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Yesterday’s pathetic entry was called ‘The Manipulators’ for a reason. Rarely have we seen institutions – an entire industry and a lazy media – team to manipulate public opinion as is happening now. Like it or not, residential real estate is in the early stages of a correction which will last long and nip deep. We know this as certainly as we know the US debt ceiling debate will be pure theatre or that realtors can’t stay away from this blog.

Here’s today’s example, courtesy of the cartel running the Toronto real estate market. Reporting their mid-month numbers, TREB said 1,469 properties changed hands in the last two weeks. “This result represented an increase of 2.4 per cent over the 1,435 transactions reported during the same period in 2012.” And as for prices, “The average selling price during the first 14 days of 2013 was by up by four per cent on a year-over-year basis.”

What, no softening? Is this truly that elusive soft landing taking place? Is Garth actually not omniscient (but still has a great butt)? “The GTA is not suffering a correction,” one of our resident realtors rushed to comment.  “TREB stats prove. The so-called correction has turned to a fizzle. Awwwww. Sales up, prices up…say what, Garth?”

I say be careful what you swallow.

In January of 2012 the real estate board reported 1,506 sales. This January the number’s 1,469. This isn’t a 2.4% increase, but a 2.5% decrease. Every month the realtors fudge their numbers without publishing corrections, which means they can pretty much say what they want. And do.

And that price increase? Ditto. Let’s compare detached houses in 416 which averaged $743,993 for all of last January. This year that same house costs $720,759, which is $23,000 less. So how is a 3.1% decrease an increase?

But that’s not actually important. Real estate – like stocks, gold or philandering – is all about momentum. Sales have been falling on a year/year basis now for ten months, and the average detached house has not been at this price level since October of 2011. In fact that detached house has lost 7.8% of its value since September, and a significant 13.2% since April, when it cost $110,410 more than now.

All the numbers, by the way, come from the Toronto Real Estate Board, which really, really, really hopes you read the Toronto Star and have a memory as short as the minister of finance.

But it gets worse.

Some days ago I told you clearly why people throwing their extra cash at low-rate mortgages are making a big, ugly mistake. The argument is simple: tons of folks have mortgages with rates less than inflation (3.1% at the moment in Ontario). That means the bank gave them a wad of money that’s losing value faster than the price they ‘re being charged to rent it. Why would you want to pay that back faster and clean up the bank’s mistake?

Apparently if you’re a senior editor and business writer for CBC, you think this is great. “You can make an absolutely safe, tax-free investment with a guaranteed rate of return by paying off your mortgage,” says Don Pittis in a column claiming people with fat mortgages are lucky and should pay them off instead of investing in retirement plans. I guess he must know.

The trouble is, money can grow much faster in other non-scary assets, so if the goal’s paying down debt, why make extra mortgage payments? A balanced portfolio of fixed income and growth assets (no stocks or mutual funds) with 40% in safe stuff (like preferreds) has yielded 8% over the last three years and popped into double digits last year. Why not enjoy a five-year mortgage term with cheap payments, sticking it to the bank, while growing your extra money by 50% to trash the loan upon renewal?

In fact, do you really want to shovel more of your net worth into an asset which is on the decline? Isn’t creating a big pot of cash to finance 25 years in retirement more critical than paying back a subsidized loan? After all, most of us don’t have CBC pensions. And while we’re at it, when you can rent a $1 million house for $3,000 a month – which would actually cost $8,000 a month if you owned it outright without a mortgage (the income your money could generate) – why wouldn’t you?

We need income, not houses. Too many of us confuse real estate with security. God makes those people editors and realtors. She’s always testing us.

163 comments ↓

#1 guelphstudent on 01.16.13 at 10:09 pm

If you look at condos, they are down 4.4% on y/y. Down 40k from the peak, look at the condo graph below and see for yourself

http://www.torontocondobubble.com/2013/01/condo-prices-down-44-mid-january.html

#2 Toronto_CA on 01.16.13 at 10:10 pm

I don’t understand why they are allowed by anyone to restate prior year numbers with no explanation. It is a material adjustment if they bring the sales from a loss to a gain or vice-versa by restating prior year.

Realtors are really scumbags, aren’t they? What a joke of a “profession”. And you wonder why the hate for them by the general public, never mind on this blog.

That said, even without the revised prior year numbers, the drops in sales aren’t as big as the last few months have been. Why can’t they (TREB) just be honest, or at least explain the prior year re-statement with their puffery press releases?

And why do the press let them get away with it? Oh right, in both cases the answer is self-serving money (ad revenue and commissions).

#3 gold bug on 01.16.13 at 10:11 pm

The problem is most are financially illiterate, and everyone one is scared to invest, too much fraud and too much stealing, so the one item that stood the test of time is a house, but right now is not the time and many will come to realize it VERY SOON.

#4 Mike on 01.16.13 at 10:13 pm

Great picture:) Is the VREB running Walmart now ? :)

#5 Derek R on 01.16.13 at 10:13 pm

Hear, hear. Housing is a cost pure and simple and the sooner people realise that the better.

#6 JSS on 01.16.13 at 10:13 pm

Garth – do you recommend borrowing from a HELOC @ 3%, to invest in a balanced portfolio which makes 7%?

Ask your wife. — Garth

#7 Smoking Man on 01.16.13 at 10:15 pm

People need income true…. I need tax relief.

#8 East Van on 01.16.13 at 10:17 pm

Business Opportunity:

http://vancouver.en.craigslist.ca/pml/bfs/3549235818.html

#9 TurnerNation on 01.16.13 at 10:17 pm

Smoking man, traders: my next medium term short (put) target is Westjet WJA.TO. Sure it may run another .5 to a buck but I’m scaling in. Target, 19. Little risk of a takeover situation with foreign ownership regs. Owners care to a point.
Small divvy.

#10 Proud Musty Basement Dweller (WestCoast) on 01.16.13 at 10:19 pm

I can’t wait for someone to eventually break the Real Estate Agent Cartel in Canada. Nova Scotia shouldn’t be the only place we can get access to sale and pricing information. The public should have all of the information the Cartel does, as the public does in the states. F should get on to that now that he is happy with the price correction taking place.

#11 Keeping the Faith on 01.16.13 at 10:25 pm

IDIOT Realtors!

“It is difficult to get a man to understand something when his salary depends upon his not understanding it.” — Upton Sinclair

#12 Proud Musty Basement Dweller (WestCoast) on 01.16.13 at 10:26 pm

If everything is so Rosy with Real Estate in Canada (according to the Real Estate Agent Cartel) why are they lobbying Ottawa for changes to the ridiculously lax mortgage regulations?

#13 Mic D'angelo on 01.16.13 at 10:26 pm

Garth, preferreds as you call them are preferred shares. They could be banks, utilities, railroads, insurance companies, pipelines, energy companies etc. They are shares which as an asset class are equities. Equities are another name for stocks. Stocks, equities, preferreds are all the same asset class using a different name.

Learn more. — Garth

#14 Spiltbongwater on 01.16.13 at 10:33 pm

After all, most of us don’t have CBC pensions.

Says the guy with the best gold plated pension anyone could ever ask for.

My pension is $26,000 and I donate it. — Garth

#15 Djb on 01.16.13 at 10:33 pm

How about renting a home in Point Grey tax assessed at $ 1.6 million and paying $1800 month. Out of the $21,600/year they collect $5500 goes to property tax. The $16,100 left over gets taxed at 30%.

Netting $12,400/yr. or a scant 0.77% return on their tied up equity.

Got to love real estate agents that give out invesment advice

#16 Smoking Man on 01.16.13 at 10:39 pm

Turner Nation, I’ll chk it out tomorrow on bbg, let you know what I can think.

#17 Mic D'angelo on 01.16.13 at 10:42 pm

Garth, your example of preferreds are like the manager of my credit union saying to me buying their special credit union shares paying 4.25% annual dividend for 5 years are not equity or stock in the credit union. The manager said they are special or preferred equity to the other shareholders. They are still stock in the credit union.It does not matter what you call them they are stock or shares in the credit union and are not deposits protected by DICO.

So stick with your government bonds. Good luck with that risk. — Garth

#18 JSS on 01.16.13 at 10:45 pm

@ # 6 JSS

Garth – I asked my wife.
my wife says “no way in hell you worthless rodent”

Thanks

#19 AK on 01.16.13 at 10:45 pm

BNN interviewing a Scotiabank Economist regarding the RE market.

Just an adjustment. Right… :-)

http://watch.bnn.ca/#clip845021

#20 Canadian Watchdog on 01.16.13 at 10:48 pm

In January of 2012 the real estate board reported 1,506 sales. This January the number’s 1,469. This isn’t a 2.4% increase, but a 2.5% decrease. Every month the realtors fudge their numbers without publishing corrections, which means they can pretty much say what they want. And do.

Actually they do publish the numbers, but nobody looks at them, except me. Link From top bottom is the original sales number to present with revisions. On average, 3% of sales will be removed in 6-8 months time, always.

What’s distorted here is that every month they compare current monthly sales and average prices to last year’s adjusted figures. This is equivalent to StatsCan reporting seasonally adjusted employment numbers compared to the previous year’s unadjusted numbers. This is absurd. Any economist or statistician knows how distorted this is.

Anyways..

With GTA’s mild weather, it’s quite likely there was a small sales increase from early buyers.

Environmental Canada – Toronto Average Temperature Jan 1-15: 2013 (0.5°C)*, 2012 (-1.9°C), 2011 (-5.4°C), 2010 (-7.0°C), 2009 (-8.0°C), 2008 (0.8°C)*.

Despite the numbers and freakish weather, December and January stats should be taken lightly as these two months are naturally volatile in low season. Keep in mind 1,506 minus 1,469 is a measly 37 sales. That’s peanuts.

As sales pick-up into spring, the distribution of dollar volume to sales widens and declines average prices. I haven’t changed my call for double digit declines from Q1 to Q2.

#21 45north on 01.16.13 at 10:52 pm

TREB said 1,469 properties changed hands in the last two weeks.

guava.ca shows GTA sales by the month. Sales have to hit 9000 by May 2013 or people will notice. TREB can run but it can’t hide.

