The F effect

wicked

Days ago, when Sir Mark said the next rate hike was ‘less imminent’, a nation of realtors went bananas. Grasping at straws, they lurched from blog to blog spreading the message that interest rates were ‘on hold until 2014’. Or maybe forever.

Untrue, of course. Carney said nothing of the sort. Most economists I ride with fully expect the central bank to starting moving later this year. They also know (unlike most realtors) the Bank of Canada does not influence fixed-term mortgage rates, since banks fund those in the bond market. With the US on LowT therapy and stock markets advancing, bond prices have only one direction in which to travel. That means bond yields – and mortgage costs – will do the opposite.

But even that doesn’t matter. Right now it’s all about the kids.

It’s now been half a year since F did what this pathetic blog predicted three months earlier, and killed off the 30-year mortgage. But that was just the start. The feds also chopped the gross service debt ratio and murdered cash-back mortgages. The effect was to increase mortgage rates for first-time buyers by more than a full percentage point. At the time real estate boards said it was all irrelevant.

We know what happened. Sales from Vancouver to Halifax have taken a tumble, and nationally they’re lower by 17%. Construction in the GTA is falling rapidly, listings are expected to surge as spring arrives and sellers will be under pressure to cut deals or lose buyers. A huge amount of this comes from the impact wizened little F had on the virgins.

A new Re/Max survey (imagine me citing such an authority) makes the point clearly. Three years ago 43% of all real estate purchasers were first-time buyers – inexperienced, naive babes who coughed up a small downpayment and jumped into home ownership as prices started to crest. According to new data, only 30% of buyers over the next two years will be virginal – a most significant drop of 13%.

And what kinds of properties do these kiddies overwhelmingly buy? Right. The ones they can afford – condos. This reduction in demand is enough to stop the box-in-the-sky market in Toronto, Vancouver, Montreal and Calgary cold in its tracks. After all, this weekend there are 5,700 resale condos for sale in the GTA, and over 8,600 on the market in Greater Vancouver, plus all the thousands of presales being flogged.

There is absolutely no doubt that virtually every condo owner in every major Canadian city will lose equity in 2013. Those who bought with minimal downpayments will end up with mortgages larger than the market value of their units. This is already the case in Calgary, Edmonton and most of Vancouver. As the reality spreads, thanks to social media, the pool of buyers will shrink further. So, expect a slew of projects now in the planning, marketing and pre-construction phase to end up being puffs of smokes or parking lots.

If house prices followed family incomes 2010 Saskatoon Housing Bubble

By the way, this might interest you. Almost four in ten people who intend on buying a house in the next two years earn less than $50,000. In Toronto the average property (condos included) costs $459,780. In Calgary it’s $429,648 and $590,800 in Vancouver. That’s a ratio of eight to twelve times income, which brings us to a conclusion even Re/Max reached: prices in most places have risen twice as fast as incomes. So, to restore 2009 market momentum, one of three things has to happen. (a) Wages and salaries take a flying leap higher. (b) Real estate prices fall by about a fifth, at least. (c) Or, F crumbles and brings in 50-year amortizations and free downpayments with every TFSA opened.

Now, which one of those do you think has the greatest likelihood of happening?

But wait! The realtors have unearthed another key finding – “Just over 80 per cent of buyers believe housing values in their area will rise or remain the same.”

OMG. This will be wicked.

259 comments ↓

#1 Curious! on 01.25.13 at 7:45 pm

But if these 4/10 people have dual-income and/or supplementary income (basement rent), then 50k isnt so bad.

#2 Ballingsford on 01.25.13 at 7:49 pm

You are early tonight Garth! I know you don’t like mutual funds, or at least I don’t think you do, but if someone were to contribute to one in a TFSA that is full of dividend payers, such as Banks, ETF’s, and REIT’s, would that be a wise move?

Or, what would be wiser?

#3 John Tivoli on 01.25.13 at 7:51 pm

Or you can turn a blind eye as the real estate industry outright promotes the illegal use of the zero down payment schemes the government has eliminated.

http://whispersfromtheedgeoftherainforest.blogspot.ca/2013/01/major-developer-reprimanded-over.html

#4 Pretty Boy Swag on 01.25.13 at 7:59 pm

Any comments on how well the maritime provinces will make out? At least in NL, we don’t have a large condo market, so it’s either buy a house or rent a house.

Pretty Boy Swag. Is that even legal on the Rock? — Garth

#5 not 1st on 01.25.13 at 8:12 pm

Economists riding harleys? why does that make me a little sick to my stomach.

Anyway, whatever wage gains people are striving for pale in comparison to the inflation of real needed items. Have you been to the grocery store lately? $100 of food fits in 2 smallish bags.

#6 BigEnglish on 01.25.13 at 8:14 pm

Recently found your blog, it’s been a great read. Sold our house in Vancouver in December 2012 +$60k over asking.

Glad we got out when we did. Hoping to convince wife we should wait before the next purchase and rent for a while. Will be using your blog to help in that matter.

#7 Twooping on 01.25.13 at 8:16 pm

Why is Winnipeg never on any of these stats charts? I guess there’s not much of a bubble there.

#8 AK on 01.25.13 at 8:18 pm

“Bond prices have only one direction in which to travel.”

The US 10 year Bond closed @ 1.95 today. Watch for 2.00 next week.

#9 Bill Gable on 01.25.13 at 8:29 pm

RE here in the Rain Forest is a smouldering wreck.

#10 Scott in Gibsons on 01.25.13 at 8:35 pm

Just man up and admit you were wrong about the BOC raising rates later this year. Your market analysis will continue to fail because you ignore a key point; we don’t operate in a lawful, free market.

You and the economists you ride with should throw away your text books and instead study fraud, counterfeiting, extortion, blackmail, and corruption. These are the practices of the current financial system.

For proof look no further than criminal organization HSBC. It was caught laundering tens of trillions of dollars for drug cartels and terrorists and got a token slap on the wrist and no criminal charges. You and your economist friend are lost to explain this in your fantasy world of rule of law and functioning markets.

The explanation I offer explains it perfectly.

I’m sure you think it does. — Garth

#11 Rainclouds on 01.25.13 at 8:35 pm

Am confused,

Assuming Calg and Tor have higher household income than Van why the huge variation on the “if” scenario on above chart?I would expect them to be much closer or even Van to be lower than either.Not sure what relevance 2000-2010 has, as it is a income to price ratio.

#12 chickenlittle on assignment on 01.25.13 at 8:36 pm

So I was told last night that city dwellers subsidize suburbanites.
I don’t know if that person is just an angry hipster because he found the same mid century modern furniture he bought on Queen st for a thousand bucks on the curb in markham at a gut job for free at a McMansion, but he sure wasn’t happy.
I live in Mississauga and the property taxes here are nuts. I do not work in the city, but if I did I would probably live there. Seeing as I like space and do not like to feel like a rat in a cage, I like it here in the boring burbs.
And I also agree with Victoria when she says there is no need to live downtown anymore.

#13 Rob on 01.25.13 at 8:37 pm

Some reports have said that their has been a drop in condo development or less permits issued to keep inventory lower until sales/prices settle. I believe it with all the construction I see in Surrey. Any comments?

#14 Lilyflor on 01.25.13 at 8:41 pm

Why is Montreal never on those national charts??

#15 Junius on 01.25.13 at 8:42 pm

#2 Baillingsford,

The problem with most mutual funds is that the management fees are usually about 1.5-2.0% higher than most ETFs and they basically do the same thing. In a low growth world that can make a considerable difference.

I had a mutual fund when I started investing in ETFs and I have kept it as a comparative to my self directed investing. I bet it every year on my own. I will probably get rid of the mutual funds this year.

#16 Hoof - Hearted on 01.25.13 at 8:47 pm

#211 Nostradamus Le Mad Vlad on 01.25.13 at 7:11 pm

#108 Hoof-Hearted — “BTW ….study the Great Depression?.. (i)engineered ?” — Yes, then Prescott Bush, dubya’s granpappy financed Hitler and the Third Reich. Hitler’s 1,000 year reign last approx. 12 years.

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

C’mon Vlad….you are far smarter than that……there is not formal proof of that myth.

Re Boot:
Homework = Google Woodrow Wilson (extortion ) and Bernard Baruch .
==================================

Also : Benjamin Friedman 1961 speech on YOUTUBE..a hidden gem classic.

http://www.youtube.com/watch?v=HhFRGDyX48c

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

The Depression was created by the same mechanism we see unfolding now. WHERE was Winston Churchill ?

http://churchillcrash1929.wordpress.com/

QUOTE:

In 1929, a financial disaster of unprecedented proportions swept through the United States with lightening speed. The American people began a slow decent into an 11-year financial hell that became known as The Great Depression.

Learn:

Why Winston Churchill being at the New York Stock Exchange on Black Thursday, October 24, 1929, was not “quite by chance,” as he later wrote.

Why Wall Street “plunger” Bernard Baruch was Churchill’s “favorite American.”

etc. etc.

Vlad: Lots of History to UNlearn

#17 Waterloo Resident on 01.25.13 at 8:50 pm

Yes, $100 really does not go very far at the grocery store these days! That’s true.

But everyone needs to live somewhere, and they don’t want to pay rent to someone forever. The way they see it; if they pay rent for 30 years they will end up owning nothing, but if they BUY now then in 30 years they will have a house to show for their payments. That’s what everyone keeps saying to me. I rent, and frankly I’m beginning to feel as if I’m the stupid one here.

I would like to buy a small lot and build myself a small 500 sq-ft house on it, but here in K-W even small vacant lots cost upwards of $250,000 – plus ! Then add an extra $50,000 for the house and its not any cheaper than buying an aready finished-built house for $350 K to $400 K here. Here in K-W even abandoned burned-out houses are going for $500,000.

As for jobs: What jobs? Professional CMA Accountants with 5 years experience are being offered starting salaries of $24,000 per year, sometimes less. It used to be $50,000 , now they get less than half that.

So, if working for someone else pays so little, then why not just start up your own business. To me that is the smartest thing to do right now. I know of accountants who are starting up lawn care companies, daycare in their houses, pet-hotels, hair cutting / salon shops, even small coffee and donut stores. Even if the business is a flop and does poorly, its still better pay than what private employers are paying accountants right now.

As for me: I’m starting up a pet hotel in my basement and a part-time driveway sealing business also, one has to start something just to survive, right?

#18 OnlyTheBankersLaugh on 01.25.13 at 8:53 pm

Love the income to price graph. It’s amazing that major newspapers never think to publish this one to support their positions.

Every knows Pretty Boy Sway – a bay boy turned townie, he’s a legend on George St kissing a lot of cod

#19 claudius emperor on 01.25.13 at 8:55 pm

Interest rates would either:
1. stay the same for a very long time and everyone will enjoy potential nice inflation or hyperinflation
or
2. the bond market will force the correct rates and we will enjoy rates north of 10 % very soon.

rates in the range of 2-4 percents (nost likely outcome) fall under scenarion number 1.

#20 Canuckistan on 01.25.13 at 8:56 pm

While south of the border…:http://www.bloomberg.com/news/2013-01-25/debt-burden-at-80s-level-may-aid-u-s-economy-chart-of-the-day.html

Canuckistan can at times be decades behind. Sometimes, it is for good, many times, though, it is for bad. It has to be the province-thing that makes it so backwater, one would imagine….But wait, it’s different up here…and wait some more, Canadians are so much more financially savvy than their southern brethren…

#21 DDCorkum on 01.25.13 at 8:57 pm

#7 Twooping on 01.25.13 at 8:16 pm

“Why is Winnipeg never on any of these stats charts?…”

—–

Canada’s largest cities (ignoring suburbs):
1. Toronto
2. Montreal
3. Calgary
4. Ottawa
5. Edmonton
6. Mississauga
7. Winnipeg <—
8. Vancouver

Canada's largest census metropolitan areas:
1. Toronto
2. Montreal
3. Vancouver
4. National Capital Region
5. Calgary
6. Edmonton
7. Quebec
8. Winnipeg <—

#22 Daisy Mae on 01.25.13 at 9:01 pm

“We know what happened. Sales from Vancouver to Halifax have taken a tumble, and nationally they’re lower by 17%. Construction in the GTA is falling rapidly, listings are expected to surge as spring arrives and sellers will be under pressure to cut deals or lose buyers. A huge amount of this comes from the impact wizened little F had on the virgins.

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

What are we paying this little twerp who’s making such stupid decisions on our behalf?

#23 Andrewski on 01.25.13 at 9:06 pm

Re: #2 Ballingsford.
Do you give away your skills or knowledge pro bono?
Research, research, research, and ye shall find the way…

#24 coastal on 01.25.13 at 9:07 pm

“Untrue, of course. Carney said nothing of the sort. Most economists I ride with fully expect the central bank to starting moving later this year. They also know (unlike most realtors) the Bank of Canada does not influence fixed-term mortgage rates, since banks fund those in the bond market. ”

Exactly, not to mention the doofus agents who can’t figure out why it’s a slow market in Victoria and that it’s still the middle of winter regardless of rain versus no snow. People have only just started opening up their Visa bills from Christmas and trying to plan on how to pay the thing, not load up on some old flipper shack in a crappy hippy neighborhood where every third house has pot smoke streaming out the window.

We also can’t forget that ReMax in Victoria was on the tube the other day saying the market will be flat for next two years and most of the action will be the move up buyers. Except whose gonna buy the moldy shacks in need of 100K reno on top of the 500K plus all the ridiculous gouge taxes and fees plus reno licenses ?

Toss in all these recent anecdotal stories of zero down gift/scam loans with fuzzy math by mortgage brokers,developers and CMHC not even verifying secondary incomes and we are ripe for a good old can of whup ass on the west coast. Unless of course you juice the charts to your liking by cherry picking incomes. Pretty pathetic but if you are on the fence with a pen ready to sign on the dotted line then you will convince yourself of anything right ? Talk about a bunch of gonzos.

