Humans

Days ago a marker was likely passed. One of the house-humpiest media outlets in the country ran a story predicting the end of real estate’s golden age. At least in Toronto. As the Star reported, a growing army of economists have joined this gnarly blog in forecasting the market will either flatline (best case scenario) or tank (about 25%).

As you know, my unwavering belief is that the GTA and (especially) Vancouver will go through a substantial correction, then plateau. This is when the suckers rush in. After that, given the economic future we face, I’m betting on a slow, inexorable hemorrhaging until we achieve a return to the mean. Precision is impossible, but I’d say 2015 will have a lot in common with 2005. After that, thanks to the oxygen-sucking, house-rich and liquidity-poor wrinky Boomers, it might all get worse. Especially for the suckers.

But this is theoretical, based on what we know. Debt’s overwhelming. Houses cost too much. The economy’s tepid. America is in the soup. Rates will rise. Wages are stalled. Demographics are against us. Broke governments mean more taxes. And we have an asset bubble. The mama of Canadian gasbags. Unsustainable.

What the pointy heads in economics departments cannot measure, and always miss, is human nature. Because the lust to own a home is in our DNA, it causes irrational behaviour. People just flip out. The longing to nest, for example. Or simple greed and fear. We panic to buy stuff that’s appreciating and run screaming from assets in decline. It makes the ascent more breathtaking and the decline a terror.

Talked this weekend to a westside Van guy who bought a $700,000 house four years ago and just sold it for $2.6 million. “Everybody on the street says I’m a frigging idiot,” he told me. “Why would you sell now?, they ask, cuz it’s going to four mil.”

See what I mean? Quantify that. Chart greed. Humanity just makes such a damn mess of economics.

Like Jake. Spent time with him over the last few days, after he sent me this email:

I just turned 50, Garth. I married in 96 and then started thinking about purchasing a house. Should have bought something but had no cash, no down payment, and job wasn’t that good. But then things picked up. Starting saving, had 2 kids, moved to a small rental house.

But in 2001 prices started spiralling out of control, and even though my income and savings increased, I am still chasing the market up. I could rent a much better and bigger house than I could ever buy, so did just that. But I am running out of time.

So if I wait until 2013 or 2015 to buy in, and I could as I have now saved, I will be 54 by then and ready to retire. And every rent payment is going right out the door, I don’t even want to think how much I have spent on rent in the last 15 years, I could have bought 3 houses.

I work for Government, and my pension from BC Pension Corp starts at 55. I have 31,000 in an RESP, and 90,000 in RRSP money, of which 50,000 was destined for the HBP. 5,000 in a TFSA.

Am I screwed as far as owning a 4 BDR House in Victoria ? Is it time to throw in the towel on my dream, rent til the kids are gone, and then buy a 76 Winnebago and live off the land?

Following up, I found his two kids are 11 and 13, his wife doesn’t work, the family income is seventy grand, he’s desperate to retire at 55 and his pension will be $2,800 a month gross. So here is the situation – devoid of emotion.

The average SFH in that city is $630,000. His down payment will max out at $80,000 (with the HBP and cashing in his TFSA plus the rest of his RSPs). That’s 12% down, which means (with closing costs) a mortgage of $562,600. Of course, he can’t risk going variable since rates have nowhere to go but up, so a 4% fiver amortized over 30 years would cost $2,734 a month, and then escalate. With property tax and insurance, that climbs to $3,134.

His pension income, after tax (at 20.6%), would be $2,416 a month. So, carrying the house would take 129% of his income. No food. No gas. No cable TV or new clothes. No car. And only $31,000 in RESPs to help his two kids through a collective eight years of university.

See what I mean? Home ownership’s a dream denied by his own financial reality. The only hope might be to move to rural New Brunswick, buy a place for $139,000, shoulder a mortgage in retirement, and have zero savings. Or, Jake could rent for 50% of his after-tax pension income, still have money to live, plus $95,000 invested.

If financial security and quality of life are the goal, renting’s the only sane option. But I know from his conversation with me, that ain’t gonna happen.

“Needless to say, I am not whining about my position in life, I thank God for what I have, I know I am in a better position than some that have shared their stories on the blog,” he said, “but this is my goal. A house by 55.”

Such is the break between humans and analytics. Our emotions pee all over them.

Most people don’t even remember the last major real estate downturn. They don’t understand this irrational market came through monetary policy manipulation. They now believe what we have – rising prices and dirt cheap money – will last indefinitely. The new normal could hardly be more abnormal.

This is why my friend got $2.6 million last week for a $700,000 house. It’s why Jake’s happy to eviscerate himself reaching for something he already has – a place to live. It’s why the irrationality around us could last longer than we thought, and end in much higher flames.

But it will not be with a whimper.

159 comments ↓

#1 Jesse dylan on 07.17.11 at 9:05 pm

Great article – you should do my show

#2 Mr. Lahey on 07.17.11 at 9:13 pm

Randy, Ricky, Bubbles, Julian and I are waiting for the economic shit hawks to do their thing all over Toronto and Vancouver. Us simpletons in the trailer park own our trailers outright and have the rest of our capital in dividend paying bank stocks. During the Nortel debacle, Ricky astutely observed that he got a better return on his beer than most Nortel stock holders got who never dumped their shares. To boot, Ricky enjoyed the ales.

#3 robert in london on 07.17.11 at 9:19 pm

When I look back 40 years or so we have replaced the hard on for carz with the hard on for houses. At least with a car you could could drive to the next job opportunity.

#4 Ray MacDonald on 07.17.11 at 9:20 pm

We’ve owned a house since 1973 – owned one outright since 1984. It’s been nice.
But seeing home ownership as a life goal, messing our financial lives up with a mortgage when ready to retire – fuhgeddaboudit. Besides, I hate gardening.

#5 squidly77 on 07.17.11 at 9:22 pm

1.9 Million profit in 4 years, sounds good, sounds really good but it just puts an explanation mark on the fact that the Vancouver housing market is nothing but a Casino, a cheap house of cards, a Ponzi and I find it hard to believe that if Vancouver housing can go up 400% in 4 years I see no reason why it can’t go down that same 400% and more.

The damage that’s being done to Vancouver may be irreparable and what’s even more galling is it’s all being done with tax payer backed mortgages.

I would be so pissed, so really, really pissed if my kids faced a government induced juiced up market like that.

#6 rhw on 07.17.11 at 9:24 pm

http://www.ericmargolis.com/political_commentaries/banking-has-become-our-state-religion.aspx

#7 squidly77 on 07.17.11 at 9:29 pm

There was a time, when you had kids, they grew up, moved out and started their own family in their home town. Now what, thanks to sleazy realtors, crap MSM, government sponsored Ponzi schemes, they grow up and move away.

This is all ass backwards, it’s about time that the government stepped up to the plate, led by example and stopped the insanity.

This is doing huge damage to Canadas future.

#8 Jsan on 07.17.11 at 9:29 pm

I watched an episode of Property Ladder on TLC the other day. It was filmed back in 2007. 3 buddies in their 20’s, zero experience started a real estate “investment” (flipping) company. It was quite amusing listening to them talk about how they would soon be amassing millions even though this was their first flip. As usual, everything became more complicated and expensive than they had counted on.

To make a long story short, they had to drop their price numerous times while they bled mortgage, property tax and utility money every month that the property stood unsold. The episode eventually ended with a note that the house was still for sale months and months later and at this point any hope of profit was long gone, now it was about how much will they lose.

It never fails to amuse me how seemingly intelligent people are so easily convinced that they cannot lose, Why? And than when it happens as it so often does, they are shocked?

As bad as these fools in the US were all rushing into the “get rich in real estate” pipe dream, the fools in Canada that have also rushed into this pipe dream are beyond words. When they have witnessed first hand what has happened after the US real estate bubble burst, there is absolutely no excuse for diving head first into our own soon to implode Canadian real estate bubble.

I love watching those house flipping shoes at the peak of the bubble. They are one financial train wreck after another with almost every flip going unsold and still on the market. Now that’s entertainment.

#9 Bottoms_Up on 07.17.11 at 9:33 pm

Took the wife out today for some good real estate porn.

Prestigious area north of Ottawa. Show up at the end of the open house.

Agent tells us that we’re only the second group through the house (and that the first group was ‘really interested’ but they have just leased a place — I said, ‘they can always break the lease’, and she just looked at me confused).

She then tells us the owners have already bought a place, unconditionally, and that they MUST sell (isn’t this a conflict of interest/breach of trust?!).

#10 Deano on 07.17.11 at 9:35 pm

Question. I live in Brantford. I have a great job and so does my wife. We bought this year for 200k in the nicest neighbourhood in town. Owners here tend to be long time, old money owners (many mansions that have been in the family for a few generations or more). I know Brantford is not the greatest place on earth, but we love it here. Ok, the question is, are we in for the cataclysmic Garth-predicted real estate schiesse storm that the GTA and Vancouver are in for? Will it be more modest or will we escape it almost entirely (wishful thinking).

Nobody escapes a downturn, but it will certainly not be uniform. Your big problem could be liquidity. — Garth

#11 kimi on 07.17.11 at 9:39 pm

I think that the ‘group think’ mentality has and will die. I feel sorry for the guy because he thinks that he ‘has’ to own something at 55. Ownership is over rated. If it was under rated, I would buy… as for the ‘wasting money on rent': reality is that you need shelter, unless you still live with your parents, that is not a watse, its a cost of living.
I don’t whine when I buy tomatoes, wishing I could grow my own. I buy them, pick out the pretty ones, with no regrets … but I do have one wonder: Are Utopias home-grown tomatoes better.

#12 The InvestorsFriend (Shawn Allen) on 07.17.11 at 9:41 pm

Many people readily say yes to gorging on debt in the hundreds of thousands and 3 to 4 times income.

Meanwhile I have no debt and a paid for house. Anytime I suggest to the wife that we could borrow even 100k (a half year’s pre-tax income for us) and put it in stocks she recoils in horror reflexively. Does not want debt.

$30k in one stock is thought risky. $100k in one stock is thought insane. $100k borrowed to put into stocks is thought certifiable. $350k in a piece of crap 50 year old bungalow with a $300 k mortgage is thought prudent.

You won’t get rich by following the crowd. Few are rich. The rich do things a little differently than the masses.

#13 Lisa on 07.17.11 at 9:49 pm

The only house you can “take with you” would be a Winnebego. A bricks-and-mortar house, doesn’t matter you own or rent, you can’t take it with you so what does it really matter if you own or rent?

#14 Thirty something on 07.17.11 at 9:52 pm

WTF

We were just discussing how we will likely never own a home, because we would never consider carrying a mortgage into our retirement. This guys “plan” totally boggles my mind, and not in a good way.

#15 BC Bring Cash on 07.17.11 at 9:55 pm

How Banks create money and destroy it.
http://www.activistpost.com/2011/06/moral-hazard-of-modern-banking-how.html#more

#16 kimi on 07.17.11 at 10:01 pm

10 The investors friend Shawn … you married a smart one, so lucky you are.
Ive been to the malls, so many people are charged up with ownership and possesions and texting. I look around some time and realize that not many people see that the freedom you can have with money, with the act of keeping it. You can attain knowledge, wisdom, pursue things that matter in life, like good health, etc.
Some many and most of my family members are caught up in the stuff, storage, homes, possesions, shopping, and the time-slot of exactly when you should have this or that, like poor old Jake.
… and before you know it the tomb of youth is closed and in the end, what do you chose… bankruptcy of purse or bankruptcy of life.
I know, I know, I quoted this before but its so true.

#17 From Mississauga with love on 07.17.11 at 10:01 pm

Garth,
What are you saying in this article regarding 2015 being like 2005? That it won’t be till 2014 till we see a crash?
I don’t know what the heck to believe anymore. People are asking more and more for their houses here even though the house sits unsold. It’s as if they don’t really want to sell but only trying to get the max they can regardless of the wait. What people are asking now in Mississauga for POS houses have now bypassed the absurd.
I am convinced it’s about the interest rates and nothing else, but I think for us to see any shock here, we’d have to see serious unemployment like the US.

