Trang wreck

If the Amazons haven’t been too rough Saturday night (I heard something about nylon rope and vegetable oil), then I’ll be posting my 2012 outlook on NY day. This will include some thoughts on financial markets and taxes, as well as real estate and the economy. I’m confident it will irritate everyone.

Where we’re going is, of course, always critical. When it comes to the future, most people screw it up. Like Trang from Tranna:

Wife and I (in our early 30s) are living in a mortgage free 1 bedroom condo from our parents. We are making 150K plus and saving about 50K/yr. Bought a pre-construction 3 bedroom condo in 2009 ($430,000), which was suppose to be done in 2012. We put down 15% ($64,500). We had planned that when we close the deal we would only have about 200K mortgage and it would take us 6 yrs to be completely mortgage free. Now it’s delay until January 2014. My wife is expecting and the little one is coming this summer so we’ll need more space. We are thinking of a house in the next few years but we are stuck with this pre construction condo deal. I heard that it’s expensive to get out of a condo deal like this… but really don’t know much about it.
Any thought/advice on our situation would be greatly appreciated.

This note raises more questions than it answers, of course. Like why did the parents give the kids a condo, and what’s expected in return? If these thirtysomethings have no mortgage, earn $150,000 a year and save a third of that, where’s the rest going? Why would anybody in their right mind buy a condo in 2009 that won’t materialize until 2014? Did they not have the agreement lawyered? If so, don’t they have the right to walk on a deal that’s delayed by years?

This whiny little note teaches us a few things.

First, never buy a pre-build. Not a house nor a condo. Real estate is, after all, supposed to be real. You need to see it, inspect it, touch it and experience it, especially when this is going to be a home. Buying something from a brochure, a floor plan and a salesguy means you’re entering into a real estate futures deal, paying money now for the right to buy a commodity at a later date when it’s delivered. It might be worth more or less at that time. It may or may not be what you expected. The market may have advanced or tanked. One thing’s for sure – you just bought a heap of risk.

So, never sign a one-sided contract which allows the builder/developer to (a) make changes to the floor plan at his discretion, (b) substitute materials without your prior approval or (c) delay delivery of the unit without specific consequences, or your consent. Of course, there ain’t a developer in Canada who will ink a fair pre-construction contract giving the buyer equal rights, which is why this is a bad idea. At the least, ensure you have your lawyer read the agreement before signing it (or before expiry of the cooling-off period), so she can laugh and tell you what an idiot you are.

Now, what of buying a condo in Toronto, especially one that won’t exist for another two years? Another boatload of risk. There are some 43,000 new condos being marketed, going up, in the pipeline or in approvals in the GTA. That just about guarantees an oversupply. Additionally, about 80% of existing deals are being done by speckers and flippers. That means demand can evaporate in weeks if interest rates rise, mortgage rules change again (watch out for F in March) or the economy takes a dump. Speculators are like flies. When they move in, you know things are too ripe.

The urban condominium market is a dangerous place. In the last few weeks most big bank economists have made this point. Hell, even Brother Carney raised the alarm. We all know if it weren’t for Canada’s own subprime mortgage rules (if you don’t have 5% down the bank will give it to you) all those glass towers would not be populated with people with student loans and bicycles. And speaking of glass, about ten years from now when the building skins need replacing, condo and strata fees will look like mortgage payments.

In short, there are a hell of a lot better places to be spending $430,000.

Finally, what’s this thing about needing a bigger place to live when you have a kid? Where did that come from?

Financially speaking, starting a family is a major event all on its own. It now requires a full year of maternity leave for the mother and the loss of an income for 12 months, at the same time all that baby stuff is purchased. And I have yet to meet a father who didn’t see little feet emerging and immediately feel the need to run out and throw himself at an insurance salesman. This is apparently man’s guiltiest moment.

Succumbing to an emotional nesting instinct at the same time can be the financial coup de grace. And so unnecessary. I hear children (unlike puppies) are not even ambulatory for about a year. And they sure don’t need a pony or a swing set in the backyard. So what’s the rush? Why heap on more risk and economic burden at a fragile time?

The bottom line is that Trang needs to grow a set, get out of the condo deal by threatening a hideous law suit, pay his parents some rent and stay where he is for a year until the real estate market takes the inevitable slide.

And stop reading this blog. It’s depraved.

 

104 comments ↓

#1 Randy on 12.30.11 at 7:20 pm

No Parking…..

#2 Randy on 12.30.11 at 7:20 pm

First ??

#3 Condo buyers looking for a way out on 12.30.11 at 7:30 pm

All over Toronto people are looking for a way out of this condo bubble thats crashing down. No buyers or renters as thousands of condos sit empty and tens of thousands are yet to hit. 60-70% are flippers and many are looking for a way out. Condo prices are set to crash 20-25% in 2012 alone. There is no stopping this crash as anyone with an internet knows condos in the GTA is going to crash hard. sorry realtors you will need a new and real job.

#4 P & T S on 12.30.11 at 8:01 pm

“And stop reading this blog. It’s depraved.”

Not even in remotely the same league as ZeroHedge!! You’ll need the Xanax at least half an hour before having a read (and that’s the “more reasonable” articles!).

Happy New Year to Capt. G and all the rest of the Blog Keeshonden (and may you all be “Furry but Nice With It!”)

We’ll have significant “money to stash” in ’12 (providing the doomsayers turn out to be wrong). Any chances of “hints” for Non-Canadian, Non-US residents??)

Thanks in advance and All the Best from Sunny Ecuador!

#5 Renting in Vic on 12.30.11 at 8:09 pm

Oh, and of course if the value of your pre-build condo does go up prior to completion, the builder will just scale back on quality and features. They know that you cannot afford to walk at that point. Contract doesn’t matter because once the lawyers are involved only the lawyer comes out ahead.

Enjoying renting after owning for 20 years.

#6 prairie gal on 12.30.11 at 8:09 pm

safety first, Garth!

#7 TurnerNation on 12.30.11 at 8:13 pm

Finally, a picture of a Trang. Always wondered what they look like.

#8 bob's my uncle on 12.30.11 at 8:13 pm

Mr Trang needs to keep to his obligations, he bought into this condo thinking it will be worth a trillion dollars by the time it’s built, after reading this pathetic blog he got a little nervous and now wants to get out of the deal, of course using the baby story is sob enough, so he thinks; developers have black hearts and they dont care.

Suck it up, grow a pair as Sir Garth says and pay the piper.

#9 Freedom first on 12.30.11 at 8:25 pm

When it comes to buying a place to live, the majority of people have lost the ability to think clearly. For me it is like any other commodity. A house is not a home. Any place that I live is home to me.

Wow! The ability of people to get themselves into trouble is truly amazing! I learn from many different people, Garth being one of them, on how to operate in a sane manner. However, I also learn quite a bit from people who do things that lead to problems and chaos, and what not to do. Being vulnerable to self-inflicted mistakes, is akin to putting ones gonads in a vise, and giving someone else the handle. I’ll pass.

#10 InvestorsFriend (Shawn Allen) on 12.30.11 at 8:36 pm

“HOT” Off the Press from CMHC

CMHC managed to get its flagship publication out the door on December 29.

Yes indeedy, The Canadian Housing Observor 2011 is available. Some 184 pages of actual facts and figures about Canada’s housing markets.

Pretty good eh, getting the 2011 edition out before the year is even over. Not bad for government work.

