Pot light porn

Todd’s folks live in Bowmanville, a bucolic little place full of busty fresh maidens, an hour’s commute east of godless Toronto. The house is a century-old, Ontario red brick edifice, its second story hosting five bedrooms with a country kitchen and spacious rooms downstairs. The whole package sits on a half-acre lot in town. Walk to the grocery store. The vet. The bank. Sit on the verandah at night. Sip daiquiris.

“Well I did my part to keep house prices sane outside the GTA,” Todd says. They listed the home for $425,000 and, after an eternity, it sold for $390,000.

Here it is.

Meanwhile the sis of one of Todd’s co-workers in Toronto put her home up for sale, in a rummy area of downtown Toronto, off Queen West, where the trendy people go.  “It’s a hideous thing,” he says.

Nonetheless she listed at $600,000 and received 12 offers the first day it was on the market. The selling price ended up being $100,000 more than she asked for it. “Going to go bang my head on my desk for a while,” says Todd.

Here is sister’s house.

Hmm. What does this tell us? First, almost any dump anywhere in an inner urban hood can be sold for any price, so long as it has enough kiddie house porn in it – pot lights, an exposed brick wall, a little Miele and something from Ginger’s to pee in. Second, when big banks everywhere shower money on first-time buyers – who think real estate will go up forever, so there’s no risk – this is what ya get. Very expensive junk, which then ripples upwards through the entire market.

Third, this is demographics at work. A perfectly fine ‘starter’ house in Bowmanville which will last another century or two sells for about half the value of a place that might make it until Justin Bieber’s puberty ends. Why? Because the market for rural, small-town and decidedly un-urban properties where people have windows instead of LED lighting systems, is dead. Croaked. Kaput. More evidence real estate is driven more by fad than economics – and is setting itself up for a mama of a tumble.

Fresh evidence of that came a few hours back when the latest building numbers were unveiled. It should be no surprise that, with so many young greater fools running around, our condo scene is exploding. In fact in the GTA it’s gone berserk. There are 148 skyscrapers and condo towers now being built, with 400 condo projects being sold, and an estimated 23,000 units coming on to the market this year. No other place else on earth is being this stupid which, I guess, means it’s different here.

Condo construction is up by a third over last year, which pushed national housing starts to the best level since the lights went out in 2008. Economists (all of whom live in houses) attribute this to a stronger economy and a lack of listings for SFHs. Both are factors, but talk with anyone at a condo sales centre – or working for a major developer – and they’ll tell you an estimated 80% of buyers are speckers and hopeful flippers. With just a few thousand they can secure a unit and buy the right to assign the deal even before a backhoe violates the first clod.

Of course we know how this will end. The same as last time.

After developers went nuts with an early-90s condo boom, flooding the market with spanking new inventory, interest rates rose and the market withered. Condo sales collapsed, new projects were canceled and flippers-turned-landlords were desperate to find tenants to defray costs in units they couldn’t sell. I know. I owned two of them – taken in a property swap from a guy who defaulted on a mortgage to me. Monthly property taxes and condo fees were $1,550 each. The top rent possible at the time was $1,250. And there weren’t even mortgages to worry about.

It took six years for prices to return to my break-even point. It took 14 years for them to recover  to post-crash levels.

Ah well, who remembers? The idiots who bought that hideous green and red thing off Queen Street were probably filling their Huggies in 1991.

I’m so pleased they grew up, and know everything.

198 comments ↓

#1 Duke on 04.11.12 at 9:50 pm

Great Post as always!

#2 Bill on 04.11.12 at 9:50 pm

Thanks Garth!

#3 Tim on 04.11.12 at 9:52 pm

Garth,
is it time to buy in Spain yet?

I heard Apple bought it. — Garth

#4 guy from toronto on 04.11.12 at 9:52 pm

I feel like saying “first” just to poke the people who get so annoyed by that!

But I decided not to :)

#5 Randy on 04.11.12 at 9:55 pm

The price of gas won’t help these rural properties….Liberals and NDP will try to add more Green Carbon Taxes too…

It’s not rural if you live there. — Garth

#6 charlie sheen on 04.11.12 at 9:56 pm

Muah First

#7 Trevor Pereira on 04.11.12 at 9:57 pm

Are properties out of the GTA going to implode at the same rate? First?

#8 Bill on 04.11.12 at 10:02 pm

Well… When you’re first you don’t actually have to say first – unless you’re in grade 5. Stop being stupid.

By the way, decided to refinance today at 3.29 % for five years…. Maintaining the same payment so that more goes to pay down the principal…. Anyone who decides that low rates are a time to upgrade instead of pay down their existing mortgage is a fool.

#9 SGIP on 04.11.12 at 10:03 pm

That rowvhouse is really bad

That bow. House is gorgeous, i want that house

.
.

#10 Mister Obvious on 04.11.12 at 10:04 pm

OK, I concede. Vancouver is very stupid. But yes, Toronto is even stupider.

#11 FerrisWheel on 04.11.12 at 10:05 pm

Garth,

Love reading your Blog.

I don’t agree that Carney is ever going to raise rates on his watch. You’ve been hinting he would for a long time and it hasn’t happened and it will not happen. Maybe the next Bank of Governor will. (Years away)

#12 Kenken on 04.11.12 at 10:05 pm

… and the wait goes on!!!
our so-called leaders are so coward that they are prepared to risk the future of generations to come than be man enough to take corrective actions now!

#13 Can it be? on 04.11.12 at 10:08 pm

Omg… Hate trendy Toronto people who
Think it’s different on
Toronto… No its not… People in the rest of the world wear lululemon.. Do yoga and drink
Lattes just like the cool Toronto folk… They just live in better homes and properties and get
More bang for their buck… Half the people who
Live in Toronto don’t even work
There they just feel the need to live there. Encourage them to keep going into debt… No
Pint discouraging them, they just want to prove
You wrong.

#14 45north on 04.11.12 at 10:09 pm

After developers went nuts with an early-90s condo boom, flooding the market with spanking new inventory, interest rates rose and the market withered.

just read some stuff about “Floating Rate Notes” which the US Treasury issued in the 50’s as a prelude to raising interest rates. Next time I talk to Mark Carney, I’ll ask him what it’s all about.

#15 Blacksheep on 04.11.12 at 10:13 pm

Garth & Daystar,

The twelve year old girls, bank system video, has
now been posted here, three times.

This tells me the Dogs are an definitely interested
in what she is saying.

Garth, you have obvious insight to our banking
system. Daystar, you also seem knowledgeable
on this topic. I respectfully request your opinions
on the info she presents. Lets ignore the fact, this
bright young girl, may not be the author of this
speech. Lets ignore minor statistical missteps, that
do not alter,the fundamental message. Oh…and
please, lets leave religion out of it. Please address
the content of her statement. Is it sound or
unsound? If you find her message unsound,
please elaborate why.

Banking is a regular topic/discussion on this blog,
so I figure, who better to ask.

This issue has a bigger impact on our lives than, RE bubbles, interest rates or OAS changes combined and effects every single taxpayer in Canada.

take care,
Blacksheep

#16 Ric on 04.11.12 at 10:14 pm

Credit is the problem, easy credit, best buy is laying off employees, and closing stores. Why? They are running out of customers buying with easy credit. Soon real estate will run out of customers with easy credit.

#17 Lilyflor on 04.11.12 at 10:15 pm

The house is always the same, guess he is having trouble unloading it, lol

http://www.canadianbusiness.com/article/74982–private-real-estate-service-launches-in-b-c

#18 Furst on 04.11.12 at 10:15 pm

FURST!!!!!

#19 Smoking Man on 04.11.12 at 10:16 pm

The Rich Keep Getting Richer

There is a recurring theme on here, folks mad as hell at the rich, believing rich are out to get the poor middle class. Wha Wha Wha………

Nothing and I mean nothing is further than the truth to that. Making loot is like a hobby to the rich, a game where we compete against other rich people. Banksters trying to out fox other Banksters. Don’t take it personal.

It’s that simple, so if you’re a poor shleep, working and helping a rich dude compete against another rich dude for poverty wages, well that’s your fault. No one else’s.

You swallowed the teachers cool aid. They train you to fear the loss more than the love of the win. Hence making you into a 99%

Anyone can make money and lots of it, it easy when you have the right mind.

Someone once said we are all actors, world is a stage, if you think of yourself as less than, you will be, no matter what wall you put up to conceal it.

I keep stressing that the 99% have an inflexible belief system. That Belief system is what defines you and keeps you trapped in the role you play on the stage of life.

You can make money doing anything, without so much as lifting a finger.
You need to risk a little money but it’s a simple and primitive formula. Hire people. They are obedient, work for nothing these days, and are too stupid to steel your customer list.

This just popped into my head,

door bells on the outside, almost anywhere I go they are broken, Find a deal in china, bring in a boat load, good ones. Hire a sales manager, to recruit and manage door to door sales people, high turnover but that’s what you’re paying him for. Demand results with a good bounce. It works every time, he don’t deliver fire him and get another.

While you sit on your ass your slaves are out making you loot.

Sorry for sounding blunt but that’s how it’s done in every business.

We have a guy play acting as Owner, and we have the 99% play acting slave.

Opps, I mean resource.

PS I now have imposters, hecklers, it’s a beautiful thing, means I’m pushing the right buttons. You can’t bend what you can’t offend.

#20 Jenna on 04.11.12 at 10:16 pm

Garth, I am one of those young people you make fun of. I haven’t bought yet because my Dad thinks like you and I ended up here in sept 2010 and check your blog daily ever since. Anyways, Toronto has the worst commutes in the world and has done nothing about this. Of course no one sane would buy in the suburbs right now. The price of gas doesn’t help but mostly who wants to spend half their life bumper to bumper.

Of course not. You’re special. — Garth

#21 Rural Rick on 04.11.12 at 10:18 pm

21st

#22 tomohawk on 04.11.12 at 10:18 pm

Tomorrow my wife and I are planning on agreeing to purchase our first house together, in a small town in SE Ontario. Three bedrooms, 1.5 baths on a 75×150 lot for just over $110,000. I just don’t understand the attraction of city living. Pay at least five times as much to live a half-dozen feet from your neighbour.

#23 gary on 04.11.12 at 10:20 pm

Garth.. I am a senior 67 who grew up for the most part in Leaside (my dad rented the house from his company)
Long story short he had a chance to buy it in 1959 for peanuts,but chose to continue to rent.There went my inheritence methinks haha
But after reading this blog tonight and seeing the pics. I can’t believe what was paid for the “trendy urban house”..What are these idiot buyers drinking,and what are these bankers thinking, for holding a mortgage on that dump. We left the big smoke years ago,and have no regrets..settled in NS and just laugh at the goings on in Hog Town!! Shame.

#24 Bottoms_Up on 04.11.12 at 10:22 pm

#7 Bill on 04.11.12 at 10:02 pm
————————————
By accelerating payments on a 3.29% mortgage, you are effectively saying you can’t earn better than a 3.29% rate on that extra money.

Your money would be better spent invested and earning 8%…then take this money and put it as a lump sum on your mortgage, before and if you have to renew at a higher rate.

#25 Furst on 04.11.12 at 10:24 pm

#18 Smoking Man You are one hilarious dude trying to convince everyone that you’re part of the rich 1%. You ain’t foolin anyone my muddy-minded co blog ruiner.

#26 Aaron - Melbourne on 04.11.12 at 10:25 pm

It should be no surprise that, with so many young greater fools running around, our condo scene is exploding. In fact in the GTA it’s gone berserk. There are 148 skyscrapers and condo towers now being built, with 400 condo projects being sold, and an estimated 23,000 units coming on to the market this year.

No other place else on earth is being this stupid which, I guess, means it’s different here.

**********************
Australia thinks that last line sounds an awful lot like a challenge

http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/8750.0Dec%202011?OpenDocument

#27 Hardassi on 04.11.12 at 10:28 pm

Garth,
memories are short in RE. Poster from Calgary yesterday cited that Calgary’s different and he knows from 25 years in Calgary RE. Conveniently forgetting the great collapse of ’82 and the ‘kick ‘em when they’re down’ repeat in ’85. 21st century before prices back up to floated to late- ’70’s values (not including v. expensive mortgages, lost opportunity cost of the money, etc.)

Furthermore, many city folks think that the StatsCan numbers on urbanization imply that now that we’re urban, we’re all living in cities.
Newsflash: Bowmanville is ‘urban’. For StatsCan, ‘urban’ means a ‘population centre of over 1,000′. Yes one thousand people. A lot of people live in very nice small towns and cities and don’t miss the big city problems one bit.

#28 Rob .T on 04.11.12 at 10:30 pm

Hey Garth, is there anyway we can help THE SMOMING MAN? He sounds exceptionally drunk tonight. I really think he is crying for help. I know we are all here to talk real estate but seriously, try to make out what he writes night after night. Anyways great blog again.

#29 Gypsy Kid on 04.11.12 at 10:39 pm

I remember the early ’90s. so many people lost everything….life savings went up in smoke.
But this is worse. So scary…..are people blind?

#30 Can it be? on 04.11.12 at 10:42 pm

You know what’s trendy and cool… Not having debt :) oh and not having to pay those ginormous property taxes on top of those mortgage payments. Also not having to pay bank discharge fees… Oh and living within ones means. You would be surprised how happy you can be with less :) and still live well.

#31 Narrowgate on 04.11.12 at 10:47 pm

Back when Mel Lastman hyped Toronto as a “world class” city it was laughable. It still is today. All Toronto is known for is “hockey town” (losers there), “money town” (boring Bay St types), “multicultural town” (Ottawa’s dumping ground) and “worst traffic in North America town” (not an exaggeration). We also have a overheated, overhyped real estate market.

You forgot the world-class bigots. — Garth

#32 ANONYMOUS on 04.11.12 at 10:48 pm

I would like to find a nice ‘affordable’ 3-bedroom house in the Kitchener-Waterloo-Cambridge-Guelph area, with a nice small lot, for around $600,000 to $800,000.

But they are few and far between!

Any suggestions?

#33 xyz on 04.11.12 at 10:48 pm

Asian Invasion/Cam’s site I think not….

http://www.alexa.com/siteinfo/pls.ca#

“Pls.ca has a three-month global Alexa traffic rank of 3,619,523, and it is located in Canada. Almost all visitors to the site come from Canada, where it has attained a traffic rank of 56,765.”

Compared to this dinky blog:

http://www.alexa.com/siteinfo/greaterfool.ca
“Greaterfool.ca’s three-month global Alexa traffic rank is 74,608. The site has a relatively good traffic rank in the cities of Echo Bay (#15), Red Deer (#51), and Welland (#57). The site’s visitors view an average of 1.9 unique pages per day. Approximately 61% of visits to this site are bounces (one pageview only). We estimate that 91% of Greaterfool.ca’s visitors are in Canada, where it has attained a traffic rank of 1,297.”

nuff said…

I’m big in Echo Bay? I can die now. — Garth

#34 ACP on 04.11.12 at 10:58 pm

$700,000 for that $%^@ box on Queen Street? NO WAY! I am sorry, I refuse to believe that anyone, even a Vancouverite, would pay that much that for that.