#25 Observer on 01.25.13 at 9:07 pm

As the reality spreads, thanks to social media….

That would suggest a communications vacuum being filled and my browser bookmarks would seem to bare that out.

#26 Freedom First on 01.25.13 at 9:08 pm

Bar parking lots-full. Casino parking lots-full. Lottery kiosks-lineups. Doorways of commercial/public buildings-crowded with smokers. 80% of Canadian RE buyers-believe prices will rise or stay the same. Canadians-maxed out on record levels of debt. Canadians-savings rates- at all time lows.
Canadians-obesity at epidemic levels
All proof positive-many Canadians do not know what is good for them. When did we get so stupid?

#27 Westernman on 01.25.13 at 9:13 pm

Daisy Mae @ # 22,
How long have you had this infantile delusion that anyone in Ottawa has EVER been interested in ” our behalf “…

#28 claudius emperor on 01.25.13 at 9:15 pm

26 Freedom First.
———————————-
spot on on the stupidity, it is unbelievable.

It is amazing how one year without TV and public media/MSM can change one’s view.

It is ultimately a fault of the media and education. or maybe the ‘success’.

#29 Mister Obvious on 01.25.13 at 9:19 pm

Concord Pacific has been preselling a 40-floor development called “The Met” near Burnaby’s Metrotown for the past two years. I have driven past this location many times.

Until recently, it’s just been a large empty lot where once stood a half-dozen dilapidated houses. The chain link fence surrounding the site is surfaced with classy signage touting “Timeless Design”, “Opulent Finishes”, “Lush Formal Gardens” and “Exquisite Private Amenities”.

To be honest, I never believed this had a snowball’s chance in hell of going ahead. But behold! Yesterday I saw foundation excavation well underway.

The website claims that floors 37 and below were 100% sold out in three days last April. However it’s not too late to register for the ‘Sky Collection’ (i.e. floors 38, 39, & 40).

Saving the best for last, I guess.

#30 Canadian Watchdog on 01.25.13 at 9:45 pm

Teranet partners with Nationwide Appraisal Services

Teranet Partners with HomeVerified Home History Reports

VAR and HPI value models are ferociously swinging in every direction right now. The brainiacs failed to foresee (as did Shiller when a natural disaster hit) that when sales plunge to a fraction of what was an over-heated market, the sample size becomes so small that the lessor amount of homes sold begins to dominate output valuations. So, as any well-trained textbook statistician would do; they scramble for more information in order to guesstimate what homes are currently worth. 

These models being used are a complete absurdified metric of home valuations, because as any economist or smart investor knows, no market or asset class can be valued higher then the number of participants and, how much money they wager on bids.

I'll take a long-shot prognostication: watch for Teranet's methodolgy change something in the near future.

#31 T.O. Bubble Boy on 01.25.13 at 9:47 pm

Rob Carrick links to Garth’s TFSA post, but doesn’t mention anything about Garth or greaterfool.ca:
http://www.theglobeandmail.com/globe-investor/personal-finance/carrick-on-money/carrick-on-money-what-dont-you-understand-tfsas-rule/article7780767/

Is this a stealth way of sending more people to this blog?

#32 Ogopogo on 01.25.13 at 9:49 pm

I walked past the bankrupt (props Form Man for the clarification) Sopa Square condo project last night. The concrete skeleton looks forlorn, abandoned. The developer went so far as to glass the ground floor, a crystal sarcophagus. The only bright thing is the glossy promotional billboard out front. All the names of the would-be businesses lined up too like a casualties roster from a lost war…

And yet Kelownian sellers are as delusional as Calgarians (I suspect many of them are). Stubborn, proud little puppets of Global and Re/Max. But their peackock strut is starting to falter. They grumble and hiss. In denial. Angry flashes here and there in the local media.

Cue in the vile lies of the real estate cartel.

#33 Pr on 01.25.13 at 9:53 pm

…As the reality spreads, thanks to social media….

Yes, in 2006 the informations, on the USA real estate meltdown, was not like today.

Now we have Internet everywhere, twiter, Iphone, cellular with Internet and emails, etc.

It should pick up more speed as the months progress.

#34 Innumeracy chick...No more on 01.25.13 at 9:54 pm

The stock market will continue to grow past the 2007 high, making 2013 a good time to invest as the 2008 losers flock to bonds and gics. With a diversified portfolio of etfs, us equities and us reits one should make gains.
Garth will the market continue to grow during a housing correction or will it drop as well like in 2008?

#35 claudius emperor on 01.25.13 at 9:59 pm

How about 100 years amortization and 10 percents downpayment sponsored as a gift by the government?

and CHMC giving premium of 10 % to the banks for their expert service. By law everyone would be eiligible for credit. No income verification needed.

This is F after all, I would not be surpirised by enything he comes up with to save his skin,

#36 Innumeracy chick...No more on 01.25.13 at 10:00 pm

I think the Canadian bank stocks are maxed out and only can go down soon they pay a nice dividend but there must be something better. Everyone I know is betting on the bank! I’m not intrested in following the herds. What about the banks across the border?

#37 JuliaS on 01.25.13 at 10:07 pm

The best thing our local Vancouver government could do at this point to address funding shortfalls coming from the drop in assessments, sales and eventually building permits that have remained high all through the 10-month long crash, is to raise property taxes. They are doing it already actually. The assessments will partially conceal some of the damage.

It’s like BC hydro convincing customers to go energy efficient, so they don’t notice how much the rates rise in the meanwhile. They save half the juice and pay only a quarter more. Modest, right?!

The end of business class immigration visas will only contribute to Vancouver’s RE downfall. I’m already counting projects that have gone long pass their projected move-in date with nothing to show but an empty lot.

My daughter goes to a daycare that’s being demolished in a few months to make room for a condo tower. 1 thing will happen for sure – business will move out and the building will go down and that’s where it’ll end.

The builders know it’s bad out there. I’m clueless as to why they keep hunting for permits.

CRE occupancy is also in a state of permanent decline.
I see many businesses stores in West End with signs indicating move out dates around 2009-2010. Still sitting empty. The retail business model is dead. Supermarkets are losing long time occupants as well to downsizing.

New malls built since 2008 often look like deserted fortresses.

Van’s been dying a slow and painful death for a long time, but real panic hasn’t yet started. People believe it’s a rough patch and it’ll pass.

A friend is getting ready to dump a 2-bedroom Richmond condo that’s hardly 3 years old and already is in need of major repairs. The market is heading down and he’s already underwater, so what does he do? He chooses to wait till summer 2013, thinking prices are in direct correlation with outside temperatures. Oh well! That’s as good of a theory as any realtor typically comes up with.

Good thing my friend doesn’t owe me any money, else I’d be worried.

#38 mortgagebrokeront on 01.25.13 at 10:09 pm

I have gone onto my filogix (online mortgage application website) and run a few scenarios.

Want the truth?????

Can you handle it?

Here is what a 1% interest rate hike will do to a person with 65000 income, a credit score over 680 , zero consumer debt(yes no credit card debt, line of credit debt, student loans, or vehicle loans!!)… with a $20,000 down payment, lets assume property taxes are 4000 per year, and this applicant will go up to 39% GDS ratio

Today they purchasing a home with 2.99%,,,,, yes they are still getting that rate thru mortgage brokers….. 5 yr term fixed rate mortgage 25 yr amortization max purchase price is $365,700.00

mortgage with cmhc added to it would be $ 355,206.75

with a monthly payment of $ 1,679.18

If rates climb one percent

They will be purchasing a home with 3.99% 5 yr term fixed rate mortgage 25 yr amortization, 20000 down payment this applicants max purchase price is $331,000

mortgage with cmhc added to it would be 319,552.50

with a monthly payment of $ 1,679.18

Draw your own conclusions, if hot and horny homebuyers that are entering the market as virgin homebuyers want to keep buying as much house as they can afford, It is guaranteed that house prices must drop a minimum of 10% once the interest rate goes up 1 percent

#39 johnnny on 01.25.13 at 10:11 pm

#26 Freedom First – I’m seeing the same thing.
I’m working “on the road”staying at a hotel.
The place is filled with hockey tournament trophy children screaming and running all over the place,all hours of the night,while their parents are getting down to serious drinking in the bar,and later in their rooms.
The children are snapping their fingers at older waitresses,who are being run off their feet at the hotel restaurant,trying to keep up.
I’ve been on the road for 35 years,and have never seen the money (or debt)flowing like it is now.

#40 Canadian Watchdog on 01.25.13 at 10:22 pm

#36 Innumeracy chick…No more

Watch the weather and agriculture/commodity stocks this year. Everyone is guessing where money is going next, but not looking where supply is falling short.

#41 maria on 01.25.13 at 10:24 pm

My friend bought a condo in a bizarre townhome complex in oakville. She bought the bottom unit which has 2 bedrooms. It is TINY. She paid over $300K for something that is essentially a basement apartment. The front is a walk out but the bedroom has those tiny slit windows. Her “master bedroom” fits just her bed, and a tiny dresser, and she has to get dressed in the hallway. While visiting, we could hear the people upstairs clomping loudly all night.

Just yesterday, I found a top floor unit in her complex for sale to rent for $1,400. It really hit home to me that in her situation, it would have been better to rent and not buy. She would be paying less a month to live in a top unit where there would be no noise of people stomping on top of her, with more light, and even a balcony.

She still prides herself on investing in her own home. But when I compare the rent price vs how much she is spending on a mortgage, it’s just mindblowing.

It’s sad to know that my friend is a Greater Fool. But I can’t imagine her being able to sell her unit to anyone in the future for more than what she spent on it. She is sunk.

I do feel bad…but really, didn’t she think about what she was buying? Definitely house horny.

#42 Innumeracy chick...No more on 01.25.13 at 10:28 pm

Where are my posts? They were there? Were they deleted?

What’s your agenda? — Garth

#43 Innumeracy chick...No more on 01.25.13 at 10:29 pm

Strange now they are there. Ignore last post

#44 AK on 01.25.13 at 10:30 pm

Innumeracy chick…No more on 01.25.13 at 10:00 pm

“I think the Canadian bank stocks are maxed out and only can go down”

Wrong. TD is the best Canadian Bank. They have a large footpring in the US market.

In the US, JPM is trading at book value.

#45 CrowdedElevatorfartz on 01.25.13 at 10:33 pm

@#10 Scott in Gibsons
Ummmm Scotto? HSBC didnt launder “trillions” of dollars. The illegally handled sevreal hundred million dollars at most. And the fine they just paid to the U.S govt. Hurt.

I have two questions for you.
1. Do they put chemicals in the Gibsons water supply to cause paranoia and temporary insanity?
2. Do they have any elevators in Gibsons?

I’d love to come for a visit………

#46 Saskatoon Housing Bubble on 01.25.13 at 10:36 pm

Garth,
here is another version of that chart. It’s the same as the one in your post but also shows 2000 prices.

http://1.bp.blogspot.com/-Aqz0FDCZBCY/UQBDmQy5rAI/AAAAAAAAE5w/DtFgRmVnhWw/s1600/If+house+prices+followed+family+incomes+2010+new+one.jpg

For those wondering why Winnipeg, Montreal or other centers are not mentioned in those graphs, I can’t put them all in the graphs. But I am doing some super posts on major centers in Canada. For example I just finished one on Calgary and it had over 30 charts. It will take awhile but I will look at most of the major centers in Canada.

Who needs major centres when we know all about Saskatoon? — Garth

#47 Canadian Watchdog on 01.25.13 at 10:37 pm

Remember Canada's twin mortgage debt country?

SNS Reaal Falls on Bad Loan Writedowns Report: Amsterdam Mover

One week later: Dutch SNS Reaal shares plummet amid bailout rumours

SNS Reaal Stock

Canadian banks are time bombs.

You are absolutely nutso. — Garth

#48 Ogopogo on 01.25.13 at 10:37 pm

#36 Innumeracy chick…No more on 01.25.13 at 10:00 pm
I think the Canadian bank stocks are maxed out and only can go down soon they pay a nice dividend but there must be something better. Everyone I know is betting on the bank! I’m not intrested in following the herds. What about the banks across the border?

If you’re that keen for US banks, why not just buy the BMO Equal Weight US Banks Hedged to CAD Index ETF?

The ticker is ZUB. It’s fairly volatile for an ETF, but at least you won’t have to deal with currency issues.

#49 guelphstudent on 01.25.13 at 10:38 pm

Garth where do you derive the price of house in Toronto from ? The average price for condo and houses combined in 2012 was $538000, in city. Are you referring to mos mid month ?

Toronto Real Estate Board: “The average selling price during the first 14 days of 2013 was $459,728.” — Garth

#50 Snowboid on 01.25.13 at 10:40 pm

Our best friends from our time in Nagoya, Japan have a 100 year multi-generational mortgage – they took out in 1991 or 1992. The oldest son is to take over the mortgage and he to his oldest son, etc. etc. until 2092!!

How about that – a 100 year mortgage! Maybe if F implemented that with tax-deductible interest – wouldn’t that save RE in Canada?

#51 mortgagebrokeront on 01.25.13 at 10:46 pm

a follow up to last post, if rates go up 4.99 per cent that same applicant max purchase price is 301000,

so if rates go that high a 21 per cent correction would need to happen

#52 Snowboid on 01.25.13 at 10:49 pm

#17 Waterloo Resident on 01.25.13 at 8:50 pm…

Adding to #5 not 1st on 01.25.13 at 8:12 pm – same in Kelowna, $100 doesn’t go far at the grocery store. However, you can almost fill your cart with that same outlay in Phoenix. Still, the Phoenicians complain about the ‘high’ cost of food!

I also agree that most renters don’t want to rent forever, but as long as home values are going down, it doesn’t make sense to buy.

It could be many years before it pays to buy.

CMA accountants with 5 yrs experience offered $ 24K to start – do you have links to back that claim up?

