In the air

In Mississauga this holiday weekend, Jasmine will be at her husband. Nothing new here. It’s a same old, same old argument. She worries about stuff. He thinks she’s a helicopter. Relax, woman, he says. It’ll all work out.

But during the final days of summer, 2011, some people aren’t so sure. Can’t really blame them. There are whiffs of autumnal fear in the air. The latest jobs report sucked, showing zero employment growth in the US last month, and raising worries recession may return. That knocked 250 points off the Dow and by the end of Friday had the yield on US ten-year bonds below 2%. Once again investors piled into the safety of the fixed income market, driving prices higher and crunching yields lower.

This came just a day or so after news the Canadian economy is also stuck in the mud, the economy now officially in neutral. That has observers, like my pal David Rosenberg, calling for a global slowdown as America “turns into one giant soft patch.” According to him, the next season is recession.

Meanwhile we heard from a few realtor boards in Canada, and the news was sure mixed. Calgary prices continue to slump (four months in a row now), making a lie of the claim housing prices follow oil. In Vancouver, sales are running below their long-term average while listings have started to mushroom. In Toronto, as you know, the average price of a detached home plunged $123,000 in a month.

Draw your own conclusions. I have. Sounds like Jasmine’s working on hers:

Dear Garth: I can’t tell you how riveted I’ve been to your blog since I happened on it by accident (thankfully). I’ve been combing through your blog entries and your book, as fast as I can looking for a similar situation to mine. So far without luck.

House purchased 18years ago for 260K. If sold today, likely 650K. We have a 300K HELOC with 140K outstanding with non-investments and, truth be told, were renos, and we pay interest only at prime. The whole Purpose was to invest, however we were so paranoid about trusting someone with our money, we never got started. Yes, I know, stupid.

Three kids 21,14,&10 (with oldest son failure to launch)

I would sell in a heartbeat however hubby afraid of renting (unheard of) and kids displaced. Husband’s income 90k , I’m a stay at home mom. He & I are early 50’s.

My husband wants me to present him a case study.  Can you help me win? Regards, Jasmine

A case study? You may end up being one – a good example of how not to invest. It sounds like you have few, if any, liquid assets, which I’ll assume is why you haven’t yet paid off the loan for the renos. Of course this home equity loan does not have tax-deductible interest, since you poured the money into your house instead of investing. Like you said, stupid.

So, if the house constitutes the bulk of your net worth and you’re in your fifties – and we’re likely at the top of the real estate price mountain – what possible scenarios lie ahead? What action should you take?

If every economist in Canada and elsewhere is wrong, if interest rates never rise, robust growth resumes and aliens bring new jobs and rising household incomes, then the housing market will continue to advance, and your equity grow. Good news. You’re saved.

However, if our major trading partner contracts, the economy sputters and indebted families stop buying new cars and iPads, all bets are off. Since 65% of our GDP depends on consumer spending, it only takes a few months before the effects are felt – and housing starts to freeze. We’ve already reached the point of absurdity, when a McMansion in an upscale burb of an affluent city like Nashville sells for exactly 50% of what fools pay in Mississauga. As I boringly point out every day, this will not last.

Now, Jazz, imagine you sold, paid off the equity loan and walked away with $500,000. While I don’t recommend this, if the whole thing were invested in a collection of bank preferred shares – with fixed dividend payments and proven market stability – you’d have an income of about $2,200 a month. Add in what you now shell out for property tax, insurance, maintenance and HELOC repayments, and you can probably rent a better house, and still have $500,000 in liquid wealth.

If Rosenberg’s recession arrives, if the economy starts shedding jobs and opportunities, if the local real estate market turns illiquid or a mess of confused Boomers like you realize they need income more than they need a house, well, you dodged that bullet. Remember, the last time properties plopped in the GTA it took 15 years for them to recover. And you’re not 30 anymore.

Houses are not retirement plans. At some point, almost everybody needs to cash out. You can wait until you have no choice, and risk being vultched. Or you can deal now, and find a greater fool.

One more thing. Rent a smaller house. Launch the kid.

224 comments ↓

#1 T.O. Bubble Boy on 09.02.11 at 10:46 pm

Tale of 2 Vancouvers is happening right now:

Vancouver becoming a buyers’ market: Real Estate Board

but

Bidding war adds $501,000 to Point Grey sale

And, the stat of the night (from the 1st article):
“Detached houses — a market skewed by wealthy buyers from China — saw a 14.2 per cent sales increase and an adjusted price gain of 11.7 per cent to $888,000.”

I don’t think that Global TV or Cam Good could have written this better: Chinese buyers push detached houses to an adjusted average price of $888,000!!!

#2 LH on 09.02.11 at 10:56 pm

Preferred dividends (and Canadian stock dividends in general) are great for those Canadian taxpayers who inhabit the lower income tax brackets. If my calculations are correct, at the 15% tax bracket your dividends are almost TAX FREE. Even at the 25% bracket, your dividends are taxed cheaper than the US (where it is 15% for now)

However, at the 40% bracket (mine), the tax is an ugly 35.65% after 2012. What is one to do?

For starters, learn more. If you earn $127,000 or more the eligible dividends marginal tax rate, now at 17.7% will rise to 19.29%. Hardly a body blow. — Garth

#3 Tim on 09.02.11 at 10:58 pm

Despite the ineptitude of the bankers and politicians in the States and the poor housing market, desireable areas have held up well. California has unemployment of around 12 percent, yet the median house price in San Francisco is still almost $700, 000. With an economy in better shape than the states, what is the likelihood of seeing a huge correction in the Vancouver market, given that San Francisco has held up this well, despite poor economic conditions?

Vancouver is not SF. — Garth

#4 The InvestorsFriend (Shawn Allen) on 09.02.11 at 10:59 pm

Garth said:

“Once again investors piled into the safety of the fixed income market, driving prices higher and crunching yields lower.”

Yes but that would be the PERCEIVED safety of the fixed income market. If yields on fixed income rise then there will be market value losses on longer-term fixed income investments.

And at today’s yield’s many longer term fixed income investments may not provide a return that even offsets inflation.

AND some investors must have sold so that other could buy fixed income. So some are selling their fixed income now harvesting fat capital gains. Others are buying. In two years which side of that trade will look like the smarter side? Time will tell.

But even if yield rise maybe today’s buyer will deftly sell before and real losses mount up. I imagine a few will, a very few.

#5 DJH on 09.02.11 at 11:02 pm

“While I don’t recommend this…” Huh?

Never put all your wealth in one asset class. — Garth

#6 The InvestorsFriend (Shawn Allen) on 09.02.11 at 11:12 pm

ARE STOCKS CHEAP?

Basically stocks look VERY cheap at today’s earnings levels. Unless corporate earnings are going to drop, stocks are cheap.

The P/E ratio on the S&P 500 index is about 14 based on trailing GAAP earnings, 13 based on trailing earnings with unusual losses removed and 12 based on forward GAAP earnings projections.

That looks decidedly cheap compared to the long-term historic average trailing GAAP P/E of about 16.

And since a rational P/E goes UP as interest rates drop, we would expect that, all else equal, the P/E would be much higher at a time of extreme low interest rates.

So yeah, stocks look cheap.

Yes, one can come up with lots of scenarios where they get even cheaper tomorrow. Earnings could plummet due to recession / depression.

But unless you think earnings are going down and will stay down for the count and not recover for many years if ever, stocks are cheap.

You pays your money and you takes your chances.

Are we looking at a major opportunity to profit in stocks? Time will tell.

#7 The InvestorsFriend (Shawn Allen) on 09.02.11 at 11:21 pm

MARGINAL TAX RATES ON PREFERRED SHARES AND MORE.

Here is a link to the marginal tax rates in Ontario

http://www.taxtips.ca/taxrates/on.htm

I believe they show the highest rate at 26.57% over $128,800 taxable income. And keep in mind the gross up whereby $10k in pref dividends turns into somthing like $15k of taxable income. That jumps you up to the higher brackets faster.

Here is the link for all provinces.

http://www.taxtips.ca/marginaltaxrates.htm

Can you believe it? Alberta maxes out at 15.88% marginal tax on elegible dividends.

It’s good to be in Alberta…

In Ontario you can pay a maximum 46% tax on money you earn or 26% tax on money your money earns. Not a hard choice for me. — Garth

#8 WatchingItAll on 09.02.11 at 11:24 pm

Garth, Was there no way to include the chinese kids that took their parents Lamborghinis out racing and weave that into your story? ;)

Are you referring to the Canadian kids I saw on the news? — Garth

#9 waterloo Resident on 09.02.11 at 11:25 pm

Garth; “LAUNCH THE KID”; he’s not a torpedo or space-shuttle, you don’t just ‘launch’ a kid !

And as for the job market these days, if you throw out your kid onto the streets …. well, you might as well just take a gun to his head and shoot him, it will have the same results.

Really, I don’t feel the least bit sorry for people who don’t take care of their own children and then something bad happens to themselves, they got it coming to them!

(“a McMansion in an upscale burb of an affluent city like Nashville sells for exactly 50% of what fools pay in Mississauga.”) =

Hey, who needs over-priced Nashville when we have WORLD-CLASS Mississauga, ,, RIGHT ?

#10 LH on 09.02.11 at 11:28 pm

I confess, I am not very familiar with Canadian dividend tax law. Looks like I used the wrong gross-up rate (It was 45% in 2008-2009 but after this year it will be 38%)

However, your 19.29% top marginal marginal tax rate is only on the Federal level; provincial taxes bring it closer to 30%. At these confiscatory levels I’ll wait for stocks to plunge another 20% before dipping in…

Preferreds will not plunge. When markets were off 16% in August, they did not budge. — Garth

#11 Timing is Everything on 09.02.11 at 11:39 pm

…and housing starts to freeze. – Garth

Farmer’s Almanac predicts brutally cold, lengthy winter for Prairie provinces…

http://tinyurl.com/4x684dg

http://tinyurl.com/3cgphwa

—————————————————
For what it’s worth…

http://www.vreb.org/mls_statistics/current_statistics.html

#12 blase on 09.02.11 at 11:45 pm

Garth,

Typo: Jasmine will be AT her husband? (with)

#13 45north on 09.02.11 at 11:53 pm

Three kids 21,14,&10 (with oldest son failure to launch)

how sharper than a serpent’s tooth, it is to have a thankless child

#14 blase on 09.02.11 at 11:54 pm

Garth,

Oops, no typo.

#15 Amy on 09.02.11 at 11:59 pm

Up to date “Greater Vancouver Monthly Real Estate Statistics 2006 – 2011″

http://canadabubble.com/charts/vancouver-monthly-real-estate-statistics.html

#16 Nostradamus Le Mad Vlad on 09.03.11 at 12:00 am

-
“Relax, woman, he says. It’ll all work out.” — Hahahahahahahahaha hahaha hahahahahhahahahahah ahahahhaahaaahahhaa . . . Oooohh, peed my pants!

Once again, the above quote proves that women are smarter and men are best left alone to become dried twigs.

“There are whiffs of autumnal fear in the air. Draw your own conclusions.” — see first link re: Cycle changes.

“. . . an income of about $2,200 a month, probably rent a better house, and still have $500,000 in liquid wealth.” — Oohhhhh, I Dream Of Jeannie but she ain’t here anymore. Wot a succulent thought!
*
Better description of the cycle change; Gold Chinese tungsten mascots; Madagascar is where the DoJ has advised Gibson Guitars to relocate, and US jobs gone; China has it right; Syria and Libya – Spot the connection; Solar China knocks out western competition.

Dow 13,600 Anything is possible. “stay long risk assets/short gold and volatility and long USD”; Screwed City One, Screwed City Two and We’re Screwed; Japan Scary situation, and not Fukushima.

6:34 clip John Cleese (parrot sketch and Fawlty Towers incl.) rocks the boat; Smart Meters One and Smart Meters Two – Silent killers, such as high blood pressure; Illegal Immigration First two paras. are sufficient; Oil – Water – Gold Three reasons (other than the fact Libya has a central bank and didn’t need the IMF — remember when Poland said the same thing, their govt. was conveniently wiped out) why the UN – NATO – US is bombing the crap out of Libya, and this; Germany Getting annoyed.

Riots Next year will be a barn burner, if this year was anything to go by; 9:23 clip What we didn’t know about Libya; Nestle doesn’t like organic food. Fine — Boycott Nestle! Map Of Cesium Worse here than Japan.

#17 JohnnyBravo on 09.03.11 at 12:21 am

http://www.huffingtonpost.ca/2011/08/17/toronto-housing-market_n_929457.html

“But an analysis of TREB’s numbers shows that the summer dip was much more pronounced this year than last. While the average resale price in Toronto dipped $51,000 from May to August last year [2010], this year the same period saw a decrease that was more than three times as large: $177,000 […]”

It wasn’t all that long ago when an entire, average SFD in Toronto cost about as much as this year’s May to August drop.

#18 BrianT on 09.03.11 at 12:24 am

#Tim-Are you aware that San Francisco is a city of about 800000 in the middle of a metro area of maybe 6 million? It is the richest part of that metro area, basically a rich neighbourhood.

#19 HouseBuster on 09.03.11 at 12:26 am

Fools have no idea what is coming but I will tell you.

2003 prices and then back to 1998 prices.

#20 Samir Azza on 09.03.11 at 12:27 am

“negative growth in the April to June period is the first time the economy has shrunk in two years.”

Whomever coined the phrase “negative growth”: Is that supposed to make it sound good? Its kind of like having a “positive deficit”. We win on both counts!

Of course Canada will go negative. All they do is export raw materials and if other countries aren’t manufacturing using those then they have a problem. We’re not sure who is the bigger problem – their Con jobs in Ottawa or our business leaders for not investing, not innovating, not training.

#21 Lawn (South) Asian on 09.03.11 at 12:40 am

I think we’re entering some very interesting times. We are saving as much as we can, and all our real estate is pretty much paid off…

This blog – and the books – have been a great gift for those of us who care to read… and I gobble up all the details every day. I can’t believe Garth has the time to write every night… and they’re lucid thoughts!

Great job Garth.

#22 Robert Dudek on 09.03.11 at 12:52 am

Maybe Vancouver is the San Francisco of the North?

Garth doesn’t seem to think Vancouver is special in any way. Maybe he’s wrong about that (I don’t know).

But all real estate is local and perhaps there are good reasons why Vancouver has had the most expensive real estate in Canada for the last couple of decades. This is very likely to remain the case for the foreseeable future.

That said I think Van RE will level of for the next half decade or so.

#23 Sp on 09.03.11 at 12:53 am

“Garth, Was there no way to include the chinese kids that took their parents Lamborghinis out racing and weave that into your story?”

Funny how people start putting label on people when a Chinese or Black drives a Lamborghini. When a “Canadian” does the same thing, it is considered the norm or success. The world is changing fast. Wealth is being redistributed. We will see a different future much sooner while some people are still looking through old lenses and expecting status quo ante.

#24 Romeo Jordan on 09.03.11 at 12:54 am

Shawn Allen

Good posts.

I think Garth said in an earlier post that bonds are over owned and stocks under.

I’m betting against the crowd (sticking to quality balance sheets, dividends, etc. (and gold stocks)), but the fear is high so good time to buy? Let’s see what the next few years bring.

#25 Devore on 09.03.11 at 12:55 am

#4 The InvestorsFriend

Yes but that would be the PERCEIVED safety of the fixed income market.

The safety is real. How is it “perceived”? Has the US or Canadian government not paid the coupon, or not paid back the principal?

#26 Timing is Everything on 09.03.11 at 1:12 am

We’ve already reached the point of absurdity… – Garth

Mississauga hasn’t even hit ludicrous yet.
In Vancouver…”They’ve gone ta plaid!”

http://www.youtube.com/watch?v=ebAkXuOk9rg

#27 Being John Malkovich on 09.03.11 at 1:15 am

Today I was in the bunker taking inventory for doomsday. Sixteen #10 cans of kidney beans. The supply of canned goods is very “bean heavy” so I added a fresh 24 roll stash of toilet paper for the dreaded and inevitable episodes of “mud butt”. . .which brings me to today’s post on this blog. . .

Why don’t we tax financial transactions as a general rule–and certainly the multi-million dollar ones between the banksters and their corporate croonies? I think we could probably do away with the gst and pst just through this one tax action alone. Then we could pay the nurses, doctors and the teachers what they are actually worth for a change.

Okay. . .time to work on the wind powered toilet-flush I am installing in the master bedroom of the main bunker.

#28 Jane24 on 09.03.11 at 1:31 am

We had a failure to launch 26 year old and us going to work every day while he dossed around just killed us. We asked him to leave and hear he is now on a friend’s floor contemplating getting a real job so he can afford to pay his own bills. Suspect he will become less picky about what this job will be too.

Sometimes you just have to put them out. It’s the kindest thing a parent can do.

#29 Mr Buyer on 09.03.11 at 1:44 am

My kids will not have to launch. In fact I hope they stay and save of a bundle of cash. United we stand, divided we fall. Low salaries and crappy jobs awaiting them will only launch them into the arms of the nearest bank’s loan officer for everything from a new table to a laptop.
(my Japanese acquaintances laugh out loud when I explain some Canadians borrow money even to buy a kitchen table). Given the shift from an ever expanding manufacturing based economy to a contracting service economy, I think Canadian families will soon have to start behaving like families in the past in Canada and as many families presently do in Asia(especially Japan). A child is not an accessory. They were not asked to be born, I am responsible for my children. I can not pretend that jobs are still a dime a dozen as they once were (especially if one was willing to move as I was). I would not be able to magically pull a 30k a year job out my ass if I were starting out again and there were no such things as $1000 monthly rents when I was getting going. I lived with friends and shared apartments even back in the day. No, my kids are not going to see their wages consumed just scraping by. It is fine with me if people want to hold onto the rugged individual myth and crap on kids doing what they have to to get by but not in my house. My kids are training hard and getting ready for the rat race every day and once they get into the race they will be banking cash from day 1. I lost over two decades bringing cash in the door and throwing it out the window. PS. It is not independence if you are borrowing the cash from your parents or the bank (especially when you are paying interest on the loan). We made these crappy circumstances our kids are facing now by not standing against the loss of good jobs while we were sitting on our butts watching hockey and borrowing for the past 2 generations. My kids will be driven and hard as nails but they will not have to rob from Peter to pay Paul if I have any say in the matter.