#22 An Cat Dubh on 01.16.13 at 10:53 pm

Just when Global tv couldn’t get worse, they in Vancouver are going to have a ‘reality” show where a realtor shows a client several different homes. Their ratings are too low for zero and they are bringing this!?!? But what do you expect when they keep going back to the IKEA monkey and call it news.

#23 juno on 01.16.13 at 10:54 pm

If everything is so Rosy with Real Estate in Canada (according to the Real Estate Agent Cartel) why are they lobbying Ottawa for changes to the ridiculously lax mortgage regulations?
==================

Yes and if everything is so rosy, why are we still in emergency interest rates. Raise the rates cause everything is good.

1+1 = 1,000,000 ==> correct

Too bad the average canadian is economically illiterate.
The believe its their right to get more debt for next to nothing so they can substain their Bling Bling lifestyle!!

#24 MarcFromOttawa on 01.16.13 at 10:56 pm

Should I pay down my 2.35% mortgage or buy some silve?

#25 The Man From Nantucket on 01.16.13 at 11:07 pm

http://www.businessinsider.com/gary-shillings-2013-investment-themes-2013-1#treasury-bonds-are-still-attractive-and-shilling-calls-them-his-best-investment-to-date-1

Treasury bonds???? Really???

Don’t feed the bears.

#26 ChickenLittle on 01.16.13 at 11:10 pm

Your comment about the Star is true.. Today they had an article saying how real estate just keeps on “defying gravity”.
So if RE is a stable bet for your money, why do they have to write articles at least 3-4 times per week reminding folks of the fact???
Heaven forbid if people started producing wealth insted of consuming goods!

#27 Inglorious Investor on 01.16.13 at 11:13 pm

Great post, Garth. Expose the lies. Love the photo.

#28 AK on 01.16.13 at 11:13 pm

#6 JSS on 01.16.13 at 10:13 pm

“Garth – do you recommend borrowing from a HELOC @ 3%, to invest in a balanced portfolio which makes 7%?”

If your quastion is serious, then the answer is ‘Yes’.

#29 Inglorious Investor on 01.16.13 at 11:16 pm

#13 Mic D’angelo on 01.16.13 at 10:26 pm

I know occasionally we all do it to a degree, but people really shouldn’t speak so authoritatively about things they obviously know nothing about.

#30 some reader on 01.16.13 at 11:19 pm

priceless picture !!!

i,m gonna collect your articles pictures, with their titles

#31 Retired Boomer - WI on 01.16.13 at 11:20 pm

Just spend it now. US dollars and Loonies… about in the same bin. On SALE because they’re both full of hot air.

Hope the markets fall 20-30% just for giggles! RE too!!

#32 Garth Rocks! Yeah! on 01.16.13 at 11:22 pm

Dear Garth:

I bought 10 Houses with my 6/49 winnings.

Each one had a grow opp which the Biker Gangs paid cash for and also paid for renovations better than original(Granite counters, stainless steel kitschen…u catch my drift.)

After doing a minor reno..I found the previous owners had stashed gold bars and various works of art by some peopelz named Picasso…. Van Gogh…. Da Vinci and Michelangelo.

Question:

What should I do?
Anyone want this crap?
If not I will leave it on the curb.

Reading this blog I realize that if I break even in this current market I yam a geenyiuz

Thunx Garth !

#33 Polski on 01.16.13 at 11:22 pm

So we sold our 2.25M McMansion in cowtown last spring and decided to rent another McMansion a few blocks away.the owners just got their 2013 assessment @ 1.6M,and 10,500.00 in taxes to pay.I’m more than happy to contribute 4000.00$ monthly to their investment despite the fact that my entire family makes fun of us now.nevertheless,off to Mexico next week, the usual monthly exotic trip now that I reduced my living expenses by 9k/month.I just need to leave a note to the owner to make sure he takes care of a few repairs here and there as well as the usual maintenance. life has definitely dramatically Improved since we decided “to throw ou money out the window!” every month. I highly recommend the lifestyle, good luck to all and goodnight bloggers.

#34 Oakville on 01.16.13 at 11:24 pm

Anyone know how close to asking this listing sold for?
http://www.homefinder.ca/listings/378388-1093-melvin-avenue-oakville-ontario-h3090977
The above was on the market for well per 100 days.
Also. To the person who posted those power of sales. Lots of activity on them. Mostly agents putting in offers according to the list agents. Really interesting times.

#35 Smoking Man on 01.16.13 at 11:24 pm

Vlad looks like Lincoln toned down what he was going to do. A wise choice. Leaving it to the floor, and finestone. God she’s ugly

Ok risk on……

#36 Michael F on 01.16.13 at 11:26 pm

Just saw a gold vending machine in a Realtors waiting room.

Just about says it all.

#37 Dg on 01.16.13 at 11:26 pm

Is there not a way that we can lobby the government , and force the realtors to report the true market?

#38 Dr. WAYNE on 01.16.13 at 11:35 pm

Am I now unemployed ???

#39 Nodebt on 01.17.13 at 12:02 am

I’m 38, debt free, own my house out right, how much do I need to retire comfortably at age 55? How much fellow bloggers?

How much do you have? — Garth

#40 Inglorious Investor on 01.17.13 at 12:08 am

I know this is off topic, but it relates to tonight’s post as it speaks to the collusion that occurs between large corporations, government, and the media––just as we are seeing in the RE market…

A few days ago the FAA and Boeing held a news conference regarding the technical problems plaguing the Boeing 787 Dreamliner.

I was appalled at the cheerleading for Boeing by Michael Huerta, the FAA administrator, who said that there is nothing in the data the agency has seen to suggest the plane isn’t safe. But more than that Huerta kept repeating that he believes the plane to be safe––before they concluded their review!

Since when did the FAA become a PR arm of Boeing? Yes, I understand the reasons, but it’s wrong. The FAA should simply have said that they are going to conduct a review and take if from there.

Well, today we get news that the FAA is grounding the Dreamliner, or should we call it the ‘Dreadliner’––AFTER a number of airlines determined on their own that the plane is not safe.

We are supposed to trust agencies like the FAA. Do you trust them, now?

#41 Ronaldo on 01.17.13 at 12:17 am

A couple of graphs showing the median prices for 2012 real estate for West and North Vancouver……a good example of how markets differ from one area of the lower mainland to another.

http://www.johnjennings.com/Blog.php/west-vancouver-real-estate-statistics-graph-22?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+JohnJenningsWestVancouverRealEstateBlog+%28John+Jennings+West+Vancouver+Real+Estate+Blog%29

http://www.johnjennings.com/Blog.php/north-vancouver-real-estate-statistics-graph-23?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+JohnJenningsWestVancouverRealEstateBlog+%28John+Jennings+West+Vancouver+Real+Estate+Blog%29

#42 OlderbutWiser on 01.17.13 at 12:38 am

Nodebt – #39 – do you currently have a Defined Benefit Pension entitlement? If no, then you will need a hell of a lot of capital if you plan to retire at 55 (unless of course you enjoy eating cat food).

For myself, I own two homes outright (a farm that I go to on the weekends and a downtown condo that I live in from Mon to Fri). I plan to eventually sell the condo when I retire. I also have about $2.2m in liquid assets today fully invested in mostly blue chip dividend growth US equities. I am 52 now and plan to retire by 60. I have figured out that I will need at least $4 million in investments to retire comfortably if I don’t want to have to touch the capital. DGI gives you that luxury as dividends will hopefully grow to keep pace with inflation. Not needing to sell shares to fund your retirement removes the stress from market volitility.

You are young. I highly recommend that you consider dividend growth investing. Lots of good articles on seekingalpha.com. And do not think that it cannot be done, there are lots of people out there who have achieved financial independence using DGI. I wish I had started when I was young…would be retired by now. If you don’t think you have the time to educate yourself (and make no mistake, it takes alot of time to invest on your own behalf….at least the right way), then you should give Garth a call. Just my 2 cents.

#43 Renter's Revenge! on 01.17.13 at 12:38 am

@ #32 Garth Rocks! Yeah!

I fail to see how your comment adds to the discussion :P but it certainly made my day!

#44 furst on 01.17.13 at 1:00 am

#38 Dr. WAYNE on 01.16.13 at 11:35 pm
Am I now unemployed ???
________________________________________
No, just underemployed. Now gimme some fries with that, up sized no doubt!!

#45 Vatodeth on 01.17.13 at 1:05 am

Garth is actually omniscient, but still a bit of an ass!

Dude, you made me laugh so hard! You’re freaking hilarious!

#46 Derek Edward Trotter on 01.17.13 at 1:07 am

Eventually, He Who Dares, Wins…

#47 Mic D'angelo on 01.17.13 at 1:12 am

Garth, I am earning an average 6.50%+ a year in my government bonds which I will hold all of them to maturity. I have been buying government bonds since 1994.I have at least 12 years of liquid assets including bonds of 25% of my total assets maturing over the next 12 years and more than enough cash reserves. I have no principal risk or cash flow risk and no interest rate risk . I have a laddered short term to mid term to long term bond portfolio. I will never need to sell my bonds for any large expense. I am sitting pretty with a $100,000+ a year income. I have no credit card debt, mortgage, line of credit, car loans or any other debt. I am a bank’s worse nightmare because I don’t borrow money. I don’t need and want mutual funds, Etf’s, preferred shares, common stocks, foreign stocks, income trusts etc. I am not financially illiterate and know how all these investments work. All you so called experts were telling me to not buy long term bonds since 1994. I have government bonds with coupons of 9%+,8%+, 7%+ etc. I know how the money game is played. To Inglorious Investor # 29 instead of just criticizing people back up your comments with some real life facts and historical figures. I invested small amounts in all these investments and I have had experience with all these so called equity investments, real estate etc. They all underperformed and never earned me 6.50%+ net of fees. The next time you talk just don’t follow the media and so called experts and do your research. There is a reason the government gives tax credits and tax breaks for these investments. It is because you have much more long term risk. There is no free lunch buddy boy. For example CIBC common shares were $125.00/ share in 2007 today, they are $82.23 per share. They reached as low as $53.89 per share. Even today it is a loss of 34% of the original investment. In 2012 CIBC declared $3.64 in annual common dividends per share. If you use the current stock price of $82.23 it is a 4.43% annual dividend yield. It would take 7 years and 8 months to just get back to the 2007 original stock price. If it drops again or fluctuates up and down in a range, good luck making any profit. Also, if your in the highest tax bracket all the dividends are all taxable at 30% . This means it would take 11 years after tax to get to the 2007 $125.00 stock price of CIBC. Do your research, I was not born yesterday. If they are such good investments why don’t all the CIBC employees, managers, executives get paid in CIBC dividends and CIBC shares.