#53 Ogopogo on 01.25.13 at 10:56 pm

#49 Snowboid:

I can already see Scotiabank’s slogan for century-long mortgages:

“Your DNA is richer than you think”.

And another slogan for Century 21:

“Century 21, with you until Century 22″

#54 Innumeracy chick...No more on 01.25.13 at 11:02 pm

Garth- whats my agenda? You tell me this is my 3rd day on this blog which I enjoy very much.
@AK you may be right.

You’re not an Amazon, right? — Garth

#55 HogtownIndebted on 01.25.13 at 11:07 pm

#12 Chickenlittle – I was eggspecting you to return to feather your nest of illusions, and you did not disappoint me. Thanks for the henpeck.

As our host says, “Most Canadians make abysmal choices.” Living in suburbia is an abysmal choice, all things considered. Been there, done that. Especially when you stare into the face of a real estate downturn which will hit you like a maelstrom but probably only modestly affect mixed urban neighbourhoods like mine. (I rent btw – sold my condo and am waiting to vultch a bit down the road, so am not part of the 1 per cent hipster elites – though I do pick through their garbage and I can assure you that the rich downtown have much better curb-alert freebies than you’ll ever find in Mississauga. Half of my furnishings are freebies or garage sale pickups from Forest Hill. Awesome quality stuff, dirt cheap. I got an art deco dining table for pennies on the dollar of what its worth last month. I’ll be serving roast chicken on it this week – your relatives?)

Nothing is perfect here, and we still have our embarrassing suburban incompetent as mayor as of today, so I have no illusions. Life ain’t immune to problems here, but it is pretty good, and balanced.

But the suburbs? Crime rate higher than the cities (and the break in rate in places like the 905 is amazing to see for people in midtown Toronto where I am) Terrible to see that 9 year old boy shot in Brampton. Or the horrific crash today in Clarington – dozens of suburban commuters crushed in their cars, EMS still trying to rescue people as of 9 p.m. tonight and the highway won’t open until after 10:30 they say.

http://www.thestar.com/news/gta/article/1320199–giant-pileup-shuts-down-highway-401-westbound-in-clarington

What a life you 905ers live. Your architecture is new-ish, but most should already be torn down.

http://www.thestar.com/news/gta/article/1319202–new-peel-region-affordable-housing-complex-too-ugly-for-some-politicians

And yes, people like me do subsidize people like you. Suburbanites are classic economic freeriders, particularly with transportation costs. Look it up. And please, don’t let your mayors ever pretend they have anything to tell people in real cities about how to manage their finances, since you suburbanites are basically living on the government equivalent of a HELOC. Good luck with that in the coming downturn btw – your infrastructure is far too sprawling and will need replacement very soon – your taxes have only barely begun to increase, so get ready, and enjoy. (Maybe Hazel’s son can get you some more development money, for a price, if you know what I mean.)

You say you don’t like feeling like a rat in a cage. Funny, I never feel that way in the city. But I do feel exactly like that every time I have to navigate suburban multi-lane roadways or the 403 or Hurontario or the 401 east or west of Toronto. Driving at 25 kmh in stop and go traffic for hours weekly is exactly my definition of being a rat in a cage. Urban driving is way more efficient and fast than trying to get through Scarborough or Brampton. There’s new and pretty frightening scientific insight lately into how all the sitting you do can kill you. Why spend extra hours daily sitting in a car?

http://www2.macleans.ca/2012/03/12/health-news-you-wont-want-to-sit-down-for/

Today my suburban colleagues fretted in the office about the horrific snowy drive home they faced, and how they would then have to go to multiple hockey games or whatever (one of the precious few forms of quasi culture that suburban parents can find for their kids, so sad) and would be exhausted all evening.

Interestingly, about 90% of my suburban colleagues are somewhere between obese and morbidly obese, too. The urban ones are in much better shape.(#26 Freedom First here notices something similar) No time to take care of themselves. I am one of only a couple people in my office who is capable of walking up our six flights of stairs, which I do several times every day. None of the 905ers dare try it, poor things. They are also sick much more frequently.

I imagine some of them may be just getting home now. I got home in 18 minutes today, went for a walk, took time to prepare quality home made food (nothing processed) and relaxed.

If I need to or want to, I can easily pick up additional part time work in the city as well, and it is not nearly as stressful as time spent commuting. I usually earn an extra $15K annually more than my colleagues by doing this, simply because I have so much time outside the office and don’t have their long commute there and back. Same for education and retraining – I can take courses and get an employer subsidy with all my free time. My suburban co-workers? Too tired to learn. That’s ok – as I increase my credentials and move up the ranks, they will make adequate subordinates for me, I suppose, though I suspect their working lifespans will be shortened due to the toll the suburban dream is taking on them.

So Chickenlittle, enjoy your suburban henhouse, though I do hope you don’t have any equity to lose in it in the coming RE turbulence. On the substance of our discussion, you have presented some modest points, but the facts are mostly on my side.

In our little tete a tete here, I am reminded of the old saying about who brought the most to breakfast: the chicken made a contribution, but the pig made a commitment.

#56 Axxman on 01.25.13 at 11:10 pm

To Garth’s point about rates being set in the bond market – the same day Carney announced less upward rate pressure, government officials were quietly asking banks what an upward rate shock would do to them.

#57 Innumeracy chick...No more on 01.25.13 at 11:12 pm

#48 ogopogo thats intresting I will check it out. I wasn’t planning on buying US bank stocks I like ETF’s.

#58 Smoking Man on 01.25.13 at 11:16 pm

School is such a waste of money. Was messing around on Google looking for C# sample code, everything you can think of is out there.

Copy paste bit of modification instant app……

But send your kid to western 60k later, he still knows less that a Dyslexic Drunk…..

Why Am I the only one that can see the obvious….

#59 Smoking Man on 01.25.13 at 11:18 pm

Nice one Garth, your on da bal and rolin

as for me, i just pulled an all niter with a couple of entertainers and the botle,

I hope my wife doesnt read this

#60 Innumeracy chick...No more(AKA AMAZON) on 01.25.13 at 11:28 pm

#58 Smoking Man you make me laugh…we have to keep the teachers employed golden handcuffs and all. Unfortunately for the youngens the pension plan was not managed well should have listened to Garth.

#61 Smoking Man on 01.25.13 at 11:29 pm

Only two things will push up fixed rates, low un employment, or 4 months of positive trade balance, to get that dollar needs to be at. 90 vs USD.

On Fix rate, retail investors need to pile into the equity markets. The outflow continues.

Low rates are the new normal.

For status, you need granet and hardwood, it cost 76 bucks a week per 100k of debt,

And guys wana go against the herd, more over, the wife.

Do you see why I am superior.

I see the obvious…….

#62 Smoking Man on 01.25.13 at 11:32 pm

Error on my last post, first line should be floating rate, not fixed rate. Damb auto correct on these dumb phones….

#63 Fleabitten Monkey on 01.25.13 at 11:37 pm

#17 Waterloo Resident

CMAs with 5yrs post qualification experience? Or are they prequal and non designated? That would be more plausible. Qualified for 5 yrs and making $50K per year at that level is most certainly bullshit. Support this please.

#64 Smoking Man on 01.25.13 at 11:40 pm

What would be interesting, a company sets up two sales offices. One is staffed by university grads, the other kids that dropped out of school left home and hustled for a living.

I would bet 1 Million that the drop outs would out preform the grads by a ratio of 3 to 1.

The west is going to get crushed, everyday Charley gets stronger in the jungle, and we pay huge amounts of money send our kids away only to be emasculated and made week… And stupid, they buy condos for zillions 500 Sq ft…….

We are doomed

#65 GTA Girl on 01.25.13 at 11:41 pm

two principles in a large condo/SF development firm are in big trouble. One, has beginning stages of Alzheimer’s. the other, showing signs of dementia.

Both have signing authority and from 2 separate families entwined by business interests and company name. The idiot sons are all now trying to prop up their sides. Organizing lawyer, trying to get power of attorney. Which side will get it done first?

Sad sad. What’s horrible is fake smiles both sides pretend everything is fine. But the sons w/Alzheimer’s dad, are going to rip the throat out of the dementia-ridden business partner’s son.

The bloodshed wil, be viscous

Don’t feel sorry for any of them. They’ve all destroyed people in their rise to top..

#66 Chickenlittle on 01.25.13 at 11:46 pm

HogtownIndebted
“The chicken made a contribution, but the pig made a commitment.” And the pig also made one heck of a dinner, too.
I do not own, I rent. I have nothing to lose.
You don’t date much do you? With those long winded speeches you give, I’d be surprised if any girls would give you more than five minutes.
You can drone on all you want. I work 10 minutes from where I live. I am not fat, either.
Enjoy idling downtown in your car.
I am not going to argue about how more walking a person can do downtown. I agree, in fact I would like that a lot.
I will be the first to admit that the city definitely has its perks, hands down. For my life right now, boring old suburbia will do.
Now that you have finished attacking the straw man you so deftly set up, have a good night.
That would be a good name for you- StrawMan

#67 Ken R on 01.25.13 at 11:50 pm

#26 Freedom First on 01.25.13 at 9:08 pm

Excellent observations but you might also include the payday cash stores parking lots- also full.

It won’t take a RE meltdown to wipe out the less informed; the explosion of poverty is already upon us.

#68 Innumeracy chick...No more(AKA AMAZON) on 01.25.13 at 11:50 pm

#17 Waterloo Resident move to Toronto rent and work extra job according to HogtownIndebted its better for you.

#69 HeartoftheWorld on 01.26.13 at 12:02 am

I see that the BoCs ‘dovish’ tone on rates (not raising them as soon as they have been publicly projecting that they would) has knocked the loony down more than a cent over the last couple of days. In fact it is now below par with the US. Yippee! That may slow the haemorrhaging of manufacturing jobs to locales south of the border, and stimulate Canadian exports.

So, Mr. Carney has been ‘talking his book’ of raising rates in order to slow borrowing; but when it becomes clear (like it did a couple of days back) that he is really talking through his hat, then the looney loses value, and Canada regains a sliver of competitive advantage.

We know that the US Fed has put rates on hold (ZIRP) until at least 2015. That means there is a 3/4 point spread between US and Canadian rates. We keep hearing on this blog (which I dearly love!) that the BOC will soon raise prime. If they do, the looney will rocket up, maybe by two or three cents past parity. Not so long ago it was ten cents over parity. So what would this do to Canadian manufacturing and exports industries? Harm them, of course.

Sorry Garth. I simply can’t accept your assertions that the BoC will raise prime anytime soon. I think they will do what the Fed dictates that they must do: stand pat. They will continue to talk up the possibility of a rate rise, however, to try to stem consumer borrowing.

And, as I said, it doesn’t matter. Mortgages go up anyway. — Garth

#70 CMA on 01.26.13 at 12:03 am

Being a CMA myself and knowing several CMAs making similar salaries only 2 years after designation, I call BS on Waterloo Resident. Then again, I live in Toronto, not Waterloo.

To be accepting less than $50k as a designated accountant speaks more to the individual than the designation, IMO.

http://www.cmaontario.org/HireACMA/SalarySurvey.aspx

#71 Mithan on 01.26.13 at 12:07 am

Friend at work and I were arguing this week. Today his house is worth $350k in Regina. He swears it will be worth $500k in 5 years and that there is no way prices will drop.

I still think once this thing hits, most of Canada is looking at a 25% correction at least. Everybody I know seems to complain they are broke or in massive debt, even though they make high 5 or six figure incomes.

#72 DON on 01.26.13 at 12:09 am

Friend left to work in Alberta (Oil) a couple of months ago. Up until recently he worked in home construction in the Central Vancouver Island area (now a retirement destination for prices for an average 3 bedroom house around a golf course might be 300K+, of course not on the golf course, everything has a premium).

His former company was building non-stop subdivisions and were not selling many, but the building went on at the same pace as the last 7 years. Well until all the crews got laid off before Christmas, YUP! Christmas.

My friend has good Karma! He got out just in time, I had been warning him of the impending disaster.

#73 Mic D'angelo on 01.26.13 at 12:15 am

Garth, in 2012 the same pattern happened with bond yields rising until April in which the U.S. 10 year reached 2.40% and U.S. 30 year reached 3.40%. We all know what happened after April 2012. Bond yields crashed to all time low on the U.S. 10 year of 1.48% and the U.S. 30 year fell to 2.52% and still have not recovered todayl. The U.S. 10 year is 1.95% and the U.S. 30 year is 3.13%. This is the same record playing over and over seasonal bond trading and central bank manipulation. Government bond yields make lower highs and lower lows. In 2010 April U.S. bond yields were 4.00% on the U.S. 10 year and 4.75% on the U.S. 30 year. All the financial experts and financial media were saying that the U.S. 10 year was going to 5.00% and the U.S. 30 year was going to 6.00%. the last time this happened was in 1998. Good luck expecting a long term sustainable rise in government bond yields over the next 5 to 10 years. It is 2 years and 9 months and we are not even close to 4.00% to 4.75% yields. I know the game is rigged ,Garth!

#74 Axxman on 01.26.13 at 12:26 am

#61 Smoking Man – Risk premiums will also push rates up. This has the Feds spooked.

#75 Smoking Man on 01.26.13 at 12:32 am

How to be a smoking Man….

Put the news on…… Two glasses of wine,… Head phones on…. Listen to Roger waters creations, and my favorite… Ca Ira….

It’s fking spiratchal..

#76 Mike on 01.26.13 at 12:33 am

It kills me how everyone here agrees house prices are inflated, but people mention the stock market, they point out the lack of growth in the last decade. Past performance does not determine future performance. You can’t point to extraordinary growth in the housing market and say it cannot last while looking at the stock market as a poor asset because of past performance.