#35 Increasing that 1% on 04.11.12 at 10:59 pm

The type of market Bowmanville represents can’t be “dead. Croaked. Kaput.” if that place went for 390k

#36 Hardassi on 04.11.12 at 11:01 pm

#29 can it be?
You nailed it perfectly. Sometimes it takes a long time to grow young.

#37 DonDWest on 04.11.12 at 11:04 pm

#18 Smoking Man

You’re advocating door to door sales as a business model? You’ve just proven you’re a hack. I seriously doubt you’ve ever opened a legitimate business your entire life. Door to door sales is the equivalent of opening up a video rental store in a world of Netflix.

#38 Smoking Man on 04.11.12 at 11:04 pm

#24 Furst on 04.11.12 at 10:24 pm

Damn thought I had you

#39 Ogopogo on 04.11.12 at 11:08 pm

Speaking of growing up, I sold off my SNC holdings at at a sweet profit yesterday and hit the market buffet for some choice equities (served à la Garth, of course) when the market dipped vertiginously.

It takes every ounce of lizard brain to bet against the herd and buy when everyone is selling, but boy am I glad I did it!

And to think that this is money that would’ve been pumped into a downpayment on a money pit in Kelowna. Thanks Garth!

#40 Smoking Man on 04.11.12 at 11:12 pm

Shine on Crazy Diamonds

TaToo in Vegas what is bubble heads

#41 Bill Gable on 04.11.12 at 11:12 pm

Vancouver is the stupid capital of the world. At least the GTA has a real economy. Here it’s grow ops and Real Estate morons.
Looking to vultch in the Okanagan, and get the heck out of here, and winter on Maui.

#42 Comedy Gold on 04.11.12 at 11:17 pm

Heard President of Toronto Real Estate Board on radio (1010AM) this morning (Something like…Mike Silver?) When asked about the future of Toronto Real Estate, he responded by Spending 5 minutes talking about Starbucks…that, in order to buy a house in a trendy area…you look to see where Starbucks plans to open.

Good ol’ fashioned long-term planning?

Or Comedy Gold…

#43 Canadian Watchdog on 04.11.12 at 11:18 pm

April 1-11 condo stats from http://tosolds.ca/

https://docs.google.com/open?id=0ByrPFSoPLahJR0V5TUNEdVN1dTQ

TREB Condo Apartment Benchmark Prices http://i43.tinypic.com/2cwtpg1.jpg

#44 DonDWest on 04.11.12 at 11:28 pm

Back to the topic on hand.

That property in rural Ontario (Bowmanville) is greatly overpriced at 390K.

That slum in Toronto priced at 700K is in the Twilight Zone, overpriced so badly in defies the laws of the very universe.

Stop gouging my generation you greedy baby boomer pricks. Stop essentially cannibalizing your own children – thanks.

Methinks you are feasting on each other. — Garth

#45 Yuus bin Haad on 04.11.12 at 11:30 pm

“The stable people will sit tight, but those who bought a condo and flipped it and made money and bought a condo and flipped it and bought a condo and flipped it might want to take a pause in that particular program right now.” Harry Stinson (postcity.com, 2012)

The jig is up when Harry starts to make sense.

#46 cramar on 04.11.12 at 11:41 pm

@ 21 tomohawk
Congratulations! You are obviously someone who can use your brain for actual thinking.

@ 29 Can it be?
Couldn’t agree with you more! Lovely isn’t it? I’m so blessed, and have also owned my own home for years.

@31 ANONYMOUS
Your criteria for a “small lot” is the tough part. The only suggestion I can make for here in Kitchener is to only look at new housing and make sure you try to keep it to only $600k. New subdivisions gravitate towards dinky lots. Even then you are still $200k-$250k over market. If you go over your lower limit, they tend to give you a much bigger lot to make it seem like you are getting your money’s worth, but you might have to accept another couple of bedrooms in the deal and another garage or two. Don’t look outside of the cities. Your upper limit will unfortunately get you “horse farm” sized land.

#47 harden on 04.11.12 at 11:43 pm

Somebody paid $700M for that piece of crap?! It doesn’t even look like it can be torn down, at least not without pulling down the rest of the block. Their parents must be so proud.

#48 Pat on 04.11.12 at 11:46 pm

“Walk to the grocery store. The vet. The bank. Sit on the verandah at night. Sip daiquiris.”

Die from boredom.

“Countryside is for cows” (Salman Rushdie)

#49 Ice & Rivet Centennial on 04.11.12 at 11:52 pm

Bay street’s less relevant to the Americans today. The former ground zero companies don’t do as much business here. They’ve moved, been bought out or have new partners elsewhere in crime. The Bay-Wall street link has whittled. Don’t know if the yokels including the mayor & premier realize this .

#50 getreal-tor on 04.11.12 at 11:56 pm

#31 ANONYMOUS

Wait for RIM to implode further and RE prices will also implode in that area.

#51 John G. Young on 04.12.12 at 12:00 am

#21 tomohawk on 04.11.12 at 10:18 pm

“I just don’t understand the attraction of city living…”

Oh, I know… cultural diversity, a huge selection of restaurants, tertiary care hospitals, repertory cinemas that show independent and classic films, public transit, specialty shopping, art galleries, live theatre at all levels from community theatre to world-class productions, architecture, festivals, parades…

You’re right, what could possibly be attractive about city living?

#52 DonDWest on 04.12.12 at 12:08 am

Methinks you are feasting on each other. — Garth

Wrong. I don’t set the prices, those that came before me do. My choice is to pay for an overpriced mortgage or an overpriced rent. In either case, the benefactor is the person who bought the property before me.

Sorry Garth, the free market doesn’t work in real estate. The sellers are sophisticated enough to discover they can effectively hold a monopoly. This monopoly is enforced by the reality that going through life without a civic address is simply impractical.

The sellers can collectively agree to list all their properties at overpriced rates. By not competing in this fashion – they all stand to profit tremendously. Read Nash’s theory on non-competitive gain to understand my meaning. This form of oligopoly works well in real estate because it’s the most essential service to human survival. Unlike a laptop computer or that trip to Starbucks – you can’t choose to opt out of real estate. Either way, you’re paying for it through an overpriced mortgage or overpriced rent.

Of course, there’s a limit to how much the sellers can reasonably collectively squeeze out of the wages of the young. If the lemon is out of juice – the lemon is out of juice. Yes, the expansion of credit enabled by the Conservative government has only served to further propagate this process, but blaming the government for everything becomes childish after a while. This mess should be squarely put on the personal greed and irresponsibility of the individuals selling these homes. Let’s not kid ourselves that housing will ever become a competitive industry that fights for that lowest possible price for consumers. Whatever is the maximum they can squeeze – is the price that will be set. Everyone needs housing; therefore I can’t see a world where housing ever takes up less than a third of a person’s income minimum. There exist no downwards pressures on prices that are apparent in other industries.

#53 DonDWest on 04.12.12 at 12:12 am

#50 John G. Young

You can get all that stuff by visiting the city on the weekend.

#54 broadway skytrain on 04.12.12 at 12:18 am

simple – locationx3

land NEAR DOWNTOWN in TO, VAN and ALL big cities is worth a mint.
land EVERYwhere else is pretty cheap or very cheap.
bowmanville,fort langley,or kingston are not near downtown. nor will they ever be.
empty 33′ lot value round here 650-850 in e van

the house in TO may be worth 0 , the land is 90-100% usually. it does look a bit ‘ahem’ “tight” to tear down though.
however it may be perfect inside, solid 0 mtce brick outside. maybe they don’t care about impressing others. remember the “undercover” luxury car that was a busted up beater on the outside on SNL. ha!

willie mitchell , damn you!

#55 Marco on 04.12.12 at 12:25 am

This is so much like London UK was 5 years ago where a broom cabinet in Chelsea sold for £270k (the Toronto analogy) to a kid who mortgaged himself to the hilt so he could have the right postal code. Homes on the south coast (the Vancouver analogy) exploded in price when a bunch of rich footballers bought homes in Poole.

5 years hence the top footballers (a very few) don’t care (the Real Rich Chinese analogy) if their properties went up or down as their investments are well diversified and their yearly income is far in excess of the losses.

The not so top footballers lost fortunes and have not recovered (the not so rich Asian-Canadian who mortgages to the hilt and appeared to be HAM), and most of those who bought because “all the rich are buying here so things go up forever” got screwed by the mortgage rates and the new rules and lost their shirt/skirt (making the summer months entertaining).

Not so many new buyers coming into that market now (bankers and footballers staying clear) and the local housing market is in the doldrums.

The Chelsea broom cabinet? Has not sold as it is intrinsically worthless now that money got tight with the new rules and actually is harder to come by.

HAM, HFM (Hot Foreign Money), financial traders and old wealth still lives in London, but with the tighter lending rules, their marketing “pull” has ceased.

All this is happening here, but the marketing machine is much more efficient at presenting a different truth. The inevitable will happen, but much more abruptly and that much more painfully…

Instead of a hiss or a pop it may be a shocking Bang!

Try to sell a home in whistler at a price according to the appreciation trajectory as described by the local press/real estate lobby last year… Try Squamish… Try Richmond… Try Tssawassen… Try Maple Ridge… Compare this to 2 years ago and you can see the circle closing in to Vancouver.

As a foreigner (eg. Not yet Canadian) I am studying this phenomenon as a social science learning experience and as a base model for the financial education I will ensure my children will have to get before they get $1 out of their respective trust funds…

Oh yes, I have 0% exposure to the Canadian ands aged 2x the average family income in BC (net of tax), live in a $+ home and made 2.5x my yearly rent in post tax returns from my investments… That is what ownership is… Owning your own freedom, NOT the illusion of ownership of a property rented from the bank where you take all the risk and the bank none.

After taking the moronic raltor license “course” to satisfy my curiosity, I am also having a lot of fun helping friends squeeze the realtors and go direct… Too easy, really…

#56 Van grrl on 04.12.12 at 12:27 am

Today on the 4pm CBC news (Van time), Steven Quinn mentioned “Interest rates may be going up sooner than you think” as one of the upcoming stories. I was in my car and had to make an appt so didn’t catch the rest- but there ya go, if Steven Q is talking about it… it’s happening!

#57 Marco on 04.12.12 at 12:27 am

Sincere apologies for the iTypos in the prior post… Corrected text below. Sorry again for taking blog s

This is so much like London UK was 5 years ago where a broom cabinet in Chelsea sold for £270k (the Toronto analogy) to a kid who mortgaged himself to the hilt so he could have the right postal code. Homes on the south coast (the Vancouver analogy) exploded in price when a bunch of rich footballers bought homes in Poole.

5 years hence the top footballers (a very few) don’t care (the Real Rich Chinese analogy) if their properties went up or down as their investments are well diversified and their yearly income is far in excess of the losses.

The not so top footballers lost fortunes and have not recovered (the not so rich Asian-Canadian who mortgages to the hilt and appeared to be HAM), and most of those who bought because “all the rich are buying here so things go up forever” got screwed by the mortgage rates and the new rules and lost their shirt/skirt (making the summer months entertaining).

Not so many new buyers coming into that market now (bankers and footballers staying clear) and the local housing market is in the doldrums.

The Chelsea broom cabinet? Has not sold as it is intrinsically worthless now that money got tight with the new rules and actually is harder to come by.

HAM, HFM (Hot Foreign Money), financial traders and old wealth still lives in London, but with the tighter lending rules, their marketing “pull” has ceased.

All this is happening here, but the marketing machine is much more efficient at presenting a different truth. The inevitable will happen, but much more abruptly and that much more painfully…

Instead of a hiss or a pop it may be a shocking Bang!

Try to sell a home in whistler at a price according to the appreciation trajectory as described by the local press/real estate lobby last year… Try Squamish… Try Richmond… Try Tssawassen… Try Maple Ridge… Compare this to 2 years ago and you can see the circle closing in to Vancouver.

As a foreigner (eg. Not yet Canadian) I am studying this phenomenon as a social science learning experience and as a base model for the financial education I will ensure my children will have to get before they get $1 out of their respective trust funds…

Oh yes, I have 0% exposure to the Canadian and saved 2x the average family income in BC (net of tax), live in a $1m+ newly renoed home and made 2.5x my yearly rent in post tax returns from my investments… That is what REAL ownership is… Owning your own freedom, NOT the illusion of ownership of a property rented from the bank where you take all the risk and the bank none.

After taking the moronic raltor license “course” to satisfy my curiosity, I am also having a lot of fun helping friends squeeze the realtors and go direct… Too easy, really…

#58 broadway skytrain on 04.12.12 at 12:32 am

9 getreal-tor on 04.11.12 at 11:56 pm
#31 ANONYMOUS

Wait for RIM to implode further … ——————–
what little is left – too bad reallly.

but…what tech/gadget/electronic co lives forever? none, i think, therefore apple should be a short from 1000 to 0 (roughly) – but when does the mighty apple begin to rot?

#59 Van grrl on 04.12.12 at 12:37 am

Here it is. Donna Guzik on interest rates/household debt:

http://www.cbc.ca/hereandnowtoronto/episodes/2012/04/11/interest-rates/

#60 tired_of_idiots on 04.12.12 at 12:40 am

#50 That’s a great synopsis of city living, but not a description of Toronto, the city that is a legend in its own mind.

#61 John G. Young on 04.12.12 at 12:41 am

#43 DonDWest on 04.11.12 at 11:28 pm

Being a Boomer and having no children of my own, I plan to bequeath my house to my niece and nephew.

Of course, if they mouth off like you do, they can forget it.

#62 tired_of_idiots on 04.12.12 at 12:42 am

Toronto is to cities what Vanilla Ice was to rap.

#63 Van guy on 04.12.12 at 12:45 am

“I know. I owned two of them”

Did you not see a correction coming back then?

It was better than losing a mortgage. — Garth

#64 The Thing in the Basement on 04.12.12 at 12:51 am

23 Bottoms – remember the 3.29 return is a guaranteed after-tax. The 8% is not guaranteed and is tax-advantaged at best. It does narrow the gap.

What may be more important for Bill is lowering that debt as quickly as possible so he isnt worried about the rate on renewal.

#65 Nostradamus Le Mad Vlad on 04.12.12 at 12:55 am

-
Good post. There is something to be said for living in the distant ‘burbs, namely peace and quiet. By the same token, renting a condo in a downtown area also has its own highlights.
*
#2 Tim — “is it time to buy in Spain yet?” — Possibly. See here.
*
Agenda 21 from the NWO California is bizarre, no doubt about that, but this is taking things too far; The Wacky World of Insurance; Cutting Tea and Toilet Breaks lead to strike; GS is a total disaster; Iran If true, it would hurt the west much more than is being let on, ‘tho high gas and diesel prices point the way; So the wealthy are scared of death. How sad; Soros Similar to Kevin O’Leary, they both love the smell of (blood)money; Renting Homes Good for Fannie and Freddie; Swiss Bank Accounts I’m not rich enough; Sony Double Trouble; 5:04 clip Corrupt Cdn. banks; Spain’s VAT Hike; Pay Yourself First Good advice.