But wait. What’s that? You say it’s actually the data from 2010.

Oh, well then we have the 2010 data published and not a moment too soon as 2012 is upon us.

Well anyhow it’s the freshest data they have:

http://www.cmhc-schl.gc.ca/odpub/pdf/67508.pdf?fr=1325286080152

#11 Shane on 12.30.11 at 8:37 pm

Garth, do you expect to see a down turn in the housing market by spring 2012?

#12 Randy on 12.30.11 at 8:43 pm

Just thought that I’d mention that the rural property market in southwestern Ontario is being affected by McGuinty’s FAKE Green Energy Act…

Local planning control was taken away from the municipalities under this legislation. This means that Energy Companies can get you neightbours to lease their lands for use as a wind farm….without you or your community having any input…..

You wake up one day, look in the local paper and find out that a Wind Farm is being planned in your back yard….or in the future, or offshore in front of your cottage…With setbacks of only 550 metres, you will be looking up at these 450 foot high monsters….

Some broker data indicates that you property can go down in value by as much as 40%….as nobody wants to see these ugly monsters and some people are seriously affected by low frequency sound and EMT emitted by these 450 foot monsters.

I also understand that there has to be some due diligence and disclosure provided as to the threat of Industrial Wind Farms…by real estate agents

When they find out that a Wind Farm proposal has been submitted, the agents must quickly visit their clients and suggest a price reduction.

There were lots of smaller properties for sale but it appears that the property owners couldn’t sell them and took the signs down….

Local realtors that I spoke to said they were hoping that Hudak would be elected since he promised to gut the Green Energy Act…

Needless to say I won’t be looking to buy more farm or recreational land under the Green Energy Act is dismissed….

The west coast of southwestern Ontario from Grand Bend to Manitoulin Island will soon be buried in Industrial Wind Turbines.

The corridor from Bruce Nuclear to north of Milton will also see thousands of Industrial Wind Turbines and Wind Farms built over the next 5-10 years.

This is why rural Ontario hates McGuinty and the Liberals…..

Green Energy is FAKE and the Green Energy Act is a $26 Billion Boondoggle.

At least McGuinty and Chris Bentley could have give us some billboards for our communities with flashing lights that say “WELCOME TO HELL”….

#13 poco on 12.30.11 at 8:44 pm

#3Condo buyers looking for a way out on 12.30.11 at 7:30 pm
All over Toronto people are looking for a way out of this condo bubble thats crashing down. No buyers or renters as thousands of condos sit empty and tens of thousands are yet to hit. 60-70% are flippers and many are looking for a way out. Condo prices are set to crash 20-25% in 2012 alone. There is no stopping this crash as anyone with an internet knows condos in the GTA is going to crash hard. sorry realtors you will need a new and real job.
____________________________________________

just change Toronto to the tri cities—we’ve been slowly melting in many areas of the tri cities for at least 1& 1/2 years now–not only have the flippers been trying to unload but the poor schmuks who fell for “real estate only goes up” are also trying to get out–at any cost—and speaking about empty condos—there are hundreds—like these–
first one is a foreclosure 738 Farrow St Coq.

http://www.realtor.ca/propertyDetails.aspx?propertyId=11209653&PidKey=-1686569614

http://www.realtor.ca/propertyDetails.aspx?propertyId=10915698&PidKey=908756120

http://www.realtor.ca/propertyDetails.aspx?propertyId=11024304&PidKey=1005227964

http://www.realtor.ca/propertyDetails.aspx?propertyId=11105489&PidKey=1023086540

#14 Stinky the Fish on 12.30.11 at 8:45 pm

My thoughts exactly. This story seems super unrealistic. LOL who would sign a pre construction contract? Maybe the 150k annual income is also from mommy and daddy

#15 East Van on 12.30.11 at 8:47 pm

Many “experts” say real estate in Canada will fall 5 to 30%. Many other “experts” say we have reached a plateau, and prices will stay firm for a long period. A third set of “experts”say demand is strong and supply limited, so prices will continue to rise.

The thing about “experts” is that their predictions have been shown to be no more reliable than flipping a coin. This blog is a good example of that.

BTW Garth, you say 80% of Toronto condos are being bought by “speckers and flippers”. Do you have data to back this up?

Of course not. Everything on this blog is made up. — Garth

#16 Arse on 12.30.11 at 8:53 pm

A lot of people are irrational and will continue to make irrational decisions to ride bubble because of the inherent greedy nature of humans. Why people pay half a million dollars for roof is beyond beleif to me. After paying interest on the mortgage, property taxes, insurance, heating, electrity and repairs, the total cost of the house is more than a million dollars. This just for having a roof on top of your head.

#17 PrairieMongoose on 12.30.11 at 8:58 pm

A chat with a lawyer for an hour would be in order. A couple hundred bucks could save you thousands here.

#18 not 1st on 12.30.11 at 9:00 pm

A 2 year delay on completion is an easy lawsuit, unless you have signed an agreement for the extension.

Most pre-construction contracts cite close date as on or about some month in the future. If its a month of two or even 3 or 4 you have a tough case, but 2 years late! Sue their ass for your deposit back, damages and opportunity loss in the market waiting for completion. You will be better off financially than waiting to take possession of that box just as the market is unraveling in 2 years time.

And Garth, why do new buildings need “skin replacement”in 10 years. I see highrises all the time look like they have never changed windows ever. Is this shoddy construction coming home to roost?

#19 Blair on 12.30.11 at 9:06 pm

“And I have yet to meet a father who didn’t see little feet emerging and immediately feel the need to run out and throw himself at an insurance salesman. This is apparently man’s guiltiest moment.”

Fair enough comment, I’ll agree to that, but what is the right amount for a parent be insured for if you don’t have any (or think you don’t have enough)? Any magic formula?

#20 InvestorsFriend (Shawn Allen) on 12.30.11 at 9:14 pm

10 Year Mortgages are Expensive TOO

CMHC is involved in securitisation of mortgages.

In the case of the 10-year mortgages CMHC ( technically their entity called Canada Housing Trust) buys up a load of fresh new 10-year mortgages from banks and uses the incoming interest and principle payments on those to create a standard 10-year bond guranteed by the government of Canada.

The latest 10-year issue pays investors 2.65%. About 50 basis points higher than the 10-year government of Canada bond on November 11, 2011 when this was issued.

http://www.cmhc-schl.gc.ca/en/hoficlincl/in/camobo/camobo_002.cfm

Banks therefore indirectly access money at about 2.65% from bond buyers (but I don’t know if CMHC charges the banks a higher interest for its troubles, I suspect it would).

RBC offers a special deal 10 year at 5.45% (280 basis points higher than the investor is paid.) However the lowest 10-year rate on the market in Canada is apparently the 4.34% from true-north mortgage and ING has 4.44%.

So not too bad of a 10-year rate for Canada here at 169 basis points more than the investor receives (and CMHC and the bank gotta’ make a profit )

And with this 4.34% 10-year rate the most penalty you will pay if you need out AFTER five years is three months interest. Prior to five years the penalty could be higher especially if, somehow, rates drop.

So 4.34% is not that bad. But still, Americans can get 3.12% for 15 years (or 3.50% APR whic I think includes all fees). Now I am not sure how easy it is for Americans to break a 15 year rate. I understand they can break a 30 year mortgage at minimal fees.