#48 T5>myT4 on 01.17.13 at 1:17 am

Outside pacific mall in Markham I actually saw one of those blackboard neon lettering signs advertising getting ones real estate license in 90 days.

Thought it quite comical.

#49 Mic D'angelo on 01.17.13 at 1:21 am

Garth, the U.S. 30 year Treasury bond is now below 3.00% at 2.998%. It was 3.131% last week. The Canada 30 year bond is 2.46%. Those interest rates are going to the moon. They are so high I can’t calculate them. You know this is a rigged game up and down but always less over the long term. In 1981, Canada savings bonds were 19.50%. Today, they are 0.50%. A one year GIC at Royal bank in 1991 was 11.50%. Toady, they are 1.35%. The highest GIC rates for 1 year are 2.00%. If interest rates were to rise by much it would of happened over the last 17 years.

#50 Fans of Dr Wayne ! on 01.17.13 at 1:22 am

Nunerous Minions in search of alms/Candian Tire shekes to lay at the bunions , athletes foot and carbuncle- infested feet of Dr Wayne

http://www.youtube.com/watch?v=ghrDIQ-K8mg

PS Search for which in IS Dr Wayne !!

#51 Joe on 01.17.13 at 1:24 am

Shes…..thinking you took Sundays off. Up up and away…

#52 Nostradamus Le Mad Vlad on 01.17.13 at 1:25 am

-
Good column. I trust the better half and myself, beyond us no one.
*
#35 Smoking Man — “Vlad looks like Lincoln toned down what he was going to do.” — Idle threats because he wants to assert himself, show people who’s boss. Empty rhetoric counts for nothing. Texas, Ohio and other states are running outta guns, selling like hotcakes but the m$m doesn’t report that, ‘cuz they’re paid for and controlled. Something like this? Cheers!
*
Novel Idea if it works; Illinois One in three people live in or near poverty; Wealthy Germany wants its gold / money back; Breaking up Banks that are too big to fail; Japan concern, esp. if war breaks out with China; US VAT Crushing middle class; Low cost post-secondary education; HMV and Blockbuster Two down and the year’s only just begun; Giving Up Supermarkets Interesting perspective; Top Class Service One doesn’t see this often, unfortunately.
*
NWO (US) attacking itself; The Growling Stones Note the lips; Aaron Swartz His father is probably too close to the truth for western m$m outlets to say it; Jigsaws Some are small, others are huge; Porsche makes TVs? Apparently so, and very large ones; Adrenaline Junkies Skiing off mountains? Not my bag; Smart Meters Throwing fuel on to the fire; Slitting Throats Obomba needed a reason which Aurora and Sandy Hook supplied, 6:58 clip Adam Lanza disappeared for three years, and Sandy Hook “We need more duct tape to keep our heads from exploding.”; Ten min. clip When is Agenda 21 coming to your neck of the woods? Noddin’ Yahoo Taken to task by watchdog; Pink Slime Wonder if this was part of XL’s problem? The Ultimate Tomato Cage for under $2; 9:39 clip Deep sea diving in a wheelchair; GW? Ask the Korean families; France The west doesn’t really like Muslims, but there is a price for everything; 350.000 Bulgarians and Romanians headed for UK, and David Cameron So far, all the west’s plans have backfired; Facebook Reaching saturation point? War was a major part of Europe’s early civilizations.

#53 martin9999 on 01.17.13 at 1:30 am

care for a Maserati Garth?

#54 martin9999 on 01.17.13 at 1:32 am

#39Nodebt on 01.17.13 at 12:02 am
I’m 38, debt free, own my house out right, how much do I need to retire comfortably at age 55? How much fellow bloggers?
———
You asking the wrong question dude. You should ask yourself first: How long do you expect to live?! so you dont outlive your $$$$

cheers
———–
but still, the answer to ur question is: you need MORE!! as long as Ben Bernanke is alive.

#55 Irene on 01.17.13 at 1:44 am

#34 Oakville:

Anyone know how close to asking this listing sold for?
http://www.homefinder.ca/listings/378388-1093-melvin-avenue-oakville-ontario-h3090977
The above was on the market for well per 100 days.

——————

Original price: 1,998,000
Reduced to: 1,879,000
Sold for: 1,800,000
DOM: 194

#56 Nodebt on 01.17.13 at 1:44 am

#42 Olderbutwiser
Thanks for the reply much appreciated!
I will have no pensions except for the government pensions when I’m in my 60’s and not really counting on them for retirement but I’ll take any money I can get from them! Yes I need a guy like Garth to help me out i don’t have the patience or the time to try and invest on my own. Garth with my house, commercial building, rrsp, tfsa, savings account and business account I have around 1.8 mil and nodebt at all. That doesnt include my 300k of assets my business owns. Looking forward from you fellow bloggers for more input on how much a person needs to retire! Thanks

#57 Tony on 01.17.13 at 1:45 am

The smartest thing you can ever do is pay down the mortgage or loan if either aren’t tax deductible. That is if there’s significant equity in the house or real estate holdings. We all know how the stories play out about people taking a loan against their house to invest. Most end up losing their shirt because they invest at the wrong time. Now is not the time to invest in stocks unless they’re bear funds. That’s why we hear these stories time and time again and will continue to hear them.

Most fail because they DIY, and haven’t got a clue. — Garth

#58 JuliaS on 01.17.13 at 1:49 am

HELOC ads have been playing non stop on the radio in BC for the last few years. I love the latest slogan that goes along the lines of: “Ever wonder why some people never worry about money and have cash for the credit card bills? … They borrow against their homes!”

In other words: “Want to get rid of debt? Borrow some moe!”

After 2008 HELOC agencies were advertising loans covering up to 40% of home’s value. I guess at that point they were completely ruling out 60% depreciation, which doesn’t sound like a stretch anymore.

If we pass 60, we’re gonna see some serious sh*t!

#59 Tony on 01.17.13 at 1:54 am

Re: #39 Nodebt on 01.17.13 at 12:02 am

Depends on your standard of living and likely zero percent inflation for the next 17 years (plus or minus 0.2 percent). Prorate the two.

#60 Humpty Dumpty on 01.17.13 at 3:01 am

Vlad
Jess
CW

KB is one of the few men worthy of trust in the industry..

https://www.youtube.com/watch?v=JUc8-GUC1hY&list=UUvPpdXUKvHB7I1rjPYzPtPw&index=1

If you haven’t listened to him already, its worth your time…

Trust ME!

#61 Freedom First on 01.17.13 at 3:07 am

Interesting watching the Canadian politicians, RE industry, bankers, and media using the same script the Americans used, about a “soft landing” in the RE market, or, a RE “adjustment”….etc. before the American RE market sent so many Americans into bankruptcy. Garth, the title today, “Trust us”, how apt. For my own personal consumer protection in everything in life, I just look in the mirror. Too put it simply, Garth’s advice on a daily basis translates to”Protect Yourself”…….excellent advice. Misinformation abounds.

#62 Trust us — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate « The Affluent Boomer™ on 01.17.13 at 3:10 am

[…] via Trust us — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate. […]

#63 blobby on 01.17.13 at 3:16 am

This article made me brain want to get out, pack its bags and leave the building. At first i thought he was going to suggest making your rrsp your mortgage.. But no.. He’s SERIOUSLY suggesting that paying down your mortgage at record low rates is a good thing..

http://www.cbc.ca/news/business/taxseason/story/2012/12/18/f-rrsp-2013-don-pittis.html

#64 Buy? Curious? on 01.17.13 at 3:18 am

Garth, if TREB publishes incorrect numbers that give extra leverage to real estate agents to dupe people, who cares? That can’t be held accountable. Realtors (what a goddamn stupid name to trademark) can just say they were merely repeating what the TREB put out as information when angry people come back to them a few years later and $100k less in equity. They’re psychopaths for having the ability to lie to us.

http://www.youtube.com/watch?v=ZfL4xKQeSfo

#65 Aussie Roy on 01.17.13 at 3:18 am

Aussie Update

Beware the comedown if house prices surge

Despite the steep prices, housing affordability is close to its highest level in a decade. Confused? Don’t be fooled, says Michael Janda, because interest rates can’t stay this low forever. And if prices surge, the likely outcome is an even bigger housing bubble.

The new year is less than two weeks old, and analysts are already arguing about the trajectory of Australia’s real estate market.

http://www.abc.net.au/news/2013-01-11/janda-beware-the-comedown-if-house-prices-surge/4461370

The slump we have to have

I’m going to go out on a limb here and say that Melbourne’s property slump is, if not exactly a ‘‘good’’ thing, definitely overdue.

I’ve been covering the real estate market for Fairfax for nearly six years – a tenure taking in the 2007 boom, the global financial crisis, the 2009-10 boom, and . . . whatever it’s becoming now.

That period, even with its low points, has been marked by an unprecedented rise in prices, often climbing to gobsmacking levels that seem to defy even basic notions of commonsense.

Take the 2009-10 boom. While the rest of the Western industrialised world was grappling with the the global financial crisis, buyers flooded into Melbourne’s property market and prices soared nearly 37 per cent.

http://theage.domain.com.au/home-investor-centre/blogs/domain-investor-centre-blog/the-slump-we-have-to-have-20130103-2c6gl.html

Sea changes in paradise: Byron hits a 10-year low

Figures from Australian Property Monitors show Byron Bay’s median house price has dropped 10.5 per cent in 12 months. Apartments have performed even worse, falling 31.3 per cent.

The common denominator is uncertainty.

http://smh.domain.com.au/real-estate-news/sea-changes-in-paradise-byron-hits-a-10year-low-20130111-2clb4.html

#66 stop lying on 01.17.13 at 3:20 am

Anyone know how close to asking this listing sold for?
http://www.homefinder.ca/listings/378388-1093-melvin-avenue-oakville-ontario-h3090977
The above was on the market for well per 100 days.
Also. To the person who posted those power of sales. Lots of activity on them. Mostly agents putting in offers according to the list agents. Really interesting times.