Timeshares Not recommended; 2013 Budgets? 2012 ain’t over yet; South Africa’s economy Half-decent; Mumbai vs. Vncvr. Mumbai hands down; Ten Quickest dying industries in NAmerica; Seven Things, not counting asteroids etc.; Africa and natural gas; Gary Shilling Predictions; Critical Bellweather Market is falling; Singapore’s towers; Aging The IMF is right, so ‘owzaboud depop? Copper Rising? Good for TFSAs.
*
Real Mental Illness The headline alone clearly says who the dinglenuts are, and it ain’t me; The Boss and Adele Quite a show, and this; Skill-testing Questions for a Google job; Bental vs. Pawpoise Nice meeting; 6:30 clip Music does have an effect on certain people; Fungus (not F) A European export that could have been done without; Falkland Islands Who legally owns them? Human Reproduction Men are being cast off into oblivion; Strangely Silent “Strange Things Happening On The Sun”, with 18 more things; Beauty and the Beast Suicide is (not so) painless.

Earth Cataclysmsand Major Changes Not to mention the cycle change; ‘Quake-o-Canoes Speaking of such; A Menage a Trois of FFs? Sexism Row I’m a man, and you’re not! ACTA Still alive and kicking, but SOPA is under a different name now; When I’m 64 US very generous; Fleeing Babylon Not until the soccer season is over; Underground Stuff.

#66 Mass Debater on 04.12.12 at 12:57 am

Good Article April 11, 2012

“Toronto Condo Surge Disguises Looming Slowdown”

by Toronto Star business reporter

http://www.thestar.com/business/article/1159857–toronto-condo-surge-disguises-looming-slowdown

#67 furst on 04.12.12 at 1:01 am

#37 Smoking Man

You had me at ‘Damn’…

#68 Ivan on 04.12.12 at 1:06 am

#18 Smoking Man on 04.11.12 at 10:16 pm

What are you ‘Smoking Man’?!

#69 Lenny on 04.12.12 at 1:15 am

I really wish you would stop exposing this housing bubble and let people fall on the swords of their own stupidity.

You say this will end badly? I predict it will end up with a new government program where you and I pick up the tab. Lets call it the “Canadian Home Affordability Equalization Program”.

Just wait for it….

#70 YVROptimist on 04.12.12 at 1:33 am

I think it’s worthy of note to point out those people who are talking about the ‘price of gas…green carbon taxes’ and the ‘length of commute’ and ‘bumper to bumper’ should be reminded that buying a house 5 minutes (or 10, or 15, or 20…) from where you live in Vancouver or Toronto is one heck of an expensive commute. It might be short but it doesn’t come at no price… (double-negative, sorry)

#71 John Ratadlin on 04.12.12 at 1:36 am

This blog is a real estate bubble that seems to never explode. Garth ,how much time is left?

#72 Steven Rowlandson on 04.12.12 at 1:44 am

Government wants to import skilled workers.
http://zen-haven.dk/canada-looks-to-speed-entry-of-skilled-foreign-workers/

Given the possibilty of a decline in real estate this looks like it could be more than an effort to fill a few jobs.

The new chums need to live some where so lets sell them a overpriced house or condo and delay the decline in prices a bit longer. Near instant gratification or what’s the case?

#73 mad vancouver on 04.12.12 at 1:54 am

The madness continues:
http://www.vancourier.com/news/Blaming+Chinese+high+house+prices+Vancouver+racist/6417310/story.html

http://www.vancourier.com/Reader+Soapbox+Concern+about+foreign+Chinese+buyers+Vancouver+based+facts/6442525/story.html

Reader Soapbox: Concern about foreign Chinese buyers in Vancouver based on facts

Debate about housing prices comes from full spectrum of community

#74 Steven Rowlandson on 04.12.12 at 1:58 am

Nice try #18 Smoking Man .
With a relatively high unemployment rate and an immigration policy most guys are not in a position to insist on the $60 bucks an hour to facilitate living in Canada. The implied threat is accept what your offered or it’s no job for you. It is not like the so called 99% actually have a choice in the matter… If the prime minister of Canada gave me his job tomorrow at a rate of pay not decided by me the rate of pay would be minimum wage just because of who and what I am.
The first thing I’d have to do is fire the payroll clerk and give myself a raise…. Some times if you want something done right you have to do it yourself.

#75 balraj sandhu on 04.12.12 at 2:09 am

I just made 400k on a house I developed in east vancouver. 1 million for the property and 500k for construction costs. The house sold for just under 2 million (plus taxes) and the real estate agent took 50k. Even if a doomsday 30% market correction does happen I will never lose money.

#76 Mutherpucker on 04.12.12 at 3:11 am

Saw a dump in trendy TO area! The Listing as my realtor states “is priced to sell fast!” Same area as the $730k fraud! The house was slapped together last minute and had an inspection report that would make your head spin of everything that was wrong with it! I thought to myself is this what I believed growing up what half a million ( actually more when some idiot finally buys it) would buy me! When did carrying half a million dollar mortgage become the normal! Just 5 years ago I thought $300k was a lot!

#77 Smoking Man's Fan Club on 04.12.12 at 3:48 am

Is there a doctor in the house? Can someone give us an idea when Cirrhosis will do the job to Smoking Man that Garth can’t? He must be getting close to OD’ing on aspirin considering the hangovers he must be having. Good thing he works from his Norman Bates-esque home with his mother in a Whitney Houston styled bubble bath. His Robert Shaw (from JAWS) act on how smart he is, is getting boring, BORING!

http://www.youtube.com/watch?v=dPi40lQetew

#78 I'll do anything for a listing - please on 04.12.12 at 4:39 am

Heres a thought from the heart of Vancouver BC – bubblicious….
The Canucks lost Game 1 today – running tally for policing cost $86,000 and rising. Too bad the Aquelini owners don’t have to pay any of this. it’s all us taxpayers….

“Many of you will have heard the expression that you can measure your net worth as a person by combining the incomes of the five people that you spend most of your time with. Others have stated that your net worth is also the sum of the people networks of the five people you spend the most time with. This is a very simplistic application of holographic mapping techniques, but still nonetheless very effective and surprisingly accurate…”

This well know business quote no longer applies in Vancouver, where the leveraged are now Millionaires, and the ‘self centered better than East Van’ people that happened to buy West of Oak street are multi-millionaires.
Why go to school when you house gees up 10% a month???
Why hang out at cafe’s and discuss the world, or why get a degree, just become a realtor with a helicopter license, and donate to Global TV – the world is your oyster. A HAM flavored oyster!

Still lots of sold signs out here. Too bad all the entry level homes go to the builders with deep pockets. All you renters should fight for your right for local ownership, cause the gov’t caved long ago…

Back to the news – The local housing problem solvers “Forum” ( who happen to be panel of developers) state – the key to affordable housing is “more density”. Isn’t it funny that developers think density – read rezoning and big profit – is the key to lower home prices in Vancouver.
Couldn’t find the link, but that is what the panel put forward to Gregor who can now swallow it up, and give them what they want.

Poor Vancouver…….

#79 Deb on 04.12.12 at 6:06 am

A good friend of mine has a mortgage which will happily be put to rest next Thursday. I asked him if he remembers anything in particular about renewing his term in the early 1990s? He said that his first renewal of the fixed five-year term seemed to be not too bad at the time: it was 13%.

#80 The real Kip on 04.12.12 at 6:29 am

“With just a few thousand they can secure a unit and buy the right to assign the deal even before a backhoe violates the first clod.”

It costs more than a few thousand today to buy a new condo and you know it. Most buyers have 30k to 50k on the table within 90 days of signing. That’s why few are willing to walk away as they did 20 years ago.

The developers today learned their lesson and are not as stupid as you make them out to be.

Twenty grand or less on a $400K unit buys a specker the right to flip before close. My assertion is correct. — Garth

#81 Aussie Roy on 04.12.12 at 6:36 am

Aussie Update

GTA sounds a lot like Melbourne Australia about a year ago (as mentioned above Hi Aaron Melbourne).

Just to touch on another MYTH, rents will never fall, strong demand, yarda, yarda, yarda. (Note Hobart didn’t even over build, much).

PROPERTY agents have started to drop their rents in a bid to lure tenants after vacancy rates hit the 4 per cent mark for the first time in decades.

Some agents are reducing rents by nearly 10 per cent to counter a struggling rental market.

Latest figures show Hobart’s vacancy rate in February was 3.9 per cent the highest rate in more than a decade.

http://www.themercury.com.au/article/2012/04/11/317391_tasmania-news.html

More evidence the Aussie economy is grinding to a halt: Yesterday, the Australian Bureau of Statistics released Australian housing finance and building approvals data. It wasn’t pretty.

Housing finance – the amount of credit provided to the residential housing sector, including refinancing – fell 1.3 per cent in the month of February. Finance provided to owner-occupiers fell a hefty 4 per cent while ‘investor’ finance increased 4.4 per cent. How anyone thinks housing is a good investment is beyond us…a speculation in the hope of rising prices maybe, but an investment?

http://www.dailyreckoning.com.au/the-road-to-australian-housing-hell/2012/04/12/

The Victorian government may cut more public-sector jobs in May, after the state recorded the highest unemployment rate on the Australian mainland in March.

http://www.theage.com.au/victoria/state-may-cut-more-jobs-20120412-1wvzu.html

We need more debt, they cried.

The Federal Government’s commitment to a budget surplus is not only drawing criticism from some Australian business leaders, it’s now starting to worry international financial markets as well.

One strategist is warning that deep spending cuts could jeopardise Australia’s Triple A credit rating and could even push the country into recession.

http://www.abc.net.au/am/content/2012/s3475421.htm

#82 Just Park It on 04.12.12 at 7:07 am

Wanted to pass on a story a law student shared with me last week – though I would not advocate this practise to anyone – it’s more of a moment of thought. As we have heard of the heavy penalty for breaking a mortgage (for those who have a fixed rate and are in the early stages of the agreement). Well, some are getting around the penalty by using a simple tactic. If you won a lottery, came into an inheritance or lined up a better rate with another institution. You call your current lending institution, tell them you have no plans on paying anymore. Legally after 90 days they will send you a demand letter for the entire balance plus the 3 months of interest. No biggie – you had your lawyer informed of the strategy – the paper work was already been setup. You pay on that demand letter – yes, your possible R1 rating just turned in R2 which is pretty much a non-issue.
And without being 100% accurate – the Interest Rate Act notes that anything more than a 5year fixed rate term, banks are not allowed to charge you those outrageous fees for breaking the mortgage early. That’s probably why they always pitch the 5 year fixed rate as the focal point.

Again, I provided unproven information that has an interesting element to it!

#83 detalumis on 04.12.12 at 7:13 am

The reason people gravitate to the city is because you have everything on your doorstep, literally. Most cities used to be built on this model but in one generation we created suburbia instead and the dirty little secret is almost nobody likes living there. If you look at pictures of other cities like London or Hamilton from 1950 I also would like living there but sure as heck not today.

Toronto is expensive but it’s rare, the only Ontario city with a subway or streetcars or decent transit that runs pretty close together. It has a beautiful downtown core with lots of shopping, not a hole full of boarded up shops. It has top ranked specialty medical care like Princess Margaret Hospital. It has lots and lots of entertainment including lots of free concerts and such if you care to dig around a bit. If you are retired you can live there without a car and not be helpless. You have huge numbers of areas to explore, all very diverse. I would choose an itty-bitty condo in Toronto over that house in Bowmanville any day of the week.

Ever been there? — Garth

#84 jess on 04.12.12 at 7:30 am

“huddles”
… paid $1.4 billion to resolve claims that they issued overly optimistic research on companies to win their investment banking business.

http://www.reuters.com/article/2012/04/12/us-sec-goldman-sachs-idUSBRE83B05020120412

#85 T.O. Bubble Boy on 04.12.12 at 7:58 am

OECD recommends Debt/GDP under 50%:
http://www.cnbc.com/id/47026928

Ya… right:
http://en.wikipedia.org/wiki/List_of_countries_by_public_debt

Is OECD run by Estonia and Kazakhstan or something? Because most of the sovereign debt out there was issued by countries that:

A) are well beyond 80% debt/GDP

B) run structural deficits (like Canada under Flaherty & Harper), with no near-term solutions to getting even close to a balanced budget – which would be a pre-requisite to even starting to trim debt

#86 Randy on 04.12.12 at 7:59 am

Can you hand me that rental agreement…..

http://www.thecomingdepression.net/main-street/real-estate/home-ownership-thing-of-the-past-experts/#axzz1rpIwyXc8

#87 Ben on 04.12.12 at 8:02 am

$700,000 dump

LMAO

#88 Gypsy Kid on 04.12.12 at 8:03 am

Tired of Idiots:
Toronto might not be a world class city, but it’s a city with all the aforementioned entertainment/amenities.

I love going up north to cottage country, but am glad I live in Toronto with all it’s evil and stupidity.

Sadly, not too many people will have the money to enjoy themselves in the city when cheap credit leaves…

#89 John on 04.12.12 at 8:07 am

The rummy house is unbelievable. Wouldn’t anyone feel desperate to be living there? I don’t get it.

You’d have to be soaking in the “Canadian soup” for a really long time to be so easily sucked into the ponzi like that. Having said that, it’s understandable. Decision-making in that kind of culture ( denial of self and reality) must be “group think”. It has to be emotional.

The concern would be how all those people are going o react emotionally when reality shifts. How can that be absorbed into the market?

Some are posting about waiting for “interest rates to go up”, or “prices to come down”. That’s fine in an excessive market, but not in a wildly emotional market. I mean it does seem like people are blindly trusting banking cartels.

Blind trust is actually really positive if you’re talking about a higher power. That’s faith, and the concept is usually known as spirituality. God.

So if I’m reading this right, people in Toronto have made gods out of the actors in the system.

A person in their right mind would simply leave the city if that kind of insane risk environment was put on the table. Isn’t money earned in a regular job in Toronto now absolutely worthless if you’re between 24-35 years old? What future would you have there?

And how is it possible for the system to now stabilize in the event of Greece-Spain-Italy-Portugal-Ireland default and interest rate hikes…all absolute certainties. Forget the Middle East, China and the US debt ( and military threats).

Too many people were used in the ponzi. Regular folks.

Would criticism of Toronto real estate be included in “doomer talk”? Just checking.

#90 tony w on 04.12.12 at 8:15 am

Recent pre sale condos agreements in the GTA require deposits of up to 15% of the purchase price within the 1st year, a further minimum 5% deposit on occupancy.

