other possibility of renting in Toronto may be a win for all of you as long as your job is secure. Take into account today’s economy and the prediction that the fed government will cut back— less jobs. You are part of this equation……

#51 Chaos on 06.30.11 at 12:27 am

Ok …clearly the driver of that car can no longer see the dashboard…soon she won’t be able to see the road ahead…and shortly after that she will run out of air as those balloons suffocate her…

hard to believe she started out as a size 4

where did she go so wrong?

Oh…the Koolaid.

#52 SK Driver on 06.30.11 at 12:34 am

Oh you poor brainwashed “fiat” people…. The day you will buy groceries with a bar of gold will never come.

#53 Bottoms_Up on 06.30.11 at 12:39 am

Capital Economics says real estate is out of touch with economic fundamentals.

True, but the irregularly low mortgage rates is also ‘out of touch’ with the historical average. Thus, there is a reason for this ‘out of touchness’.

If the irregularly low mortgage rates persist, then we may have a new ‘normal’ and real estate may not be that out of touch with (the new) economic fundamentals.

Smoking man would likely agree.

In terms of responding to Pierre, here’s what I can offer:

1) I lived in downtown Hamilton for a handful of years, and had friends who lived just east of downtown (where nice single family homes can still be had for under 200k). I could see living just east or west (near Hess village) of downtown , or on the ‘mountain’. The commute into Toronto wouldn’t be all that fun, but I do think Hamilton is a safe city and does have an undeserved bad reputation. Avoid Ancaster and around McMaster as the prices are too high. Consider Dundas (I’m not sure what the values are there) and north Burlington (possibly more family-friendly than Hamilton).

2) Renting’s a good option because it can buy you some time (i.e. to house hunt in Hamilton/Burlington so that you make the best choice for your family)

3) The Ottawa real estate board published historical average prices in Ottawa since the 1960′s. In only 2 or 3 years was the average price negative, and of those years the number was low (i.e. around -2 or -3%). Ottawa is known as a “recession proof” city and the real estate valuations are stable (they haven’t shot up like other cities in Canada, and when things turn sour they likewise don’t shoot down). So there is some merit in thinking Toronto may be worse off in a downturn, but I think waiting for this to come to fruition is a hopeless endeavour. It could be many years to achieve the “Ottawa didn’t lose much but Toronto lost more” ratio and by that time you will have lost those years of being close with your family members.

Good luck with your decision!

#54 a prairie dawg on 06.30.11 at 12:43 am

start rant

It’s official, the stupid are #winning.

http://business.financialpost.com/2011/06/29/house-prices-jump-most-in-five-months/

If you think the hockey riot was big, then wait until the show homes, and the trophy wives, and the toys start to disappear. Wait until austerity measures hit home for the wannabe upper, the middle, and the lower classes here. Then you’ll see a proper riot. Think global economy, you dullards. (only directed at those of you who are…) It’s all financially connected, and has been for some time now, and no one is immune indefinitely.

You think this is the first time bank lending standards grew lax because central bankers loosened monetary policy? This has been going on for centuries. Duh!
Call it the “fleece a generation policy” by the monetary global elite.

People really are like sheep. It’s sad to say, but they’re getting dumber every decade that goes by.

But have a Happy Canada Day eh. :)

end rant

#55 Valkyrie on 06.30.11 at 12:44 am

a)OK, parents own in TO? Time for them to cash out and downsize in beautiful downtown Gatineau! Why be small fish in big pond, be big fish in small pond.
b)Moving to Hamilton….I shudder at the commute……
c)Cheaper and easier to drive to Toronto occasionally from Gatineau to visit, dump the spawn off at G&G’s and have a couple of nights out on the town, it will do you good.

#56 Ravishing rick on 06.30.11 at 12:49 am

Garth you Pompous Bastard, i love your blog!

#57 Utopia on 06.30.11 at 12:51 am

“The prof’s argument is that house prices have done a Kirstie Alley simply because a small drop in mortgage rates of a couple of points had a massive impact on borrowers’ ability to leverage”. ~~ G.Turner
————————————————————————————
Professor Stephen Gordon is correct when it comes to interest rate sensitivity and the accumulation of debt. He will no doubt have noted how easy credit, a willing population of borrowers, low rates and irresponsible lending practices all but cratered US housing beginning in 2006.

What is most important though is that the housing bubble there began bursting prior to the recession and also prior to the Credit Crisis. Even lower rates that followed could not reinvigorate the market once it began to correct. Housing asset inflation was impossible to resuscitate once social attitudes turned negative on the topic.

What we are facing here in Canada unfortunately is a situation of bad timing. In our case, the deflation of our housing bubble will most likely run concurrent with the onset of the next recession.

In economics parlance…that is a double whammy (very technical).

So take one part housing deflation, one part economic slowdown, a dollop of fresh unemployment numbers, falling consumption and the ever bitter taste of government revenues in decline and you have an ugly slumping GDP stew to eat for dinner. Yuck.

Also very technical.

So what do you do now since most of the stimulus bullets have already been fired during the first crisis and now the national debt is humoring nobody between Gander and Esquimalt?

The whole country is, by this time, repulsed by the debt we carry in this country and even more disgusted by the personal debt that is killing the family budget yet they are even more terrified of jobs losses and negative growth prospects as interest rates do in fact finally begin to rise?

Who do you turn to when you finally realize you are in troubbe, that you neglected to save in good times but instead foolishly accumulated debt?

To your family? Your friends? The ex-spouse? Government?

This is when self reliance and good common sense finally pay off for many. There are dividends for those who saved like a squirrel after all. Only the harsh punishment of barely repayable debt can teach that lesson to most though.

#58 reality guy on 06.30.11 at 1:01 am

Nice read : Chinese real estate gets downgraded

http://citywire.co.uk/money/the-chinese-property-bubble-time-to-duck-and-cover/a504531

#59 wes_coast on 06.30.11 at 1:14 am

Sell. Pay down debt. Rent. It may as well be the tag line for this site. Why do people email for advice when thats all this blog gives out daily is consistent advice. You know the answer already Pierre. It just takes balls to go against the herd. You can do it bro.

#60 Aussie Roy on 06.30.11 at 1:19 am

Perhaps Pierre needs to sit down with all the numbers projected out for the next 10 years and show his lovely wife how each decision pans out cost wise. At Xmas time when the extended family was here I spent a day preparing the numbers behind my grand daughters housing wants. It was very easy to then explain how better or worse off they would be 10 years. Long story short with interest, larger taxes and running costs (inc transport) if a larger home was not purchased they would have enough money to pay for a FIRST class education for my 2 great grand kids. Of course the choice was hers to make, I am very pleased to say that she went with securring her childrens educational future.

As a side note she then asked me if I thought buying rental properties could be a way to make some money. I only had to show her this example (one of my sold properties). 500k house (expected yearly taxes and holding charges 5k pa) rental return 15k pa (3%) current mortgage rate 6.5%. I was so pleased when she said “gee there are a lot of stupid house investors out there”, of course we all know investors sold up years ago there are only delusional speculators left, willing to subsidize rents in the hope (of course they are sure) price rises will not only cover these extra daily expenses but of course make a bundle.

So where did the housing shortage go?.

Rental properties listings on the rise and so are properties for sale. Wow some big increases listed.

http://www.whocrashedtheeconomy.com/blog/?p=1593

2010 House price slide now larger than the falls during the GFC in 2008.

http://www.smh.com.au/business/house-price-slide-eclipses-gfc-drop-20110630-1gruy.html

Or this gem – prices down 2.7% across the nation in 2010.

http://www.abc.net.au/news/stories/2011/06/30/3257433.htm?section=justin

But not to worry, private debt at 160% of GDP – not important, cost of living rises – not important, falling sales and prices – not important, rising rental property adverts – not important. This is Australia no bubble here “she’ll be right mate”. House prices are going to the moon – FOLKS.

#61 Bottoms_Up on 06.30.11 at 1:37 am

Ottawa real estate prices 1956 to 2009 (OREB no longer carries a link but this website seems to have copied the numbers from them):

http://www.do-financial.ca/real-estate-investments/2010/08/ottawa-ontario-residential-house-values-market-appreciation-from-1956-to-2009-fair-market-value-housing-increase-rent-to-own-house-home/

#62 CrowdedElevatorfartz on 06.30.11 at 2:02 am

@#9Patz
While I think that the “scythe” is long overdue. (whether Harper or Layton did it matters not to me).
My main arguement is the endless growth of the public sector is unsustainable. And with the growth of Human Resources depts we seem to be getting more people and less work accomplished. The public sector just seems to be better at the “growth” portion of it.
Patz, as Garth mentioned a few days back.
There are now 420,000 federal govt employees, when you add on the Provincial and municipal legions of generously paid, generously benefitted, generously pensioned employees are costing the Canadian taxpayer BILLIONS of dollars per year for job that could easily be done by the private sector.
Ever heard of out sourcing? Check out SNC Lavalin. A huge company with unbelievable federal contracts(and federal connections no doubt) They pay their employees well, ok benefits, and defined contribution pension plans. They can do the same govt jobs CHEAPER than the govt. Its that simple.
Do you want to pay more taxes? I don’t.
And if you have been grasping anything that Garth has said about the approaching Boomer tsunami …
We, as taxpayers have very few choices.
Raise taxes to keep the “golden” govt employees locked into their “Higher than industry standard” employment packages OR
We dont raise taxes and allow attrition to take hold without replacing the govt staff.
To avoid a Japanese style workforce where some employees have excellent packages and the rest are part timers with zero benefits or senority working side by side (great environment).
Perhaps we make ALL companies form pension plans Mandatory such as Australia. aprox 10% of everyones salary goes into a plan of their choice.
Either way, The Govt Model is DOOMED to down sizing. The falling population cannot(and more likely WILL NOT) sustain it.
Time for another Beer. :)

#63 CrowdedElevatorfartz on 06.30.11 at 2:19 am

Oh and speaking of taxes,
The new HST tax that the BC and Federal govt implemented is an unmitigated DISASTER.
The Old GST(5% on Goods AND Services)) and BC PST(7% only on Goods NOT Services)taxes were somewhat palatable.
The new HST ( 12% on ALL Goods and Services )is essentially a new 7% additional tax on Services the BC province never collected.
EVERY tradesman I have asked just shakes their head when I ask how many people now want them to work for “cash” under the table. One of them even told me,” When the GST dropped to 5% from 7% it wasnt worth the trouble of getting caught doing cash jobs. Now everyone wants cash jobs!”
12% Tax on Labour? Are they INSANE!
What your seeing is the beginning of a tax revolt.
God bless the internet because the “Lame Stream Media” will never tell the real story.
The BC and Fedral govts told the tax payers it was a “revenue “neutral” tax when it was first implemented.
NOW they say there will be an 800 million dollar tax short fall if the pending BC HST referendum votes it out.
The squirming weasels in the govt are promising the tax will drop to 10% in 2013 !
Gee thanks Mr Tax Man

I still plan on voting YES to repeal the BC HST.
Hopefully a majority of voters will turn out this summer to do the same( gee a summer vote . garunteed to get a low voter turn out for that one eh Mr Tax Man)

#64 Dubble on 06.30.11 at 3:17 am

Re: Today’s Pic

Crash Imminent… Deploying Airbags

#65 Imstupid on 06.30.11 at 3:24 am

Find work first.

