New rules

Eddy says if you need a root canal, “I’m your guy. I almost make it fun.”

As riotous as the procedure might be, the 52-year-old Markham dentist also tells me business sucks lately. Seems even in his affluent community in the northern reaches of the GTA, where houses routinely cost seven figures, families are eschewing major dental work since they don’t have the dough. If a tooth breaks, and it’s not covered by insurance, that sexy white cap can wait a while.

(As an aside, the auctioneers at Sotheby’s were shocked Tuesday night in Toronto when a slew of quality Canadian paintings went under the hammer. Works expected to fly out the door remained unsold. In fact, a third of the lots were still sitting there at the end of the night, with the event bringing in millions less than expected. As one life-long collector put it to me the next morning, “You just saw history. Even the rich are flipped-out about their mortgages.”)

Eddy’s wife works in the dental office. Together they bring home about $250,000, at least for now. Self-employed, no pensions. Their house is worth a million, with $180,000 left on the mortgage. Three kids, two of them expensive teenagers. Total liquid assets: $175,000 in mutual funds inside two RRSPs.

“Jen and I were discussing whether or not we need to change anything,” he says. “We talked about paying down our mortgage versus investing that money.  She is the math person in the family.  She can see investing the money instead of doubling up on the mortgage if the mortgage wasn’t so high or if the investment and the mortgage amounts were close to equal.  She prefers the old school thinking of paying down the mortgage first.  This is the way both of us were encouraged to do things and continue do so.

“I respect Jen for her caution.  But how do I make a case to convince a leery wife the old way our families always did it isn’t the right way?”

Well, after all the moaning on this blog yesterday from people who cannot find $5,000 in a year to put into their TFSA, Eddie and Jen may seem like royalty. But if it weren’t for the cash the dentistry thing has thrown off in the last seven years, these guys would be victims of their own family funk. As it is, they’re at more risk than they realize.

For starters, bringing a quarter million a year into the household and ending up with less than $200,000 in liquid, investible assets in your fifties is not cool. Obviously they’ve been spending excessively, plus channeling cash into one asset – the house. So the second problem is a lack of diversification. Here’s a net worth of almost a million bucks, with 80% of it in one thing. Worse, that thing is almost guaranteed to lose value over the next few years as 905-area real estate – especially at that price point in a glutted market – withers.

Third, no pensions. And yet they’re spending most of $250,000 in annual income. So even when the kids leave home they’ll feel impoverished if they take a 50% or 70% income hit once Eddy retires (and he already sold his stake in the practice). Obviously $175,000 in RRSPs won’t last more than a year or two. Then what? Try to unload the palace in a housing vortex?

Fourth, they have no non-registered investments, meaning every dollar being invested now becomes taxable in retirement. No TFSAs, either. And their retirement stash is stuffed in do-nothing bank mutual funds with management fees high enough to negate any growth.

In fact, the net return on the million dollars of net worth: zip. And Jen thinks the best course of action is to keep throwing money at a 2.8% mortgage, thereby increasing the real estate imbalance. Why? Because that’s the family groupthink, and it worked in the past.

But no more. In a quasi-deflationary world all the rules are changing. Real assets have a rocky future. Liquidity will rule. Financial markets will trump the housing market. Having the bulk of net worth in one property at one address, in the burbs no less, is asking for heartache. After pushing prices to heights of stupidity, debt’s now sucking the life blood – cash flow – from society. If it weren’t for cheap mortgages, real estate would collapse overnight. If not for credit cards and LOCs, Best Buy would empty. So when it comes to paying for stuff with real money – like a G7 painting or a fun tooth demolition – you can glimpse the future.

Eddy, you need to renovate your finances. Stop doubling up payments on a mortgage costing barely more than inflation, and shoveling more money into the same furnace. You’re far better off to put the next $50,000 into TFSAs, and fill them with equity, REIT and preferred ETFs. Then start building that joint non-registered account with a balanced and diversified portfolio heavy on dividend income. Income split with Jen. Incorporate and take remuneration through company dividend payments so you collect the tax credit.

Tap into some of the $800,000 in dead equity inside the McMansion. For example, borrow money against it at prime (3%) and invest it in bank preferred shares (5%). The interest on the loan is deductible, which means it effectively drops to 1.5%, at your income. Meanwhile the dividend tax credit means the equivalent yield on the preferreds is greased closer to 6%, while they remain stable, liquid, dependable, high-quality assets that will certainly outperform your house. Why would you throw money into real estate paying you nothing, with the capital at risk, instead of profiting from a spread of four points on borrowed money?

In fact, sell the sucker. Take your million, get it managed properly, and spin off enough income to rent a better suburban palace for five grand a month – while retaining the principal for the years ahead when you’ll sorely need it.

The worst strategy? The one you’re following.

Jen’s caution is worst than a root canal. No offense.

139 comments ↓

#1 TurnerNation on 11.28.12 at 8:23 pm

Typical Toronto: co-worker’s bought an old semi. Discovered roof and pipes needs work. Many thousands later. Do not know if home inspection was used.

#2 TurnerNation on 11.28.12 at 8:24 pm

Picture: The King (Queen), Rex, is in charge.

#3 JO on 11.28.12 at 8:27 pm

This situation is probably the most common i see too. House rich, lots of stuff, but minimal savings and essentially no diversification….

YOY rate of growth in the amount of debt in Canada has steadily been coming down and will inevitably flatten out…and maybe, hopefully not but possibly, start contracting…look out below if this happens…

Garth, what do you think about RESPs…the grant is great but I am not convinced these plans will escape the mad dash for taxes that is coming. On paper, they are great…but if it seems to good to be true….
I am leaning toward saving inside a TFSA first then a low fee corp class MF if i have more savings for the child.
JO

#4 Richard and Zeus on 11.28.12 at 8:28 pm

Hey that looks like Zeus !!

Oh……and furrssst !!

#5 George Theophylactou on 11.28.12 at 8:36 pm

I humbly apologize to the TTC and any employees that would feel I have disparaged. All names quoted were fictional and any actions associated were misconstrued.

#6 Priced Out in Toronto on 11.28.12 at 8:42 pm

I’m sorry, but after all this time and all that income, how could you possibly only have such small savings and a mortgage?
I don’t normally say Garth is too conservative, but in this case he might be.
I think you should downsize the house, get rid of the mortgage, and invest the rest.
I now live in Markham. I can see what’s coming down the pike. (homes for sale are sitting for a very long time – unlisted then relisted every few weeks – the same homes, on rotation)
Still working on investing and saving for retirement.
However, no doubts, if I could afford a house in this area, I would. But I can’t at the moment and have trouble believing that it’s remotely possible in the near future. There is a huge income/price discrepancy that, even on this blog, has been understated.

#7 TurnerNation on 11.28.12 at 8:47 pm

With a name like Eddy, sounds like he’s more in the kneecap business.

It’s a dental nom-de-plume thing. — Garth

#8 Grim Reaper/Crypt Speculator on 11.28.12 at 9:01 pm

Dentistry was basically rooted in Barber-ism .

I never understood how a person can go to Medical School for 4+years..cover 99.9% of the body…..yet DDS evolved from the follicle primordial ooze.

I think its a scam lower than even Real Estate or pathetic blogs.

Anyway..my Barber has “Tooth- 4 -One” sale…..haircuts and root canal for $15 (if you pay CA$H).

#9 Randy on 11.28.12 at 9:02 pm

I only go to my Chinese dentist in the afternoon….Appointment made for “Tooth Hurty”….

#10 Old Man on 11.28.12 at 9:06 pm

Well own three master works from Europe that bought as an investment 15 years old, so guess I am out of luck; just knew should have sold them a few years ago, as was thinking maybe this coming Spring. All in mint condition with one painted back in 1785, and the rest all known names during the 1800′s.

#11 LJ on 11.28.12 at 9:16 pm

What happens when the government starts scrambling, say 20 years down the road, and they start taxing ALL investments (capital gains, dividends, etc…) like income?

Wait, that could happen in the US as of January 2013…

No place to hide.

#12 JustTryingToProtectEquity on 11.28.12 at 9:20 pm

Vancouver and Victoria have already witnessed a 20%-30% decline in their house prices. As people begin to panic.

I see houses in my neighbourhood of Bloor West Village, here in Toronto, going for as much as $200K under original listing. In many cases they have relisted two or more times.

People may argue that they were over priced to begin with but… again, when we look at these number from the Toronto Real Estate Board…

Mid-May: $835,522
http://www.torontorealestateboard.com/market_news/release_market_updates/news2012/nr_mid_month_0512.htm

October: $779,484 (-6.7%)
http://www.torontorealestateboard.com/market_news/release_market_updates/news2012/nr_market_watch_1012.htm

If people have paid off their mortgages and have well diversified portfolios of investments, or sizable pensions, with which to retire…then staying in their homes makes sense. But, if they have big mortgages and are relying on the value of their home to fund their retirements, then they will be making the biggest mistake of their lives. The market is correcting. Now. For so many, the declining value of their homes will be absolutely crushing. Life changing. Good luck to everybody!