I was referring to price and sales levels. — Garth

#18 Martin P on 07.17.11 at 10:06 pm

I’m really struggling with the reasoning behind purchasing a house that expensive, with barely a downpayment.

Right now I’m a 28 year old living in Southern Ontario… living at home with the parents. I have a good paying job and eventually plan to purchase a house.

However, one thing I’m struggling with are the home prices here. A friend recently purchased a $400k home and I can only imagine what their monthly payments are after something like that. I’m browsing the market and looking for something in the $250k-range with a 28% downpayment.

After reading your blog for several weeks I think that I’m going to postpone buying for now. I’ve read several major banks share similar views about the future market as well.

Any buying advice for a 28 year old who wants to finally move out of his parents house and have a place to call his own?

#19 April on 07.17.11 at 10:13 pm

#17 – From Mississauga with love. I think what Garth is saying is that by 2015 we will have seen a substantial correction.

#20 kimi on 07.17.11 at 10:13 pm

13 Lisa said The only house you can “take with you” would be a Winnebego. A bricks-and-mortar house, doesn’t matter you own or rent, you can’t take it with you so what does it really matter if you own or rent?
————————————————–
Good point Lisa, I just done researching the cost of living on a boat. I fiqure they end up with the best view on coal harbour so why not. I live 2 blocks from there, every morning I go down to there and its heaven. Boats have gone down in price by atleast 25 to 40 percent since I started looking. I think that is a good indicator to the furture of housing, recreation property, as I believe, recreation stuff is the first to go.

I would love to live on a boat because I could easily do it (but not without a shower) LOL! Turns out the slip is more than my rent!! Oh well.

Next thing I was looking at is an AirStream (winnebago type thing). So I will let you know how that goes.

#21 betamax on 07.17.11 at 10:15 pm

Why is Jake in such a hurry to retire and do nothing for the remaining 30 years of his life? And does he think those two kids will cost nothing to send to college years hence? He needs to think about how his early retirement will hobble their lives.

Here’s a retirement plan: man up and work for another 10 years, then retire in style instead of like a pauper. He’ll still have 20 years left to do nothing, which should be sufficient.

Further, Victoria will crash in due time, and even now there are cheaper towns nearby. If he’s retired, he doesn’t need to live in Vic.

It amazes me that some people read this blog yet learn nothing from it. You can lead a yutz to water but you can’t make him think.

#22 nonplused on 07.17.11 at 10:24 pm

I like that photo, 3 young ladies and their cocks (roosters, for the rest of you.) Maybe they recently competed in a show. Rural people seem weird from Bay Street, but not to themselves.

Jake seems to have started his life a little late, despite having gotten full time employment long enough ago to be ready to retire. I can’t imagine having an 11 year old at 52. Actually, I can’t imagine having kids at any age even though I already do but still. People wait too long to do anything these days. If he’s ready to retire and he still doesn’t have a house, maybe home ownership is not for him.

And I find it interesting that he insists on retiring at 55 into $2800 a month. That ain’t much. From what I know of these government plans, you take a good discount to retire early. Working 5 more years might be the best paying five years of his life as he takes his pension from 60% up to 80% of final salary, and even better if there is a raise or 2 in there. Funny you didn’t mention that Garth, because for Jake reconsidering his retirement age might be the most important financial decision he can make, depending on his plan. You already know the pensions aren’t going to be paid at 100 cents on the dollar, don’t you? From your inside connections on the hill?

Remember folks, freedom 55 is for people who make a whack of cash and save 30% of it (and invest using a GarthPlan ™ (or Money Road ©). It’s not for pensioners or anyone else. If you aren’t one of Fidelity’s target “high net worth individuals”, freedom 55 is a mistake.

“Throwing away money on rent” is a misnomer. Housing is never free. A wise financier will consider mortgage interest, taxes, maintenance and realty fees when evaluating the cost of home ownership as compared to renting. Someone who can pay cash has to look at “opportunity cost” (the money your GartPlan ™ or Money Road © could be paying as compared to having the cash “sit there” in your house.) The fact that most people buy a house using extreme leverage and then inflation pays it off confuses things, and the last 7 years have been really confusing as governments around the world have artificially suppressed rates and let inflation go wild in search of an answer to the debt problem. (Don’t give me the CPI lame-assed argument. CPI is a joke if not an outright fraud. Check the prices at the pump, it really is all you need to know. Oil prices = inflation with a lag.)

#23 Toxicosis on 07.17.11 at 10:32 pm

@DEANO
Remember, you may even own your house flat out but around you the cost of living increases including property taxes, and even possible job loss may keep you feeling like a prisoner in your own home. A glut of inventory coupled with significant and rising costs for electricity, gas, water and home repairs/maintenance on top of property taxes might make you seethe with frustration that money trapped in your home is virtually unavailable to you without financial stress and pain. Cash is necessary and so will be currency substitutes such as gold and silver. The price of gasoline will rise much further and that will effect the price of virtually everything else including food and taxes(health care). This is already happening, hoping it will get better is both foolish and ridiculous.

#24 Alan on 07.17.11 at 10:33 pm

Wish you had a reliable track record for predicting what’s going to happen to real estate Garth. I guess if you predict that real estate is going to go down in price, you will eventually be rewarded. Unfortunately, there are people who have listened to your advice for years and lost out on one of the best TAX FREE profitable capital gains you would have earned over the last 5 years and if you want to go back 10 years the returns are even better. Clearly, you have no problem sleeping at night knowing you have not only advised of an imminent RE crash for years. I’m not suggesting a correction is not in order either. It’s a natural part of a cyclical asset class. Supply/Demand.

Why don’t you embrace the asset as one of many different asset classes. Subject to the ups and downs of economies and the greed and fear of investor sentiment.

I have nothing against RE ownership, but fear for the overweight and the over-leveraged. Your attitude – treating houses like stocks, for capital gains – lies at the heart of our current trouble. — Garth

#25 Snowboid on 07.17.11 at 10:38 pm

Jake should be focusing on the goal of retiring with a reasonable income.

Most public servants can’t collect at 55 unless their age and years of service add up to 85. Based on the family income and his expected pension he may be taking a penalty for retiring at 55.

Unless he has planned other work to supplement his income, he may be better off waiting until he is 60.

Effective April 2012 additional pension benefits previously provided to BC Public Service retirees end – a further hit to his net pension income.

There were still ‘deals’ around in 2001, but admit they were hard to find. After looking for a year, we finally found a 4 bedroom home in October of that year – the one that was recently sold to move back to the Okanagan (and rent).

A rule used in our household was to never hold a mortgage worth more than two years gross family income. Our investment properties were only bought when all other loans were paid off.

Our fiscal prudence (many called us cheap, especially our sons) in the years from 1973-2005, plus a pile of luck in our RE dealings – allowed for meeting a goal of retiring at 55.

In Jake’s situation renting looks like the best option. If he wanted to continue to work until 60 or 65, then maybe consider buying when the prices come down.

Spend $ 400-450K max on a home, which should be doable by 2013. If he could keep his mortgage PIT at around $ 1800 he may be able to swing it.

If he is renting an average home he is probably paying $ 1800-2000. But then there is the maintenance home ownership requires. From experience Victoria homes tend to by high maintenance especially close to the ocean.

Jake, timing is everything, but this isn’t the time to buy.

#26 cool on 07.17.11 at 10:41 pm

why does he has to retire at 55?

#27 waterloo Resident on 07.17.11 at 10:43 pm

If the US defaults on their debts come August 3, we could very well see interest rates shoot up by 6% to 10% in less than 24 hours. And once those rates go up that high they WON’T be coming back down anytime soon. Canadian mortgage rates also will spike up about 4% to 6% higher than they are now. Just imagine what that is going to do to our housing market. The worst thing is that our dollar will hit 2:1 with the US, yes, our CDN dollar will be at $2 US, and that will really hurt our manufacturing and tourism sector.

#28 Snowman on 07.17.11 at 10:58 pm

“And every rent payment is going right out the door, I don’t even want to think how much I have spent on rent in the last 15 years, I could have bought 3 houses.”

But, but, but … I thought renting was the key to success. Good thing he did not end up like most boomers, stuck in houses worth $630,000 which they may have to sell for $550,000.
Well, at least he did see his dream come true. Oh wait, actualy he didn’t. Remarcable story nonetheless, about this guy Jake … who does stuff.

#29 Thetruth on 07.17.11 at 11:04 pm

It’s official. Metro Vancouver population is 51% visible minority. How will this affect psychology with respect to land ownership? New immigrants have always loved land and shunned equities!

http://news.xinhuanet.com/english2010/indepth/2011-06/28/c_13954549.htm

#30 Debtisforever on 07.17.11 at 11:08 pm

This makes no sense. The guy is due to retire soon, so why commit himself to a mortgage that he won’t be able to make the payments on once he retires? Unless he plans on not retiring….ever….
Dude, there’s nothing wrong with renting. Sure, go, get a mortgage. Some credit union or bank will be more than happy to fulfill this goal. But you won’t be happy in a few years time. You’re focusing on the wrong thing.

#31 Snowman on 07.17.11 at 11:09 pm

#5 squidly77

“I find it hard to believe that if Vancouver housing can go up 400% in 4 years I see no reason why it can’t go down that same 400% and more.”

LMAO …. how can one not like this blog? This is a place where you can hear the most not smart things ever. Didn’t like school much huh, squiler77?

#32 Anotherlowlyrenter on 07.17.11 at 11:17 pm

Well – I convinced my brother – a doctor in Vancouver – to NOT upgrade his accommodations. He owns a 2 bedroom condo and had been considering buying a house. Not that he can afford it. Homes are too pricey even for doctors. I said, don’t you think you have enough $$$ exposure? He said, but what if I get priced out? I said, don’t you think the fact that you – a doctor – is afraid of getting priced out means that something is very wrong with this picture. Besides, who is going to price you out? Incomes in Vancouver are well less than incomes in toronto, yet prices are 3 times as high. He sez, but what about the Asians – they’re coming aren’t they? I said, well they have been coming. But what if they stop coming? Or maybe they sell too, once the bubble starts to deflate. Asian “investors” are pretty good at riding a trend up – and they’re good at selling on the way down. Besides, if Vancouver becomes a place that doctors can’t afford to live, then maybe you better ask yourself if this is the kind of city you want to live in . . .

#33 Devore on 07.17.11 at 11:32 pm

See what I mean? Home ownership’s a dream denied by his own financial reality.

But it’s not stopping him, is it? He’s all set to take on a brand new mortgage for over 1/2 a mill, when he retires at 55 with 30 years of payments. And if there is a way to make it happen, he will do it in a second.

This is why all the economic models and central planning in the world will never work. You can’t predict irrational people. We know where things are going, but have no idea when they will get there.

#34 Kitchener1 on 07.17.11 at 11:35 pm

The Saturday article in the Toronto Star was a suprise.

read between the lines.

Banks are calling for a 10-25% drop– so if a bank thinks house prices will be 10-25% lower, that means getting a mortgage with 5-10-15% will be tougher, even with CHMC.

When i read that article, first thing I thought about was a contraction in credit supply. THen I thought about what that means for most companies.

for banks, it means less profit
for companies it means less profit
small biz and large corporation rely on lines of credit to supply, in a down market credit is harder to get

less profit = less jobs or less job creation=lower consumption(people are freaked out) = lower GDP.

add into that the whole wealth effect from housing which will turn negative and see what that does to consumption levels across the economy.

You can bet that companies and banks alike are going to take steps to remain proftiable, but that is bad for overall job creation and economic growth.

#35 Coho on 07.17.11 at 11:36 pm

It’s ironic that someone retiring at 55 is determined to buy himself a prison to lock himself and his family into. This is a twist on the term “Freedom 55″. Going into debt a half mil is a helluva way to begin a “retirement”. Well, I guess if financial worries keep Jake up at night after he buys his dream, he can sleep in since he’ll be retired. It’s sad that he can’t get past this line of thinking….

#36 Burnt Norton on 07.17.11 at 11:40 pm

Too funny. Since yesterday’s comment here on her typo she’s corrected the name to Locarno beach from Lacarno beach.