#66 Beach Girl on 06.30.11 at 3:34 am

Watched Mr. Obama on TV today. Kinda scary. I think he only got that job cause no one else wanted it. Like the Liberal party, they cannot find a leader that even looks normal. What a cluster f**k. Anyway, the Jack Russell appears to like roast beef. I think I have been hosed.

#67 AG Sage on 06.30.11 at 4:16 am

I say D, rent in Hamilton for a year until you are certain that is where you want to buy, then buy. Sounds like you are emotionally hoping Hamilton is the logical answer. Buying in a new city until you get a feel for the rhythms of a place is another layer of unnecessary risk.

#68 Jody on 06.30.11 at 4:19 am

Pierre, why even work in Toronto? Alberta and Saskatchewan is where its at. Better yet, stay put. With the silly prices and rents charged in Hogtown you could buy a plane, live in Buffalo and commute. That way you could see Toronto burning instead of the other way round. Better yet, sell and buy a big enough home that the grandparents can move in with ya, maybe PEI or Manitoba, I’m sure you can do your gubermint job from those places, that is if you still have one in 6 months. I’d start peppering the suppertime conversations with people in your office getting layoff notices, make her think you may lose your job, then she’ll shut the hell up about buying a house, or up and leave ya. Make her understand she’s lucky to even have a roof over her head. Even when the economy is going all to shit people still want to keep up apperences, don’t be a dumbass, save that for myself and my fellow Albertans. Now if you’ll excuse me I see some nice looking men in a canoe on a river and hear banjo music……………..

#69 cb on 06.30.11 at 4:22 am

Go Ticats!

#70 Rob now in Nova Scotia on 06.30.11 at 4:22 am

Hi Pierre,

Hamilton is the ass of Canada and smells like it, too. Just drive over the Skyway (the bridge connecting Hamilton and Burlington) and breath deep. Downtown Hamilton has offerings of small shops and hotels that rent by the hour. On top of the escarpment, called the “mountain”, life is better but homes cost twice as much.

Then there’s the commute. If you work in downtown TO, you can take the GO train but it stops in Burlington. The alternative is a 90 minute commute in the summer, 2 hours in the winter when it snows. That’s every morning and again coming home. It wears you down, let me tell you.

Hamilton has no money to fix the streets so make sure you have an offroad vehicle to navigate the potholes.

I’d stay away from Hamilton real estate.

Cheers, Rob

#71 SquareNinja on 06.30.11 at 4:36 am

#8 Mr. Lahey – You got that right. People who don’t understand it sure are scared of it… What I’d like to know from SK is… how exactly did debt kill a fortune when a country went belly-up? If the country’s money got severely devalued and you had debt; hallelujah praise the lord!!! So, I don’t get your grandpa’s advice.

Pierre: Buy a house in Oshawa.

Ever since GM pulled out of Oshawa, the local economy hasn’t fared very well. Older houses (~1,500 sq. ft.) can be had for around $150,000 – I kid you not. New houses (~2,500 sq. ft.) can be had for under $300,000.

Oshawa’s cheapest house would be something like a post-war bungalow for $90,000.

The city is decent, has all the amenities, has good schools, and is only a 30-minute drive to Toronto on the 401 in the middle of the night! It’s double if it’s rush hour… but there’s also the GO Train available.

Oshawa is the answer! Check it out on MLS.ca, you won’t believe the prices! Property tax is a bit higher, though… like, 1.8%, whereas Toronto is 0.8%, but since value is lower, it’s STILL cheaper!!!

#72 Mortgage girl on 06.30.11 at 5:08 am

A happy wife is a happier life. Buy an income property that is distressed. Of course if you have no clue about construction you could quickly loose your investment.

#73 salonist on 06.30.11 at 5:53 am

ca vas?
there are no good places within the core of hamilton,it is dangerous.there are beautiful houses,ask yourself,ask others, how come people don’t take advantage of these gorgeous properties.it’s like moving from stittsville to vanier.
the commute,you will understand fear!!! for two hours towards your workplace and two hours back,that is on a good day.ask those that when they arrive at their destination the knuckles on your hands are still white and you have this physical vibration in your body from being in a constant state of self preservation for the duration of your journey.cost about $20.00 per day.
then, the final question for yourself.what would be the quality of your life should you move?
you’re thinking, i can do this, i can make it work,but once your there, it’s oh shit.what did i do.

#74 Sp on 06.30.11 at 6:25 am

“Holy ..uck” was my first reaction looking at the picture. Now I will read what Garth has to say.

#75 Ray MacDonald on 06.30.11 at 6:42 am

The 4th option is for the grandparents to exit the GTA and move to Eastern Ontario to be near daughter and grandkids. We did that 6 years ago and it was the best move of our lives. Just back from chasing my grandson around his parents’ comfortable and affordable Ottawa home.

#76 David B on 06.30.11 at 6:56 am

In the end people do want they want …. they just find people to agree with them and dismiss sound advice. Hello? if this were not true there would no blog here Garth would a happy MP living under the thump of Stephen and Canadians would have sound investments and not be house proud and poor. But heck life is like that … so go for it Pierre and drop by some time and tell us just how smart your were and life is great.

#77 fancy_pants on 06.30.11 at 7:05 am

I don’t think MC has the balls… or someone else has too tight a squeeze on them.

I dare him to raise the rates.

jellyfish anyone?

#78 Tkid on 06.30.11 at 7:07 am

Let me get this straight:

Pierre and Alison have decided, during a time of economic uncertainty, to give up their jobs, or at least his job, because of the terrible lack of grandparents in Ottawa. Or he’s transferring. I’ll keep the fingers crossed this works out for them, and Pierre won’t wind up on EI in six months.

Pierre and Alison cannot afford to buy a house in Toronto, and are aware that housing prices are very likely to fall and continue to fall over the next several years. Pierre and Alison are aware that renting is currently their only option.

Pierre and Alison are in the process of talking themselves into making Mistake! Number! Two! They are going to purchase in Hamilton.

Pierre and Alison, my advice? Stay put in Ottawa. But you already knew this.

#79 Johnnie on 06.30.11 at 7:19 am

Govt policy is to keep interest rates as close to 0% as possible, and even one or two 0.25% increases won’t send the housing market into a tailspin. The only thing that will are severe job losses and/or reductions to CMHC.

#80 julie on 06.30.11 at 7:37 am

Pierre,
I think you have a lot more options.
I live in Hamilton (you’re right it is under rated) and am planning a vacation in Ottawa this summer (my third visit). You live in a wonderful location to raise a family. Why don’t your in-laws cash-in on their capital gains and retire to your area?
Also, if you’re considering renting in T.O., why not consider renting in the Hamilton area?

BTW, Hamilton ranks below average in Macleans magazine survey of “most dangerous cities” but our taxes are above average for cities in Ontario.

#81 Utopia on 06.30.11 at 7:40 am

#59 wes_coast on 06.30.11 at 1:14 am

“Sell. Pay down debt. Rent. It may as well be the tag line for this site. It just takes balls to go against the herd. You can do it…”
————————————————————————–

Perfectly said Wes. Sell, pay down debt, rent. You summed up my own sentiments with just five short words. It is so blindly obvious too. Why can’t everyone see it?

Could it be the media vacuum we live in perhaps? I loved the piece published yesterday by the CBC warning us that the housing “bubble” was about to burst. This news came via a new Capital Economics report.

The head scratcher for me though was this..Where were all the articles warning that a bubble was forming in the first place? I mean, even if you were regular reader of the CBC daily news you might be forgiven for not knowing that big trouble was brewing in real estate markets.

And then POW! Out of the blue comes news that Canada’s housing bubble is about to burst.

WTF!!!!!!! What Effin Bubble??? The kids never saw it coming.

#82 Stevermt on 06.30.11 at 7:49 am

#31 JohnnyBGood
are you a TO snob…(similar to an Oakville,Campbellville, Milton and Mississauga snob)
You”ll be brought down to size soon enough my friend :)

#83 T.O. Bubble Boy on 06.30.11 at 7:59 am

NO ONE should consider buying a house in Toronto these days, especially if you’re moving from a lower-priced area like Gatineau.

You can actually buy a brand-new “designer” home in the $300k’s in Gatineau:
http://www.century21.ca/OU8501341?centris=1

Or, $400k’s for a centrally-located 4-bdrm:
http://passerelle.centris.ca/Redirect2.aspx?CodeDest=ROYAL&NoMls=OU8570652&Source=WWW.REALTOR.CA&Langue=E

Or, the “high end”… $500k’s for a new McMansion:
http://passerelle.centris.ca/Redirect2.aspx?CodeDest=ROYAL&NoMls=OU8552646&Source=WWW.REALTOR.CA&Langue=E

Try finding any of that in Toronto!

$300k’s gets you a starter condo, or a dumpy bungalow in a not-so-nice part of town:
http://www.realtor.ca/propertyDetails.aspx?propertyId=10625827&PidKey=1250670674

$400k’s gets you a burbs house in Brampton, a nicer condo downtown, or a dumpy 2-storey house in a not-so-nice part of town:
http://www.realtor.ca/propertyDetails.aspx?propertyId=10804016&PidKey=1226749053

$500k’s gets you a burbs house in a slightly nicer suburb, a pretty nice condo, or a dumpy house in an “up and coming” part of town:
http://www.realtor.ca/propertyDetails.aspx?propertyId=10804103&PidKey=559862602

#84 Tom from Mississauga on 06.30.11 at 8:06 am

Rent in T.O. is the way to go. Always live as close as possible to work. Commuting from The Hammer would be exhausting after a while. To buy in The Hammer means you have to be right about it. Rent there for a year and see if you must.