#13 Mr Buyer on 11.28.12 at 9:22 pm

#8 Grim Reaper/Crypt Speculator on 11.28.12 at 9:01 pm
…………………………………………………
There are two irrefutably good things that have been produced by our society and number 1 on my list is dentists. I am just guessing but I think in human history dental problems likely factored into a great many deaths. The second great good is a little more open to debate but I think grocery stores are another great manifestation of our society. That’s my story and I am sticking to it.

#14 Smoking Man on 11.28.12 at 9:26 pm

My accountant says the types of people that have the toughest time with making CRA obligations are Doctors, Lawyers, and Dentists. They spend too much. I fell into that trap up to my bankruptcy in the early 90′s. Never again.

I do it different, I seriously over pay all my taxes with monthly installments. Having no discipline it’s dangerous in trusting me with the machines loot.

Example, last week when Buy? Couscous and I where having a chirp feast, most on here where going WTF.

Even LaughingCon posted on my blog semi concerned.

I am good.

I knew Buy? Couscous was young, I knew he was working on something cool, I withdrew commenting gave him the show, and set in my mind not going to until he creates and delivers.

At which point I would in courage him. I love art in all it’s form and people who create it. Written, Painted, Sung, Computer work crazy talkers, its all art to me and I can’t get enough.

Do you have any idea how hard it was for me not to post, I had 1000 word essays with a huge raging battle between the mouse and my finger, To Click, or not to Click, was the question.

Anyway held of as long as I could. I caved before he delivered. I’m weak

Then he does it.

He has created something, not consumed something. This is the Secret road to prosperity street. CREATING

Well his Video was a beauty, In life kids you got to let the Lonnie side take over once in awhile, its healthy.
Don’t listen to old people other than me.

Buy? Curious? loves messing around with that stuff, it may take him 10000 videos before he has one go viral, or maybe his 3rd. Who knows, He likes doing it, so it’s not a job. Its a hobby.

He was smart enough to engage a chrip feast with the Great Smoking Man and bring attention to himself.

Now if we all played teacher with him, told him it was it sucks, try harder. He might throw in the towel after a few try’s.

Now I think we are all going to enjoy his up and coming creations.

Buy? Curious ? don’t be afraid to let the hair down and push the bounders a bit. Other wise you’re just a regular track 6 tax farm slave.

Looking forward to your next clip, and with this blog there are so many rich & inspirational characters to pick from.

Well Played well made:)

And George Theophylactou I am still afraid. I yield to your alpha.

#15 TurnerNation on 11.28.12 at 9:27 pm

Sure Garth. In this litigious world a ‘suedonym’ is a good idea.

#16 LIVE WELL OVER YOUR MEANS on 11.28.12 at 9:31 pm

These are my rules:

the banks and loans folks want to give you credit?
Regardless? Take it!
Live large then when you can’t pay back anymore or those minimum payments won’t be made, do not blame yourself. Blame the lenders. You see, the lenders are the specialists. You are not responsible for the mess you are in. The “specialists” are.
Be careful: stash your cash while living large off credit.
Then you get to do it again!!!!

#17 Larry from ON on 11.28.12 at 9:34 pm

I couldn’t be happier that I sold my house. I read the blog daily to be reminded to be thankful that I assessed my situation, understood the situation, and made a sound decision.

Plan to fill my TFSA with growth ETFs, would welcome opinions on holding bonds or bond funds in the RRSP – may look at GICs in the RRSP until equities rally and bond prices drop (raising the yield on bonds).

#18 TurnerNation on 11.28.12 at 9:49 pm

CDN Watchdog look at these spreads: 1-2%. Which you’ll not find in equities:

http://www.questrade.com/pricing/commissions_gold.aspx

Which is why, perhaps, this is linked in large font on the Canadian Security Trader’s main web page:

http://www.canadiansta.org/
“Recovery Program / Substance Abuse ”

You stick to economics.

#19 Junius on 11.28.12 at 9:50 pm

The Carney Act goes to England

Marshall Auerback offers his opinion:

http://www.nakedcapitalism.com/2012/11/marshall-auerback-bank-of-canada-governor-is-wrong-on-too-big-to-fail-and-wrong-on-canadas-banking-system.html

#20 Maximum on 11.28.12 at 9:54 pm

Garth, if you have a minute, can you answer a simple question? The other day, you said that when you want to take full tax advantage of a RRSP, you buy bonds in there because the personal tax rate is higher on coupons than on dividends (And invest in Stocks in your cash account). What if I buy an ETF like the – “BOND” -Pimco Tot Return Bond fund, does this logic still apply?

Thanks for your time.

Max

More correctly, I said to shelter those parts of your portfolio which are most taxed within an RRSP. That could be bonds, but this is not the moment to buy a bond fund. — Garth

#21 Smoking Man on 11.28.12 at 9:54 pm

Vlad did Grim get you?

#22 Bigrider on 11.28.12 at 10:02 pm

“Do nothing bank mutual funds with fees high enough to negate any growth”

A sorry state the financial markets are in when an extra 1 to 1 and a half percentage points in fees a year negate any chance at growth.

I wonder if the boomers worried much about fees when Canada savings bonds and term deposits paid 15% during the eighties or 8% in the ninties..hmmn

#23 GTARealEstateCorner on 11.28.12 at 10:03 pm

#14 Smoking Man

Nice post this evening. I’m glad you’ve decided to take a positive spin on things. I’d like to tell you something that I don’t share with everyone but hey, this is a blog and I’m comfortable here. I’ve done very well for myself financially but it was not that long ago (well maybe a couple of decades okay) I was like you. It felt like nothing would ever work out, bills to pay, in over your head and just a financial disaster. Felt like a loser in every way. It seemed hopeless. But knowing that feeling, I completely understand why you come here and post. It relieves that anger and tension.
I do have hope for you that things will improve. I’m a fan of your posts in all forms. Please keep doing what you’re doing! And never let anyone rain on your parade. You’re just as important as everyone here.

#24 Smoking Man on 11.28.12 at 10:04 pm

More correctly, I said to shelter those parts of your portfolio which are most taxed within an RRSP. That could be bonds, but this is not the moment to buy a bond fund. — Garth.

Garth you check out the latest batman on bond yield charts.

http://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/

And you know what happens to bond prices when yields go down.

But they pay shit, not worth the risk, your right.

Preferds :) Liking them more everyday. Thanks for that one

#25 Nemesis on 11.28.12 at 10:04 pm

I once had an emergency extraction and a root canal performed by a Dr. Ow… He more than lived up to his name.

Speaking of “Ow!”, OldPol… for someone who used to frequently luncheon in Courtalds’ CourtYard your Sotheby’s anecdote was probably the most interesting tidbit I’ve heard this season. Thank you.

[PS - don't be impressed, I used to buy my sandwiches at PretAManger and just commandeer an empty public table on the plaza. Otherwise I'd have to go through a metal detector - and that wouldn't do, would it? More importantly, where is... Nostra???]

#26 Stu on 11.28.12 at 10:11 pm

money printing, the kind of which we have going on in the west, only can result in inflation, as bankers see deflation as the worst enemy of all. The r e market may pause a bit, but nothing goes up in a straight line forever. RE, gold, tangible assets will keep rising as more money just keeps being printed. QE to forever.

The rich must be taken care of somehow when their vote counts as much as one from a welfare recipient.

Oh you truly think this is a fair democracy??? ok buddy.

#27 JSS on 11.28.12 at 10:19 pm

“Tap into some of the $800,000 in dead equity inside the McMansion. For example, borrow money against it at prime (3%) and invest it in bank preferred shares (5%). ”

What happens to Eddy’s spread when interest rates jump to 4%? 5%? 6%?

Borrowing using a variable credit line to make a gain is usually a bad idea.

Bad advice. Sorry.

He sells the liquid assets and retires the debt. Or, he deducts more. As we both know, however, rates will creep higher. This is Not the risk to worry about. Sorry. — Garth

#28 Smartalox on 11.28.12 at 10:21 pm

[I]Incorporate and take remuneration through company dividend payments so you collect the tax credit.[/I]

Wait, wait, wait. Can you please elaborate on this statement?

#29 Rain bird on 11.28.12 at 10:28 pm

“Incorporate and take remuneration through company dividend payments so you collect the tax credit.”

Yes, but the company has to pay full tax on its income before it can pay out dividends. So, what is the advantage in that?

Lots. The company invests, too. — Garth

#30 Canadian Watchdog on 11.28.12 at 10:31 pm

#19 TurnerNation

Not sure who buys bullion on Questrade or would even want assets stored with them. Big money is all going west.

As for equities, nobody is trading other then HFT algos amongst themselves. I already see what’s coming next.

Extreme statements are cred-killers. Careful. — Garth

#31 Victor V on 11.28.12 at 10:33 pm

SOLD – 1092 Argyle Drive – OAKVILLE

http://themashcanada.blogspot.ca/2012/11/sold-1092-argyle-drive-oakville.html

$11,499,000 August 2012
$9,360,000 November 2012 [SOLD]

Sold for 81% of original list price.

#32 MC on 11.28.12 at 10:33 pm

Now we need IIROC to loosen up some of those margin %’s. Probably not gonna happen the CDN gov’t hates risk takers.