#30 Goldenfox on 09.03.11 at 2:08 am

The year is 2020

10 year bonds are yielding 1%. The ave price of housing is
$3 million and the ave fam income is $600 thousand. Garth and his followers are still waiting for house prices to crash. The usual suspects are calling for interest rates to skyrocket and house prices to plummet. Little do they know that as long as the US military is dominate and the Us has a stranglehold over derivative int. rates hi int. rates are a no go. If the Us loses control of int. rates the worry of house prices will be the least of your worries. I bought my first house for $30 grand in the early seventies and every body told me I paid too much and prices would fall. I laugh when they say gold is a bubble. Same house, same gold, its the paper money thats in a bubble. The payment on my house was
$200, how much rent does that buy you today?

#31 Tony on 09.03.11 at 2:13 am

#6 The InvestorsFriend (Shawn Allen)

All you have to know is 1929 and 1987 (on or before October 19th) looked like better buying opportunities than today. Stocks have never in the history of mankind been more expensive. Profits are a total lie and will plunge more than 50 percent from today’s values. As well the P/E ratios should fall to the 5 to 6 range.

#32 Mark on 09.03.11 at 2:49 am

“And as for the job market these days, if you throw out your kid onto the streets …. well, you might as well just take a gun to his head and shoot him, it will have the same results.”

Yup. And even if he went to school, the results may not be different. Most of my engineering class (2002) is unemployed even to this day, the Canadian job market never having recovered from the catastrophe of Nortel, or the glut of immigrants brought over who take the jobs for half price. Only the government-supported healthcare, finance, and legal professionals seem to be doing okay.

#33 dave on 09.03.11 at 3:54 am

This is good news. trend is your friend. HST will be gone in 2013, so i’ll wait then i heard they only limiting immigration to 700 applications startin 2012. with this is mind, govt knows Hot asian money will run out of air soon. it will be nice to not have to spend more than 33% of your income on a home!

#34 Aussie Roy on 09.03.11 at 4:52 am

Aussie Update

Welcome to the world’s most liveable delusion

http://www.theage.com.au/opinion/society-and-culture/welcome-to-the-worlds-most-liveable-delusion-20110902-1jqbd.html

Spring property market set to bloom late

THE wattles are out, the blowflies have made their usual noisy entrance, but that other harbinger of spring, a flood of houses on the market, is absent this year.

Just as well considering the current level of houses already on market.

http://smh.domain.com.au/real-estate-news/spring-property-market-set-to-bloom-late-20110902-1jq68.html

#35 Aussie Roy on 09.03.11 at 5:07 am

Aussie Update

Even the RE industry heavy weights have started fighting with each other.

TASMANIA’S real estate peak body has disputed data showing property prices are slumping in the state.

Real Estate Institute of Tasmania president Adrian Kelly said the data, released on Thursday by national company RP Data, was out of date and out of touch.

“From what I have seen and from speaking to our members, there has been an increase in sales and buyer activity over the last three to four weeks,” he said.

“So the RP Data figures do not paint an accurate picture of what is happening here.”

Mr Kelly, may I offer the premise that your average punter hasnt seen an accurate picture in housing for years, only sickening cliches and worthless spin peddled by the industry. Scream all you like now, watch prices collapse under their weight, yes even in the cheapest Aussie market.

http://www.themercury.com.au/article/2011/09/03/258681_tasmania-news.html

#36 Beagle on 09.03.11 at 7:13 am

Victoria’s average price snapped back pretty good from last months plunge of 50,000. Wow, up around 70,000.

#37 allister on 09.03.11 at 8:27 am

I left home when I was 18 with a beatup old convertible and all my possesions in the back seat. Had about $200 in my pocket. That was 1973.

I moved to another city to get work because I knew there was no future in the small town my parents lived in.

I forced myself to GROW UP and be a man. Had to stay in a rooming house because I couldn’t put together first & last rent.

Now my new house is paid for and I am comfortably liquid, have two great kids and a wonderful wife. I’m thankful for what I have.

Launching is a good thing.

#38 Faithful Garth advice follower on 09.03.11 at 8:34 am

Need feedback from Garth and his fellow rational web followers :
Our story :
We(in our early 50′s) sold our big house(4,000 sq. ft) back in the summer of 2008 in Toronto GTA for over $3/4 of a million (today the same property is going for over 1 million) thinking it was a good time to downsize to smaller accommodation. So decided to rent until we found something suitable and hopefully the house price come down like the U.S. as to what Garth predicted in his book.
Today, we find ourselves looking for new accommodation to rent because the landlord wants to sell (this is our 2nd move in 3 yrs), my family is fed up with the hassle of moving and looking for new accommodation despite the fact that we can buy a home for under $1 million in GTA with cash as we have no debts and we have overcome the perception of people who think renters are losers despite the fact that we have a net worth of just under $2 mil. and a healthy indexed pension for my spouse and I when both of us retire in the next 5 year time span.

(BTW we were paying an average of $2500 per month for rent since 2008 while interests earned on savings were averaging 2% all this time.)

Should we buy a house now for under $500,000(our retirement home ) or continue renting for another year ? We paid for both our children’s university education and they are now both working and saving with no debts and living with us(thus the high monthly rental) so that they can have enough money and have a good financial start in their lives and hopefully not have the banks make them a financial slave.

Need advice, should we buy now or continue renting ? Considering our financial position and the current house prices and the emotional turmoil we are facing as a family.

Garth ? Fellow readers ?
Thanks in advance.

Why do you have $1 million sitting earning 2%? Why do you have two adult university-educated, debtless children living at home? Why do you need to move because the leased house is for sale? And if you sold because you wanted to downsize, why haven’t you? I don’t think you qualify as ‘faithful Garth advice followers.’ — Garth

#39 allister on 09.03.11 at 8:36 am

Those who feel that launching the poor twenty somethings need to know some history.

It was the twenty somethings that left the depression dust bowl farms because they were starving and enlisted in WW2. They were assigned to tanks, bombers and battleships and had to fight for their lives and their country. And they won it for todays kids.

And todays kids are disadvantaged? The fruit is hanging on the trees, they just got to get of the couch and go picking. Man up.

I won’t say anymore.

#40 allister on 09.03.11 at 8:44 am

#6 The InvestorsFriend (Shawn Allen) – hey profits have been up this year. Explain this.

By: Doug Noland | Friday, September 2, 2011

For the week, the S&P500 slipped 0.2% (down 6.7% y-t-d), and the Dow lost 0.4% (down 2.9%). The S&P 400 Mid-Caps declined 0.4% (down 8.2%), and the small cap Russell 2000 declined 1.2% (down 12.8%). The Banks declined 2.0% (down 28.4%), and the Broker/Dealers fell 2.2% (down 28.9%). The Morgan Stanley Cyclicals dipped 0.2% (down 19.9%), and the Transports slipped 0.3% (down 13.0%). The Morgan Stanley Consumer index gained 0.7% (down 6.8%), and the Utilities added 0.7% (up 4.9%). The Nasdaq100 gained 0.3% (down 2.3%), and the Morgan Stanley High Tech index increased 0.1% (down 14.7%). The Semiconductors declined 1.2% (down 17.1%). The InteractiveWeek Internet index rallied 1.6% (down 10.1%). The Biotechs added 0.6% (down 11.5%). With bullion rallying $55, the HUI gold index gained 3.5% (up 7.8%).

#41 Canned Goods and Buckshot on 09.03.11 at 9:00 am

#34 Beagle

VREB would give more accurate picture if they chose to graph the median price rather than the average. I think the average gets shifted up in a place like Victoria where the retiring wealthy buy the $1m and $2m houses regardless of the economic factors most of us contend with.

The median price for SFH in June was 569,900. July was 535. Aug was 547. Yawn.

#42 Min in Mission on 09.03.11 at 9:01 am

#29 – Mr Buyer – X2

#43 T.O. Bubble Boy on 09.03.11 at 9:10 am

Apparently #3 Tim hasn’t heard of Apple, Google, Intel, Facebook, Oracle, or any of the other high-paying companies full of rich employees that live in the San Francisco area.
http://www.siliconvalley.com/ci_12091678?nclick_check=1

Let’s compare to Vancouver’s list:
http://www.vancouver.com/jobs/vancouver_job_info/top_companies/

Ya, that’s comparable. Even Electronic Arts (a much-heralded Vancouver-area company) has probably as many employees in the SF area as it does in Burnaby.

Interesting to note that the Vancouver Top 20 Employers list includes the likes of 1-800-Got-Junk, the Keg, the Port Authority, and the Airport. Not trying to say anything bad about these companies or their employees (I know that public pensions are pretty nice), but when’s the last time you heard of an airport employee bidding $500,000 over ask for a $2M house in West Van?

#44 dd on 09.03.11 at 9:10 am

…That knocked 250 points off the Dow…

But did you see the TSX? It usually matches the DOW. This could rebound. With the government printing money energy, food, and the metals are going to go higher.

All commodities, plus boffo bank profits. — Garth

#45 dd on 09.03.11 at 9:12 am

Tim

…San Francisco is still almost $700, 000….

YA, off 30% from the top.

#46 dogman01 on 09.03.11 at 10:07 am

Mr Buyer #29
You sir are a wise person.
I have seen the capital accumulation sling shot the “family enterprise” structure creates.
I have a fair number of young parents working for me. They start with the same pay. Those that are the result of the traditional “you are on your own family” struggle mightily. Child care, student loans, insane mortgage, average wage. They are stressed and have priorities and pressure all over the map.
On the other hand there is another tradition; child care provided by a elder family member..big savings. Family supported and expected education. Saving rent by living together. Shared contribution to a pool of capital, reinforced and accelerated by the savings . A career focus, less stress, less pressure and ready to move up.

The bar for decent jobs is much higher; the hamster wheel is turning faster…run hamster run.

#47 Nemesis on 09.03.11 at 10:22 am

Ya know, GT – I’ve often heard that VintageHogs are like ‘ChickMagnets’… but until this morning I’ll admit that I never took that particular fable seriously.

Hmmm… always did like the TwinBob, bagger, RoadKing… perhaps it’s time?

#48 BrianT on 09.03.11 at 10:26 am

#30Gold-One thing you are missing is that since the 1970s the gains in residential RE have been steadily decreasing (with the possible exception of certain Vancouver neighbourhoods). I know that someone bought in TO in 1972 for 25 grand and sold that place (unrenovated) for 500 in 1989. 2000% in 17 years-that no longer is possible in TO. People don’t realize the % increases have been steadily decreasing because the numbers (and debt) are so much larger.

#49 Brad in Cowtown on 09.03.11 at 10:46 am

Preferreds will not plunge. When markets were off 16% in August, they did not budge. — Garth

The trouble with bold statements like that is people tend to remember them. Just like your bold advice to sell gold $400 ago. Well played. Meanwhile, non-parochial financial advisors are making their clients money, even in today’s turbulent enviroment.

Preferreds may not have plunged in August, but they sure did in 2008. They can plunge again.

My statement is 100% accurate. In 2008 everything went down – but preferreds recovered light years faster than equities. Deal with it, cowboy. — Garth

#50 Devil's Advocate on 09.03.11 at 10:50 am

The things you want are getting less costly to acquire but you can’t afford them anyway because the things you need are costing a lot more.

Things you want: Granite, stainless, big screen TV, … and on and on and on.

Things you need: Food and shelter. That’s it; food and shelter – full stop. And you do know what shelter is don’t you?

Rented or owned a roof over your head is NOT going to cost significantly less but for it’s following historically typical gyrations in the economic cycles.

Why have Vancouver prices shot through the roof? Well #1, despite what you might think, it is a pretty fantastic place to live. We were there for a few days staying in a downtown hotel in which there were a great many American tourists. On each and every ride up or down the elevator those tourists were extolling amongst one another the great beauty of the city. #2, The income gap in this country, and others, is widening dramatically. There are those with money and those without. Those with money can live wherever they want to live, those without money cannot. Apparently a great many of those with money chose to live in Vancouver.

Why is Vancouver such a beautiful city? Well #1 its location. There is no disputing the BC Coast is pretty spectacular. #2, because the residents can afford to keep it beautiful. Sure there are some ugly neighbourhoods in Vancouver but comparatively few as if you can afford to live there you care about what your little McMansion looks like and have the resources to keep it looking decent. And, you certainly aren’t going to put up with a steel factory next door are you? They don’t want such industry it does nothing for the landscape. They don’t want it there. That kind of activity is for places like… like Ontario thank you very much.

Take a drive through the residential neighbourhoods of that city. No not Surrey (although it too is cleaning up), Vancouver, or Victoria or Kelowna. There is a lot of money there. Yes there is some in GTA too but it’s only there while they save enough to be able to join their buddies in BC.

People with money can live wherever they want to live and clearly there are a good many of them, enough to sustain a level of demand for those cities that the demand is reflected in the prices. That you cannot deny. It is as real as anything – the income gap in this country is widening as it has and is in so many other parts of the world. There are and always will be people with enough money that they can live wherever they want regardless of the general state of the economy. While this is a beautiful world there are some parts which are more beautiful than others – a whole lot more beautiful and such beautiful places with always garner a demand from those who have and be the envy of those who haven’t.

So how are these people making money? Well of the ways they are, I can assure you, reading this blog is not one of them.

#51 Mr Buyer on 09.03.11 at 11:00 am

#38 Allister…You did not see the opportunity I had even without a high school diploma at the time. These are not fruitful times. Either you have forgotten or never knew them. I was making $18 an hour in 1981 and a company apartment for $80 a month. I got bored and went out west and walked into a $20 an hour job with on the job training my first day off the bus (do not take the bus across Canada more than once, the first time was cool but the second time was tedious). There is not enough fruit to go around anymore and it is mine and my parents generation that allowed things to come to this. Sure man up, but the fight is much harder now. A clown like I was would not cut it presently. It is much better to wise up I think.

#52 City Slicker on 09.03.11 at 11:01 am

Garth I just read in the Calgary Heard sales in August were up 29% and the avg house price sale was $453K in August, up 1.8% compared to Aug 2010.
Are you meaning prices are down from May, June, July?
And is the $123,000 plop in Toronto official as per TREB?
Thanks!

Nah, I made it up. — Garth

#53 Mr Buyer on 09.03.11 at 11:06 am

I am sorry Garth I have to respectfully disagree on the whole launching thing. You have to spend some real time in Asia and especially Japan to see the effectiveness of the family unit. There is no need for kids to leave home until they want to or have to pursue employment elsewhere. Not that I need to say it but debt is a four letter word for a reason.

#54 The InvestorsFriend (Shawn Allen) on 09.03.11 at 11:11 am

Number 25 DEVORE asked me the following:

#4 The InvestorsFriend

Yes but that would be the PERCEIVED safety of the fixed income market.

The safety is real. How is it “perceived”? Has the US or Canadian government not paid the coupon, or not paid back the principal?

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

Here is my answer to DEVORE’s question here.
DEVORE:

As I tried to explain, the risk is that a long-term government bond WILL fall in price if interest rates / yields on these bonds rise. Also the risk that today’s low yield does not even compensate for inflation.

I agree Deciple, there is no risk that coupon or principle will not be paid.

Number 31 Tony replied to my claim at 6 that stocks are cheap and Tony said that earnings and P/E will fall. Okay, we disagree there…

Number 38 Allister sort of replied to me but it was not clear if he disageed (he seemed tothough). In fact he did give evidence that stocks were down recently. Are we to conclude Allister that since stocks are down in price, they can’t be cheap?

I gave facts and figures in my post at 6 that stocks are cheap. But not as cheap as mindless opinions without any facts. (Many people on this board just post things like stocks are gonna fall, houses are going back to 1998 levels. Doomsday is nigh. Garth meanwhile uses facts and figures like house price to income ratios.)

#55 Junius on 09.03.11 at 11:13 am

#41 T.O. Bubble Boy,

Exactly. When people try and compare Vancouver to San Francisco or Seattle they are just fooling themselves.

I deal with several firms from Silicon Valley who have branch offices in Vancouver. They frequently comment that they get paid much better on contracts in S.F. Conversely, salary expectations in Vancouver are just as high and often higher due to the cost of living.

Something has to give.

#56 Sheila on 09.03.11 at 11:16 am

Getting and spending, grasping and hoarding…..sometimes, we all need a little perspective from George Carlin:

“That’s all you need in life, a little place for your stuff. That’s all your house is: a place to keep your stuff. If you didn’t have so much stuff, you wouldn’t need a house.
You could just walk around all the time. A house is just a pile of stuff with a cover on it.”

#57 gman on 09.03.11 at 11:17 am

#46 Brian T
House prices increased as such due to double digit inflation for many of those years. Inflation ain’t nowhere to be seen right now. But it if it came back, real assets such as RE, commodities (not GOLD) and the likes would increase in tandem. The problem though is that if you high debt and you have high inflation, interest rates will increase. It’s not the asset that will kill you it’s the cashflow from the debt.

#58 bigrider on 09.03.11 at 11:26 am

Brian T #46-excellent post.

I have had similar arguments with many people all to no avail.

Appreciation rate of RE in T.O has steadily decreased. All you have to do is look at gains between ,say 1970 to 1990 and then 1990 to 2010.

Better yet, compare 1965 to 1990 (25 year period) and then 1985 to 2010 same 25 years..even more dramatic.

Appreciation rate going forward will turn negative.

#59 Junius on 09.03.11 at 11:31 am

Great article on banksters entitled the “The Great Bank Robbery” from Nicholas Taleb –

“In other words, banks take risks, get paid for the upside, and then transfer the downside to shareholders, taxpayers, and even retirees. In order to rescue the banking system, the Federal Reserve, for example, put interest rates at artificially low levels; as was disclosed recently, it also has provided secret loans of $1.2 trillion to banks. The main effect so far has been to help bankers generate bonuses (rather than attract borrowers) by hiding exposures.”