So our American friends are still getting some 84 basis points LOWER for a 15 year term than our very best 10-year rates. This despite that government interest rates are lower in Canada so we should have the lower mortage rates. And government guranteees are in place in both countries.

So, okay CMHC is doing SOME securitisation for the banks, but they need in my opinion to issue (or let the banks issue directly) longer term bonds and flow through the pre-payment risk to investors so that our banks and therefore our home owners can access reasonable locked in 25 or 30 year rates with reasonable (as in very little) prepayment penatilies like our American cousins get.

It’s not right that our home owners can’t lock in rates for a long time on reasonable terms. Not when idiot investors stand ready to fork over 30-year money to our government at as low as 2.5% right now. That should translate to something under 5% for the home owner.

By the way, it is interesting that a 10-year CMHC bond guranteed by Canada pays 50 basis points more than the direct government bond. These bonds are available to retail investors in amounts as small as $1000. For example they are on TD Waterhouse under Agency bonds. (You do face a rather large buy/sell spread of about 1.4% on a ten year bond however, so buy for keeps)

#21 Nostradamus Le Mad Vlad on 12.30.11 at 9:25 pm

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“And stop reading this blog. Trang wreck, nylon rope and vegetable oil, I’m confident it will irritate everyone. It’s depraved.” — Degenerative fetish site, pawn blog, call it what you will, this is one of the funniest and best sites to become one’s own Dr. Phil, then figure everybody else out!
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#17 PrairieMongoose — Excellent idea.
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#22 OwlEyes on 12.30.11 at 9:35 pm

#18 not 1st on 12.30.11 at 9:00 pm

http://www.cbc.ca/news/canada/toronto/story/2011/11/13/tor-glass-walled-condos.html

#23 Temenos on 12.30.11 at 9:36 pm

@13 – Poco

Thanks for posting re: foreclosures on Farrow in Coquitlam. Very interesting stuff, and not too surprising IMHO

#24 Onthesidelines on 12.30.11 at 9:42 pm

@#4 P&TS ” Any chances of “hints” for Non-Canadian, Non-US residents??)”

Interest earned from Crown backed and provincial bonds is not subject to taxes if you are a non resident of Canada. Go live in Japan ( not advisable after fukushima) or elsewhere where you are NOT taxed on your world-wide income or, alternatively, get yourself an off-shore capable sailboat and go world cruising.

We did both in the past decade, had great adventures and made money to boot.

#25 TurnerNation on 12.30.11 at 9:45 pm

O-M-G!

http://www.thestar.com/business/article/1108666–star-exclusive-angry-trump-condo-buyer-wants-out

Alice Batista readily admits she was blinded by dollar signs and slick advertising when she dialled up the Trump hotel and condo sales office back in 2006.

The single mother of three became convinced that $50,000 was a small price to pay to get in on the ground floor of what was, at the time, the glitziest new high-rise planned for downtown Toronto — the five-star Trump International Hotel & Tower.

In fact, Batista, 49, became so swept up in the hype, within a few weeks she’d put $165,000 deposits on two units worth $2.4 million.

#26 Deano on 12.30.11 at 9:56 pm

Randy, ever been to Denmark? The Netherlands? Germany? It’s not so bad. Stop being such a cry baby about some wind turbines. Geez, like Garth told our man Trang, grow a set.

#27 the star: condo boom helping toronto on 12.30.11 at 9:58 pm

talk about short-sited!

http://www.thestar.com/news/cityhallpolitics/article/1108991–condo-boom-set-to-help-city-s-finances?bn=1

#28 Debt's Dark Embrace on 12.30.11 at 10:13 pm

If home and property values decline by say 25% and the owners are underwater and banks hold a mortgage on those properties, what happens to the value of bank stocks Garth ? Just wonderin’…………

If payments are made, nothing, of course. — Garth

#29 T.O. Bubble Boy on 12.30.11 at 10:13 pm

The most shocking part of this post is that apparently some builder in Toronto sells 3-bedroom condos. This has to be fake!

#30 Mr. Lee on 12.30.11 at 10:30 pm

Take predictions for what they are worth. As no one has an insight on the future, we can sure infer a lot about events based on human psychology which has not changed in over 200 000 years. That being said, hysteria in any market is always followed by panic.

If everyone believes that the findamentals are so strong in Canada to continue the house price/ownership inflation, then you have nothing to worry about. If not, get prepared and do not be reckless with your money or some other institutions borrowed money.

Cheers and Happy New Years

#31 JessicaJ on 12.30.11 at 10:51 pm

Garth, thanks for another fantastic message. Absolutely love the humour too… “At the least, ensure you have your lawyer read the agreement before signing it (or before expiry of the cooling-off period), so she can laugh and tell you what an idiot you are.” Keep up the excellent work and Happy New Year!

#32 Angela on 12.30.11 at 11:01 pm

I find your views on parenthood amusing.

#33 Angela on 12.30.11 at 11:10 pm

#13 Poco: That foreclosure is interesting. The furnishings and possessions in the pictures don’t exactly scream “overindulgence.” Job loss probably… Sad

#34 Farfetched on 12.30.11 at 11:18 pm

DELETED

#35 Daniel on 12.30.11 at 11:25 pm

Interesting over the last year – TSX is down 11% and gold (even after the big drop) is up from $1450 – $1550 (7%)… so if you invested in gold, instead of the TSX, you’re up 18%! … counting inflation, you’re up about 4% with gold, and down 14% with the TSX.

Next year, watch for gold to be up about 20% and the TSX to be down about the same amount.

You forgot dividends and forex. — Garth

#36 Alan on 12.30.11 at 11:47 pm

http://www.thestar.com/business/article/1108666–star-exclusive-angry-trump-condo-buyer-wants-out

#37 TurnerNation on 12.31.11 at 12:02 am

28T.O. Bubble Boy on 12.30.11 at 10:13 pm

Yes, nobody builds 3 bedroom condos these days.

But here is one in City Place? Must be rare layout:

http://www.realtor.ca/propertyDetails.aspx?propertyId=11103805&PidKey=-118106986

#38 the Phantom on 12.31.11 at 12:04 am

Garth, Fellow bloggers and Lurkers…

#12 Randy: Has the premier of Ontario rescinded the moratorium on turbines. While I spent four months at CFB Kingston earlier this year, I recall reading that there weren’t going to be any further permits issued for those turbines. I agree completely with your take, Randy, on the esthetical violation the windmills precipitate. Looking across the water towards Wolfe Island from the Vimy Officer’s Mess, the windmills can be seen. On the ferry over, they become increasingly foreign among the beautiful scenery evident on the island. If anyone has the time to visit it is worth the trip (the ferry is a free service for those in Kingston and in Wolfe Island) turbines notwithstanding. I was completely taken with the architecture and the decor in the R Catholic church there…something else.

On another note, some of those that have contributed tonight have mentioned legal action. I would have to agree although without reading the legal text, it may well prove to be a moot point. This suggestion Garth isn’t necessarily the most ethical manner, but was hoping to obtain others opinions or insight into my alternative approach. If this couple were to divest themselves of their assets and squirrel these away somewhere, would they be able to walk away from the deal and declare bankruptcy? Certainly while the credit would take a seven year hit, they might get off easy, although being such high income earners, they may witness a garnishee of their wages irrespective of the amount of assets they hide or “don’t have”. Opinions anyone?

the Phantom

#39 Devore on 12.31.11 at 12:14 am

#24 TurnerNation

“I thought I’d be able to get a Trump tower suite for less than everybody else. I didn’t think I’d get rich. I just thought I’d make a little money and maybe have a place to retire someday.”