#33 Old Man on 11.28.12 at 10:38 pm

There is a rumour about the next appointment who will head up the Bank of Canada, and they need someone who knows the machine. Now the whispers that abound in Ottawa keep saying someone called Smoking Man is on the A list.

#34 X on 11.28.12 at 10:41 pm

Hmmm….pay back mortgage at 3% or invest and earn double that…..doesn’t seem like much of a decision to me.

#35 LJ on 11.28.12 at 10:43 pm

“but this is not the moment to buy a bond fund. — Garth”

Interesting analysis!!!

#36 Derek R on 11.28.12 at 10:47 pm

Yeah, where are you, Vlad? We miss you.

#37 Randy on 11.28.12 at 10:53 pm

Here’s What’s Happening In North America’s #1 Housing Bubble…..with some nice pictures…haha

Read more: http://www.businessinsider.com/canada-housing-market-2012-11?op=1#ixzz2DZnbRbvp

http://www.businessinsider.com/canada-housing-market-2012-11#

#38 Hugh Jasz on 11.28.12 at 10:59 pm

#15 TurnerNation on 11.28.12 at 9:27 pm
…… In this litigious world a ‘suedonym’

I like! Cunning linguistics, TN.

#39 Jounce on 11.28.12 at 10:59 pm

Garth, you nailed it.

That is the financial survival theme for the next decade.

Liquidity, cash flow, unencumbered loot.

#40 Ralph Cramdown on 11.28.12 at 11:02 pm

He wasn’t already incorporated? Wow, that IS old school.

When you’re employing your wife as the receptionist (effectively income splitting, oldest tax trick in the professional’s book) is there a limit to what you can pay her, or will CRA buy it when you say “I’m paying her $80,000 and she’s worth every penny. Best receptionist in the city!”

#41 Canadian Watchdog on 11.28.12 at 11:09 pm

Extreme statements are cred-killers. Careful. — Garth

High frequency trading accounts for 42% of total TSX trades and estimated 60-70% on S&P. You’re watching nothing but a circus show everyday.

#42 Mic D'angelo on 11.28.12 at 11:09 pm

It sounds like Eddy and his wife are the financial irresponsible I wrote about yesterday.He is a dentist and that’s what he knows. The wife likes to have a million dollar house and thinks she is being cautious. It looks like people are over educated and have no concept and intelligence of financial matters, saving,investing,tax planning based on one’s personal risk tolerance and basic financial literacy. I personally do not have more than 19% of my total wealth in my personal residence. I have short-term, intermediate, long-term investments,government bonds, TFSA’s , RRSP’s in different maturities staggered yearly. A short-term reserve fund of at least 18 months of income. I do not have any debt, no mortgage, credit cards, lines of credit, car loans, car leases etc. I guess this dentist is too busy to care to look into his finances and his family finances. It’s pretty sad indeed.

#43 Fartweezel on 11.28.12 at 11:21 pm

Where is Vlad the mad lad?

#44 salonist on 11.28.12 at 11:22 pm

what a newly graduated dentist told me.the most susceptible area for cavity is where the previous cavity had been filled and the area of the tooth and the filling meet is where most cavities will develop.

more fillings, more cavities?

as well saliva ph level is worth looking into.

#45 Grim Reaper/Crypt Speculator on 11.28.12 at 11:27 pm

#13 Mr Buyer on 11.28.12 at 9:22 pm
==========================

Well , Dentistry has brought a high suicide rate amongst the Ex Barber-ism -ists( aka DDS)….probably because they realized they should have been Banksteristas/Mortgage Brokers/Realtors who do not have souls or conscience.

Dentistry could be accomplished by Auto Body repairmen…..is no real practical difference…except Bondo doesn’t contain Mercury or they don’t endorse Fluoride debased compounds.

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

#22 Smoking Man on 11.28.12 at 9:54 pm

Vlad did Grim get you?

Actually..no….I think Vlad may get a lifetime pass..or at least until the Maple Leafs win the Stanley Cup…whichever comes first..(what are the odds ?!?)

#46 AK on 11.28.12 at 11:31 pm

#17 Larry from ON

“Plan to fill my TFSA with growth ETFs, would welcome opinions on holding bonds or bond funds in the RRSP – may look at GICs in the RRSP until equities rally and bond prices drop (raising the yield on bonds).”

When investing in Bonds, a Bond ETF is the best way to go. Such as: T-XCB and T-XHY.

Do not limit yourself to just ETF’s. Also, look at individual stocks if you have the time.

#47 Inglorious Investor on 11.28.12 at 11:34 pm

I’ve been thinking…

Is this another “death of equities” moment? We have regular reports of billions in outflows from funds almost month after month; trading volumes from actual humans on the exchanges have all but dried up, leaving only HAL 9000 trading between his various processor cores; and more and more people I talk to have simply given up on stocks and are buying properties in Honduras.

A classic case of revulsion?

And yet, thanks to the Beard@TheFed, enough money is still flowing into stocks to keep them levitated if not soaring.

Then we have the US in the early stages of another energy boom, which might just force a reset of the current global geo-economic meme that few are expecting. Maybe we could even fix the disconnect between available jobs and the skills to fill them.

With many of the problems facing the world already known (Europe, Japan, China, Fiscal Curb, Middle East, Paul Krugman), is it just possible that we might avoid another Taleb/Lehmen moment? In which case, a cheap-money-supported stock market that can’t drop much in nominal terms, might recouple with an American economy that’s on the cusp of a new boom thanks to cheap RE, cheap labour and cheap energy? And this just as almost all of the little people regard ‘stocks’ as a four-letter word?

Remember, the time to buy is right before everyone else does. We may not be there just yet, but I’m feeling something big on the way.

In 1979, after more than a decade of a roller coaster bear market that went nowhere, Business Week declared “The Death of Equities.” About three years later the greatest raging stock market bull in history began its charge. I wonder…

Just in case, buy some gold.

#48 AK on 11.28.12 at 11:38 pm

#41 Canadian Watchdog

“High frequency trading accounts for 42% of total TSX trades and estimated 60-70% on S&P. You’re watching nothing but a circus show everyday.”

That’s why you invest for the long term. Ignore the short term noise. Especially the fiscal cliff garbage that is contineously paraded on BNN and CNBC these days.

#49 TRT on 11.28.12 at 11:39 pm

This Dentist in his 50′s has LIVED and SEEN more of the world…countless vacations…countless expensive presents to loved ones. His kids will do fine due to his connections and money he will have to send kids to professional schools.

Advice on this blog seems to be save, save, save so you can spend it after 67 for a year or three. Good Luck!

I knew a MD who ‘donated’ huge amounts to a Carribean school and his offspring et al…have been graduating and getting first rate residency positions in the USA. This is how the real world works.

#50 TRT on 11.28.12 at 11:43 pm

Get ready for your rents TO GO UP! especially Vancouver.

http://www.theglobeandmail.com/news/politics/visa-free-travel-for-mexican-visitors-is-in-the-works-pm-tells-president-elect/article5788609/

#51 Ezmerelda Fitzmonster on 11.28.12 at 11:44 pm

For giggles i went to the mls site and searched the westside of Vancouver, there are presently;

1517 residences for sale @ 1,000,000+
774 residences for sale @ 2,000,000+
400 residences for sale @ 3,000,000+
194 residences for sale @ 4,000,000+
106 residences for sale @ 5,000,000+
45 residences for sale @ 7,500,000+
29 residences for sale @ 10,000,000+

Vancouver, you are sooooo screwed!

#52 Smoking Man on 11.28.12 at 11:44 pm

#24 GTARealEstateCorner on 11.28.12 at 10:03 pm

Ok if this makes you feel better.

I’m a fraud, I moved to Long Branch, I rent, don’t own cause it’s cheap. my wife left me for a well endowed dark person. My kids don’t talk to me cause I am a nerd with a pocket pen protector.

I lost all my money trading, hookers, casino, booze. I don’t know anything about finance as I am a rivet bucker by trade, looking for a job.

I can’t afford internet so I blog at an internet coffee shop, and I screw them as I put instant coffee in a flask hidden in my pocket and sneak it in. On the way home I search blue boxes for discarded wine bottles.

My part time job is, I am a dish washer at South side Johnees.

My boat is a blow up raft. My motor a paddle I found floating in the lake.

Happy:
…………………………………………………………………

I think it just blows your mind, your passive aggressive jabs tell me you can not compute that a guy who loves his wine, is out there a bit, like 25 ish rentals , cant speel (maybe I can just don’t want too) A risk taker, I guy who loves life and succeeds with no plan what so ever.

Admit it this concept blue screens your brain
.
I am making an appearance at the tilled kilt tomorrow night, 5 ish esplanade. look for the bum.

Got a smart phone,
[email protected]

Your buying I’m poor.

#53 Ralph Cramdown on 11.28.12 at 11:52 pm

High frequency trading accounts for 42% of total TSX

“In the short term, the stock market behaves like a voting machine, but in the long term it acts like a weighing machine.” — plus ça change, eh? Long before HFT, the other side of many trades was a market maker in a McLeod tartan blazer… and the spreads were as wide as the pant legs.

#54 A Nightmare on Bay Street on 11.28.12 at 11:54 pm

10 months ago, Black Berry PlayBook Tablet (32Gb) hit the market at a price point of 599$.