Here is the entire link:

http://www.project-syndicate.org/commentary/taleb1/English

#60 Elmer on 09.03.11 at 11:40 am

I think 21 is too young to determine whether or not he’s a failure to launch case. I didn’t move out until 24 and yet I’m fairly successful now. I’ll be just shy of meeting Garth’s 100k-networth-by-30-or-you’re-a-loser criteria.

Did you pay them back? — Garth

#61 vreaa on 09.03.11 at 11:42 am

Moment Of Truth For An Old Favourite – Attempted Vancouver Flip For $350K Profit In 6 Months

http://wp.me/pcq1o-2St

It seems a little like Russian Roulette… one of these days that gun is going to go off.
…the kind of house that will sell for less than $1M in the coming trough.

#62 Devil's Advocate on 09.03.11 at 11:43 am

“Sure there are some ugly neighbourhoods in Vancouver but comparatively few as…” – D.A.

Burger King doesn’t pay any more just because you live in Vancouver. Those service workers have to live somewhere. Every city has a “the other side of the tracks” that’s where the riff raff live. Vancouver has fewer of them though as they keep the “ugly” out of the city… you know the lower paying, polluting manufacturing industries and such. That’s for places like… China or Ontario. Yes we have some but only as much as are geographically necessary.

I can hear you now… “but isn’t it the Chinese who are pushing Vancouver real estate prices so?” To which I reply “Damned straight it is! And so too are the Ontarions who move here and the Albertans and so on and so on and so on”. Ya makes yer money where ya have ta and ya spends it where ya want ta.”

Make no mistake… this is Disneyland for adults and there is a cost of admission.

#63 vreaa on 09.03.11 at 11:44 am

Spot The Speculator #53 – Beth: 31; Single; Forestry Job; Condo in Alberta [bought at peak]; Home in BC [bought 2010]; “..thinking of expanding her home and maybe buying a cabin.”

http://wp.me/pcq1o-2SH


Beth, along with thousands of other apparently innocent civilians, is a RE speculator.
By the end of the bust, all speculative activity will have left the market.

#64 Moneta on 09.03.11 at 11:47 am

Kids moving out does not necessarily = independence.

It’s a simplistic notion based on what has worked in the recent past.

Families which understand what healthy dependence/independence is will always thrive. And it does not mean that children have to move out to be productive and responsible citizens.

#65 Not a Metal Head on 09.03.11 at 11:49 am

“That knocked 250 points off the Dow and by the end of Friday had the yield on US ten-year bonds below 2%. Once again investors piled into the safety of the fixed income market, driving prices higher and crunching yields lower.”

Why no mention of the rush into the safety of Gold and Silver? It went up much higher than bonds yesterday.

Is this a blatant oversight Garth?

BTW, I’m not a metalhead.

Because 0.8% of Canadians own PMs. Almost 40% of people have equities and bonds through RSPs, mutuals, pension plans or ETFs. I don’t write about options, warrants or futures for the same reason. — Garth

#66 Tim on 09.03.11 at 11:50 am

RE 18 Brian,
yes I am aware, and if you look at certain neighborhoods in central San Fran, the median price is over a million. My point is that, despite having the worst housing crises ever, some desireable areas still hold up. If the Canadian economy tanks, I doubt it will be worse that in the States, so I don’t think Vancouver will have a massive correction. Vancouver isn’t San Fran, but it does have similarities

#67 Devil's Advocate on 09.03.11 at 11:58 am

As a REALTOR® a substantial part of my income is generated by people moving here from points east and buying homes. Second to that is a substantial part of my income which is generated when a good many of those same folks re-list and sell their home because they realize they have not yet earned enough money to reside here and have to move back from where they came. That or take out their real estate license. It’s been that way forever and I see no reason to believe that’s going to change – unless the planet shifts on its axis. Anything is possible I guess.

Want to turn your bank account into a million bucks? Come to B.C. with two million in it. I don’t expect Monte Carlo (http://tinyurl.com/bsc8ts ) is any different for the average Joe.

Well I gotta go to work…

#68 Tim on 09.03.11 at 12:00 pm

RE 41 TO Bubble Boy
Apparently you haven’t figured out that the Bay Area is over 4 times as large as the lower mainland, so of course they have bigger companies and more jobs. You also probably haven’t grasped that these people in these high paying tech jobs only account for a small portion of the working population and therefor cannot drive the housing market

#69 The Emperor's Clothes on 09.03.11 at 12:14 pm

@ #27 “Mr.Malkovitch”
….I almost snarfed coffee out my nose when I read your post… LOL.
May I suggest a “pneumatic mail tube” type drain line for the toilet in the bunker?
Nothing impresses fellow survivors more than a WHOOSHING louder than a jet engine and Voila! The mud butt patties are gonzo.
Cant find a pneumatic mail tube? No problemmo. Just visit any of the old dept stores that have bankrupted themselves a la Eatons over the past 25 years. Miles and miles of pneumatic tubing to be found.

#70 The Emperor's Clothes on 09.03.11 at 12:16 pm

@#45 Nemesis
“Harleys. The most expensive vibrator a woman can own.”
Rosanne Barr

#71 young & foolish on 09.03.11 at 12:33 pm

Garth has demographics on his side …. as well as the current deleveraging trend. What used to be shelter, “housing”, has become another speculative play. Prices are no longer connected to average (and flat) earnings. People are heavily indebted … so who’s going to buy your house again?

When the herd turns (as it will when people realise that they will be running out of money), the demand for credit will turn negative … as will RE sales …. and even bank profits.

It must be hard being a boomer!

#72 The American on 09.03.11 at 12:36 pm

#3: Tim, Vancouver doesn’t even compare to SF. The Bay area has well over two and a half times the population of Vancouver’s metro (and much, MUCH nicer weather and public transportation system) Also, SF has an actual economy with more well-known global corporations and entrepreneurial creative start ups than one can mention. What does Vancouvr have? EA, The Keg, and Lululemon? Seriously, it is kind of sad. As a city, though, SF has 39% more population, and it is 25% more densely populated than Vancouver. The two cities land masses are within only three square miles of one another. Property values have compressed nearly 30% in SF since the RE correction. This in a city with clearly the statistics and density to support higher values far greater than Vancouver (supply/demand).

There is absolutely ZERO business case for Vancouver’s values to sustain themselves, and nearly every economist, economutritionist, RE broker, marketing firm, banker, and case study expert I know agrees that Vancouver’s correction will be unlike all others seen. Its no longer the BPOE by measure of ALL credible sources in case most Vancouverites missed this in the past TWO years. So, get over it. This comes directly from publications like The Economist, Monocle, Mercers, Forbes, etc. Other cities, particularly European, have quickly been climbing the ranks, such as Berlin. Ahhhhh Berlin, a much nicer and more beautiful city IMO than Vancouver, offering its people much more in almost every aspect from public transit, shopping, parks, recreation, cultural events, arts, and history. Berlin now ranks much higher than Vancouver in quality of life, now at #9 in the world. Vancouver has slipped quite a ways in a short period of time to #16, according to Monocle. The point? Oh yes…. Berlin’s housing is nearly 70% LESS expensive than Vancouver. So, this BPOE crap no longer applies for the false “business case” of Van’s dumb prices. Its never sexy or desirable to be dumb, is it? No, I didn’t think so.

The HAM in Van is only another lame and VERY tired excuse that propelled it to this level. HAM is quickly drying up as they’re now understanding they might need to hang onto some of that cash for a while – the Asian markets are going to get slammed and some of it has begun already.

Look, nobody is being fooled here, apart from Vancouverites. We see BC plates speeding by in a nice car, and we already know it came from the home equity line of credit on the false home value the market has driven. We know that most people in BC are living hand-to-mouth just to make that mortgage payment (most have a negative savings rate, and cannot afford to save even $25/week as Garth recently pointed out), and nobody down here is impressed whatsoever. We find it quite stupid and comical, in fact, being that you should have known better after seeing what happened down here. This is nothing more than what every other city in the U.S. and Europe witnessed now over five years ago.

Tim, if you even have to pose the question, then you probably already know the answer, or you honestly don’t feel confident enough in what propaganda you’re being told. What’s your gut-check feeling tell you?

#73 Mister Obvious on 09.03.11 at 12:36 pm

#37 allister…

Amen to that, brother.

#74 Jsan on 09.03.11 at 12:55 pm

Danielle Park was on Michael Campbells Moneytalks this AM, it was a good interview. She anticipates that it will probably get pretty rough over the next couple of years as Sovereign debt, economic world wide slowdowns, increasing unemployment and China’s escalating inflation begin to weigh heavy on our economies. She argues that many people say it is not as bad as 2008 but she suggest it is worse. Back in 2008 the US credit system and housing meltdown was the only real issue. Today you can add a much deeper in debt US and all of the above mentioned issues (Europe credit crisis, Unemployment, China Inflation, deeper worldwide debt after unprecedented stimulus programs). She said China had tons of cash in 2008 and low inflation and were in a much better position than today.

She also went on to say that when this eventually passes, it will be a great buying opportunity for those with cash. She said house prices in Canada will drop 20-30% in the next while (I say easily higher in the extreme bubbly areas) and that if you had planned to sell your house in the next 2 or 3 years to pad your retirement nest egg, she said sell now before the price slide picks up steam.

#75 Mister Obvious on 09.03.11 at 1:07 pm

#29 Mr Buyer

I suppose you’re doing what you feel you have to regarding your kids transition to adulthood. I can only offer up my own experience as an isolated data point:

My father offered to pay for my university education while I lived at home. I threw the offer back in his face since I already knew everything worth knowing. He quite correctly responded by tossing my sorry ass out the door. I will always love him for that.

Over the following fifteen years I grew up. I worked dozens of menial jobs and sweated rent. I learned to make my way and save money. Eventually, I paid for my own education. It was certainly not the cushy route to success offered by my father but it was the one I had to take. I think Dad somehow knew that about me.

Thank God he cared enough to give me the boot.

#76 Smoking Man on 09.03.11 at 1:12 pm

Holly cr@p Garth was more than wright about windsor.

Lake front property is going from 98k not a bad shack to 2 mil for stunning mansions on the water which would cost 8 to 15 mil in oakville or burlington.

Going to buy one in dec when seasonal prices are at the lows.

#77 vyw on 09.03.11 at 1:20 pm

#36
Dear Faithful:
You’re in the best position: renting, cash assets, no debt.
How much does it cost to live?
rent $2500
hydro $150
internet/phone/cable $150
food $600
car $150 for gas + insurance
misc $450 (insurance, vacation, housewares, etc)
total $4000 a month
or $48,000 a year

dual income of $120K+ one assumes?
with indexed pension in 5 years that would still cover the $48K baseline living costs?

rent means no property taxes, no condo fees, no major maintenance costs, no mortgage rate risk, no downside risk in real estate collapse, etc.

heck the only thing I’d change is:
1. charge $500 a month per child for living; use the money to rent a nicer home
2. find a home in a neighbourhood you desire to live in, preferably close to the subway
3. get some professional financial advice for 1/2 of your cash assets, keep the other 1/2 in cash for the time being.

The reason for #3? This looks like another leg down in the financial markets and turmoil for the next 12 – 18 months. Stay in cash, sleep well at night. Work less, stay healthy, charge the kids rent, stay away from the real estate and private debt bubble.

Savings and income count because we are in a deflationary period.

Oh and btw, I rent and I’m not a loser. My landlord refuses to raise the rent because I take care of the place for her.

#78 Keeping the Faith on 09.03.11 at 1:26 pm

#48 Devils Advocate:

You cannot be MORE wrong about Vancouver and your reasons why after a 2 day visit downtown you think it’s the best place on earth. I lived there for a decade and have been back in Toronto for 2 years believe me when I say, Vancouver has it’s Big problems just like everywhere else and in some cases more problems than other places.

I concede it’s beautiful. The idea that many rich people move there is Entirely Incorrect. I’m in my late 30′s and everyone I knew, except myself was house poor/condo poor and carrying LOC and credit card debt. I was an ‘outsider’ for renting and investing in a diverse couch potato portfolio, while everyone else my age, older or younger subscribed to the idea that Vancouver and lower mainland real estate is the only way to make money.

You are misled to think people living in 800K places are all rich. Many if not all that I knew had little equity in their homes and owed the bank everything yet they thought they were “Kings of the World” and the next Donald Trumps for borrowing from the bank with less than 5% down that they borrowed from parents. What a joke it was and I’m sure still is.

I again concede it’s a beautiful location. On the ocean, against the mountains simply Great! I lived in Yaletown on the water for the last 3 years I was in the city and I can tell you it was a wonderful location.
You are ENTIRELY Incorrect about people keeping it beautiful. I guess you didn’t show your family the spectacular local culture on the corner of Hastings and Main. Just 4 blocks from Rogers Arena, 5 blocks from BC place and a short 15 minute walk to ‘world acclaimed’ Robson street shopping, you can have your pick of any injectable, snort-able or smoke-able illegal drug you want. You should have taken your children for a stroll down east Hastings, 5 minutes from Pacific Centre where you could have shown them the entrepreneurial spirit that is live and well in the Vancouver drug trade and explain to them that this was where Willy Pickton met his dates before snuffing out their lives on a visit to his pig farm another short 45 min drive out the Fraser Valley. That’s an incredible place to live and raise a family I tell you. The best part is anytime you talk to a home owner or real estate person in Vancouver they conveniently miss these salient points.

And don’t get me started on the difference in work culture in Vancouver and BC to the rest of Canada. Did you ever wonder why so many people were off partying in the middle of the day during the May/June Canucks Stanley Cup run?!?! It’s because work culture in Vancouver arguably could be compared to that in Greece, union attitudes with a hand-out solution. You may think it was only for that time during the hockey games, don’t kid yourself. I had worked places where people regularly stopped work at 3 pm and thought it was ‘normal’ they ‘deserved it’. Don’t get me wrong, there are a lot of great hard working people in Vancouver. The over riding feeling though and city culture is that work takes a back seat to life. Great when you’re there visiting on vacation with your family for 2 days or if your having an Olympics party, bad if you actually want or need to get work done. It’s also great for a huge underground drug economy that just has to watch plants grow to make money. Why work when you can water and watch.

Devils Advocate, if you think it’s so great, I Dare you to move your family to Downtown Vancouver and write back to us on this blog in August 2012 to tell us your thoughts. Even better put down 100K and get your 5% share of a $2M SFH and I guarantee you, your rose-coloured glasses will have a new pig-farm brown tint to them.

Shame on you for being so shallow.

#79 Timing is Everything on 09.03.11 at 1:43 pm

#28 Jane24

You failed to launch your kid. Blame the ‘engineers’ not the rocket. Poor design.

#80 Devil's Advocate on 09.03.11 at 1:52 pm

I lived in Vancouver for many years and still have friends and family living there and currently live but a short 3 hour drive away from Vancouver. I know well what Vancouver is about.

East Hastings is a whole lot more habitable on a cold winter’s night than down town T.O. and, believe it or not, we do have some level of social services here in B.C.. Like I said, we do have those “other sides of the tracks” but not so much as those cities back east which are, comparatively, entirely on the other side of the tracks.

#81 waterloo Resident on 09.03.11 at 1:55 pm

#36 ” Faithful Garth advice follower”
Hi. Sorry but Garth is a bit busy now reading crazy nut-bar e-mails, so I will try to help you with my advice.
The American economy is slowing down DRAMATICALLY, and that is an understatement ! Since Canada is tied so much to the U.S. economy then our economy will also be slowing down too. So that is what will be happening over the next 2 to 3 years. From this our interest rates will probably be falling 1% (not rising), so if you want to buy a home then go ahead, our home prices will not be falling for the next 2 to 3 years as our interest rates will be falling, NOT rising.
My advice to you is to move out of the city and find as small and as cheap a house as you can find, and invest the rest of your cash into Bonds ETFs as they will be going up in price as interest rates fall. Then, in 2 years or 3 years sell these Bond ETFs when rates begin to go back up.

Personally, I don’t think that Canadian home prices will EVER fall much or for very long. Prices might drop 10% over a few years but then they AWAYS bounce right back up to where they were, and go even higher, so that is what Canadian home prices will be doing for the next 3 million years.

I don’t know if I’m right or not, but that’s my advice.

#82 Devil's Advocate on 09.03.11 at 1:56 pm

“Don’t get me wrong, there are a lot of great hard working people in Vancouver. The over riding feeling though and city culture is that work takes a back seat to life” – #76Keeping the Faith

What’s your point? Sounds like a good plan to me – if you can sustain yourself on it. I’d put “life” ahead of “work” anytime. On your death-bed I doubt you are going to say to yourself ” I wish I had worked harder”

#83 BrianT on 09.03.11 at 2:07 pm

#64Tim-No one has a crystal ball, but I can assure you that when things go parabolic they always have major corrections. That doesn’t mean Vancouver RE isn’t a good long term investment, just that things have gone crazy. If you don’t agree with this conclusion, then you must agree with the observation that Vancouver RE circa 2006 was wildly undervalued. Why do you feel Vancouver RE was wildly undervalued in 2006?

#84 jess on 09.03.11 at 2:07 pm

… these toddlers were ready to launch

online voting?

The daycare opened on June 10, 2009, and has won the Markham Economist and Sun’s reader choice award for best child care two years running.
==============
The daycare will remain closed until a qualified supervisor is hired and the centre’s operator provides evidence of sufficient food, as well as a detailed plan on how the children will be looked after at all times.

http://www.thestar.com/news/article/1048956–markham-daycare-shut-down-after-toddlers-escape?bn=1

#85 BrianT on 09.03.11 at 2:10 pm

#63Not0-Garth summed it up for you-the way things are going to play out you do not want to follow the herd to the slaughterhouse.