—————–

sold for 1,800,000, 96% list, 194 DOM

the 96% list is a fail as it was originally listed for 2m

#67 Canadian Watchdog on 01.17.13 at 3:56 am

Now we’re getting 30% drops. Link

Sep-12 E2466936 50 HILLSIDE DR $1,249,000
Oct-12 E2485658 50 HILLSIDE DR $999,000 -20.0%
Nov-12 E2510354 50 HILLSIDE DR $925,000 -25.9%
Jan-13 E2510354 51 HILLSIDE DR $855,000 -31.5%

If only buyers could see what’s really going on…

#68 NoName on 01.17.13 at 3:56 am

WT@%=*
Buy leaky condo and get free money from chmc to repair it.

http://promortgageteam.ca/leaky-condos-and-getting-financial-assistance

#69 JustTryingToProtectEquity on 01.17.13 at 4:00 am

My wife and I sold our house, in the High Park area, on June 26, 2012. We listed it at $949K, it sold for $975K. There was another, very comparable home in our neighbourhood, listed at the same price, $949K. When ours sold, and theirs did not, they relisted at $899K. They eventually sold. Their realtor put a sticker on their sign that read “SOLD ABOVE ASKING”. It’s all a scam. The numbers are fudged. And more and more poor people are being dragged into this market, buying into the lie that they will be “priced out forever”. Please, please, I beg of you, stop listening to the likes of Wazzup on the Globe & Mail website. Stop listening to anybody who would have you purchase under these conditions. You, YOU, are being lied to… And it could set you and your spouse, your kids, on the wrong trajectory. It could ruin everything you hold dear in your marriage. I’ve been there, I know what it’s like to lose out on real estate. I’m a multi-millionaire now… Because I learned from my mistakes. It’s about timing. Time is UP! This market is COOKED!

#70 happy renter on 01.17.13 at 4:22 am

Many Canadians prefer cashable GIC that pay 1% -2% a year,better safe than sorry.A lot of Canadians got burned in stocks and mutual funds in the last crash so investing is out of the question.U.S. rental properties is the way to go.Our bankers and goverment want to punish the savers and pensioners for a very long time.

#71 The real Kip on 01.17.13 at 6:59 am

December is always a fickle month for real estate. I heard that from Al Sinclair on Hot Property with Ann Rohmer, which is on tonight by the way. You know where I’ll be! Ann will get to the bottom of this number fudging fiasco!

#72 SaraBeth on 01.17.13 at 8:00 am

“Trust me”? A lot of babies have been born because of the phrase, “Trust me…”

#73 The Man From Nantucket on 01.17.13 at 8:33 am

Happy Renter #70 – what is your definition of safety?

Buying interest-paying investments with 2% yield guarantees you’ll fail at this game.

Buying something else means you have a chance at success.

#74 Kevin on 01.17.13 at 8:50 am

“Do you really want to shovel more of your net worth into an asset which is on the decline?”

Argh! Garth, it drives me nuts when you make such horribly misguided statements like this.

Paying down your mortgage vs. investing the cash have the exact same effect on your net worth, regardless of whether the value of the home is going up or down.

To put it another way, whether your home is going up in value or down in value has nothing to do with where it makes sense to put additional money.

One more try: You owe the same money, whether you pay it back now or later. You’ve already borrowed it. The deal is done. You cannot manipulate your net worth by evaluating the value of the home and determining where to apply additional cash.

Example: You have a $100,000 mortgage on a $200,000 home, and $100,000 in the bank. You have $100,000 in debt, and $300,000 in assets. Your net worth is $200,000.

Your regular mortgage payment is $2,000. This month, you have an extra $5,000. Do you save it or do you pay down your mortgage?

If you save it, then your savings grow to $105,000, your home is still worth $200,000, and you still owe $98,000 on the mortgage. Your net worth is (200+105-98=) $207,000. A gain of $7,000.

But what if you applied that money to your mortgage instead? Then your savings are still $100,000, your home is still worth $200,000, and you owe $93,000 on the mortgage. Your net worth is (200+100-93=) $207,000.

Your net worth is exactly the same in both scenarios. Now, if your house went down in value, then it would have gone down the same amount regardless of where you put the extra money. Your net worth would be the same, no matter whether you put the money into savings or against the home.

So PLEASE stop saying paying down a mortgage is shoveling “net worth” into an asset that’s losing value. The deal is done – you own the house. You cannot control whether or not it goes down in value. If it does, then you’re in the exact same situation, whether you pay down the mortgage or save the cash. The house is going down either way, that part is out of your hands.

You have to pay the loan off someday anyway, so the value of the house is irrelevant with respect to decisions regarding what to do with extra cash flow, and the effect on your net worth is the same.

Your argument is flawed, since most people move before they pay a home off. Losses in equity, which are clearly coming, do affect net worth. People with low-rate mortgages are better to rent their housing money and invest into a growing pool of liquid assets – wealth that is portable, as opposed to wealth left behind. — Garth

#75 Oakville on 01.17.13 at 8:51 am

#66. They have to keep driving the prices higher. Hence the fudging of the %. 194 days on market is a long time, but proves the realtor theory that if you wait long enough… Someone will pay your price. Speculators continue to win, except even they cannot fford to live in their desired neighborhood after driving the prices up. Interesting irony isn’t it. Maybe the trend in the future will be learning to live well but under the radar. Future book title… The multimillionaire next door.

#76 EIT on 01.17.13 at 8:53 am

“Rarely have we seen institutions – an entire industry and a lazy media – team to manipulate public opinion as is happening now.”

Rarely? You are describing the norm Garth.

#77 Smoking Man on 01.17.13 at 8:57 am

Turner Nation, would wait for a double top on wja but even if it goes your way not a lot of loot on that trade….

#78 Mississauga on 01.17.13 at 9:07 am

Re: #34 Oakville

Mississisauga Lorne Park power of sales – – I’ll let you know on Sun. after my usual 2-4pm open house tour.

Realtors are usually the first to tell you when you walk in the door there is an offer pending.

BTW, another power of sale came up. Similar to others, mostly finished but needs work:

http://www.realtor.ca/propertyDetails.aspx?propertyId=12734741&PidKey=-1407139714

What’s laughable is realtor says “lot value” over $1M.

#79 Nukester99 on 01.17.13 at 9:16 am

Preferred ETF’s for the Canadian Investor:

HPR, CPD, PPS, XPF, CNPF

US Preferred ETF’s:

PFF, PGF, PGX, PSK, IPFF, PFXF, SPFF

There may be others but this is a start. I am NOT in the financial industry and make no recommendations for any of these. Do you own homework and make you own decisions. http://www.morningstar.ca has a good search tool for ETF’s.

Good Luck

#80 AK on 01.17.13 at 9:39 am

Based on a number of recent posts on the blog, there is a bearish sentiment when it comes to investing in Equities.

It may explain why there is 7 Trillion dollars sitting in US bank accounts collecting $0.00.

#81 AK on 01.17.13 at 9:45 am

#59 Tony on 01.17.13 at 1:54 am

“Depends on your standard of living and likely zero percent inflation for the next 17 years (plus or minus 0.2 percent). Prorate the two.”

Zero percent inflation? Where do you live?

#82 AK on 01.17.13 at 9:49 am

#42 OlderbutWiser on 01.17.13 at 12:38 am

“I also have about $2.2m in liquid assets today fully invested in mostly blue chip dividend growth US equities. I am 52 now and plan to retire by 60. I have figured out that I will need at least $4 million in investments to retire comfortably if I don’t want to have to touch the capital.”

Hell, I’ve been thinking of retiring with my poultry 1.3 Mil. I guess it depends on each individuals expectations. :-)

#83 AK on 01.17.13 at 9:51 am

#38 Dr. WAYNE on 01.16.13 at 11:35 pm

“Am I now unemployed ???”

They are all afraid now. :-)

#84 Bobby Brown on 01.17.13 at 9:53 am

As others have said, that CBC article was a joke. The most entertaining part of it was all the losers piling on their to comments to support the idea! These same idiots will be the ones 20 yrs from now blaming the system for their financial problems, making blaket statements about those more successful than they, like “the rich get richer”. I, as many of you, intend to be the latter.

#85 hangfire on 01.17.13 at 10:08 am

It looks like the banking industry is raising rates….

http://business.financialpost.com/2013/01/16/scotiabank-cuts-off-mortgage-brokers-at-ing-direct/?__lsa=e70f-079d

by reducing the number of institutional money going towards mortgage brokers…..the 3 big banks plus ING are now out of the mortgage broker business…..a rate raise by any other name………there will still be second tier money available with zero down…but the time and terms will be egregious…to all but the desperate…..me thinks the real estate industry has been protesting to no avail………put a fork in it people……this is a concerted effort by the PTB to drain excess liquidity out of the market.

#86 fancy_pants on 01.17.13 at 10:14 am

Careful when poking fun at the minister of finance… you could bag him trying to take him out at the knees.

Is the other guy with the nice haircut still around? When does he head off across the pond?

#87 hangfire on 01.17.13 at 10:18 am

BTW….you mention a ‘lazy media’……didn’t the New York Times recently….like last week…. brand the CBC ‘LIARS’…….and use some very choice language to decribe the truth……..

if only the Truth Hammer were alive today….he would be content and justified that an organization outside the blanket of heavy propaganda has had the jam to come out and call a spade a spade….the media in Canada is a duplicitous self serving propaganda wing of the Liberal left….supported by aggressive union advertising dollars…said to be in the billions per year….all in the effort to dumb down theCanadian population in order to plow through their agendsa onto an unsuspecting and ignorant public…….LIARS……..it should have been you Garth….but it took an American organization to tell the truth about the role of the Canadian media.

#88 Ralph Cramdown on 01.17.13 at 10:28 am

#56 Nodebt

Buy yourself a copy of “The 7 Most Important Equations for Your Retirement.” You’ll be able to figure your numbers out for yourself, and it will teach you about some lazy assumptions that many advisors in the investment and retirement planning industries use.

#89 DM in C on 01.17.13 at 10:29 am

my poultry 1.3 Mil.