I bought one this week 140$. (32Gb).

WallMart.ca had a sale at 118$ on the same, a little while ago.

And its a very good tablet. All tungsten/stainless and luxury.

So, how you guys feel about your 1.5 million luxurious places with tungsten and stainless ?

10 little months …

#55 Ralph Cramdown on 11.28.12 at 11:57 pm

#42 Mic D’angelo — The wife likes to have a million dollar house [...]

To be fair, that’s only 4x income and, if they bought a few years ago or more, may well have been bought at 3x or less. Not everyone currently living in an overpriced house overpaid for it.

#56 Chris L. on 11.28.12 at 11:57 pm

If your yield is 6%, inflation is 1.5% and cost is 3%, your net is 1.5%…or in other words, what’s the point? You might even have some management fees in there of 1%…leaving you with 0.5%….or what’s the point?

Saving, destroying debt and MOST importantly, living frugally is where the future wealth will be. By the numbers; investing is dead.

#57 N x NW on 11.29.12 at 12:02 am

So I cashed half my mutual funds that are valued roughly the same as 2008 and bought NIE ishare ETF. It holds corporate bonds, preferreds, bank stock and REIT. Personally I thought it should be listed as GRTH with that mix…dividend yield of 7% (0.04/ share monthly for past 3 years) with share appreciation north of 10% this year. Hell I don’t even care about the share appreciation with those yields. Am I willfully blind to the downside on this….what’s the catch?

Thanks for all the enlightenment Garth

#58 N x NW on 11.29.12 at 12:03 am

Correction…FIE ishare ETF

#59 Billy on 11.29.12 at 12:12 am

Did anyone notice that one item brought up to help the fiscal cliff in USA was to disallow the tax deduction for mortgage interest does anyone have any idea how much that would affect USA real estate prices?

Smoke man I almost went bankrupt in the dot com crash got by with a proposal out of guilty conscience. Tough lesson but my assets sure have grown enormously after the realization of how to properly grow assets, best lesson I ever had… Fortunately it came at a young age. Allowing recovery.

Literally at the time I was a high tech professional with a large income blowing every cent an leveraging to the max… It is amazing what ten years of discipline can do for ones net worth, never again!

#60 Angela on 11.29.12 at 12:24 am

Have had a listing on Craigslist for almost a month for a nice quality baby car seat. Finally got an offer last night, 50% below asking because “We live in Vancouver and it’s all we can afford.” I put obo on the thing and I don’t care why you’re making the offer you are, but I just thought that was interesting, as though living in Vancouver and having no money go hand-in-hand, it’s a given that you have no money.

#61 Country Girl on 11.29.12 at 12:25 am

#65 Buy? Curious? on 11.28.12 at 1:11 am

Best video ever! Congrats.
Can’t wait for SM 2013.

#62 Investx on 11.29.12 at 12:28 am

Why bother investing in the banks’ preferred shares and not buy the common shares instead and benefit from a growing yield from dividend increases?

(a) Preferred dividends are generally higher. (b) Preferreds are more stable in terms of capital value. (c) Valuations of preferreds are largely unaffected by the profitability of the underlying institution. (d) If you want yield, this is the place to be. If you wish potential capital gains, go common. — Garth

#63 GTA Girl on 11.29.12 at 12:30 am

The Sotheby’s auction had similar results to a GTA Ferrari dealers big unveiling party this week.

Last year the place was packed with developers, Bay Streeters and their mistresses. Open bar, trays of fresh salmon and the new Italia and the FF.

This years reveal was an azure blue Berlinetta F12. Not many people showed up. And those who did? Um…most of them don’t seem to have any tax paying kind of job. Types that deal in all-cash types of business.

A wash out.

#64 Old Man on 11.29.12 at 12:48 am

#42 Mic D’angelo – as disagree with your premise that a dentist is over educated based on definition. I have never met a dentist in my life who had a clue, and will explain why. Most go to university taking courses involving the sciences and acquire a B.Sc. degree and then off to Dental school.

These are not courses that challenges the mind to think, as compared to the Arts, but rather two solitudes walking in different directions. An education must be well rounded with subject matter to think and analyze the real world within the context of society.

#65 Tom from Mississauga on 11.29.12 at 1:07 am

For those whining about coming up with TFSA money. Buy dividend stocks and preferreds with a little margin. Imagine, portfolio cash flow pays the loan. While fully deductible interest and dividend tax credit ensures a refund every year. The lower your income, the more sense it makes! To think, I have an RRSP. What a waste.

#66 Mister Obvious on 11.29.12 at 1:14 am

I’ve personally known quite a few nurses over the years. Perhaps as many as ten or more. Most of them were experienced, competent and well paid.

And yet, they all seemed to be quite broke even after years of uninterrupted employment. Generally, they saved practically nothing and often were in debt. Money just slipped away from them and they really couldn’t say how or why.

It’s just something I’ve noticed. Perhaps a nurse or two out there would care to comment.

#67 Nostradamus Le Mad Vlad on 11.29.12 at 1:20 am

-
CBS GOLF ANNOUNCER

A few choice Dave Feherty quotes . . .

“Fortunately, Rory is 22 years old so his right wrist should be the strongest muscle in his body.”

“That ball is so far left, Lassie couldn’t find it if it was wrapped in bacon.”

“I am sorry Nick Faldo couldn’t be here this week. He is attending the birth of his next wife.”

Jim Furyk’s swing “looks like an octopus falling out of a tree.”

Describing VJ Singh’s prodigious practice regime — “VJ hits more balls than Elton John’s chin.”

“That’s a great shot with that swing. It’s OK — the bunker stopped it.”

At Augusta 2011 — “It’s just a glorious day. The only way to ruin a day like this would be to play golf on it.”

“That was a great shot — if they’d have put the pin there today.”

“Watching Phil Mickelson play golf is like watching a drunk chasing a balloon near the edge of a cliff.”

“That green appears smaller than a Pygmie’s nipple”.

He also said one day, “It would be easier to pick a broken nose, than a winner in that group”.
*
#22 Smoking Man — “Vlad did Grim get you?”
– plus –
#26 Nemesis — “More importantly, where is… Nostra???]”
– and –
#37 Derek R — “Yeah, where are you, Vlad? We miss you.”

Fear not friends, for I are back! See following — One of the more curious things during our recent jaunts happened at Chicago’s O’Hare Airport. A United mechanic was sitting next to us, listening to the clunk-thumping shuddering sounds coming from the wheels as the plane lurched towards take off.

He said (a couple of times), “This bird ain’t gonna fly”, and as we passed the runway he murmured “Told ya so.”

Turns out the entire braking system (air and ground) had failed. We could have landed, but it would have been at full speed. A 50-minute flight to Minneapolis turned into six hours, with de- and replaning. Shit happens!
*
5:04 clip Where a lot of the gold has gone — US$300 bln. gold heist on 9-11, while sheeple were watching something else (Germany’s, Holland’s and a few other countries); 1969 “New research found that while median wealth plummeted, the top 1 percent increased wealth by 71 percent.” and Pontiac, Mich. now almost a ghost town; >ark Carney and GS global domination; Jobs “Meaningful job growth will not happen next year, because employers are still very nervous about what the economy will look like, and are, in fact, reducing numerous full-time workers to part-time workers to avoid having to follow Obamacare burdens on their profitability.” wrh.com; Deduct Mortgage Interest? Not so fast; 55:51 doc. House of the Rothschilds.
*
The Amityville Horror was true, and the entire block of homes where The Exorcist happened (in Maryland) was demolished decades ago; 3:04 clip Billary admits that the CFR runs the WH; Agenda 21 Global Smart grid, which is why all the Smart Meters are coming into play, Monsanto and Agenda 21 We’re paranoid here and UN wants control of ‘net kill switch. I suggest these reports are linked; Ice Caps shifting with magnetic poles; 6:13 clip Pedo scandal in UK and the Royalty link; Barfmobile Giant anaconda regurgitates its lunch.
*
Smoking Man Finland has a different approach to education.

#68 Brew on 11.29.12 at 1:23 am

I got a call from RBC the other day and the fellow asked me if I wanted to increase my mortgage payments. I thought it was kind of odd since my mortgage is very small. My rate is at 2.25 so I thought man they are having the junior staff trying to reel in the cheap debt even the small potatoes. I had dropped it from $600 a week down to $75 a week and paid off a more expensive LOC and now investing the difference in RESP’s. RBC can wait for several more years I reckon.

#69 Grampa Hindsight on 11.29.12 at 1:36 am

Last weekend one of my greedy neighbours, who’s house was listed for about a year, then expired, no sale, ran outside and plunked a ”For Sale By Owner” sign on the front lawn.
It was during a Realtors open house a few doors down the street, then it was gone, 2 hrs total
Talk about desperate

#70 raider on 11.29.12 at 1:41 am

Garth, why is there no reference to REITs anymore when you talk about investment options? You just seem to mention preferreds at this point.

In earlier posts you advertized preferreds at around 6-7%, why 5% now?