#86 Daystar on 09.03.11 at 2:13 pm

If’s are essentially when’s, but when is the key question of which some will say no one knows. Others will say its predictable, there are only so many variables and they indicate a global recession coming. Others still, say the answers are already known but the ones in the know aren’t talking or at best, talking very privately so…. where does this leave us?

To guess, of course. To pool our knowledge (bloated egos excluded if one can help it), skim the cream from the top, pluck some magic beans wash roast brew add sugar and hopefully get an enjoyable latte thanks to an awesome long order cook? :)

Origins, timelines, purpose potential, who, what, where, why, when, will, goal, plan. The mind is the builder and with all who seek, there must be structure, the soul can only lead one so far, this will not change. It does not change for those who know, or those who want to know. Look for the permanence within the impermanence and we see it for what it is, the formula’s, the recipe’s, the order among the chaos and when it comes to something even as so called complex as the human economy, it still applies. It especially so applies.

Now… there are minds here who are brilliant who meet and come together every day or close to it. Our host, though sometimes moody over sexed and suffering from what it is like to near perfection perhaps has the most brilliant mind of all when it comes to wit, humor and the economy. (I cannot, alas, vouch for his Harley navigational skills and as such cannot offer no opinions on his finer subtleties) Some of us admittedly are not on the same page and it is this way for we are all in different various states of evolution and even when one is at his/her infancy whether it be economic, social or otherwise, it should not be mocked for we all began at the beginning so I say, respect it. Most of us will get it eventually, assuming we’ve given birth to such potential (yes, assuming one has given birth), so… embrace it persay. Plant the seeds knowing there is a good chance we will not enjoy its fruits directly, and one will taste the fruit of wisdom as Garth I’m sure, knows well.

I suppose what I’m really trying to say is that what we realize through observation is that brilliance is not enough and as we plan and effort a seer into the future, we realize that solo efforts are never enough, that we as individuals can only take it so far and to achieve true greatness, it takes intergration, pooled energies working in harmony with each other toward the same common goal. What, you don’t believe me? Ask Cisco or Intel, Ford, heck, even Exxon (not to mention actual governments and NGO’s who have been ridiculed in the past but have done well regardless). It has always been this way even though eccentric fools think otherwise (yes, I’m taking a barb to ego bloated leaders out there, some of whom even fancy themselves to be chairmen) and what was I saying… where have I lost my train of thought? Ah yes, the economy. Housing.

Unless CMHC wishes to juice the markets with 40 year nothing down sub prime loans and banks decide to reduce interest rates yet even lower than they already historically are, how can one see house payments getting smaller and equity continue to swell, have we not learned anything about credit? Are income averages getting larger? Is economic money falling from the sky? Are alien voices whispering to a Nicoli Tesla 2? (don’t answer that question, its actually possible but potentially still years away) Is our dollar somehow miraculously going to become highly competitive with the U.S.? Where is this magic income coming from… housing? Whats driving it… asians that can no longer buy their way into canada through real estate? Banks who want household debt to explode to 200% of GDP, what the middle class doesn’t owe enough? Where is this dough coming from?

Uhuh.

It befuddles me to see how optimism can shine on Canada’s export driven economy while a reeling Japanese economy (look at the performance of their Yen), a financial freeze looming in Europe, rampant inflation in Chindia and chronically bad economic news coming from the U.S. is ongoing front page news. Logic dictates that economic growth will be slow and enemic… at best for the short term.

Its not to say opportunities won’t exist out there to make dough, they will. Some, however boring, like fixed income, balanced portfolios, preferreds, corporate bonds, etc. etc., while not sexy for the get instant richer investors of the world, still have their place. Others will quite simply… have to work for it. And whats wrong with that?

We seek to know where to best invest do we not? Its what drives us here towards this site. We want to know what each other are thinking, perhaps, especially so, what Garth is thinking. A home for our wives and children if affordable, if not, to rent (hard as it may be to embrace or hear)… our children and spouse, they need it too, a balanced portfolio perhaps filled with bank preferreds, corporate bonds, well chosen growth stocks if there is money left, fixed income perhaps and if there is any money left (where have you heard this boring but effective stuff before…?), perhaps, if one is wise, continue to invest in one’s self. Yes, thats right, invest in the one that got you here.

You.

And if… just if, you don’t have the money to invest in real estate or “portfolios” or family or friends or whatever else, there is nothing stopping you from investing in yourself with or without money, never forget it.

There once was that saying, there is no “I” in TEAM. Every team I’ve ever looked at is full of I’s, full of Individuals and the strength of that team is fully dependent on the strength of its individuals whether they be leaders or followers, its just how it is so never forget yourself in this but to think you can invest in yourself wisely without being a team player… this is where people blow it, quite frankly. They either invest in everyone else but themselves, or they invest “only” in themselves and no, investing in everyone else including yourself isn’t quite good enough if it was still all about you.

Its called balance. Right? (I’m so Taoist today)

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

Happy investing y’all and may your fruits be ripe and sweet!

#87 Devil's Advocate on 09.03.11 at 2:17 pm

“…explain to them that this was where Willy Pickton met his dates before snuffing out their lives on a visit to his pig farm another short 45 min drive out the Fraser Valley. That’s an incredible place to live and raise a family I tell you. The best part is anytime you talk to a home owner or real estate person in Vancouver they conveniently miss these salient points.” – Keeping the Faith.

And other parts of Canada are crime free? Do the names; Karla Homolka, Paul Bernardo, Marc Lépine, Colin Thatcher, to name but a few, mean anything to you?

#88 BrianT on 09.03.11 at 2:18 pm

#55gman-The majority of Cdn employees were getting DOUBLE DIGIT wage increases. The only two things that can drive median residential RE are wage increases and debt growth, both of which are tapped out.

#89 BrianT on 09.03.11 at 2:29 pm

#49Buyer-1981 is nothing-in the late 1960s to early 1970s in southern Ontario even semi retarded guys could quit school at 16 and literally walk into unionized jobs paying the equivalent of $150000/yr (when the generous overtime was included). Many moved up to foreman and made even more coin. it was even cushier 10 yrs earlier. Guys who are e.g. 75 yrs old were the most coddled Canadian generation ever there ever was, and ever will be IMO.

#90 BrianT on 09.03.11 at 2:30 pm

PS-that is in 2011 dollars.

#91 Keeping the Faith on 09.03.11 at 2:30 pm

#78 #79 Devil’s Advocate:

Nice try buddy, you just outed yourself as a real estate pumper.
Not this site, not this time, not this country.
Vancouver sucks and blows just like every other city in this country. Some good and some bad but Van City is waayyyyyyyy overpriced! …. most other Canadian citys only have a maximum of 4 y’s.

Getting concerned that your BC real estate is going down and Vancouver, your flagship city will lead the way to the bottom and drag your Prince George, Kelowna, Kamloops or Cranbrook real estate with it? Too bad, that ending has already been carved in stone. So put your efforts into better things, like decided what no-name brand tuna you enjoy as you beef up my dividends from my Canadian bank stocks over the next 20 years.

And regarding, work-life balance … 3 pm as the end of the work day, your attempted defense proves my point that BC is Canada’s version of Greek work ethic. Thanks for helping the cause. Oh and by the way, when I’m on my death bed I will remember all the life I had, because I do have a great balanced life here in TO and that I contributed to society with my work, not sucked off it, as the tribe you represent in BC aspires to.

Thanks for helping my point and go back to your delusional world, what colour is the sky in your world today??!?!?

#92 The InvestorsFriend (Shawn Allen) on 09.03.11 at 2:31 pm

BOND BUBBLE?

In his 1984 letter Warren Buffett wrote of the stupidityof those who bought bonds in 1946 at extremely low yields. Does the same apply today?

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

Warren Buffett said in his 1984 letter (written early 1985):

“However, we believe that many staggering errors by investors could have been avoided if they had viewed bond investment with a businessman’s perspective. For example, in 1946, 20-year AAA tax-exempt bonds traded at slightly below a 1% yield. In effect, the buyer of those bonds at that time bought a “business” that earned about 1% on “book value” (and that, moreover, could never earn a dime more than 1% on book), and paid 100 cents on the dollar for that abominable business.”

“If an investor had been business-minded enough to think in those terms – and that was the precise reality of the bargain struck – he would have laughed at the proposition and walked away. For, at the same time, businesses with excellent future prospects could have been bought at, or close to, book value while earning 10%, 12%, or 15% after tax on book. Probably no business in America changed hands in 1946 at book value that the buyer believed lacked the ability to earn more than 1% on book. But investors with bond-buying habits eagerly made economic commitments throughout the year on just that basis. Similar, although less extreme, conditions prevailed for the next two decades as bond investors happily signed up for twenty or thirty years on terms outrageously inadequate by business standards.”

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

Okay, back to me, well today is not 1946. But once again bond yields are without question outrageously inadequate by busines standards.

The recent ROE earned by S&P 500 companies averaged 14%. But you had to pay about twice Book value to acquire them on average. But lots are available near book value.

The point is by Buffett’s logic it makes no business sense to invest in long-term bonds. Berkshire has very little invested in long-term bonds. But what does Buffett know?

P.S. Never confuse volatility with actual risk of long-term loss. Sino-Forest was not that volatile. Until it was…

#93 maxx on 09.03.11 at 2:39 pm

Nostradamus, re: “Japan Scary situation, and not Fukushima.”

Not surprised and I wonder what we’ll be learning in a year or two- nothing and no one, bunker or not, is safe from this mess. The quantity of food produced on the west coast and Okanagan is gargantuan. Used to be we only had to read labels, then decide on “regular”, “organic”, GMO or non-GMO. Yikes, now we must add “hot” to the list!

#94 Snowboid on 09.03.11 at 2:45 pm

#48 Devil’s Advocate on 09.03.11 at 10:50 am…

“So how are these people making money? Well of the ways they are, I can assure you, reading this blog is not one of them.”

Are you suggesting you aren’t making any money?

And subsequent posts…

“Burger King doesn’t pay any more just because you live in Vancouver”

Maybe not BK but everyone I know are making more because they live in Vancouver.

“Vancouver has fewer of them though as they keep the “ugly” out of the city”

Apparently you have never been through the Downtown Eastside – just try east of Main on Hastings!

“…this is Disneyland for adults and there is a cost of admission”

Are you suggested we are living in a fantasy world?

“That or take out their real estate license.”

Last IT friend of mine that did that lost a few hundred thousand on a ‘can’t lose’ deal and went bankrupt!

“Want to turn your bank account into a million bucks? Come to B.C. with two million in it.”

Sure, come to BC with two million and watch it become ‘a million’.

And finally, as a reader of two of Garths’ books and of this blog, I can assure you I am making more money than ever.

I have dealt with real estate agents since my first home and subsequent investments and all the deals worked out to our satisfaction (and the agents). I have respect for the amount of work they did on our behalf, but also the bottom line is they are salespersons first and foremost.

So why do you keep trying to baffle us with BS?

#95 Timing is Everything on 09.03.11 at 2:48 pm

Mr Buyer
dogman01

Agreed, mostly. What goes around, comes around. Hell, even now kids (16 and 20) and their friends (very polite and respectful btw) come in handy. My kids will launch….when the time is right. Until then then, they work (part-time), go to school (full-time) and contribute ‘what they can’ to the bunker. No free rides. In the long run, it’s a win-win for the ‘pack’.

Don’t get me wrong, we have our ‘moments’. It can be a hard world….or not.

‘There are but two lasting bequests we can give our children: The first is roots. The last, wings.

——————————————————
Did you pay them back? — Garth

Garth, did you ever have the ‘opportunity’ to launch a kid?

They will get ‘paid back’….One way or another. Life’s like that.

#96 45north on 09.03.11 at 2:59 pm

the American: comparing Vancouver to other cities:

Berlin now ranks much higher than Vancouver in quality of life, now at #9 in the world.

since I’ve never been to Berlin I’ll take your word for it

Devils Advocate: have you ever been to Berlin? New York City? Guadalajara?

#97 maxx on 09.03.11 at 3:10 pm

#29 Mr Buyer on 09.03.11 at 1:44 am

Excellent post. I also cannot believe the level of borrowing that goes on. Much of the stuff purchased is junk and easily available from second-hand stores. I love the shops affiliated with religious organizations as they charge NO tax.
I’m allergic to debt. I can afford full retail but refuse to pay it. I have a horror of padding someone else’s wallet with 40%-plus markup.
I buy a lot of really amazing stuff for next to nothing. If they get lost or damaged, so what? Meanwhile, your money keeps making money and serenity reigns.

#98 BrianT on 09.03.11 at 3:17 pm

#90Inv-What does Buffett Know? He knows how to get access to taxpayer funds. He has already gotten one massive bailout and when BAC gets bailed out again he will be getting another. You notice he wasn’t stupid enough to simply buy BAC common stock-that is for the shmucks and pension funds to eat the loss on.

#99 Aussie Roy on 09.03.11 at 3:44 pm

BrianT on 09.03.11 at 2:07 pm #64

Tim-No one has a crystal ball, but I can assure you that when things go parabolic they always have major corrections. That doesn’t mean Vancouver RE isn’t a good long term investment, just that things have gone crazy. If you don’t agree with this conclusion, then you must agree with the observation that Vancouver RE circa 2006 was wildly undervalued. Why do you feel Vancouver RE was wildly undervalued in 2006?

2006 was wildly undervalued.
Says who, based on what historical measurement?

Or is your observation based on the logic that, because house prices are so high now they must have been under priced in 2006?. You realise the same observation could have been made, in ANY bubbled housing market before it popped?.

Ever considered prices where high maybe even expensive in 2006 and now they are really expensive.

You might get a bit closer to the truth if you look towards the drivers for price and value.
You know, debt and emotion drive prices, wages and rental yield drive values. Check out the negative growth in rental returns based on current market values between 2006 – 2009. Wage growth didnt keep up with house price appreciation during this period either.

Van has always appeared to me as, a matter of faith, that emotion, debt demand and ham will never change. Never is a very long time.

Also.

That doesn’t mean Vancouver RE isn’t a good long term investment.

Pretty sure these exact words where said but in Japanese about RE around 1985, I will let you discover how thats worked out for them, 25 years later.

#100 jess on 09.03.11 at 3:46 pm

From the other day Aussie grain accumulator

The Mantra
“I don’t believe in politics,” they says. “I believe in the market, and the market is always right.”

…”the volume of index fund speculation increased by a dizzying 2,300 percent between 2003 and 2008 alone. According to the FAO, today only 2 percent of commodity futures contracts result in the delivery of real goods. Before that happens, 98 percent of contracts are sold by investors who are interested in turning a quick profit — ”

OLIVIER DE SCHUTTER
UNITED NATIONS SPECIAL RAPPORTEUR ON THE RIGHT TO FOOD
“As regards commodity derivatives trading in particular, States should ensure that dealing with food commodity derivatives is restricted as far as possible to qualified and knowledgeable investorswho deal with such instruments on the basis ofexpectations regarding market fundamentals, rather than mainly or only by speculative motives. These measures would enable States to fulfill their legal obligations arising under the human right to food.

http://www.srfood.org/images/stories/pdf/otherdocuments/20102309_briefing_note_02_en_ok.pdf
http://faostat.fao.org/
Source: Jayati Ghosh, “The unnatural coupling: Food and Global Finance” (2010), at 76. Using data accessed on 29 March
2009, from: http://faostat.fao.org/.

…”A speculator, unlike other investors in agriculture, does not create new capital such as barns or tractors. If that speculator goes bankrupt, her creditors will have nothing they may satisfy their debts upon31. It can also be extremely dangerous – the terrible Bengal famine of 1943 in which 3 million people died, occurred to a large extent because grain traders hoarded essential food grains in anticipation of future higher prices32. Such hoarding exacerbated the price spike, thus denying the poorest sections
of society access to food.

momentum
The strategy evolved by the Goldman Sachs managers who ran the GSCI was to have nothing but “long”
positions, to keep on acquiring them, and to “roll” them over as they expired, no matter how high the price of those futures
climbed. As Kaufman puts it, the purpose was to accumulate “an everlasting, ever-growing long position, unremittingly
regenerated”37.

As mentioned above in the section on speculation based on market fundamentals, speculation can be useful because
it helps farmers and buyers determine prices. As such, ordinarily, futures prices are lower than spot prices, and this
ordinary situation is known as “normal backwardation”38.

However, the effect of the commodities index funds appears to have been to throw the commodities futures markets into
“contango”39, producing a vicious circle of prices spiraling upward: the increased prices for futures initially led to small
price increases on spot markets; sellers delayed sales in anticipation of more price increases; and buyers increased
their purchases to put in stock for fear of even greater future price increases40. As is demonstrated by Figure 2, when the
spot prices increased, this fed an increase in futures prices, which attracted even more speculation, thus setting the whole
process into motion once again. Indeed, the whole structure of commodity index speculation was premised upon contango.
Commodity index speculation was the gift that was designed to keep on giving

#101 Versailles Family on 09.03.11 at 3:50 pm

Ameican awesome post. You are right. We recenently visited Vancouver from Paris. That town is joke. Pretty but very boring. We were to be in Vancouver for seven days but we stopped after three. Our friends say instead go to Seattle and Portland and have much nicer time. We did and loved it. We do not understand why for anyone think Vanouver is that nice because it is not.

#102 OttawaMike on 09.03.11 at 3:50 pm

88 BrianT on 09.03.11 at 2:29 pm
Guys who are e.g. 75 yrs old were the most coddled Canadian generation ever there ever was, and ever will be IMO.
Agreed. The true golden generation. If you couldn’t make it then, you really had something wrong.

#103 Timing is Everything on 09.03.11 at 4:00 pm

#36 allister

Groovy.

#104 DM in C on 09.03.11 at 4:05 pm

Jeeybus DA didn’t you once promise to go away and not return? Forever in fact, cause you had better things to do?

6 posts just today — when you fall off the wagon, you fall hard. Or you’re just full of crap. Oh wait, you are a realtor, forgot.

Wouldn’t bother me if you actually contributed something of value, but simply finger pointing at Garth and bragging about being a real estate shiller doesn’t count as much.