You made your money in chickens? My brother works at Maple Leaf but I don’t think he has quite that much.

#90 fancy_pants on 01.17.13 at 10:31 am

#74 Kevin on 01.17.13 at 8:50 am

Well I suppose the argument is specific to a situation where you are earning more by investing extra $ than the interest cost of not applying that amount to your mortgage principal.

Ex. mortage 3%. have extra $ burning hole in pocket. A. could pay down principal, saving (or indirectly earning you) 3% per year OR B. you place in a TFSA and find an investment yielding say 7% a year.
option B will increase your net worth more as it’s growth exceeds the gains realized by paying of mortgage principal.

I would like to say your mileage may vary but the laws of mathematics apply the same.

However, once one adds in other variables such as investment risk (the 7% may only become 2% or a loss etc.), stress factor, personality etc. then one could argue they prefer to just pay the mortgage.

I tried route B and my 7% quickly became -50% (and worse) so I said screw it and paid off the mortgage instead. I’ll stick to GIC’s; at least I am only losing a small % per year via inflation rather than piss it away in the stock market.

#91 Google Boogle on 01.17.13 at 11:16 am

#34Oakville on 01.16.13 at 11:24 pm
This looks like a brand new house. Google maps street view shows in construction stages…kindda cool…:)
http://maps.google.ca/maps?q=1093+Melvin+Avenue,+Oakville,+ON&hl=en&ll=43.46995,-79.669333&spn=0.000016,0.013937&sll=43.466637,-79.669254&layer=c&cbp=13,285.55,,0,2.41&cbll=43.466498,-79.669414&hnear=1093+Melvin+Ave,+Oakville,+Ontario+L6J+2V9&t=m&z=17&panoid=QXQ4leT4__G_midtA0EMmg

#92 wes coast on 01.17.13 at 11:23 am

Garth if the REB is outright fudging numbers, are they not breaking any existing laws? Its so obvious what they are doing yet frustrating that they get away with it. As you’ve said before, in other markets (financial) these practices would amout to jail time.

#93 Nancy on 01.17.13 at 11:23 am

@AK # 82

“I’ve been thinking of retiring with my poultry”

That’s it. Canadians’ retirement planning has officially gone to the birds.

#94 Confused in the GTA on 01.17.13 at 11:25 am

Hi Garth,
Can you shed some light on this?
A former neighbor of mine ( not an Einstein, but not a totally stupid fellow either) joined that famous real estate group whose name rimes with rain…;-) a couple of years ago. While he was explaining the workings of this “investment strategy” and I politely listen to his rantings about how this was the break he had been waiting for all his life, I could not help thinking that it sounded like the greatest Ponzi scheme of all times and hoping he would soon open his eyes and save himself, while his investment was still small and his loss tolerable. A few month later we met and he enthusiastically proceeded to inform that he has adquired another property. “Well” I thought “Perhaps I was to quick to judge and there’s really some money to be made in this” After all houses were going up still.
The other day we met again. I saw him aproachin in the mall and was getting ready to offer my condolences and support, expecting he would need a shoulder to cry on over his RE debacle. Guess what? He told me his investments are growing exponentially and he’s now the proud owner of 8 properties and planning on adquiring about a dozen more in the next few years, using all his available cash, RRSP, LOC, inheritance money, savings etc.
I now this cannot be a good idea, or, as you put it “This won’t end well” but I am flabbergasted as how come this hasn’t crashed yet and how people of average inteligence can believe in fairy tales at this point.
I would appreciate your input on this.
Thanks, Garth, for educating the likes of me and reassuring us our little voice is right.

#95 coraline on 01.17.13 at 11:57 am

Victoria #79: TREB reports all sales every month even if they have not been finalized. For the first half of January 2012, 1,506 sales were originally reported. But some of these sales eventually fall through. So, now TREB knows that only 1,435 sales were finalized for that first half of January 2012. But TREB compares its new January 2013 data (which also has sales that will fall through) with its revised 2012 numbers. Voila, there’s a sales increase!

TREB has several options. The most obvious is that it could report sales only once they are finalized.

#96 Daisy Mae on 01.17.13 at 11:57 am

#89DM in C: “….my poultry 1.3 Mil.”

“You made your money in chickens? My brother works at Maple Leaf but I don’t think he has quite that much.

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

You guys are a riot! LOL
The correct spelling is ‘paltry’.

#97 Holy Crap Where the Tylenol on 01.17.13 at 12:03 pm

And that price increase? Ditto. Let’s compare detached houses in 416 which averaged $743,993 for all of last January. This year that same house costs $720,759, which is $23,000 less. So how is a 3.1% decrease an increase?
Garth the Real Estate industry has taken account courses from the The Accounting Firm of Dewy Cheatum & Howe. All you have to do is ask you accounting team to provide the real data and they will present the numbers and ask what would you like the numbers to say!

#98 Chris L. on 01.17.13 at 12:04 pm

Garth, my ex-rental is up for sale again. Up from my sale price of $290k to $349k. You owe me $60k!

#99 Snoop Dawg on 01.17.13 at 12:36 pm

All the sizzle turned to fizzle; foshizzle.

#100 AK on 01.17.13 at 12:44 pm

.#96 Daisy Mae on 01.17.13 at 11:57 am

“#89DM in C: “….my poultry 1.3 Mil.”

“You made your money in chickens? My brother works at Maple Leaf but I don’t think he has quite that much.

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

You guys are a riot! LOL
The correct spelling is ‘paltry’.”

LOL. I should check my spelling before I hit submit. :-).

#101 amazed on 01.17.13 at 12:52 pm

A good exercise to do. Pretend like you need to liquidate today. Sell the house (if you have one work with a realistic dollar amount not your ideal amount)… what proceeds would be left after realtor fees etc… pay off all the debts (loans, credit cards, car payments, school etc.) Actually figure out what liquid amount of money you could have today if you cashed out and settled everything. Does that amount feel comfortable for your age? What dollar amount should someone have at age 30,40,50,60,70,80 etc. in order to live. Obviously everyone has a different lifestyle, but does anyone really think ahead anymore? Personally most people I know who appear to be living the high life in the eyes of others don’t have much to their name. I think this is the whole point of this blog isn’t it? Isn’t this what Garth is trying to explain?

#102 Arthur on 01.17.13 at 1:01 pm

Driving into work on CBC radio this morning they were saying to expect housing to go down in value this year. They said buyers and sellers are at an impasse and that typically it takes sellers 6 months to adjust their expectations and drop prices. They also said in places like Vancouver that have higher foreign investment to expect bigger booms and bigger busts. It seems like finally many news outlets have started to realize what is happening.

#103 Inglorious Investor on 01.17.13 at 1:12 pm

#47 Mic D’angelo on 01.17.13 at 1:12 am

OK, maybe my comment was a tad harsh because in your previous comment you displayed an arrogant disdain for equities coupled with an ostensible lack of understanding. Yes, both common shares and preffereds are equity. But they reside at different levels in the capital structure and they function differently. You may or may not understand the differences, but they are not trivial.

Before I go on, let me say that I am not an equity bug. I am asset-class agnostic. Meaning I do not prefer stocks, or bonds, or precious metals, or real estate, or cash or commodities. I only want to invest in what will get the best return.

Regarding your 6.5%+ per year return. You claim you’ve never gotten that with equities. Well I can tell you quite assuredly that I have gotten those returns––with mutual funds no less. I was heavily invested in mutual funds (bonds and equities) between 1999 and 2008 (before the crash). Keep in mind that between those years we experienced the bear of 2000-2003 and the swoon of 2007. During those years my mutual fund portfolio realized an average annual compound return of 6.25% net of fees. This is not a guess or an assumption; I actually carefully did the calculations.

Let’s look at bonds vs equities since 1994 (the year you started government bonds). You say you are earning an average yield of 6.5% on your bonds. So, if, for example you earn a 6.5% coupon on a $1000 bond, which matures in say, 30 years. That means you are earning $65/year in interest for 30 years.

First, you have to take into account inflation. Let’s assume the purchasing power of money is being destroyed at a very conservative rate of 2% per annum (the actual average over the last 30 years is more like 2.9%). This means that in real terms, by the thirtieth year, your $65 coupon would really only be worth roughly $35. Inflation also erodes the value of the principle, so at the end of the term, the government will be returning a principle amount with a real value of about $550. Then you have to take into account income tax. Interest income is taxed at your marginal rate, so you are paying the highest amount of tax possible. If your bonds are in RRSP’s these taxes are just deferred to a later date.

Let’s look at equities using the S&P, and let’s assume you invested in an index ETF that tracked the S&P in US dollars, such as the Vanguard VOO––I don’t think the VOO actually existed in 1994, but this is just for illustrative purposes. I use the S&P because it’s easier to get long-term data, and US dollars because a Canadian-dollar hedge would impact returns. Since 1994 the S&P has returned about 217% (mid 400s in ‘94 to mid 1400s today) for an average annualized return of about 6.3%. The average dividend yield over that time frame is 1.87%. So, between capital appreciation and dividends the average annual return would have been 8.17%. If you did a DRIP the total returns would be even higher.

Of course you then have to knock off inflation and taxes. So inflation will erode the nominal returns just like bonds, but taxes on capital gains and dividends are lower. For example, on capital gains you pay your marginal tax rate on half of the gains. And with the dividend tax credit you also pay less tax on dividends than on interest income. You also have to take out the ETF MER. The VOO has an MER of 0.05% (that’s not a typo). If you want to account for tracking error, knock off another 20 basis points just for fun.

So what’s better, stocks or bonds? The answer is, it depends. The best friend of any investor is luck in timing the market. And when I say, luck, I mean it, because I have never found anyone who can accurately and consistently time the market, and believe me I’ve looked. You can always manipulate RORs using timing bias. I used 1994 to the present based on your own investment time frame.

I’m glad you’ve had the good fortune of investing in bonds when interest rates were high. Good for you. If you had bought a bunch of govy bonds in the very early ‘80s you would have done much better. But maybe you are not old enough to have done so. The luck of timing again.

And the reason many of the pros are buying bonds today is not for the coupon. It’s for price appreciation caused by falling interest rates (at least until recently). You can make good returns like this, but if you hold a bond to maturity you only get the coupon, with the built-in, completely assured erosion of inflation. The risk is not will your money get devalued, but by how much?