REITs are a dandy addition to all diversified portfolios and I have referenced them often of late. Don’t miss a day of this blog, pal, as such absences are proven to be cognitively damaging. As for preferreds, as prices rise the yield is affected for new purchasers. Today bank preferreds return about 5%, plus the dividend tax credit. I never did reference them at 7%. — Garth

#71 freedom_2008 on 11.29.12 at 1:57 am

#12 JustTryingToProtectEquity,

Where did you get the 20-30% price drop figure for Victoria? How come people live in Victoria see about 10% drop here since the peak? Please verify your numbers before putting them out, especially for places that are not even where you live.

#72 long time/first time on 11.29.12 at 2:38 am

They may not have any non-registered investments, but Garth is wrong to say that everything they invest in will be taxed – I still think a primary residence capital gain has a pretty good tax rate…

#73 NorthOf45 on 11.29.12 at 3:39 am

Eddy should sell now, else he end up like this guy:

http://www.realtor.ca/propertyDetails.aspx?propertyId=12516026&PidKey=-816776230

A year ago this guy probably thought he was on easy street. Originally listed for $970,000, all 5,000 sq. ft. complete with lighted tennis court. Fast forward a few months, reduced to $879,000, then a big drop to $699,000 (with a kijiji listing to boot as desperation grows), and now finally listed at $679,000. But more importantly, it sits empty, abandoned, and marked “AS IS” by the realtor. That’s right, what was once loved is now not just unwanted, its shunned. And all this, located just outside of Hamilton on the Niagara Escarpment overlooking scenic Dundas, Ontario. The same Hamilton where everything is supposed to be “priced right”, where there is “no bubble”. In fact, its just five minutes from Helen and Duane’s place in Westdale, the Horny in Hamilton 900 sq. footer that’s “worth” $300,000 but surrounded by students.

So if a 5,000 sq ft. house on 2 acres with fruit trees and tennis court can’t sell for six and change, then is a 900 sq footer just around the corner “reasonably” worth $300K in this market? Who knows. I guess Helen and Duane won’t know until they list, if they can stomach it.

#74 robert on 11.29.12 at 4:25 am

Driving through Kelowna today i heard a radio ad from a developer offering new condos in West Kelowna for 50% off the original asking price. This housing market is in serious trouble and anyone thinking that the spring market will usher in higher prices is dead wrong in fact IMO the market will get worse much worse. If Fridays GDP numbers come in under 1% there will be little help for employment and wages going forward and finding a QUALIFIED BUYER will be the anomoly. Sold my house in October and am in total cash right now as liquid as i could be. The buyers that bought my house put 5% down and were underwater before they even took possession. Am renting an executive townhome valued at 450k for $1400 month and enjoy the lakeview every morning. Spoke with a Remax Realtor today and was told that 80% of the realtors are having a difficult time just paying their office fees. He thinks that by late spring 50% of the Realtors will be long gone. This is not going to be a pretty picture in spring. Consumer spending will dry up and both real estate and the car business is going to suffer bigtime.

#75 sheik yahboudi on 11.29.12 at 4:54 am

The fact that a lot of people are going to hit the retirement brick wall is just natural and possibly for the greater good. Maybe some of these fiscally and cerebrally challenged will die off after eating too much cat food and not being able to afford simple health care.

Society will be cleansed of their spend thrift wanton excesses.

#76 Onemorething on 11.29.12 at 5:43 am

In fact, sell the sucker. Take your million, get it managed properly, and spin off enough income to rent a better suburban palace for five grand a month – while retaining the principal for the years ahead when you’ll sorely need it.

That’s it Garth! Nuff Said! The winning solution!

Will he be able to do it? Not a chance!

He’s stuck, she’s lost in space, they’re cooked!

#77 the guy in the hat on 11.29.12 at 6:11 am

“the 52-year-old Markham dentist also tells me business sucks lately”

Quarter-million a year when business sucks, eh? And the gall to whine about it….

If he liquidates the equity in his house and puts it in plain old bank shares the dividends alone are more than the average salary. And dividends don’t have the same deductions or tax rate that regular work income does.

#78 flabergasted on 11.29.12 at 6:22 am

Seriously? Who the heck spends 5k a month on rent? Eat the rich…

#79 maxx on 11.29.12 at 7:57 am

“After pushing prices to heights of stupidity, debt’s now sucking the life blood – cash flow – from society.”

As usual, a perfect bulls eye Garth….and if the indebted eventually do manage to claw their way out of debt, they then need to begin accumulating cash to invest. Much of society is living on credit and has lost touch with the value of money. So much precious time is lost this way and results in a huge gamble with future quality of life.

#80 Buy? Curious? on 11.29.12 at 8:57 am

I just finished ANOTHER Smoking Man tribute that is funnier than the previous one. I’m just waiting for YouTube to uploaded it. It’s titled “Smoking Man Tribute Pt2″.

I want to take this opportunity to apologise to Smoking Man for any posts made in the past that were upsetting or offensive. What you said to me today was thoughtful and true. I know it’s a chilche when you hear someone say “If I can help just one person, then it was worth it” but you know what? I am that person!

Thank you Smoking Man.

#81 Finally on 11.29.12 at 8:59 am

I spend $1800 for a OLD 1500 sq foot 3 bedroom duplex in Kerresdale, Vancouver. Is that a lot?

#82 TurnerNation on 11.29.12 at 9:01 am

#31Canadian Watchdog

Ironically most of the niche ETFs are horribly illiquid with huge spreads.

There’s still decent liquidity for retail. Example: with a broker like QuestT, if you sell a US ETF at market, and the bid/offer is say $10.00 x 10.01, your
fill price will be 10.0012 or something like that.
That’s slightly improving the fill price by .0012.

Large US market makers (Citi, MSCO, MLCO et al) first internalise this flow within their in-house dark pools. Nothing wrong, as long as your fill’s price is equal to or better than the national best bid/offer. That’s their spread now.

More and more flow is being shopped out via Indications of Interest (IOIs), between institutions. Some of these IOIs are actionable directly, into fills based upon live orders.
Although slight the quality of liquidity may be improving. Up to 20% of US fills are traded in the dark pools. No information leakage, price improvement. Why show your hand.
TSX and Alpha have launched slew of dark order types this year. The new trend.

Summarizing, the stock market has always been about who you know, building relationships to get fills.
That has not changed. It’s not easy, why should it be.

#83 GP on 11.29.12 at 9:18 am

” #58 N x NW on 11.29.12 at 12:03 am
Correction…FIE ishare ETF”
—-

This fund had very high return of capital rates when I looked at it. IIRC over 40% in 2011.

#84 fancy_pants on 11.29.12 at 9:18 am

Further evidence that it doesn’t matter how much $ one makes, so few are able to live within that income.

#85 Karie on 11.29.12 at 9:52 am

I can definitely relate to Eddy and Jen but we’re lower on their numbers overall but very similar picture to us. I read this blog all the time but yet I do what Jen does and that’s pay down the mortgage. I have all our savings in RRSP mutual funds from the bank that I’m pretty sure has made 2% average in 10-15 years. Why don’t I take your advice? Fear or lack of knowledge or something else, perhaps this is out of my comfort zone! I don’t know if I like borrowing against our house – I’d rather pay it off. It somehow doesn’t feel right to borrow on the house to invest. It feels better to own it free and clear.

Bank preferreds, ETFs and REITs are new to me and I don’t really understand how they’re better than mutual funds but I did move into almost all index mutual funds. I have a small amt of money in a TFSA but in a high interest savings account. We have 3 children (2 of which are in expensive sports) these sports the kids love but cost several thousand a year making it hard to save a lot of money. I’m sure we could being doing so much better investment-wise!

#86 hangfire on 11.29.12 at 10:27 am

#8 GR…I agree….dentistry is rife with bottom feeders masquerading as medical professionals. I do see a commanality between DDS and real estate ( even auto prices) in that DDS has jacked up it’s ‘value’ due to public service insurance coverage subsidized by the taxpayers. RE/Auto prices was jacked up by ther extension and abuse of taxpayer subsidized interest rates.

Home prices doubled not based on value/demand but solely on the basis of monthly payment ratio’s and obscene amotization trickery.

Car prices have also doubled due to emergency rates and the subsidy from taxpayer funded deficits/debt. They raise the price because they can. Who knew the lowly BMW could reach triple digits……why….because no one buys one anymore ( where do you ever see the price advertised?) they lease them for stupid periods of time based on taxpayer subsidized emergency rates.

So Marc Carney is going to take this fiscal magic to Britain…good luck bozo. They have a free press in England…..the smoke and mirrors game run here in Canada by hard left media pundits doesn’t play there in the same secretive vortex that they can get away with here. Marc…the British Press will tear you a knew hole in your pajama’s.

http://business.financialpost.com/2012/11/28/carney-faces-heightened-media-scrutiny-as-bank-of-england-chief/

#87 Southern Ontarian on 11.29.12 at 10:35 am

#73 NorthOf45 on 11.29.12 at 3:39 am

Cool find. The buyer of that house will pay over $12,000 in property taxes next year. That, and the fact that it’s a ten-minute drive every time you run out of milk, might explain why it’s languishing.

I’m not shocked that someone else’s custom built five-bedroom home in rural Hamilton is not desireable to very many people, but good comparison with the place in Westdale.