Oh yeah, sure she did. “A little”. Just “a little” money to retire on.

She’d fit in well with Madoff’s customers who thought nothing was wrong because they were making only a consistent “modest” 10% (or whatever) a year. Isn’t that how it works, you throw a little spare change in, and through the magic of your investment genius you’re a millionaire? No heavy lifting or any work required, just stir and wait.

Oh, oops! whocouldaknowd?

#40 TurnerNation on 12.31.11 at 12:26 am

Unfortunatley the judge ordered Westernman to enroll in this program:

http://www.wgsi.utoronto.ca/graduate

#41 Daniel on 12.31.11 at 12:29 am

Thanks, Garth.

With some dividend paying stocks you are definitely closer to even with stocks and I’m guessing with some research you do better than the TSX as a whole.

Gold pays no dividends, no income, it is only a hedge against uncertainty. It holds it’s value over time ( One ounce has always bought a very nice suit) and has typically been prices the same as the Dow. (loo for both at about 5k in the coming years).

#42 Unistar38 on 12.31.11 at 12:57 am

Garth,

FYI: Mr. Dennis Gartman is (al)ready to turn into a gold bull. What??? Just two weeks go, as you quoted, he said that the gold bull was dead!

CNBC:
Dennis Gartman: $15 Lower, Start Nibbling at Gold
Published Thursday, 29 Dec 2011 | 5:40 PM ET
http://www.cnbc.com/id/45815902

#43 Nostradamus Le Mad Vlad on 12.31.11 at 1:44 am

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#44 Blacksheep on 12.31.11 at 1:57 am

“That’s 14% lower than it was when gold pumpers flooded this site, and I told you to take profits. Don’t hate me because I’m right. — Garth”

Had I followed your advice, I would have “taken profits” and sold @ $ 1000 oz. As of today, I’m a solid $ 700 per, to the good.

So…often you warn of a correction and when it
eventually comes, Bada-Bing, your right.

Besides, haven’t you heard, nothing goes straight up, corrections are healthy.

No reason to hate.

take care,
Blacksheep

#45 nonplused on 12.31.11 at 1:58 am

I like depraved. Keep going Garthman.

PS hot tub is installed and operational. Plenty of room for you and the Amazon girls to park your bikes in the driveway. Say sometime in July? Tell the girls they can bring all the rope and lube they think they’ll need, but vegetable oil isn’t the best option. I have what they need. But they should be warned my wife & I and our girlfriend don’t play softly. Tell your Amazon girls not to be expecting to ride again until at least after noon.

#46 Canuck Abroad on 12.31.11 at 2:47 am

8 – Bob’s my uncle – “Mr Trang needs to keep to his obligations… he got a little nervous and now wants to get out of the deal…developers have black hearts…Suck it up, grow a pair as Sir Garth says and pay the piper.”

Garth did not say to grow a pair and close the deal as agreed, he said to grow a pair and sue to get out. A purchase agreement, like a mortgage, is just a legal agreement nothing more. Morals have nothing to do with complying or not, the only thing that is relevant is the legal consequences.

Do you think that banks and corporations sit back and say, “oooh, I said I would buy this and now morally I must even though I’ll lose my shareholders money if I complete?” Nope, they do not. They call their lawyers, find out what it will cost them to undo the deal and if the numbers work out by walking away that’s what they do.

And that’s what millions of Americans are doing with their underwater mortgages as well. There is nothing wrong with this decision if the numbers make sense, it’s just business. If the banks made bad lending decisions, then the banks deserve to eat the loss.

The important thing for Trang to do is to hire a lawyer and make sure you he is doing everything correctly. Leave morals out of contracts.

#47 bigrider on 12.31.11 at 8:53 am

Just a question for Garth or anyone.

If the U.S were to see some unexpected stabilizing of their housing market next year, or , by some miracle, a resurgence of both demand and prices, would that help Canda avoid the inevitable slide in real estate it is destined for?

In other words, if housing prices rise in the U.S next year, do ours in Canada continue the ascent ?

#48 bigrider on 12.31.11 at 8:58 am

As for pre construction condo thing, buddy of mine just bought into the four seasons at Yorkville, 650k for a corner unit not ready until 2014. As per usual, he is convinced that the project is different than the rest, you know, landmark building, Yorkville(bloor and Avenue) yadda yadda yadda.

Told him 2014 interest rates will be higher and condos will be all over the GTA. Rents will be under pressure and no way your unit will carry itself.

Fell on deaf ears but not on a quiet tongue. He went on to tell me the financial markets are ‘rigged’ and a ‘scam’

Anyway RE love is alive and thriving .

#49 allister on 12.31.11 at 9:36 am

#12Randy on 12.30.11 at 8:43 pm

Why don’t they put those wind mills where the electricity is needed-say- Toronto island or Sunnyside park or any or on excess Toronto board of Education land.

#50 House on 12.31.11 at 9:44 am

Hate to tell you this,but it looks like you were wrong again according to a new CMHC report the new norm is 87% of the population should have their own house or be able to finance one. Also since 68% of the 153% in personnel is in mortgages there is no problem as “most Canadian households have the capacity”. CMHC are the experts, unfortunately they apparently just don’t have staff with any formal education. Also what I have noticed with people nowadays is if they earn any money they have to find something to spend it on.

#51 Erika on 12.31.11 at 10:09 am

This is a general question. What is going
On in oakville. It seems a lot more
Houses are up for sale than in
Mississauga.

#52 househornyhousewife on 12.31.11 at 10:27 am

Garth,

You have just hit the nail on the head about why I don’t want to build. Have been looking for a lakefront for ages and everyone keeps telling me to buy land and build. For one thing, all of the best plots are already built on but more importantly, I have a problem committing to something that may or may not turn out well in the future.

I think that building is more than simply a financial risk. It is a big fat headache because once you commit, you have to be on the work site every single day to ensure that things are being done right. I have not yet met a contractor or builder who can actually make building decisions that are influenced by sound integrity instead of the botton line. And often these guys have a problem with proper supervision because they have many projects going on at once. Since you will be living there, this puts the responsibility squarely on YOUR shoulders.

As for the condo thing, I have been saying for decades that condos are worthless boxes. You pay scads of cash for the negatives of a house (repairs, taxes etc..) PLUS the negatives of an apartment (close neighbours, noise and lack of privacy, monthly rent that never ends etc..). Used to be that condos were cheaper than houses and this is why people put up with these things but nowadays this is no longer the case so anyone getting into a condo deal should have their head examined. Between buying or renting a condo the choice is so obvious and simple I just don’t get it. I guess it IS true that there is one born every minute.

HHHW

#53 truth hammer on 12.31.11 at 11:08 am

#67…BR…your friends instincts towards the stock market are not entirely wrong….scams and fraud abound. The integrity of many boards aand officers have proven to be less than stellar. The trouble with avoidance is that cash in the mattress is not a viable strategy either. Choose your investments wisely…don’t put all your eggs in one basket…nationally or otherwise…..no matter what the return ….invest an equal amount in the five major sectors of the economy…..be confident that stocks will pay more than bonds and cash over the long term

#54 bob's my uncle on 12.31.11 at 11:13 am

#45 Canuck Abroad

I know Garth didn’t say to close, I did

Nothing about morals were mentioned in my post, the new build condo contracts I’ve seen have an 18-24 month delay clause in there. Like most, I’m sure Trang did not even have a lawyer skim over the contract as most lawyers do without even reading. The last 6 years the RE market has been bought without looking, saying or doing..it was just bought.