Ask yourself one question; how have markets performed subsequent to 10 years of low growth, and you will quickly realize you need to invest and fast

#77 juno on 01.26.13 at 12:35 am

#1 Curious! on 01.25.13 at 7:45 pm

But if these 4/10 people have dual-income and/or supplementary income (basement rent), then 50k isnt so bad.
==========================
You think someone will rent your smelly basement when there will be tons of spank’in new Condo for rent at reduce prices (Supply and Demand). Happened in the 80’s. Also when those Broke Ass Virgins get destroyed, there will be no first time buyers for houses, cause they will be taken out of the “POTENTIAL BUYER” equation.

When people lose it all, expect them to go crying back to mommy and daddy and live with their parent’s until they can get their life straightened out. Meaning even more empty houses and less potential renters.

Don’t forget the huge percentage of people working in the housing industry, from builders, bankster, mortage brokers, the trades (electical, framer, plumber) and event the retail outlet (Home depot , REvy) who can potentially lose their jobs or reduce hours.

Have fun, trying to pump your BS to people, time will tell and you can’t defy gravity forever!!

#78 Evil Magpie on 01.26.13 at 12:36 am

That lovely 829K house nearby has been on the market for two months now. Price hasn’t budged a bit. City of Calgary assessed value: 616K. And on top of that, this house and its twin were under construction for the better part of a year. How could this not end in tears? :p

#79 Big Al New on 01.26.13 at 12:37 am

Hey HogtownIndebted you just reminded me why I hate Toronto, Jesus your smug. Next time give us the condensed version you pompous ASS.

#80 45north on 01.26.13 at 12:40 am

Canada is the biggest housing bubble in the world

http://www.theatlantic.com/business/archive/2013/01/the-biggest-housing-bubble-in-the-world-is-in-canada/272499/

HogtownIndebted: Living in suburbia is an abysmal choice. Especially when you stare into the face of a real estate downturn which will hit you like a maelstrom but probably only modestly affect mixed urban neighbourhoods like mine.

this is the year that total full on panic takes hold in the 905.

#81 Saskatoon Housing Bubble on 01.26.13 at 12:43 am

For those wondering,

Here is family income growth and average house price growth for Halifax, Montreal, Ottawa, Toronto, Kitchener, Winnipeg and Hamilton from 2000 to 2010.

http://4.bp.blogspot.com/-HjebRBtm2zE/UQNdUfmRKrI/AAAAAAAAFDM/EukHV6unAh8/s1600/House+Price+and+Family+Income+Growth,+2000+-2010+easter+canada.jpg

Compare that with the cities in this post.

http://4.bp.blogspot.com/-re6xkBrSDho/UPXHrMqTIOI/AAAAAAAAEsQ/wjpf1bH7khs/s1600/House+Price+and+Family+Income+Growth,+2000+-2010.jpg

Why should house prices follow incomes?

From Lawrence Roberts ( The Great Housing Bubble)
“Over the long term house values are tied to incomes because most people buy houses with mortgages for which they must qualify based on their income. Inflation keeps pace with wage growth because people will bid up the prices of goods and services with their available income. Therefore, over the long term house prices, wages and inflation all move in concert. There are short-term fluctuations in this relationship due to variations in financing terms, migration patterns, employment, local limits on construction and irrational exuberance, but any such deviations from the mean will be corrected over time by market forces. As an investment, houses serve as a hedge against the corrosive effect of inflation, but over the long term appreciation much in excess of the general rate of inflation is not possible. In this regard, houses are little better than savings accounts as an asset class, and they are inferior to stocks or bonds in the long term.”

#82 Smoking Man on 01.26.13 at 12:46 am

Lead belly kind of like a smoking Man influenced a generation, know one another a few rock stars knows who he is.. Apart from people that plagerized him. Stones, Zeppelin, at leased kurk cobain gave him a mention.

#83 not 1st on 01.26.13 at 12:51 am

Saskatoon housing bubble, thanks much for the charts and all, but seriously you need to get a life. This can’t be your hobby can it?

#84 Tony on 01.26.13 at 12:53 am

Re: #36 Innumeracy chick…No more on 01.25.13 at 10:00 pm

You go to the head of the class. You have things exactly right. If you believe real estate will recover in America buy iStar Financial Inc. common or preferred shares.

#85 EIT on 01.26.13 at 12:57 am

“Where are my posts? They were there? Were they deleted?”

BAHAHAHAHAHAHAHAHA, yea that happens

#86 Nostradamus Le Mad Vlad on 01.26.13 at 12:57 am

-
“Almost four in ten people who intend on buying a house in the next two years earn less than $50,000. So, to restore 2009 market momentum, one of three things has to happen. (a) Wages and salaries take a flying leap higher. (b) Real estate prices fall by about a fifth, at least. (c) Or, F crumbles and brings in 50-year amortizations and free downpayments with every TFSA opened.” — I opt for (c), and open as many TFSAs as I can!

#16 Hoof – Hearted — Noted, and thx. for the links. As always, there are many sides to a story, but I wasn’t aware that Churchill was up to his neck in it. Always something new to learn!

Timing Is Everything: I’ve found the Sno Cones Factory, in a galaxy far, far away from here. Is this where you live?!
*
Bay St. pic Now that’s a pic for the ages; Emperor Diocletian The scam is almost complete; Cdn. Friday links; Turkey aids Iran through gold trade; 1:32:00 movie Grinding America down; China quiietly eating up American resources; Bonds The 1994 Moment and World Currency War; Derivatives How much are the losses? G7 Yuan Swap Hosted by the BoE; Honduras Almost broke; Apple “Its shares have fallen almost 40% since hitting a record $702 in September.”; Banks A Cdn. show exposed how Cdn. banks are doing very nicely off us, so Brit. banks are doing well off their citizens; Low energy lightbulbs Not that efficient after all; Three Trillion What would we do with it? UK’s current slump worse than GD. Hence, it’s GD2; 1:02 clip Countries cannot become wealthy by printing money; Search on for Russia’s missing gold.
*
1:36 clip “At this point it is clear that the US Government moved the AR-15 from Adam Lanza’s car into the school in order to demonize and ban military style rifles. The goal is not public safety (or they would ban prescription anti-depressants) but disarmament of the American tax-slaves ahead of monstrous new “austerity” measures; looting the people to placate the money-junkies.” wrh.com; 44:05 doc. Agenda 21 and environmental marxism; Hashtags Something to do with the French govt.; Betalgeuse Crashing into something? Life – Life after Death This was taken undersea; Nice car Not yer average family beater; 5:35 clip Russian opposition leaders receive instructions in US Embassy’s office; Communists love Obomba’s gun grab (politicos are exempt, ‘tho); Believe It Or Not Belgian MP goes public with war on terror lies and 9-11 false flag; Why Are Some Cops So Violent? “Are antidepressants dangerous medications for cops?” Yes, and possibly Joe Biden has something to say on this matter; 9-11 and CISPA It’s back; No Shots Fired “Real Americans would have let themselves be shot dead waiting for the police!” — Nancy Pill O’see; wrh.com; MSoft Passing the buck; 0:33 clip The Chesterton Prophecies; Koreas Back on war footing, and China testing new weapons; Gatorade pulls ingredient linked to infertility.

#87 stop lying on 01.26.13 at 1:17 am

ouch

Sold: $1,850,000
21 Laureleaf Rd
Markham, Ontario L3T2X4 York Bayview Glen
List: $2,185,000
Orig Price: $2,490,000
Taxes: $10,277.30/2012 85 % List
DOM: 122

#88 The F effect — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate « The Affluent Boomer™ on 01.26.13 at 1:18 am

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

#89 Muddy Waters on 01.26.13 at 1:36 am

Just stumbled upon two full newsprint pages of comic book heroes, aka REALTURDs, on pages 4-5 of the Globe’s Report on Business. Their sole claim to Canadian fame? …sales for most gross (an appropriate term) closed and collected commissions, aka ‘sucking the life equity from your home’.

In today’s wired world, why would anyone turn over 7% of their life equity to a necktied, data manipulating, deceitful, pump & dump land pimp, when there are more cost-effective ways of publicizing the forthcoming sale of your own home?

#90 Tooz on 01.26.13 at 1:53 am

Garth – bond market is manipulated by Fed. They can and will keep 10 year bond rates below 2.5%. There is no way out of a ZIRP. Low rates are here to stay for a very long time. Where did your economist friends get their education?

#91 Vancouver CMA on 01.26.13 at 2:01 am

cma’s with 5 years post qualification experience make 85 to 100k. Not sure where you get 25 from. An AP/AR clerk make 35k and that’s like when you start the program.

#92 Mark on 01.26.13 at 2:30 am

Garth, do you “ride” with economists that understand that mortgage rates and other rates applicable to retail residential mortgage borrowers can change as a function of not only central bank policy rates, but also as a function of the level of perceived risk in a particular marketplace?

BoC’s next move is down. This is quite clear from the deflationary data we saw in the most recent CPI report. Probably eventually to zero, with USA-style quantitative easing required. But spreads are quite likely to expand as people in the investment community realize that SFH’s and condos are ‘turds’ with decreasing rents, and decreasing overall credit quality of the occupants.

The central bank rate will not be decreased, obviously. — Garth

#93 Mark on 01.26.13 at 2:46 am

About Canadian banks: They mostly hold mortgages and other assets that are short-term in nature, matched with deposits, and carry little or no risk in the portfolio that isn’t backed by the CMHC. The banks stand to benefit enormously through house price declines and a revulsion to additional housing debt. Remember, they hold 100% guaranteed mortgages in a deflationary environment. A travesty to the taxpayers who may very well be writing the big-5 cheques for hundreds of billions of dollars over the next few years, but an opportunity for bank shareholders to re-liquefy the economy with their rich bank dividends.

#94 Suede on 01.26.13 at 3:00 am

“(Bob) Rennie disclosed that one unnamed client pays him $25,000 per month to drink coffee with him three times a week. This anecdote illustrated Rennie’s point that there will always be someone who is smarter and richer than you.”

http://www.straight.com/news/345121/bob-rennie-offers-life-lessons-vancouver-students?mobile_theme=1

#95 █ ♣ █ ANONYMOUS on 01.26.13 at 3:57 am

Waterloo Resident; I hear you! I too know of quite of few professionally designated accountants who are having a difficult time right now, its tough on them, but not nearly as tough as it is for UK accountants: ” IS ACCOUNTING A DYING PROFESSION” http://uk.answers.yahoo.com/question/index?qid=20100309063852AAkg1dr

As for living in the city: I like it, but only if you live within 3 miles of where you work, and then you can bike/walk to work and back each day, to me that’s paradise.

BED BUGS: HUGE PROBLEM !!!
Don’t pick up any old furniture you see laying in someone’s trash; 80% chance its out there because it has bed bugs. Don’t go to Goodwill for the same reason: Bed bugs.

Okay: 2 Professional Accountants, each earning $25,000 per year (total $50,000 per year). They buy a $400,000 condo in Toronto, their food is $400 per week, and they want to have 2 kids right away. I don’t see any problem, do you?

#96 dave on 01.26.13 at 4:32 am

With the recent blast of positive global economic news, I am now positive there will not be a major crash in Canadian real estate in 2013 or 1014. Although I think Garth you are probably right that condos appear to be an over supplied market in city centres.

Stock markets, especially in the US — look like they could be on track for a terrific year. At the low end I think you’ll see the S&P at 7% and maybe a face ripping rally up to 20%.

One thing I haven’t been able to figure out is why Canadian BOC or Fed reserve haven’t at least moved a quarter point to take us away from the current emergency levels. There is enough positive news to warrant a tiny move in rates.

#97 martin9999 on 01.26.13 at 5:00 am

The road is narow and long !!! And I thought you were genuine

#98 martin9999 on 01.26.13 at 5:11 am

#61Smoking Man on 01.25.13 at 11:29 pm
Only two things will push up fixed rates, low un employment, or 4 months of positive trade balance, to get that dollar needs to be at. 90 vs USD.
———–
Live the macro crap alone. They never behave like they should. Cheers

#99 John Melville on 01.26.13 at 5:12 am

“So, to restore 2009 market momentum, one of three things has to happen. (a) Wages and salaries take a flying leap higher. (b) Real estate prices fall by about a fifth, at least. (c) Or, F crumbles and brings in 50-year amortizations and free downpayments with every TFSA opened.”

– there is another option: hot money from Asia continues to flood the Canadian property market, turning locals into increasingly impoverished renters.

#100 Jane24 on 01.26.13 at 5:38 am

Just got up and made a coffee.

Took it into the living room and looked out the window.

My first daffodil is in bloom – it’s Spring!

I do like living on the South coast of England.

This will be a happy day in spite of the usual Mother’s Saturday job list!!

#101 Victoria Real Estate Update on 01.26.13 at 6:13 am

Hi girls and guys from Victoria. If you are here because you might be buying a house or condo in Victoria, then I invite you to read my updates about Victoria real estate.

I’m a female in her 20’s who has always lived in Victoria. I know how expensive houses are because we were thinking of buying a couple of years ago but decided against it and boy am I glad we did. I can tell you now that the houses we were looking at in Saanich have gone down in price quite a bit since then, and they will keep going down. If we would have bought back in 2010 or 2011, we would now owe more on our mortgage than the value of the house. We have been keeping track.

We’ve been watching the housing market here in Victoria closely for a long time. The new mortgage rules have really changed things here in Victoria. There are a lot less sales than before because not as many people can qualify for mortgages. I’ve seen houses in Victoria listed for almost 40% below assessment on MLS. That’s proof that the market is really starting to fall. We’ve come to the conclusion that now is not the time to buy. We’re waiting for prices to go down more. It might take another year or two, but we know that it will be worth it.

Guys I know some of you are probably feeling pressure to buy because your girlfriend wants you to. Girls, I know how much you want that house or condo, but it really makes a lot more sense to rent for now until prices come down. Buy at a much lower price and you will have much more money to spend on everything else.