#88 Ronaldo on 11.29.12 at 10:38 am

http://www.tmxmoney.com/en/cpnews/29TB727.html

”More pessimistic analysts have warned some types of Canadian real-estate in some markets are overpriced and at risk of tipping into a rapid decline.”

Latest report from canadian banking group saying that a cooling housing market may be good for the economy. Obviously trying to downplay what Garth has been telling them for months. See above quote from the report.

#89 Gunboat denier on 11.29.12 at 11:04 am

77 guy in the hat – the marginal tax rate on dividends for
someone making $200K is about the same as the marginal tax rate on income of about $50k.

#90 Dupcheck on 11.29.12 at 11:04 am

My dentist drives a Maserati, should I feel bad if he switched to a Mercedes? Nonsense, deal with it and live within your means. Maybe they should lower the prices down to earth where normal people can afford it. Wages have changed so should the prices they charge.

By the way it is not shame to drive a Toyota either, they offer everything that Benz does for less. The rest of the money can be invested and still live a good quality life.

#91 Bob on 11.29.12 at 11:10 am

Garth,

How about a comment on the upcoming “fiscal cliff” in the USA? Will a lack of compromise by the US politicians drive the North American financial markets into the ground and if so by how much? Your thoughts?

Non-event. Compromise coming. — Garth

#92 Richard on 11.29.12 at 11:26 am

Grim Reaper/Crypt Speculator on 11.28.12 at 11:27 pm

Well , Dentistry has brought a high suicide rate amongst the Ex Barber-ism -ists( aka DDS)….probably because they realized they should have been Banksteristas/Mortgage Brokers/Realtors who do not have souls or conscience.

Dentistry could be accomplished by Auto Body repairmen…..is no real practical difference…except Bondo doesn’t contain Mercury or they don’t endorse Fluoride debased compounds.

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

Wow, grim, what’s with your hate? Dentist suicide rates are a myth, they aren’t any higher in some studies than the general population. You had a bad experience with one, or something? If you think dentists are barbers, next time you get a toothache do go to one and hopefully he’ll be knowledgeable in handling it, putting the freezing in the right place, expecting the normal sequelae afterwards, looking after you just in case complications develop, identifying the right problem and doing the right job etc (From the way you think of us I guess you wouldnt mind getting the wrong tooth pulled).

I mean, no offense to barbers; i need a good haircut right now and I sure as s*** wont be looking into the mirror with a pair of scissors unless I want to end up looking like an idiot. I’d be smart and get a person who can do the job (unless i got absolutely no $$$$).

You remind me of one of my patients at school. Theres alot of “conscience and soul” I can dole out to everyone on the chair, especially those who arent great fans of dentists. And I enjoy it, because at least for me if a person walks in and doesn’t like me, It can only get better by establishing trust and making them informed with what they need.

It only taps out in the face of people like you, who just want to bash us with heaps of ignorance-veiled hate and make our jobs harder.

P.S mercury dosage from leaking amalgam fillings is negligible, even if every tooth had one such filling.

P.P.S there’s definitely a dosage problem with fluoride in the water coupled with the adequate amount you get from toothpaste, but the benefits of F- are well known.

When I next go to the auto repairman to get my car fixed, I’ll let him know you’re looking for someone to wing-it with your tooth problems. I think a car jack would be pretty good at prying your mouth open…. wrench to take any teeth out… :P

I thought all surgeons started out as barbers in the western world. What difference does it make? The important thing is they’ve come a long way learning about the very basics, like being clean, controlling bleeding, coming up with anaesthetic etc.

#93 tkid on 11.29.12 at 11:42 am

Maybe some of these fiscally and cerebrally challenged will die off after eating too much cat food

There was some sort of investigation in the 50′s or 60′s in the UK that found cat food was healthier than a lot of the processed foods found on grocery shelves.

#94 Penny Henny on 11.29.12 at 11:58 am

I’m confused.
All I keep hearing is “REIT and preferred ETFs” and I know you mean in addition to home, etc.
But if all my savings/investing money goes into “REIT and preferred ETFs” is this a lack of diversification?

Penny Henny

Pay attention. I have spelled out how a diversified portfolio should look – corporate, high-yield, real return and government bonds, preferred shares, REITs, high-income fund, a diversity of exchange-traded funds and real estate, all in appropriate weightings determined by age, circumstance, income, net worth, risk tolerance, market conditions and spouse. — Garth

#95 Longterm on 11.29.12 at 12:29 pm

#180 bigstick on 11.28.12 at 6:21 pm

Re: Kids and my budget. I have one kid already and I’m stopping there. BTW, this wasn’t my budget, rather it was a recap of what I actually made and did last year. This year is looking similar but with an increase in the ISA contribution to about £10k / $16K CDN and likely a longer break as I’m making a bit more money.

#96 Suede on 11.29.12 at 12:33 pm

Royal Bank just blew analysts expectations out of the preverbial water.

Glad to see my chequing fees helping out my portfolio

#97 dosouth on 11.29.12 at 12:51 pm

Now the banks are coming on board…..shifting gears so to speak

http://www.cbc.ca/news/canada/british-columbia/story/2012/11/29/housing-prices-cibc.html?cmp=rss

#98 Linda Pearson on 11.29.12 at 12:59 pm

#92Richard on 11.29.12 at 11:26 am

“It only taps out in the face of people like you, who just want to bash us with heaps of ignorance-veiled hate and make our jobs harder.”

Cheer up Richard; it could be worse. You might have gone into teaching. :)

#99 Johnny Boy on 11.29.12 at 1:01 pm

As riotous as the procedure might be, the 52-year-old Markham dentist also tells me business sucks lately. Seems even in his affluent community in the northern reaches of the GTA, where houses routinely cost seven figures, families are eschewing major dental work since they don’t have the dough. If a tooth breaks, and it’s not covered by insurance, that sexy white cap can wait a while.
I couldn’t belive this when I found out Dentists in in the top suicide rate of any profession!
http://www.straightdope.com/columns/read/1588/what-occupation-has-the-highest-suicide-rate

#100 Westernman on 11.29.12 at 1:19 pm

Concerning Eddy and Jen’s problems I think I can sum up the feelings of millions of canadians with the simple statement – ” Aaaaaaaaaawwwwwwww…

#101 Canadian Watchdog on 11.29.12 at 1:54 pm

#96 Suede

Royal Bank just blew analysts expectations out of the preverbial water.

That's because RBC's Q3 notional derivatives increased to $7.2 trillion making up 35% of the total $20 trillion in domestic contracts. How can a bank lose if they're allowed write insurance contracts (CDS/Derivatives) to hide contingent liabilities and more absrudly write insurance against themselves? Like BNN's Howard Green once asked: How do Canadian banks keep reporting double digit profits when GDP is stuck where it is? Simple. It all goes back to Nobel laureates Akerlof and Romer's working paper: Looting: The Economic Underworld of Bankruptcy for Profit

 

The big five can hide and reshuffle their debts all they want — in time, it eventually gets exposed.

#102 NorthOf45 on 11.29.12 at 2:21 pm

#87Southern Ontarian on 11.29.12 at 10:35 am

Taxes that high would definitely put off a majority of buyers. As well, I believe NEC approval is necessary for any major modifications to the property. There’s a 2006/2007 application noted in NEC’s online catalog.

Regarding its “ruralness” though, this house is actually only a minute or so from downtown Dundas, straight down Sydenham Hill. Its the reason why Sydenham is such a great shortcut from Hwy #5 into Dundas / West Hamilton when the 403 West is backed up, which these days is pretty much every day. :)

#103 Doug in London on 11.29.12 at 2:21 pm

So, the economy in Canada is slowing down. In amongst the storm clouds are, however, some silver linings. One is the U.S. economy, our biggest trading partner, is slowly recovering but don’t expect that to save our grossly overpriced real estate markets. The other is some news by an analyst at CIBC who suggested that if prices drop then new buyers will have more money in their pockets to spend elsewhere (granite counters or big screen TV’s anyone?) which will stimulate the economy. That’s probably true but there will be a delayed action, some years down the road. Deja vu here, didn’t I suggest that idea on this blog in the last year or so?

#104 passion8_one on 11.29.12 at 2:26 pm

I don’t know, my mechanic charges $150/hr and he is a RELATIVE.

Next time, I’ll be getting under the hood myself…it can’t be that hard to figure out, I own a KIA ;-) Yes, Garth that was a lob over the plate for you!

I don’t feel so bad now, thanks for the post. At least I’ve managed to save almost 100% of my yearly income AND build up 60% equity in the house.

I am a FT student (on top of a FT worker bee)…it looks like I *could* take out some RRSP with no penalty and invest in TSFA. With tuition credits & child expensions, I would be able to take out $2K and still get a tax refund. Valid strategy? I put some of this money away in my late teens in GICs and it has just been losing purchasing power every since. Seems like I couldn’t do worse at this point!

#105 TorontoBull on 11.29.12 at 2:33 pm

@ Buy curious and SM -GET A ROOM!