IMO the ad should say “Loco beach”. I jogged by the place today. $5.7 million and it’s right on the corner of a pedestrian-controlled light busy street intersection going up a steep hill. Great. For $5.7M, you too can gaze over the city vista and listen all evening, every evening to ‘beep-bop’ walk signals in between deafening engine noises from all the Lambos and Harleys gunning it up the hill off the red. Better buy now because it’s going to be $10M soon. Oh, and it’s on 2 lots – perfect for that mortgage-helper meth lab you’ll need to build next door.

Fracking unbelievable. WTH has happened to my home town?

http://www.sothebysrealty.ca/idx/cms/10162/details.html

#37 the Phantom on 07.17.11 at 11:41 pm

Evening Garth, fellow bloggers and lurkers everywhere:

Just a few thoughts here for tonight…

#11 Kimi:
“…as for the ‘wasting money on rent’: reality is that you need shelter…that is not a watse (sic), it’s a cost of living.”

Your words ring so true Kimi…the few times I have heard people tell others that, I had to resist the temptation to ask the same questions as you raised here…we don’t say that we throw our money away on food, clothing, water or fuel and rightly so…I am uncertain where that phrase came from but I have heard it for many years already, since I was a young child.

The only other point to add is that link; you have Garth, to the house in NB takes you to what has to be one of the ugliest homes I have ever seen in many years! I guess it all boils down to a matter of personal tastes but the style certainly isn’t one I would be amenable to.

There are other reasons why homes may be cheaper out there, too. Granted there are oodles of friendly folk in New Brunswick and they have some of the most beautiful scenery I have ever seen. For example, within the forests there: dark, mysterious and magical (simply wonderful), the night life isn’t too bad as long as one stays away from the 20-40-60 Club in Fredericton (the real name being the 20/20 club but it earned the moniker due to the ages of some of the female patrons that went fishing there for “dates”(yikes)!

That being said, however, when I completed some of my training out at CFB Gagetown, the weather often leaves much to be desired (the running joke was “three seasons in one day”), the mosquitoes there can be every bit as bad as Manitoba, too, depending where you are. I suppose however if you could look beyond all that and sell your house like the west Vancouver guy and collect and pocket a cool 1.7 mil (1.9 mil less RE agent fees) you could buy that place in NB cash, invest the rest and retire comfortably or wok at something part time just for shits and giggles…

Anyway all, that is my humble contribution tonight…

The Phantom

#38 dd on 07.17.11 at 11:43 pm

“But this is theoretical, based on what we know”

Based on probability. Yes, the odds are against that prices will go up much.

#39 retiring now on 07.17.11 at 11:49 pm

Garth thanks for helping us make a decision.

Just convince my wife to sell our place after owning it for over 35 years. We paid 50,000 back in the 70’s for our place and was able to pump it out at 850,000.

It was a difficult decision but we are now old and retired.
The house work and gardening is no longer fun and more of a tedious chore which is killing our tired old bodies.

But now we feel comfortable with our decision to sell and have a good nest egg for our retirement which we can stretch out for a long time. Even with the low interest we are collecting from interest bearing investments.

We now know we have little to worry about since we have plenty of fixed income and a decent pension to support us into our retirement years.

We have downsized into a decent 2 bedroom apt. Haven’t bought a new condo/apt since we feel this may be a repeat of the 80’s crash and in no hurry to rush into a new place.

Just wanted to say “Price for freedom is Priceless”

#40 fiendish Thingy on 07.17.11 at 11:55 pm

Garth,

I was confused, but thanks for clarifying; I thought you were saying that 2015=2005 i.e., that’s when the RE market had just about peaked in the US. In that sense, based on the MSM coverage in the past week or so, Canada RE market in 2011= US RE market in 2005.

I welcome a return to 2005 prices, but weren’t 2005 sales in Canada pretty high?

#41 cj on 07.18.11 at 12:32 am

This guy is not thinking clearly. Wanting to own a home when his retired income is less than his expenses!!!! So stressful. I feel so bad for him
A home is not about just the bricks and mortar. My son has not purchased his first home yet and is waiting for prices to come down. Meanwhile his friends who own homes think he has missed the boat and feel superior. Hard to go against the herd…..

#42 Dirt Dog on 07.18.11 at 1:02 am

Soooo the chickens are coming home to roost with the virgins…yeah I got it. Niiiiicccee!!!

#43 Ravishing rick on 07.18.11 at 1:45 am

Hey garth…

The insanity of it all…. 700k turned into 2.6m… Id expect that from playing a great hand of junior mining stocks. With the 2m in the tank he can make an inflation indexed annual income of say 120k.

It is disgusting, and i say that out of pure jealousy! Unfortunately, stories like this only make fools run to the party… Even though the party is over!

#44 The Original Dave on 07.18.11 at 2:46 am

G man, I’m glad I have company in my opinion of 2005 prices returning. The mantra in 2005 was already that houses were a sure-shot investment. Prices and the mentality of the market changed drastically at the time. Many times, you can tell where a market is heading by speaking to a few dozen ppl. When silver took off and hit mid $40’s, I knew of a few ppl that were saying silver is a sure-shot. My mind told me that a mid term correction was due…and it came. People weren’t as house obsessed in 2005 as they were between 2007-2011, but the safety of investing in houses was still deeply engrained. Normalcy was 2003. In 2003 and previous years, people actually weighed in on whether their timing was right. People actually considered a price correction as a possibility. There weren’t any wild swings in prices because real estate wasn’t presumed to be almighty at the time.

We can safely assume 2005 prices are coming but 2003 prices (lower than 05) can be hit as well. If you factor in bubblenomics and how panic selling occurs, we can below 2003 prices. I don’t mean to be a drama queen and throw out numbers/years that sound ridiculous, but this should sound sensible. Nothing occurred in 2005 and afterwards to substantiate the panic purchasing that transpired. A supply shortage or an absurd amount of new immigrants would substantiate those price rises and a big correction wouldn’t be a must in those circumstances. Not the case with real estate.

For those of you on the fence, know this: 2005 prices will be back. Whether you’re patient/seasoned enough to wait is your call. Patience will be rewarded. Calling the exact top is difficult as people in masses are crazier than we think (vancouver canuck riots). So prices can rise. Heck, houses can go up 100% in price tomorrow, but the more they rise, the bigger the fall. We will get back to normalcy, and normalcy was before 2005. Good luck everyone.

#45 blase on 07.18.11 at 3:17 am

Garth,

After reading about the Brantford purchase of one of your readers, I visited mls.ca and was shocked at how cheap houses are there. For instance, a beautifully landscaped 4 bedroom house in a mature area can be bought for $240s, comparable house/area would be $600 in Calgary. Seems like if there is a correction, the Brantford place would barely be affected. Or even with a 20% correction, Brantford still 200. Seems like buying a house in many of these mid-sized university towns wouldn’t be all that bad an idea. Rebuttal?

Agreed. — Garth

#46 Onthesidelines on 07.18.11 at 4:03 am

You can’t have it both way, Garth. When, not if, the housing market start going south, the effect on the economy and employment will most likely force the hands of government to keep rates low or lower.

The bond vigilantes have a lot of other better pickings on soverign debt to go after before they get to Canada, so I don’t see much pressure on rates from the market.

My best guess is that after an initial crash, Canada as well as the US is going to be looking at an economic situation not unsimilar to Japan’s lost decades.

A lot of pump priming on a sinking boat.

#47 Jon in Cowtown on 07.18.11 at 4:18 am

We are witnessing the collapse of the credit bubble which in turn was fueled by the energy bubble. No more cheap and ever increasing energy supplies = the inability to “grow” our way out of this mess by lending money in to existence. The state of RE market is just a bell weather of the larger malaise.

Most of us older and more sanguine folks would likely admit that any time housing started “appreciating” at a faster rate than inflation, we kind of knew we were incredibly lucky. We were either living in some local anomalous hot market or …..??? The bottom line, when faced with a local RE bonanza, great if you managed to profit by it but in really it was just pure dumb luck. Somewhere along the line, however, it seems that people have come to expect that RE is an investment that appreciates in value well in excess of inflation, well …duh that’s not the historical model.

My parents sold their house in the GTA in 1971 for just over $30K It was a former show home, 3 bedroom bungalow on a corner lot in Richmond Hill. They thought they’d done incredibly well as they’d bought it for $24K in 1966. According to the Bank of Canada inflation calculator this place should be worth somewhere between $165K and $180K in today’s dollars. Bear in mind this was at a time when the Americans hadn’t come off the gold standard yet. This was also at a time when my Dad was making $12K per year. Yet today a quick check on mls.ca indicates prices range from $500K to a Million in this area for something equivalent. Guess what, house hold incomes have pretty much tracked inflation albeit often with the addition of a second wage earner (we were a one income family back in those days).

My point, to echo Garth, this can only end badly. A bungalow in the burbs of TO should at best be worth no more than $200K if fundamentals were being observed. This assumes that the Ontario manufacturing sector wasn’t being gutted as we speak and that some form of productive economic activity was still taking place. Such is not the case. Now think of the Okanagan, wonder why RE values are tanking!

#48 Just Jack on 07.18.11 at 4:38 am

Retire at 55 in Victoria? You’ll die of boredom in a year. The kids are tweenagers, get the wife a job in the government service. Invest in yourself and buy yourself a job as a landscaper or computer analyst. Heck, if you think that real estate can’t go south on you, become a builder of custom homes. All you need is a cell phone and the yellow page ads. And kiss your lucky ass for the government golden parachute.

#49 TS on 07.18.11 at 5:11 am

High home values scare the hell out of large business. Not competitive. The last place most growing employers will be expanding will be where home values are high especially when combined with huge debt.

#50 detalumis on 07.18.11 at 5:46 am

I am 6 months older than Jake and a woman and don’t feel particularly sorry for the guy. Financially he made a lot of mistakes #1 being to marry somebody who decided to stay home and be dependent on him. I don’t know any 50 year old women who were housewives, zero – zip. He also has complete job security unlike myself who was downsized from a big bank last year like everybody else 50+. He can do pension splitting with the little lady and pay almost no income tax until age 65 when he will pay nothing. I am sure his pension is indexed as well unlike mine which is half of what is so of course will be worth almost nothing in say 20 years. He also had a pretty good life since he didn’t grow up until he was 35; I lived like a 50 year year old when I was 21, all I did was work and save. I also bought my house in the last meltdown in the 90’s which he could have done as well; I bought mine with almost nothing down and just lived in poverty until I paid it off ASAP. I suggest his wife should shoulder a bit more responsibility and go and get herself a job for the next 10 years or so. They could bank all that money as well but I guess that would be asking too much. They seem to like to pretend they are Ward and June Cleaver living in 1955 and complain that life-is-not-fair.

#51 Tony on 07.18.11 at 6:02 am

#19 April on 07.17.11 at 10:13 pm

He said home prices and sales volume will be the same in 2015 as it was in 2005.

#52 Mr Buyer on 07.18.11 at 6:46 am

#24 Alan … It is a house. A home. A domicile. To be lived in. People such as my self want one near good schools with reasonably sane neighbors so we can raise our children in a healthy stable environment with friends that enjoy math and do homework (I went too far on that one). Does that sound anything like a financial instrument it shouldn’t if it does).

#53 Onemorething on 07.18.11 at 6:53 am

okay here goes. Garth the bitter reality for this dude is not bitter but sweet! Doesnt know it through 30 years of monetization and now compares his position with all of the other manipulated ones.

Bro, I’ve been out of RE for years now, doubling returns on various liquid investments. That’s double what my homes would have been valued today!

My rent (for a $3M USD valued property) is 35% of what it costs to own P+I+T and my landlord throws money at me for planting my tail there for 2 years.

Can you comprehend what Pappa Garth is shouting from the rooftops here???

Btw, retirement at 55 is a dream homeboy. My FIL retired from BC hydro on $5K/m rents in West Van and plays golf everyday, takes his trips each year but he had a whack of equity.

You dont! Get used to it! Make the best of it and YES, east coast does look like a great option (good call G!)