#85 yulyyz on 06.30.11 at 8:16 am

Pierre,
1: Wait to see what happens with your work. It’s risky to think that any job is safe these days. Just ’cause it’s T.O. doesn’t mean it’s any easier getting a good job, not yet anyway.
2: If you do decide to come this way: Whatever area you end up-Don’t underestimate the commute. It’s unbelievable.
3: Whatever you do, don’t buy yet. Rent for 2 years in Toronto, not Hamilton. Toronto is full of little areas, and you will find as you explore them you will be drawn to some more than others.
4: Older home and elbow grease is a nice idea> but unless you’ve done it before and it went well… It can be brutal. Older, affordable homes typically have smaller rooms, small kitchen, smaller yards, then what you may be used to. What seems cute and cozy will leave you wanting more ‘space’ within a year. Then selling becomes your new challenge.
5. As for Hamilton, I can only say that if it was that great – way more people would have filled that place up and driven up the prices by now. Given that neither your work nor your inlaws will be there – I would skip it for those 2 reasons alone.
Good luck!

#86 Kevin in Winnipeg on 06.30.11 at 8:18 am

#22 squidly77

So over 3 years being right for 2 out of the 100 major cities in Canada makes their analysis accurate? I’m not even an economist and I can do that.

#87 bridgepigeon on 06.30.11 at 8:37 am

Stay out of godless Toronto if you can. Ottawa is in the top five cities to raise a family in Canada (one study I read). Commuting from Hamilton? What a complete waste of the precious time you’ve been given in your life. The stress alone eventually will break your health. You’ll be seeing so much less of your family and when you do you’ll be too burnt out for anything. Take a week off, do the commute as a trial, see if this is your dream.

#88 debtified on 06.30.11 at 8:37 am

This must have been posted previously but just in case…

CBC just published this article by Capital Economics:

http://www.webcitation.org/5zpQKAh3N

I don’t know who the people at Capital Economics are but the real insights are on the Comments section of the article.

#89 Stevermt on 06.30.11 at 8:47 am

#53 Bottoms_up
I agree with most of your post…except telling Pierre to look at north Burlington.
Have you seen the prices of those suburban shacks up there?? north of $500k for slapped together Sundial and Mattamy pieces of firewood kindling. They’ll be in greater debt, unhappy and will have to drive everywhere…and get fatter !
Hamilton neighbourhoods are walkable, urban and friendly, something the suburbanites will never appreciate, until gas goes to $3 a litre.sorry about your luck .
Hamilton is the better choice for affordability.and its prettier by far (despite the opinions of the Hamilton bashers on this blog).

#90 tomohawk on 06.30.11 at 9:02 am

How about the grandparents move? Sell your place, buy a duplex near work, share it with the grandparents, when they die or go off to the nursing home rent out the other half or sell the thing and move elsewhere. Result: you get to keep your job, no long commute, you aren’t renting and the GPs are near your wife. Also, potentially free babysitting on date night/sex night. ;-)

#91 Kim 1 on 06.30.11 at 9:02 am

What happened to ‘the kids’ spending more time with thier ‘FATHER’????? If it was so important for the grandparents to spend time with thier gran kids they would move.
I would say rent closer to where you work, so you can have time with your children. So you don’t have to work like a slave and you can live a little. My father is 80, he told my mom one day that his only regent was not spending enough time with us as kids. Those kids need YOU more than present-giving grandparents.
YOU should count in your family …. all the options you given us are all your wifes so give her one. PERIOD.
Tell her you are selling the house, renting closer to work because she is right, working takes YOU away from YOUR kids, screw the gran parents, they can move or visit more if its so important! And screw losing money because it will just mean YOU have to work more to get it back. End of story!

#92 Stevermt on 06.30.11 at 9:05 am

#70 Rob…
When u drive over the skyway..btw there are other more beautiful entrances to our diamond in the rough.anyhoo when you see that smoke..its not that bad people..I see Canada actually producing something of value..steel, which we all need and love in our fancy little BMWs and SS fridges. Hamilton is actually an example to the rest of the country..get off your arses and make something..China doesn’t have to produce everything and deal with all the pollution to boot. thanks
Can you tell that I have pride in my city ?
GO TICATS !! 1-0

#93 Kim 1 on 06.30.11 at 9:09 am

Oh yeah … this a shift, my friend, its not about the STUFF, who has more or bigger or owns or rents… its about YOUR CHILDREN who need time with thier DAD.
Rent closer to work, sell your house, can all the options you wife gave you and the old people can visit.
Look at the bigger picture. YOUR children and your relationship with them will be a huge part of thier lives always. Work on that. Make time. Cut the driving down. Make a difference in thier lives, while you still can.

#94 Kopaja_Avenger on 06.30.11 at 9:09 am

HI Pierre,

If you have a good job, I’d be holding on like grim death. The expression of happy wife happy life also reciprocates. If you arent happy it will also rub off on her only to come back again like a spiral. I have had the same pressures from my wife only swap Gatineau with Jakarta and Ottawa with TO. We argued for years (at contract renewal) and only recently have we made the big move. In the end, we were happy we delayed as we made a contentious effort to “be happy” in Jakarta and made the long term goal to return to NA. (PS, one of the best decisions we made was to live close to work – Jakarta has some legendary traffic stories). Once we had adopted JKT as our city, things really did start to change for the better. I did better at my job and my wife found activities that interested her. We made an effort to find happiness.

Here is my advice,
If you are reasonably happy where you are at, try asking your wife what she would need to be happy in order to stay in the Ottawa area. Perhaps the answer is easier to accommodate than you think. (Think of more weekend trips to TO w or without you – a computer for video streaming for your techno peasant in-laws – or even could be a personal goal like returning to school part time etc.)
Make your move to TO a longer term goal for your family but dont put an emphasis on it. If you do, you wont allow yourself to grow some roots. People assume roots = house ownership which Garth would lump into the category of ‘houseporn’. Another idea might be to make a change in Ottawa, move out of the dark side and rent a place in a cooler part of Ottawa. Ottawa has a huge range of different neighborhoods including some older character homes that are way better to rent than to own – I could not imagine the nightmare of maintaining a century home. By renting you would ensure that you are able to get out of your illiquid house when you are ready to go. PS, Gatineau to Ottawa is as Hamilton is to Toronto – and you and your wife dont like Gatineau – why Hamilton?
Best, K_A

#95 Kim 1 on 06.30.11 at 9:12 am

#59 westcoast said ….. Why do people email for advice when thats all this blog gives out daily is consistent advice.
—————————————–
AMEN! Westcoast. AMEN.

#96 Raven on 06.30.11 at 9:18 am

Reading the news this morning it looks like stuff is going to pot for ordinary workers everywhere. In the UK, they are raising the pension age to 65 and making them contribute more and draw less. In the States, Milwaukee is laying off hundreds of teachers, and here in BC we are in the middle of bargaining for our own working conditions. In Greece, austerity measures have been passed that will reduce pensions, raise taxes and sell off government assets–only to qualify for more IMF money and get further into national debt.

The writing is on the wall: the little people are getting screwed. I should expect to work longer (I am currently scheduled to retire at 60 with 35 years teaching service–I started at 25), get less (in the States they are apparently raiding federal pension investment funds to keep the government afloat) and contribute more to pensions and other federal schemes (I already pay over $2500 a year to CPP and EI, $1000 a month to my teachers’ pension fund). Work more, work longer, get less in return.

What to do? Lower my material expectations. Get out of debt NOW and save as much of my income as I can for the future as even the things I thought I could count on are getting eroded. Expect major collective psychological upheaval as the life we thought we could have here in Canada gets turned on its head. I don’t mind living with less. I think we are too obsessed by material greed in North America anyway. We don’t need as much as we have. It isn’t a right to own a house. And we are raising another generation of kids with high expectations and shrinking opportunities.

But it the way it is being done, and the WHY, that really makes me angry: wealth being concentrated into the hands of fewer and fewer people and corporations, leaving the rest of us to scrabble for the leftovers. It isn’t about gold vs tin plated, or someone pulling one over on the private sector Joe. There is a bigger more complex set of forces at work that seem to be dooming us all to play a game we are framed to lose from the start. Whether the Credit Game, or the Mortgage Trap, or the Lifestyle Hoax, it seems the fix is in. And the masses are not only falling into the abyss in greater numbers, but gladly walking themselves into it.

Teetering.

#97 Dan in Victoria on 06.30.11 at 9:20 am

CEF @63
Yes.
All true, people want to pay cash.

Vlad @45
Its surreal here right now, we just rented a place. The owners are obviously in distress, but try to act like everything is okay.
Its all okay…..this is just temporary…..construction will pick up….. The resturant will be hiring me back…..

Glad we sold and pocketed the dough.

#98 Utopia on 06.30.11 at 9:25 am

#70 Rob now in Nova Scotia on 06.30.11 at 4:22 am

“Hamilton is the ass of Canada and smells like it, too”.
————————————————————————-
What’s with all the Hamilton hate? I loved the place when I was there. Lot’s of potential, gorgeous homes, good night life….did I mention the pubs?

#99 Sid on 06.30.11 at 9:27 am

Hamilton is one of the few cities around that have great cash flows on rental properties. Reviving neighborhoods are everywhere and there are many strong arguments for house prices in certain pockets to rise. It is conveniently located too. Why work in Toronto anyway, there are jobs in Hamilton, Burlington, Oakville and Missisauga. The commute is not that bad if you leave early or like many say, take the train.

#100 Kim 1 on 06.30.11 at 9:34 am

#72 Mortgage girl said ….A happy wife is a happier life. Buy an income property that is distressed. Of course if you have no clue about construction you could quickly loose your investment.
———————————————
Let me introduce ‘Mortgage girl’…This is Allison… Pierre’s wife.

#101 Rich Renter on 06.30.11 at 9:49 am

We live 9000 kms away from grandparents and skype regularly. Stay where you are and tell your wife it’s only a 5hr drive.

#102 Ret on 06.30.11 at 9:50 am

Any move to Hamilton, including renting must be approached with extreme caution.

The place is a lowlife and slumlord’s paradise. Zero enforcement of any by-laws. The building department isn’t much better. Developers and slumlords do what they want.

Lots of roaches, mice and bedbugs in the lower city high rises. Large blocks of vacant, poorly monitored, heavily contaminated industrial land. As well, the poverty lobby controls the politics at city hall and you will be expected to pay their bills at tax time.