#105 betamax on 09.03.11 at 4:15 pm

#48 Devil’s Advocate: “People with money can live wherever they want to live and clearly there are a good many of them, enough to sustain a level of demand for those cities”

Where did I hear that before? Oh yah, Florida. Demand is a fickle b****.

Lots of DA posts on a Saturday = slow day at the open house. Frequency denies content.

#106 bigrider on 09.03.11 at 4:27 pm

Devils advocate- All this hype about Vancouver.

What I don’t understand is if it is such a desirable place to live, why was it just recently discovered to be so. I mean prices have gone parabolic in the past 4 to 5 years ..does that mean nobody knew about it before 2005? Seriously something else must be going on here.

Why the parabolic price increases now as opposed to previous 20 to 30 years?

#107 Burnt Norton on 09.03.11 at 4:29 pm

American: Right on the money.

I’ve been on the Vancouver koolaid, managed to avoid getting burned (but got a little singed) found my way into koolaid rehab and now have a world view that sees Vancouver for what it is: not different here.

People need to ease up on DA. I for one get a kick out of his helpful comments. Helpful like a dope dealer dropping off a dead junkie in front of the hospital.

#108 betamax on 09.03.11 at 4:30 pm

#29 Mr Buyer: “My kids will not have to launch.”

I get your point, but “will” implies they’re not at the age yet. You may feel differently later if those stay-at-home young adults don’t apply themselves in the manner you expect — which is a common reality in North America. Japanese culture differs not only in attitudes regarding extended families, but also regarding engendering a strong work ethic.

There’s a difference between providing support and fostering dependency. Too often, middle-class North American boomer parents err towards the latter.

#109 The InvestorsFriend (Shawn Allen) on 09.03.11 at 5:16 pm

Number 97 Brian T says Buffett got bailed out.

Actually Berkshire and Buffett have always paid their fair share of taxes.

Berkshire of course got no bail out.

Buffett was doing the bailing when he bought Goldman Sachs.

My thinking is Buffett is an incredibly smart suinessman and investor. My thinking is he is worthy of the GREATEST respect. He has earned respect in spades.

There will always be those who bash him and make excuses for their own short comings.

Winners Win and Losers Lose (and losers whine a lot too, which are you Brian T?, and what have you done in this life? Tell us what makes you worthy of bashing the likes of Buffett?).

#110 Devil's Advocate on 09.03.11 at 5:16 pm

#93 Snowboid on 09.03.11 at 2:45 pm

You’ve done a poor job convincing me. Or is yourself you are trying to sway the opinion of?

#111 Devore on 09.03.11 at 5:18 pm

#53 The InvestorsFriend

Also the risk that today’s low yield does not even compensate for inflation.

That is not a risk, that is a fact. Bond investors are not concerned with yield. They are concerned with safety. Where else can you put several billion dollars for a few weeks or months?

There is nowhere you can put your money that will compensate for inflation that is even remotely safe. So the “safety” of government paper is not “perceived”, it is real.

#112 Devore on 09.03.11 at 5:24 pm

#65 Tim

My point is that, despite having the worst housing crises ever, some desireable areas still hold up.

You continue to miss the point. SF proper was expensive, is expensive, and will continue to be expensive. All the same, it has not “held up”. Go look up a Case Schiller or Zillow chart for any SF neighbourhood, and you will see their curve looks the same as graphs anywhere else in US. SF took a 30% haircut, vs 35% nationally. So this means that some areas actually held up as well or better than SF. Both SF and Seattle, for years thought to be immune to the national housing downturn, have bit the dust just the same, and are now tracking the national averages. It wasn’t different there after all.

#113 Killer Chicken or Imploding Boomer? on 09.03.11 at 5:27 pm

50 Mr B – your wages seem out of line with what I recall from the early 80s – my positions were unionized forest
sector with a tech diploma. What were these jobs? Or are these inflation adjusted $?

#114 Dad on 09.03.11 at 5:29 pm

Hi sons (IE dads who failed to fuel the kids properly) I had to post in this topic because it is one that is dear to my heart. My sons are the same age as these “failures to launch” and sad to say it, it is your failure as a dad to teach your sons to be independent, and your daughters to think before they act.

I have nothing to add to this topic as Garth posted, but as a dad, I need to impart some wisdom on my failed colleagues who are so quick to blame their children and “this generation”. Its not their fault, it is yours.

Signed, Cape Canaveral. AKA World’s #1 Dad.

#115 Alister on 09.03.11 at 5:50 pm

#37 Faithful Garth advice follower on 09.03.11 at 8:34 am

you wrote – “should we buy now or continue renting? Considering our financial position and the current house prices and the emotional turmoil we are facing as a family.”

You nailed it with “the emotional turmoil we are facing as a family.”

You tried to time the market and wait for a lower price and you intended to BUY to downsize.

So, do what makes you sleep well. You’re torn apart inside your guts, between the money matters and your comforts.

Make a decision then live with it. Its the same with equities or bonds or anything in life. Patience will be rewarded. Sometimes you need to wait for the market to come to you. If you can’t be patient, then do what makes you happy. Markets can stay irrational a long time, and NOONE knows the future.

Personally – I think Garth is right – RE is headed for stagnation or a fall, because I think there is a worldwide slowdown in progress. Look around, it’s on our border and across the sea. We do not live in a bubble.

Good luck to ya.

#116 Brad in Cowtown on 09.03.11 at 5:52 pm

Because 0.8% of Canadians own PMs

Interesting.

You’ve been “advising” people to sell PMs for awhile and calling a gold bubble (thankfully, most of us knew you were blinded by bias and ignored such lunacy).
And yet, all along, you obviously recognize that less than 1% of Canadians own them!!!
By definition, there can’t be a bubble in something if so few people own it.
So, one little statement like that, and you’ve simply confirmed that there’s plenty of room for more demand in the PM sector. Thank you Garth! Take a bow.

You’d think a guy from Calgary would know about bubbles. Oil soared to $147 a barrel and then collapsed – a classic bubble. And nobody you know bought barrels to keep in their garage. Try harder. Your horse looks up to you. — Garth

#117 Daystar on 09.03.11 at 6:03 pm

http://money.ca.msn.com/investing/markets/market-news/us-economic-calendar-312

Ah… timelines. Take a good long look at this calandar dear readers. Does anyone see any good news ahead from our largest trading partner, seriously?

September 14th spoke to me a while back and it wasn’t good. Is this the month retail falls off a cliff? Just my 2 cents.

Its been said that the markets look 2 years ahead. Bond markets, I’ll agree with. Stock markets sometimes don’t look much farther than a calandar (but its the first one that I would pay more attention to this month)

http://money.ca.msn.com/investing/markets/market-news/canadian-economic-calendar-304

#118 S on 09.03.11 at 6:14 pm

#29 Mr Buyer on 09.03.11 at 1:44 am

One of the wisest comments I have come across on this blog. Ever.
I cannot figure out why so many parents just cannot wait for their kids to leave. Could it have something to do with how the children were raised in the first place?
Mine, too, will stay as long as they want to as long as they continue to study and/or save to prepare for their future. And I hope that they will look this kindly at me when I am too old to take care of myself. Family is everything. Without it all the stocks, bonds, gold and houses add up to big fat zero.

Stop supporting them and see how long that ‘everything’ lasts. — Garth

#119 Mr. Lahey, Trailer Park Supervisor on 09.03.11 at 6:16 pm

Captain Garth, in Europe, it is not uncommon for 4 generations to live in an ancestral home. The notion of leaving the roost is a North American phenomenon. “Randy, grab me some more liquor and let’s head over to see what Ricky is up to”.

And Europe is in such great shape. — Garth

#120 jess on 09.03.11 at 6:17 pm

coddled ? it seemed when one retired at 65 you were dead within 2-3 years perhaps why life insurance was a big seller a sure winning product for the company

the industrial age has had plenty of occupational disease

if you were born in M/F
1920 to 1922 59 61
1930 to 1932 60 62
1940 to 1942 63 66
1950 to 1952 66 71
1960 to 1962 68 74
1970 to 1972 69 76
1980 to 1982 72 79
1990 to 1992 75 81
2000 to 2002 77 82
2005 78 83

Statistics Canada

#121 Daystar on 09.03.11 at 6:30 pm

#115Brad in Cowtown on 09.03.11 at 5:52 pm

If there is no QE3, what do you think happens to gold?

If there is a Euro meltdown, what do you think happens to gold?

If the U.S. dollar rebounds in any signifigant way, any way at all, what do you think will happen to gold? All it could take is a tax increase on the rich in the U.S. to end the rise of gold. A G.S.T. in the U.S., major cuts in federal government spending, something… anything to signal to americans that the government can and will tackle their debt issue and gold, dude, is a dud and if the government drags their feet through to the end of 2012, watch real estate and financials recover once ARM’s wind down and then what happens, must I spell it out? These are facts that are worth noting here.

Putting all of one’s eggs in a basket of gold is for total risk takers and in my friendliest opinion, a foolish one and why, the biggest reason? Because it literally bets against america and there are so many other better chances at profit offering much less risk than to buy into the now bloated record high priced gold. Sorry, but gold has lost so much of its lustre due to the meteoric rise in golds value alone…

Have you never, ever heard the wise saying, “buy low, sell high?” Gold is high, its profit potential on the wane. Its at the end, not the beginning of its high flying days. Thats not to say it won’t hover around the teen’s for the next 12 months but $2400 an ounce talk is all it is. Talk.

I once asked a very smart respected man for his financial advice concerning investments and he told me, “try investing in the stuff that sustains people’s lives”. Thats where the money/good karma is and yup, thats a pretty broad definition, real estate included. Sorry, but gold doesn’t make the list.

#122 waterloo Resident on 09.03.11 at 6:44 pm

I just read an article from an economist who predicted that in a few years time ” ONE HOUSE IN VANCOUVER WILL BE WORTH MORE THAN ALL OF NEW-YORK CITY COMBINED ” !!!!

WOW, I’ve got to get me some of that !!!

#123 Snowboid on 09.03.11 at 6:51 pm

#109 Devil’s Advocate on 09.03.11 at 5:16 pm…

Huh?

The point I was trying to make is your posts are complete gobbledygook.

#124 Brad in Cowtown on 09.03.11 at 7:05 pm

Oil soared to $147 a barrel and then collapsed – a classic bubble. And nobody you know bought barrels to keep in their garage. — Garth

Nice sleight of hand attempt – did you hone that skill back in your politician days?
Of course I was referring to an entire PM sector that very few people have exposure to (hence, no bubble) and you somehow compare that to no one having had barrels of oil in their garage? Really?! I think it’s time for us to start worrying about you if that’s the best argument you can make.

No, but it was the argument you deserved. — Garth

#125 Mr Buyer on 09.03.11 at 7:22 pm

Did you pay them back? — Garth
I am not a banker, I am a father and I brought my kids into the world. They own me nothing, ever, full stop.

Of course they owe you. Stop emoting. — Garth

#126 waterloo Resident on 09.03.11 at 7:33 pm

Hey EVERYBODY ! : want a glimpse of the future?

Well, take a look at this chart:

http://stockcharts.com/h-sc/ui?s=BAC&p=D&yr=3&mn=0&dy=0&id=p10494415512

Notice how the price-line is getting all volatile, all ‘jagged’ up-and-down, just like it was way back in Oct / Nov / December of 2008. Well, at the end of 2008 the chart was volatile because we were heading into a recession. Now the chart is jagged / volatile again, and prices will start falling in a similar way it was falling at the end of 2008. So if you own bank stocks; RUN, DON’T LOOK, JUST RUN.

#127 S on 09.03.11 at 7:37 pm

“You’d think a guy from Calgary would know about bubbles. Oil soared to $147 a barrel and then collapsed – a classic bubble. And nobody you know bought barrels to keep in their garage. Try harder. Your horse looks up to you. — Garth”

Plenty of individual investors bought into the oil bubble. Speculation in oil futures, stocks and ETF’s has received plenty of attention by producers like the Saudis and has been blamed for stratospheric pricing. No need for barrels of crude in the garage. Come on, Garth, you know this…

The context was, ‘there is no bullion bubble because people are not lining up to buy it.’ Nobody lined up to buy oil stocks or ETFs, and a bubble ensued. The cowboy’s logic is false, and you know this. — Garth

#128 The InvestorsFriend (Shawn Allen) on 09.03.11 at 7:53 pm

Devore at 53 said in response to me:

“Bond investors are not concerned with yield. They are concerned with safety. Where else can you put several billion dollars for a few weeks or months?”

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

Devore, I agree Treasury BILLS measured in months are completely safe.

Bonds are generally defined as being more than 1 year in maturity.

At number 4 above I responded to Garth’s point that

“Once again investors piled into the safety of the fixed income market, driving prices higher and crunching yields lower”

So I was thinking bonds.

Am I to understand that your position is that people don’t go into the fixed income market for the income but rather just for the safty?

It makes no sense for safty, go bank deposits and Treasury BILLs.

My point is that a 10 year Treasury BOND is perceived as safe and yet as you said it does not even compensate for inflation and it has a large risk of capital loss if market yields rise.

It seems like we should be in violent agreement here. Treasury Bills are safe. Treasury Bonds longer than a couple years are in a major bubble and are risky as regards market value and purchasing power.

#129 BrianT on 09.03.11 at 7:57 pm

#98Aussie-It is like this-if someone thinks that Vancouver RE is NOT currently overvalued then by definition that same person would think that Vancouver RE circa 2006 was undervalued. I realize conceptual thinking like this is difficult (probably at the average nine year old’s level) but do your best to keep up.

#130 T.O. Bubble Boy on 09.03.11 at 8:00 pm

#67 Tim:
Apparently you haven’t figured out that the Bay Area is over 4 times as large as the lower mainland, so of course they have bigger companies and more jobs. You also probably haven’t grasped that these people in these high paying tech jobs only account for a small portion of the working population and therefor cannot drive the housing market

Tim – do us all a favour and visit somewhere outside of Vancouver.

Take a nice drive through Palo Alto, and past Stanford’s campus. Feel the money around you. Feel what it’s like to be surrounded by rich entrepreneurial people who are employed by successful companies. Then, head down by the Golden Gate bridge to the Sea Cliff neighbourhood and feel the success around you.

Then – head back to Vancouver. Keep staring at those nice mountains, take a drive through UBC, and try to keep believing that you are in the best place on earth. Then, realize that you are in the middle of an illusion – one that has been created by the Media and the RE industry to justify insane house prices that surround you. Every single person you meet will either be a debt slave trying to keep up with the mirage, or an extremely rich person trying to get money out of another country before the sh*t hits the fan.

Here’s a question for you: when’s the last time a Vancouver-based company had a billion-dollar IPO?

#131 Nostradamus Le Mad Vlad on 09.03.11 at 8:03 pm

-
#11 Timing is Everything — Good link re: winter, and I did a little research on cost-efficient, portable electric and gas heaters.

These are the top ones — #1, #2, #3, #4 and #5, ‘tho I have seen wood and pellet burning stoves, and once they are firing on all cylinders, they are toasty warm. Better to be prepared than flash-freeze one’s nuts off!

#92 maxx — Not sure whether it will be a year or two, it may well be a lot sooner than that (see first link).

With Fukushima, PIIGS, other countries and the formation of WW3 taking shape and happening very quickly, chances are there’s gonna be a lot of unnecessary BS taking place as it is now, all incidents taking place ever more speedily.

“Try harder. Your horse looks up to you. — Garth” — Are we speaking of Crazy Horse?
*
Death Panels #92 maxx — See whut I mean? 9:21 Cartoon 50-yr.-old cartoon, when the economy was growing. Now, Soros bankrolled O’bomba The Butcher, they are lefties and follow Marx’s dictates; 2:27 clip Pyramid schemes are becoming much more prevalent, as crooks take advantage of desperate people; The Master Plan is not working very well at present; Last Resort Motels becoming home for many; GS is justified in QE3, as they run the presses, not Bernanke, and that is why they expect an Economic tailspin sooner rather than later.

Word Of Mouth is how to spread truth, not the m$m; Born Again ObL broke on thru to the other side in Dec. 2001 of natural causes, but the warhawks are scaring everybody shitless as they have nothing else to do; dubya and Cheney The Cheney Law massacre; Top Ten List Worst military contracts; War On Broccoli Well, not really but it sounds better than the War on Terror; US happy, but Doublespeak? The Pentagon has a way with words; Operation False Flag or How To Fool All The People All The Time; Stirring The Bear Encircling Russia and Iran.

Go Turkey! At last someone is boing to help the Palestinians; Sexualizing Children Another reason to avoid the m$m; New Iraq – New Libya Courtesy of the IMF – UN – NATO – US.

#132 BrianT on 09.03.11 at 8:08 pm

#101ottawa-As Garth says, the economic future for younger Canadians at this point looks pretty bleak overall. These 75 year olds everyone sees are the end result of the highest wage (median) generation, with most having pensions. At the median, they are far richer than 30 year olds of today will be at 75, and the bonus is that they will drain the economy dry in the meantime.

#133 Mr Buyer on 09.03.11 at 8:09 pm

#112 Killer Chicken or Imploding Boomer? I was doing contract work in a small shop with a huge sheet metal fabricating contract and I was getting paid like a dollar an hour less than the the guy with 20 years of experience working beside me (no union, security or benefits). It was amazing looking back but I left that opportunity along with a hundred other before I got my head even halfway out of my butt. Those were the times though, there were tons of jobs to be had if you were willing to relocate. My friends back in Ontario were doing all they could to get great paying $8 an hour jobs on the gas pipeline at the time. I eventually got a unionized position in Calgary as a systems operator that started at $10 an hour and went to $15 an hour after a 3 or 6 month probationary period (12 hour shifts, 4 days on 4 days off, and I usually worked 2 of those 4 days off so you can imagine the pay and taxes). All these jobs with no direct experience in the particular field, just the strength of the interview and successful probationary periods. It is definitely a different set of circumstances presently.