So why hate equities? Why not just use them to your advantage, the way you’ve used bonds?

Cheers.

#104 JB on 01.17.13 at 1:37 pm

Without being so idealistic about some of our realtors, I have learned that you can get a deal of trustworthy information on their pages. I know they are being overly optimistic, but keep in mind its their job that is at stake.

I haven´t checked the January stats, but for example November Market Report on this page seems correct to me. At least in comparison with the official stats (which can be manipulated by MLS).

#105 walltiger on 01.17.13 at 1:42 pm

“Garth – do you recommend borrowing from a HELOC @ 3%, to invest in a balanced portfolio which makes 7%?

Ask your wife. — Garth”

Oh Dear Garth, how do I go through my day without you.(reading this pathetic blog, that is)

#106 Steve on 01.17.13 at 1:44 pm

#98 Chris L. on 01.17.13 at 12:04 pm
Garth, my ex-rental is up for sale again. Up from my sale price of $290k to $349k. You owe me $60k!

Sadly, too many greaterfools will agree with your line of (not) thinking. I really hope that was 100% in jest

#107 walltiger on 01.17.13 at 1:44 pm

#8 east van.

how did you find it, LMAO.

#108 Sixth sense on 01.17.13 at 1:45 pm

How does a million dollar home costs $8000/month to maintain? At 3% interest rate, there’s a 30k/year interest, plus tax and maintenance, could add to $45k/year which is about $3700/month which is not much more than you can rent a million dollar home for. I’d expect this kind of data manipulation from Realtors only!

I said clearly that maintaining $1,000,000 in equity means not earning income or appreciation in an equal amount of liquid assets, plus the occupancy costs of ownership. A common mistake homeowners make is acribing no value to equity. — Garth

#109 Holy Crap Where the Tylenol on 01.17.13 at 2:03 pm

#100 AK on 01.17.13 at 12:44 pm

.#96 Daisy Mae on 01.17.13 at 11:57 am

“#89DM in C: “….my poultry 1.3 Mil.”

“You made your money in chickens? My brother works at Maple Leaf but I don’t think he has quite that much.

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

You guys are a riot! LOL
The correct spelling is ‘paltry’.”

LOL. I should check my spelling before I hit submit. :-)

Please peruse Smoking Mans maltreatment of the English idiom. I have frequently speculated that he is an ESL student. Sadly however it is somewhat perceptible he is a local boy. It is the one of the central reasons I continue to view this Blog. The daily laughter is quite insane as he carves, cuts and ploughs his way daily through the English language. Crucifying the mother tongue with grammatical and spelling mistakes one has to deduce what he is trying to get across in his rant. Truly hysterical!

#110 Buy? Curious? on 01.17.13 at 2:33 pm

If the CBC says there’s going to housing downturn, it means that now, right now, the exact moment that moron on radio said it, is the time to buy a house! CBC employees have no clue what’s going on! Well, except for Carolyn Dunn.

#111 Andrew on 01.17.13 at 2:39 pm

Patiently awaiting DABob’s opening remarks for the day…

#112 };-) aka Devil's Advocate on 01.17.13 at 2:40 pm

A common mistake homeowners make is acribing no value to equity. — Garth

I concur. Just as so too do many neophyte landlords not consider, in calculating the viability of their venture, the down payment they make on their mortgaged rental property.

#113 OlderbutWiser on 01.17.13 at 2:49 pm

Fancy_pants – #90, you said…I tried route B and my 7% quickly became -50% (and worse) so I said screw it and paid off the mortgage instead. I’ll stick to GIC’s; at least I am only losing a small % per year via inflation rather than piss it away in the stock market.
****************************************
I feel for you FP but this is typical thinking of greater fools. If you stick with GIC’s you will inevitably run out of money in retirement (unless of course you have a nice DBP plan). So… when you decided on your stock investments (where you lost 50%), was your first action to obtain, read and understand the company’s financial statements? Or…did you go on a “wing and a prayer” based on some “tip”? I fear that you, like others, chose the latter…a most assured road to ruin.

I am not trying to disrespect you but you and others need to understand the long term impact of your choices. You have been once bitten and are now twice shy. Time for some education…you need a financial planner like Garth (and no I don’t get any kickbacks lol!).

To be honest, you sound like my dear brother who told me about a “great” investment in some mining stock. I ask him if he had pulled the F/S…of course not…so I pulled them myself…company was basically insolvent so I did not invest. Dear brother was sure his “tip” would pan out..he invested and lost his money. I just shake my head……

#114 Edward on 01.17.13 at 2:53 pm

Another Toronto Star article by Susan Pigg touting how well real estate is doing? Seriously?! She writes the exact same thing every time. (And must be on the payroll of the real estate cartels.) The Star could honestly just take any one of her old stories, change the month references, and republish.

#115 };-) aka Devil's Advocate on 01.17.13 at 2:54 pm

Let me revise that so that it is a little better understood…

I concur. Just as so too do many neophyte landlords not consider, in calculating the viability of their venture, the opportunity cost associated with tying up that money they invest as their down payment on their mortgaged rental property.

#116 Holy Crap Where the Tylenol on 01.17.13 at 3:04 pm

#109 Holy Crap Where the Tylenol on 01.17.13 at 2:03 pm
Gee wiz just shot myself in the foot. Ouch!

#117 MikeB on 01.17.13 at 3:30 pm

Like anything in life… you need balance. Don’t put all your eggs in one basket as they say. Same can be said with real estate. Why put yourself on a limb but certainly it is better to own , at least from my experience, than rent. Way better. Do you put yourself in huge debt..of course not. So clearly I agree with Garth in most instances but alas am no disciple. I think if anyone is interested in real stats for Toronto they could easily go to guava.ca and see that, for what it’s worth, the charts show high prices and low inventory and low to medium days on the market. Just look at the charts. I can tell you
that we were looking for a house during the 2008 financial crisis and I can tell you that from first hand experience there were few to no bargains out there. Any “cheap” houses were in need of everything and those that were in good condition did not last long at all. Do I think this time around we will see huge price drops. NOPE.. Problem with predicting anything is that you base the prediction on the current set of circumstances or criteria, ie interest rates and mortgage rules etc, and if those criteria change then so do the so-called predictions. As such I am loath to predict anything about real estate except to say it is cyclical and heavily dependent upon interest rates or mortgage rules. I am gleefully happy we bought when we did but would not even consider buying a second home because it is a good investment. There are very few fixer uppers that people like myself could fix up and make a penny of profit on. Certainly not in Toronto… maybe in smaller communities. Suffice it to say that those people will wads of cash will still have cash regardless of any real estate meltdown or correction. They often have secure high paying jobs and enjoy life regardless of whether their property goes up or down in price. Those people leveraged to the teeth, assuming they exist, will muddle along paying off their mortgage slowly but surely. I don’t see much happening in GTA… maybe Vancouver but even there I would say any pullback would be moderate.

#118 Larf on 01.17.13 at 3:31 pm

Ahhh… Every time I start to let my ‘woman in her early thirties with a family’ house horniness insert bad ideas into my head like “Maybe that decrepit half duplex in a terrible neighbourhood isn’t too badly priced at 900,000″, I come here for a nice refreshing smack in the face.

Thanks, Garth!

#119 Dupcheck on 01.17.13 at 3:37 pm

Real estate numbers:

1+1=3, YES…….

#120 Andrew on 01.17.13 at 3:59 pm

DABob,

Keep revising…

#121 elchavo on 01.17.13 at 4:05 pm

Yeah, what correction Garth?
In toronto, women shape the “new” housing market.

Bet you didn’t know that Garth ;-)

http://www.theglobeandmail.com/life/home-and-garden/real-estate/how-single-women-and-what-they-want-are-shaping-the-new-housing-market/article7442398/

oohh man, that article is full of one liners. Hilarious.
Enjoy dawgs.

Adios!

#122 Chris L. on 01.17.13 at 4:07 pm

#106 Steve on 01.17.13 at 1:44 pm

#98 Chris L. on 01.17.13 at 12:04 pm
Garth, my ex-rental is up for sale again. Up from my sale price of $290k to $349k. You owe me $60k!

Sadly, too many greaterfools will agree with your line of (not) thinking. I really hope that was 100% in jest

Jest, yes, but if this continues forever, my jest will be no jest! Ha.

#123 Holy Crap Where the Tylenol on 01.17.13 at 4:08 pm

O war! thou son of hell,
Whom angry heavens do make their minister,
Throw in the frozen bosoms of our part
Hot coals of vengeance! Let no soldier fly.
He that is truly dedicate to war
Hath no self-love, nor he that loves himself,
Hath not essentially but by circumstance
The name of valour.
Here is another War waiting to happen! There goes the gold / oil market…..
http://www.marketwatch.com/story/oil-futures-slip-under-94-a-barrel-in-asia-2013-01-17

#124 juno on 01.17.13 at 4:16 pm

Canadian are now investing in other countries debt, probably borrowing against the Can $$ at ultra low interest rates to get a better return elsewhere. Probably the hedge fund managers . Gee I totally recall that is what happened in Greece when they borrowed against the Greek dollar to buy Germany dollars. Does some dumb PHD/BA Economist know something that the super Brainy 2 month educated Real Estate Agents don’t know?

Canadians gobble up foreign debt in November

http://www.cbc.ca/news/business/story/2013/01/17/business-foreign-securities.html

http://worldnewsresource.com/phh-leads-the-way-today-in-refinance-interest-rates/6429/honeywood

#125 Ogopogo on 01.17.13 at 4:18 pm

#117 MikeB on 01.17.13 at 3:30 pm
Like anything in life… you need balance. Don’t put all your eggs in one basket as they say. Same can be said with real estate. Why put yourself on a limb but certainly it is better to own , at least from my experience, than rent. Way better.

Clearly you don’t know the first thing about real estate risk or the benefits of investing in a diversified, balanced portfolio.

You’re what I like to call a “real estate cultist”, worshipping the golden calf of debt. That said, do consider purchasing a second “investment” property. My BMO preferred shares thank you.

#126 Devore on 01.17.13 at 4:20 pm

#75 Oakville

Hence the fudging of the %. 194 days on market is a long time, but proves the realtor theory that if you wait long enough… Someone will pay your price.