But the odds of you doing the wrong thing – buying – is about 95% isnt it! Whatever!

#54 GTA Girl on 07.18.11 at 7:04 am

Jake has been sucking the Koolaid straw of past London Life commercials.

#55 dd on 07.18.11 at 7:45 am

…Am I screwed as far as owning a 4 BDR House in Victoria….

Yes. Get over it and start saving for retirement.

#56 dd on 07.18.11 at 7:47 am

….So, carrying the house would take 129% of his income. No food. No gas. No cable TV or new clothes. No car…..

Hey, but other people will move to the island. And prices will go up. And I can then retire.

#57 Utopia on 07.18.11 at 8:42 am

#11 Kimi

“….but I do have one wonder: Are Utopias home-grown tomatoes better?”
————————————————-

You bet they are. Sweet and tender (just like me).

#58 BrianT on 07.18.11 at 8:46 am

#50Deta-I guess it is the Facebook thing-you actually used the word “I” 9 times in that paragraph about this guy.

#59 Amarillo on 07.18.11 at 8:53 am

#15 Kimi “…and before you know it the tomb of youth is closed and in the end, what do you chose… bankruptcy of purse or bankruptcy of life.” Kimi, what does this mean?

#60 In the Maritimes on 07.18.11 at 9:04 am

Rural New Brunswick can offer great bang for your real estate buck to retirees from Toronto, Vancouver, Victoria etc.

With the money saved on Real Estate you can head south for the worst of winter every year. Some winters are easy. Clean, crisp air. It makes a difference when you don’t have to go to work. This place is fantastic in the summer. Average house price in Moncton is around $150,000.

Arcade Fire is opening for the U2 concert in Moncton later this month so it is not like you’re way off in the boonies.

I moved from Victoria two years ago and am happy to be here. Victoria is great but you sure do have to tie up a lot of money in one asset if you want an actual house with a bit of land.

I think some people are afraid to retire. If you can stop and smell the roses and want to I say do it. New Brunswick might just be the place for you.

#61 Killer Chicken or Imploding Boomer? on 07.18.11 at 9:13 am

29 Truth – 51% minority – makes no sense – everybody is then a minority….

#62 Ratpick on 07.18.11 at 9:16 am

You know why I am likely to be one of those suckers who rushes in too early after the initial correction?

Because there are no decent or decently-priced rentals anywhere in the west end of Toronto, where I live with my family.

It’s so easy to SAY we should keep renting — but the cheap leases that would make renting a slam dunk? I ain’t seeing ‘em.

#63 Aussie Roy on 07.18.11 at 9:19 am

Aussie Update

So can what kind of house porn is currently on TV tell you where in the cycles we are?.

Get with the program.

Meanwhile Britain’s two most famous property experts, Phil Spencer and Kirstie Allsopp, who have hosted 15 series of Location, Location, Location, have reflected the times. Spencer’s own buying agency business went into administration and Allsopp’s latest TV forays have concentrated on nest-building rather than buying as an investment.

http://www.ft.com/cms/s/2/ffca2928-a7d2-11e0-a312-00144feabdc0.html#axzz1SSpD4uiV

So prices are falling in some of the best beach locations around Australia. Ah but everyone knows snowfield properties in Australia never fall, dont they?.

http://www.theage.com.au/business/property/snow-properties-on-the-skids-20110717-1hk4l.html

SELL SELL SELL says big snow field developer.

http://www.theage.com.au/business/property/schwartz-weathers-markets-big-chill-20110717-1hk4q.html

You silly renter scum, rents never go down – LOL.

http://news.domain.com.au/domain/real-estate-news/relief-as-rents-take-a-dip-20110716-1hj28.html

Aussie RBA cash overnight rate is 4.75% mortgages around 7.5%. Big bank can see the slowing retail sector and the stalled housing market but refuses to admit 51% of its assets (aussie mortgages) are at risk, or do they?.

http://www.smh.com.au/business/banks-cut-fixedrate-mortgages-20110718-1hl3l.html

#64 Utopia on 07.18.11 at 9:22 am

#55 Devore on 07.17.11 to #39 Utopia

“One thing you can be sure of, there will be plenty of time to find great deals, it’s gonna drag for years once it hits bottom, there’ll be no rocketing up”.
———————————————
That is exactly what I am thinking now too Devore. We are going to get a correction that runs over a few years time and it will just naturally meld into the demographic sell-off as the boomer’s cash out.

I really can’t imagine that immigration would hold the market up either as most immigrants tend to end up in just the dozen major cities in this country anyway.

What that suggests to me is that places like Vancouver and Toronto could actually bounce back fairly well after a correction but much of the rest of the country would see flat prices for years to come.

There is no hurry at all.

#65 fancy_pants on 07.18.11 at 9:28 am

something wrong when a speculator on Vancouver RE can make more in 4 years (tax free to boot) than I can make in a lifetime of work.

depressing almost.

as sure as there are winners on the way up, there will be losers on the way down. dangerous game that I wager a cup of coffee has reached its pinnacle (wouldn’t wager more as it is a crapshoot).

I am one of those pricks hoping for a US default (anything to increase % bank rate) b/c the low cost of $ is getting ridiculous IMO.

#66 Killer Chicken or Imploding Boomer? on 07.18.11 at 9:43 am

50 detalumis – ironic that your post was #50. Actually I know many 50 yr old “housewives”

#67 Deano on 07.18.11 at 9:48 am

#23, Toxicicosis. I appreciate the input, I understand that having my money locked in my house would suck, but if all of those things rise, would I not see an increase in rents as well?

We’re not worried about the price of gas…we both walk to work. We moved to Brantford because of that really, and we could buy here for more than 50% less than where we were living before (for a comparable neighbourhood).

I understand the dangers of an overall economic meltdown…if that happens I’m happy to live in a trailer. I was more concerned about real estate (yes, they tend to go together, but let’s pretend society isn’t ending in 2012).

#68 kimi on 07.18.11 at 9:59 am

#59 Amarillo. It means, in regards to this blog, that are you going to work all your life so you can keep up with the Jones, do what the herd does. Waste your life feeding the monster and then in the end have wasted that time because eg. you invested in a market that crashed.
Or are you going to think outside of the box, be original, and use your head and pursue some of your dreams. So when you get old, and your in a rocking chair … you can enjoy your life a second time (eg. the choices of your youth)another eg: (tomb of youth closed, but no regrets)

#69 kimi on 07.18.11 at 10:05 am

#57 Utopia … Sound like your growing the aphrodisiac kind. I’ll be right over.

#70 Live Under Your Means on 07.18.11 at 10:07 am

#22 nonplused on 07.17.11 at 10:24 pm

“Jake seems to have started his life a little late, despite having gotten full time employment long enough ago to be ready to retire. I can’t imagine having an 11 year old at 52.”

Hubby’s twin bro at 55 has a 7 YO!!. He finally married 11 years ago. Wife is now 47 & has an STB 19 YO from former marriage. BIL lived with someone for 18 yrs after she left her husband and 3 kids with ex. !!! She is 2 mos. younger than I. He finally kicked her out after he discovered she was stealing from their company. She did the books. Co. went under. She was your total ‘princess’. DH & I were pleased they split. She had the audacity after to want to visit us. No way. From what I know, she had to declare bankruptcy. Long story.

Few years prior, when co. seemed to be doing well & they were living the high life, they bought a $60K lot & had architectural plans drawn up. Very impressive. Their then current new home didn’t impress the Jones’ enough, I guess. For several years the lot sat vacant, but incurred high taxes. Finally sold it for considerably less than they paid.

He lives in the original mtg. free home. Has a well paying IT job with a good pension plan but will have to work until at least 65+ as they have no investments and still live beyond their means. Plus, AFAIK she’s been unemployed for the last 6+ mos – after earning 60-70K as a pharma rep (chemist). PIL’s abroad put money in accts for b’days, etc. but put most of BIL’s in their Savings acct. knowing that they cannot draw on their Savings outside the country.

“I find it interesting that he insists on retiring at 55 into $2800 a month. That ain’t much. From what I know of these government plans, you take a good discount to retire early. Working 5 more years might be the best paying five years of his life as he takes his pension from 60% up to 80% of final salary, and even better if there is a raise or 2 in there. ”

Eighty percent sounds too high to me. I thought it was 66 – 2/3rd with 35 yrs of service. I retired at 54 w/about the same in % of pension – Four restructurings in 5 yrs – never knowing if the 5th would see you out of a job. Plus, low morale & stupidity of spending decisions were at their highest. We considered ALL costs of working vs retiring and concluded I would not lose much. As DH is 9 yrs younger than I, the earliest he can take his pension is 2016 but it would be a small one as he would only have 18+ yrs of service, IIRC. If he continues to enjoy his job and his health is good, he likely will continue to work. Fortunately, our mtg. was paid off years ago. No debts, some investments (now w/Garth & his colleagues) & plan to max out our TFSA’s each year, etc. BTW, we have no children.

FIL told us when he retired from his Power Corp job at 55 he rec’d 80% pension. We were surprised. Plus, they & another BIL receieve a v. good discount, as former & current employees) on their power bill. PIL is now 81. MIL (STB 80) inherited big time from her mom when she died back in the 90’s. Grandparents hoarded their money, never helped out their daughter & family in tough times. PIL’s did otherwise. They continue to say they’ll have enough money if they have to go into a nursing home. Their home was turned over to their 3 sons to reduce inheritance taxes. If parents move out, their house automatically goes to their children by their country’s laws. However, none of the children would see them without.

Pardon my long winded response. Have always been a detail person. In my last several years on the job I worked on a pilot project using DMR’s Systems Development Methodology. Higher ups chose too large a project. I wrote highly detailed business specs for programmers to develop. Then trained users, supported & maintained Systems Engineering database. After spending $$$ millions on this pilot project they scrapped it. After another 2 similar projects (less $$$, but I had had enough and haven’t regretted it).

#71 Rocket Boy on 07.18.11 at 10:23 am

I kinda feel for Jake, he has this inner burning desire to own a home. I rented for many years and each month as I wrote my cheque to a landlord who did only one thing – pick up his cheque on due date. Of course there are pro’s and con’s to anything in life.

A house is an opportunity when everything aligns. I believe those who still have a mortgage, bought before the massive run-up (pre-2003) and are locking into historical low rates are winners. Those who have bought recently or are currently buying – good luck with that. If they used the 3X income rule, we wouldn’t have this insane run-up to start with. Home ownership is my little sanctuary – I don’t view the $$ – I see the benefits.

And a final note – lets cut Jake some slack, I am a avid sailer, its in my blood. I pump some nice coin into my sailboat that I am fully aware will never get back – but that doesn’t matter. I enjoy sailing, its one of life’s pleasures that I can never put a dollar value too. Not many understand my concept. They laugh at my yearly expenses, but its what it I get out of it – only those who share the same passion would fully understand.

Sail away Jake, sail away!

#72 Mr. Plow on 07.18.11 at 10:33 am

#53 Onemorething

When it comes to communicating, there is the written language and the spoken language.

They cannot be intertwined. i.e., you can’t write how you speak.

When you do that it makes no sense.

#73 Mr. Plow on 07.18.11 at 10:37 am

#65 fancy_pants

I agree with your comment on winners on the way up losers on the way down.

Like the lottery, you have millions of people chasing a payout, they all contribute to the few people who will actually win. But for those few to win, there has to be many that “lost”.

In the case of speculators who artificially inflate house prices, yes there are some who make out pretty good. But there are others who end up flat on their face.

I know both after the last run in good old Edmonton.

#74 Beach Girl on 07.18.11 at 10:38 am

I think Kimi is smart. I am on your page. Really, I am glad I am not married to Jake. If this is the level of intelligence of our Government officials. They should just lay them all off. And his wife should go to work, instead of being a house hamster.

#75 Abitibi Doug on 07.18.11 at 10:38 am

Garth said: Talked this weekend to a westside Van guy who bought a $700,000 house four years ago and just sold it for $2.6 million. “Everybody on the street says I’m a frigging idiot,” he told me. “Why would you sell now?, they ask, cuz it’s going to four mil.”