#55 -=jwk=- on 12.31.11 at 11:16 am

Just wanted to comment on some of the misinformation I read yesterday re USA property. I lived in the US during their boom, sold out in 2005 when the end was near. I have bought/sold property in 4 states.

Evictions: Varies by COUNTY but there are usually state laws as well. In Florida evictions are swift and brutal. If Renter is 1 hr late, notice of 72hrs to pay is given, and at 7 days tenant is forced out (there’s that county sheriff…). Due to the prevalance of short term, usually winter leases of 3-4 months evictions have to be quick. BTW in FLA, leases transfer. So if you buy a leased property you inherit the tenant, great for investors.

Titles: titles are held by the county. In florida every county has all their land holdings online, including transactions, improvements, permits, taxes and usually a drive by recent photo of the property. Sweet. Check the ownership chain of any interested property online. It’s the liens and the right to enforce them that were before the courts. Work with a group like Chang or FHFC that knows what they are doing.

COndos: condo’s are hold to you die. Period. There is no (profitable) way out of a FLA/Nev/AZ condo. Even at their frothy peak banks would not lend to a condo community unless there was a high % of owner occupied units. For wells fargo it was 80%, lesser banks went down to 60%. That means that even if we get back to the good ole days you won’t be able to sell to anyone except another cash buyer. IN other words, a very difficult resell. If the CDN market goes down there will be no HELOC buyers to take it off your hands. no capital gain expectations. And the HOA fees are brutal. A SFH is a much easier resell.

taxes and insurance. Don’t buy anything in FLA made before 2001. They changed the building code – no more cinder block and tin roofs- and prior to that insurance is very expensive, if you can find it at all. My prop tax on a home in lehigh acres was $890 this year on a assessed value of 45k. The MOST that can go up is 10% a year. So next year worst case my assessed value will be 49.5k. A FLA resident gets 50k yr homestead exemption (so they would pay $0 taxes!) and the value can’t go up more than 3% a year. THis 10% thing applies to all americans, canadians, global humans except those that live in fla. they enacted this to stop out of state speckers from driving up values and hurting the locals.

Currently hold a break-even only condo in Myrtle Beach that we use every year and one SFH in florida. Will pick up another house in same area next spring. The houses cost ~70k, fully reno’d and tenanted, are very nice, rent for $850/mo. Take off 25% for management, taxes, insurance and maintenance. Im happy with my <100k purchase(s)

Anything else? Happy to answer questions at the lower end of the investment scale…

#56 bob's my uncle on 12.31.11 at 11:17 am

“Fell on deaf ears but not on a quiet tongue. He went on to tell me the financial markets are ‘rigged’ and a ‘scam’”

Hes onto something, you better do the listening from here on in. You can make money in the markets but anyone who thinks that there is a level playing field well……

#57 TurnerNation on 12.31.11 at 11:18 am

Talking about pre-construction, this downtown Toronto condo (located opposite to Roy Thompson Hall) just broke ground (this means most units are sold):

http://www.buzzbuzzhome.com/theatre-park

Prices? “from $409,900 to $2,283,900″
A sucker born…

A discussion about $730/sq foot for a studio apt. there:

http://www.buzzbuzzhome.com/forum/default.aspx?g=posts&t=122

#58 Adviser on 12.31.11 at 11:22 am

Blair on 12.30.11 at 9:06 pm
“And I have yet to meet a father who didn’t see little feet emerging and immediately feel the need to run out and throw himself at an insurance salesman. This is apparently man’s guiltiest moment.”

Fair enough comment, I’ll agree to that, but what is the right amount for a parent be insured for if you don’t have any (or think you don’t have enough)? Any magic formula?
_____________________________________________

There is no magic formula, you typically want to have enough permanent insurance to cover final expenses and potential tax liabilities due on departure from this planet. You also need a fairly large amount of temporary or term insurance (10,20,30 year) for your current needs (mortgage, college fund, your replacement income). You don’t want to be over insured but in the end it all depends on your personal beliefs and monthly budget. In general I a male in early thirties with a several hundred thousand mortgage should have around $500,000 in a T-20/T-30 plus maybe $200,000 in permanent coverage.

Best,

David

#59 -=jwk=- on 12.31.11 at 11:23 am

@turnernation
3 Bedrm OK
+Study OK
. 2 Bathrm OK
1116 Sqft Yikes! Imagine the room sizes.

And 580 per sf, what a great deal!

#60 Kip on 12.31.11 at 11:35 am

“And stop reading this blog. It’s depraved.”

OK, it’ll be my New Year’s resolution!

#61 bob's my uncle on 12.31.11 at 11:38 am

BOOMERS HORNY FOR CONDOS

http://www.torontosun.com/2011/12/30/real-estate-market-all-about-baby-boomers-and-condos-report

CMHC = the government’s Re/Max. — Garth

#62 Abitibi Doug on 12.31.11 at 11:55 am

Well, as you can see, I read this depraved blog today. Now my question: is there anyone (other than Garth) in this vast country of ours, from St. Johns, NL to Tofino, BC or Leamington, ON to Resolute, NWT who remembers a similar glut and correction in the condo market that happened in 1990?

#63 I remember, Abitibi Doug!!! on 12.31.11 at 12:02 pm

it was brutal!

I was just a renter then, like now, but I remember it absolutely nailed people.

#64 Deb on 12.31.11 at 12:03 pm

The family member who was the focus of my comment the other day has been given a full apology. I would like to apologize to any readers who may have found the content of my comment to be offensive. I will use better judgement from now on.

Better option is to get a new family. — Garth

#65 dd on 12.31.11 at 12:16 pm

buying down in the US real estate market? the US dollar is going to get real cheap. Maybe you should hold off on the purchase.

Jim Rickards = Currency Wars
http://www.youtube.com/watch?v=9ePLO8TGWtM

#66 dd on 12.31.11 at 12:19 pm

#43 Blacksheep
the correction from 1900 to 1500 in the last few months, is no different that the correction in 2006, when gold went from 725 to 560. this is a correction in a bull market that hasn’t ended yet. end of story.

You have no idea if this is so or not. — Garth
…………………………………………………………………………..

The dollar is going to get a lot cheaper. That what QE is all about. The fundamentals are lining up for the metals to go a lot higher.

#67 GregW, Oakville on 12.31.11 at 12:50 pm

Interested in reducing your energy consumption?
You might be interested in this.

Thinner thermal insulation
“The panels are only 2 cm thick and yet perform just as well as a classic 15-cm-thick insulation layer made from polyurethane foam.”
http://www.asminternational.org/portal/site/www/NewsItem/?vgnextoid=eaaee4c87ab54310VgnVCM100000621e010aRCRD

#68 Devil's Advocate on 12.31.11 at 1:04 pm

Nothing new, as was reported two years ago by local columnist John Thomson, it appears that now three substantial investment families (Donald Trump Junior and the Mondavi family being two of the three) are poised to announce their backing of Kelowna Mountain nestled upon the south slopes of this fine city. The lofty undertaking will include 1,200 luxury homesites amid a ski hill and a signature golf course – Greg Norman if I remember correctly being the 3rd investor.