High crime and related auto and home insurance rates as a result. You may not be able to get home insurance in some postal codes. Brutal taxes, 15-20% higher than anywhere else, and a crumbling road and sewer system. Lots of flooded basements contribute to home insurance problems. You may not get any flood insurance at any cost.

The commute or the $18 a day return GO commute to Toronto will kill you in time and cost.

As a Westender around Mac, the student housing continues to degrade the area with illegal conversions. I have lived here all my life and can’t wait to move to Burlington. My house has a 90% chance of going to a slumlord, probably Asian, for a student rental.

Dundas or Ancaster, why? Burlington, a relatively well run, family values community is only 10 km away.

There are a few nice streets here and there, but there are not enough to justify the hope of any serious revival of what is essentially an old decaying industrial city. You have been warned. Hamilton-DON’T.

#103 Michelle on 06.30.11 at 9:57 am

@ #44-M.M.

You make me laugh! “Smoke a joint” is always good fall-back advice for any sort of panic. (Or the alternate…”take a pill”).
Gives you a chance to step back, reflect, and use your “wise mind” to make decisions with. People should do this more.

#104 Dad on 06.30.11 at 10:06 am

Son, when the mason jar your wife keeps your testicles in is that far out of your reach, maybe it is time to entertain the idea of a prosthetic.

#105 GoRiders on 06.30.11 at 10:08 am

As others may have already mentioned, maybe Pierre should consider selling and renting in Gatineau or Hamilton, then waiting.

#106 squidly77 on 06.30.11 at 10:20 am

#86 Kevin in Winnipeg

So over 3 years being right for 2 out of the 100 major cities in Canada makes their analysis accurate? I’m not even an economist and I can do that.

100 major cities in Canada?

I live in Alberta pal, why would I give a rats ass what prices are in the big smoke or Vancouver.

The English would laugh at the French if an average priced French home cost $1,000,000 and France is only 21 miles from England.

Truth is the speculator crowd left Alberta years ago and are now centralized in Canadas two largest cities.

#107 calgaryillusion on 06.30.11 at 10:26 am

My wife bought a small bag of cherries from Stupidstore last night (and subsequently returned them) – cost $11.00!!!!!!!

Forget mortgages, think food inflation.

#108 MikeT on 06.30.11 at 10:41 am

re: keeping the wife happy: this is kinda true and I pity the guys whose wives need a house in order to be happy. My wife recently said we need a new vacuum cleaner cause the old one is kaput. So, I said we budget ~300$ for a new one. She researched the market and said we can find an ok one for that amount. We go to the store and the 300$ ones are kinda crappy – I saw that myself. So, long story short, we bought a Miele for 600$ (taxes and extra filters and bags included). Wife happy. Me – not so much until the seller told us Miele gives 10 years of warranty for body and parts. I found this quite good. Plus, I’ve never seen so much quality in one household device. But most importantly, the “dividends” from my wife being happy with the purchase are worth so much more…

@ 101 Rich Renter: our kids’ grandparents are also 1000′s kms away and we skype too, but this is no replacement for real interaction, so guess what – they want to visit us. No knowledge of English, expensive air tickets, 3 ongoing businesses, several 10′s of tons of wine to be made (they’ll visit in Sept) – nothing can stop them from visiting us. Love’s a powerful thing and yes, technology made it easier to contact these days, but I bet your kids’ grandparents wish they could play with their grandkids more often.

#109 disciple on 06.30.11 at 10:49 am

#52 SK Driver…oh you poor mistaken soul…precious metals are not real wealth either…if only you wanted to understand…pity.

#62…”To avoid a Japanese style workforce where some employees have excellent packages and the rest are part timers with zero benefits or senority working side by side (great environment).”

Where have you been for the last two decades???

Indeed, many on this blog are deluding themselves into thinking that the present economic system has a happy ending. It does not. Thankfully, it will all be over pretty soon. And we can start anew.

#110 Mickey on 06.30.11 at 10:56 am

It cost roughly $0.52/km to commute + time + stress. Cost of Toronto house should = Cost of Hamilton house + cost of commuting. Are you really saving money living in Hamiltion if you spend $2000 per month on car expenses?

#111 Dan in Victoria on 06.30.11 at 11:10 am

Raven @96
I don’t know if you have watched this,
Someone here linked it.
THIS is well worth a watch. Ties in with your post.
Its called the “Secret of Oz”……..
http://www.youtube.com/watch?v=swkq2E8mswI

#112 Lawn (South) Asian on 06.30.11 at 11:13 am

Let’s see:
- RIM/Blackberry hitting a wall… Sounds almost Nortel-like from my tech perspective…
- Federal gov’t laying off 1000s of employees – mostly in Ottawa.

I’d say Ottawa is about to be hit very hard by the recession double dip… Stevie Boy has few “economist” skills and his by F isn’t any better. Remember, these guys simply have run on “autopilot” a shiny economy left behind by the true geniuses (Martin/Goodale). The so-called “Canadian advantage” in banking rules and fiscal policy was all because of the Liberal economic strategy and fiscal restraint (neither of which H & F have been able to show).

There’s a rough ride coming for Ottawa. I would RENT in a Toronto suburb. Sure it’s not “cool”, but the wife would be close to the folks, the “Go Train” will get you downtown, and you’ll have money in your pocket (or invested). You can grab a large (2 bedroom) basement suite, or an entire home in the burbs, and the price would still be better than “ownership”.

My 2 cents…

- Lawn (South) Asian

#113 Industrial Guy on 06.30.11 at 11:17 am

Move to Hamilton? Pierre, vous êtes fou?
The city gripped by a crippling lock out at its major employer, US Steel (Stelco)?
A city where the term “Pollution” hardly describes their collective assault on the environment.
The city where the term Ivor Wynne is synonymous with acute frostbite
The city where you’re most likely to have a neighbour who is a “Full Patch” member of the Hell’s Angels?

Interesting article from Desjardins Securities. Ok, so there is a touch of VooDoo economics in this article …. it’s still interesting ….
Housing buy/rent ratio shows real estate ‘vulnerable’
http://www.theglobeandmail.com/report-on-business/top-business-stories/housing-buyrent-ratio-shows-real-estate-vulnerable/article1761838/

#114 Kitchener1 on 06.30.11 at 11:32 am

Dude, the commute from Hamilton to Toronto is a nightmare during peak hours, think 2 plus hours each way at least.

Dont buy anything in Hamilton– first, go and get a hotel for one week in Hamilton, then do the commute for one week– and see if its something you can put up with for ever.

Best bet would be to rent somewhere in Toronto area, wife is happy, inlaws are happy, you are not tied into one location and if you work for the federal govt, you can relocate at moments notice. A good job comes up in 1-2-3 years in another city, you can always move.

#115 Chiquita Banana on 06.30.11 at 11:52 am

Pierre – As a commuter’s spouse and reformed renovator, let me tell you it is not worth it. Live where you want to live, and adjust your housing expectations to suit. Having family around to help with child care is a HUGE benefit, so live close by.

Although much of the rental stock in Toronto is in crappy condition, you would be better to apply a little elbow grease to an old apartment or chopped up house, than have your life sucked away by renovating and commuting. We have done both, and though we’re stuck with the commute because of two different work destinations, we’re never going “fixer-upper” again.

#116 JohnnyBGood on 06.30.11 at 11:52 am

#82 Stevermt on 06.30.11 at 7:49 am
“are you a TO snob…(similar to an Oakville,Campbellville, Milton and Mississauga snob)…”

I notice you didn’t mention Hamilton. ;)

#117 Williston Geo on 06.30.11 at 12:05 pm

#86 Kevin
So over 3 years being right for 2 out of the 100 major cities in Canada makes their analysis accurate? I’m not even an economist and I can do that.
———————————————–
I would argue the whole province of Alberta has not yet recovered to 2007/2008 levels, so about 10% of the population is seeing a real estate correction already. So why did Alberta fall? Decent economy, good wages, low taxes…doesn’t make sense for prices to fall there while going up in the rest of the country.

#118 pjwlk on 06.30.11 at 12:16 pm

#14 Hashnugs: “divorce the lady, then meet some of the MILFS at your kids school.”

Two things wrong with that dude. Divorce = half your net worth gone, and new MILFs equals starting all over again and potentially losing another half of what you have left…
————————
Live close to where you work, work outside of the high rent/taxation areas if you can… but you’re already doing that right?

I agree with the earlier statement of spending more time with your family and less in the car.

#119 TS on 06.30.11 at 12:22 pm

Alison pines for her home town of Toronto, wants her kids regularly shucked under the chin by grandparents

Something is wrong with this picture. Alison is not comfortable period. I think Pierre and Alison need to work on the marriage and family relationship first. Alison and Pierre are going to find out that by moving they are still taking the old Alison, Pierre and kids to Toronto. Sounds a little too co-dependent on Grandparents. Happiness is an inside job.

#120 UVZ on 06.30.11 at 12:25 pm

Unanswered questions:

If Pierre thinks about these questions he might figure out the best move.

1. Which job (Toronto vs. Ottawa) has a more reliable stream of income for Pierre? Public sector jobs are the ultimate prize in “job security” and will likely remain so in any era – austerity or no austerity.

2. Would Pierre’s wife work in Toronto? What is the reliability of her income stream? If she does generate income, does she also work in the public sector?

3. Does the couple expect one income or two incomes to fund their lifestyle in Toronto?

4. How does Pierre feel about the prospect of losing tens of thousands of savings dollars (or more) plus foregone return-on-investment on that cash in the span of a couple of years because he didn’t wait?

5. How does Pierre feel about being on the hook for the life of the mortgage for tens of thousands of housing bubble dollars plus ongoing compound interest expense because he didn’t wait a couple of years? As Pierre knows, interest rates have only one way to go – up.

6. Where do the in-laws live? Would they consider selling in the bubble and moving? Hamilton is a non-issue. Like the GTA the GHA is a large geography and there are many nice places to live there. For both parties to help each other Pierre better live as close as possible to his in-laws.

#121 Paul on 06.30.11 at 12:34 pm

Gatineau is beautiful and so is Uxbridge. Lived there for 16 years and commuted to Toronto (for entertainment purpose’s) in under an hour. Consider Uxbridge. No I don’t own this property.

http://www.realtor.ca/propertyDetails.aspx?propertyId=10829717&PidKey=279375158

#122 JoshL on 06.30.11 at 12:37 pm

#7 Corey,
Raising interest rates has other consequences too … like stalling the economic recovery.