That tells me, beyond the shadow of a doubt, that he got out at an excellent time. Even if prices do go any higher, that’s a capital gain (tax free!) of 1.9 million minus selling costs. He won the lottery, and could retire easily with that kind of money.

That this sort of thing goes on is puzzling and counter to intuition. With prices like that I would have predicted a flood of listings months ago from people trying to cash in their lottery winnings. Maybe I am just lazy and don’t have good work ethics like most people seem to have. Perhaps I am far too materialistic and greedy and assume most people are also.

#76 Kevin on 07.18.11 at 10:40 am

50 years old and a total net worth of $100,000? Jake is dreaming. Retiring at 55 is not a right – it’s a luxury, and it’s one Jake can’t afford. Even if he already OWNED a house outright, with no mortgage at all, he will not be able to quit his job in 5 years. Throw housing costs back into the mix, and he’s downright delusional.

Watch for Jake in the “Letters to the Editor” in 10 years, opining about how Gen X should be paying more taxes to subsidize the retirement he “deserves.”

#77 Alexis on 07.18.11 at 10:44 am

Garth are these girls in the picture Russian?

#78 The InvestorsFriend on 07.18.11 at 10:53 am

DOWN WITH ABBREVIATIONS!!

Live under your means at number 70. Your post is full of abbreviations that that I don’t understand , PIL? DH?, STB, IIRC?

WTF, I mean What the F**K, This is idiotic, spell it out for easier reading!

I mean your post was brutally long, the abrreviations dod not help that way, they just make it hard to read.

#79 Jody on 07.18.11 at 10:57 am

Jake,

“Be a man!”

Rent!

What on earth do you need to own a home for? Say you buy, then live in it for 20 years, you end up selling it to pay for a place in a long term care home anyways, whats the point? Invest what you have, don’t piss it away on a downpayment to nowheresville. Buy some metal, buy some ETF’s, buy some bonds, buy some guns and ammo for the coming crash, but don’t buy a house, unless you are terminally ill and haven’t told anybody and have insurance that will pay for the house if you die. It’s not like insurance companies have always been upfront and honest and caring with us right?

#80 Deano on 07.18.11 at 11:11 am

#45 blase,

I was certainly glad to hear the response and particularly Garth’s take. A lot of my friends live in Dundas and pushed for me to live there. My house there would have run me 300 plus, probably more!

It’s funny, but in my neighbourhood, Dufferin, there are six houses that have sold in the last 2 years to people relocating from Toronto. They bought gorgeous 3-5000 sq. ft. homes for 400-600…I heard one sold his T.O. digs for 2 mil. Smart people, maybe Garth readers?

Brantford has it’s quirks, it was at one time one of the most important cities in Canada, but fell on hard times when the main industries left. It’s been clawing its way back up though, and the expansion of Laurier U in the downtown has no small role to play in that. I look forward to seeing the city reinvent itself further.

One last thing, an old sports teammate of mine recently bought a place in Vancouver for 850k. It looks identical to the little cottages you can buy here for 120-150 (move in ready…his was a freaking disaster). He makes about 110k together with his wife. That’s an 8 to 1ish ratio of price to income…my ratio here in Brantford is about 1.5 to 1. But hey, I don’t get to tell everyone on facebook that I just bought in Van….and you can’t put a price on that…

#81 Mister Obvious on 07.18.11 at 11:22 am

#13 Lisa

“…doesn’t matter you own or rent, you can’t take it with you so what does it really matter if you own or rent?”

Yep, it matters. The rental you can leave behind in a month or two. If the home should go underwater it will become a nasty ball and chain. Even if it doesn’t it could take a year to sell. Meantime, that job opportunity in Lloydminster could be toast.

#82 Mister Obvious on 07.18.11 at 11:34 am

#24 Alan

“Why don’t you embrace the asset as one of many different asset classes. Subject to the ups and downs of economies and the greed and fear of investor sentiment.”

Its hard for me to believe you know the first thing about Garth Turner’s investment advice having made a statement like the one above.

#83 Leon Llens on 07.18.11 at 11:36 am

“precision is impossible” is the fine print that really undermines the value of your existence. I can tell you with reasonable certainty that one day the world will come to an end. Please stop pretending to be the housing market God or even guru, when you’re really just stringing us along with your glib tongue and bawdy humour

See that door marked ‘Exit’? It’s unlocked. — Garth

#84 Peakoilist on 07.18.11 at 11:44 am

Garth, I really think that shack in Mirimichi is very nice..different.lots of land
If we sold our place here in Hamilton, we would be free and clear and have 80k cash to invest..it’s tempting
but then the winters are hellish.its 10 km from town and probably not a lot of good paying jobs in the area.

On the other hand you can buy houses here in the Hammer in the 139k range , but you wouldn’t want to live in those neighbourhoods.
We saw a home in northeast Hamilton last year, before we bought here in the west of Hamilton .
It was between King and Barton, if anyone if familiar. Listed for 199k, beautiful home. maybe 50-60yrs old. renovated to the hilt. new everything,fully finished lower level, backyard ingrd pool. the owners took pride in their property. We would have had a 30k mortgage.
But the area just sucked..every 3rd house had a sofa on the front porch..

#85 BrianT on 07.18.11 at 12:12 pm

#79Jody-100% of the public thinks they will end up in “long term care” even when they have personally viewed the high % of relatives and friends who never make it to “long term care” nirvana. I guess this comes from the mutual fund ads.

#86 Antinomia on 07.18.11 at 12:29 pm

#24 Alan, you feel sorry for those who listened to a free advice and “lost out on one of the best TAX FREE profitable capital gains…” etc.?
Nobody wants advice – only corroboration. Still do not confuse an opinion blog with a fortune telling service.

#87 jess on 07.18.11 at 12:50 pm

fair playing fields

California’s Governor to sign a law requiring internet retailers to collect the state’s 7.25% sales tax at the point of sale.

State and federal legislators exempted e-commerce from taxes in the 1990s.
In California, Amazon gets a wholly unproductive 7.25-9.25% (depending on which city or country you’re in) price advantage over competitors with physical stores in the state – which have to collect the sales tax even when it sells online. As Caldwell argues, it’s the tax exemption, not the technology, that most distinguishes Amazon from its rivals.”
===
….”release of a massive collection of ALEC-drafted and endorsed legislation obtained by the Wisconsin-based Center for Media and Democracy. The more than 800 bills and resolutions in the collection include proposals to disenfranchise thousands of voters, privatize public schools, and protect tobacco and pharmaceutical companies from lawsuits stemming from the use of their products.

“By claiming to be a charity and calling participating legislators `members,’ ALEC attempts to evade disclosure of its lobbying, allows corporate members to deduct their payments as charitable contributions rather than non-deductible lobbying expenses, and does an end-run around state ethics laws intended to restrict the ability of businesses to buy access to legislators in order to promote their policy agendas,” the Common Cause letter said. “The IRS should stop allowing the continuation of this charade.”

#88 randman on 07.18.11 at 12:55 pm

LOL!

From JHK

” Europe has run the money string to its bitter end and now it just remains to be seen how each country blows up and where the dust settles. Greece and Portugal may just shrug and retire on an economy based on goat-cheese and olives. Ireland will get drunk and pass out for at least a century. Spain sinks back into an age-old catatonic daze, having gone broke spectacularly once before. Italy strings up Mr. Berlusconi on a lamp-post and breaks up into 112 warring city-states. France elects DSK, whose first act is to declare war on the City of New York. Religious wars leave England in embers. And Germany becomes the world’s first “green” police state.

Europe has run the money string to its bitter end and now it just remains to be seen how each country blows up and where the dust settles. Greece and Portugal may just shrug and retire on an economy based on goat-cheese and olives. Ireland will get drunk and pass out for at least a century. Spain sinks back into an age-old catatonic daze, having gone broke spectacularly once before. Italy strings up Mr. Berlusconi on a lamp-post and breaks up into 112 warring city-states. France elects DSK, whose first act is to declare war on the City of New York. Religious wars leave England in embers. And Germany becomes the world’s first “green” police state.

Europe has run the money string to its bitter end and now it just remains to be seen how each country blows up and where the dust settles. Greece and Portugal may just shrug and retire on an economy based on goat-cheese and olives. Ireland will get drunk and pass out for at least a century. Spain sinks back into an age-old catatonic daze, having gone broke spectacularly once before. Italy strings up Mr. Berlusconi on a lamp-post and breaks up into 112 warring city-states. France elects DSK, whose first act is to declare war on the City of New York. Religious wars leave England in embers. And Germany becomes the world’s first “green” police state.

http://www.kunstler.com

#89 Hoof - Hearted on 07.18.11 at 1:03 pm

Entitlements under siege in our new post-recession reality
Ray Turchansky, Freelance
Published: Friday, July 08

http://www2.canada.com/edmontonjournal/news/business/story.html?id=33470a9c-d4bc-49ec-b79e-a8448dd590f5&p=2

In the United States, judges in Colorado and Minnesota dismissed court challenges by retired public workers whose pensions were cut, causing other states to consider following suit.

More and more workers are finding that if they want salary increases, or social benefits that are enhanced or just maintained, the trade-off will likely be lost jobs.

For seven years now, Jack Dean of the California Public Policy Centre has been sending 1,400 journalists a daily newsletter, Pension Tsunami, with links to pension news stories around the U.S. Among recent headlines: “San Jose Forced to Lay Off 66 Police Officers Due to Rising Pension Costs,” and “Milwaukee Teachers Oppose Contributing 5.8% to their Pensions to Save 200 Jobs.”

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

This is where one can see solidarity exposed….

It’s been my experience that when the going gets tough…..the senior members will throw the junior ones to the wolves .

#90 Government Dude on 07.18.11 at 1:10 pm

Squidly77: what is your fixation with realtors?
Did you fail your 5 week RE course?
Did you date a realtor & she dumped you?

#91 Hoof - Hearted on 07.18.11 at 1:14 pm

Entitlements under siege in our new post-recession reality

http://www.edmontonjournal.com/business/Entitlements%20under%20siege%20post%20recession%20reality/5070279/story.html

We’ve seen riots over reduced social benefits and a clampdown on tax evasion in Greece, strikes at Air Canada over things like twotiered pension plans and at Canada Post over accumulating sick days, plus bills passed by a handful of American states including New York requiring public workers to pay significantly more of their health-care premiums.

Causes ranging from an underground economy in Greece to an American push to get people into houses they eventually couldn’t afford contributed to a global recession that is having a stunning effect on lifestyles and how people will be compensated for work in the future.

A pension is no longer a promise, eyeglasses won’t be covered by your medical insurance if they already aren’t, tuition fees will rise and some day you may have to live off the proceeds from the sale of your house.

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

I have heard this re: if one has assets…..such as a home…that on emay be obligated to sell it to cover future health care costs.

So that so called nest egg may be only short term

#92 Not 1st on 07.18.11 at 1:18 pm

The government will always try to inflate the housing sector. Why, because only a fraction of people have enough savvy to actually save money or invest in equities, but 95% dream of owning their own home and if the prices can stay stable or gently rising, the wealth effect translates over to the greater economy. If half the population became renters overnight, they sure as hell wouldn’t become savers or investors and the larger economy would tank for sure.

The bernake in the U.S. knows this, but doesn’t know how to do it. He wants to inflate housing by giving banks more money to lend, but those institutions just help on to the money, propped up their balance sheets and greased the wall street machine. Thats why there is no recovery there in housing.

#93 SCalgary on 07.18.11 at 1:24 pm

#24 Alan ,

If you exclude Vancouver and Toronto, Garth is bang on his predictions. Take Calgary for example…market is stagnent for the past 3 years after a reduction of around 15%. Where is the question of TAX FREE profit? I am thankful that I took Garth’s advice and didnt buy a house yet… I like the way of expressing your opinion (contrary to #83)

#83 Leon whatever,

I treat Garth more than a predictor for real estate. His views on Real Estate is part of a lot of other suggestions that he passes on… Why Garth speaks more about real estate? Because thats where most of the idiots are trapped now…

I am sure you are greedy realtor who is pissed off with Garth’s propaganda with valid points that nullifies your lies…

Good luck…

#94 City Slicker on 07.18.11 at 1:32 pm

Garth is your motto still – don’t bet against the U.S?
Seems things are getting worse and gold’s rise sees no end in sight.