And remember, occupancy (not title at unit transfer date) is 3 to 4 years away (with luck)!

Assignment clauses are still in demand and sometimes mandatory to satisfy investor purchasers.

Exactly. — Garth

#91 Frank the skank on 04.12.12 at 9:06 am

Does anyone know how I could get in touch with Todd? I want to put out a bid for that downtown house, I’ll make the new owner an offer he can’t refuse.

Thanks in advance

#92 Bond junkie on 04.12.12 at 9:10 am

People.. COME on, don’t you get it yet?? Garth is a magician, a master in the art of perception. You only get half the story and it’s generally the half that is best suited to his argument. Yes, that red brick little Italian monstrosity should never trade at +700k, but I’ll tell you what, it will never drop below 450k either. There will be buyers lined up around the corner for it. Why? In this day and age urban professionals, esp those with children, place a disproportionate value on their time and ammenties. Like it or not, Toronto has a REAL economy where people can make a decent living and live WELL. I would argue that my quality of life is better than most and I happily dwell in a 2000 sq. ft semi, far from what anyone would consider extravagant. What Garth fails to mention (an NO I’m not a realtor I trade bonds for a living) is that house is a stone’s throw away from Trinity Bellwoods Park in Queen west. Trinity is the nicest part of downtown T.O, hands down. There’s a community centre with a pool, a starbux on the corner, a short walk to great restos and bar scene on Queen AND College, great schools, 5-7 min highway access and in the summer you can walk to work downtown. How can you go wrong?? As a new parent, I can tell you that the 200k I would save to live in Bowmanville, not to mention B*O*R*I*N*G, is not worth the 2-3 hours spent sleeping on the GO train. You can’t even get home with enough time to put your kids to bed. Seriously?? To save 200k?? I would place 5x that premium to spend an extra 2 hours every night with my family, then take them to have a picnic or swim in the park on the weekends 5 min away. That’s the reality and the whole truth. Sorry Garth

You want to raise your family on that street, so you don’t have to commute? I rest my case. — Garth

#93 TurnerNation on 04.12.12 at 9:11 am

Vote Garth for Senate! Whoops, what happened to the elected Senate pipe dream we were sold? Fool me once…
(Today, only the most dim witted followers – eaglesbay, westernman – are still espousing these empty-speak motherland dreams. Fool me twice…).

Of course not. The Senate is stacked with only boot lickers. Regime-friendly media mouthpieces (Wallen, Duffy), and the likes of hockey players who’ve taken too many hits to the head. People who will not make trouble.

These days, I’m ranking about 7/10 on the DonDWest anarchy scale.

#94 GTA Girl on 04.12.12 at 9:19 am

What no one is speaking about are the investor clusters the developers are putting together to buy whole parts of their own condo projects in order to push over the 70% sales mark.

It’s not just little Mom & Pop flippers.

I’m leaning to the belief that it’s a type of ponzi scheme, and shell game with leveraged cash. Nefarious.

#95 GTA Girl on 04.12.12 at 9:29 am

To the fellow advocating a ‘itty bitty” condo in Toronto is a better life style than small towns.

That’s a choice my friend.

But to live in a minuscule box in the sky in a mediocre city like Toronto and pay the worlds top dollar for the privilege would make me bitter. Explore Toronto? You’d be finished in a month, or the cold winters would make it difficult. It’s not New York, Paris or London. Cities that have evolved with different sites, cultural areas and good accessible transit to get to each. Unless you don’t mind the bus on Eglinton stuck in traffic packed like sardines.

And one other thing? Every time you leave your condo you spend money. It will be out of pure boredom. Either to buy an expensive coffee, lunch or soul-less shopping.

World class? My ass.

#96 penpal on 04.12.12 at 9:44 am

@ # 31

Are you crazy?

No, really.

The entire K-W area has been inflated due to RIM. Every employee has bought a house and the execs have all sold their stock and built ridiculous homes that NO ONE will pay them even 1/2 of replacement costs.

RIM employs directly approx 7,500 people in K-W area and are laying off and if taken over will move all jobs abroad. They are by far the largest tenant for ICI buildings and account for 30% of all office space in this area.

Budd auto has closed
Schneiders Meats is closing
etc.,
etc.
Manufacturing is dying there

Check the average annual income there

It is a boring, boring community with some of the most unfriendly Canadians I have met, really bad drivers as well and a high crime rate.

If you must move there, rent – much cheaper, can rent a house as you describe for 2K a month.

In a couple of years you will buy whatever you want here for 250 to 350 K.

Think Windsor, but with less class.
K-W is a dump with crappy schools and horrific hospital / emergency services.

Good luck in your search.

#97 peter on 04.12.12 at 9:45 am

Actual cost (To build) a shoe box cost around 90k to 120K per unit, builder request in some cases 60K down payment on a 400K shoe box (sale price). If market crash`from 400k to 150K the builder gets even however the “inverstor” will be screwed.

#98 penpal on 04.12.12 at 9:52 am

@ # 93

After extensive world travel and living abroad for decades, my sentiments exactly regarding Toronto.

And the comment about going out and always digging in your pocket spending to avoid dying of boredom is spot on!

Toronto is not world class, period.

In fairness, it has some world class elements, but spend a weekend there and then in NYC or San Francisco and then talk to me.

#99 Rene on 04.12.12 at 9:52 am

http://www.cbc.ca/news/business/story/2012/04/12/debt-survey-equifax.html
“Interest rates are still obviously very low so people are still borrowing, but I don’t know if it’s a good or a bad news story,” said Nadim Abdo, vice-president of consulting and analytical services at Equifax Canada.
*****************************
Apparently, we are all grossly overqualified to be VP of Consulting and Analytical Services at Equifax Canada.

#100 Daisy Mae on 04.12.12 at 9:55 am

#10 FERRIS WHEEL: “I don’t agree that Carney is ever going to raise rates on his watch.”

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

Garth says he will. He has no choice. So, he will.

And we’ll all remember what transpired on “his watch” — the Conservative government as a whole. They ultimately get away with nothing. It will cost them the next election.

#101 penpal on 04.12.12 at 9:57 am

# 44

Boy are you ever right!

The Skeleton (Stinson) is generally a moron (met him several times), but heh, even a blind chicken finds a kernel of corn once in a while!

#102 big T on 04.12.12 at 9:57 am

note to smoker, that someone you misquote was
W. Shakespeare, a pre condo kinda guy..

#103 Don Johnson on 04.12.12 at 10:07 am

That’s it! I’m taking all my liquid assets and shorting the tsx. Balance portfolio be damned. Another report today that Canadians continued to take on debt in the first quarter, real estate is out of control, interest rates sure to rise, job losses everywhere, and so on and so on. Only a matter of time.

#104 eaglebay - Parksville on 04.12.12 at 10:09 am

#50 John G. Young on 04.12.12 at 12:00 am
“Oh, I know… cultural diversity, a huge selection of restaurants, tertiary care hospitals, repertory cinemas that show independent and classic films, public transit, specialty shopping, art galleries, live theatre at all levels from community theatre to world-class productions, architecture, festivals, parades….”
_______________
Lived in cities, Toronto 25 years, most of my life.
I’ve never gone to or used any of the things that you mentioned. Except perhaps Boston Pizza.
Out of millions of people only a few thousands use such facilities with the exception of public transit which I never used.
The city is boring and especially now, overcrowded.
I’m not holding this against you. To each his own.
The majority of the people cannot afford such boring things. I could but didn’t like this kind of stuff.

#105 J.I.M. on 04.12.12 at 10:14 am

The thing about the Canadian real estate market is that it isn’t consistent at the moment. On this blog we have people reporting that it took a year and multiple price cuts to sell their house, while at the same time other houses are experiencing bidding wars. Some areas in the country are booming, while some (ie Kelona) are crashing.
Seems to be a dangerous time for Real Estate.

#106 T.O. Bubble Boy on 04.12.12 at 10:15 am

It’s not New York, Paris, or London.

… and, it’s not Bowmanville, Paris Ontario or London Ontario either.

Toronto is the closest thing Canada has to a major metropolitan city (no – Vancouver and Montreal don’t count), but in a country of less than 35M people and a huge land mass, you’re not going to have a “world class” city of 10M+ centralized anywhere. We simply spread our dollars too thin in this country trying to have roads and hospitals and F-35’s and submarines euqally distributed across a truly giant country. Russia, the US, and China are pretty much the only other countries that are comparable in terms of land mass, and they all have populations 8x to 30x higher. (ok – Australia is there too, and Sydney is more “world class” than Toronto, but you can’t win em all)

poo-poo-ing Toronto for winters but praising small town Ontario is also silly… small towns you are guaranteed to be snowed in at some point.

#107 John G. Young on 04.12.12 at 10:18 am

#52 DonDWest on 04.12.12 at 12:12 am

“You can get all that stuff by visiting the city on the weekend.”

True, and then you will be in it, but not of it.

#108 SaraBeth on 04.12.12 at 10:19 am

That house in Bowmanville is just what I will be looking for in about a year….

to rent.

#109 Aussie Roy on 04.12.12 at 10:21 am

Aussie Update

NumberWang (or lies, damned lies, and statistics)
Written by Australias biggest property spruiker.

The best thing about this article are its comments. You know the ones?, Ah, house prices double every 10 years, blah, blah.

It just proves how intrenched the house “flu” fed by junk math and economics is in Australia, even after a year of price falls.

http://theage.domain.com.au/real-estate-news/blogs/domain-investor-centre-blog/numberwang-or-lies-damned-lies-and-statistics-20120412-1wvfk.html

No house price bubble here – lol.

#110 Industrial Guy on 04.12.12 at 10:23 am

Hello Garth,
Congrats on the Echo Bay thing. I guess your Order of Canada is assured after this.

Equifax Canada’s reports that consumer debt grew 3.4 per cent in the first-quarter of 2012. This is after all the dire warnings from Bank of Canada governor Mark Carney and changes to mortgage rules by or Lilliputian of Finance. It’s either a continuation of the myth of affordability which has gripped the housing market or simply desperation as Canadian families use lines of credit to supplement their faltering incomes. I sure hear a lot of desperation stories here in South Western Ontario.

I work in the manufacturing sector and I’m always shocked when customers and clients tell me that good times are right around the corner. The economy will boom again and that will solve the debt problem. They think that one good month of employment numbers from Stats Canada is a trend. Ignorance is not bliss. Just drill down into those stats and see what is actually happening. I’ll admit. some items look promising if they continue for the next six months.

Auto loans and leases, increased by 10 % cent from the same period last year. This myth of affordability is like a pernicious cancer which has invaded the entire economy. This house of cards if climbing higher and higher. We all know this will not end well, but how this scenario plays out is quickly moving from bad to worse. Sadly, a free fall may be inevitable followed by yeas of deflation.

I was in Windsor on Tuesday. The local RE guy said a lot of the cheap houses around the University were purchased by investors looking to turn them into student rentals. It’s not a bad return either ….. Mortgage, taxes and utilities are under a thousand dollars a month. You can rent the place out to four students for $500 a month each.
Check out what $59,000 gets you …… It’s not the best part of the city but, it is close to the University.
http://www.realtor.ca/propertyDetails.aspx?propertyId=11628861&PidKey=-1365947226

#111 Kris on 04.12.12 at 10:24 am

Dare I say it, there appears to be change in the air, in my nook of Burlington, west of the GTA .

Three townhomes on my street sitting unsold for 3-4 weeks now. Sure, not an eternity, but it’s a big shift from last year, when listings were flying off the mkt within the week.

As for condos, there are 2 buildings coming up within spitting distance of my street. One of the sites is having trouble finding buyers, it seems. For the last little while, the builder has been doing nothing but carting over soil from other construction sites, and playing with these mounds of dirt half-heartedly.. That’s all, for 8 weeks!

My construction buddy says this is a classic ploy by developers to kill time while waiting for buyers – Hire a truck & maybe a couple of workers.. to make it look like construction is underway. And hope enough naive buyers sign-up, so there’s money to actually start construction.

Nice to see sellers & developers on the defensive – Never thought I’d live to see that day. This is for townhomes & condos, though – The SFH market seems to have steam, due to scarcity of listings, I’m told.

#112 SKRenter on 04.12.12 at 10:24 am

Hi Garth,

Things appear to keep soaring here in Skatch, new tower announced for an FCC expansion in Regina. However, most people don’t realize that these FCC’ers are scattered around Regina, it’s not really like new companies or employees are coming, just relocating around town. Same deal with other Harvard tower.

I have talked to multiple pubes who think that things will go up for ever, maybe even the next 25 years. Well, that last point was the dumbest one i’ve heard. Clearly the majority of Saskatchewan thinks economics is some sort of new cheap cereal.

Well, while the local realestate orgy tries to replicate RIM’s sense of optimism, there are some cracks in the foundation. These cracks largely resembles RIM’s ability to innovate, but hey at least they have good times on flights.

Here’s the crack:
Exhibit A: http://www.realtor.ca/propertyDetails.aspx?propertyId=11425492&PidKey=-716280365

This property, a 3320 sq ft mansion happy meal located in a newer area within walking distance of best buy and built in 2007 quickly went on the market a few years after it was built. It has been sitting on MLS for at least one year and was originally priced at around $1.2 million. Now it sits at $849,000. The problem is that there are only so many members of the Brandt and Hill families in Regina who can afford these prices.

Well, there are more affordable places in Vregina, like this little diddy: http://www.realtor.ca/propertyDetails.aspx?propertyId=11667395&PidKey=1589362079
close to $300k for a 968 sq ft house in North Central Regina, omfg. 6 years ago this house would be $50k max. Oh and by the way, this is the same neighbourhood MacLean’s touted as Canada’s worst. But hey, where else do you get to watch crime drama’s without having to pay for cable.

Rented and jaded in the vag of the skatch.

SKRenter

#113 Friend of Todd on 04.12.12 at 10:39 am

#43 DonDWest

“Stop gouging my generation you greedy baby boomer pricks. Stop essentially cannibalizing your own children – thanks.”

The guy that sold the Bowmanville house is a close friend of mine. He’s 38, not a “greedy baby boomer”. The only reason that he sold the house was because his mother passed away last year (his father passed away a couple of years earlier). He would have liked nothing more than to have been able to keep the house that his parents bought right after they were married and that he and his four younger siblings were born and grew up in. Unfortunately none of them were in a position where taking on a significant mortgage to pay the others out made sense financially, so they had no choice but to sell the house. Sometimes things aren’t as black and white as you think they are.

#114 eaglebay - Parksville on 04.12.12 at 10:47 am

#91 TurnerNation on 04.12.12 at 9:11 am

Thank God you’re not in the Senate.
Jealousy will get you nowhere.
Everything is a conspiracy. Ever heard of self worth and responsibility?
Now, get to work and acquire some skills.
Do your country a favour and stop quacking.