It seems the only people who are not predicting much lower prices are realtors and real estate boards. The reason is obvious. Victoria is very overpriced right now. It is actually considered to be extremely unaffordable and one of the most unaffordable cities in the world, along with Vancouver. Victoria is really no different than Miami, Phoenix, Los Angeles and Las Vegas were before their housing markets crashed. I will write more about that another time.

#102 monopoly money on 01.26.13 at 6:36 am

You were wrong again Garth, overnight interest rate annoucned by the bank of canada stays at 1% for another year… You keep claiming interest rates are going to rise instead they stay low, just as the metalheads and gloom and doomers say they would, simply because they know that Ben Bereneke is going to keep interests rates low until 2015. Nice try on covering it up through in your post… lol

Learn to read. The BoC made no such announcement. — Garth

#103 blobby on 01.26.13 at 7:10 am

Garth – I dont know if you’ll reply to this, but i’m interested.

I come from the UK. Years and years ago when i first looked at buying property – the banks wouldn’t touch me for a mortgage that was more than 3x my income – or 2.5x the joint income of me and my spouse.

Of course that changed under new labour (which was just as left as the bc “liberals” are).. When they decided to make it so that ANYONE could pretty much borrow what they wanted – still almost the case here too.

Now IMHO such a system of a max borrowing of 3x income is a BLOODY GOOD one and limits people over borrowing and stops any major dips/bubbles from happening. But of course – it’s not a vote winner amongst people who see that as a “nanny government”.. And ever more of course – it’s VERY hard to inroduce one the damage is done without causing a MAJOR crash.

But Im wondering your thoughts on such a system?

#104 Mike Leblond on 01.26.13 at 7:15 am

Two other housing markets bite the dust: the French and Dutch housing markets were considered to be very resilient up until recently. Now:

“..Downturns in the Dutch and French housing markets appear to be accelerating. We forecast nominal price declines of nearly 6pc and 5pc respectively this year as rising unemployment, decelerating wages, and the prospect of austerity measures frightens off buyers,” said Jean-Michel Six, the agency’s chief Europe economist….”
“http://www.telegraph.co.uk/finance/financialcrisis/9809723/SandP-sees-deeper-house-price-falls-in-eurozone-as-slump-engulfs-core.html

#105 For Sale on 01.26.13 at 7:33 am

I got a letter in the mail from Scotiabank yesterday informing me of a change to my 6% “no-fee value visa”.
It’s being “converted to a personal line of credit, and as a result, the 21 day interest-free grace period will no longer be available”. Interest begins when you use it. Or apply for a new card at 19.00% int.
When I asked why, their answer was government regulations. But they weren’t able to expand on that. Government regulations??

#106 Ballingsford on 01.26.13 at 8:23 am

Thanks for the comments Junius and Andrewski.

So, is there somewhere I can do some research on how to self direct an ETF or other dividend payers through my TFSA and not pay any or too much management fees?

Earning dividends inside a TFSA means loss of the dividend tax credit. Smart investors usually learn that doing things to be cheap has consequences. — Garth

#107 Ballingsford on 01.26.13 at 8:33 am

Watched Marketplace last night about the fees that the big five banks make from us and I wasn’t impressed. I know they need to make something for their services but that is ridiculous.

When a bank is taking a percentage for Mutual Funds, say 1.5%, how do you know exactly how much and when they are taking it? I can never see it specifically on the hardcopy or on-line statements or transactions.

#108 Kingbubbles on 01.26.13 at 8:43 am

@ #7 – Winnipeg

Winnipeg has one of the worst bubbles as incomes have not changed much yet house prices have gone up percentage wise close to Vancouver. I don’t see how that can be a sign of a healthy real estate market.

#109 902 Scotian on 01.26.13 at 9:31 am

Don’t think markets will be going through the next resistance level, especially with fiscal cliff debate 2.0 in February. Fixed mtg rates stable for now.

News flash: there is no 2.0 debate. — Garth

#110 POOR TO MAN on 01.26.13 at 9:33 am

Interest Rates Will Spike This Year: Soros
http://www.cnbc.com/id/100401701

Soros warned, “Once the economy gets going, then interest rates are going to take a big leap.”

Soros and Turner made the same prediction on interest rates.

Most of my friends are still thinking interest rate will not increase again in their life time. GOOD LUCK!!!!

#111 Young & Eligible on 01.26.13 at 9:36 am

I look forward to the acres of parking being prepared at Yonge & Eglinton, Toronto. I walk exactly 950 m to school with the kids every morning and pass 4 towers being planned – all told at least 140 new floors of “boxes”. Garth, what happens when all these kids marry each other? That should accelerate the inventory for sale. Oh wait, there are 100,000 new immigrants coming into the City early to look for jobs that don’t exist!

#112 Piccaso on 01.26.13 at 9:45 am

Soros sees soaring interest rates, strong euro
January 25, 2013, 4:44 AM

The U.S. economy is picking up steam and the Fed’s quantitative-easing approach is helping, but investors should watch out for a possible spike in interest rates once growth is well under way, billionaire financier George Soros warned as he made the rounds at the World Economic Forum in Davos.

“Once the economy gets going, then interest rates are going to take a big leap,” Soros, the founder of Soros Fund Management LLC, told CNBC in an interview late Thursday.

Soros said the move is likely to happen in 2013 and “may have already begun.” Once uncertainty over the federal budget is overcome and investment decisions are made, “I think you’ll see it,” he said.

Soros, who famously made a billion dollars betting against the British pound in 1992, also said there’s room for the euro to appreciate as other countries, such as Japan, take steps to weaken their currencies, Bloomberg reported.

Soros in September slammed Germany for foisting austerity on the euro zone and said the region’s largest economy was potentially heading for a depression of its own.

On Thursday, Soros said Germany would do the “minimum” to preserve the euro, but said the euro-zone still faces a “tense” situation over the next two years, according to Bloomberg. Maintaining that the timing remains wrong for more austerity, Soros said tight fiscal and monetary policies will see the shared currency appreciate as other countries pursue looser policies.

“Currencies have been remarkably stable in the last few years,” he said, according to the report. “Now there is the making of more fireworks, more volatility.”

#113 Bigrider on 01.26.13 at 9:51 am

All this banter about which areas of the GTA will hold up better ,price wise, over the other.

I say big deal. In the event of an RE correction who cares.

So, a couple with a million dollar mortgage on a 1.5 million dollar home at Leaside loses 20% of his equity and is minus 300k.

A couple with a 400k mortgage on a 600k home in Brampton loses 30% and is minus 180k.

Both couples in a world of financial hurt.

#114 Darlene on 01.26.13 at 9:55 am

Waterloo Resident on 01.25.13 at 8:50 pm

“I would like to buy a small lot and build myself a small 500 sq-ft house on it, but here in K-W even small vacant lots cost upwards of $250,000 – plus ! Then add an extra $50,000 for the house and its not any cheaper than buying an already finished-built house for $350 K to $400 K here. Here in K-W even abandoned burned-out houses are going for $500,000. ”

Great news Waterloo Resident! I found you a small place in Kitchener. It’s in a heritage designation so you’ll never have to worry about a McMansion going in beside you. It’s got a large enough lot to do some serious vegetable gardening to cut down on those grocery bills. What more could you possibly want???

http://www.realtor.ca/propertyDetails.aspx?propertyId=12619927&PidKey=-160999450

#115 AK on 01.26.13 at 9:57 am

#84 Tony on 01.26.13 at 12:53 am

“If you believe real estate will recover in America buy iStar Financial Inc. common or preferred shares.”

I also like SFI, along with AGNC and MTGE. It will be sweet if SFI starts paying a dividend though.

#116 Q on 01.26.13 at 10:00 am

“Perhaps instead of pursuing the unauthorized use of provincial logos to help sell condos, the government should be looking at what appears to be widespread illegal use of the first time home buyer grant to circumvent CMHC mortgage insurance regulations?”

http://whispersfromtheedgeoftherainforest.blogspot.ca/2013/01/is-bcs-first-time-home-buyer-grant.html?m=1

#117 Nemesis on 01.26.13 at 10:01 am

@Nostra #86 – Apple “Its shares have fallen almost 40% since hitting a record $702 in September.”

Including, of course, yesterday’s HFT dramatic plunge in the final second of trading… (800k share, USD 350M ‘trade’)

http://tinyurl.com/b74tdjo

#118 T.O. Bubble Boy on 01.26.13 at 10:04 am

Wow – the media is all-in on a housing correction… Check out the “done deals” headlines, which now all mention ‘price cuts’ and ‘under asking':
http://www.theglobeandmail.com/life/home-and-garden/real-estate/

Only a few months ago, these headlines were 100% about bidding wars and sales well over asking price.

#119 Risk Analyst on 01.26.13 at 10:07 am

I got a letter in the mail from Scotiabank yesterday informing me of a change to my 6% “no-fee value visa”.
It’s being “converted to a personal line of credit, and as a result, the 21 day interest-free grace period will no longer be available”. Interest begins when you use it. Or apply for a new card at 19.00% int.
When I asked why, their answer was government regulations. But they weren’t able to expand on that. Government regulations??

Td had a product similar to this, the powerline, which they had to discontinue because of regulation.

#120 Tri State Pat on 01.26.13 at 10:25 am

Hey HogtownIndebted you just reminded me why I hate Toronto, Jesus your smug. Next time give us the condensed version you pompous ASS.

——–
Good analysis on HogtownIndebted. He did raise some good points however, but he was not nice about it.

#121 Calcanadian64 on 01.26.13 at 10:34 am

Lets not forget that a significant part of “family income” comes from the sales of remodeled kitchens, 60″ LED TV’s, BMW leases, construction of condo’s, fine dining etc. When I lived in LA during the last crash, all these luxuries were halted in their tracks. 6 figure Sears appliance salesman became a thing of the past… and THAT had a huge affect on the overall income.

#122 TimV on 01.26.13 at 10:35 am

#46 Saskatoon Housing Bubble: Interesting (and a bit surprising) that my quick guess from your charts shows Toronto as being one of the least overvalued regions, on a percentage basis. Toronto prices are pulled down by all the tiny condos, but I guess the data are what they are.

Might be interesting to plot “expected % price correction assuming reversion to y2000 price:income ratio”, per city.

#123 Herb on 01.26.13 at 10:40 am

#82 Smoking Man,

ah Smoking Man, a legend in his own mind.

#124 The Prophet Elijah on 01.26.13 at 10:46 am

#5 not 1st on 01.25.13 at 8:12 pm

Economists riding harleys? why does that make me a little sick to my stomach.

Anyway, whatever wage gains people are striving for pale in comparison to the inflation of real needed items. Have you been to the grocery store lately? $100 of food fits in 2 smallish bags.
———————————————————-
What are you talking about inflation is just under 2% (lots of sarcasm)

#125 The Prophet Elijah on 01.26.13 at 10:54 am

#26 Freedom First on 01.25.13 at 9:08 pm

Bar parking lots-full. Casino parking lots-full. Lottery kiosks-lineups. Doorways of commercial/public buildings-crowded with smokers. 80% of Canadian RE buyers-believe prices will rise or stay the same. Canadians-maxed out on record levels of debt. Canadians-savings rates- at all time lows.
Canadians-obesity at epidemic levels
All proof positive-many Canadians do not know what is good for them. When did we get so stupid?
———————————————————
This sounds like America pre-2006.

#126 Ron on 01.26.13 at 10:54 am

I think the more you learn about the investment approach and principles Garth is generous enough to trickle out here, the less sense most of the comments make. In another six months I may need a lobotomy to understand them. A tip for others who are also finding this to be true…. control F on your keyboard and search “garth” to read his replies and skip the conspiracies and paranoia.

#127 The Prophet Elijah on 01.26.13 at 10:57 am

33 Pr on 01.25.13 at 9:53 pm

…As the reality spreads, thanks to social media….

Yes, in 2006 the informations, on the USA real estate meltdown, was not like today.

Now we have Internet everywhere, twiter, Iphone, cellular with Internet and emails, etc.

It should pick up more speed as the months progress.
———————————————————-
They had Peter Schiff on the nightly news warning about it, but hey was just laughed at.

#128 The Prophet Elijah on 01.26.13 at 11:00 am

#42 Innumeracy chick…No more on 01.25.13 at 10:28 pm

Where are my posts? They were there? Were they deleted?

What’s your agenda? — Garth
————————————————————
You must’ve said something about gold, Garth is selective here. I’ve had to re-post twice as my logical arguments were “forgotten”.

You have posted here a dozen times today. Go for a walk or something. — Garth

#129 CrowdedElevatorfartz on 01.26.13 at 11:03 am

@#86 Nosty Mad Vlad

While I occasionally enjoy checking out some of the links….. The govt conspiracy drivel is a bit much.

If you really believe the conspiracy that “the US govt would perpetrate the Sandy Hook killings and then blame it on an obviously deranged antisocial loon just to bring in gun control….”
You need help for your paranoia If you truely believe that conspiracy drivel.
Oh and news flash! 911 was done by muslim highjackers NOT the US govt.

unbelievable
Your a fool.

#130 Daisy Mae on 01.26.13 at 11:04 am

Watch Marketplace’s episode, Busting The Banks, Friday at 8 p.m. (8:30 p.m. in Newfoundland and Labrador).

#131 The Man From Nantucket on 01.26.13 at 11:06 am

Apple?

I don’t want to try to catch a falling knife, but there’s certainly value in this company…….The product is sleek, sexy, and quite functional if you agree with Jobs’ world vision.

Every time there’s a new product, idiots line up before midnight on release day to overpay for it.

Guessing that AAPL’s true value is going to be a fair bit more than whatever trough the panicked sellers might drive it into.

Any of the blog dogs got a theory as to where this ride changes direction?

#132 Eaglebay - Parksville on 01.26.13 at 11:11 am

#107 Ballingsford on 01.26.13 at 8:33 am
“Watched Marketplace last night about the fees that the big five banks make from us and I wasn’t impressed. I know they need to make something for their services but that is ridiculous.”