#95 Not 1st on 07.18.11 at 1:32 pm

But like my dad says, a home is really just a place to sleep at night and watch a few hours of TV. To him, he was out and about every day doing things so granite counters and stainless steel appliances were meaningless. Even if you raise a family, how many hours a day are your kids hanging around the place. Most are bored at home anyway.

#96 timo on 07.18.11 at 1:32 pm

vancouver r/e investment quiz

sorry if this has been posted before but it made me actually laugh out loud. Prices are just insane in Hongcouver.

#97 Harlee on 07.18.11 at 1:54 pm

Utopia & Kimi : If you two are going to examine each others… tomatoes,then spare us….and get a room ! (or a greenhouse) :-)

#98 timo on 07.18.11 at 1:56 pm

something is lurking in the night

never been a gold or silver bug but there are events that are flying past my inbox that tell me that things are getting ugly fast over in Europe. The bond market is spooked and this could spill over. Watch out people because it seems that some think the iceburg has been sighted.

#99 The InvestorsFriend on 07.18.11 at 2:16 pm

Antinomia at 86 said:

Nobody wants advice – only corroboration.

That is so true, 99% of the time we are looking for others to confirm that what we did was smart or that what we think is correct.

We read blogs and articles that support our point of view. We ignore what does not.

We get angry at people who disagree.

It’s human nature.

#100 Brad in Cowtown on 07.18.11 at 2:29 pm

“#5 squidly77 on 07.17.11 at 9:22 pm
1.9 Million profit in 4 years, sounds good, sounds really good but it just puts an explanation mark on the fact that the Vancouver housing market is nothing but a Casino…”

Really, squid? An “explanation” mark?
No wonder everyone makes fun of you – you make it too easy for them!

#101 Mean Gene on 07.18.11 at 2:34 pm

Jake in no position to stop working at 55, maybe leave his public service job with his superannuation, making sure he had some other gainful employment setup beforehand.

Time to look at going back to school and getting some training for his second career… hocking real estate doesn’t count

As for owning, he may as well forget about Victoria for a while.

#102 spaceman on 07.18.11 at 2:44 pm

Jake and I are a lot alike, he is in a bind, but I think if he is careful, and doesn’t screw up, he may retire some day. Just not at 55. Who wants to retire at 55 anyway.

but the topic is buying, well if he ever buys, it will have to something a lot smaller. And not in a major center such as Victoria, and at the bottom of the market.

#103 squidly77 on 07.18.11 at 2:47 pm

Really, squid? An “explanation” mark?
No wonder everyone makes fun of you – you make it too easy for them!

Yes I can be spelling and grammar challenged. LOL

#104 bill on 07.18.11 at 2:49 pm

”Garth are these girls in the picture Russian?”

-those are the class winners of the chicken racers club awards [ and dinner] at the polka festival in smokey creek
shoulda been there.. parr-tee

#105 BrianT on 07.18.11 at 2:52 pm

#95Not-Really? That is all a house is? Was your Dad a chick?

#106 BrianT on 07.18.11 at 2:55 pm

#94City-Long and medium term the US economy is a huge risk for Canadians. We are not nearly as removed from that mess as people believe.

#107 Not 1st on 07.18.11 at 2:57 pm

Garth, still thinking a bet for U.S. renaissance it a good idea? You are ignoring the facts on the ground.

U.S. banking system is insolvent and will require another tax payer funded bailout, which only leads to further indebtness of the sovereign U.S. state and loss of value on the dollar and eventual default.

And the U.S.A. has massive exposure to the euro crash as well with the fed just borrowing the ECB trillions of dollars a few years ago. Many U.S. banks also hold debt of the PIIGS and France & Germany as well. Good thing Canadian banks shed that toxic crap a few years ago.

“U.S. banking system is insolvent.” Statements like that make whatever comes afterward irrelevant. Do you even know what ‘insolvent’ means? — Garth

#108 Hashnugs Inthebong on 07.18.11 at 2:57 pm

Am I screwed as well? I make about 70K per year, try to save 10% of that for retirement. Rent for less then 1K p/m, and spend my money on golf, prostitutes and weed. What should I do?

#109 keep on keepin' on brother! on 07.18.11 at 3:06 pm

hey there Hashnugs Inthebong…..sounds like you’ve hit on the perfect formula for happiness and success.

Rock on!

#110 TS on 07.18.11 at 3:25 pm

To #92 Not 1st on 07.18.11 at 1:18 pm
The government will always try to inflate the housing sector.
Between the Federal, Provincial and municipal governments they get like 25% taxes in New Homes. They also get economy. Now 20% between on site and all that Home Depot crap. Made up for some of the manufacturing lost. Governments do not care 25 or 30 years down the road. Hell most of them only care till the next election.

#111 Mr Buyer on 07.18.11 at 3:29 pm

#50 detalumis … my wife takes care of our kids. In fact I am entirely dependent upon her to do so. I think she has made the right choice. Some women here in Japan put their 2 month old babies into daycare so they can return to work. This is truly sad. Another aquaintance is a doctor. She returned to work 6 months after each of her first two children but now thinks it is a mistake for her to return to work after a year off with the 3rd child. She feels her children need her and she has never been closer to them (not to mention she seems to be as busy as hell taking care of 3 young children). Many mothers stay home with their children here in Japan. I mentioned a few posts ago that my wife has to take a course this summer vacation along with my daughter in grade 1 on how to better drill my daughter in math. I have no problem staying at home with my kids and raising them but the wife is not interested in having a stay at home husband for some reason (I am not joking, I would like to homeschool them). I mean why have children otherwise. Are they some sort of fashion accessory…

#112 VICTORIA TEA PARTY on 07.18.11 at 3:34 pm

#88 Randman

AND JHK ALSO WROTE:

“…While there’s a good chance the US debt ceiling will be extended, it seems to me that meanwhile we have crossed an invisible line into a place where untoward things happen.”

The unravelling euro currency and the staged default in the US, which I believe WILL happen.

THE BACK STORIES…MY TAKE ONLY…

The numerous behind-the-scenes Euro-problem meeting and greeting sessions, in northern Europe, bespeak an inability of these fine-suited men and women attending these meetings to actually decide on ANY course of action.

They were never trained to do so!

Their raison d’etre was to screw hotel maids (the men) and have endless fine-dining experiences (the chicks), interspersed with petit-bourgeois pointless discussions on why bugs fly and whether pigs have wings!

None of these over-paid zombie drones could have actually comprehended the WHY of the tsunami of debt now drowning the Euro-periphery’s massage parlours and deck bunnies and soon-to-swamp the continents main German-made engine room! Titanic problem this, eh wot?

The euro currency has a darkling future right now thanks to all of that indecision. A “solution” will have to be imposed by traditional, if brutal, market forces, but I’m not sure exactly when.

OVER IN THE US…

The REAL reason why I think there will be NO RESOLUTION to the debt-ceiling problem lies in the upcoming 2012 US election season.

Wall Street, and the rest of the so-called “elites”, were not pleased that they supported Mr. Obama in 2009 because of the outcome so far: heavy medicare and other social programs costs as well as higher taxation threats and debts, that did not play into their wishes.

What “they” wanted was more wealth, brought about by stuffing the demographically-challenged middle class remnants down the bung-hole, once and for all, through lower corporate and overseas taxes, decrepit infrastructure and service cuts.

So, no middle class means no unnecessary social expenditures thus freeing up investment capital for overseas markets such as: India, China, South America and the Middle East for the real profits. And that is exactly what they’re doing.

But the current US administration is making this effort a little more trying than they were planning.

SO…

The elites’ Republican lapdog congressmen and senators are carrying out new marching orders: Force debt-ceiling failure on the Dems and use that as the hammer to defeat them at the next election season.

I expect that “those in charge” are ready for some market tumble, but a few weeks after that “failure” the markets will be up and running again thanks to QE 3.

And that’s pretty much that! The elites are SO SMART!

Or NOT.

#113 Devore on 07.18.11 at 3:35 pm

#92 Not 1st

The government will always try to inflate the housing sector. Why, because only a fraction of people have enough savvy to actually save money or invest in equities, but 95% dream of owning their own home and if the prices can stay stable or gently rising, the wealth effect translates over to the greater economy.

These goals are not consistent. You can’t inflate housing (or anything) artificially, and have stable prices. Has the last century of tinkering with the economy, interest rates and credit not taught people anything yet? “Gently rising prices” is a nice fantasy, and works great on paper. In the real world, not so much.

Also, the “wealth effect” arises purely from credit. A house you live in, as an asset, does not give you any income. If you have equity, the only way to extract it is to borrow money, because you cannot sell a portion of your house to raise money.

While you have the money borrowed from your house, you feel “wealthy” and very prosperous. Times are good. Then the money runs out, but debt remains, and you are less wealthy. Because wealth is about your purchasing power. Consumer debt diminishes that. If you borrow money to feel wealthy, ie, to spend, you will end up poorer.

#114 Dontcallmeshirley on 07.18.11 at 3:54 pm

Reported on Canadianmortgagetrends.com:

“Scotia can now approve salaried borrowers on liquid net worth w/ no income verification. 75% LTV max; TDS waived; 680+ Beacon”

This is an avenue for landlords with a portfolio of houses to buy a even more real estate without proving income.

Face it fellas, the game is rigged, the floor is tilted.

#115 jas on 07.18.11 at 4:01 pm

My friend, who builds in Victoria told me today that Victoria market is dead.
Many of his clients have dropped the idea of getting their houses built.

#116 Van Isle Renter on 07.18.11 at 4:43 pm

Looked at an open house yesterday here on the Island. Nice place, 1 block from the ocean. Stunning views of the water and mountains. $200K over what the local market would bear and about $100k what an Albertan might pay (hey, nobody says Albertans are smart).

Realtor told me that the price on the sheet ($100K above the present listing price) was actually left on from “a different house” Yeah… right… So now the owner is looking at $200K less (-25%) than original asking when they tried to sell it a year ago. And it’s been on the market for several months.

The realtor said ” Hey, but it’s different here.”

He’s right. The market is crappier here than in other places.

#117 mouthagape on 07.18.11 at 4:59 pm

113 Dontcallmeshirleywrote:

“Scotia can now approve salaried borrowers on liquid net worth w/ no income verification. 75% LTV max; TDS waived; 680+ Beacon.”

Yeah genius; the floor is tilted in favour of those who are employed, have a sizeable proveable liquid net worth, at least a 25% down payment and a sterling credit history, duh!

#118 Mr. Plow on 07.18.11 at 5:03 pm

Why do dissenters on here get labeled “greedy realtors”?

Can someone not disagree without having an agenda?

#119 mouthagape on 07.18.11 at 5:12 pm

#112 Devore:

Consumer debt diminishes nothing, unless you fail to pay it back. Nothing of any substance was ever accomplished financially without first borrowing money. That’s how fortunes were/are made.

Being overly debt-averse is self-defeating.

#120 Not 1st on 07.18.11 at 5:17 pm

“U.S. banking system is insolvent.” Statements like that make whatever comes afterward irrelevant. Do you even know what ‘insolvent’ means? — Garth

____

“Insolvent”, as in not having enough current working capital and long term financing ability to fund daily operations, thus requiring massive amount of external funds to return the organization to normal business, or face bankruptcy.

Just what happened in 2008. Where did TARP go? B-A-N-K-S

And just like Bank Of America needs now.

http://www.businessinsider.com/bofa-needs-to-build-50-billion-cushion-for-housing-losses-stock-tanks-2011-7

Then you’re wrong. — Garth

#121 The InvestorsFriend on 07.18.11 at 5:25 pm

113 Dontcallmeshirleywrote:

“Scotia can now approve salaried borrowers on liquid net worth w/ no income verification. 75% LTV max; TDS waived; 680+ Beacon.”

What possible problem do you have with a privately owned bank lending out money like this? With 75% Loan to Value there is likley no CMHC insurance. The bank is taking a risk here.