#115 tkid on 04.12.12 at 10:56 am

#43 DonDWest: That property in rural Ontario (Bowmanville) is greatly overpriced at 390K.

Bowmanville is not rural, there are Cinemas, more gas stations that are in Toronto’s downtown core, 2 supermarkets and a Zellers, a thriving downtown (which is unusual as most small cities/towns have downtowns which are dead), free parking for the first 2 hours with a rate of $2 for the rest of the day, a library, schools, hardware stores, a Walmart that had a tornado touch down in its parking lot, and a transit system.

Bowmanville has that small town feel with the big town amenities sans the traffic jams. If I had children it is where I’d raise them.

And yeah, I miss the place terribly.

#116 torontorocks on 04.12.12 at 10:58 am

#82 and the other TO pumper. I admit, growing up in Bowmanville or Shirley Temple, Ontario or wherever else these TO pumpers come from may not have the same zest and flash and stuff to do like TO, but if you’ve travelled anywhere in the world, you can see what kinds of cities there are that are truly world class. With neato shops stuffed with reasonably priced goods, clean streets, stylish and friendly folks that aren’t full of themselves (b/c they came from Numbnuts, Ontario, arrived in the Big Smoke and have officially arrived with a capital Douchebag). Cities like Chicago. London, Paris, Montreal, Seville, Madrid, Barcelona, Rome (even with all the scooters), Vienna, Lyon, Milan, Buenos Aires, Rio, Mumbai, Moscow). There is nothing unique about Toronto and riding the train today I actually felt it really is just a big small town, which is why it holds such appeal for Cobourg. And just as a note, Hamilton has some gorgous period homes and some of the best research hospitals in the country, if not North America. So settle down. $700,000 for that crackshack on Queen is a joke.

And I’m born and bred in TO. IF a gorgeous period home in Edgebrook, Illinois (15 minutes to downtown Chicago) can go for $500K from a peak of almost $900,000K, then so can TO. TO has NOTHING on Chicago for it to warrant those valuations.

#117 Al on 04.12.12 at 11:03 am

I think that this is the house in Toronto (inside pics)

http://themashcanada.blogspot.ca/#!/2012/03/14-manning-avenue-trinity-bellwoods.html

Nice enough but it goes to show you how not based on fundementals a decion like this can be.

#118 tkid on 04.12.12 at 11:03 am

#82 detalumis: If you are retired you can live there without a car and not be helpless.

Bowmanville has a hospital, emergency care and everything. Walk in clinic is across the street. Seniors centre is down the street, across from the old mall with the second Shoppers and a supermarket. If you need to commute to Toronto there is a Go Bus that connects to the Go Train in Oshawa.

There is no need to drive in Bowmanville.

#119 Ross K on 04.12.12 at 11:07 am

This commentary on non-urban homes is very valid. During the last crazy period of the late late 80’s, country subdivisions of luxury homes on 1/2 acre lots, increased in value more than the urban homes.

This time around the opposite has happened and there must be a reason for it. A shift in the dreams of urban dwellers clearly has happened.

Home buyers must remember, home equity valuations are directly inverse to interest rate changes. If a mortgage payment increases 30% when rates go up the value of the home will decrease that same 30%.

With rates at historical lows we know historical devaluations will happen as rates return to an economically sustainable threshold of a constantly modifying 5-7%.

#120 Mark "the talk" Carney on 04.12.12 at 11:13 am

Canadians continued to heap on debt in first quarter

http://www.theglobeandmail.com/globe-investor/personal-finance/canadians-continued-to-heap-on-debt-in-first-quarter/article2399535/
—————————————————————–

Mark Carney you are either a moron or a criminal who is trying to bankrupt Canada? The stupid masses will borrow spend borrow spend borrow spend until they are bankrupt. I know people living it up with no intentions of paying the debt back. I know one couple who BORROW from their HELOC to pay the mortgage. Yes… crazy but is reality Mark Carney. Are you really a moron?

#121 Bottoms_Up on 04.12.12 at 11:17 am

#69 YVROptimist on 04.12.12 at 1:33 am
——————————————
Savings on gas and wear and tear on your vehicle is easily calculated. But you forgot one huge component: TIME.

How valuable is your time?

#122 cramar on 04.12.12 at 11:38 am

Location! Location! LOCATION!

That is the reason for asking price for that $2.1 dump in Van, is it not? Yet “location” is relative. Now this house HAS location to command a “million dollar view”. I drove by it last year on the way to Collingwood and noted the sale sign. The location is perfect at the top of a forested hill with a view of the countryside for 20km. Since it has been on the market since mid last year, I’m sure it would sell for no more than the asking price of that flee-infested dog in Van. Besides the view, you get 26 acres, 7 bedrooms, 4400 sq ft, a Tuscan wine cellar, and 30-person media room! Did I mention the LOCATION?

http://www.realtor.ca/propertyDetails.aspx?propertyId=11748910&PidKey=1123589322

#123 Q on 04.12.12 at 11:38 am

I wouldn’t let my dog play in that hideous green and red thing off Queen Street. The twits that bought it, obviously shouldn’t be allowed to play with money, as the have proved that they don’t have any regard or understanding of it. The longer and higher this nonsense goes on, the harder the inevitable fall. This ones going to be a doozey…..should make the early 90’s look like great days for real estate. Now if only F the gnome had the pants to can (retroactively) the CMHC and tell the banks they can eat their own risk.

#124 Bond junkie on 04.12.12 at 11:57 am

Al #115, THANK YOU for posting that and validating my point and location. See, two sides to every story people. Obviously the decor and layout isn’t for everyone, and no Garth that’s not where *I* would choose to raise my family, but presenting a different point of view for all those people that see the initial fascade and end up scratching their heads in disbelief is what this blog is all about, n’est pas? That house is definitely where more than a handful of wealthy 30 somethings would settle for 5-10yrs, believe me. And TR #114, I get it, you’re apathetic towards Toronto, get in line. I sympathize because there’s more than your fair share of douchebags in this city but as I’m sure you know having been born and bred (as have I), there are also pockets of great communities and wonderful people. No, it’s not world class, but it’s the best this country has to offer and those who’ve already put down roots and built a life for themselves see very little value in going to live in Detroit or Chicago to save some cash, life is too short.

#125 Sticky on 04.12.12 at 11:57 am

@ #82 detalumis

Everybody loves waiting for the streetcar when its -10 and the wind is a howling! World class is the first thing that comes to my mind too.

All the retired boomers love walking around Toronto in the winter….Oh wait…no they don’t

I know exactly 0 people who WANT to retire in Toronto. They want to cash out of their expensive homes and spend as much time south as they can swing.

#126 Still Renting on 04.12.12 at 11:59 am

Something I find really perplexing about the real estate market in Toronto is the often massive difference between assessed value and market value. Take a look at this property, for example:
http://www.torontomls.net/PublicWeb/CL_CF.asp?link_no=42601088.111000&t=l&fm=M

The asking price is $1,049,000 (and I’m sure it will sell for much more after the inevitable bidding war). The 2011 taxes are listed as $3651.42. Based on the City of Toronto’s tax rate, that equates to an assessed value of just $460,502. That’s only 44% of the asking price (which, as I noted, is likely to be much less than the selling price).

If this property were ever to be assessed at a value similar to the asking price (ie: something closer to market value), the taxes would be $8317.

I’m accustomed to the fact that assessed value is usually lower than market value. But what can account for such massive differences as this one? Are the future owners likely to face a huge increase in taxes when this proprty is reassessed?

#127 MoneyMyHoney on 04.12.12 at 11:59 am

Mark Carney said the following to Canadians: “Woof, Woof, Woof”
Canadians smiled and said: “Cute puppy”

#128 refinow on 04.12.12 at 12:58 pm

#126 The significant increases in toronto values are rapidly exceeding the annual increases in Poperty taxes, this is somewhat undetecitble to the city until such time that the house sells, then the city can legally increase the assessed value to match the purchase price. So yes…Massive increase in Future Property taxes.

Also $34160 in land transfer Tax for the $1,049,000 house to boot..

#129 Can it be? on 04.12.12 at 1:08 pm

#29… To add to my last post… You know what else is trendy and cool… Being able to actually retire some day! All while living a good life. I realized yesterday after my real estate agent tried to make fun of where I live (FYI I live in a very desirable area, not as desirable as the agents, but my property taxes are half of the agents and 1/4 of the neighbors)… I realized that no matter where you are they will judge you… But the jokes on them… Because only you know just how ok you really are… Or in my case, my financial investor knows too ;) it’s cool to not have debt and to have investments making you money :) trust me… It’s a nice feeling.

#130 Can it be? on 04.12.12 at 1:09 pm

My agent is bouncing cheques ;)

#131 Dave on 04.12.12 at 1:13 pm

#24 Bottoms_Up on 04.11.12 at 10:22 pm

Your analysis doesn’t consider risk factors or tax. Where can you get a risk free rate of return of 3.29% after tax?

#132 Sonny on 04.12.12 at 1:19 pm

“A major international bank said today that Canada’s best hope to avoid a real estate crash would be for policymakers to raise interest rates by half a per cent over the medium term.”

http://www.cbc.ca/news/business/story/2012/04/12/rate-hikes-housing-nomura.html

#133 phlex on 04.12.12 at 1:19 pm

Of course homes in downtown Toronto are going to be expensive, just like most big cities. Even after the crash, a closet sized condo costs close to a million dollars. Same with London England. As a world class city, why shouldn’t Toronto command similar real estate premiums?

Because it’s not London. That was hard. — Garth

#134 PrincessLeia on 04.12.12 at 1:40 pm

@Still Renting, it’s because the taxes were assessed on the house that formerly sat on that lot … very likely a tiny bungalow. They’ve knocked that down and built the McMansion in the listing, which hasn’t been reassessed yet.

#135 jess on 04.12.12 at 1:42 pm

Wednesday, March 28, 2012
Difference between the OECD and United Nations on international tax

http://www.taxjustice.net/cms/upload/pdf/Sourceresidence.pdf

India says:

..”the OECD should not try to dominate the development of international tax issues: no more Rule Makers forcing Rule Takers to accept what the Rule Makers decide.”

http://profit.ndtv.com/News/Article/vodafone-tax-case-review-in-supreme-court-tomorrow-300021

#136 $$$BPOE#1 on 04.12.12 at 1:42 pm

Great Pro real estate site here. Love it. The hysterical irony is some people think this is an anti real estate site

http://vreaa.wordpress.com/

#137 Alex N Calgary on 04.12.12 at 2:10 pm

Bowmanville is a nice little town, its basically in toronto its so close. There are people all over Calgary who commute EASILY that far from just the edge of the city. Although downtown toronto and traffic is super murder. Why do people live in cities? Jobs, small towns don’t have much if anything at all. Most of BC barley has any growth and actually there have been lots of cuts and layoffs recently. when I lived in victoria in 2010 it was totally dead, nothing, came back to calgary.

Its going to end badly, its just a matter of how long they can delay this, the housing has brought out the essence of greed in so many people, looking to get rich with no effort at all, it can’t end well.

#138 John G. Young on 04.12.12 at 2:10 pm

#125 Sticky on 04.12.12 at 11:57 am

“I know exactly 0 people who WANT to retire in Toronto.”

Now you know one: me. And I have many friends who want to retire here as well.

And BTW, what’s with all the comments about the horrible winters here? Maybe 50 years ago, but not now.

#139 daystar on 04.12.12 at 2:11 pm

#179 Blacksheep on 04.11.12 at 4:59 pm

I’m obviously going to shred this, as expected. Lets have some fun! (this is murderous long Garth, big apologies but its a gem so… what do I do with it)

http://www.setyoufreenews.com/2012/04/11/corrupt-canadian-banking-system/

In 1996 when Canada approached a 100% intergovernmental debt to GDP ratio, our Liberal government (and Micheal Wilson before him, 7% GST) responded with dramatic tax increases and dramatic cuts to healthcare and social spending. Capital gains were 75% taxed. Today gains are 50% taxed. Corporate taxes were at 28%. Today its 14.5%. Personal income taxes for the rich were north of 50%. Today its in the low 40’s.

The script writer of the video makes reference to high taxes. Compared to what? 17 years ago? Each year since, taxes have fallen, its a matter of record. Other nations? Yeah, we should definitely compare ourselves to other nations (and not the U.S. that runs near 40% budget shortfalls please, a nation that actually makes an attempt to balance budgets. If anything taxes are too low in Canada with 13% federal budget shortfalls and the red ink shows so who’s responsible? Your elected government, fiscal policy all the way.) Compare tax % to GDP by clicking on nation/economy and scroll down here:

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html

The script writer goes on to say there is a growing gap between rich and poor. True:

http://business.financialpost.com/2011/09/13/gap-between-rich-and-poor-growing-fast-in-canada/

This gap has grown by 10% over the last 15 years. Reason? 15 years ago Canada was still climbing out of a currency crisis, crunched by high taxation. The rich are getting richer while the poor aren’t getting any poorer, just struggling at par and it has a great deal to do with taxation. This gap will narrow going forward as Canada enters a RE led recession (poor people don’t own RE).

Our spokes girl claims we have a federal 800 Billion dollar deficit. True? False:

http://www.debtclock.ca/index.php?option=com_wrapper&view=wrapper&Itemid=1

Where does the 800 number get derived from? Can’t say. Net federal debt would be higher:

http://www.fin.gc.ca/afr-rfa/2011/report-rapport-eng.asp

(615 Billon in 2010) … but not high enough and Canadians don’t use net federal debt numbers because assets against net debt are hard to value (likely quite undervalued, truth be told which is why the Canadian taxpayers association doesn’t go there).
It can’t be intergovernmental debt (sum of all fed, prov and municipal bonds) which is currently at 84% (2011 est) of GDP or roughly 84% of 1.57 trillion = 1.32 trillion worth of public debt.

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

Future pension spending is my guess as to where 800 billion is derived. Too bad future tax revenues weren’t included to offset. Every other business under the sun includes future revenues with future expenses so I conclude 800 billion to be federal only number which is a mythical sum.

The speech writer suggests we spend 160 million a day on interest on national debt…. sounds like a big number right? 160 million x 365 = 58.4 Billion annual interest. True or False? (table 6.4)

http://www.budget.gc.ca/2012/plan/chap6-eng.html

Federal interest on debt comes in at 31 billion annual (2010) or rounded 85 million per day (5.27% average interest on bond maturities). Intergovernmental of course, comes in much higher, I would think double or more likely around 180 million per day. The little girl goes on to say we pay 60 billion per year in interest but this can’t be federal. Its implied to be federal, but it can’t be. Intergovernmental interest on debt is close but its more. If collective provincial/municipal debt averaged the fed interest rate average of all federal bonds (which it won’t be but it should be close at 5.27%, I’d look up prov/municiple bond numbers but too exhausting) on 1.32 trillion its actually 69.5 billion ballpark that Canadians pay annually on total public debt but is this a total public debt number she refers to? We’ll never know but the numbers are shady. And finally, this is what 10 year Canadian soveign bonds sell for now:

http://www.tradingeconomics.com/canada/government-bond-yield

2%…. is what we currently pay with interest on 10 year sovreign bonds. Does that seem like theft to readers? 2%, we’re oh so burned lol, but wait! We are reaping the benefits of past fiscal policy which made tough choices we all paid for but are reaping these past sacrifices now. 10 years from now (I suggest far sooner) our future generation will be reaping the good/bad choices of today. Debt is exploding without pricing in a housing/credit bubble sure to bring a long drawn out recession in Canada and rates are poised to move up meaning we are going to get screwed in the future as we rollover bond maturities into higher rates going forward.