That CBC show was just BS.
The bald idiot was loaded with credit cards, lines of credits and mortgages. Yet, he was impressed to realize that he could save a huge $25 saving on one credit card.
The old guy (boomer) was surprised that he signed up for a “collateral” mortgage.
WTF he should be cashing out not get a new mortgage.
He’ll be dead by the time the mortgage is paid off if ever.
Typical MSM. Waste of time.

#133 The Prophet Elijah on 01.26.13 at 11:14 am

#58 Smoking Man on 01.25.13 at 11:16 pm

School is such a waste of money. Was messing around on Google looking for C# sample code, everything you can think of is out there.

Copy paste bit of modification instant app……

But send your kid to western 60k later, he still knows less that a Dyslexic Drunk…..

Why Am I the only one that can see the obvious….
———————————————————-
There is alot of truth to this. In addition to coming out with student loan debt job prospects are drastically falling. Graduates exceptions of what to expect is such an illusion, mainly cause in the past select few went to university and landed high paying jobs, but now every tom dick and harry has a degree in something and the market is saturated, like RE. But because everyone else is feeding this cash cow called post secondary it forces everyone else too as well, otherwise you can’t get your foot in the door. The next thing they’re pushing is MBA’s with propaganda on how you’re going to make more with a upper education, but sorry it’s not that simple either. The other trend is earning additional designations, so after work you can study all night for you employer thats not going to pay you anymore for it, cause eveyone else is duped into it and the market is saturating with these too. In all reality a strong work ethic, maturity and work experience go way further than an eduction any day, school of hard knocks as they call it.
But having said that education for certain things that require it, like medical, law and the trades (thats right only a 2 year college diploma) are still worth it.

#134 Twooping on 01.26.13 at 11:21 am

#108 Kingbubbles 
@ #7 – Winnipeg

Winnipeg has one of the worst bubbles as incomes have not changed much yet house prices have gone up percentage wise close to Vancouver. I don’t see how that can be a sign of a healthy real estate market.
————————————-
Yes, prices jumped substantially from 88k to 228k (2000-2010) but household income has hovered around 70-75k. Housing was dirt cheap in 2000. You can’t even begin to compare Winnipeg to Vancouver.

#135 The Prophet Elijah on 01.26.13 at 11:22 am

#64 Smoking Man on 01.25.13 at 11:40 pm

What would be interesting, a company sets up two sales offices. One is staffed by university grads, the other kids that dropped out of school left home and hustled for a living.

I would bet 1 Million that the drop outs would out preform the grads by a ratio of 3 to 1.

The west is going to get crushed, everyday Charley gets stronger in the jungle, and we pay huge amounts of money send our kids away only to be emasculated and made week… And stupid, they buy condos for zillions 500 Sq ft…….

We are doomed
———————————————————
But smoking man won’t the grads have exceptional critical thinking skills and social skills that will propel them to those well paying jobs? Isn’t that how they sell post secondary?

#136 902 Scotian on 01.26.13 at 11:30 am

#109 Don’t think markets will be going through the next resistance level, especially with fiscal cliff debate 2.0 in February. Fixed mtg rates stable for now.

News flash: there is no 2.0 debate. — Garth

_________

More political theater on the horizon as automatic spending cuts take affect mar1. Lots of fiscal issues still in US. Markets will respond. Trade accordingly.

http://www.washingtonpost.com/politics/hold-house-votes-to-suspend-debt-limit/2013/01/23/58f2013c-6574-11e2-85f5-a8a9228e55e7_story.html

Zzzzzzz. — Garth

#137 The Prophet Elijah on 01.26.13 at 11:31 am

#72 DON on 01.26.13 at 12:09 am

Friend left to work in Alberta (Oil) a couple of months ago. Up until recently he worked in home construction in the Central Vancouver Island area (now a retirement destination for prices for an average 3 bedroom house around a golf course might be 300K+, of course not on the golf course, everything has a premium).

His former company was building non-stop subdivisions and were not selling many, but the building went on at the same pace as the last 7 years. Well until all the crews got laid off before Christmas, YUP! Christmas.

My friend has good Karma! He got out just in time, I had been warning him of the impending disaster.
———————————————————
Your friend might not have a job much longer considering Alberta’s ballooning deficit problems resulting from collapsing oil sands prices.
And I know what you mean about construction companies building homes with no buyers, I watch one neighborhood in particular in a mid sized Alberta city, 40-43 houses for sale and nothing moving, maybe 1-2 now and then, but then you question if it was a sale or just taken off the market, either way it’s baffling as to why they continue building more and more when the supply is already crushing the demand??

#138 Daisy Mae on 01.26.13 at 11:33 am

#52 Snowboid: “Kelowna, $100 doesn’t go far at the grocery store.”

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

Depends what you buy. Is it a guy buying meat? Or a woman buying fresh produce? :-)

#139 Innumeracy chick...No more(AKA AMAZON) on 01.26.13 at 11:45 am

#84 tony #115 AK I like the preferred shares of SFI. You have to hold US dividends in RRSP so as they don’t qualify for the dividend tax credit. Also some brokers mine BMO lets you hold US cash to buy these with. That would help with the conversion. I just learned this today after looking up your stock suggestion. So I guess US equities are not for the TFSA or non reg acct. Back to the drawing board.

#140 Buy? Curious? on 01.26.13 at 11:56 am

Scott in Gibsons, great post! So frickin true. But after learning the Zen of Smoking Man, wouldn’t it be wise to INVEST in those companies that are untouchable? BP, HSBC, Haliburton, the list goes on with companies that commit horrible crimes but get away with barely a fine.

Hey Innumeracy Chick, fancy going out for dinner?

#141 a prairie dawg on 01.26.13 at 12:00 pm

The 12 Best Charts Of The Week

http://www.businessinsider.com/best-charts-of-the-week-january-26-2013-1

#142 The Prophet Elijah on 01.26.13 at 12:03 pm

In Redfords address it can be translated as – Um saddle up partners the boom is about to go bust, and its not our fault, really:

http://www.youtube.com/watch?feature=player_embedded&v=ryD5DXuBwg0

#143 a prairie dawg on 01.26.13 at 12:25 pm

So everyone now is stuffing the orange guys shorts or the bond market.

For those here that haven’t yet, it MUST be time to do the opposite.

http://www.businessinsider.com/a-google-trends-chart-for-the-word-investing-says-it-all-2013-1

#144 squidly77 on 01.26.13 at 12:26 pm

131The Man From Nantucket on 01.26.13 at 11:06 am

$300-$350 – Its a great company but no one rides the crest of the tech bubble for ever.

Watch out for FB – I cant see any value there @ $31 a share.

#145 Snowboid on 01.26.13 at 12:29 pm

#126 Daisy Mae on 01.26.13 at 11:33 am…

You are so right – all I ever buy is meat: steaks, ribs, ground beef, pot roasts, prime rib, and let’s not forget stewing beef.

What’s fresh produce?

#146 NoOneOfConsequence on 01.26.13 at 12:33 pm

#55 Hogtown indebted

#147 CrowdedElevatorfartz on 01.26.13 at 12:34 pm

YO ! Eagle Bay- Parksville
If you recall my rebuttal to you a few days back
( Check under Garths title “Moral Hazard” and #30)
We were discussing SNC Lavalin. That “great” Canadian company as you so naively described it).

Been watching the news?
Google “SNC payed $160,000,000.00 BRIBE” and see what pops up

This is only gonna get better. Then the lawyers for the shareholder class action suit will pick the financial flesh off of what ever is left. I will enjoy every last news article over the next 5 years about their demise.

have a nice day in Parksville…..Is it still raining?

#148 Innumeracy chick...No more(AKA AMAZON) on 01.26.13 at 12:35 pm

#140 Buy Curious LOL are you sure you are blogging on the correct site! Do you look like the fabio in the Highlander Youtube video? Just teasing. I do love classic rock though…I was born in the 70’s But I have never seen that movie and I love Sean Connery so thank you I will look into watching it tonite.

#149 Ret on 01.26.13 at 12:36 pm

Re: #41 Oakville townhome.

“The front is a walk out but the bedroom has those tiny slit windows.”

I see high horizontal windows like this in just about every episode of a certain show on HGTV that promotes finishing basements as income suites.

My read of the fire code is that these windows do not meet egress requirements for fire escape as these windows are too high above the finished floor and are often not the minimum length, width or total area required. Please correct me if I am wrong.

Were there permits taken out and inspections done on this unit or was this a unit added in the building’s basement? Most basement suites, student rooms and apartments are firetraps ignored by municipalities. (Certainly the case in Hamilton.)

Areas around universities and colleges are danger zones. Students are young and carefree and don’t know of the dangers that they are exposing themselves to. Landlords either lie or don’t care.

Anyone renting a basement room or apartment needs to read up on the fire code before renting. When in doubt, ask for a fire department inspection with you present. Get the fire department to give you something in writing regarding the inspection of the unit as a fire code compliant rental, re: ceiling heights, egress windows and doors, smoke/CO alarms, stairway widths, etc.

#150 hangfire on 01.26.13 at 12:36 pm

Vancouver is still the scam capital of the world

http://www.vancouversun.com/business/Blockbuster+donation+Michelangelo+sculptures+turns+into+multi/7875342/story.html

Famous scams came out of the Vancouver stock exchange with the likes of names like Pezim and Costard…..we were treated to giant bunnies and moon sized black pearls….which saw the naive dump their money into some scamsters pocket……and phony gold plays….well don’t get me started….Vancouver is synonomous with sleaze…….the efforts of the same scam artists have now been working the real estate market….with the help of the civil service and the media……the truth has been kept …hush hush…while massive numbers of people lose their life savings on leaky condo…soon to be derelict high rises…and mortgage scams they will never be able to pay back……some things never change eh?

Today I think I might go to a museum stuffed with actual treasure…..free of course…..in Dallas Texas of all places…….so why isn’t there any museums in Vancouver or Toronto for the enjoyment of the public….free? Of course there isn’t a gallery or museum in Vancouver so we’ll just write that city off.

A truly enlightened society brings art to its people…..Canada is always boasting of its ‘world class ‘ cities…..so where the world class stuff for the peoples enjoyment.

If you stop fuming for a second you’ll realize that the reason is because more than 100% of all revenues go directly into the pockets of the greedy elite unions and civil service…with nothing left for the people.

Vancouver me thinks has hoisted itself on its own petard.

#151 NoOneOfConsequence on 01.26.13 at 12:39 pm

#55 Hogtown Indebted

You are clearly speaking from a completely selfish point of view. As long as its all about ME, ME, ME…your comments have a *little* merit.

Your attempt at applying sweeping stereotypes to the majority of suburban dwellers is clearly mis-informed and actually amusing in it’s immature hubris.

Come out to the West Coast. Come meet thousands and thousands of FAMILIES who don’t meet your ridiculous statements.

I think you better crawl back to your cave…er….450 square foot palace in the sky and take a look at what you really have: a sad and lonely existence in a concrete jungle.

#152 Hoof - Hearted on 01.26.13 at 12:48 pm

#37 JuliaS on 01.25.13 at 10:07 pm

I hear you.

The only thing that makes sense is money laundering..how many more greater fools are left ?

Our Gov’ts must extrapolate ever Visa as X dollars…y’know a SFH or condo/s. From that is a property tax base a cash cow. The concern is the rest of us do not have Jobs in Asia and cannot afford these ravenous revenue demands by Gov’ts.

They can milk this offshore cow and ignore the fact that they ar kililng jobs ad opportunities here. As you say..you can see the signs all over…businesses closing etc. and dark empty condos and McMansions In this economy, I just can’t see them ever coming back.

#153 Bigrider on 01.26.13 at 12:51 pm

That’s all we need on this blog now. The arguments around the urbanites and the suburbanites about where it is better to live. ‘ 416′ ers feeling superior to ‘905 ers’ and vice versa.

You make your choice based on your own personal requirements, wish lists and circumstances. You then live with the benefits and the drawbacks of either choice.

Make no mistake , there are clearly benefits and drawbacks to both lifestyle choices, unless of course, money is no object.

#154 Herb on 01.26.13 at 1:00 pm

#150 hangfire,

If you stop fuming for a second you’ll realize that the reason is because more than 100% of all revenues go directly into the pockets of the greedy elite unions and civil service…with nothing left for the people.

Balls, as usual.

#155 coastal on 01.26.13 at 1:04 pm

#101 Victoria Update,

Great post, too many young people are being pressured to buy at the wrong time by dumbass helicopter parents and arrogant friends who happen to be up $50K or so and think they are geniuses. Beware the slimy agents who pump themselves all over social media, they care not for your financial well being as they make it well known with pompous assed blog postings. The shit is about to hit the fan this spring and the last person saying “soft landing” needs serious help as it’s never happened in the history of real estate booms.

#156 T5>myT4 on 01.26.13 at 1:13 pm

Drove by Yorkdale mall this morning near Toronto. PACKED.

#157 Hoof - Hearted on 01.26.13 at 1:25 pm

#101 Victoria Real Estate Update on 01.26.13 at 6:13 am

Keep in mind a few things ..(and I lived through all this , always had suspicions, and recently had them verified

The feminist movement was a form of cultural marxism. it preached equality, but effectively aimed at creating divisions between men and women, traditional roles changed , Women got careers, which added to the family income.

Homes? Were they paid off quicker with the extra income?…no more money entered the system to bid up the prices. It was getting out of reach for one generation already. I grew up and still live in HAMville. In the early 1980’s, we had this bubble, many in our age group couldn’t afford to live here..and moved to Ladner ….Surrey, one couple we know bought a Burkeville bunglaow for $80,000.

Then the flood of HAM…since 1986 put it out of reach.

Lately…it appears the Banksters saw a chance to tap a market for pent up demand house horny property virgins. Again, they inflated the money supply via cheap credit.

Re the purchasing power…The DOLLAR is worth on 3 % of what it was decades ago, that implies massive inflation.