What they need to do, and in fact have started to do, is tighten the CMHC regulations. CMHC was brought in to get banks to lend to low income earners so they could buy a starter home. The rules were they needed 10% down and the amount that could be insured was relatively small (enough for a small basic house). Then we took our queue from the US and removed the deposit limit to effectively 0% down and also removed the cap. This meant banks could lend rediculous gobs of money to people with no risk to themselves. Of course this sent real estate rocketing as banks were giving money to people who were only concerned about the monthly payment and not the overall price. Next people benefitted by all the extra “equity” by taking out vast somes of money in HELOCS (now gauranteed by the CMHC) to buy fancy cars and toys. When you remove the risk to the banks you get a boondoggle.

Simpley go back to the old rules (staged if you have too) and now the banks will refuse to lend money to people without a decent down payment, good credit and decent cash flow. As soon as people have to come up with 10% of the cost of a home on their own it limits the amount they will pay for it.

#123 Cabot Lodge brylcreem & trenchcoat on 06.30.11 at 12:40 pm

Pierre – votre femme

She wants to move, she doesn’t like rent – she’s wearing the pants. Would our advice make any difference?

#124 JB on 06.30.11 at 12:43 pm

#25 Brainsail: A lot of federal employees have 2nd jobs or start up small business cause they don’t have enough to do at their “Club Fed” job… I know 3 fed employees who will full well admit they have the time to run their small business while at their heavily overpaid government job…

#125 Imstupid on 06.30.11 at 12:48 pm

#20 Stevermt

Reasonable commute, you got to be kidding me. Next you will say it only 20 min to Toronto. It may be true driving at 200km/h at 4 am. It’s 4 times income because most people commute to Gta to get 70k income. If you go by that number add in the gas/ go train cost. Give me a break, a 40 hour work week turns into a 50-55 hour week with all the driving. Waking up at 5 am to get to work by 9 will surely be good for the marriage.

#126 Victor on 06.30.11 at 12:57 pm

Garth, you’ve spoken about this in past, but perhaps you could do so again. In watching this clip what are your thoughts about Canadians purchasing real estate in the US (in this illustration, California)?

http://ca.finance.yahoo.com/video/marketnews-22350846/canadians-play-big-role-in-real-estate-rush-25703738

#127 Mickey on 06.30.11 at 1:15 pm

Garth here are 3 houses that appear to me to be about the same size, value, the $339 home is in North Oshawa. The other two homes are in North Whitby $600K & 589K. The houses are about 5 km apart as the crow flies. Why can’t they find a greater fool to buy the executive bungalofts? Surely it is not for lack of advertising. What is wrong with these people?

http://www.realtor.ca/propertyDetails.aspx?propertyId=10796859&PidKey=-1737617920

http://www.realtor.ca/propertyDetails.aspx?propertyId=10631103&PidKey=1694812480

http://www.realtor.ca/propertyDetails.aspx?propertyId=10780182&PidKey=611387130

#128 TS on 06.30.11 at 1:21 pm

Nice little write up on Canadian family incomes. The exact opposite is happening in Vancouver and Toronto. Income is going down. Very unhealthy housing market. So if this continues (and it will) is demand going to continue to increase housing prices….

http://worthwhile.typepad.com/worthwhile_canadian_initi/2011/06/ontarios-recession-battered-families.html#more

#129 Form Man on 06.30.11 at 1:25 pm

#122 JoshL

Your post is essentially correct. What is important to remember, is the relaxing of CMHC standards you refer to, happened after the the Harper govt came to power in 2006. Harper and Flaherty both favour deregulation as an ideolgy. They took their cue from what Bush had done in the U.S. ( with considerable encouragement from the like of AIG, and Genworth etc). When the financial crisis hit, it was obvious this deregulation was a mistake.
What did Flaherty do then ? moved the risk from the banks to the taxpayers via CMHC and kept the party going. CMHC still has far more lax standards then before the conservatives came to power, and indeed far more relaxed than the U.S. now has. The Harper govt stayed true to their conservative ideals: ‘even if something is proven not to work, keep trying, hoping for a different result’ ( some also refer to this as the definition of insanity ). I expect Canadian taxpayers may be a bit peeved with Harper once they realize what he has done. Harper was portrayed in the media last election as a ‘trained economist’. Mental midget would be a more accurate description ( my apologies to the height-challenged )
By the way, housing market continues to deteriorate in the Okanagan…….

#130 Coho on 06.30.11 at 1:33 pm

Which is easier, to walk away from a job and uproot an entire family or for the grandparents to move closer to their grandchildren, particularly if the grandparents are retired? Moving is very hard on children.

This is common and one of the reasons why there are so many divorces. A husband or wife will do backflips for his or her side of the family, while often having little regard for their spouse’s.

Some grandparents will make the sacrifice to be with their grandchildren, while others insist their children and grandchildren gravitate towards them instead.

It may not be the case with this family but this is an example of why it is a bad idea for people to marry momma’s boys or daddy’s girls. In some families, the parents have difficulty taking a back seat once their children get married and attempt to raise their own family. They perceive themselves as not meddling, but they do. They perceive themselves as helping but often hinder. They often wish to remain the first priority of their married sons and daughters and play on their childrens’ feelings of guilt or whatever to get their way. And it can leave the other spouse feeling as if his or her needs are waaay down the list of priorities. It may not be this year, next year or in five years but this scenario is shaping up to not end well. Good luck to Pierre, Alison and their children.

#131 TS on 06.30.11 at 1:44 pm

As the so called Bubble deflates we will not have the luxury of writing articles such as these. I do not blame the Banks/lenders in Canada. They were given a great opportunity with limited risk. The taxpayers of Canada are going to be the Greater Fools over the next decade.

Blame the Banks
http://www.ritholtz.com/blog/2011/06/first-blame-the-lenders/

#132 disciple on 06.30.11 at 2:06 pm

beep….beep….Incoming transmission….

Climate change….a rehashed version of Medieval Catholicism where you are all doomed to burn in hellfire and that is the end of it if you don’t do as we say and pay your carbon taxes…there is an element of where we are to be removed, most of us are surplus to the economy going forward and we have to sacrifice our existence in order for a Priest class to rule the Earth and …humans are a bacteria on the Earth and this is the projection, this is the shadow of the psychopathic control grid projecting upon us and even that has religious aspects….Calvinism ..they keep rehashing these tried and tested techniques of social control going back thousands of years and putting a new label on them and they have the technological ability now to do what they want (Transhumanism) Lady Gaga meat dress.

…….beep…….Transmission interrupted by your daily news………go back to sleep……everything’s okay….

#133 Bottoms_Up on 06.30.11 at 2:39 pm

#62 CrowdedElevatorfartz on 06.30.11 at 2:02 am
——————————————–
If your numbers are correct, that means the Canadian municipal/provincial/federal gov employees represent 1.2% of the population, or 2.4% of the working population.

(http://www4.hrsdc.gc.ca/.3ndic.1t.4r@-eng.jsp?iid=13)

Blaming anything on 2.4% of the working population is ridiculous.

As a direct comparison, 33% of Greeks work for the government.

#134 borrowedcarbon on 06.30.11 at 2:45 pm

Before you move to Hamilton — spend 2 weeks of holidays there to experience the lifestyle. Rent an apartment.

Every day commute into Toronto to arrive for your regular work time, (visit the family all day), and return home at your regular time.

You have to experience the commute to know if you can handle the lifestyle for many years to come.

#135 Bottoms_Up on 06.30.11 at 2:46 pm

#62 CrowdedElevatorfartz on 06.30.11 at 2:02 am
——————————————-
And with outsourcing, don’t be so quick to judge.

I’ve seen work outsourced for 300 to 500% more than it would have cost doing it internally. And the internal work would have been better.

So, as with anything, you can find examples that represent the alternative.

#136 Bill Gable on 06.30.11 at 2:46 pm

#130 Coho – Ask any Armed Forces Family about moving.

My Dad was a Commander in the RCN, and we moved every 18 months.
Stop whining and grow some, ok?

Look at MP’s – have to maintain two homes (in Mr. Turner’s case – the Bunker) and a joint in the Big “OWE”.

I moved so many times, my theme song was “The New Kid In Town” – by The Eagles. (*great song, BTW).

#137 disciple on 06.30.11 at 2:50 pm

Just a couple more hours…the anticipation of the long weekend is keeping me from gouging out me own eyes. Just think, 24 hours from now, I’ll be lounging in my collapsible chair, roasting some chicken and marshmallows, listening to the sounds of the rustling leaves in the gentle breeze by the beach, kicking around the soccerball with my loved ones…in the meantime I’ll get a tea to wash down my 70% cocoa bar. See y’all in a few days. Booyah!

#138 robert james on 06.30.11 at 3:24 pm

Holy smokes !! Where on earth do you find these pictures?? I rather doubt the lady in the orange car will need air bags if she has a collision..

#139 mid-Ontario on 06.30.11 at 3:25 pm

#44 MM
You almost have it.
1 sell the house
2 rent in Hamilton
3 30-40% PM’s in secure storage.
4 stay cool – no illegal drugs needed.
5 search out a nice Greek Island – Greece is toast.
6 Buy the good lady a snappy Go Train pass holder

#140 R on 06.30.11 at 3:40 pm

If your wife is so crazy about Mommy and Daddy she needs to grow up. She also needs to move herself and the kids in with them and not you.

#141 debtified on 06.30.11 at 3:49 pm

I think Pierre is not addressing the real problem. Talk to the wife to address the REAL problem.

Moving to Ontario is simply a distraction. It will not last and could also potentially cause even more problems and complications.

If the wife and kids must get their regular “shucked under the chin” fix with the grandparents, just buy a Commuter Pass between Ottawa and Toronto. It’ll be cheaper and the time away from each other may even help address the REAL problem.

#142 betamax on 06.30.11 at 4:01 pm

Nice pic. There’s an ‘airbags’ joke in there somewhere.

#70 Rob now in Nova Scotia: “Hamilton is the ass of Canada and smells like it, too.”

LOL. Cruel but fair.

#143 D from London, ON on 06.30.11 at 4:03 pm

#6 – 45north

You said: “if you go you will rent the house as close as possible to your in-laws (after all that’s the whole point of moving)” and “her call”.