Lol, she asks who recieves this interest. Good question! I could only find this:

http://www.theglobeandmail.com/report-on-business/top-business-stories/who-holds-europes-debts-no-fiscal-shocks-seen-in-canada/article1603037/

…a dated story from April of 2010 that said our sovreign debt to GDP ratio was at 15% with no indication of whether this is federal or intergovernmental. If its federal a ball park would be 40 to 45% external federal debt. True external debt to GDP numbers all combined public/private debt to GDP in my searches which is disappointing for obvious reasons because both numbers are much more important to know separately concerning fiscal policy.

Lets continue. Speech writer goes on about debt slaves… criminal act… ok, the BoC. The BoC is formed in 1934 but doesn’t open its doors til’ 1935 and is private until Mckenzie King turns it into a crown corp in 1938 so the origins of the BoC were formed by all those who sat at 3 tables (Royal commission under R.B. Bennet in 1933, leading to the Bank of Canada act in 1934 and the nationalization of the BoC in 1938). McGeer was highly vocal publically concerning bank reforms and it did lead him into influencing the Royal commission’s direction in 1933 and again, to pass the BoC act in the commons in 1938 but he was by no means alone with the BoC evolving into a crown corp. My best guess is that Graham Towers had more to do with this process than anyone:

http://www.thecanadianencyclopedia.com/articles/graham-ford-towers

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

Looking into Gerry McGeer was entertaining, I must say, the highlight of my late night. Its an interesting tactic the speech writer used (build up the pioneers as hero’s only to run down the current institution/leaders, how far the apple has fallen from the tree so to speak). In 1935 as mayor McGeer faced controversy introducing “baby bonds” to build a new town hall, a direct contradiction to what Gerry had espoused in his speeches. This is an example of a historical perspective on Gerry McGreer:

http://www.vancouverhistory.ca/chronology1935.htm

Mr. McGreer was a former mayor who often railed away against those evil depression era big bad banks/bankers who are to blame for it all as 30’s depression era “maverick” politicians sometimes do and remained an MP backbencher who was never favored by McKenzie King (until appointed into senate) which I think, tells the story of 2 tales:

http://www.discovervancouver.com/articles/mayors-of-vancouver

McGeer was both hated and loved, a radical too extreme for economic/political elites and yet McKenzie King, a PM I’ve admired (fellow walrus) appointed him into the senate (while campaigning for McKenzies re-election bid in 1946).

Our speech writer now states Canadian banks only have 4 billion on reserve but have 1.5 trillion in loans. Which numbers or both are true and/or false? Our spokesgirl speaks of reserves to which Fractional banking deserves a look:

http://en.wikipedia.org/wiki/Fractional-reserve_banking

… which we no longer have since 1994 under Chretien’s first year in government:

http://www.thecanadianencyclopedia.com/articles/bank-of-canada

Its been replaced with Cash management, open market operations and moral suasion during the Martin era. The information in this last link cannot be understated. Why is fractional reserve banking a ghost? In 1994 Canada’s fiscal house was a mess, thats why! Our chartered banks couldn’t keep the fractional reserves required to function normally so it was replaced. This is what happens when you approach 100% intergovernmental debt to GDP levels readers and we are headed there again. If we keep the same course we are on under Harper, we are less than 4 years away. (strong hint, we are at 84% and have yet to price in a RE/credit bubble bust, running 5% intergovernmental debt to GDP deficits annually. How do you spell nearing DISASTER?)

By the way, our Royal bank of Canada has 7 billion in cash. The BoC if memory serves me, has the same. Collectively, cash reserves should be well past 25 billion (I think its closer to 30) within our Banking institutions but the collective credit pie is also much larger than 1.5 trillion.

Household debt to GDP ratios are presently around 153% meaning consumer debt is tagged at 2.4 trillion. Combined public debt is at 1.32 trillion and I haven’t got an answer on corporate bonds. Close to half of our consumer debt is 95% insured by CMHC. Our 1.1 trillion worth of mortgages in this nation have approx 45% equity that is 100% insured according to CMHC. ($560 billion CMHC insured at 100%, private insurers 90% insured by CMHC for the remainder and of the $560 billion at 100%, 45% is equity so I assume this percentage to be near 45% with private mortgage insurance as well)

In short (is that possible for me?), our federal government is the largest, best and last resort defence but lets say there is a RE/credit bubble crash and there is a run on our banking system. Theoretically we don’t have enough cash so… we go to open market operations as a second line of defence. Banks sell 3 month bonds to each other (literally print money) and drum up quick cash. The net effect is the money supply swells and currency drops inducing a spike in interest rates depending on how severe the runs are.

Our last defence is moral suation which means in not so many words, our federal government tells our private banks what to do, sells bonds like mad (with high rates, the bond vultures will smell blood) and begin bailouts. Anyone comforted by this? One last quote from the last link:

“Unstated was the fact that it is the federal government that determines overall monetary policy and the value of the dollar and has ultimate responsibility for the actions of the Bank of Canada. ”

What makes this true is that at any time a majority government can change monetary policy by firing the governor of the BoC. There would be political consequences of course, but thats the case and only until the next election. This is a democratic society. If we elect representatives who are corrupt or aren’t loyalists or are simply incompetant, we will collectively pay the price and all indications are that Canada will experience a currency crisis that is 3 to 4 years away assuming the fiscal/monetary policy we have now. It’s the theme of the video by the way (delivered in the movie “kickass” fiscal fashion, excellent orator) but the numbers are off, the rhetoric too unsupported and the fingers pointing to the wrong source of our problem which is Harper all the way. Too bad. A golden opportunity was missed.

#140 Tiny Bottoms on 04.12.12 at 2:33 pm

A major international bank said today that Canada’s best hope to avoid a real estate crash would be for policymakers to raise interest rates by half a per cent over the medium term

http://www.cbc.ca/news/business/story/2012/04/12/rate-hikes-housing-nomura.html

But then again, what do the Japanese know about housing bubbles?

#141 jess on 04.12.12 at 2:33 pm

T.O.Bubble Boy

UN model or the OECD regarding international tax

OECD model treaty, which is more favourable to residence, while capital-importing developing countries tend to favour the UN model treaty, which is more favourable to source.
http://taxjustice.blogspot.ca/2012/03/guest-blog-on-rifts-between-oecd-and.html
Tuesday, March 20, 2012
India slams the OECD’s arrogance on international tax
http://profit.ndtv.com/News/Article/vodafone-tax-case-review-in-supreme-court-tomorrow-300021

#142 Uh Oh Canada on 04.12.12 at 2:36 pm

“He sounded the alarm- but to no avail.”. Found this article from the Washington Post that somehow reminded me of Garth’s work:

http://www.washingtonpost.com/wp-dyn/content/article/2010/11/12/AR2010111207059.html

Another question about housing bubbles. Garth, you’ve referenced previous bubbles of the past. I was wondering if these bubbles were also happening in other countries too. For example, we know that the Ireland/UK/US bubbles popped during the same time circa 2008. It seems that we’re next along with Australia and perhaps China. Did we see various real-estate bubbles in different countries pop around the same time in the past?

#143 John G. Young on 04.12.12 at 2:37 pm

#104 eaglebay – Parksville on 04.12.12 at 10:09 am

“To each his own.”

Yes, and thank you for being one of the few here to state that. I prefer living in a big city — I’d live in New York (or better yet, Paris!) if I could, but I can’t afford it, so for me Toronto is an acceptable compromise, despite not being “world class”: of course it’s not — just look at our mayor :(
Also, I was born and raised in Toronto, so I have family, friends and emotional ties here — which are the main reasons for my staying here.
On this blog I read a lot of comments from people who denigrate the personal choices of others, while knowing absolutely nothing about what led to those choices . I find that puzzling and disrespectful.

Cheers!

#144 jess on 04.12.12 at 2:46 pm

Spain to Limit Cash Transactions to Fight Tax Fraud
http://www.bloomberg.com/news/2012-04-11/spain-to-limit-cash-transactions-to-fight-tax-fraud-correct-.html

#145 live within your means on 04.12.12 at 3:01 pm

The following just confirms what Garth has been saying. Neighbour’s daughter bought a home last eve. Yes, only around $180K in Dartmouth – a real fixer upper apparently. She likely earns about $30-35K, working out of her apt. with a bank. She previously worked for Timmy’s. Hubby hasn’t worked for 8 years since they moved back here from US. They have a 10 yr old. Went to her bank and was approved for $600K mtg. RIDICULOUS

#146 VICTORIA TEA PARTY on 04.12.12 at 3:21 pm

TITANIC HUBRIS: “…HALIFAX? NAH, WE’LL WALK. LIFEBOATS MAKE ME SEASICK!”

As we approach the 100th anniversary of that Titanic sinking in the Western North Atlantic, let’s look at something else that’s Titanic: The ZOMBIE ATTITUDE and it’s profound influence on our economic futures.

FIRST OFF…

Some observations, from my trusty crow’s nest, telescope in hand:

–Filled with endless hubris and dreams of borrowing more and more “because interest rates WELL NEVER GO UP AGAIN BECAUSE BIG BEN SAYS THEY WON’T (!),” your average Canadian consumer is going ever deeper into debt, cashing in with OPM on one marvellous consumptive shopping spree after another;

–Inspite of crummy economic data coming in from EVERYWHERE TODAY, the stock markets are up big time because it’s PARTY-TIME. Janet Yellin of the San Francisco Fed regional bank hinted that QE 3 is now a viable option.

AH YES, THE QE “SOLUTION” TO FREE ENTERPRISE’s “ongoing issues”…

The Fed’s clear signal to anyone who uses debt, is that THINGS ARE SO BAD OUT THERE THAT “WE’RE GONNA LOOK AFTER ALL YOUR NEEDS” with this here QE 3, 4, 5, 6…”In fact, we’re gonna print up so much money that you can become like us and NEVER have to pay it back because YOU CAN’T!”

And that, folks is my new definition of OBAMACARE, and a sure-fire second term for the young lad of definite left-wing bent.

But of course, compromising free enterprise with suffocating government intervention and the resulting zomiefication of the masses, IS ANOTHER NAME FOR SOCIALISM!

Stalin, et al, had slightly less luck with achieving their socialist utopia because it involved killing tens of millions of their own: so many “petit bourgeois hacks” so few bullets!

INSTEAD KILLING ‘EM WITH KINDNESS

So, it is with great relief to realize that those in charge of the US Empire have finally figured it out: kill ‘em with low interest rate debts and feel-good entitlements. They’ll be down on the (Animal) Farm in no time.

In that way you can have forever high unemployment rates, low educational standards, continue exporting inflation to China and so forth. In other words making a total hash of everything we consider to be “normal” because that’s the only way the empire can survive.

Thanks for asking and…

You’re welcome.

#147 Ralph Cramdown on 04.12.12 at 3:28 pm

It’s DIFFERENT here
It’s DIFFERENT here
Our borrowers never lie (never lie)

It’s DIFFERENT here
It’s DIFFERENT here
Our lenders always verify (verify)

Collateral values
will keep going up
until they reach the sky (reach the sky)

It’s DIFFERENT here
It’s DIFFERENT here
Like no place else on earth

Our borrowers
don’t even really need the money
because they’re all High Net Worth (high net worth)

It’s DIFFERENT here
It’s DIFFERENT here
We don’t write those kind of loans

It’s DIFFERENT here
It’s DIFFERENT here
Why rent when you can own?

#148 Toronto_CA on 04.12.12 at 3:39 pm

If you build it, they will come?

http://www.urbantoronto.ca/news/2012/04/development-proposal-50-bloor-street-west-tallest-residential-tower-canada

Tallest residential tower in Canada. I am sure there’s a Tower of Babel analogy somewhere in here?

#149 GTA Girl on 04.12.12 at 3:46 pm

toronto BubbleBoy

I didn’t praise Bomanville, I said its a lifestyle choice.

Toronto is a spoiled aloof city. Prices on everything are higher than most anywhere in the world. And Torontonians gladly pay for it, just so they don’t die of boredom or to keep up with their friends.

I’m in Europe every year, small villages to big cities. People with little money can live happy lives. I’ve seen varying degrees of this in most cities, Montreal and Barcelona being my personal favorites …even snow covered Montreal
When I return home to Toronto, I’m always struck by the bitterness of it. The greedy myopic tendencies of its city council..lack of imagination of builders, and it’s hibernating worker bee mentality. Couple in the ‘Dont you know who I am??!” attitude, and it’s somehow worse.

So to buy a 700 sqft. condo near King Street for $900/sqft? After seeing quality of life elsewhere but being pushed to spend world class top dollar for badly designed built crap?

It’s sad and won’t last.

#150 Al on 04.12.12 at 3:47 pm

What happened to all news about homeowners loosing thier homes to mortgage fraud – are Banks being more diligent and responsible nowadays?

#151 LuckyRenter on 04.12.12 at 3:57 pm

#111 Kris on 04.12.12 at 10:24 am

Three townhomes on my street sitting unsold for 3-4 weeks now. Sure, not an eternity, but it’s a big shift from last year, when listings were flying off the mkt within the week.
———————————————————-
You’re right Kris. Me and my wife went for a drive few days ago and noticed a lot of “for sale ” signs by the lakeshore in Burlington.We also checked one Town home with the “open House” sign. Real estate agent told us that the Owner is very willing to negotiate.

It seems that housing market is slowly dying.

#152 jess on 04.12.12 at 4:14 pm

I wonder if Mr. Mckay read this?

Lt. Colonel Daniel Davis, a 17-year Army veteran

Davis writes, quote, “Senior ranking US military leaders have so distorted the truth when communicating with the US Congress and American people in regards to conditions on the ground in Afghanistan that the truth has become unrecognizable.” Davis argues that local Afghan governments are unable to provide the basic needs of the people and that insurgents control virtually all parts of Afghanistan beyond eyeshot of a U.S. base….
In the first section below I will demonstrate how numerous military senior leaders have used omission and outright deception in order to prevent the American public from knowing the truth in regards to the genuine conditions on the ground in Afghanistan…

http://www1.rollingstone.com/extras/RS_REPORT.pdf

#153 CD on 04.12.12 at 4:27 pm

There is something I see a lot of in the past year (in Burnaby at least) that contributes another layer to inflated average prices.