“Nesting” and having a place to call your own is a primal instinct, but one that has been taken advantage of. The average Joe or Jane has to do some critical thinking, which does not include a high dive into a dark pool of unknown depths.

Again , this was a plan hatched long ago, and its reached it final milking point

Times have changed dramatically, and calls for a new game plan .

#158 NoOneOfConsequence on 01.26.13 at 1:25 pm

I think I am beginning to understand and buy into your diversify / liquidity / preferred / rebalance strategy.
There’s another strategy that interests me, and that’s a DRIP within a TFSA.

http://www.dripprimer.ca/tfsadrip

I know that it sort of violates the diversify portion of your strategy, but I think there may be additional value realized due to free trades and share purchase discounts. I was surprised at how you can actually get free share purchases at a 5% discount off the bid value of shares.

A person is not limited to individual shares, there are trusts, reits and ETFs available as well.

see: http://www.dripprimer.ca/canadiandriplist to see where I am getting my info.

I am trying to determine the weaknesses in the strategy…and well….I can’t see any significant ones – other than it’s pretty long term.

Are there any big dangers in this strategy that I’m missing?

We have a recently earned $50K right now, sitting in stupid land (low interest savings)…I’m kind of a deer in the headlights. I want to move…but am frozen. Coming up on 2 months in that account and it’s really aggravating me that I have it there and not somewhere working.

This is the most money we have ever earned in a single shot – I don’t want to screw it up, its not likely to happen again. I don’t know if this sum is worth your time to advise us either.

Wife and I have no debt, and no TFSA.

#159 Hoof - Hearted on 01.26.13 at 1:41 pm

Smoking Man…..

I hear you re: education…

It’s a bigger racket than Real Estate. They get drawn into the” Cult of the Mortar board”.

Bachelor’s is not good enough…must get Masters..(….so people can yell Hey Waiter…Hey cabbie?)

I don’t know why they keep expanding…probably something to do with employment numbers….create more “entitled” civil servants and the students kept in 4 year+ programs so they are kept off the unemployment roles. (Of course, we won’t get into the social engineering aspects right now).

The basic laws of the universe haven’t changed, nor need to be manipulated.

#160 Al on 01.26.13 at 1:43 pm

#8 – With the Bond Futures entering a downtrend, mortgage rates will go up whether Carney wants it or not. Look for the Apartment REITs to start unloading their buildings to keep paying distributions.

Why on earth would apartment REITs sell assets when they have long-term low-cost financing in place and guaranteed cash flow? — Garth

#161 The Prophet Elijah on 01.26.13 at 2:05 pm

#128 The Prophet Elijah on 01.26.13 at 11:00 am

#42 Innumeracy chick…No more on 01.25.13 at 10:28 pm

Where are my posts? They were there? Were they deleted?

What’s your agenda? — Garth
————————————————————
You must’ve said something about gold, Garth is selective here. I’ve had to re-post twice as my logical arguments were “forgotten”.

You have posted here a dozen times today. Go for a walk or something. — Garth
———————————————————-
Sorry Garth but when I awoke from my cave this morning many revelations were running through my head. But I shalt heed your advice and take a stroll through the jungle, and return with more divine revelations.

#162 Old Man on 01.26.13 at 2:06 pm

#158 NoOneOfConsequence – I recommend you do some homework, and place $10,000 into 5 preferred share isssues in top blue chip Canadian corporations. This will give you about a 5 yield dividend yield, instant liquidity; and the dividend tax credit. Now you don’t give all the facts, but its an option to consider.

#163 Innumeracy chick...No more(AKA AMAZON) on 01.26.13 at 2:08 pm

#40 Canadian Watch dog commodities market is probably the most hardest to predict. Too many variables.
Was your point that the US markets are up because of commodities and you feel it will be dragged down when commodities drop?

#164 AK on 01.26.13 at 2:18 pm

#160 Al on 01.26.13 at 1:43 pm

“Look for the Apartment REITs to start unloading their buildings to keep paying distributions.”

LMFAO. I guess I should dump my Morguard Reit. You are hilarious. :-)

#165 Old Man on 01.26.13 at 2:19 pm

#159 Hoof-Hearted – Higher education is cool in todays world, but the world has changed, and its good to get a higher education if it is focused into a highend profession. I prefer the younger crowd look carefully at other options with a community college offering a course diploma for a skilled trade in demand as know one for two years. Any young woman who graduates can find immediate lifetime employment earning as much as $60,000 a year; this might be enough for a highschool student with a skill in demand forever.

#166 Mister Obvious on 01.26.13 at 2:23 pm

#133 The Prophet Elijah

“…but now every tom dick and harry has a degree in something and the market is saturated, like RE…”

—————————

We still exist in a physical ‘bricks and mortar’ world. The trades are now the place to be. For example, a young woman who goes to technical school to become a welder or pipe fitter is exceedingly wise.

Then she need only following the investment strategies of this blog to find lifelong financial security. Of course very few young women, or young men for that matter, are following such a path.

#167 Smoking Man's Old Man on 01.26.13 at 2:24 pm

It’s entertaining to me that people have no problem paying excessive prices daily for Starbucks coffee, dinners out, ludicrous cellphone contracts,automobiles, etc. But when it comes to investing they’d rather gamble than pay a financial advisor 1% management fees…

#168 jess on 01.26.13 at 2:35 pm

waterloo resident

The record kit on. sat.jan 23 1999
Title of article: ‘Cities grew over festering landfills’
by Bob Burtt

An “A” indicated highest hazard to humans . It redefines the word heritage.

#169 DON on 01.26.13 at 2:49 pm

@#137 The Prophet Elijah

I agree with you, but my friend should be safer than most, his father is higher up in the company and the company maintains the piping/parts etc for the operating wells etc. 3months on the job and he’s already received training he can take with him to the next opportunity if need be.

But as always cross your fingers.

Cheers,

#170 Smoking Man on 01.26.13 at 2:51 pm

Hoof o I watch in amazement over the years, the kids do a rotation in capital markets world.. Get coffee, the learn from the traders, non of them are a smart as me… They get in cause they, or mom and dad know someone, but once in, you get along its easy street.

I made it in the door on bull shit, followed up with brilliance.

But in the big firms, it’s the seat that makes the money, not the guy sitting in it….

#171 jess on 01.26.13 at 2:59 pm

the f effect maybe the lehman l effect

watch cbcs 60 minutes
…the notorious repo 105’s lehman 50b back and forth from us to uk and back again poof WHO WERE THE AUDITORS

44m document leveraged 44:1
This is the first interview that Chicago lawyer Anton Valukas has given since the publication of his 2,292 page report into the bankrutpcy of Lehman Brothers on March 11th, 2010. At that time, Valukas found strong evidence of financial and accounting fraud designed to deceive investors at the defunct New York-based investment bank.

http://www.nakedcapitalism.com/2013/01/ian-fraser-something-sinister-about-the-lack-of-prosecutions-at-lehman-brothers.html

#172 DON on 01.26.13 at 3:03 pm

@ # 77 Juno

Basement rentals – So true!

What we have in currently in Vancouver is couples buying houses renovating the basement into a rental unit….but everyone is playing this game. It is happening in Victoria also. It is just as cheap to rent a Condo or Apartment. Who’s going to rent out the extra suite if everyone is playing the same game. And basement rentals are short term in nature and are not consistently rented out. The nastiness is starting to happen – I no longer hear people talking about real estate at work or around town. I believe people are really starting to realize the true implications of the matter at hand. Now the justification starts to settle in…usually. “well I’m planning on living in my over priced house for life” Well that’s good cause you will be paying it off for life and it will not be worth what you paid…. Dumb people everywhere.

#173 coastal on 01.26.13 at 3:17 pm

“And basement rentals are short term in nature and are not consistently rented out.”

#172 Don,

Very true, yet any of the bulls who got sucked in the last 5 years will tell you as it’s God’s word that they have never had a problem renting out long term nor a single problem. Now that’s either a complete crap shoot luck or complete BS. If someone lived in my basement suite for longer than 6 months I would be very concerned with who this person really is. Strangers in the basement with a smile on your face is just such a bizarre way to own a home and justify some superiority while claiming home owning this way gives me so much “security”. What a load.

#174 Old Man on 01.26.13 at 3:18 pm

#164 AK – I know Morguard well, as years ago was throwing around $million in pension fund money, as they did the administration. Now here is how the pension funds work, as was on the inside, and back in the early 1980’s a group of pension funds literally bought many of the commercial buildings on Bloor Street just west of Yonge, as several pension funds would syndicate the buys to be administered.

I had one deal in Toronto, whereby, CMHC and who I was representing in government pooled our pension funds to fund in syndication a huge commercial project in Toronto, and I appointed the TD for administration for it all. The mortgage yielded 18% for 25 years, and the Federal Government did a paydown which you the taxpayer paid.

#175 HD on 01.26.13 at 3:18 pm

@#158NoOneOfConsequence on 01.26.13 at 1:25 pm

I use a similar strategy with a small portion of my portfolio. I currently have 11K invested in various Canadian stocks (Financial, Energy and Telecom) that offer ‘organic’ DRIP as opposed to ‘synthetic’ DRIP. The ‘organic’ DRIP allows you to purchase fractional shares and some companies offer a discount (5% on the price) every time you do; like you pointed out.
I was initially looking into using a TFSA account with this strategy but I decided against it:

1. When you transfer your share certificates into the TSFA, it will create a taxable event that can become a nightmare to figure out.

2. You lose the tax credit (CAN stocks) advantage you have in a non-registered account.

I’d rather use the TFSA for a passive investment strategy. The ‘organic’ DRIP method is very effective in a non-registered account especially if you invest in Canadian stocks.

Best,

HD

#176 The Prophet Elijah on 01.26.13 at 3:29 pm

#166 Mister Obvious on 01.26.13 at 2:23 pm

#133 The Prophet Elijah

“…but now every tom dick and harry has a degree in something and the market is saturated, like RE…”

—————————

We still exist in a physical ‘bricks and mortar’ world. The trades are now the place to be. For example, a young woman who goes to technical school to become a welder or pipe fitter is exceedingly wise.

Then she need only following the investment strategies of this blog to find lifelong financial security. Of course very few young women, or young men for that matter, are following such a path.
——————————————————–
Problem is although it pays well people don’t want to necessarily be welders, especially a woman. Gotta consider “passion” too. And that’s another whole saga when it comes to careers. There isn’t a shortage of labor in Alberta due to oil production, it’s fewer and fewer people want to sacrifice working in norther -40 environments.

#177 Smoking Man on 01.26.13 at 3:33 pm

I have a new apprentice, I call him Zohan, born in Israel, not from a wealthy family, ambitious as hell, but a little green, I’m slowly turning him into a smoking Man.. But until he comes to the dark side and eats a bacon sandwich, he will only get a bit of mitsva from me..

Amazing I’m not a jew,and more Jewish than him.

The work of a Smoking Man never ends….

Should have seen his face when I said, 911 inside job, he called me nuts… So I said but your normal, you think mosses parted the sea.. .

#178 Old Man on 01.26.13 at 3:51 pm

#167 Smoking Man’s Old Man – I agree that a financial advisor is the only way to go with those that have big money, and Garth knows his stuff. Now it is interesting to note that the deal that I made in Toronto years ago with the pension fund at CMHC and who I represented in government was put together with a financial advisor. I got a call one day from a financial advisor in Ottawa who had CMHC committed with funds, and asked if I would come in for 50% to syndicate the mortgage for $millions.

I said yes because it would all be guaranteed by the Government of Canada; in hindsight this was a conflict on interest lol. I hit a plane and flew to Toronto for a meeting with the principals, and had the TD bank there as wanted them for administration on closing. The point am making is a financial advisor put two pension funds together to make this deal happen.

#179 The Man From Nantucket on 01.26.13 at 4:23 pm

#149 Ret on 01.26.13 at 12:36 pm
……fire safety, fire code, etc……

I agree every renter should know what they’re getting into.

The thing is, when you’re a broke student, choosing an apartment you can ‘afford’ often comes down to a choice between a kick in the nads or a shit sandwich .

I’ll speculate that if you tell the landlord you plan to bring in a fire inspector, you’re not getting the apartment.

As for the landlords, I’d be damned careful about getting into the rental business. I’d be even more careful if I had to share my own home with a down-market renter.

#180 Smoking Man on 01.26.13 at 4:33 pm

Old Man in senica, come on down

#181 Hoof - Hearted on 01.26.13 at 4:34 pm

Obama to Top Brass: Will you fire on American Citizens?

http://www.youtube.com/watch?v=kzT6X3_Bg9o&feature=player_embedded

Published on Jan 23, 2013

http://NextNewsNetwork.com |

The Obama administration is openly escalating its campaign against private gun ownership, and shaking up the top ranks of the military command structure — but is it also preparing to make war on the American population?

According to a person identified as a former senior military official, the answer to that shocking question is yes.

World-renowned educator and human rights activist Jim Garrow says that the source, man regarded as “one of America’s foremost military heroes,” told him that President Obama is using a new litmus test for “determining who will stay and who must go” among top-ranked military leaders.

That test is whether they will fire on US citizens or not. Garrow says that his source made the disclosure in order to “sound the alarm” over the administration’s plans.

While Garrow will not yet reveal the identity of the source, it’s important to note that Garrow himself is a man of considerable accomplishment. He is the founder of the Bethune Institute, which has established hundreds of schools throughout China. Three years ago, he was nominated for the Nobel Peace Prize for his work though a group called Pink Pagoda, which combat “gendercide” in China — that is, the practice of rescuing baby girls who had been abandoned or targeted for infanticide because of the government’s one-child policy. He was personally involved in helping to save the lives of more than 50,000 Chinese girls. He joins Gary Franchi on WHDT World News to discuss this new “Litmus Test.”
etc etc.