Anyone who has visited the site of Kelowna Mountain will no doubt be puzzled by this venture which has had more ups and downs than the proposed ski lift to be built there where avid skiers can prepare for the Big White season. Big White is the name of the most prominent of the local ski hills. Thing is very seldom is does the proposed Kelowna Mountain site ever actually get even a dusting of snow. Of course with technology and enough money that can be taken care of.

1,200 new luxury homesites alone in an already saturated quadrant of the city which resembles too much the outside of the ice cream cone currently melting is ambitious enough. But a golf course and ski hill in an area already boasting ample if not excess of the same?!? Golfing there will be exciting as most of the terrain is rocky buttes thus it will not be so much about your long drive as banking shot – but be sure to call the correct hole as local rules dictate so in the game of pool and I expect so too will be the same of that course.

Can’t say I understand the investment strategy as the market for the final product appears dismal to me but that these three investors are willing to stake their name, if not their capital, upon it says something of the allure of the Okanagan Valley wouldn’t you agree?

The point of this post is, while I do believe the development in question has a most dubious future, clearly this city does have an allure that catches international attention. As it does that so too does it garner the attention of many a Canadian stuck working in some hell-hole in another part of the country as their preferred Canadian location to which they aspire eventually move to. For those who disagree – tell Donald Junior, the Mondavi’s and Greg that.

#69 Randy on 12.31.11 at 1:07 pm

#37 The Phantom – Offshore moratorium was only temporary…. pending more studies…but we all know that cottagers in Liberal ridings were outraged with McGuinty’s plans.

Approval of existing wind farm proposals was slowed down during the election.

Gas-fired plants were not cancelled, only scheduled to be moved in Mississauga and Oakville. They were both Liberal held ridings.

Wind Farms will continue since outside of Toronto there are few Liberal ridings.

The FIT rates are under review and may or may not be adjusted. The Liberals have to repay the Wind Welfare Lobby for their support in the last election.

I expect that the Liberals FAKE Green Energy Program and their Crony CRAPitalism will continue and they will continue to subsidize the Wind Welfare Lobby.

Interesting to know that Mike Crawley who was former Pres of Ontario Liberal Party was one of the first to benefit from the GEA and made $ Millions. He is now running for the Pres of Liberal Party of Canada. It’s who you know that helps….

New Year’s Day Wind Rally and 1812 Celebration

Don’t miss out on this important opportunity to attend Lt Gov David Onley’s New Year’s Levee at historic Fort George at Niagara On The Lake. This event will be a major media event and in addition to the local and Regional politicians we expect to see a few MPP’s including St Catharine’s Jim Bradley, Minister of the MOE.

The West Lincoln Glanbrook Wind Action Group will be meeting with his Excellency to convey our disgust with the travesty and horrors that the Provincial government is imposing on rural Ontario residents with their industrial wind policies under the Green Energy Act.

I have friends who live on and near Wolfe Island. They are not happy with having their Island turned into and Industrial Wind Farm. There are a couple of Green Jobs there, counting DEAD birds everyday. This is apparently condoned by the hypocritical Sierra Club.

There are hundreds of anti-wind groups in Ontario…Here’s a link to the largest
http://ontario-wind-resistance.org/

Liberals will be FOREVER DEAD in rural Ontario.

Good Luck

#70 vic_guy on 12.31.11 at 1:24 pm

From the househunt Victoria blog the 2011 numbers look ugly :

Thanks to Marko (a Victoria realtor) :

2007 = 8,931 unit sales
2008 = 6,519 unit sales
2009 = 8,096 unit sales
2010 = 6,546 unit sales
2011 = 6,050 approx. unit sales.

It will be the worst year for sales since 2000 and the worst year in terms of Total Sales $ since 2004.

#71 Herb on 12.31.11 at 1:37 pm

#39 Turner Nation,

BS! Cruel and unusual punishment is prohibited in our fair Dominion.

#72 X on 12.31.11 at 1:39 pm

I would love to hear in your 2012 outlook your forecast for F’s rule changes in March, or better yet, how Garth would change the rules for borrowers to…..

Thanks for the great work on the blog, all the best in the New Year Garth!

#73 Devil's Advocate on 12.31.11 at 1:40 pm

Oh and before y’all go deciphering’ my last post as admission the Kelowna market is capitulating let me interject with all markets are different – Kelowna is different from the Canadian city you are banished to and so too is each neighbourhood in Kelowna different from the rest. That is to say Kelowna Mountain does have its own unique challenges that do not plague other areas of the city.

Remember “ice cream melts from the outsides inward”. Check out the Abbott Street corridor at the center of the city and you’ll see what I mean.

#74 vic_guy on 12.31.11 at 2:01 pm

Hmm, Duncan may also have the slowest year since 2000 : http://www.timescolonist.com/touch/business/Duncan+condo+project+gains+traction/5926288/story.html?rel=917199

The author left the good part of the story until the last two paragraphs :

The latest Multiple Listing Service statistics from the Vancouver Island Real Estate Board show the Cowichan Valley region had just 38 sales in November, the lowest of the year since 28 sold in January. After 11 months, there have been 546 sales and projections for December indicate overall sales for 2011 could finish below 600.

If that’s the case, it would be the slowest year in real estate for the Duncan area since 2000, when there were 487 transactions.

In 2010, there was 666 sales. The high-water mark was in 2005 when 1,011 properties changed hands.

#75 libertarian on 12.31.11 at 2:37 pm

> Finally, what’s this thing about needing a bigger place to live when you have a kid? Where did that come from?

—————————————–

When my first child was born 2 years ago we were sharing our 2 bedroom rental apt. with my friend. After one year, shortly after my wife got pregnant with 2nd child our roommate friend moved out, it would be too much for him hearing 2 babies crying in the night.

Our car is small Hyundai Accent. When our whole family goes shopping I have at the back 2 safety seats for 2.5yrs and 4month old kids plus my mother in law, my wife is sitting at front , yet in the trunk there’s still enough space for 2 strollers and groceries.

2yrs ago we cancelled cable, too much crap, not good for mental development of children. We just have an TV-antenna and are happy to be able receive 3 channels.

If we need more space for the kids we just throw away stuff we do not use.

As it seems we are going to stay in rental forever, even if prices drop, the price of mortgage will never be comparable to the price of rent. Considering today’s leveraged real estate prices I don’t think that I will live long enough to save substantial down payment to cheapen the mortgage and bring down the risk.

Nevertheless, I cannot feel more happy, this is my most happy period in my life.

#76 John Prine on 12.31.11 at 2:47 pm

Been renting since selling the 20 year home in the Okanagan that sold on March 21, 2011. Money in the bank at only 1.9% until April 1st this year. We will buy another home because we LIKE owning…..But will be waiting until Fall 2012. The 1.9% almost covers our rent for the time being. Conservative I know but comfort levels are important after a working lifetime of saving. Approximately 50% of our net worth is in our past/future home.