Except “your price” in this case was below asking, after several price reductions through re-listing. So not true, was it?

Also, “waiting long enough” erodes your position through financing charges, property taxes and operational expenses. Each month on the market means a month of mortgage interest, so even if you do get your price, you’ve lost that month, to speak nothing of the opportunity cost of the money tied up in the property, which you could deploy elsewhere if you sold.

#127 walltiger on 01.17.13 at 4:23 pm

#103

well written argument.

#128 Country Girl on 01.17.13 at 4:31 pm

#56 Nodebt on 01.17.13 at 1:44 am
If I were you, I’d contact Garth offline for his help with planning and investing for your retirement.
The amount you need depends on the lifestyle you desire during retirement.

#129 };-) aka Devil's Advocate on 01.17.13 at 4:54 pm

#111Andrew on 01.17.13 at 2:39 pm
Patiently awaiting DABob’s opening remarks for the day…

How’s this…

Year to date MLS Activity for the Central Okanagan Region of the Okanagan Mainline Real Estate Board vs that of the year before:

SINGLE FAMILY RESIDENTIAL

Jan. 1 – 15, 2012
Active Inventory then = 1,604 units
Unit Sales = 40,
Ave List = $449,825
Ave Sale = $432,178
Ave DOM = 105

Jan. 1 – 15, 2013
Current Active Inventory = 1,528 units
Unit Sales = 57
AveList = $568,553
Ave Sale = $531,812
Ave DOM= 115

STRATA

Jan. 1 – 15, 2012
Active Inventory then 1,285 units
Unit Sales = 29
Ave List = $304,120
Ave Sale = $293,778
Ave DOM = 103

Jan. 1 – 15, 2013
Current Active Inventory = 1,097 units
Unit Sales = 30
AveList = $339,267
Ave Sale = $324,536
Ave DOM= 147

#130 Oakvillian on 01.17.13 at 4:58 pm

The star says.. Garth is wrong. heheheh

http://www.moneyville.ca/article/1316011–toronto-home-sales-up-at-midway-point-in-january

#131 Suede on 01.17.13 at 5:02 pm

Top story today. DOW and S&P are at the highest levels in many years (Dow can’t seem to break the 13,600 hump and S&P is at lofty heights). Kind of quiet for such big news.

High index values make me more nervous than low ones that make me salivate.

#132 };-) aka Devil's Advocate on 01.17.13 at 5:03 pm

#125Devore on 01.17.13 at 4:20 pm

#75 Oakville

Hence the fudging of the %. 194 days on market is a long time, but proves the realtor theory that if you wait long enough… Someone will pay your price.

Except “your price” in this case was below asking, after several price reductions through re-listing. So not true, was it?

Also, “waiting long enough” erodes your position through financing charges, property taxes and operational expenses. Each month on the market means a month of mortgage interest, so even if you do get your price, you’ve lost that month, to speak nothing of the opportunity cost of the money tied up in the property, which you could deploy elsewhere if you sold.

Not to mention that having missed your market you are going to have to sell for something below what you could have in order to regenerate all that lost interest of those buyers who looked at your home but now remember it only as “there was ‘something’ wrong with that house” even though they don’t recall what exactly it was. And indeed there was something wrong with it – PRICE.

– – – – – – – – – – – – – – – – –

Well I expect there’s enough meat on those two bones I just lobbed over the fence for the Dawgs to gnaw on for the rest of the day. I check back after dinner to see how you enjoyed them.

};-)

#133 Suede on 01.17.13 at 5:07 pm

#98 Chris L.

If you keep following your trades, whether in houses or equities and think “what if” you’ll go nuts. Just do, and move on. The house hasn’t sold, it’s just listed for a price – means nothing but a ballpark

#134 Andrew on 01.17.13 at 5:09 pm

DABob,

How’s this?

Not lookin’ good.

#135 Andrew on 01.17.13 at 5:23 pm

DABob,

Look, we’re concerned about you, it’s past mid-month did you sell anything yet?(and stuff on Kijiji doesn’t count)

#136 jess on 01.17.13 at 5:27 pm

Humpty…i couldn’t resist

can women save Japan?

http://www.imf.org/external/pubs/cat/longres.aspx?sk=40048.0

=Inside Job – How crooks set up the largest bank in Afghanistan & then robbed it for almost $1 billion
28th November 2012

http://www.globalwitness.org/library/inside-job-how-crooks-set-largest-bank-afghanistan-then-robbed-it-almost-1-billion

#137 juno on 01.17.13 at 5:54 pm

Sorry Garth, but I thought this was funny

http://www.joe-ks.com/archives_apr2009/Gangcouver2010.htm

#138 Oakville on 01.17.13 at 5:55 pm

@devore. I totally agree with you. Sitting on that house with those expenses is easily $100k is carrying costs. That money invested in a return like we got in 2012 would be better. In the case of this house their first offer was their best offer… Probably should have taken it instead of carrying the house for so long. I’m just repeating the realtor rhetoric I’ve heard lately.

#139 Ken R on 01.17.13 at 6:25 pm

#113 OlderbutWiser on 01.17.13 at 2:49 pm

“To be honest, you sound like my dear brother who told me about a “great” investment in some mining stock.”

Agree with your assessment. By the time the “great tip” gets around town, the big money has already left the table. I live in a mining town and I never invest in mining stocks. Two local projects, well over a billion each are underway. Mining is an expensive business.

#140 mark on 01.17.13 at 6:27 pm

http://www.canadianbusiness.com/economy/how-low-will-house-prices-go/

https://twitter.com/GreaterfoolVan/status/291961132195934208/photo/1

Canadian Business sticking the boots in now.

#141 raginnn on 01.17.13 at 6:39 pm

http://www.canadianbusiness.com/economy/how-low-will-house-prices-go/

#142 jess on 01.17.13 at 6:42 pm

where’s the beef?

Food Safety Authority of Ireland

…’ A total of 27 beef burger products were analysed with 10 of the 27 products (37%) testing positive for horse DNA and 23 (85%) testing positive for pig DNA.

http://www.fsai.ie/news_centre/press_releases/horseDNA15012013.html
======================
“climbdown ”
“I find it a bit depressing (The Bank of England governor )that people who earn so much seem to think that it’s even more exciting to adjust the timing of it to get the benefit of the lower tax rate …which they will benefit from in the long run to a very great extent knowing this must have an impact on the rest of society, when even now it is the rest of society which is suffering most from the consequences of the financial crisis.”
http://www.guardian.co.uk/business/2013/jan/15/mervyn-king-goldman-sachs-bonus-row

#143 rosie on 01.17.13 at 6:51 pm

I thought you all might enjoy the American perspective from The Housing Bubble Blog, which has served me well since 2006. But not nearly as well as this blog. http://thehousingbubbleblog.com/?p=7547

#144 Static on 01.17.13 at 7:07 pm

DA…can you provide links showing what ones money buys today compared to last year? I have a feelig one is able to buy much more house today than last year.

#145 jess on 01.17.13 at 7:09 pm

“widows over the age of 50 whose husbands alone were holders of the mortgage — are losing their homes to foreclosure because of a paperwork flaw that keeps them from obtaining loan modifications.

By JESSICA SILVER-GREENBERG
Published: December 1, 2012
“http://www.nytimes.com/2012/12/02/business/widows-pushed-into-foreclosure-by-mortgage-fine-print.html
Debt for Americans ages 65 to 74 is outpacing any other group, according to the Federal Reserve.

#146 Form Man on 01.17.13 at 7:11 pm

#129 DA

The trend is in the right direction, but a long way to go my friend ( MOI needs to drop below 6, yet is approaching 20 according to BCREA ). One interesting note: DOM has risen year over year………

#147 Adjusted Sales on 01.17.13 at 7:29 pm

Can someone explain why January sales for 2012 have to be seasonally adjusted? I thought January of every year is a winter month. Adjust for what?

Oh, I see, “adjust” as in “cook”.

#148 Lucky Sometimes on 01.17.13 at 7:57 pm

#47Mic D’angelo on 01.17.13 at 1:12 am

Fact Check, CM (CIBC) closed Jan. 2, 2007 at $79.680 and not $125.00 as you claimed.

#149 Nostradamus Le Mad Vlad on 01.17.13 at 8:02 pm

-
#60 Humpty Dumpty — Thanks for the link. It’s really interesting — I have been reading Garth since the ’80s in the Toronto Sun, been through his political journey and now here, and I can honestly say that I have learned more from his and other blogger’s posts and links than through the school system. Smoking Man is spot on — live by one’s smarts, and Garth is also right — ignore the herd!

#103 Inglorious Investor — “. . . those returns––with mutual funds no less.” — Same here, plus more. Our CFP has used monthly DRIPs to increase our retirement funds, and we have done our part by staying out of debt and using TFSA returns to boost the non-registered plan. It’s worked well for us.

#123 Holy Crap Where the Tylenol — Good link. As the war drums beat ever louder in the MEast, the price of oil may / may not expand rapidly to the point where people have to carpool, and lord knows what effect it would have on travel. Horse and buggy?!
*
A new gold standard is being born. Start of a new cycle? Yeeehhhhhaaaaaaa! Obomba gets debt ceiling raised; Robbing Mali to pay Germany Same thing happened in Libya — their gold was quickly removed; Improving Military (costs) while letting vets sleep on streets; BoE, Lloyds and RBS So get those printing presses rolling already! Ain’t Mark Carney working going to work there soon? France – Belgium Taxes and stuff; Short clip Poor Jamie Dimon. Send gold, silver, cheques and money to help him; 4:39 clip Unfunded liabilities growing at US$100 bln./ week.
*
9:57 clip “Hani Hanjour could barely fly a Cessna, but he flew a 757 into the newly reinforced section of the Pentagon with the skill of a fighter pilot.” 1:03 clip From one actor to another . . .; Raising children in the country is better; Rivers on Mars where our ancestors came from (at least some of them); Abnormal amounts of snow in Russia (they will have a good runoff this year); Japan – China Over a few rocks in the sea? Prince Chuck and depop. He’s as rich as hell, so what does he care? 47 states moving against Obomba’s gun control, 8:05 clip Double standard on gun control, but whatever laws are passed won’t matter. Because of the new 3D technology appearing, people will be able to get their own guns and bullets anyway, but then again; Obomba livid? Now is a good time for him to understand how the people of AfPak feel plus Miss. Gov. will thwart Obomba’s gun control efforts; ObombaCare and one of the unintended consequences; Iran and Obomba’s foreign policy; 21-01-13 is when The Dark Side Of The Moon shoves Jupiter’s craggy facial features into the sun; Becoming A Centenarian is a growing trend.