#134 Devore on 09.03.11 at 8:30 pm

#115 Brad in Cowtown

And yet, all along, you obviously recognize that less than 1% of Canadians own them!!!

Much more than 1% of Canadians own gold and gold stocks.

Those waiting for people to start lining up around the block to buy gold as their bubble signal will be very disappointed. Gold is bought online, electronically, and via ETFs. Only lineups will be gold bubble heads lining up to sell their “physical” to dealers, on dealer terms.

#135 Devore on 09.03.11 at 8:58 pm

#127 The InvestorsFriend

It seems like we should be in violent agreement here. Treasury Bills are safe. Treasury Bonds longer than a couple years are in a major bubble and are risky as regards market value and purchasing power.

We probably are, in a way. Bills and notes are ultra-safe. Treasuries are subject to rate risk, but what are the chances US or Canada bonds will experience rapid rate/yield increases? There are only so many bills to go around, even though sovereign debt is becoming increasingly shorter and shorter term. Thus demand spills over into bonds, which are seen as very liquid. The yield curve tells us no one is expecting rates to be rising in the near future.

Look at it this way. Where else can you park lots of money? Money markets? You probably know as well as anyone what MMMFs are invested in, and what they pay is not nearly enough to offset their massive counter-party risk. Also, recent rule changes mean MMMFs will become very illiquid in a crisis. They are supposed to be as good as cash, and pay practically 0%, but they are not as good as cash. These people do not trust banks. Banks are charging for deposits, and make it difficult to withdraw cash. In this light, the only alternative is bonds. Although they are more exposed to rate risk, they are seen as safe enough. It may well be the case we will see a game of musical chairs here, but on the risk scale investors face today, US bonds are very very low.

#136 Ronaldo on 09.03.11 at 9:08 pm

#36 Allister – except for the year, (mine was 1964) our story sounds identical. Good for you. And I bet your kids are both very successful as mine are and thank you for it.

#137 Mr Buyer on 09.03.11 at 9:10 pm

#112 Killer Chicken or Imploding Boomer? Your question got me thinking about what I made and at what time so I called a buddy I worked with both of the times I went out west (he gave me the heads up on more than a few jobs). Anyways we worked on the same contract and he too disputes the $20 an hour assertion (he says it was more like $16 but he is not sure either ). I am getting this sinking feeling that it may have been the 1991 trek out west that yielded the $20 and hour salary but I am not ready to throw the towel in yet. Anyways, more than a little red faced, my point still stands, there were a ton of opportunities that simply are not presently available.

#138 Mr Buyer on 09.03.11 at 9:22 pm

Of course they owe you. Stop emoting. — Garth
What do they owe me? It is my duty. Speaking of my children, I actually have to stop blogging and spend some time with them today so a response is unnecessary. All the best, until tomorrow…

#139 LS on 09.03.11 at 9:33 pm

Financially, the next generation is on its own

http://www.theglobeandmail.com/globe-investor/personal-finance/ted-rechtshaffen/financially-the-next-generation-is-on-its-own/article2148720/

I call this group Classic Canadian Retirees. Most of us know someone that fits into this group.

1) They grew up poor.
2) They believed that “a penny saved was a penny earned.”
3) They were fearful enough of how quickly things can change that they never overcame their fear of running out of money – no matter how much they had.
4) Debt was their enemy.
5) They never spent much on themselves.

Somehow this group gave birth to the Baby Boomers.

1) They grew up middle class (or wealthier), with few or no financial crises in their childhood.
2) They believed that a “penny saved won’t make much of a difference.”
3) They believe the future will end up OK – so no need to save for a disaster.
4) Debt is OK.
5) They spend a lot on themselves.

#140 Burnt Norton on 09.03.11 at 10:14 pm

Mr. Buyer aka dutiful dad

“I am not a banker, I am a father and I brought my kids into the world. They own me nothing, ever, full stop.”

———————-

Come off it. Every parent knows that diaper spelled backwards is “repaid”.

#141 smoking man on 09.03.11 at 10:20 pm

Bubble heads getting my ass handed to me tonight at ceasers in windsor down 11k. Good news is made r320k on friday. Plus a bronet with fake blond hair with the best painted toe nails I have ever seen is working me ya she is a hio but I’m to drunk to ever prodice. That ever elusive steel bar required to get an oh oh. God I love life. Tommorow when I’m sober I will scholl u kids on who to make millions fast

#142 shanks on 09.03.11 at 10:36 pm

Hey Vlad,
What did you research turn up regarding the portable low cost heaters?

just curious, because its always good to be prepared… you can store canned food and dried beans all you want, but if you cant cook them or keep yourself from freezing, they wont do you much good :)

#143 shanks on 09.03.11 at 10:37 pm

lol sorry, i should have known you would post them.. must be the ADHD…

#144 Bottoms_Up on 09.03.11 at 10:45 pm

#32 dave on 09.03.11 at 3:54 am
———————————–
That 700 number is a special type of immigration (some business-entry thing). Regular immigration will continue.

#145 Junius on 09.03.11 at 11:11 pm

#129 T.O. Bubble Boy,

You asked, “Here’s a question for you: when’s the last time a Vancouver-based company had a billion-dollar IPO?”

Never. Mining companies IPO with shares at a nickel hoping they can get them to a quarter before someone reads the geological reports.

#146 Junius on 09.03.11 at 11:13 pm

#121 Waterloo Resident,

You seem to forget that our economists also smoke B.C. bud. And you thought only our house prices were high.

#147 Bottoms_Up on 09.03.11 at 11:14 pm

#137 Mr Buyer on 09.03.11 at 9:22 pm
—————————————
I know we’re in Canada but as you can see in at least 30 states there are laws dictating that children must help their parents (and I think the laws are similar in Canada but who knows if they are enforced?):

http://law.freeadvice.com/estate_planning/elder_law/children_pay_parents_nursing_home.htm

#148 Stevie Why ?? on 09.03.11 at 11:18 pm

Devils AD ….. yes B.C. is a beautiful province …. Vancouver and Victoria … well … Not So Much. After my driving sojurn there the mountains are nothing short of spectacular. The bullshit driving in Van city takes something away from the background scenery. Now to Victoria … as an early riser I was outside of our downtown hotel at 4:30 a.m. Kind of distressing to see the street people rumaging through the waste containers before the City workers cleaned them up an hour or so later… and BTW … IF you are a Realtor your industry has added nothing to the economy. 5% to introduce buyer to seller ? May the power of the internet bring you parasites to your knees.

#149 Nostradamus Le Mad Vlad on 09.04.11 at 12:08 am

-
#141 shanks — Hi shanks, just costing out low energy users for heaters, but your post makes it obvious that a really good supply of pellets or wood is better and gives greater heat. Not sure about zoning bylaws, ‘tho. Cheers! — Pellet stoves — #1, #2, #3, #4 and #5.
*
Screw You (markets); BoA Anyone buying? Civil War on Wall St.; 13:20 clip While we were all sleeping . . .; Germany Going to the dogs; Recession? Mebbe.

Niagara Falls Should be interesting in the next few days, with a cyclone covering Fukushima and other parts of Japan; Cover Up at North Anna, VA nuke plant, and 13:04 clip Fukushima will take LOTS of time to clean up, if Japan hasn’t already disappered beneath the sea; Scaremongering Here we go again. When will these dummies learn? Cdn. Dictatorship What else can Cdns. expect from Harper? Islamophobia First para. is interesting, as a link posted a few days ago said O’bomba had the support of a majority of US Muslims; War Pigs Headline is good; Michigan Privatizing public schools. “When privatization of schools in this country becomes the norm, only parents with the disposable income to make this possible will be able to provide their kids with an education.” wrh.com. What happens if parents cant afford it? Military?

4:53 clip “At the 1:20 mark in the video, it is reported that Rumsfeld told reporters there would be a second attack after the World Trade Towers. This was before the crash into the Pentagon. The spin is that Donald Rumsfeld was taking lessons from Ms. Cleo, but Occam’s razor suggests a more reasonable explanation.” wrh.com; Nothing changes in a dictatorship — NATO Butchers along with O’bomba The Butcher; Chile’s Dry Desert Almost 32 inches of snow; Good or bad Union not allowed to strike (getting rid of unions. turn this continent into McJobs); Will be an interesting electon next year — business vs. Muslims; Xtreme weather world wide (not surprised as we’re all pet rocks now); 0:40 clip Curiosity killed the cat. Alien or human at Fukushima? All Is Fine until the baby goes out with the bathwater.

#150 Alex on 09.04.11 at 12:16 am

“Failure to launch” – got to love this and general take of North Americans on family and relationships with others. When parents think that 21 year old that is still living with them is a failure, well – it tells me how screwed up this society is. All you people care is money and all you think is for yourself. Why bother having kids if all you can think of – “When will they move out already, they are 18?”. You have no support of the family, you end up alone and your own blood doesn’t really care about you. This is very sad. And probably a big reason for so many mentally and emotionally screwed up people in the west.

#28 Jane24 – This only shows that you’re a failure as a parent, nothing else. And it’s sad that you do not see or understand that.

#151 timo on 09.04.11 at 12:22 am

http://efg-bnusfoodreserves.blogspot.com/2011/09/video-trends-forecaster-gerald-celente.html

Trends Forecaster Gerald Celente Warns on RT News – US Economy is Going to Get Worse

http://www.presstv.ir/detail/196745.html

Unemployment rate in the eurozone has climbed to 10 percent, supporting fears that the region’s economy is in slowdown as it rises for the third consecutive month

Hang on to your delusions that your an island because hurricane season brings surprises. It is not getting better and the German Banks that are exposed to Greek debt will insure a very volatile market.

Get your popcorn and your football helmet. :)

#152 Ronaldo on 09.04.11 at 12:27 am

#138 LS – you forgot one thing. 6) and they will/have inherited the wealth that their “Classic Canadian Retiree” parents were afraid to spend. Sad.

#153 timo on 09.04.11 at 12:40 am

#138 LS

Financially, the next generation is on its own

Everything works in a cycle and Generations learn from first hand knowledge but only can pass on verbal warnings to the next. We unfortunately are just repeating mistakes made years ago.

“If the 54-60 year cycle is based on generation aspects, then it would naturaly be ‘stretched’ beyond 60 years. Since these cycles of wars and economic birth and renewal occur every 2-3rd generation, we can say that when the generation to last see a depression dies off, it’s time for another cycle to begin.”

http://www.angelfire.com/or/truthfinder/index22.html

#154 Fool on 09.04.11 at 1:03 am

Here’s a case study for you: How about selling your gold to buy a house?

http://seekingalpha.com/article/291365-sell-gold-to-buy-house

#155 S on 09.04.11 at 1:18 am

“And Europe is in such great shape. — Garth”

I get a kick each time I hear a North American making such quips. Let’s see… Canada with its meager population of 30 million covers approximately same territory as all of Europe and is infinitely more wealthy as far as natural resources are concerned. In the two odd hundred of years this country existed large swaths of it have been strip mined into oblivion (oil sands), fisheries show signs of catastrophic depletion (both coasts), many rivers so polluted recovery will take generations. I wonder how well we’d do had this land had to support population density matching that of Germany, France or, just to be inclusive, Albania. Also consider that most European countries had to rebuild on average twice each century due to major military conflicts. That Europe functions as well as it does is a wonder. Their quality of life ain’t too shabby either.

#156 Rose Bud on 09.04.11 at 2:33 am

The American; Right on, brother! Right on! Vancouver tries way to hard to be something it is not or ever will be. People who try to compare Vancouver to San Francisco have obviously never been to San Francisco. Vancouver is culture less and has no identity or soul. I guess that’s why everyone in Vancouver is always trying to compare it to some other place just to find some form of validation that they are world class or better than. Newsflash!!! If you need to search for ways to be recognized as world class it is because you are not world class to start. World class cities speak for themselves.

#157 New Era on 09.04.11 at 2:48 am

As the tides turn, the remaining jobs in vancouver will go to the US,

YOur going to see a decrease in wages in the US, Killing the remaining jobs in BC.

Until the only thing left in BC will be Tourism and government.

#158 Mr Buyer on 09.04.11 at 2:52 am

#117 S … I hope to be of use to my kids and grand kids as long as possible but as soon as I start becoming a liability I hope I have enough of my faculties to take up kayaking again on the Great Ottawa river. I am more of a go off on my own on an ice flow type when I get too old. The kids should pack me off to a nursing home as soon as I become a permanent liability(no fancy ass place either). That said, I am going down fighting…

#159 timo on 09.04.11 at 3:43 am

http://www.cbsnews.com/stories/2011/09/03/eveningnews/main20101416.shtml?tag=re1.channel

The number in a category the government calls “mass layoffs” has jumped by 3 percent. Mass layoffs are when employers let go of 50 or more people at one time.

It is not looking good down south.

If your exporting you had better cut costs and trim budgets. Good luck competing if wages and the dollar remain higher than other countries.

Enjoy the Oil and commodity bubble because if markets cannot show growth that will deflate as well.

Ugly,Ugly…..

#160 Beach Girl on 09.04.11 at 5:33 am

Good luck getting the kids to repay you. HAHA. I have reinforced to my beloved sons (idiots), you get a tattoo or a piercing you are out of the will. Now, I realize they do not like me. As I play one of the other, but defacing your body, makes you even more unemployable. But instilling fear is the only way to go. My dear departed mother, said, never hit them, just yank at their hair when they are not expecting it. It leaves no marks.

#161 Utopia on 09.04.11 at 6:34 am

#103 DM in C said…

“Jeeybus DA didn’t you once promise to go away and not return? Forever in fact, cause you had better things to do?”
——————–
I am wondering too. Is that even the same DA? The one I remember actually made sense and offered some reasonable arguments but this new one talks crazy and is insulting.

Must be a fraud.

#162 Moneta on 09.04.11 at 7:55 am

Burnt Norton on 09.03.11 at 10:14 pm
Mr. Buyer aka dutiful dad

“I am not a banker, I am a father and I brought my kids into the world. They own me nothing, ever, full stop.”

———————-

Come off it. Every parent knows that diaper spelled backwards is “repaid”.

———————
LOL!

That’s the beauty of parenting and life. You know you did your job properly AND got good kids when they WANT to help and you were not expecting it.

#163 Utopia on 09.04.11 at 8:07 am

So I was sitting in a restaurant in Saskatoon. At the table next to me is an old guy and a young kid, maybe 20 years old. Turns out the old guy is the grandfather.

Anyway, gramps is telling everyone at the table how he just sold his house. It was not even listed for more that a few hours and he had received multiple offers. The Realtor had a terrific deal wrapped up in just one single afternoon. Solid as a rock.

The whole table is dead silent.

Rapt attention paid to this incredible story. Almost like he is relating an event from a Greek adventure saga and everyone is awe struck. He made out good too. (Some folks actually still respect the elderly in this part of the world, by the way).

But you know me. Being a prissy party wrecker I engage them a little from across the isle and say to Gramps “You go out just in time buddy, the market is rolling over and you sold at the top”

That’s when all hell breaks loose.

You see, all those people and the snot-nosed kid had just bought into the fantasy of ever-rising prices. They were transfixed. Grandpa was showing them all the way to the land of lollipops just when I piped up and pissed on the parade. My comment said there was not a chance in hell that any of the rest of the group would ever see the same payday Gramps just got.

So they rejected my comment out of hand.

With the snot-nosed kid leading the charge, they all launch into a diatribe of real estate fiction. The exact same stuff you have all heard before. It is different here etcetera. We have Potash blah, blah, blah. There are good jobs. Saskatoon can’t fall.

I argue back. The kids voice rises and then they all try to drown me out with loud voices instead of reason.

Then the kid booms over all the voices “a lot of people have a lot of opinions about houses but it doesn’t mean anything at all”. And so I snap back with “that may be true but at least I can actually back up my case with some real facts”.

So I got their attention.

And then it happened. I had a brain-puke. My whole monologue could not have lasted two minutes total but it had impact. Went right to the heart. I related the salient points of our real estate insanity. The stuff that we all know so well here.

I told them about the very high levels of home ownership, lack of new blood to buy into the market, our historical low interest rates versus record high prices….how rates could only go up. You know the drill.

I concluded with my “teeter-totter” analogy. When rates rise, property prices fall and vice versa. It is a fact and so I demonstrated the effect by tilting my arm up and down as I was talking. As I finish, I look over at Gramps for a reaction. So does everyone else.

Then I add, “if rates are already at the bottom, which way do you think they will go next? You remember the 70′s don’t you?” Then Gramps smiles back. His only two words of response were “you’re right”.

The whole table goes dead silent again. What a day.

#164 TurnerNation on 09.04.11 at 8:31 am

Perhaps another reason for avoiding mutual funds!

SEC Seeks Comment on Use of Derivatives by Mutual Funds
August 31, 2011
Lee Barney

The Securities and Exchange Commission is seeking public comment on the use of derivatives by mutual funds over the next 60 days after publication in the Federal Register. If it determines that new regulations to protect investors are necessary, the SEC will consider passing and enforcing them.

Concerned about derivatives’ use of leverage and increased complexity, particularly in light of the 2008 financial crisis, the SEC began investigating the use of derivatives, swaps and leverage by the $13 trillion mutual fund industry in March 2010.

In this go-around, the SEC is asking for detailed information from funds on how they use derivatives and what benefits, risks and costs they find the instruments offer.

In particular, the Investment Company Act of 1940 restricts the manner in which mutual funds may incur indebtedness and leverage their portfolios, the SEC again notes.

“The derivatives markets have undergone significant changes in recent years, and the Commission is taking this opportunity to seek public comment and ensure that our regulatory approach and interpretations under the Investment Company Act remain current, relevant and consistent with investor protection,” said SEC Chairman Mary L. Schapiro.
Lee Barney is editor of Money Management Executive

#165 TurnerNation on 09.04.11 at 8:33 am

They will run Ewetopia right out of Saskbush town! :)

#166 allister on 09.04.11 at 8:42 am

#135 Ronaldo on 09.03.11 at 9:08 pm

“And I bet your kids are both very successful as mine are and thank you for it.”