#77 Smoking Man on 12.31.11 at 3:11 pm

Happy New Year blog dogs
Weather is fine here in atlantic city. Wife has tickets to party tonight. Who the hell is didti

#78 neo on 12.31.11 at 3:27 pm

Year end scorecard on the global major indices:

Toronto -11.91%
Dow +5.53%
S&P unchanged
Nasdaq -1.80%
Shanghai China -21.68%
Hang Seng Hong Kong -19.97%
Japan -17.34%
UK -5.55%
France -16.95%
Germany -14.69%
Russia -22%
Brazil -18.11%
India -24.64%
Australia -15.18%

So the Dow was the only major indice positive territory and that was just because they got rid of all the financials since the 2008 meltdown and McDonalds and IBM produced something like 50% of the overall gains. Moreover, after all the handwringing Garth has done over gold all year long it finished up 10%.

Factor in dividends and the Dow beat it. Of course those who succumbed to the gold-pumping on this site in the late summer got creamed. — Garth

#79 Soylent Green is People on 12.31.11 at 4:07 pm

HarperCON’s X-mas card to the faithful:

MERRY CRISIS
&
A HAPPY NEW FEAR

http://www.facebook.com/photo.php?fbid=321830537850311&set=o.292671928599&type=1&theater

☻☻☻

.

#80 Mike Rotch on 12.31.11 at 4:15 pm

#19 Blair on 12.30.11 at 9:06 pm ……what is the right amount for a parent be insured for ?

I recently wrestled with this. I ended up just estimating the NPV of what one would need to keep paying the current monthly bills until the kids were both 20. It’s not fat, but it’s enough that my family has a fighting chance of getting by, and the wife wouldn’t have to sell the house like tomorrow.

Careful what you assume for inflation….the calculation is very sensitive to that.

#26 talk about short-sited! – Condos and property taxes. Short term gain, long term pain for 416 ratepayers? Wondering what happens if there’s a glut of empty units. City will still have to service the building and block even if there are only half the ratepayers……crap!

#68 GregW, Oakville on 12.31.11 at 12:50 pm
Thinner thermal insulation

Might be useful for retrofits, but unless it’s cheaper on a square foot basis for total materials and labour, I can’t see it being adopted for new builds here. Installed costs for timber, brick, fiberglas and styrfoam are all probably a damned sight cheaper here than Germany, as is the land.

#76 libertarian on 12.31.11 at 2:37 pm
I admire your minimalism, but I’m calling BS on moving 5 passengers, two child seats, two strollers, and groceries in an Accent.

I occasionally handled a young family of four in a rice-grinding four banger for a couple years. It’s technically possible if you don’t need the rear facing infant seat or the sport utility stroller. No frigging way can you fit gear for the 4 month old with everything else you said.

#81 Deb on 12.31.11 at 4:16 pm

Those who seek to know how 2012 will develop in their local residential real estate market need to keep a keen eye on the sales volume and price of recreational properties and condos in particular, as these are the harbinger of the future activity of the overall market. It’s kind of like keeping an eye on those who are the last people to arrive at the party and the first to leave.

#82 live within your means on 12.31.11 at 4:47 pm

#65 Deb on 12.31.11 at 12:03 pm
The family member who was the focus of my comment the other day has been given a full apology. I would like to apologize to any readers who may have found the content of my comment to be offensive. I will use better judgement from now on.

Better option is to get a new family. — Garth

…………….

Deb

Yes, your Bro’s request was over the top. I must admit that I have quite a bit of gold in my mouth and, as I’m 9 years older than my hubby & have health issues, I asked hubby to see whether he could have my gold fillings/bridge work removed before my cremation. Why should the crematorium benefit from the $$$ I spent years ago.

#83 Temonos on 12.31.11 at 5:09 pm

@69

Sorry, but Kelowna is a provincial backwater filled with people with something to prove. Your post reeks of that. While Vancouver barely registers internationally, Kelowna is completely off the map. Indeed, Kelowna is about as well known in Europe as a tourist destination as Bled Slovenia is in Canada.

As well, Kelowna is a growing crime haven filled with meth addicts. I saw them when I drove through Kelowna via that highway corridor going through the city.

#84 TurnerNation on 12.31.11 at 5:09 pm

Do you anticipate a stronger Canadian economy in 2012 than in the past year?

Yes

34.0%

No

66.0%

UPDATED: 12/31/2011 4:08:31 PM

From http://www.640toronto.com/index.aspx

(Disclosure: I voted No) :-o

#85 MGTF on 12.31.11 at 5:41 pm

Garth, your financial advice is hear and heeded by many of us, the silent majority, who don’t post.
Please ignore the nutbars and continue to feed us with your valued insights into financial management.
All the best for the New Year.
Best regards.

#86 Coho on 12.31.11 at 5:55 pm

From post #15,

“The thing about “experts” is that their predictions have been shown to be no more reliable than flipping a coin. This blog is a good example of that.”

“BTW Garth, you say 80% of Toronto condos are being bought by “speckers and flippers”. Do you have data to back this up?”

Of course not. Everything on this blog is made up. — Garth
_______________________________________

That’s so funny! Thanks for the laugh. It reminds me of men (usually seniors) shooting the breeze each morning over coffee at the local diner. A few laughs, occasional useful tidbits of info or advice, and embellished or outright fabricated stories are told and entertainment is had by all. And by their 5th and last cup of java the inevitable argument ensues, usually over politics and which hyper-caffeinated one gets to pay the bill. Finally, as they part ways for the day, they agree to do it all again tomorrow! :-)

As 2012 rings in, one wonders if the turbulence the world is presently in is just a cycle or a downward spiral with an end result being the permanent eradication of the middle class.

Wealth is being funneled to the few and power is becoming more centralized, while personal liberties and freedoms are eroded. With the NDAA bill passed and into law, the USA for all intents and purposes is under Martial Law and no longer the USA as we’ve known it. To me, this is an alarming trend towards tyranny and not what can be considered a cycle.

As material hopes and dreams fade away for many people in this contorting world, may they turn to the spirit within to help them cope and to draw strength, tranquility, and happiness from.

Best wishes to everyone in the coming New Year!

#87 a prairie dawg on 12.31.11 at 6:14 pm

Grilling up some tenderloin steaks and baking some Atlantic lobster tails for supper tonight. mmm…
(no booze though, that shyt will kill ya lol)

Might pissoff the neighbors later with some fireworks on the front lawn. Maaaaybe around midnight… lol

Have a safe and Happy New Year folks.

All the best to you in 2012.

Have some cake…

_|_
| |
— –
| |
— –
|________|

#88 Hoof-Hearted on 12.31.11 at 6:37 pm

Many thanks to all for their contributions , and especially Sir Garth for this Blog.

Great Info and I mention it to many parties to save themselves from the siren call of RE.

Have a Safe and HAPPY NEW YEAR !!!!

#89 bob's my uncle on 12.31.11 at 6:47 pm

#86 MGTF

Just because Garth is the write/owner of this blog does not make his opinion gospel. Many people have insights and many of the things discussed on this blog are just that, nobody can be 100% sure of anything, not even Sir Garth. First post and kissing a$$.

And a manly one it is. — Garth

#90 Alan on 12.31.11 at 7:01 pm

Kelowna, Victoria, Vanc Island and all recreational properties are behaving no differently than they should. The money is headed for the major cities and no amount of doom and gloom that people happen to be fixated upon in 2012 will change the course of good real estate. We have a 62% ownership rate and 46% of those people own their homes free and clear. -CMHC

The uncertainty in financial global markets make it easier to be in real estate at today’s record low interest rates. Especially cash flowing rental properties. Money printing will only make hard assets go up in price. Re-inflate is the only answer to the worlds debt problems. You cannot measure this activity over months, only years.