An old three bedroom, two bathroom shack is bought by someone around the assessed value of say $800K. They tear it down and in a couple of months slap up a monstrosity. You can then see it listed for say $1.4+ million and sold.

The kicker is that the new house often has some ridiculous floorplan. Last fall I saw one of these on mls with 11 bedrooms and 8 bathrooms! Is that a house or a rental apartment? Another kicker is that secondary suites aren’t even legal in houses in Burnaby.

#154 Realirtbytes on 04.12.12 at 4:47 pm

Suburbia is dying.
Spending 10 years commuting into Toronto from Whitby was hell. Never again.
People are waking up, and wether that dmp is worth 700k, urbanization and higher population density are the wave of the future.
There should be a 2X premium to live in the city. It’s worth it… for lifestyle, peace of mind, and the planet.

#155 Blacksheep on 04.12.12 at 4:54 pm

Daystar # 137,

Thank you for finding the hard facts, as I knew the
little girl was off a bit.

“at any time a majority government can change
monetary policy by firing the governor of the BoC.”

Thank you for your confirmation of the fact that, even though our Government can, at will, remove from private banks, the power to lend to, and collect interest from,
said Government, it chooses not to.

“Does that seem like theft to readers?” ”

“Federal interest on debt comes in at 31 billion annual (2010)”

Yes, It’s 31 Billion dollars in annual taxes the people of Canada get burdened with that’s completely unnecessary. Let’s not forget compounding interest, regardless how
low the current rate is. Of the current outstanding 615 Billon the Gov. has borrowed, I dare you to print the amount which was principally borrowed?

Thanks again for you hard work!

take care,
Blacksheep

#156 jess on 04.12.12 at 4:59 pm

soldiers /security guards

April12 (Bloomberg) — DARPA’s new robotic platform, developed by Boston Dynamics, is designed to respond to rescue situations in disaster areas and hints strongly at applications on the battlefield. (Source: Bloomberg)

Robo-guard” on patrol in South Korean prison
It’s the world’s first robot prison guard…and, according to the Asian Forum of Corrections’, it’s the future of prison security. Lee Baik-Chul, the forum chairman says the robot is a game changer.

http://www.chicagotribune.com/videogallery/69349008/Technology/Robo-guard-on-patrol-in-South-Korean-prison

#157 KingBubbles on 04.12.12 at 5:02 pm

Another Alarm Bell For Canadian Real Estate

http://www.cbc.ca/news/business/story/2012/04/12/rate-hikes-housing-nomura.html

#158 jess on 04.12.12 at 5:03 pm

..Front Porch Strategies had US staff on the ground – p”ossibly against Elections Canada rules barring foreign campaigning. In the wake of the “robocall” voter suppression scandal, the Republican-tied U.S. firm hired by 14 Conservative campaigns admitted on Friday to having had U.S. staff working “in the trenches” during the 2011 elections, in an apparent violation of the Canada Election Act which bars foreign political involvement….”

http://vancouverobserver.com/politics/2012/04/09/republicans-ground-canada-helped-elect-harpers-tory-government

#159 Canadian Watchdog on 04.12.12 at 5:09 pm

CanEquity Mortgage Application Stats For Toronto.

http://i40.tinypic.com/i50gw5.png

#160 Smoking Man on 04.12.12 at 5:25 pm

Pisst. -I think Carney just called the fat lady and told her to warm up.

Then again well defind Batman on the Bond Yeilds

Oh what to do?

#161 coastal on 04.12.12 at 6:06 pm

Dan in Victoria,

As per your previous blog thread posts about the glut of tradesmen in Victoria. A month back I had my “free” plumber from one of the major plumbing companies in town in to repair a few worn out taps and shut offs, at zero cost of course in my rental with the million dollar view. As usual I ask the tradesmen what it’s like out there for plumbers and he stated there is a whole slew of starving plumbers out there. I found that very surprising in a city filled with rotting old piping systems. He said the last construction boom created way too many tradesmen to add to the existing stock and it’s dog eat dog out there in Victoria. It backs up your factual stories that old V-town is not a good place to swing a hammer or pipe wrench regardless of what the agent types spew.

#162 anon on 04.12.12 at 6:19 pm

My husband and I are mid-thirties and in the epicenter of real estate madness. We rent on the west side for a ‘bargain basement’ price of 4000/month. Insane yes, but cheaper than a mortgage. Our rent is slightly higher than the interest costs to the bank @ current rates in a comparable house.

We struggle with our housing decision daily. As insane as prices are, it really sucks to rent. Our market does not have a huge inventory of SFM waiting to be rented out. It took us almost a year to find this place. During that year most rentals at the same cost were utterly horrific (think of the sweet sweet smell of catpiss to the tune of 4-5K a month). Though our current place is nice, we have absentee landlords that have been less than stellar and we are sure they will be looking to sell the place in the next few years, which means another move for us.

Having a family and renting in a city that doesn’t have droves of homes for rent (in decent condition) is a nightmare. When you are a parent, you do have to think about stability for children. Moving every 3-4 years is not stable. School placements are based on catchments. If we can’t find a stable place to live we will be shelling out 15K a year for private school for each of our two children.

Do we buy now in an inflated market for stability, knowing we are paying a premium for it?

Do we wait and see what happens and hope we don’t get an eviction notice?

Do we move out of the city and buy into far cheaper markets?

I know no one has a crystal ball, but how long is this expected to last? I feel like we are in a catch-22.

My biggest fear is the market only goes down slightly, rates increase and we will have held out for nothing.

FML.

#163 Kris on 04.12.12 at 6:19 pm

#106 Bubble Boy
#147 GTA Girl

Bubble Boy, Canada’s entire land mass doesn’t count, only HABITABLE land counts. The majority of our population lives in urban centres, and along a thin strip bordering the US. That’s not a coincidence, bcuz the rest of our land is pretty much swamp. It needs compelling reasons (like Oil Sands) to make development of such land feasible.

I’ve travelled to many European countries, also Hong Kong, and a handful of countries in Africa & Middle East as well (Not Australia, I admit) I’m with GTA Girl. Anybody who thinks these Toronto prices are justified needs to get out more.

#164 mel in victoria on 04.12.12 at 6:30 pm

Anyone here buy the metals last week?

Was an almost obvious bottom…….perhaps temporary…….perhaps not…

#165 TurnerNation on 04.12.12 at 6:38 pm

The Squamish Sasquatch strikes again!

http://www.squamishchief.com/article/20120412/SQUAMISH0101/304129973/-1/squamish/single-family-homes-hit-hardest-by-dos-tax-hike?

Single-family homes hit hardest by DOS tax hike
April 12, 2012

Squamish’s languishing property values have placed a larger share of the municipal tax burden on residential properties.

This year, property assessments fell across the board, some more steeply than others. As a result, the burden of taxation has landed on single-family dwellings, Joanne Greenlees, the District of Squamish’s general manager of financial services told council at its Committee of the Whole meeting on Tuesday (April 10).

The average assessment for a residential strata unit dropped 8.9 per cent from last year, while a single-family dwelling assessments fell 2.4 per cent. Consequently, the proposed 7.5 per cent 2012 municipal tax increase will bump single-family dwelling taxes up 10.9 per cent and while hitting residential stata units with a 3.5 per cent increase.

#166 betamax on 04.12.12 at 6:57 pm

#92 Bond junkie: “You only get half the story and it’s generally the half that is best suited to his argument…it will never drop below 450k”

So your other half of the story is that the shack deserves a 35% haircut? Quite the contrarian, you are.

#167 Smoking man blowing smoke on 04.12.12 at 7:01 pm

You’re all slaves and are too stupid to trade for a living.
After all, someone has to do the real work of the world and it’s not going to be me. And all those stupid guy who went to college and ended up with MD’s, CPA’s, PEng’s, MSCS’s and Phd’s Math, hell even that guy from Hamilton who won the Noble for options theory or even old Hull himself, they really don’t know f all and are all brainwashed, case I’m the great smoking man, who smokes cause basic stats don’t mean nothing.

#168 mel in victoria on 04.12.12 at 7:09 pm

Garth………Who is Daystar?

#169 cramar on 04.12.12 at 7:15 pm

#96 penpal on 04.12.12 at 9:44 am

The entire K-W area has been inflated due to RIM. Every employee has bought a house and the execs have all sold their stock and built ridiculous homes that NO ONE will pay them even 1/2 of replacement costs.

RIM employs directly approx 7,500 people in K-W area and are laying off and if taken over will move all jobs abroad. They are by far the largest tenant for ICI buildings and account for 30% of all office space in this area.

Budd auto has closed
Schneiders Meats is closing
etc.,
etc.
Manufacturing is dying there

Check the average annual income there

It is a boring, boring community with some of the most unfriendly Canadians I have met, really bad drivers as well and a high crime rate.

If you must move there, rent – much cheaper, can rent a house as you describe for 2K a month.

In a couple of years you will buy whatever you want here for 250 to 350 K.

Think Windsor, but with less class.
K-W is a dump with crappy schools and horrific hospital / emergency services.

——————-

I am always fascinated by how any two people can come to totally diverging opinions about a place. One says TO is world class. Another sez it is hicksville and 3rd class. One says Van is the most desirable place on the planet (at least in Canada) and another says it is just a drug-infested ghetto. You say K-W is double boring, unfriendly, with bad drivers and high crime rate, etc. I say that is YOUR perception and opposite of mine. Different strokes for different folks I guess. However your comment on high crime rate is just insane! From what I’ve seen of Windsor, house prices are 50% cheaper there because it is much less desirable place to live—old, mustly, and decrepit! As far as RIM is concerned, it remains to be seen what will happen. But RIM is certainly not fueling the RE prices in my area.

#170 Westernman on 04.12.12 at 7:15 pm

John G. Young @ # 61,
I find it reassuring to hear you haven’t reproduced- your defective genes should be dead ended…

#171 eddy on 04.12.12 at 7:33 pm

Al wrote-
“What happened to all news about homeowners loosing thier homes to mortgage fraud – are Banks being more diligent and responsible nowadays?”

My lawyer puts title insurance on house purchases, I have never asked for it, he insists on it

#172 Vex and silence on 04.12.12 at 7:34 pm

#135 Alex N Calgary on 04.12.12 at 2:10 pm
Bowmanville is a nice little town, its basically in toronto its so close.

I recently spent two full years with a daily commute from the extreme Eastern edge of Toronto to Clarington (the municipality which engulfed Bowmanville, Courtice, and probably others).

My version of the commute was the good one – opposite traffic in both directions. I was also fortunate enough to have my employer covering my vehicle operating expenses.

The commute in the other direction, on your own dime is pure lunacy ….Bowmanville is not even close to being in Toronto

The cold hard facts:
-Bowmanville is 50 odd km from the closest edge of Toronto
-Approx. 85km from the core of Toronto.
-A lot of that 85km is through what is apparently the worst traffic in North America……you’re almost an hour on a good day without traffic. In the afternoon rush, you’d be lucky to drive it in 1:35h.

Opinion:
-Even if you drive a sensible rice-grinding four banger, you’re looking at bare minimum operating expense of $15 per day in gas. If you drive a non-sensible American truck, may God have mercy on you! Fuel for the average car doing this daily trip plus other errands is $400 a month easily.

-These are hard, “stop and go” miles. If you do this trip every day, plus ferrying a pair of kids around to soccer practice and all that crap, you’re wearing out your car in 6 years or less. I’m going to assume paying for a modest car costs $500 per month over the six year life cycle.

-As every motorist knows, there are lots of other hard costs that increase proportionally with a lot of driving (insurance, frequent oil changes, tire changes, brake changes, repair of breakdowns, fluids). Let’s throw $500 per year at this. It’s actually more, but so what?

-If you’re living in this “suburban wasteland”, there is no transit that is worth using. A family likely “needs” two cars.

The bottom line, I figure your hard cost for owning a modest car and running it daily to and fro the far reaches of suburbia is easily a $G-note every month. This assumes zero value for time spent in transit and zero cost parking. Easily 2.5h per day.
Your other choice is a GO transit/TTC bill of several hundred a month, but I’m figuring you probably still need the car anyway, so you can maybe shave this down to $800 a month. There is also a higher dis-utility as you are on GO’s schedule.

I am going to postulate that the act of moving 50% closer to work and taking one family car off the road might free up $1200 in operating capital per month. At 6% and 25 years, this could carry $200K worth of property. At today’s rates, I think it’s closer to $300K.

Two morals:

-I will never understand why folks commute ridiculous distances.

-Maybe if you’re stuck working in Toronto anyway, the houses aren’t such a rip off?

I dunno. I guess you might also want to move to Bowmanville if you’re scared of living next to brown people…….

#173 Republic_of_Western_Canada on 04.12.12 at 7:56 pm

#52 DonDWest

‘K, but only if you play by their rules. You see, they set you up expecting to have to live one (or two) people per housing unit. Preferably packed with chintzy glitter, and further encourage you to squeeze out a bunch of pups ASAP.

Avoiding that bullshyte provides an out. Time was where housing and services in urban areas were way less developed, but a bit of cachet and attraction to live there still existed. Two-storey low-rise commercial buildings spread out everywhere, instead of flash high-rises. Post-card shops, jazz clubs, gyms, corner stores and garages, hockey arenas (without fire and flame theatrics during intermission) and movie theatres provided a non-ostentatious cultural platform that supported all sorts of other stuff. Even in Hog Town. Debt not required (or even possible in many cases; restricting expenditures to after-rent+food residual pay).

Big old houses were rented by 3 to 6 single twenty/thirty-somethings living together. Five cars, a couple trucks, and a motorbike or two in the drive and at the curb. Three refrigerators, two freezers. Maybe half the people on nightshift, half days. Maybe even a student in the mix. Big communal meals every couple of days, and a house party every couple Friday evenings. Entire walls devoted to record collections. Thermoses to carry around good coffee from a big pot at breakfast. Self-brew beer in the garage. Life was good, and non-confrontational.

Surely social media, modern cost pressures, and limited opportunity can encourage people towards price-effectively sharing a big rented house in the ‘burbs again. Or even a non-gentrified loft if those still exist. Car-pooling, or bicycling to the local rail stop too maybe?

#174 Form Man on 04.12.12 at 8:08 pm

#156 jess

interesting. so Harper is against foreign environmental groups campaigning in Canada, but has no problem with foreign ‘dirty tricks’ experts working for his party.

#175 Form Man on 04.12.12 at 8:11 pm

#168 westernbigot

did your mother wean you too early ?

#176 Republic_of_Western_Canada on 04.12.12 at 8:16 pm

120 Mark “the talk” Carney

Mark Carney you are either a moron or a criminal who is trying to bankrupt Canada? The stupid masses will borrow spend borrow spend borrow spend until they are bankrupt. I know people living it up with no intentions of paying the debt back. I know one couple who BORROW from their HELOC to pay the mortgage. Yes… crazy but is reality Mark Carney. Are you really a moron?