My son is a CA and my daugter is in last year of college. I told her she has to be independant – can’t be guaranteed of a man to look after her. She heard me.

#167 sue on 09.04.11 at 9:12 am

http://theeconomiccollapseblog.com/archives/25-signs-that-the-financial-world-is-about-to-hit-the-big-red-panic-button

This is what my sis is spreading around facebook with people commenting about real estate is so much safer. I just keep my mouth shut.

Tell her if economic collapse were to occur, real estate equity would vanish in a blink. Cash would be king and debt the great leveler. — Garth

#168 Kevin on 09.04.11 at 9:29 am

#162 Utopia on 09.04.11 at 8:07 am
It is like talking to people that are brainwashed in a cult.
A person will never “win” an argument with them. Arguing against some people actually makes their stance stronger. My best advice is to plant seeds of doubt. Psychological warfare. I don’t use the word bubble or overvalued at the beginning. Those words raise redflags in an instant.

I usually start out agreeing with them about how real estate has been a great asset and the gains it has achieved. Gain their confidence. Then a person can chip away. Every conversation is different, so how it is approached will be different as well. But I find stats to be very useful, which I use all the time.

#169 Moneta on 09.04.11 at 9:38 am

The kids should pack me off to a nursing home as soon as I become a permanent liability(no fancy ass place either). That said, I am going down fighting…
——-
Currently 5 year wating list for public spot. You’ve got to be in late stages od Alzheimer<s and even then you probably won't get a spot is there is someone left in your family. Government and society is going the way of at home care. So you better have a lot of mulah to pay for that home.

#170 Moneta on 09.04.11 at 9:42 am

28 Jane24– This only shows that you’re a failure as a parent, nothing else. And it’s sad that you do not see or understand that
——

There is no little black book on how to raise children. I’ve seen evidence of parents giving everything to their children, yet they turned out right. And I’ve also seen parents aggress their kids, yet they turned out right.

Until psychologists can actually fix problems, I think people should be more respectful.

Raising kids is tough.

#171 Utopia on 09.04.11 at 9:46 am

#164 TurnerNation wrote….

“They will run Ewetopia right out of Saskbush town!”
————————–

Ewetopia? EWETOPIA?

No man, I am leader, not a sheep. Don’t you recall when I told you I bought two knitting machines at a yard sale a while back? Well now I have three and have been offered a fourth. All I need is some sheep to shear and I will knit my own sweaters and socks when the boats stop coming from China.

HaHaHa. OK, now I am laughing my head off!

#172 Eric on 09.04.11 at 9:58 am

Why prices are high and will stay high for foreseeable future? Due to the city’s construction policy and prohibitions.

Sometimes I think Toronto is the least populated city in the world when I look at Google map and try to find high-rise buildings outside of the downtown where no people dwell and outside from Bloor-Dundas area along the subway line. You should look hard to spot any high-rise buildings.

So the city is not populated, all the commuters travel close to an hour to get to work. This prohibition on construction creates huge deficit of living spaces in the city.

Looking at the http://www.citymayors.com I found that
97th place in the population density list belongs to Toronto Canada.
population = 4,367,000 area = 1,655 km*km, people/square km = 2,650. This seems like a manipulation with numbers and Toronto should not be in the list at all. Seems they took population of the GTA and divided it by the area of old Toronto.
BTW Wikipedia gives Toronto’s city area, city population and density as
- City area 630 km2
- City popul-n 2,503,281
- City Density 3,972/km2

#173 Mike Rotch on 09.04.11 at 10:03 am

@ Vlad RE 148:

I was crunching some coarse numbers on fuel value per dollar.

Looks to me like an oil stove would gives you just about the same bang for your buck (I’m talking BTUs per dollar).

Now the decision – will it be easier to get pellets or fuel oil in the event of zombie apocalypse or equivalent?

I’m leaning towards fuel oil being more available as far as refined fuel.

That said, if the S really hits the F, I don’t think either will be easy to source. If one is planning, they’d better be prepared create heat via raw wood, coal, waste, and anything else that can be combusted for calories.

#174 I'm stupid on 09.04.11 at 10:14 am

#66 devils advocate

Are you really trying to make a comparison between Monte Carlo and Vancouver? Wow that really shows your stupidity.

Here are the facts about Monte Carlo

1. No income tax
2. Wages way hire than anywhere else on the planet
3. Very small population
4. Playground for the super rich ( billionaires )
5. Tourism as % of population is threw the roof
6. Very little land
I guess you will use anything to support your views.
Go to Monte Carlo first then tell me if you can get a decent hotel room for less than 500 euros a night or a meal at a nice restaurant for less than 150 euros per person. I went for f1 it cost me 5k for the weekend.

#175 45north on 09.04.11 at 10:41 am

Utopia: Then Gramps smiles back. His only two words of response were “you’re right”.

tipping point

#176 vreaa on 09.04.11 at 10:45 am

Vancouver: A City Obsessed – “I can’t remember the last time I went out with friends and real estate didn’t come up. Don’t we have anything else to talk about?”

http://wp.me/pcq1o-2Sn

#177 Live Under Your Means on 09.04.11 at 10:55 am

#154 S on 09.04.11 at 1:18 am
“And Europe is in such great shape. — Garth”

I get a kick each time I hear a North American making such quips. Let’s see… Canada with its meager population of 30 million covers approximately same territory as all of Europe and is infinitely more wealthy as far as natural resources are concerned. In the two odd hundred of years this country existed large swaths of it have been strip mined into oblivion (oil sands), fisheries show signs of catastrophic depletion (both coasts), many rivers so polluted recovery will take generations. I wonder how well we’d do had this land had to support population density matching that of Germany, France or, just to be inclusive, Albania. Also consider that most European countries had to rebuild on average twice each century due to major military conflicts. That Europe functions as well as it does is a wonder. Their quality of life ain’t too shabby either.

………………………..

Having spent time in at least 10 European countries since the late 60′s I’d agree with you. Sure they have their problems as does every country. I think the EU expanded too quickly, however.

#178 Killer Chicken or Imploding Boomer? on 09.04.11 at 11:18 am

136 Mr B – thanks for responding. I remember a wage of just under $10/hr in 1979. I was in and out of the forest industry til 1986 when it was about $16/hr. This was IWA union. I recall a big strike in 1981 (I missed it)
where the settlement was something like 12 and 14%
over two years. I think the industry mill workers made a
bit more per hour, but forest workers often got more
hours.

Interesting observation from my sis who works in local FI. She says mill workers are savers while bush workers are spenders.

#179 City Slicker on 09.04.11 at 11:35 am

Garth I just read in the Calgary Heard sales in August were up 29% and the avg house price sale was $453K in August, up 1.8% compared to Aug 2010.
Are you meaning prices are down from May, June, July?
And is the $123,000 plop in Toronto official as per TREB?
Thanks!

Nah, I made it up. — Garth
—————————————————————-
I beleive you Garth. Did you have a link to the TREB numbers?
Also is this how it starts, how a bubble normally pops, will this start to spread throughout Canada?

#180 City Slicker on 09.04.11 at 12:07 pm

Never mind I think I found it.

#181 Launch to failure on 09.04.11 at 12:26 pm

I grew up in a well-to-do part of Vancouver. When we graduated for high school, some kids went out into the world and tried to make their own way. They tended to have less wealthy and influential parents.

Other kids, with wealthy and influential parents, were handed everything on a silver platters. Good jobs, nice cars, and sometimes went to good schools. I thought those kids would self-destruct because they wouldn’t appreciate all that was given to them.

I was wrong. The kids who went out into the world on their were lucky to get a middle class income. Many went nowhere in life. The rich kids are now, for the most part, extremely successful with high-flying careers.

Do all you can. Pull every string. Raise every expectation. Don’t launch your kid into the world alone.

#182 Robert Dudek on 09.04.11 at 1:12 pm

As a Torontonian and a several-time visitor to Vancouver, I can confirm that Vancouver does have a soul.

With its ethnic mix and mountains and ocean, it is different than any other place I’ve been.

I’m not saying it’s necessarily better, but it is rather unique.

#183 OttawaMike on 09.04.11 at 1:29 pm

Biker Roll Call,

I know a few of the regular bloggers on here have motorcycles. I’m just curious as to what kind of scooters everyone has.
Garth I assume is still riding the same FLH as a couple of years ago?

I’ll go first: 2008 Kawi dual sport KLR 650 with upgraded suspension and exhaust amongst other things. Cheap, frugal(60 MPG) and nimble. One of my favorite bikes in 35 years of riding.

Now have a black VTX 1300, Vance pipes, Rifle fairing. Like a Harley that works all the time. — Garth

#184 OttawaMike on 09.04.11 at 1:36 pm

I was canning tomato sauce this weekend in preparation for the collapse of the EU banking system.
That and home made tastes better.

What amazed me is how many 20 somethings had never heard of Mason jars or canning. I went into a couple of grocery stores and chains looking for supplies and most looked at me like I was trying to find supplies to fix my spaceship.

A pretty good “in the field indicator” how insidiously big Food Inc. has infiltrated our lives.

#185 OttawaMike on 09.04.11 at 1:47 pm

#169 Moneta on 09.04.11 at 9:42 am

I know a few guys that came from poor, disadvantaged , dysfunctional households and came out as wealthy, happy adults.
Same goes for all the “rich kids” I’ve known over the years that were and are absolute screw ups.

There is no true secret. Raising kids is not science but art.

#186 Bill Grable on 09.04.11 at 1:51 pm

Here’s my take on Vancouver. Have owned RE here and rented, and have lived in TO, Ottawa, NS, Victoria, and in other Countries….Vancouver is becoming a nightmare.
The obvious money laundering at the casinos, the detrius of most of the DT Eastside and the crud that our paved over suburbs leading to million dollar bungs, remind me of a Potemkin Village.
Big car leases, big show, no dough.
Industry?
Growing dope and “mining companies” that troll for suckers on the VSE, are the main industry, besides flipping RE.

The liveability of this City might be swell if you have managed to squirrel away a couple of million – but try this – phone an office on Friday in Vancouver and try and get a hold of that party…chances are they are already down on the boat they bought with the HELOC, moored at the slip that costs $1500 a month…cocktails not included. No one works here!

It’s bizarre. RE will crash and burn – and it has already started.

Took tour of Olympic Village….ruined Vancouver’s credit rating – and the place is a disaster. Doors won’t close, the windows leak, and it’s just about empty….and you are seconds away from grimy areas.

Ah, doncha’ love hype? Vancouver?

Windsor, with better scenery.

#187 UVZ on 09.04.11 at 2:02 pm

#162 Utopia

Great effort and post!

Too bad, however…

The family — kid and all — have now forgotten all about what you said. All they remember is that a rude guy interrupted Gramps’ fairy tale and their family meal.

#188 Aussie Roy on 09.04.11 at 2:14 pm

jess on 09.03.11 at 3:46 pm

From the other day Aussie grain accumulator

The Mantra
“I don’t believe in politics,” they says. “I believe in the market, and the market is always right.”

Never said that, dont agree with it.

Not sure the point you are making, do you think what I described is speculation?. Far from it, these are grain produces and end users, who use these tools to manage their own price risk.

Look, its kind of a nice claim to say well the physical canola market is X and the futures market is so much bigger. However these statement are made by people who have no concept that, actual people who rely on a certain price for their production use this market to manage risk. Ever talked to Canadian grain grower and asked how they manage price risk?.

Viterra in Canada and Australia would manage the price risk to itself and hundreds of produces the way I described, does sound sound like speculation or risk managment?.

Take a shot at the speculators if you must, just make sure its only them.

BrianT on 09.03.11 at 7:57 pm
#98Aussie-
It is like this-if someone thinks that Vancouver RE is NOT currently overvalued then by definition that same person would think that Vancouver RE circa 2006 was undervalued. I realize conceptual thinking like this is difficult (probably at the average nine year old’s level) but do your best to keep up.

I wonder how many would have thought the same way before their housing markets started to plunge and wiped away many years of appreciation?.

Try to keep up?. Um, I’m in front not behind.

#189 Bottoms_Up on 09.04.11 at 2:15 pm

#149 Alex on 09.04.11 at 12:16 am
——————————————-
They say that ’60′ is the new ’50′, so does that mean ’21′ is the new ’11′?

Personally, when I was 21, I couldn’t wait to get out of the house (despite loving my parents and siblings very much).

The only reason I was at home was to crash summers between years at university. The moment I got my own permanent place (at 22) brought a tear (of joy) to my eye…

And yes it was difficult financially but it taught me a whole lot about life and to never take anything for granted.

#190 Robert Dudek on 09.04.11 at 2:19 pm

Best thing is that the kid wants to live on his own when he/she becomes of age, but that you recognize that you should support them financially and emotionally when they need it.

IMO if your kid grows up and is not able to take care of him (or her)-self; or, if the kid grows up and is emotionally indifferent to his parents – you have failed as a parent.

#191 OttawaMike on 09.04.11 at 2:38 pm

#177 Killer Chicken or Imploding Boomer?

You mean, we still have people working in the forestry industry in Canada??

It sure is struggling in this part of the country.

#192 BrianT on 09.04.11 at 2:39 pm

As another poster pointed out, we are not worthy to criticize these scumballs, so I will just provide the link http://www.zerohedge.com/news/goldmans-dan-shitty-deal-sparks-sued-selling-%E2%80%9Cjunk%E2%80%9D-%E2%80%9Cdogs%E2%80%9D-%E2%80%9Cbig-old-lemons%E2%80%9D-and-%E2%80%9Cmonstrosities%E2%80%9D

#193 EB on 09.04.11 at 2:45 pm

#168 Moneta on 09.04.11 at 9:38 am
Currently 5 year wating list for public spot.

I’m not sure where you get that figure – I’m currently working on a spot for my Aunt and the wait in Vancouver is about 12 months – you *do* have to be in the system first (not with any particular illness) and it’s best to have someone involved who knows the system to make things go smoothly.

Both of my parents went through the public system when they needed extended care, and the standards were very high – I was always impressed with the facilities and the staff. My first-hand experience was quite different. Of course it helps to know other people who are in the same boat so you can avoid the less well-run places (they do exist).

Plus if anything the demographics say that affordable long-term care options are only going to increase over the next couple of decades – there’s an extant population of boomers who will be needing care – a service industry which addresses this need will grow to take advantage of it. Personally when (if!) I hit that point I expect to be going into a scenario of dwindling demand as the boomers pass on, but with the remains of a fairly high level of service still in place.

#194 Timing is Everything on 09.04.11 at 2:57 pm

#130 Nosty
#148 Nosty
#172 Mike Rotch

Wood for the bunker. I purposely bought a wooded acreage. Our house does not have a furnace. It has baseboard heaters that are rarely used. I converted the fireplace to an efficient ‘wood stove insert’. I basically got most of my heating fuel for ‘free’ when I bought the bunker. Heating costs are rising, so to speak. A wood stove + ceiling fan = toasty house (Advantages of a modestly sized house). Sure it’s a bit of work, but I enjoy it. I appreciate our warmth (comfort) more. Another useful upgrade was all the windows. Over 20 or so years, they will actually pay back, plus the comfort level of the house is greatly increased. Did I mention the gen-set? ;)

Excellent stuff. A Van Isl company (Duncan, BC)…

http://tinyurl.com/3pq28tm

———————————————–
wrt infrared…

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

http://tinyurl.com/3rw4ol4

#195 The InvestorsFriend (Shawn Allen) on 09.04.11 at 3:16 pm

Brian T at 191 responded to my question at 108 of whether he was worthy of bashing the likes of Warren Buffett.

Brian, your link does not appear to contain anything that shows that Warren Buffett is a “scumball”.

I get a bit annoyed because I have have spent literally hundreds of hours reading what Buffett does and says and what he has said since he first started writing about investments in the 1950′s.

If Buffett is to be “accused” of making money within the laws of the country and in an ethical manner, he has done that.

I find his views and his approach to be astonishingly constant over his entire 60 year record.

He is about the furthest thing from a scumbag that you will ever find.

Your link mentions that Wells Fargo (Buffett has a big investment in it) is not being sued by the feds while some 17 other big banks are. Wells Fargo is an ethical company. I have about $167,850 (7040 shares) invested in Wells Fargo.

I recognised about 10 years ago that Warren Buffett was indeed a truly gifted investor. I have learned and profited from his advice. I looked into Wells because Buffett owned it. I liked what I saw. So far I have lost some money on Wells Fargo. But I am confident ultimatley I will win on this investment.

When investment wisdom (like Buffett) presents itself it would be wise to study it rather than mindlessly bash it.

I mean for gosh sakes is everyone who buys a share in Goldman Sach’s a scumbag? If that is what you think, then maybe you should like for a socialist blog to join.

#196 Mister Obvious on 09.04.11 at 3:18 pm

Is it my imagination or has everything become sort of… frozen. Here in la-la nothing much is selling RE-wise anymore but prices still seem to be stuck at ’stupid’.

A townhouse near me close to the water is going for half-a-million. It’s been on the market for well over three months. It’s not such a bad place but I would only pay half of that because: (a) it’s priced simply far too high for what it is (besides ‘location’), and… (b) It would need about $50K worth of internal de-uglification right off the bat.

In the meantime, hundreds of ‘reluctant landlords’ are begging for tenants to fill their crappy two-bedroom basement suites for $1800+ per month, probably to mitigate financial troubles due to excessive ATM’ing of their properties.

Regardless, Craigslist rental suite ads abound and there again, prices seem frozen. Check out Vancouver rental listings sometime. The pool of tenants must be very small because the pool of rentals is enormous. All the while, rents remain stuck.

As I drive around the lower mainland, I see lots of new construction still underway but I somehow sense that the ‘pace’ of construction is slower. That is to say, they seem to be in less of a hurry to get them completed. It’s just a feeling I get.

A long, slow pendulum seems to stop for just a moment before reversing and picking up speed in the opposite direction. That’s kind of what it feels like to me.