It’s called the free market.

#122 Devore on 07.18.11 at 5:37 pm

#116 Van Isle Renter

He’s right. The market is crappier here than in other places.

Victoria is a funny place these days. It’s now impossible to hide the market is headed in the toilet. Not that VREB don’t try. In nearly all areas of Victoria you can get great deals right now. In condos and townhouses, you have your pick, and your offer will be the only one, guaranteed. Large majority are selling below assessed. And yet, sales are dismal. No one is buying. Not Albertans. Not Americans. Not locals.

Only problem is listings are filled with crappy overpriced houses. Since at least 2010, buyers continue getting much more house for their money, ie, defacto price drops, even if they are not reflected in average sales prices, a broken metric today reflecting merely the availability of credit. Real prices have been falling in Victoria for a year. Certainly, with such a small market and volumes so low, any aggregate metric is worthless, too much noise.

Flippes are already jettisoning, regular people will catch on soon enough and lower their expectations. Asking prices will continue to fall, and will keep falling. Where are all these desperate buyers waiting in the wings?

#123 not asian on 07.18.11 at 5:39 pm

Listing on the MLS – 1142 West 58th

Listed for $1.998 Sold for $2.708 July 14th
Small Bungalow on a 9317 sq ft lot. This was lot value.

Owner paid $580,000 in 2002. Won the Vancouver House Lottery in 2011 (less than 9 yrs.) I’m starting to worship the words of BPOE.
We all know that real estate goes in cycles, but it has proven to be the best tax free investment around.

Not in Kelowna, Hamilton, Calgary, Vernon, Halifax, Edmonton, Penticton, London, Abbotsford, Windsor, Langley, Kingston… and not for those in westside Van or 416 who fail to cash in. — Garth

#124 Devore on 07.18.11 at 5:41 pm

#119 mouthagape

Consumer debt diminishes nothing, unless you fail to pay it back. Nothing of any substance was ever accomplished financially without first borrowing money. That’s how fortunes were/are made.

Consumer debt produces nothing. Once you are done consuming, all you have left is debt service, which diminishes your disposable income, and thus your standard of living, a key metric of wealth. Debt is merely a claim on future income. If your debt increases your income sufficiently to repay it, great, we call that an investment. If your debt buys a trip to Hawaii and a new truck, not so much.

#125 TurnerNation on 07.18.11 at 5:47 pm

Prepare for assimilation.

National Bank Financial Group (TSX:NA) has completed its acquisition of Wellington West Holdings Inc., the bank has announced.

Under the transaction, which was announced in May, Wellington West and its subsidiaries are now wholly owned by National Bank.

“The transaction received the support of over 99% of all Wellington shareholders, excluding shares owned by National Bank Financial Group, and Wellington investment advisors representing approximately 99% of retail client assets managed by Wellington have endorsed the new relationship by signing new employment agreements with National Bank Financial Group,” said Luc Paiement, executive vice president of wealth management at National Bank Financial Group and co-president and co-CEO of National Bank Financial. “We are delighted with the enthusiastic response we have received.”

With the addition of the Wellington advisors, National Bank Financial Wealth Management now has more than $67 billion in assets under administration served by about 1,000 advisors in over 130 branches across Canada.

Wellington West’s wealth management and financial services businesses will initially continue under that brand, but will be folded into the National Bank Wealth Management brand in the coming months.

“We welcome Wellington West’s clients, investment advisors and professional staff to the National Bank family,” added Paiement.

The Wellington West Capital Markets group has also been integrated into National Bank Financial Markets, where it will provide additional depth and talent in areas such as oil and gas, mining and agribusiness.

IE

#126 piehole on 07.18.11 at 5:55 pm

Good idea Garth , Jake should move to New Brunswick (the picture province ) and that house would be waterfront and without views of clearcut.

#127 TurnerNation on 07.18.11 at 6:00 pm

Foreigners — mainly Americans but also increasingly British and Asian investors — more than doubled their investment in Canadian bonds in May from April, Statistics Canada said on Monday.

This helped boost overall securities purchases to their highest level in a year at C$15.44 billion ($16.08 billion), compared with C$8.52 billion in April. In May last year, foreign purchases of bonds, stocks and short-term money market paper reached C$22.88 billion.”

“The interest in Canadian dollar-denominated bonds is not new, with foreigners investing record amounts in the market last year, but it appears to be gaining even more momentum, said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets.

“It’s gained speed since May with the worries of European sovereign debt as well as U.S. debt ceiling wrangling, but really this has been going on since 2008,” he said.”

“It’s hard to imagine what’s a risk-free rate, people are now asking around the world. Canada is seen as having stress-tested the financial system through the crisis and now on the debt side of things,” he said.

Canada’s exposure to peripheral Europe is minimal, and largely indirect through U.S. banks. Its bond market is about three times as liquid as that of Australia, also a tripe-A rated country outside Europe.

Net new bond issues by the Canadian government reached a two-year high in May and long-term interest rates were down 19 basis points, according to Statscan

http://ca.finance.yahoo.com/news/Safe-Canadian-debt-market-reuters-2937498865.html

#128 Live Under Your Means on 07.18.11 at 6:01 pm

#78 The InvestorsFriend on 07.18.11 at 10:53 am
DOWN WITH ABBREVIATIONS!!

Live under your means at number 70. Your post is full of abbreviations that that I don’t understand , PIL? DH?, STB, IIRC?

WTF, I mean What the F**K, This is idiotic, spell it out for easier reading!

I mean your post was brutally long, the abrreviations dod not help that way, they just make it hard to read.

…………….

Sorry InvestorsFriend – I believe I apologized for my long post – if I did not, I do now.

PIL – parents in law, DH – dear hubby STB – ? IIRC = if I recall correctly. BTW (by the way) these terms have been used for at least the last 10+ years on the net.

#129 Devore on 07.18.11 at 6:16 pm

Here is Vancouver, being the best place on earth again.

http://www.vancouversun.com/business/Toronto+strongest+economy+among+Canadian+cities+Vancouver/5120324/story.html

Toronto has the strongest metropolitan economic activity of any major city in Canada during the first quarter of 2011, while employment-related numbers pulled Vancouver down to a 7th-place finish, according to a CIBC report.

But a big portion of Vancouver’s job gains were of the part-time variety, and overall job growth numbers were mediocre among the field of municipalities, bringing down the city’s overall placement in the rankings.

Oh wait… But but… the mountains! /lipquiver

#130 VICTORIA TEA PARTY on 07.18.11 at 6:20 pm

TURBO-DUMB NATION

Watching this Casey Anthony madness being force-fed upon unwitting nitwits is a classic case of potential-to-latent mob violence that even the trogs during the French Revolution could only ever dream about. They didn’t have TV back then!

Egged on by the Turbo-Dumb platoons of TV anchors, anchorettes and limo-loads of kleptomanical uneducated “psychologists”, and other blithering idiots, they scream and blather all day and night, looking for something “meaningful” in the outcome of this court case for their undead lives.

Their target audience, on this road to cultural oblivion is, of course, the Great American Lumpen trolls, near-catatonic masses, all of whom are in dire need of more “free” bread and circuses, they’re so broke and screwed up.

Messed up by joblessness, hopelessness and nutritional advice from that ape-like star of Diners, Drive-ins and Dives, this group of crazies represents a clear target for the Turbo-Dumb Generation of journalism grads! It’s all about the money, natch.

AND TO WHAT END?

Nancy Grace, easily the most hysterical human being ever to “grace” the tube is beyond all redemption, but she draws ‘em in and fleeces their brains and wallets. All in a day’s work.

SO…

What can we expect from this loathsome creature next? Picking up a little more audience “share” in a hardware store while she looks for a length of good, stout rope? Sure why not?

“We’re havin’ a hangin’ outside the courthouse, Freddy,” she’ll exclaim. “The first 50 people on hand get free passes to the next Dr. Oz Show! Justice for Caylee!”

Empire deaththroes take many strange forms, don’t they?

MEANWHILE…

…over in the dismal digs of Murdochville, death and exclamation ALSO stalk the streets looking for a few drawings and quarterings no doubt.

Who’ll pull the first leg first? The PM? Or maybe a Royal? Hello Kate! OR, what about a lottery for Mr. and Mrs. Great Britain to do the honours? The prize, a week’s trip to street riots in Athens. Bring your own clubs!

And who’ll go first into the maw of madness to be smothered by the wrath of the sodden, sullen, British masses? Rupert or that redheaded nightmare of a newshen?

Nancy, Rupert, and all the rest.

The news media, for so very, very long, has had no honour.

Turbo-Dumb indeed: today they’re just thieves, by the denload. Consciences having ridden out of Dodge, they are left, like their “fans”, morally catatonic and ripe for the plucking by the other force out there. Karma, it’s called. But, it’s STILL all about the money!

WHEW! NOW BACK TO REALITY! I SAY…

Casey Anthony for President in ’12! With Sarah Palin her running mate!

Now that’ll do it, eh, Nancy baby? And YOU can be the new janitor at the FBI!

#131 mouthagape on 07.18.11 at 6:32 pm

#124 Devore:

You tend to assume that those who borrow are wasteful spendthrifts. No doubt there are some who fit that category.

There are others who borrow to send themselves or their children to university, make needed repairs / upgrades to their homes, invest in or expand their businesses etc. etc.

But I suppose it’s easier to rag on the stupid ones.

P.S. There is nothing inherently wrong with borrowing money for a trip to Hawaii or a new truck, as long as it is repaid, as the vast majority of Canadians diligently do.

Credit card defaults are less than 5% in Canada, while residential mortgage defaults are less than 0.5%, and have been for many years. Even in the worst economic downturn in the past 25 years (1989-1994), mortgage defaults were less than 2%.

The concept that Canadians are loading up on credit and not paying it back, or somehow won’t be able to, is simply not supported by the facts. Of course total consumer credit has risen over the years – so has the population of Canada.

Fear-mongering and hyperbole are so unbecoming, yet so prevalent.

#132 BrianT on 07.18.11 at 6:39 pm

This is the financial system of a first world economy? http://finance.yahoo.com/news/AP-Exclusive-Mortgage-apf-3239330433.html?x=0&sec=topStories&pos=main&asset=&ccode=

#133 Debt's Dark Embrace on 07.18.11 at 6:49 pm

#108 Hashnugs Inthebong on 07.18.11 at 2:57 pm
Am I screwed as well? I make about 70K per year, try to save 10% of that for retirement. Rent for less then 1K p/m, and spend my money on golf, prostitutes and weed. What should I do?
………………………………………………………………………….
Holiday Hotel in Cebu City. $34 Can. per night,reduced rate for long stay, has a pool, gym, and spa, Cebu Country Club 5 minutes away for golf, the sun is warm, the beer is cold, and the girls are very friendly………..

#134 Onemorething on 07.18.11 at 6:51 pm

Mr. Plow – sometimes it just sounds better that way!

Thanks for being a moderator btw!

#135 No Fun Vancouver on 07.18.11 at 6:52 pm

Here is a funny real estate agent spoof, British humour not sure all will like

http://youtu.be/zem7cU85CDA

#136 A New Brunswicker on 07.18.11 at 6:56 pm

Okay, so I’ve been a lurker here for months and really enjoy reading this blog and the comments. I just felt compelled to post because I nearly fell out of my chair laughing when I clicked on the link for the house in NB. I know exactly where that house is and have driven by it before. It’s about 20-25 minutes outside of the “city” of Miramichi where I reside. It has been for sale for a very long time for obvious reasons. LOL!

I must say in NB’s defence that is the only house that I’ve seen of that kind around these parts! Thank goodness!

You can actually get a really decent home anywhere from 100-200K in these parts. For $600,000 you get this home. I shudder at what it would go for in Vancouver!

http://www.alliedrealty.nb.ca/listings/Details.aspx?l=3115

Or for half the price, this home:

http://www.alliedrealty.nb.ca/listings/Details.aspx?l=1891

Or this for under $200,000:
http://remaxmiramichi.com/listing/681543/896-walden-st/

Definitely affordable here if you are looking for a slower pace in life and enjoy all 4 seasons!