You are so right – that’s how I ended up in London. And now I have 2 regrets to fret over, one of which is that we own and don’t rent. The other I will leave you figure out for yourselves… ;-)

#144 JRL on 06.30.11 at 4:25 pm

Seems like the U.S. economy is on the brink of disaster every six months or so.
I hardly think borrowing more pretend money backed by nothing will help.
Meanwhile the CEO’s and banksters are raking in record payola as they offshore jobs and the middle class crumbles.
Interesting times.
How can this not impact Canada?

#145 jess on 06.30.11 at 4:32 pm

Thursday, June 30, 2011Former Chairman of Taylor, Bean & Whitaker Sentenced to 30 Years in Prison and Ordered to Forfeit $38.5 Million
WASHINGTON – The former chairman and owner of Taylor, Bean & Whitaker (TBW) was sentenced today to 30 years in prison and ordered to forfeit approximately $38.5 million for his role in a more than $2.9 billion fraud scheme that contributed to the failure of TBW and Colonial Bank. At one time, TBW was one of the largest privately held mortgage lending companies in the United States and Colonial Bank was one of the 25 largest banks in the United States.

Financial Crimes Enforcement Network said depository institutions filed 25,495 suspicious activity reports for mortgage loan fraud in the first quarter of this year, up 31 percent from a year ago.

http://www.fincen.gov/
====FOR IMMEDIATE RELEASE
June 28, 2011 CONTACT: Bill Grassano
703-905-3770

FinCEN Attributes Increase in Suspicious Activity Reports
Involving Mortgage Fraud to Repurchase Demands

VIENNA, Va. – The Financial Crimes Enforcement Network (FinCEN) today, in its First Quarter 2011 Mortgage Loan Fraud (MLF) analysis, reported that the number of MLF suspicious activity reports (SARs) rose to 25,485 up 31 percent from 19,420 in the first quarter of 2010. FinCEN attributes the increase to large mortgage lenders conducting additional reviews after receiving demands to repurchase poorly performing mortgage loans. In the first quarter of 2011, 86 percent of MLF SARs reported activities which occurred more than two years prior to the filing of the SARs.

The analysis also found that California dominated the top mortgage fraud rankings. Miami dropped to the sixth most reported area after five years in the top two ranks.
==============

A substantial majority of reports involved activities which occurred in 2006-2007, an indication that the industry is slowly making its way through the most problematic mortgages,” said FinCEN Director James H. Freis, Jr. “FinCEN will continue to closely track SAR data related to mortgage fraud and work closely with the U.S. Trustee’s Office, Federal Deposit Insurance Corporation, Federal Trade Commission, and National Association of Attorneys General to investigate and prosecute those perpetrating debt elimination scams and to protect consumers and financial institutions from scammers.”

In its first quarter 2011 analysis, FinCEN notes that SAR filers describe numerous fake documents and payment methods that customers and third parties submitted to financial institutions in attempts to have their mortgage obligations eliminated.

FinCEN also reported that a review of close to 70 SARs filed less than 90 days from the suspicious incident found activities such as
loan modification and foreclosure rescue scams,
flopping, and falsified claims of identity theft. Flopping occurs when a foreclosed property is sold at an artificially low price to a straw buyer, who quickly sells the property at a higher price and pockets the difference.

Read more: http://www.charlotteobserver.com/2011/06/29/2415021/3-others-accused-of-mortgage-fraud.html#ixzz1QnObaoSr

Federal prosecutors have said Operation Wax House could ultimately net up to 70 defendants, including promoters, mortgage brokers, closing attorneys, notary publics and straw buyers.

The 4-year-old probe has centered on seven high-priced south Charlotte and Union County neighborhoods. It involved about 80 homes and $100 million in loans.

Generally, the groups agreed to buy a new house at its true price, then arranged for a “straw buyer” – a pretender – to take a loan to buy the house for much more than the true price.

That required falsifying paperwork to convince a lender that the house was worth far more than it actually was – and that the straw buyer planned to live in the house and could afford to make the payments.

After the sale was completed, the mortgage fraud groups split the difference between the true price of the house and the inflated loan amount, court documents allege.

Read more: http://www.charlotteobserver.com/2011/06/29/2415021/3-others-accused-of-mortgage-fraud.html#ixzz1QnONITi0

#146 Increasing that 1% on 06.30.11 at 4:33 pm

Where is Garth, visiting with William and Kate? or, maybe seeing the other Kate(y), lining up on closed off Yonge St. getting a whiff of her perfume- (to buy for ‘the wife’of course)?

The couple in question oughtta rent in walkable distance to either her parents or his work.
Get over the ‘renting’ factor for now, unless you’re prepared to look at the financial and life benefits of buying and being in TO and close to in-laws/work, but risking drop in price.
And, get over the type of living accomodation in exchange for the other benefits of your new environment/lifestyle. Go out and look at places you would never have thought about before

Advice from my Father: You don’t want to look back ten years from now with regrets for things you didn’t do

Though, there are always things I wish I did or didn’t do ten years ago–seems part of life.
Well, while on that–there’s also the saying ‘If in doubt, don’t’, but wth?! Once you’re in doubt, which thing are you in doubt about now…

#147 garrulous squirrel on 06.30.11 at 4:40 pm

The Canadian media Bwhahahahahahahahah…what can you say to these pimps, pumpers, schills and bagmen? Last night they came out again and said …there is no bubble…….and trotted out a goofball from a real estate school supported by the developers to reiterate that position. The developers are saying…through this hand puppets patootie…that there is no bubble…..prices are affordable…intrest rates will never go up……and anyone who says otherwise is a nut.

Don’t you just love it when ‘the crack investigative reporting team does a walk through of a new condo development and bimbo blond anchorette gushes and twists herself against the granite? Thats news.

Now…..you bring the consumer into this and they have another thing to say…

http://www.vancouversun.com/business/Mood+Canadian+consumers+darkens/5029749/story.html

In their own way , the developers are half right….the government is going to have a very hard time adjusting rates. The Federal debt is so extreme that any increase will curtail new program spending and thereby wrench a few projections out of line. We have of course witnessed the rape of seniors and the poor by the ZIRP….but seniors are not the development communities target market.

They want the horny newbie who wants to boff his new bride…without considering the consequences of fertilizing a moose in a ‘too small’ pen. When the wee bairn comes along…woops…theres goes the dining room. And up comes her constant wrath to move to a larger nest. This cycle of stupid is common in new breeders….can’t think ahead. And guys….it’s hard to play catch with Little Gooey when your front yard is the sidewalk in front of the building…..

Debt and the exhaustion of duplicitous ‘investors’ from China are keeping the market alive in Vancouver……..People that are living here and can’t borrow are starving…..nicest city in canada my patoot.

#148 Smelly Melly on 06.30.11 at 4:46 pm

Garth, You’re always talking Vancouver, GTA, Saskatoon! How about sharing your insight on the Montreal market, s’il vous plait! What’s going to go down in Westmount? Inquiring minds want to know!

#149 Coho on 06.30.11 at 4:55 pm

Bill Gable,

I never had to move as a kid, but I know people that did and some of them found it difficult to adjust. It is one thing to move because of your career or out of some other necessity, but quite another to appease in-laws. Indeed, kids can be quite resilient and adaptable. I know.

Speaking of “growing some”: Some men don’t mind their wife carrying their balls in their purse, much to the satisfaction of their in-laws in some cases. But, others DO mind and this can cause a lot of friction if it’s a daddy’s girl situation.

As some have inferred, there are probably some deeper issues going on. Bottom line — if Pierre quits his job and ends up having to settle for a lousier one in Toronto, he won’t be very happy. And if they stay put, then she’s unhappy. Best solution seems to be the in-laws suck it up and move closer to them.

#150 jess on 06.30.11 at 5:05 pm

Fake Mortgages
From 2002 through August 2009, he directed the sale of more than $1.5 billion in fake mortgage assets
http://www.bloomberg.com/news/2011-06-30/fannie-mae-silence-on-taylor-bean-mortgages-opened-way-to-3-billion-fraud.html
========
“Gresham’s dynamic. –
…”that fraud can become common in an industry. This is particularly true if fraud produces a “Gresham’s dynamic.” George Akerlof explained this point over 40 years ago in his famous article on a market for “lemons” (1970).

“[D]ishonest dealings tend to drive honest dealings out of the market. The cost of dishonesty, therefore, lies not only in the amount by which the purchaser is cheated; the cost also must include the loss incurred from driving legitimate business out of existence.”

http://neweconomicperspectives.blogspot.com/2011/06/cato-is-shocked-that-three-des-produce.html

#151 ucatzoduro on 06.30.11 at 5:12 pm

Greece is revolting but still alive in the bankers eyes until it explodes and takes Europe and rest of the world with it. Great depression is coming. Start gathering seeds and fill your root cellars the great debt reckoning is coming soon. Canadian real estate will implode.

#152 Increasing that 1% on 06.30.11 at 5:15 pm

huh, it’s like last day of school, teacher leaves class to itself. Congratulations to all those Graduates, dammit! And to all those boys and girls who were unsuccessful, don’t fret,
keep putting one foot in front of the other, and soon, you too, can own a million dollar palace in Van, or TO, maybe, beside Smokin’ Man (watch out where you walk though), or even better!, between BPOE and Crowded Elevator Fartz

#153 Pierre on 06.30.11 at 5:16 pm

Hi all, Pierre here. Thanks to Garth for posting my case and thanks to all for your comments. Just wanted to clear up a few misconceptions:

1) It should be noted that a move to Hamilton implies finding a job in Hamilton, not a commute to Toronto. Rent in Toronto applies to finding a job in Toronto.

2) It is not just the wife’s family that is in the GTA, but all those who are important to me as well. This is very much a joint collaboration. I am not giving in to her demands, nor is she giving in to mine.

3) The kids are not yet school aged and are fluently bilingual, they’ve already had to deal with their daycares closing/moving and having to make new friends as a result.

#154 Dad in-Law on 06.30.11 at 5:18 pm

Son in-law, we want our daughter to move closer to us so isolate you and prepare for the divorce. Our daughter will have the fully support of the family and you will be isolated and alone, with a little luck we will be able to move into your house once we kick you out.

No hard feelings.

#155 Pierre on 06.30.11 at 5:35 pm

Upon reading the rest of the comments, a few more things need to be cleared up.

1) Families is not limited to grandparents, I’m talking aunts, uncles, cousins on both sides of the family, as well as my best friends that I grew up with. It’s not a matter of one household moving to Ottawa/Gatineau.