In Vancouver it is getting more and more difficult to find good properties to build multi-family. The low hanging fruit is gone and you need to pay up for a decent piece of land, spend 3 years going through the red-tape development process and pay holding costs while doing so.

Yes, we will have softness in many non-economically prone areas but I do not see a meltdown in RE that people wish or want to see. Or the end of the world in 2012 for that matter.

#91 Herb on 12.31.11 at 7:16 pm

Here is hoping that Garth, his family and this kennel will enjoy personal peace and prosperity in 2012 and beyond.

And let’s remember those who will not, and see what we can do to help them.

#92 martin9999 on 12.31.11 at 7:28 pm

tonite i really wanna see garths opinion about gold for 2012. it will be fun !!!

#93 Westernman on 12.31.11 at 7:54 pm

Herb@92,
Typical liberal…always offering other peoples time and money…
What’s this “we” stuff anyway? You want to save the world? Get out your OWN wallet.

#94 BPOE on 12.31.11 at 7:59 pm

2011 shaped up to be another winning year in Vancouver and that’s a FACT. 2012 is looking solid as we power ahead to be THEE dominate location for real estate in the world. Gold will go above $2000 in 2012. Even Dennis Gartman who was quoted on this blog a little while back has changed his tune. Happy New Year to all the owners. Converting renters to winners one buyer at a time. Happy New Year all!
http://www.grandich.com/2011/12/follow-up-to-1-million-offer/

#95 neo on 12.31.11 at 8:33 pm

Factor in dividends and the Dow beat it. Of course those who succumbed to the gold-pumping on this site in the late summer got creamed. — Garth

You mean McDonalds and IBM beat it. I think you need to read what I wrote again. They were the main reason for the “strong” gain. Without them your point isn’t valid and we are already only talking about just 30 campanies to begin with not the broader S&P 500 ,which is why those two companies given their weighting as well, was able to distort things.

Any fool who bought gold at $1,900 deserved to get creamed. You buy Gold on the dips and sell on the run ups. Next buying opportunity will be $1,000. However, you can also say the same for anyone who bought the TSX at 14,000 in April can’t you Garth? Timing is everything.

I brought up gold in the summer NOT as I buying opportunity for Gold but because of what it was telling you about the stress in the global credit markets and it’s volatility was a precursor to the volatility that would immediately ensue in the equity markets once Gold went parabolic. I was proven correct. The U.S. equities didn’t react the same as the rest of the world on a YTD basis. They will be playing catch up in 2012.

Tempus Fugit…

#96 GregW, Oakville on 12.31.11 at 9:28 pm

Hi #81 Mike Rotch, It might be useful in refrigerators, your home water heater, or
camping coolers. You might be amassed what some people will pay to insure their beer stays cold on a hot summer camping trip. Or keep the meat and other food cold. Maybe they can figure out how to get the unit cost down soon too.

Have a great and safe new years!

#97 live within your means on 12.31.11 at 9:36 pm

A happy, healthy & prosperous 2012 to all. We stayed in. I made filet mignons with shrooms & red wine/cream/butter sauce, asparagus, home made double fried taters (a la francaise) and a green salad. And a great bottle of red wine with a baguette.

DH will have to go on a diet after 10 days of eating rich food. Not me …. as I have a very small appetite. :-)

#98 Devil's Advocate on 12.31.11 at 10:16 pm

#91Alan on 12.31.11 at 7:01 pm

Yo brO… yoU DA man…. WOO, WOO, WOO!!!

#99 Herb on 12.31.11 at 11:35 pm

#94 Westernman,

and a very Happy New Year to you too!

#100 Devore on 01.01.12 at 12:55 am

#67 dd

The dollar is going to get a lot cheaper. That what QE is all about. The fundamentals are lining up for the metals to go a lot higher.

If the dollars is going to get a lot cheaper, EVERYTHING will go a lot higher. Why not buy something that has actual fundamentals and pays you along the way too?

#101 TurnerNation on 01.01.12 at 6:13 pm

#95Westernman on 12.31.11 at 7:54 pm

If and when you require major heart surgery “we” will be paying for it. Or, feel free to visit the USA but bring 100-200k with you.

“We” is funny that way.

#102 Kitchener on 01.02.12 at 9:50 am

Nice predictions, interestingly, I looked for your predictions in 2009, 2010 and 2011 cannot find them.

It would be nice to print them and see how you stood the test of time.

My point, predictions are just that, anyone guess.

It is not easy to predict the future, I think what many of you miss on this blog is the common sense advice.

If you made $300,00 tax free why not sell? Live off the Dividends rent free.

If you have debt, pay it down
Stop spending do you really need a 3D TV?
Did you contribute to a TFA?
Did you Contribute to an RRSP?
Did you Invest or buy hot tips?

My Predictions,
Canadians will go deeper in Debt, Pigs is not Europe its in the mirror.
Unemployment will rise, it has to because we are not innovative nor competitive.
Canadians will not save money in TFA, RRSP they love the toys.
If you really believe in Canada by a Blackberry its a cheap way to save a Canadian company Duh!

Make three goals and right them down and do them!
90% of you will fail in that task as well

Do not lick gold, it is insurance? you buy house insurance and car insurance, then buy money Insurance. I do not believe it a collapse, but then again I had my first car accident in 30 years. Insurance is because you just never know. Read Garth’s Book on the topic, your fear level will guide you to how much insurance you need.
And stop reading newspapers, think about it millions of people read the same thing, and then you all act on the same advice, its called the lemming going off the cliff.

So in conclusion come to this blog look at the pictures, get horny over houses, lick gold and read Garth’s post make stupid comments like I am first.

Like I said a year ago if you post on this blog more than 5 times a week you got real problems.

Happy New Year!
PS
I own a house and will not sell
I have zero debt
I own gold as Insurance
I made 5% in my TFA last year
I do not own a 3D TV
I right on this blog maybe once every two weeks, and never write I am first.

#103 Canada`s housing bubble and lower US wages on 01.02.12 at 2:20 pm

There is an attack on the middle class in Canada which will result in a housing crash of 50% or more to match US average prices which would be the HISTORICAL AVERAGE. Canadians from private and public sectors are being asked to reduce their wages and benefits which is impossible to do when the cost of living is much much higher in Canada and to top it all off Canadians are maxed out on debt even with so call high paying jobs. Canada’s house of cards will come crashing down just like the rest of the world. Free trade comes with a price and Canadians will soon learn what that price is.

Contract talks collapsed last week after Electro-Motive issued a final offer that would cut the wages of union members in half, eliminate pensions and gut other benefits.

http://www.theglobeandmail.com/report-on-business/caterpillars-electro-motive-locks-out-union-members-at-london-ont-plant/article2288779/

Rio Tinto locks out 800 workers at its Alma smelter in Quebec
ALMA, Que.

http://www.theglobeandmail.com/globe-investor/rio-tinto-locks-out-800-workers-at-its-alma-smelter-in-quebec/article2288359/

#104 Bon on 01.02.12 at 3:27 pm

“And I have yet to meet a father who didn’t see little feet emerging and immediately feel the need to run out and throw himself at an insurance salesman. This is apparently man’s guiltiest moment.”

Pure poetry!