#150 Snowboid on 01.17.13 at 8:19 pm

#135 Andrew on 01.17.13 at 5:23 pm…

One can only hope the rental business is booming, or that acting as a buyers’ agent (with the appropriate BRA of course) is helping supplement the better halfs’ salary.

No listings on MLS for many months (or is it years).

#151 AK on 01.17.13 at 8:20 pm

#109 Holy Crap Where the Tylenol on 01.17.13 at 2:03 pm

“Please peruse Smoking Mans maltreatment of the English idiom. I have frequently speculated that he is an ESL student. Sadly however it is somewhat perceptible he is a local boy.”

Every time I see the “Smoking Man” insignia pop up on the blog, I always associated it with a joint and a roach clip. LOL :-)

#152 AK on 01.17.13 at 8:27 pm

Did I mention that I hate Walmart.. :-)

#153 Ogopogo on 01.17.13 at 8:27 pm

I wish I could post the gradual decline in asking prices for the four listings in my building. To do so would out myself, and I’d rather retain my anonymity for now, as a quasi-public figure in the micro-microcosm of Kelowna (though some here have New York City-sized egos, but I digress).

Suffice it to say that 3 prospective sellers have lowered their asking price by tens of thousands of dollars, while the unit on my floor stubbornly refuses to yield to a reality obvious to all but DA. I bumped into the owner in the garage the other day and she looked absolutely haggard. I doubt they’ve had any showings in the last few months.

When will Okanagan sellers understand that the party is over? Let the gnashing of teeth and recriminations begin. As usual, I watch the circus tent collapse with a Cheshire cat grin.

#154 Devore on 01.17.13 at 8:42 pm

#144 Static

I have a feelig one is able to buy much more house today than last year.

One of the best metrics of this is price per sqft overlaid with some kind of price average/index. $/sqft lagging prices means buyers are getting more house for their dollars, which can indicate prices are actually falling even if all price indexes are rising. Ie, financing is still easy to obtain, but market favours buyers so they have more bargaining power. This was the situation in Victoria 2011/2012 for example.

Unfortunately, this kind of metric is very hard to get, as the square footage listed on MLS ranges from “slightly off” to “breaking laws of physics”.

#155 Ronaldo on 01.17.13 at 8:47 pm

#149 Nostradamus Le Mad Vlad –

”As the war drums beat ever louder in the MEast, the price of oil may / may not expand rapidly to the point where people have to carpool, and lord knows what effect it would have on travel. Horse and buggy?!”

We could always do what our grandpartents did.

http://www.fhwa.dot.gov/infrastructure/back0709.cfm

#156 Daisy Mae on 01.17.13 at 8:55 pm

#100AK on 01.17.13 at 12:44 pm
.#96 Daisy Mae on 01.17.13 at 11:57 am

“#89DM in C: “….my poultry 1.3 Mil.”

“You made your money in chickens? My brother works at Maple Leaf but I don’t think he has quite that much.

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

You guys are a riot! LOL
The correct spelling is ‘paltry’.”

LOL. I should check my spelling before I hit submit. :-).

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

Thanks for being a good sport! This just tickled my funny bone ALL DAY….. lOL

#157 spaceman on 01.17.13 at 9:04 pm

Paying off your mortgage at 3.5%, is riskless, as the bank has locked you in, and is taking your money. By paying down debt you are saving the compound interest. And who says the loan will stay at 3.39 ? What about in 3 years when your mortgage hits 6% ?

I will take the 6% and reduce my payments at the same time. I can’t afford a $2000 a month mortage so have to pay it down before interest rates go up.

#158 Grim Reaper/Crypt Speculator on 01.17.13 at 9:09 pm

I think Dr Wanker went to a real DR today

Other that that stated declaration of “Fiiirrzzzt” in line-up to be Fiirssszzt in the next post about Somalia condos

#159 };-) aka Devil's Advocate on 01.17.13 at 9:21 pm

#154Devore on 01.17.13 at 8:42 pm

#144 Static

I have a feelig one is able to buy much more house today than last year.

One of the best metrics of this is price per sqft overlaid with some kind of price average/index. $/sqft lagging prices means buyers are getting more house for their dollars, which can indicate prices are actually falling even if all price indexes are rising. Ie, financing is still easy to obtain, but market favours buyers so they have more bargaining power. This was the situation in Victoria 2011/2012 for example.

Unfortunately, this kind of metric is very hard to get, as the square footage listed on MLS ranges from “slightly off” to “breaking laws of physics”.

You’re kidding right? Seriously, you can’t be serious. Think about what you are saying. Let me give you just one hint, and believe me there are many other flaws in your hypothesis:

The improvements upon the land are generally considered depreciating assets. The land itself? – Not so much.

And then there is the quality of construction.

Smaller homes have the more expensive mechanicals, kitchens and bathrooms amortized over a smaller square footage.

And location – although if you consider my previous point you will already have been forced to contemplate the location variable?

Shall I go on?

#160 Herb on 01.17.13 at 9:42 pm

#87 hangfire,

I’m bored, so it’s time to deconstruct another stupid comment of yours.

Truth Hammerer isn’t dead; he’s merely changed handles and can resurrect himself any time.

Love your claim that “the media in Canada is a duplicitous self serving [sic] propaganda wing of the Liberal left….” Google “Media ownership in Canada” and tell us how many left wing Liberals you can find in the ownership.

The bit about the media being supported by “aggressive union advertising dollars…said to be in the billions per year…” is another one of your wingnut doozers. Perusal of any newspaper or any media outlet would show you how much union advertising is carried as opposed to that of, say, the real estate, automotive or sportainment industries. Of course the “said to be in the billions per year” meets your usual standard of non-existent proof.

You do, however, justice to your side’s “effort to dumb down theCanadian population in order to plow through their agendas [sic]”. Hope you get paid for writing your comments so I don’t have to worry about some poor schmuck actually believing his propaganda ravings.

It’s about time for Garth’s next post, so I will leave you with warmest personal regards.

#161 Mic D'angelo on 01.17.13 at 10:21 pm

#103 Inglorious Investor. You talk about inflation and taxes. Mutual funds were the popular choice in 1994 until about 2005 with 2%-3% annual expenses.ETF’s became more popular with lower fees depending on the type of ETF it is about 0.55% to 0.75% per year. REIT’s have some annual costs and take a portion of the annual rents or other cash flow. The last few years I have been retired and was able to save $138,000 over the last 2.75 years net of taxes and living expenses. Remember, I have no debts and I have only one a modest house which represents 16% of my net worth. I have provincial strip bonds that compound every year which I calculated is about $3,100 net of taxes today and end up paying $6,099 net of taxes by maturity in about 21-23 years. So I always take inflation and taxes into account with my investments. You also have to remember annual fees are a big thief in robbing your net annual return on your investments . ETF’s and any future new investment they invent will not settle with these lower fees which will rise for decades to come. A 0.60% annual fee could easily be 1.45%+H.S.T. may be 18% not 13% in 30 years.Also, they will add new fees and restrictions in the future which will make you loose money. This is a conservative calculation. If you look at the last 2.75 years I saved $138,000 and invested them in provincial strip bonds which are extra than those I already have mentioned. They got about a simple yield of 4.10% average return from 2010 to 2012 but after compounded rate of return is 6.89%. This means after tax the $138,000 will generate about $5,980 in extra interest income. I do have the maximum $25,500 in TFSA’s and little RRSP investments less than $40,000 as I slowly over last 8 years melted them down.Financial experts always talk about fixed income investments do not keep up with inflation. This is a myth because I have $138,000 more in assets and $5,980 more in after tax income. Inflation is a very personal item. My inflation rate could be higher or lower than your personal inflation rate. If even I did loose over 30 years say 10% of my net worth to inflation. It is better than worrying about some so called experts trying to make me 7% today but it was 12% in 2000 or 15% in 1994. My philosophy is save as much as I can and get the highest paying interest bearing investments taking principal preservation and term into account . Real estate is toast. The stock market the last 12 years gone almost nowhere with most investors loosing more than inflation. Reit’s are another fad like income trusts and tech stocks but maybe at a lower risk level. I will continue to avoid these investments at any cost. You said an 8.17% combined annual return from 1994 but if you were living on off these investments withdrawing money you would of not have gotten this return because you were selling shares or units at some time during the year. This 8.17% net return, if it is accurate, would only occur if you kept the money in these investments and never sold them. You will see over the next 10 years if you get 3% to 5% a year in equities you will be lucky. Today, central banks are using financial repression keeping down interest rates. I can get currently 3.5% to 3.70% on long term provincial strip bonds. I will take this and be happy. Do what you want but when you have to live off your investments and are not getting some subsidized government pension or benefits. You will see how you feel putting all or a large part of your hard work,sweat and blood at risk for maybe the chance to make an extra 1%-2% a year. You said it is lucky timing again and they say that with gambling too.The right place at the right time. They are rigging everything as long term interest rates should be at least 5% to 6%. The stock market is over valued and that is why the last 12 years the Dow Jones was 11,300, S and P was 1525 and now it is 13,596 and 1,481. The reason why they do not want to pay interest is because your life would be too easy. Property taxes, income taxes, gas taxes, gas prices, food prices, water, hydro, utilities, car and home insurance, car repairs and upkeep, clothing prices, house prices, Ontario health care premium(tax), health care costs etc. most of them all cost more than 12 years ago. They make your life tough if you managed to save money and have investments. Imagine the poor fools that believe Kiyosaki that saving money is a waste of time. You are toast once your a debt slave for life.

#162 Drill Baby Drill on 01.17.13 at 11:45 pm

the bloggers with the posts more than 8 sentences long must realise by now that no one reads them. Please keep them short – 6 lines or less.

#163 Ogopogo on 01.18.13 at 2:12 am

#163, speak for yourself. Not everyone has the attention span of a gnat.