2) The family is scattered throughout the GTA, in Toronto proper, Kitchener, Cambridge, Ancaster, Pickering, Barrie, as far out as London. Hamilton is actually a nice middle ground.

3) Under no circumstances is leaving the federal public service on the table. If we can’t go without leaving the feds, we don’t go.

4) Regarding the desirability of Hamilton, yes, I’ve seen the Skyway bridge and the view from the QEW. I’ve also seen Durand, Hess Village, Locke St. Gage Park and the Children’s Museum. The area around Copps Coliseum is also looking pretty good these days. The area around McMaster is great too, but yes, slightly overpriced.

#156 mackie on 06.30.11 at 5:39 pm

When I was younger I used to say that Toronto was a great place to visit but I would never want to live there. Now, as I grow older, 52 years young, I don’t even want to visit Toronto unless I have to. I live in Ancaster. a few nights ago a deer decided to bed down in my backyard for the night. We have birds, other than crows, starlings and sparrows. So you Toronto lovers can enjoy your overpriced basement apts and miniature condos pushing a million bucks. Try leaving your city once in a while and experiencing how us lucky ones get to live.

#157 mackie on 06.30.11 at 5:42 pm

For the guy considering moving to Toronto. Don’t be crazy. Stay in Ottawa. You are living in one of the best cities in Canada. Why would you even think of moving to Toronto.

#158 Hoof - Hearted on 06.30.11 at 5:51 pm

Civil Service job…..and next to a flaky Province

Reeks and oozes of a lifetime of stability.

#159 Hoof - Hearted on 06.30.11 at 5:53 pm

BPOE and CrowdedElevatorFartz..

How was the shotgun Vegas Wedding….

We can pass the hat” on -line” and send you a gift.

Maybe Garth’s Book and NILODOR?

#160 ballingsford on 06.30.11 at 6:03 pm

Pierre, consider these as options as I have read all the responses so far and I don’t think these were mentioned but some were touched on.

1. Stay away from Hamilton and stay where you are. The Ottawa-Gatineau area is a nice place to raise kids. Actually, once the kids are over childcare age, it’s probably better to live in Ottawa.

2. Have her parents sell their home in Toronto and move to Ottawa. More green space and not as busy as Toronto. They might be pleasantly surprised as to how beautiful Ottawa and the outlying areas are (e.g., Arboretum, Rideau Canal, Bike Paths, Gatineau Park). Note of discontent: We now have a major weed and pollen problem now that herbicides have been banned and not all of the city can be replaced with sod to solve the problem like they do on Parliament Hill, but the city should at lease cut the grass (weeds) before they flower and pollinate. I’m sorry I digressed, but I had to get that off my chest.

3. If your wife is unable to settle on option 1 or 2, then see option 3.

4. Find a more responsible wife! If you’re looking to be closer to free babysitters, there are lots of good one to hire here, and from your comments, you can afford the $10 or so an hour rate. Put an end to the Grandparent mooching! Although they probably love the kids, give them some space too.

Recommended Option:
#2

#161 Dad on 06.30.11 at 6:05 pm

Son, this is your father. You need to live for yourself. Your wife will not respect a beta male who caves to her every whim. She might stay married to you, but her personal trainer is the one who will get to enjoy her “company” while you wait in traffic.

#162 ballingsford on 06.30.11 at 6:06 pm

Whoops, typo in my post, option 3 should say option 4.
3. If your wife is unable to settle on option 1 or 2, then see option 3.

Should say option 4.

#163 jess on 06.30.11 at 6:14 pm

kabul bank and fake loans?
…”‘Burnt-out’ case exposes US-Afghan rift
By M K Bhadrakumar

The trail of the Kabul Bank scandal that was originally triggered by the so-called Afghan Threat Finance Cell, a little-known unit of the United States Embassy in Kabul, has reached a hotel room in Virginia in the suburbs of Washington.

Afghanistan’s central bank governor Abdul Qadir Fitrat, a former official in the International Monetary Fund (IMF) and an adviser to the World Bank, fled Kabul in panic even as the Afghan government was about to question him in connection with the scandal.

Fitrat, who enjoys permanent residency status in the US, announced his resignation while ensconced in the Virginia hotel and within two hours he was on air, interviewed by Radio Free Europe/Radio Liberty flashing his side of the story across the Hindu Kush mountain tops and valleys. His story, essentially, is
that he is a whistle blower on the bank scandal rather than a fraudster and that he fears for his life because of testimony he gave to the Afghan parliament some two months ago in which he implicated by name certain influential people in the Kabul power structure.

Fitrat produced a list of what he said was nearly US$800 million in fraudulent loans taken out by the lender’s politically connected management and shareholders. …”

http://www.atimes.com/atimes/South_Asia/MF30Df04.html

The Afghan government has issued an arrest warrant for Fitrat and sent it to the US Embassy in Kabul. There is no extradition treaty between the US and Afghanistan and it is going to be an Afghan pipedream if anyone in the Kabul government really fancies that the US would hand him over. He was one of its (and the IMF’s) key point persons in controlling the Afghan banking sector.

“The Saudis are now heading an international campaign to weaken Iran’s economy and to stop the nuclear program. Whereas the Americans are the ones that are imposing sanctions on different parts of the economy,” Javedanfar says, “the Saudi are the ones who are basically going for the jugular.

“They are going for Iran’s oil industry by going to Iran’s customers, such as India and saying, ‘Don’t buy oil from Iran; you can buy oil from us and we can basically give it to you at a better price.’ They want to flood the market to bring the price of oil down. They know that Iran is vulnerable because 80% of the country’s income comes from oil.”
asia times

#164 SwampLily on 06.30.11 at 6:20 pm

Pierre – it’s a bad time to leave a good job, my advise is to stay where you are for two years, then re-evaluate.

#165 Hoof - Hearted on 06.30.11 at 6:36 pm

#15 disciple

You cannot get rid of debt. All fiat money IS debt, that someone owes someone else. You continue to use fiat money, you continue to deal in debt. There is no escape unless you get off the farm.

————————————————–

Simple….not only let the SHTF,…..force the SHTF.

Like Henry Ford said/implied…if the general public had even a “101″ idea of how the banking system ACTUALLY worked….there would be a revolution.

Fiat currency produced by Fractional Reserve system is Fraud, scam, and if not challenged by the global masses ….will doom us all.

As I said in an earlier post…Fiat/Fractional reserve system is set up that debt can NEVER be repaid due to the usury compounding mechanism..the END GAME is to surrender control of REAL assets to an elite base.

After being somewhat enlightened on how the system works…via Garths blog and others….while I am not a fan of capital punishment, I would NOT at all hesitate put my name in the hat for a draw to pull the lever/push the button for the world’s economic war criminals…the fact they wear suits and can log on computers doesn’t separate them from Stalin..Mao..Ted Bundy etc.

#166 Glenn on 06.30.11 at 6:45 pm

It may be “happy wife, happy life” if you marry a feminist (virtually all females in North America). Keep paying that mortgage, because your “better half” already knows she will keep the house in the all-but-inevitable separation.

But if you marry a foreign girl, its happy man, happily every after. With a significantly lower risk of infidelity and messy divorce, much better domestic skills, and much less girth the the typical Canadian or American female.

#167 Art_Vandelai on 06.30.11 at 6:51 pm

Hamilton (downtown) is a great community whose undervaluation is largely of its own doing. It has prioritized the fast movement of traffic across town, instead of making it a pleasant place for people to live and work. As a result it has developed a bad rep. However, things seem to be turning around, the younger generation there is starting to make its mark, and if you’re looking to own a home, I can’t think of anywhere else where as much potential exists to come out of home ownership ahead in this economy. I’d look for two things – public support for 2 way conversion of the main streets (Main, King) through the core, and support for the LRT (like in Kitchener), before making the leap.

#168 BrianT on 06.30.11 at 7:07 pm

#155Pierre-Hopefully your spouse doesn’t read these comments-this is a rough crowd on this site.

#169 Nostradamus Le Mad Vlad on 06.30.11 at 7:17 pm

-
End of June, and will be lucky if we reach 21. Bring on a full-blown Yellowstone blast, and we freeze our buns off for years on end!
*
Thought for the Day (which also includes the CPC):

“Every time Congress makes a joke, it’s a law … and every time they make a law, it’s a joke.” — Will Rogers
*
Rich Elite to suffer when TSHTF? What comes around goes around, and it’s nice to see karma play out! Kissinger “Or was the global financial crisis created (via Wall Street’s Mortgage-Backed Securities fraud) to bring about Kissinger’s Globalist Agenda?” wrh.com; Minneapolis “Wall Street’s Mortgage-Backed Securities Fraud broke the economy, and it is up to us to force the American people to understand that they and they alone must take responsibility to pay for this mess!” — Official White Horse Souse — Not necessarily, as citizens can’t be held responsible for things their representatives did without their consent.

3:32 clip The UK has caught wind of The Greek Revolution; US debt increased more under Geithner, and now Geithner to GS? Second story; they’re all a bunch of crooks; Banks Win Again Can you say a major spike? Plus lotsa links; Johnston City, Ill. Last one out, please turn the lights off; EU No Plan B for Greece.

US Feds buying up farmland they flooded with HAARP’s help, and Soros is in on it. Something smells rotten in Denmark; 1:53 clip Las Conchas fire, just outside Los Alamos nuke facility; 2:53 clip Fort Calhoun — Evacuations within ten miles of zone.

Irish, Swedish and and Turkish ships
sabotaged. Quite easy to make a connection; Monsanto Drink Roundup — it’s good for you! Bowl of BS Don’t trust the fed., prov. or state govts.

#170 Think Tank on 06.30.11 at 7:21 pm

#102 Ret
yeah right , tell them to buy “Borington” …that souless suburban sprall …we lived there for 3 yrs..home prices there will drop like a lead balloon…suburbia will die with high oil prices..bad choice…. as for family values GIVE ME A FU**KN BREAK!!!!

#171 suzinvic on 06.30.11 at 7:24 pm

Get the in-laws to sell in TO and move to your neighbourhood, win-win.

#172 stevermt on 06.30.11 at 7:36 pm

#125 yourstupid
sorry dude I was referring to GO transit. I have a client that takes it to TO ..about 1 hour stress free then walks 20 minutes to her office..I mean you gotta do what u gotta do..

#173 Think Tank on 06.30.11 at 7:40 pm

#109 disciple
well put ..they don’t realize it yet

#174 salonist on 06.30.11 at 7:44 pm

“Under no circumstances is leaving the federal public service on the table. If we can’t go without leaving the feds, we don’t go.”

says it all.