#197 BrianT on 09.04.11 at 3:23 pm

#187Aussie-You would have to go to the original post, start re-reading verv very slowly and try to comprehend. You seem to be arguing with yourself re Vancouver RE.

#198 Killer Chicken or Imploding Boomer? on 09.04.11 at 3:24 pm

190 Mike – not nearly as many, that’s for sure. The big wood is gone, and even a lot of the easy second growth. Just drive the inland island highway to see that. But the
trees grow back, and the watering system still works,
though it has been on hiatus fo the last month. I think the boomer bulge will trim down the workforce nicely. I still have a BIL working in a supervisory role, and a
nephew in the camps.

#199 Junius on 09.04.11 at 3:30 pm

Re: Vancouver,

I find all of this talk about whether or not Vancouver is the “best place on earth” or not to be irrelevant to the question of Re Prices.

The fact is that historically Vancouver prices were never more than 4x income even when it was a nicer place to live than it is now. Nothing has changed in the fundamental economy of Vancouver to justify the current 11 or 12 time income prices. It is all debt and speculation. Period.

Everything else is just a delusional justification for the pumpers. Housing prices may rise on emotion but eventually they fall back to fundamentals. It is just a matter of time.

#200 Junius on 09.04.11 at 3:36 pm

#183 OttawaMike,

I agree. I have a big garden that I enjoy as a hobby. Most of our staff is under 40 and they think I am nuts. They are completely disconnected from where our food comes from. Sad.

#201 Junius on 09.04.11 at 3:40 pm

#66 DA,

Do you really need to bring this Monte Carlo crap up again. Vancouver is nothing like Monte Carlo. You know better.

Monaco is a tax haven. If you get on the train and go 20 minutes East to Italy or 20 minutes West to Nice, France you will find Re: prices a fraction of the cost.

If the City of West and North Vancouver where there own countries with a different set of tax rules then you could start making a comparison. Otherwise this is just silly.

#202 Utopia on 09.04.11 at 4:45 pm

#154 S wrote….

“In the two odd hundred of years this country existed large swaths of it have been strip mined into oblivion (oil sands), fisheries show signs of catastrophic depletion (both coasts), many rivers so polluted recovery will take generations”.
———————————-

I think the term “catastrophic” is a bit of an exaggeration but you do have a point. You should review your European history in a little more detail though and consider how the French, Portuguese, Spanish, Italians and English exploited the new Worlds, Africa and Asia.

Hell, Europe itself was once a gigantic oak forest from end to end and virtually none of that exists anymore. North Africa was stripped bare for hardwoods to build pianos and furniture to the extent that region is now almost 100% deforested.

If you mean that all strong nations pillage without remorse of the easy resources then I might go along. Europeans have certainly had their fair share of the wealth and the lands over the years.

Little of it is been beneficial to the sellers in the long run.

#203 Utopia on 09.04.11 at 5:13 pm

#198 Junius on 09.04.11

Exactly. Thank you for that comment Junius. I spent much of my life in Vancouver. The prices were always a little high but for as long as I can recall were still within reach of mortal human beings. What is happening now is just beyond belief. It was not so long ago (1987 I think) that I was looking at houses for a mere 30 grand in Surrey. Same junk places today are over the moon and only a nut would pay 15 times that amount for the same place.

#204 Andrew on 09.04.11 at 5:26 pm

#64

“Because 0.8% of Canadians own PMs. Almost 40% of people have equities and bonds through RSPs, mutuals, pension plans or ETFs. I don’t write about options, warrants or futures for the same reason. — Garth”

Thanks. You just demonstrated why bonds are in a bubble and PMs aren’t.

You just won the Skippy Award for September 4th, 2011. — Garth

#205 Utopia on 09.04.11 at 5:28 pm

#197 Killer Chicken or Imploding Boomer wrote…..

“The big wood is gone, and even a lot of the easy second growth. Just drive the inland island highway to see that.
————————————–

Yeah. You will see that all right.

You will see nothing but a strip of trees to the depth of a hundred feet all along the road. It looks like a forest. You might even get the feeling the whole province is lovely and green as you drive through it.

Try this instead.

Fly over to see how badly you have been cheated. Your opinion will change forever. Much of the province has been strip-cut. There is nothing but Christmas tree forests beyond the hundred foot barrier and it is almost all invisible from the road.

In other words, there will no tree harvest for decades.

#206 jess on 09.04.11 at 5:33 pm

outlook to 2020
http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000277009.pdf

Sources: IMF, DB Research chart 6
page 5/11
G20 exposed to China
China’s share in G20 countries’ total
exports/imports, %
CA
Exports Imports

year 2000 2010 2000 2010
0.9 3.0 3.2 10.9

http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000277009.pdf

See Clemens, Dyck, Just (2011). China’s housing markets – Regulatory interventions mitigate risk of severe bust. DB Research. Current Issues. 28 April 2011, p. 11.
2 See Clemens, Dyck, Just (2011).

#207 BrianT on 09.04.11 at 6:05 pm

#194Inv-Socialist-classic. Goldman Sachs only exists because of the ability to access taxpayer capital-that is not an opinion or theory, that is a fact. But whatever-you want to idolize grifters like Buffett-have fun-I mean who really cares one way or the other.

#208 Nostradamus Le Mad Vlad on 09.04.11 at 6:36 pm

-
#158 timo — Good post and link. The layoffs are coming thick and fast now, but when the feds. (and states / provinces) carry over, that is when the groundswell of discontent gets louder.

#172 Mike Rotch and #193 Timing is Everything — Excellent links, and good posts. Don’t know about you, but things are sure cooling off here in the Snowedkanagan!

#205 jess — Great link re: China. Could be that they are deliberately slowing their economy, then when things are about equal, Japan and China cash in all their IOUs and take the US down.

That’s one way of stopping their perpetual war machine, and messing with NATO and the UN at the same time.
*
Not necessarily. I could be arguing in my spare time, but that’s as maybe.

We whisk you off now, courtesy of the BBC’s Time Machine heading Back To The Future to a derivative of The Frost Report, starring Eric Morecambe and Ernie Wise.

#209 The InvestorsFriend (Shawn Allen) on 09.04.11 at 7:11 pm

BrianT

Actually Goldman Sachs was FORCED to take TARP funds from tax payers and it never asked for that and it repaid same with interest.

The real FACT is that no one knows if Goldman would have survived without that money. Buffett says they would have. But again what does he know?

You can (anonymously) call anyone you want any name you like. I have done the hundreds of hours of reading about Buffett. My opinion of Buffett (that he is a great investor and an ethical man) is not anonymous and and it is an informed and credible opinion.

Your anonymous and apparently off-the-cuff opinion is of no value to anyone.

Some people constantly whine about banks and rich people. Others of us get on with the job of making money.

Keep an eye on Wells Fargo and see how I do.

If it tanks you can gloat.

#210 Bill Gable on 09.04.11 at 7:37 pm

Anecdotal US updater: (*The time’s they are a changin’ – fast).

This story also might indicate how the Recession is affecting the general economy. Just a thought.

Gee, how is the snail mail business in the World’s most “prsoperous” Country (The USPS is suppported by sales – no stipend, BTW).

“The United States Postal Service has long lived on the financial edge, but it has never been as close to the precipice as it is today: the agency is so low on cash that it will not be able to make a $5.5 billion payment due this month and may have to shut down entirely this winter unless Congress takes emergency action to stabilize its finances.”

MORE http://tinyurl.com/3budo2w

#211 Bottoms_Up on 09.04.11 at 7:38 pm

#204 Utopia on 09.04.11 at 5:28 pm
——————————————
Seems a little drastic. Take a look at this satellite picture of interior BC, I see a lot of green……

http://maps.google.ca/?ll=51.53096,-121.404419&spn=0.886765,2.469177&t=h&z=9&vpsrc=6

#212 Live Under Your Means on 09.04.11 at 7:45 pm

I’m one of 6 kids. Father lost his job at a crown corp when he was 45. Had a major heart attack at 44. He loved his job but Dr. thought it was too stressful so they moved him to a less stressful one. He hated it and corp. knew it. Crown corp was off the island of Mtl. Corp was gradually eliminating jobs – especially those who did not speak French (Dad was from Europe) so he was let go. So we moved to a large 3 bed apt in east Mtl & Mom at 47 had to reenter the workforce. Two older bros. were in the forces at that time and my older sister worked. I babysat every day after school (Grade 8) for a young couple. She was nursing so I occupied Peter – watching the Jolly Green Giant – his favourite show – and then playing with him in his room until Dad came home. Never babysat for a nicer couple. She treated me like a young sister, taking me shopping, etc. He would drive me home each eve. and, like a true gentlemen, hold my elbow and walk me up to the apt. door. They moved a year later, but I babysat their kids for another 3 yrs. at night and stayed with them. He was French Quebecois but rec’d his psychiatry degree in the US, then returned to Mtl. (St. Jean de Dieux hospital) to get his Quebec papers in case one day he wanted to return. When they returned to Mass. they wanted me to spend the summer with them – they had a nephew around my age they wanted to introduce me to:-).

Throughout most of mine & my younger sister’s high school years we worked Thurs & Friday evening and all day Sat. at one of the big dept. stores in Montreal. My girlfriends (immigrants from war torn Europe) did as well. All of them have done fairly well in life. I really only worry about one sister’s financial situation, tho I disagree with most of my brothers & sisters financial decisions.

BTW, when Mom had to go back to work she’d dole out 10 cents to each of us for milk at the school cafeteria – and it was written down in her book. I don’t know how she managed financially. When we 3 sisters worked fulltime & got a raise we’d give her half of it. None of us had an easy life. My Mom was a very special person. She was a member of the Montreal Board of Trade. Her boss would take off for several months on buying trips (he was an importer) and would leave her in charge financially (with the bank) and all of the employees. She died 14 years ago and would have been 99 this year. I miss her. She lived with us for 4+ years.

Sorry for my nostalgic rant.

#213 Live Under Your Means on 09.04.11 at 7:48 pm

#204 Utopia on 09.04.11 at 5:28 pm

Same her in Nova Scotia. From the highway it looks great, but if you really look closely, the forest is stripped.

#214 Looking to Leave Canada on 09.04.11 at 8:21 pm

This can not be real but my wife for the past month has become very serious of leaving Canada for a better life in the US. We are starting to look into the process of what needs be be done to qualify. We…..no I don’t want to leave Canada but their is no opportunity in the GTA or Canada. My SIL lives in fort lauderdale and can help wife find a job in her field but my skills not so much. My SIL tells me not to worry that I could even find a job working at micky D and we would still live better then now. We have $200K saved up and that can get you alot of house and not have mortgage. I don’t want to leave but what can I say good about living in the GTA? Traffic?Cold weather? Being house poor? The only thing is health care but if you get a good plan you are fine. I’m so screwed all thats conservatives and CHMC who lends out money to anyone with a heart beat all on the taxpayers back. Well done Harper well done.

#215 Stinky the Fish on 09.04.11 at 8:22 pm

Still waiting to swoop down and snatch up a house. Snatch that sh-t right up. Yea… May take a year, two years or three… but I ain’t paying the current price of a home in Canada. Build up a nice cash flow and punish someone for being naughty.

#216 45north on 09.04.11 at 8:27 pm

Bill Grable: Vancouver? Windsor, with better scenery.

pretty funny, I like your story where your landlord raised the rates so you moved out. You said he is now at the bottom of the list for new tenants. I don’t understand that.

oh yeah I looked up Potemkin Village:
http://en.wikipedia.org/wiki/Potemkin_village

Mister Obvious: In the meantime, hundreds of ‘reluctant landlords’ are begging for tenants to fill their crappy two-bedroom basement suites

in the US reluctant landlords were one of the signs of real estate stress

Junius: whether or not Vancouver is the “best place on earth” is irrelevant to the question of Re Prices.

that seems pretty obvious

you know at 10 times income how could Vancouver real estate prices decline gradually? The question is binary: either you believe that Van real estate is worth 10 times average salary or you don’t.

#217 BrianT on 09.04.11 at 8:31 pm

#208Inv-Goldman got the big bucks through the AIG bailout-I am surprised you didn’t know that. Goldman got 100 cents on the dollar for bets that should have been useless as AIG had not money to pay (the schmuck taxpayer paid Goldman)-Look-if you can’t even spend 5 minutes on educating yourself on this subject I don’t want to spend any more time schooling you-my advice would be to get rid of your WFC but do want you want.

#218 Nostradamus Le Mad Vlad on 09.04.11 at 8:36 pm

-
#209 Bill Gable — If the USPS is that bad, what of Canada Post? E-mail and texting have taken their toll, bit this may be another way to get rid of unions.
*
Filettino Well done. F*&k the IMF and the other greedy bastards; US Fed running out of ammo, so what is the next rabbit to be pulled out of the hat? Pensions Fly for some, sink for most; The Bowels of Congress, and this; Banks fighting among themselves; 43:10 clip The real face of the EU.

Libya “Their crime? None. The only way NATO terrorists can take the town is if they kill everyone.” So NATO, the UN and US are the real terrorists; Booga Booga Time! “Yeah, right, TURKGuvenligi (Turk Security). Suuuuuure. And if you believe this hacker group is really Turkish, I have some of Saddam’s nuclear weapons to sell you!” wrh.com; Katia Hurricane or hurricane by HAARP? As if the US doesn’t have enough to do, would the UN change anything in Palestine? Of course not; Last Resort is the military for unemployed; Turkey Raising the bar; CC An Inconvenient Cloud; Libya Fact or fiction; CIA chooses dictators. Eliminate the CIA, that solves half or more of the world’s problems, and 2:39 clip Gadaafi and CIA.

Toba and Krakatoa maybe. Volcano alert, and Japan Flaring up again; Flashback “Remote controlled aircraft have been around since the late fifties, and can be flown from the ground with absolute precision.”; Labor Day should be renamed Corporation or War Day.

#219 Utopia on 09.04.11 at 8:44 pm

#210 Bottoms_Up to #204 Utopia

“Seems a little drastic. Take a look at this satellite picture of interior BC, I see a lot of green……”
—————
Are you with the forestry lobby? Satellite images are NOT the same as a close look by Beaver or Otter. Anyway, I kind of think you already know that. Only a true logger would try substituting a satellite image for an aerial shot to make his point. Ha ha. Good one.

To Live Under your Means:…..
—————–
I loved your reflections. It would be great to hear more too. It is such a nice change of pace when looking back at quieter, more peaceful times. So much has been forgotten even though much of it is still in the very recent past. If those memories are ranting then we need a lot more of it!

#199 Junius and #183 OttawaMike……….

That is hilarious. Maybe I should not be laughing though. I had a similar experience when I went to Superstore and asked the young lady for “Sealers”. She had to call a co-worker for help. You know, it was just like I was speaking a foreign language to her. Maybe us old guys have to keep some of Mom’s traditions alive.

Like Gardening, canning…(and knitting)

#220 OttawaMike on 09.04.11 at 8:52 pm

#212 Live Under Your Means
Cape Breton is probably the worst I have ever seen of this. Back in the 80′s we left the main road with an SUV and came to absolute clear cutting as far as you could see.
If it had less humans maybe Earth’s forests could stand a better chance.

#215 Utopia
Prolly thought you was looking for clubs to whack seals with..

#221 betamax on 09.04.11 at 8:56 pm

#204 Utopia: “Much of the province has been strip-cut.”

Agreed. A fly-over is shocking; you see highways with strips of green on either side but clear-cuts almost everywhere else. That’s why they’re logging remote places like the Queen Charlotte Islands.

#210 — zoom in on your own map and you’ll see how it’s been farmed out. There are sections of clear cuts with no trees as well as sections with secondary or scrub growth. What appears as uniform green from a higher altitude is anything but up close.

#222 Killer Chicken or Imploding Boomer? on 09.04.11 at 9:11 pm

204 Utopia – Did you understand my post? I said the easy second growth is gone. Do you even know what it is? Have you ever put on caulk boots? Ridden in a crummy?
Grabbed devil’s club?

I dont need to fly over it to see it (though I have).

No harvest for decades? I can still see millions of trees
from my house. Some immature, some harvestable. My
neighbour still works in a mill, my wifes friend is a faller,
a riding buddy drives logging truck, as well as the family
members I mentioned. If I live to a reasonable age, they
will be harvesting the third growth.

Hug a logger, you’ll never go back to trees.

Bumper sticker seen in Lake Cowichan – “Earth first – we’ll log the other planets later”

#223 The InvestorsFriend (Shawn Allen) on 09.04.11 at 10:28 pm

Brian T at 216.

Okay, right Goldman benefited when AIG got bailed out.

I had to guess what you meant by Goldman got bailed out. I guessed you meant TARP which was the direct bailout money.

Once the government decided to bail out AIG then all the counter parties of AIG benefited from that.

So what? That was entirely the government’s decision not Goldman’s.

This does not make Goldman evil. I don’t know how large those losses would have been in relation to Goldman.

But why slag Goldman for a decision of policticians to bail out AIG?

And why go further and slag Buffett for making a savvy investment in Goldman?

I don’t recall when Buffett made his investment in Goldman it may have been after the AIG bailout.

Either way, I see no basis there to slag Buffett.

I have spent many hours studying Wells Fargo. I paid my money and I take my chances. I like my chances.

#224 Snowboid on 09.04.11 at 10:33 pm

#221 Killer Chicken or Imploding Boomer? on 09.04.11 at 9:11 pm…

I have friends and relatives working in the oil and gas (fracking) in AB and BC and I accept the fact that my personal feelings about what is happening cannot be shared with them.

From 1973 to 1989 I travelled the province from one end to the other as part of my government work, mainly in small planes and helicopters.

I saw first hand the devastation of the forests, and the absolute disregard for the environment. I also witnessed first-hand the BS fed to the media about what was really going on in the forests. This was under the NDP, Socreds and Liberals.

Of course forestry wasn’t alone: mines, mills, agriculture, aquaculture and processing plants all had their ‘dirty’ secrets as well.

But to make out that forestry is being well-managed in BC is something you can share with your drinking buddies, don’t try and tell us the same!!!