Not his problem. If you’re stupid enough to borrow big time on credit instead of showing some constraint then you deserve to die.

It’s really sickening to see so much clamor for endless speed limit signs, nanny state restrictions, and various politically-correct horseshit at every turn instead of expecting people to use their heads for something besides hanging a backward baseball cap on.

#177 penpal on 04.12.12 at 8:18 pm

@ #133

Have you ever been to London, England?

If not, don’t display your ignorance and embarrass yourself by equating it to Toronto.

If you have been to London, don’t embarrass yourself by your lack of powers of observation.

Toronto is a second tier city with few world class virtues.

Sheesh!

#178 Deep Blue on 04.12.12 at 8:21 pm

Garth,

You`ll probably consider this racist, but after returning to Canada after 15 years from my point of view, what`s the point of all the immigration. I can understand some third worlder wanting to escape the hell hole he was born in for a better life of the west and the `we`re a country of immigrants` crap argument, but looking at Toronto or Van, it`s hard to see how it benefits the lucky ones born here. Indeed, when you look at things like stagnant salaries, scarity of employment opportunities, traffic, auto insurance or RE prices, it`s hard to say it`s a benefit to anyone already here. And lets not forget that on the environment side of things, bringing anyone from the third world and giving them a first world living standard isn`t going to help make a greener world, as harsh as it is, it has to be said. MD`s or Phd driving taxis – sure it happens – cause there not needed here. Their here for their children sake- hell bring in a few more million and they`ll head back for a better life where ever they came from. Why are the Canadian people so dumbed down about this. In Australia, they refuse to let anyone over the age of 45 or so immigrate,
but here in Canada we let everyone bring in their parents and grandparents and give them the medical care they `deserve`. It`s like the government of Canada goes out of it`s way to down grade the life of it`s own citizen to prove what a good country we are and to score `browny points` on the world stage.
I remember when I left, they use to say we needed immigration to grow the ecomony to make sure things like OAS were secure. Whoops, that`s appearantly not going to be part of the argument going forward.

#179 Abitibi Doug on 04.12.12 at 8:34 pm

Here we go again, talking of the condo boom in Toronto. It’s timely, as there was an article in the Globe and Mail which, among other things, mentioned more condo units being built there than any other city in North America, implying of course more than in much bigger New York City. There was mention of a possible bubble, but not confirmed. Recently I saw many condo buildings under construction downtown, near the Union Station, and it sure looks like a case of overbuilding. The good news is that when it finally ends it will free up construction workers for that alleged skills shortage in other parts of the country if they are willing to relocate.

Now west to London. There are more new houses, many being large ones, being built all around the edges of the city. Meanwhile all I hear about is the doom and gloom of how bad the local economy is. A recent job fair, so crowded with people it was standing room only confirms this idea, as do the statistics of unemployment in the region. Who’s buying these houses? Is there some BIG new employer with more high paying jobs than they can fill, or are there a lot of wealthy retirees moving into the city? Something doesn’t add up, or I’m missing something big.

#180 penpal on 04.12.12 at 8:41 pm

@ # 167 Cramar

I don’t know where you live, but if it is K-W and you are suggesting that I am inaccurate in my posting, I’d love to hear you refute my claims.

Please bear in mind that while peoples’ opinions of boring might vary, I challenge you to list 10 (ten) interesting things to do in K-W area on a Saturday nite.
Again, if you have not traveled much and come from Heidleberg, Guelph, Cambridge or some other such hotspot metropolis, then I can see how you might find it intoxicating.

As to the claims on driving, check your insurance rates (which are predicated on the number of accidents and driving infractions).

As to crime, check the numbers there as well.

Sorry to tell you if you don’t already know, but if you live there, it is a shithole of the first order.

I don’t know, but it could be something in the water I guess.

#181 Darlene on 04.12.12 at 8:45 pm

cramar on 04.12.12 at 7:15 pm

Thanks for your post. I’m was beginning to think that all these posters about K-W didn’t actually live here until you started posting.

And for all of you that think house prices here are affected because of RIM, think again. Do the friggin math. Region has 500,000 people and 9,000 working for RIM. That’s 0.02% of the population. It’s far from being like the auto industry that provided 1 in 7 jobs.

#182 penpal on 04.12.12 at 8:57 pm

# 92 Bond junkie

I have an interest in a property in that neighborhood. I know that listing and have seen the inside photos. Needs at least 150K to bring it up to the “Starbucks crowd” level of ‘groovyness’.

So now its pushing 900K all in with land transfer tax in.

You have no idea of value, do you?

#183 penpal on 04.12.12 at 9:06 pm

@ # 177 A D

What you are witnessing is a housing bubble.

Some of those large homes may be built “on spec” as they make more money from a larger house (generally) than you do from a smaller dwelling. This is a common phenomenom in housing bubbles.

#184 Form Man on 04.12.12 at 9:30 pm

#174 republic

I have no problem with individuals making stupid financial decisions, that should be their right. What I resent is Flaherty insuring their debts with my tax dollars.

#185 penpal on 04.12.12 at 9:31 pm

@ # 179 Darlene

Your “friggin” math is plain wrong!

In your haste to defend your crappy litle town, you have made some glaring errors.

First off, I didn’t mention 9,000, I wrote 7,500 RIM employees.

Further, 9,000 is 1.8 % of 500,000, not .02% as you wrote.

Also, there are not 500K people in K-W!
Approx 200k in Kitchener and 100K in Waterloo for a total of 300K.

That is total population!

Only 58% have jobs (over 20,000 adults are students at UW and WLU for starters, deduct also retirees, the infirm, children, unemployed, disability, welfare, etc.)

300k X 58% = 174,000 workers

7,500 / 174,000 = 4.3% of all workers.

As the “spin-off jobs” created, I believe the ratio is 3 jobs created for each well paid job. That would bring us up to 3 X 4.3% or 12.9% additional employment affected by RIM jobs.

This totals 17.2% (4.3% + 12.9%) of all jobs in K-W being directly or indirectly tied to RIM’s fortunes.

That is 1 in 5.81 jobs.

Do some math before spouting off next time, your insecurity is showing.

#186 Westernman on 04.12.12 at 9:40 pm

Form Man @ # 173,
Yeah, I learned to stand on my own two feet pretty early, unlike you, whom I surmise is largely living off your wife’s parents…

#187 John G. Young on 04.12.12 at 10:26 pm

#173 Form Man on 04.12.12 at 8:11 pm

Re Westernman: “did your mother wean you too early?”

I doubt that Westernman had a mother, or if he did, he’s forgotten her. I’m sure his narrative goes something like this: I conceived myself into existence purely of my own will, I’ve towered over humanity my entire life, and I will go out in a blaze of glory (hopefully sooner rather than later).

#188 John G. Young on 04.12.12 at 10:42 pm

#184 Westernman on 04.12.12 at 9:40 pm

“Form Man @ # 173,
Yeah, I learned to stand on my own two feet pretty early, unlike you, whom I surmise is largely living off your wife’s parents…”

You’re a classy guy, and a shining role model for others.

#189 GTA Girl on 04.12.12 at 10:45 pm

Dear Jess.

Front Porch Strategies working on Ministers campaigns?

Yes, I know…I know the players involved. Media is hesitant, because no one has ever been charged under that section of the Elections Act about foreign influence on a campaign..

It was blatant.

american Evangelical Christians from a tele marketing/Lobbyist company “volunteering” on a
Federal Ministers election? Is a violation.

It’s just that we have no where to complain. All falling on deaf ears.

Frankly…I’m worried

#190 Blaise on 04.12.12 at 11:46 pm

Once upon a time it was possible to rent an apartment for a reasonable price, usually from someone who took care of the property, now its impossible to find a decent affordable rental, because we haven’t built any rental property of any significance in the last 30+ years yet our population has exploded, and half of the rental stock was converted to condos. Its really time to demand the building of massive amounts of rental property across Canada

#191 Bigrider on 04.13.12 at 7:19 am

Garth, so you did do the private mortgage lending thing once upon a time and got burned.

Hence your reluctance today.

But I can tell you 10 points a year is hard for monied folks to resist.

Especially when the only downfall they see is that in a default they will end up with the asset that only ” God Created”

I have bought, sold and held many mortgages over the years. Without a strong covenant, the paper is worthless and getting the asset backing it is usually a very long and expensive process. I would not recommend it for anyone without a good lawyer and deep pockets. In the case I wrote about I accepted a property swap in lieu of paper – highly unusual, but the best option at the time. Be very careful you know what you are talking about. — Garth

#192 Bigrider on 04.13.12 at 7:31 am

#133 phlex- Stop this T.O is ‘world class’ bullshit.

T.O has a subway system stuck in the sixties.

It has a forest of condo towers(dormatories, beehives for scuttling suits) thats what it has.

Comparing it to London England ?? about as accurate as comparing it to Detroit or Buffalo.

#193 disciple on 04.13.12 at 8:57 am

Stop trashing my glorious city. Toronto is the jewel of Canada. Ask any grade-school teacher and they will tell you how all of the transportation infrastructure throughout all of Canada from coast to coast was built such that all raw materials, goods, and products could be shuttled to Toronto for export and processing and re-distribution from west to east and vice versa. Toronto IS still the economic engine of Canada.

Harper had a chance to change all of this by investing in solid infrastructure out west but instead he has allowed the West to become a banana republic that simply ships out our sustenance to the benefit of a handful of resource owners, the majority of whom are foreign multinationals.

The rest of Canada is indeed swamps with little towns that get their sustenance from the wealth-created by the port of Toronto. There is nothing wrong with this. I’m not saying it is bad or good, it is what it is.

By insulting the only thing close to a global mecca that we have, you are degrading yourselves. But I guess self-deprecation is a classic Canadian trait, eh?

#194 Steve on 04.13.12 at 1:01 pm

Technical comment …

You may have already received feedback on this, but I haven’t dropped by recently and it seems like your switch to Cloudfare for hosting/distribution of picture content has created broken links when consuming your blog entries in an RSS reader. The pictures are no longer displayed in the RSS reader (tested in Netvibes and Google Reader). Clicking on the image results in an error …

Access Denied
The owner of this website (www.greaterfool.ca) does not allow hotlinking to that resource (/wp-content/uploads/2012/04/brains.jpg). (Ref. 1011)

Timestamp: Fri, 13 Apr 2012 09:54:06 -0700

Your IP address: xxx.xxx.xxx.xxx

Requested URL: http://www.greaterfool.ca/wp-content/uploads/2012/04/brains.jpg

Error reference number: 1011

Server ID: FL_16F10

Process ID: PID_1334336046.133-5-24431537

User-Agent: Mozilla/5.0 (Windows NT 6.1; WOW64) AppleWebKit/535.19 (KHTML, like Gecko) Chrome/18.0.1025.162 Safari/535.19

Clicking on the post’s title in the RSS reader opens the blog entry from your site and the content displays as expected.

I suspect Cloudfare checks for a cookie that’s only set when the content is accessed directly from your site and if the cookie isn’t present it assumes hot-linking and blocks the image display.

Thank you. Now in my Webmaster’s hands. — Garth

#195 Elia Kouriachin on 04.13.12 at 2:18 pm

I grew up in Ottawa, and before moving to Vancouver I lived in Toronto a couple of times. The father of one of my best friends owned a tiny house just like that one in the Queen Street area. His was in Little Portugal, which is basically the same area. Actually it looks like the same house! Anyway, his place was the size of a matchbook … you almost had to let everyone know you were turing around if he had visitors over! $700k?? Yikes! I think he paid $100K, or maybe a little more for his at the time. And I thought Vancouver RE was out of control! lol.

#196 Jim on 04.13.12 at 5:48 pm

#193 disciple

I think you have it backwards, old chap. Societies become wealthy through production, not consumption. Natural resource extraction, agriculture and a few other industries form the bulk of Canada’s productive capacity. We used to have manufacturing, but it has been hammered recently.

Much of Toronto’s economy is consumption oriented. Take a drive through Scarborough and count the retail stores that merely exist to sell chinese products to chinese immigrants (etc). You’ll note tons of warehouses in mississauga where canadian companies import and distributed foreign made goods. Downtown you have dodgy banks and finance companies that are partially responsible for nearly destroying the world’s economy through financial ‘innovations’.

You will NOT find an awful lot of manufacturing or resource extraction in Toronto. True, there is a port. True, there is some R+D and engineering (although not a lot). We have some great universities. We also have health care, and a bloated civil service. We have a flood of third world country bumpkins, some of whom actually earn a living, and most of whom consume goods.

Far from being the economic engine of Canada, Toronto is a parasite on smaller towns that actually host productive industries. The economic heart of Canada is in the places where forestry, mining, oil+gas, manufacturing and other forms of productive activity take place. That is NOT Toronto.

#197 Jim on 04.13.12 at 5:58 pm

#185:

That’s a good first pass at calculating RIM’s impact. There are other tech companies in the area, but it is indeed the dominant force in the industry. It has been such a driver for Waterloo that RIM’s demise might have a major effect on morale.

They do have a good amount of support for technology startups, so one would hope that they could diversify away from RIM.

Your points about housing being overvalued there are well taken.

We differ, however, on our assessment of KW. I’m a Vancouverite who has lived in various places in the US and Canada. I actually like KW, precisely because it is a sleepy town. Traffic isn’t terrible, and there are still neighbourhoods. I don’t mean areas with houses, but neighbourhoods where people know their neighbours and converse. Vancouver used to have those, until a wave of third world immigration created such social fragmentation that most neighbourhoods disappeared. Now you have a collection of houses where people don’t talk or interact. I live in Toronto now, and would happily trade all of the alleged advantages of multi-culturalism and big cities for KW. If I need to see a world class cultural event, I can come on the weekend.

Housing, however, seems overpriced compared to incomes. I’m not saying that Toronto is better (it isn’t), but I’m not willing to pay current prices given salaries out there. I’m guessing a 30% decline is in order, but if RIM tanks and Waterloo goes through tough times, it could be worse. There’s no way I’d buy now, or trade my current salary in. For now, I just visit the area on weekends and dream of having bought out there ages ago.

#198 YVROptimist on 04.15.12 at 1:52 am

@121, oh, I agree. TIME is, well, priceless. But I wanted to point out that the smug ‘I don’t burn as many fossil fuels as you’ comments probably don’t really take into consideration the alarming cost of that short commute.
People in their 12-square-foot balconies look to the gridlock and say, ‘Whoa, I wouldn’t wan ‘t to do that’ as much as the people in the gridlock look at the mortgages of those in the urban centres and say, ‘Whoa, I wouldn’t want that.’

Really, my point – eventually the Devil gets his due. Everything has a cost-benefit.

Oh, and one more point:

@#139, brevity is the soul of wit.