#175 Killer Chicken or Imploding Boomer? on 06.30.11 at 7:55 pm

133 Bottoms – looks like approx 50% of total pop is employed (from your link). This roughly jives with the 17M contributors to the CPP.

http://www.statcan.gc.ca/pub/68-213-x/2008000/5204630-eng.htm

2.9M work in the govt sector – something like 17% of total.

#176 Think Tank on 06.30.11 at 7:58 pm

#153 Pierre
Hey Pierre..so glad that you’re considering our amazing city. You also are thinking about a new job here. WELL….

This just printed in today’s Hamilton Spectator..Mayor Bratina “said the city’s current unemployment rate of 5.4 per cent shows the economy is performing well and that shows the city is on the right track.”
There you go ..its worth a look
Please don’t listen to the naysayers..lets just chalk it up to ignorance.

#177 Hoof - Hearted on 06.30.11 at 8:11 pm

#169 Nostradamus Le Mad Vlad

Think of the classic equilibraic premise of:

” What goes around comes around ”

If we establish a quasi “given” of Greece helped establish democratic principles…this inherent geo-political “lead time” would imply that Greece would be the incubator of restoration of democracy…..the basically kick Bilderberg and Rothschilds asses.

In other words….funny how Goldman Sachs tried an very economic surgical strike on Greece…but it may be the downfall of these elitist scum.

#178 Utopia on 06.30.11 at 8:29 pm

#147 garrulous squirrel wrote…..

“The Canadian media Bwhahahahahahahahah…..”
———————————————————————————-

Well you are right Garrulous. Some of the media have let us down by not addressing this topic sooner. Better late than never though.

I have noticed a great many articles lately in a variety of papers as they finally come to terms with the damage our housing bubble is inflicting on the economy. Rob Carrick at the Globe has been on top of this for quite some time though and has done a great job in my opinion. (I could swear he is a fellow blog-dawg.)

They are sounding the alarm bells loud and clear but it may indeed be too late for most consumers to change course. Garth is correct that the worries expressed here have finally gone mainstream.

We were right all along so don’t ever let anyone dissuade you from what we know to be self evident. My prayers are for a soft landing, if that is even possible anymore. A great deal will now depend upon how the rest of the economy outside Canada fares.

I was rereading the Postmedia version of the “Capital Economics” report of Canada’s economy and housing situation. I was really struck by the strong wording they have used in this report.

1) Confirmed:
Capital Economics says signs of over-building are evident as unoccupied housing units are at historically high levels. (this is primarily referring to Toronto I would imagine. Lets dispense with any more arguments from Realtor’s claiming there is a supply shortage as that is utter nonsense).

2) “Another sign of over-building, or perhaps over-consumption, is the sharp increases in the home ownership rate over the last 10 years,”

Again, this has been one of our main contentions here for well over a year now. With ownership rates near 70% the market has just simply run out of buying power and fresh buyers. Real estate has peaked based on the participation rate alone. We can almost ignore all other factors when this is considered and rest assured a correction is inevitable.

3) “The report says the downturn in the housing sector will severely constrain economic growth over the next couple of years as consumption expands at a more “muted” pace and housing investment “shrinks.”

It is notable that they used the words “severely constrain”. Lets keep in mind that economists and accountants are a prissy austere, sheltered and conservative lot (generally speaking).

They are not prone to exaggeration and typically take care with the use of words to convey the severity of a situation. Language is important. These guys are warning in no uncertain terms that some very challenging days lie ahead in this country. Only fools relax when economists start talking tough.

4) Last, Capital Economics wrote ” “Our concern is that these excesses will eventually lead to a house-price correction, which would greatly impact household wealth, consumer confidence and the economic recovery.”

Not mincing words are they?

Anyone reading this post today who is new here on the site needs to appreciate the danger that now lies ahead. Understand too that it has really only been in the last few weeks that such a dark mood has passed from the hands of sites like this and into the broad public domain of our popular media.

The awareness of our own debt predicament in Canada is no longer the purview of outsiders and conspiracy buffs. Reality has sunk in and now it is official. The media is giving the issue serious coverage.

Expect the warnings to grow stronger. The bell has tolled.

#179 that says it all on 06.30.11 at 9:10 pm

#174 Salonist captured the only thing that really matters to Pierre and his spouse……”Under no circumstances is leaving the federal public service on the table. If we can’t go without leaving the feds, we don’t go.”

That’s the spirit, Pierre! Keep both sets of lips firmly wrapped on that government teat. Eventually Harpo will take you out back of the toolshed and put you down…..but until then good luck ramming your gilded pension and banking those sick days.

Public service indeed. Urgh.

#180 BigAl (Original) on 06.30.11 at 9:12 pm

Run…don’t walk….from Ottawa/Gatineau. What an absolute hole. I had to put up with it for 7 years and finally escaped back to civilization in the GTA. The circle of sophisticated ambassadors and politicians is very very small. Most of the population is run-of-the-mill government clerks and admin. Really exciting people (sarcasm). The entire city has an inferiority complex regarding Toronto. Ottawa has the Byward Market….that’s it. Everything else is blah.

#181 Bottoms_Up on 06.30.11 at 9:17 pm

#175 Killer Chicken or Imploding Boomer? on 06.30.11 at
——————————————————
Thanks for clarifying the absolute number. I based my calculation on what ‘elevator farts’ posted.

#182 The InvestorsFriend (Shawn Allen) on 06.30.11 at 9:23 pm

D8isciple at 15 says:

All fiat money IS debt, that someone owes someone else.

Not only is he wrong but he has it completely backwards.

When paper money was backed by Gold it represented a debt of the government to give gold in exchange for that paper paper.

With fiat money, the government does not promise to pay you anything other than more paper money in exchange for your paper money. So that is the bad news.

The GOOD news is that millions even billions of people will gladly exchange real goods and services for your paper money. Everyone from hookers to BMW dealers to crack dealers to the babysitter to the butcher, the baker and the candlestick maker will gladly exchange their wares for your paper fiat money.

Looney tunes doomers can say what they want but what I say is truth and we all know it.

Now, will paper money depreciate over time? Yes it will but not in the time it takes to spend it unless you are dumb enough to store it under matress for a few years or decades.

Are investments in stocks (i.e. companies),paintings, real estate and such investments in paper money? No they are not. These items are MEASURED in paper dollars but they are not dollar investments as such.

About the only true paper dollar investment is a bank deposit or a GIC or a bond.

You’re welcome

#183 UVZ on 06.30.11 at 9:44 pm

Message to Pierre:

If I were you I’d ask my realtor for the price record for all Hamilton listings in the areas of interest. Do an inflation-adjusted analysis going back to the 1990s. You might be pleasantly surprised.

Question to Garth and All:

What are the economic prospects for Hamilton if manufacturing returns to North America? Pierre might end up sitting in the middle of the action…

#184 stage1dave on 06.30.11 at 9:53 pm

OMG, we’re Overlords now?

I haven’t felt so flattered since that visually-challenged clerk at SuperStore cracked me for ID on a cigarette purchase a week after my 51st birthday…if I’d only known shaving would the trick, I’d probably do it more often! Anyway, on to the matters at hand…

1) Move to Hamilton.

We just moved the shop to the north side of town, so my 8 minute commute has turned into a 20 minute pilgrimage down Gretzky Dr…which is really gonna piss me off! (I hate traffic…it makes you old & mean) Therefore, to avoid being a hypocrite, Hamilton is out…the commute will take 5 years off your life.

2) Rent in Hogtown

I rent myself, but at considerably LESS than the carrying costs of a mortgage, let alone the maintenance & upkeep hassles. Also, I hate Toronto…I guess that renders my opinion on renting there completely meaningless. I’ll abstain…

3) Wait for da bubble to burst

That’s my plan, but I’m not getting married until next year & my fiance & I are on the same page: we’d rather have nice toys, some money in the bank, & no debt. We figure her kids can buy the houses & we’ll just move into the basement once we can’t shift any more gears in our GS’s, Mustangs, etc.

(So much for my worthless advice, but I’m being distracted by memories of the header pic…what’s a guy supposed to do with all that? Wish he’d never sold that 75 Caddy, I guess)

I can’t leave this thread alone without mentioning something that I’ve noticed a TON of the last few years, & something that has become pervasive in promoting RE: the attitude that buying a house is the ONLY OPTION! Many peeps I know would NEVER consider renting…they think it’s demeaning. It’s as if they (& their friends & coworkers) would lose some of their self-worth (or self respect?) if they did not “own” a home.

#185 eva on 07.01.11 at 2:22 pm

updated stats from “bubble Vancouver”…see link. sales down 60% June 11. Interesting!
http://www.yattermatters.com/2011/06/25156/comment-page-1/#comment-48218

#186 jshum on 07.01.11 at 5:40 pm

I find the comments to the capital economics article here interesting
http://www.timescolonist.com/business/Canada+housing+bubble+close+bursting+Capital+Economics/5024544/story.html

1. We are not foolish americans

R U kidding me? These econs should be charged with fear mongering. Winnerpeg could fall 25% but never Vic. I’m already looking for another investment condo. The richest guy I know in Vic made all his money in real estate. We are retirement heaven. We have government. We are not foolish americans. Filthy rich will flood our city for ever!

2. Not only asians are hot for properties. These two own 4 and 5 properties respectively

As an owner of four properties, I sure hope there is at least a 25% drop. Am looking to buy more properties when/if that happens. These kinds of articles are so off due to Canada being a large and diverse country with real estate prices varying from region to region.

As if…I’ll bet any of these economist wizards that every one of my 5 properties all rise 25% or more in the next three years.

#187 Thetruth on 07.01.11 at 7:12 pm

Good news for those seniors without RRSP’s, CPP, and other forms of income!

Guranteed Income Supplement recipients get largest raise in 25 years. Now who were the wiser seniors? Those that saved or those that spent?

#188 gtaguy on 07.01.11 at 7:58 pm

There is now a huge number of those multi million dollar mansions along lakeshore in burlington up for sale.

Previous trips down Oakville-burlington lakeshore always seemed to show a half dozen or so homes for sale in oakville and as soon as you cross the border to burlington no more sale signs.

Now they are everywhere in burlington. Things are heating up. Haven’t seen this much signs around since the lows in 2008. I’d say the number of signs are still not at those numbers but its getting awfully close.