#137 TurnerNation on 07.18.11 at 7:05 pm

Ben is a whiner! Never heard of him until recently, never will again I hope.

#138 Tim on 07.18.11 at 7:44 pm

I said at 34$ an ounce that silver weak hands were shaken out, I was mocked, but here we are back at 40 an ounce, so basically I was right.

#139 Devore on 07.18.11 at 7:55 pm

#131 mouthagape

You tend to assume that those who borrow are wasteful spendthrifts. No doubt there are some who fit that category.

I assume nothing. Read more carefully.

Fear-mongering and hyperbole are so unbecoming, yet so prevalent.

No fear mongering, and zero hyperbole here.

The initial post and my comment were on consumer debt and the “wealth effect” (ie borrowing from your house for consumer spending). It has nothing to do with paying it back, or being able to carry it. As relating to wealth, interest-bearing borrowing to fuel consumer spending is wealth destroying to the borrower (and to society, if it is a net borrower), no matter how you paint it. You won’t get wealthy borrowing money to buy stuff. Thus, the “wealth effct” is fake and transitory.

Feel free to continue the conversation.

#140 Soylent Green is People on 07.18.11 at 8:01 pm

Rent ♥ Renting is the new financially smart BLACK ♥ Rent ♥ Renting is the new financially smart BLACK ♥ Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥Rent ♥ Renting is the new financially smart BLACK ♥

You are one strange puppy. — Garth

#141 stage1dave on 07.18.11 at 8:02 pm

I was thinking about my “Freedom 95″ plan reading this…& then realizing that I NEVER plan to retire.

(Unless it’s one of my cars…hahaha)

The thought of not working has never really occurred to me, but it took me several years to figure out why. I really enjoy what I do, & most of the people I work with and for. I also enjoy the freedom; for instance today was a write-off thanx to traffic & other tradesmen in the shop, so the GF & I went Dollar Store-ing.

I used to wonder when I was young how people could stick with a job they hated, work with people they couldn’t stand, or stay in the employ of a company they had no respect for. (I figured that one out as well)

For people like me who don’t like a whole bunch of structure, (an important qualifier) staying away from long-term unmanageable debt has been a lifesaver. (I’ve got no kids, either; another important qualifier) I’ve owned a couple houses in the 90’s, but the mortgage payment on either could be made on 2 days billing. Good luck with that in THIS market!

Buying in this market would put a big dent in our lifestyle by having to toil 24/7 to make an outlandish payment…all I’ve got to worry about right now is that power bill I didn’t pay last month. THAT I can handle…

Artist-type dudes & dudettes everywhere should realize early that monetary motivation is extremely destructive to the creative spirit. My philosophical thought for the day…rent…& paint.

(I will now make up for my selfishly-spent afternoon by painting a hotrod tonite; it’s raining here so that’ll keep the dust down.)

And I’ll throw on some Motorhead, perhaps “Die with your boots on”

And ponder what in hell I would do if I “retired” at 55…geez, there’s only so many Law & Order reruns, ya know!

#142 AG Sage on 07.18.11 at 8:07 pm

>#10 Deano on 07.17.11 at 9:35 pm
>Question. I live in Brantford. I have a great job and so does my wife. We bought this year for 200k in the nicest neighbourhood in town.

What did similar houses sell for in 2004/2005 in Brantford, in that neighborhood? Time traveling is one way of scoping out what kind of bubble territory you are in. If you are in any at all.

#143 AG Sage on 07.18.11 at 8:14 pm

#121 The InvestorsFriend on 07.18.11 at 5:25 pm
113 Dontcallmeshirleywrote:

>What possible problem do you have with a privately owned bank lending out money like this? With 75% Loan to Value there is likley no CMHC insurance. The bank is taking a risk here.

>It’s called the free market.

It’s all fun and games until they play Systemic Risk Blackmail with the government and suck down a huge bailout when it all goes south. If there is absolutely zero chance of that, then more power to them. But are you SURE it’s zero?

#144 TurnerNation on 07.18.11 at 8:27 pm

Someone is using low rates for USA investments!

CHARTWELL TO ACQUIRE REMAINING 50% INTEREST IN 15-PROPERTY PORTFOLIO IN THE U.S.

Chartwell Seniors Housing Real Estate Investment Trust has entered into an agreement to acquire 50 per cent of a portfolio of primarily independent supportive living seniors communities in the United States from ING Real Estate Community Living Group. The portfolio consists of 15 communities (2,947 suites) located across nine U.S. states. Occupancy at the properties was approximately 86% at June 30, 2011. The purchase price for the 50% interest will be approximately $169.0 million, net of a debt mark-to-market adjustment of $2.5 million. As part of the transaction, Chartwell will assume debt with an outstanding balance of $135.8 million as of June 30, 2011, bearing a weighted average interest rate of 6.27% with a weighted average term to maturity of 4.5 years. The balance of the purchase price, subject to working capital adjustments, will be paid in cash utilizing Chartwell’s credit facility. Closing of the transaction, subject to regulatory and lenders’ approvals, is expected by October 2011, after which Chartwell will own 100% of these properties.

Chartwell also renewed its operating credit facility for an additional 364-day term expiring on June 24, 2012. The credit facility has been increased to $85 million and the amounts outstanding will bear interest at prime plus 1.65% or bankers’ acceptance rate plus 2.65%.

#145 Violet on 07.18.11 at 8:39 pm

Jake’s kids are in school all day, so there no real reason his wife can’t get a job unless she’s got health issues he failed to mention.

The reality is that Jake hasn’t saved enough to retire by the age of 55, even if he continues renting. His kids are still really young, and his wife is lazy or sick, so he’s got three dependants to support.

If Jake wants to retire at 55 and own a house, he and his family are going to have to leave Victoria and move somewhere much, much cheaper.

#146 TurnerNation on 07.18.11 at 8:57 pm

Where is Nostradamus Vlad etc?

Europe, collecting blood. — Garth

#147 Peakoilist on 07.18.11 at 9:15 pm

#128 LUYM..can u pls tell me what IMO stands for? I see it all the time here thx

#148 Peakoilist on 07.18.11 at 9:22 pm

Better, can anybody answer that last question?plzzzz and ty

#149 Deano on 07.18.11 at 9:41 pm

142 AG Sage…I bought my last house here around that time and just sold it to move into this place. Bought at 137 and sold for 158. Having said that, the place was an absolute dump when I bought it (toilets in the backyard…crap everywhere, paint peeling etc). I put my own sweat equity into it and 5k. I didn’t make out like a bandit, but I got my money back. If I hadn’t done as much to it I might have gotten 142ish? Bubble?

#150 Utopia on 07.18.11 at 9:46 pm

#97 Harlee on 07.18.11 at 1:54 pm

“Utopia & Kimi : If you two are going to examine each others… tomatoes, then spare us….and get a room ! (or a greenhouse) :-)”
————————————————–

Don’t listen to that jealous guy Kimi. It’s just you and me in the pumpkin patch now. Meet me at the garden gate. We have to change the “tomato” password though. Seems everyone on this site is on to us. We need a new system babe. You know the code. It’s the UPC on our favourite cans of Italian tomato paste. (Don’t tell anyone!)

He had a good idea about the greenhouse though.

#151 Diane Brennan on 07.18.11 at 9:47 pm

IMO stands for “In My Opinion.”

#152 disciple on 07.18.11 at 9:48 pm

IMO: In My Opinion. IMHO: In My Humble Opinion.

#153 eaglebay on 07.18.11 at 9:53 pm

#112 VICTORIA TEA PARTY

Boy, conspiracy or what.
Don’t you think that we have enough doomers on this blog already?
Don’t count the US out yet.
Smarten up. Except for real estate, everything should be fine.
Europe will get through their problems like we are.
Our GDP will grow slowly but it will adapt to the new world and the different circumstances and everything will be just fine.
Now, go play in your backyard.

#154 Utopia on 07.18.11 at 10:10 pm

Getting serious again.

I want to be very frank and tell you all I am worried. Really worried. Two days ago I made mention of the sudden increase in bank liquidity that has taken place in the U.S. over the last two weeks.

I believe we are in the eye of a storm and that a second financial crisis will soon erupt. Others may disagree. I do not care for their opinions though.

I do not for a second believe that this kind of liquidity intervention on the eve of both a debt crisis in Europe and raising of the debt ceiling in Washington are coincidental.

Major trouble is brewing. It is imminent. Anyone reading this should take a moment to ask themselves why the US Fed has chosen this moment in time to pump up bank reserves to levels not seen since Lehman Brothers collapsed two years ago.

I warned you then that I thought the Fed was front-running a coming threat to our financial system and I will not retract that statement. This week could be pivotal with so much on the agenda, particularly debt threats coming out of Europe and the possibility of a Greek default looming.

I have often told you that I expected a surge in the US dollar. That has not changed. This time however I do not think that surge will be quite so bullish for the global economy but rather a fear trade as European debt woes unravel.

In the past month we have been treated to one credit rating agency downgrade after another that has impacted Portugal, Spain, Ireland, Greece and now even Italy! This does not smell like trouble anymore. It just stinks to all high heaven. The frequency of the ratings changes alone are alarming.

Chart that for fun.

I cannot give anyone advice of course. I will only say this: I think it prudent to watch the market like a hawk over the coming days and weeks. The U.S. dollar is about to break out to the upside and that is not good news for some investors.

The shit is about to hit the fan.

#155 randman on 07.18.11 at 11:23 pm

Debt’s dark embrace

I stayed at the Holiday hotel last time i was in Cebu!

Do you know my friend John from San DiegO?

anyways…will see you at Red Lips!

R

#156 Mr. Plow on 07.19.11 at 10:45 am

#134 Onemorething

You’re welcome.

#157 Junius on 07.19.11 at 4:20 pm

Interesting report on the long term impact of the recession on incomes in the US.

The Potential Impact of the Great Recession on Future Retirement Incomes

by Barbara A. Butrica, Richard W. Johnson, and Karen E. Smith
May 2011
WP#2011-9

Abstract
This study uses DYNASIM3, the Urban Institute’s dynamic microsimulation model, to examine the long-run effects of the Great Recession on the future retirement incomes of working-age individuals in 2008. It compares a baseline scenario that incorporates the historic and projected effects of high unemployment and lower wages from the recession with a no-recession scenario that assumes the recession had not occurred.

The results show that the recession will reduce average annual incomes at age 70 by 4.3 percent, or $2,300 per person. This drop results almost entirely from the anemic wage growth that occurred during the recession, which the model assumes will permanently reduce future wages. Employment declines will have little effect on future aggregate retirement incomes because most workers remained employed during the recession and the losses that occurred are generally inconsequential when averaged over an entire career. Retirement incomes will fall most for high-socioeconomic-status groups, who have the most to lose, but relative income losses will not vary much across groups. Those workers who were youngest when the recession began will be hit hard. They are most likely to have lost their jobs and the impact of lower wages will accumulate over much of their working lives. But retirement incomes will also fall substantially for those in their late fifties in 2008, because the drop in the economy-wide average wage will lower the index factor in the Social Security benefit formula, permanently reducing their annual benefits. Also, many workers who lost jobs late in life will never become reemployed.

#158 Mr. Reality on 07.19.11 at 5:47 pm

http://www.institutionalinvestor.com/Article/2856797/Is-The-Chinese-Bubble-Ready-To-Burst.html?ArticleId=2856797&p=1

For all you bubble dawgs and conspiracy bums. There a number of potential shoe drops that could hammer Canada and its “bullet proof” real estate market. The China shoe is the largest.

Have a read. Very good article without someone talking about gold for a change…

Mr. R.

#159 steve p on 07.19.11 at 7:26 pm

“But this is theoretical, based on what we know. Debt’s overwhelming. Houses cost too much. The economy’s tepid. America is in the soup. Rates will rise. Wages are stalled. Demographics are against us. Broke governments mean more taxes. And we have an asset bubble. The mama of Canadian gasbags. Unsustainable.’

add to that we are a nation of burger flippers and blog writers that no longer produce anything as a country like we used to. we let them asians do all that now