#106 Bigrider on 11.29.12 at 2:52 pm

According to Bloomberg Business in 2009, 262,000 millionaire households in Canada.

http://images.businessweek.com/ss/10/06/0615_global_millionaires/12.htm

Millionaire households set to double by 2018, according to Investment Executive.

http://www.investmentexecutive.com/-/news-58446

Reaaly fascinating is the fact that 47000 households in Canada make the net worth range of 5 to10 million.

http://www.camagazine.com/archives/print-edition/2006/june-july/upfront/news-and-trends/camagazine8477.aspx

Seems to be a lot of money floating around in this country. Could this explain exorbitant prices on coveted postal codes at all?

Could it help explain high RE prices period?

#107 Angela on 11.29.12 at 2:54 pm

A lot of people ran into Ritchie Bros. auctioneer stock during the recession and it was a huge disappointment.

#108 City Slicker on 11.29.12 at 3:20 pm

#91 Bob on 11.29.12 at 11:10 am Garth,

How about a comment on the upcoming “fiscal cliff” in the USA? Will a lack of compromise by the US politicians drive the North American financial markets into the ground and if so by how much? Your thoughts?

Non-event. Compromise coming. — Garth
———————————————————-
Only thing coming is intervention by the Federal Reserve with it’s only tool in the drawer QE. Then raising of the debt ceiling.

That is not the fiscal cliff. Raising the debt ceiling is a no-brainer, and inconsequential. — Garth

#109 Humpty Dumpty on 11.29.12 at 3:35 pm

then there are those who set the rules…

A great piece by George Carlin

http://www.youtube.com/watch?v=w0yhHHPc7IU&feature=related

#110 fiscal cliff claven on 11.29.12 at 3:38 pm

Welcome back Vlad!
Thanks for all the coffee over my computer screen via the golf jokes

#111 Bob on 11.29.12 at 4:10 pm

I too am flabbergasted that at 52, NOT incorporated, and yet pulling home 250K with so little equity.

The good news is, being self-employed, you shouldn’t have to retire at 65.

#112 Marcus on 11.29.12 at 4:21 pm

Back in 2008 there was a presidential committee on how to seize the 401k’s SEP’s IRA’s and the like. The proposal was to guarantee a 3% interest rate per annum and the govt would protect the funds from stock collapse. When it is time to be paid your social security check will be made up partially from this fund. Scary as all hell. Also if you sell your house from this point on and the closing occurs after Jan 1 2013 its an automatic 3.8% tax to Uncle Sam. These are proposals in the Health care act and agreed upon by both sides of the political spectrum. The fiscal cliff is theatre for the surfs and the politicians are merely debating on how to steal our personal property. The game is almost over.

#113 Marcus on 11.29.12 at 4:22 pm

Also the mortgage interest deduction will be phased out starting with the “rich” and working its way down to the average joe. It will happen faster than people think is possible.

#114 GTARealEstateCorner on 11.29.12 at 4:42 pm

#52 Smoking Man

I think it just blows your mind, your passive aggressive jabs tell me you can not compute that a guy who loves his wine, is out there a bit, like 25 ish rentals , cant speel (maybe I can just don’t want too) A risk taker, I guy who loves life and succeeds with no plan what so ever.
_____________________________________________
Loved the post SM! Seriously no jabs intended whatsoever, so apologies if I offended you in any way.
I think it’s great that you’re thinking positive about things. I have no doubts you’ve got success coming soon. Success comes in many forms and going out there, partying it up, being silly, acting young and enjoying one’s self is definitely success to me! You’ve got it and no one can take that from you, whether you got money or not. I’ll tell you, your attitude is the right one to get back on your feet. Just try to go easy on the drinking. You’ll be fine before you know it!

#115 City Slicker on 11.29.12 at 5:03 pm

Only thing coming is intervention by the Federal Reserve with it’s only tool in the drawer QE. Then raising of the debt ceiling.

That is not the fiscal cliff. Raising the debt ceiling is a no-brainer, and inconsequential. — Garth
———————————————————-
Last time they raised the debt ceiling gold ran $400 bucks, in consequential, just another step closer to the death of the USD.

The US$ will be the global reserve currency long after you have stopped worrying about it. — Garth

#116 Elena on 11.29.12 at 5:05 pm

Hi Garth,
Regarding bank preferreds, I understand that they are protected by CMHC/taxpayers from people who can’t pay their mortgages, so they’re not going to fail. But if people are not buying homes and are therefore not borrowing money, and there is therefore little to no new business, would the banks not essentially become zombie corporations? If I understand correctly, the majority of borrowing in Canada is related to real estate (mortgages, HELOCs, etc.), so is there enough other business to keep the good times rolling at the banks? It seems to me like this would be the best time to pull OUT of any bank preferreds. Would appreciate your thoughts – perhaps it warrants a full post. Thanks.

I appreciate your thoughts, but it makes me wonder how many times I must repeat the same information. Preferreds are bond surrogates with a par value, dividend payments and history of capital value preservation. Profits of the underlying corporation can fall with no effect on the value or worth of the securities. Having said that, Canadian banks earned $8.2 billion in the last quarter alone. All high-ratio mortgages are insured. Real estate prices will correct and sales slow but the market will remain alive and kicking. Zombie corporations? You better hope not, or we will all be foraging for berries in New Brunswick. — Garth

#117 Ol'Tom on 11.29.12 at 5:06 pm

#24 GTARealEstateCorner on 11.28.12 at 10:03 pm

Waiting for Smokingman and GTARealEstateCorner at Tilted Kilt. Already drinking a bittie waiting some patiently to see the great two of ye come a walkin in here. “Yer aff yer heid boys!” I crap bigger deals than ya two.

#118 JRH on 11.29.12 at 5:19 pm

I guess preferred shares sometimes aren’t preferred Spain About to Whack Hapless Smaller Savers Conned into Buying Bank Preference Shares as a Condition of its Bank Rescue
Read more at http://www.nakedcapitalism.com/

Ah, this isn’t Spain, dude. — Garth

#119 LaughingCon on 11.29.12 at 5:25 pm

Interesting Home Capital insider transactions:

http://www.canadianinsider.com/node/7?menu_tickersearch=HCG+|+Home+Capital+Group

Someone (guess who) is offloading shares big time!

Perhaps opportunity for the regular folks to make some on the slide…

Smoking Man – It is going to be a nasty crash realtors, a nasty crash

#120 Old Man on 11.29.12 at 5:26 pm

#104 passion8_one – well I know as your relative at $150.00 an hour is ripping you off, as am sure you are joking or is he a dentist playing auto mechanic?

#121 AK on 11.29.12 at 5:35 pm

108 City Slicker

“How about a comment on the upcoming “fiscal cliff” in the USA? Will a lack of compromise by the US politicians drive the North American financial markets into the ground and if so by how much? ”

Tune in to BNN and CNBC. That’s all they talk about. I think I am going to cancel the subscription to both of them until January 01, 2013 . :)

#122 jess on 11.29.12 at 5:48 pm

finfisher spyware
http://www.icij.org/offshore/nominee-directors-linked-intelligence-military
The global offshore money maze

http://www.icij.org/offshoreimaginery empires
Britain’s sham director industry
http://www.guardian.co.uk/uk/series/offshore-secrets

British woman living on goat-tramped Caribbean outcropping listed as director for more than 1,200 companies. Read more
http://www.guardian.co.uk/uk/series/offshore-secrets
http://www.icij.org/offshore
http://www.guardian.co.uk/uk/2012/nov/25/offshore-secrets-revealed-shadowy-sid
========

#123 Old Man on 11.29.12 at 5:58 pm

#52 Smoking Man – Do not feel bad about being a dishwasher part-time, as was the best fun job that I have ever had in my life. In highschool a classmate had this uncle that owned a large hotel up north and booked a large wedding off season. Need more staff, so a few of us heading off for a weekend with pay, free room, and all the food we could eat.

I ended up in the kitchen doing everything from A to Z, and loved the production line filling plates with this and that to be stacked for a young babe to wheel it all in to the main diningroom. I became the dishwasher boss with the commercial unit, and dishes were stacked into trays and pushed into a washing unit, and then into a drying unit, and then stacked for stocking.

I was just a young lad, but later at night became not just a bartender, but a waiter filling my pockets with cash tips, as this was a big wedding. Now let us not forget about the local young lass who did the plate servings with others, as she stuck around for me as my reward came later.

#124 Canadian Watchdog on 11.29.12 at 6:05 pm

CMHC Releases Third Quarter Results

As expected and stated in a previous post Garth, at best, CMHC insurance-in-force would be unchanged at $576B.

#125 Investx on 11.29.12 at 6:09 pm

(a) Preferred dividends are generally higher. (b) Preferreds are more stable in terms of capital value. (c) Valuations of preferreds are largely unaffected by the profitability of the underlying institution. (d) If you want yield, this is the place to be. If you wish potential capital gains, go common. — Garth
—————————————————–

Thanks for the response, Garth.

If you want yield and have a long term investing horizon, why wouldn’t you go for the growing yield of the common share, which will eventually surpass the fixed yield of the preferred (and likely capital appreciation, in regards to banks)?

Because lots of investors do not want stocks which can fall enough in one day to wipe out several years’ worth of dividends. — Garth

#126 Nostradamus Le Mad Vlad on 11.29.12 at 6:18 pm

#43 Fartweezel — “Where is Vlad the mad lad?” — Right somewhere!

#45 Grim Reaper/Crypt Speculator — “..or at least until the Maple Leafs win the Stanley Cup…whichever comes first..(what are the odds ?!?)” — I’d bet billions of Nortel and Bre-X stock (evens) that the Laughs won’t ever win a major trophy in their lifetimes again!

#76 Onemorething — “He’s stuck, she’s lost in space, they’re cooked!” — Descriptive prose at its best!

#110 fiscal cliff claven — “Welcome back Vlad!” — Thanks!

#127 eddy on 11.29.12 at 6:27 pm

Dentists got paid to put mercury in our mouths, then paid again to take it out. As a group they support fluoridation of tap water.( Convenient if they ever get sued by over fluoridated patients) Notice Vancouver was in the streets protesting HST and Toronto was not. Guess which has fluoridated water? Makes you wonder ‘fluoridation of tap water isn’t consumer driven, so who’s driving it”

#128 Tony on 11.29.12 at 6:28 pm

Sell the house and rent stay 100 percent liquid short stocks or wait for at least a 70 percent fall from todays’ levels before investing money in the stock market. Currency funds are a possibility.

#129 Trish on 11.29.12 at 6:49 pm

I’m still a little confused. What *should* a house in the city limits (ritzy areas/bridlepath not included) be in the range of? (SFH, detached)
150-300k? 250-450k? 500-750?
Majority of you just keep repeating “overpriced, overpriced”, but there is no comparison given!
Where do you see the ballpark being when it crashes?

#130 City Slicker on 11.29.12 at 6:55 pm

Last time they raised the debt ceiling gold ran $400 bucks, in consequential, just another step closer to the death of the USD.

The US$ will be the global reserve currency long after you have stopped worrying about it. — Garth
———————————————————-
Yep with that 16 trillion soveriegn debt and 80 trillion in up coming unfunded liabilities for social security I’m sure everyone will be wanting to hold worthless paper, you betcha.
Just look at the global shifts away from the dollar, like BRICS etc. You think that’s just a coincidence?

So join them. Good luck. — Garth

#131 Herb on 11.29.12 at 8:00 pm

Well, Garth, you’re never going to be more mainstream than this: Beady Eyes O’Leary proclaiming on tonight’s “Exchange” that, when interest rates rise 100 basis points, 16% of new condo owners won’t be able to pay their mortgages regardles of what happens to the price of their condos.

Now I need a shower. Or a bigger bike. — Garth

#132 Suede on 11.29.12 at 8:15 pm

#101 Cdn Watchdog

So you’re saying they’re using monopoly money to look good?

Once people used the words derivatives, it loses all meaning in my mind. Like when my wife tells me ‘No you idiot, you can’t mix colours with whites”. I get that zombie stare.

You do fantastic work on here digging up nuggets of information no one could present in chart form mucu better, but more often than not it’s one sided: against big corporations, big banks, government etc…

I’m curious if you have a contrary viewpoint that proposes solutions or ways of doing things differently than what CMHC, OSFI, RBC etc… currently do.

#133 Nostradamus Le Mad Vlad on 11.29.12 at 8:46 pm

-
Although Phil Collins called it quits recently, UTube has a great number of his songs, and this stands out as one of his best.
*
History Repeats 1896 and 1904; 4:36 clip ObombaCare’s new tax hike. It’s large; Germany and the US Treasury Would gold have something to do with this? Cashless Society For the most part, we use our credit cards and pay them off monthly; Iceland Take this bank and shove it; Employees as Owners Man retires, gives his supermarket to employees; Brzezinski “The reason the US may well strike Iran has absolutely nothing to do with Iran’s peaceful nuclear program, and everything to do with the reality that Iran refuses to sell all of its oil in nearly worthless US dollars.” wrh.com. This was precisely the same road Iraq took, and was clobbered for doing so; GS Global coup d’etat. Where’s C in all this? UK banks’ bad debts Set aside 35 bln. quid; US unemployment benefits “Bring back the high-paying jobs. Problem solved!” wrh.com. Unfortunately, those jobs are long gone; German unemployment rising; Foodstamps jumped by almost 10% in 2011.
*
Syria “Meaning the US can invade and nobody can get the word out.” wrh.com. Obviously there is a kill switch somewhere; Fat and Healthy? Moderately overweight, yes; Secession? This could go along with what a Russian prof. said a few years ago, about the US breaking up into six or seven different states or countries; Palestine won the vote earlier with 138 yes votes, nine no and 41 abstentions; Agendas Globalists write ‘em, but we can change them; AP and Iran Another reason to squash the m$m, and US and Iran “Iran HAS cooperated with the IAEA. It is Israel that refuses to sign the NNPT or allow inspections. (I am still banned from commenting on Reuter’s.)” wrh.com; Red Cross and Sandy Where are / were you? GMO Cops Use us or die, don’t use us and die anyway; GW? UK freezing up after drenching, and Moscow; Heat to Electricity Converting it by using dirt; Solitary Confinement for elementary schools?

#134 bill on 11.29.12 at 8:58 pm

a bigger bike gets my vote Garth. or faster…

#135 Grim Reaper/Crypt Speculator on 11.29.12 at 9:20 pm

Dentists are money grubbing quacks.

#136 claudius emperor on 11.29.12 at 9:36 pm

Investing abroad is not a bad idea at all.

The world economy grows, BRIC grows at 4-8 percents annually, US (and wsetern) economy shrinks at least 2-3 percents (based on real inflation numbers the nominal GDP is actually decreasing, the official CPI is a joke, does anyone actually beleive that the inflation is 1-2 percents? Just look at price of gas, food, medication, education)

#137 Get a Second Opinion on 11.29.12 at 10:00 pm

The CBC Marketplace show, about a month ago, focused on dishonest dentists. A woman with no dental problems (verified by two dental professors) visited 20 dentists across Canada. About half the dentists recommended expensive treatment. What a crooked profession. Here is a link to the program http://www.cbc.ca/marketplace/episodes/2012/10/money-where-your-mouth-is.html

#138 Richard on 11.30.12 at 12:54 am

Get a Second Opinion on 11.29.12 at 10:00 pm

The CBC Marketplace show, about a month ago, focused on dishonest dentists. A woman with no dental problems (verified by two dental professors) visited 20 dentists across Canada. About half the dentists recommended expensive treatment. What a crooked profession. Here is a link to the program

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

I watched it, and by the end I wanted to punch a couple holes in wall. Why, you ask?
1. They spent 5 minutes on the majority of dentists who gave conservative treatment plans
2. They spent the rest of time on those recommending aggressive cosmetic treatment. One guy was contacted for the second time since the 1980s. All the dentists were in fact picked because they were complained about by consumers. I dont know about you, but this isnt “research” which they claimed it to be, this is clearly biased sampling to the max (And ironically, half those dentists were more or less consistent with their treatment plans).
3. The show really is about ratings as per above; they came to my school to interview one of my profs, but he had nothing juicy or bad to say about the profession and simply stated that “there were ethical issues and those need to be addressed” wrt the profession. They never included him in the show, and the hosts represented themselves as doing “research” when really they are just looking for good show material.
4. There is absolutely no information on the patient’s teeth except for pretty pictures and red stickers….how am i supposed to understand why most dentists singled out the teeth they did? How are they dishonest if not looking for stuff the “experts” at UT did not see, omitted or did not discuss with the patient?
5. They ask laypeople sitting on the street on a chair specifically about BAD experiences they had with dentists; they cant specify what happened, what the dentist actually did, and if it was needed or not (which may not be their fault if the dentist sucks at communicating but me or any other person is not gonna be able to tell what the hell is going on) and this is just going to create more undeserved confusion and distrust for absolutely no reason.

I’ve lost respect for this show, as it really is full of misrepresentation and it willingly excludes anything that wont excite the masses (i.e proper conduct and consistency). Dentistry, like any other profession, has its bad apples or at least those that are aggressive and greedy but to say its a crooked profession from this show is highly untrue.

#98 Linda Pearson on 11.29.12 at 12:59 pm

Linda- I feel enraged at some of these negative comments about dentists but they just keep coming and I think i should give up, the media and people’s perceptions will always spin off something that isnt idea.

My aunt’s an ESL teacher, so i kind of know how you feel, yet at the same time she enjoys what she does and lives well :D, so in another sense, I dont XD.

#139 Mike in Surrey on 11.30.12 at 1:43 pm

#129 Trish
From my research, base on each person garner a minimum wage can support one bedroom in a house. $10.25 x37.5 hours per week is $19988 per year. Using a rule that 30% of income normally pays housing cost is $500 per month, less $100 for Utilities (heat, hydro, and internet). That’s $400 for Rent. Subtract 25% for Taxes and Maintenance of a house. $300 to pay Mortgage per BEDROOM. Base on your selection of interest rates and 25 years amortization. With 20% down payment, a 3 bedroom detach home is 250K, while a 5 bedroom detach home is $420K. So, it’s 30% crash if a 5 Bedroom House is 600K at Peak. One must move once or twice to afford 750K house, as down payments would be larger after 10, 15 years of amortization.