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

Interesting that Dr. Garrow gets into the economics, that explain why US and Canada are opening the vault to China re: our natural resources…aka China wants something real.

Of course, this creates a spiral of more jobs exported (or Chinese workers come here) and we sink lower in western standard of living .

Fear of massive default on the paper China owns…and the Gun Grab ..(besides a Leftie orgasm)…would lessen the fear that the citizens will revolt and say piss off to the Banksters and China who..in my opinion, is simply a front for world banksters.

#182 The Man From Nantucket on 01.26.13 at 4:35 pm

#144 squidly77 on 01.26.13 at 12:26 pm

AAPL @ $300 to $350.

I can buy it (but I might not :) ).

Without the benefit of deep analysis, I was yardsticking an ultimate trading range of $300 to $400 depending on new products, reporting, what they do with dividend etc. They broke this plateau a couple of years ago without doing anything groundbreaking, so we all knew it was crap. Now lots of competitors are right there at their heels, or perhaps even ready to clip their ankles.

What might be a bit interesting is the difference between the bottom of the trough and the ultimate “stable” trading range.

As for FB, I’m certainly not rushing to make an order at $31. Ability to hold there will depend on whether their clever tricks actually translate into enough sales that the advertisers pay big for it. My bet is on “not for a few more years”.

#183 Vamanos Pest on 01.26.13 at 4:41 pm

#131 The Man From Nantucket
I need to start saying that on the way down from 700, I’ve jumped into apple and have been stopped out twice! Glad that I set tight stop levels so losses were well contained both times. Just wanted to be up front about that. Now then:

On Thursday, with the earnings announcement I took a small position not really knowing how the market would respond. On Friday, doubled the position right into the continued sell-off. Against every investing rule I have, I did not put in stops this time. The reason? I will keep buying all the way down if that’s where it’s going. Why:

This company has $155 per share in a bank account. With the Canadian dollar at par (roughly) it is completely fair to discount this cash. (i.e. buying cash with cash is zero sum) So then the price of the rest of the company is about $300 per share. For that you get:
-yoy iPhone sales increase of 25%, 50% for iPads
-a forward price to earnings of 6, trailing price to earning of 9
-still enjoying double digit earnings growth
-roughly 10 billion dollars a QUARTER in free cash flow (WHAT?!)
-no debt
-record profits in the last quarter (yes, the earnings report that led to the huge sell-off thurs and fri was the best ever for apple)

Why did it sell off? Missed the street’s expectations, and margins shrunk a bit (although still very impressive). And, as Garth stated, momentum.

If you gave those numbers to any financial “expert” but didn’t say the name of the company, just that it was large cap, or it’s recent price action 10 out of 10 of them would say “buy it.”

So, it’s currently trading below it’s real value, that’s clear. It’s just a matter of whether you have the fortitude to go for a ride on the volatility roller coaster.

#144 Squidly77
$300? Do you really think the market will let this thing drop to trailing P/E of 6, with a net of cash P/E of 3. I think apple itself would step in with a massive buyback program well before that happened, never mind the rest of the market. (Remember, at current valuations, apple could step in and buy back and cancel about one third of it’s outstanding shares with cash!) But hey, admittedly, I didn’t think it would go this far down.

And for EVERYONE ELSE who bothers to read this. The above is for the sophisticated (read “broke”) investor with a high tolerance for risk (read “broke”). Please do me a favour, and stick to Garth’s strategies, he gives good advice and much less likely to land you in the poor house than speculation on individual stocks. I have hundreds, possibly a few thousand, hours of research and study in the area, all self taught (read “broke”), and spend most of what I save in management fees being self-directed on newsletters and research. Reading things like financial statements are routine and second nature for me. When I talk to a “professional advisor” I often feel like I could teach them more than they could teach me, not vice versa. And yet, even with all that I still struggle to beat an index like the TSX or S&P 500. Often don’t. (My total return for 2012 8%, got beat by the S&P 500 by 5%!) After evaluating risk adjusted returns, I got slaughtered by the index. (higher risk, lower returns=not cool)

Could I be more clear that doing as Garth does and says: smart.
Doing as Vamanos Pest does and says: Dangerous. Please don’t.

#184 █ ♣ █ ANONYMOUS on 01.26.13 at 4:44 pm

If you don’t like the high fees of banks, the answer is simple: START YOUR OWN BANK !

No, I’m not kidding.
If you join a local Credit Union then you are essentially starting your own bank by simply becoming part of an existing bank.

So get off your butt and go to this site, find a local credit union, and open an account with them. They will share their yearly profits with you as you are a member, not just a customer.

http://www.yncu.com/

#185 Hoof - Hearted on 01.26.13 at 4:49 pm

Smoking Man…

The ” powers that be ” have created a ponzi scheme that involves and integrates ALL the institutions.

Decades ago I recall the national debt….and how it grew…doubling within every decade and think WTF ? this is never going to be paid off…what miracle are we expecting ?

All we did is pay ” some of the interest ” as life went on.
However that game had to end…implode….and the end game is to convert the debt into real assets and NWO control. In fact, the Banksters knew it would happen, but wanted it to Mushroom Cloud, economic terrorism no more slow death by a thousand cuts.

The markets are fixed…they have it down to beyond a science .

Its the insiders and the odd outsider who make the $$$’s . Rest are at the bottom of the Ponzi Pyramid.

Did your mother drop you? — Garth

#186 Snowboid on 01.26.13 at 5:17 pm

#150 hangfire on 01.26.13 at 12:36 pm…

Truth Hammer, before you start touting ‘right-wing’ Texas as the picture of excellence, maybe you should refer to the ongoing budget reports (you are a Tea-Partier, right?) from this site:

http://www.voicesempower.com/texas-budget-boondoggle/

and the followup:

http://www.voicesempower.com/the-texas-budget-boondoggle-part-2/

Seems the Texas Republicans are acting just like our federal Conservatives (or BC Provincial Liberals)!!!

I especially like the $ 25 million dollar ‘gift’ to build a F1 racing track in Austin, sounds like a giveaway similar to tax receipts for phoney maquettes.

#187 jess on 01.26.13 at 5:33 pm

…”The swap deal was not “part of normal government refinancing.” A Nation with a sovereign currency should be borrowing in its own currency rather than foreign currencies. A Nation that borrows in a non-sovereign currency exposes itself to the bond vigilantes and a potential “death spiral” if it borrows in a non-sovereign currency. The article was written in 2010 when these problems should have been obvious to any financial journalist….”

http://neweconomicperspectives.org/

#188 Smoking Man on 01.26.13 at 5:50 pm

Completely blits, have a smoking Man hat on, head phones on listing to ci ria waters opra, nice

#189 squidly77 on 01.26.13 at 5:53 pm

183Vamanos Pest on 01.26.13 at 4:41 pm

In early October, just after the program was slated to begin, Apple’s share price reached above $670. If the company had bought up shares using the first third of its $10 billion buyback fund, it would have been able to buy 4,975,000 shares. If the company waited and spent the same $3.33 billion buying shares after its earnings call, it could have instead afforded to buy over 7,593,000 shares. You decide.

Is there Monkey business going on ? Not in my opinion, but it supports your analysis. I initially flagged Apple as being in bubble territory during Oct 2011 as owning Apple stock or Apple products became a fad, or a popular trend not unlike condos became in any Canadian city.

Apples bubble price surged strong during the next 12 months until too much air was in the balloon and it burst.

Apple is a fabulous company and there products work very well, its just become a bit boring. The Samsung Galaxy 111 is by far a better device than Apples IPhone 5, its also the most popular overseas, in places like Asia cellular providers do not subsidize the purchase of phones and a IPhone could run $650 USD where as an android device can be had for 2/3rds less.

Besides, just check out whats most popular with your kids, niece’s and nephews. The IPhone does everything that a mobile device is supposed to do, only its expensive and boring.

I don’t believe that Apple can maintain the earnings it currently has, IMO sales and growth going forward will slow unless they can develop a new device.

RIMMs BB10 if its a hit, Apple will be hurt, if it misses AAPL may get a temporary lift.

I also agree that trading stocks is a very volatile venture that can blow up in your face just like that and sometimes, for no apparent reason like AAPL has just done to many people.

I tade with very small amounts of money, sometimes I win big, sometimes I lose the same. Like gambling (which it is) only play with what you can afford to lose.
Then half it.

Garths advice is solid. REITs have been screaming the past couple of years.

#190 Hoof - Hearted on 01.26.13 at 5:58 pm

#185 Hoof – Hearted on 01.26.13 at 4:49 pm

Did your mother drop you? — Garth

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

No….why ?

I do recall the 3 Wise Men and the Star overhead though…

#191 Risk Analyst on 01.26.13 at 6:00 pm

Garth, how will the market correction impact the share price of the big 5?

#192 jess on 01.26.13 at 6:01 pm

rebuttle to the wsj article

http://online.wsj.com/article/SB10001424127887323301104578255663224471212.html#articleTabs%3Darticle
Firms Keep Stockpiles of ‘Foreign’ Cash in U.S.

Jan. 24, 2013 01:24 PM EST
Missing Half the Cash
by David Cay Johnston
http://www.taxanalysts.com/taxcom/taxblog.nsf/Permalink/UBEN-949M82?OpenDocument

#193 Old Man on 01.26.13 at 6:14 pm

Some of you people need a lesson in how to save a bit of money as am cheap, as have been to Shoppers Drug today; not one but two, going back and forth to hoop me Campbells Soup at 69 cents a can. I always know not to check out a purchase with the same girl, and now all is done with 40 cans of soup as my supply, and say to myself who will be my next mark?

#194 The Man From Nantucket on 01.26.13 at 6:19 pm

Vamanos and Squiddly gave this far more thought than I ever would – I have no serious interest in purchasing individual stocks!

I agree that $300 to $400 represents a ridiculous P/E…….but that’s if you’re assuming today’s earnings and continuation at today’s sales growth.

Is this realistic?

The higher end ‘droids have caught up in quality and the lower end ‘droids kill on price. As the market moves towards saturation, the price starts falling like a rock. We’ve seen this before. I once had to use a briefcase cellular phone that cost $1700. Now, I can buy a pre-pay drug dealer phone with 20 minutes of air time for $20.

I’m figuring we’re a few years from the point where cheap 3 to 4″ tablets c/w preloaded “adware” type apps are going to be marginally more expensive than Happy Meal toys.

Apple’s sales numbers may continue to rise, but I’d be surprised if they do not have to take a large haircut on margin for their hardware to do so. If they don’t maintain market share, there’s a deadly ripple effect as they lose the follow-thru business to their iTunes store section.

Anyway, happy trading and good luck. I appreciate thoughts from people who look at this more closely than I!

#195 AK on 01.26.13 at 6:26 pm

#76 Mike on 01.26.13 at 12:33 am
“You can’t point to extraordinary growth in the housing market and say it cannot last while looking at the stock market as a poor asset because of past performance.”

Yes, these are the same people who believe Las Vegas is still run by The Mob. :-)

#196 Old Man on 01.26.13 at 6:38 pm

#180 Smoking Man – appreciate your concern, but need not cross the border for hot babes. Smoke come to me, as have them all including a few Amazons, and are you man enough for them all?

#197 Grim Reaper/Crypt Speculator on 01.26.13 at 6:44 pm

Got a text message on my Samsung from Steve Jobs.

“Suckers”

#198 The Prophet Elijah on 01.26.13 at 7:16 pm

Just thinking out loud but wondering why the biggest money withdraws from banks since 911?:

http://bankcreditnews.com/news/bank-customers-withdrawing-money-at-fastest-rate-since-sept-11-terrorist-attacks/7253/

Did you read the story you lined? It tells why. Sheesh. — Garth

#199 Smoking Man on 01.26.13 at 7:18 pm

As I sit here In alterd states….. Floyd, Cohen ear phones in doing slots it hits me, no one knows……. Apart from me…..

Can u you dogs handle the truth…..

The knowledge…. Thinking nope

#200 Innumeracy chick...No more(AKA AMAZON) on 01.26.13 at 7:33 pm

#193 Old Man Really it’s down to soup if you were really cheap you could make homemade soup with less salt then campbells and freeze it for less. You sound like my father he calls everytime Allen’s apple juice is on sale….he has been picking up the sales items at Shoppers for years lol. I order grocery gateway and have it delivered. The food is very good quality as no one would buy it if it wasn’t and that gives me time to make real homemade food…no junk food in my house. Watch the salt it wrecks havoc on your blood pressure.

#201 Devore on 01.26.13 at 8:17 pm

#107 Ballingsford

When a bank is taking a percentage for Mutual Funds, say 1.5%, how do you know exactly how much and when they are taking it? I can never see it specifically on the hardcopy or on-line statements or transactions.

There are different fees mutual funds charge (yeah, more than one), but the management expenses fee is taken out of the fund itself, and is funded by sale of fund assets, thus decreasing the net asset value, which then directly decreases the unit value of the fund. This will never show up on your statement, but will show up on the annual report. This applies to any fund or ETF (or stocks as well for that matter).

#202 not 1st on 01.26.13 at 8:39 pm

http://business.financialpost.com/2013/01/25/looking-at-etf-liquidity/?__lsa=4bdc-760d

#203 Daisy Mae on 01.26.13 at 8:42 pm

#145Snowboid on 01.26.13 at 12:29 pm
#126 Daisy Mae on 01.26.13 at 11:33 am…

You are so right – all I ever buy is meat: steaks, ribs, ground beef, pot roasts, prime rib, and let’s not forget stewing beef.

What’s fresh produce?

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

Good one! LOL

Seriously, I buy food items on sale…and I stock up, watching expiry dates. I have the room for storage. I stick to the ‘five food groups’ — no junk foods. It’s a challenge…but one I enjoy! Having been a ‘stay-at-home’ mom raising three kids, I learned to be frugal…and it’s was never a problem. It’s now instilled. Why pay more than we have to? :-)

#204 Herb on 01.26.13 at 8:45 pm

#199 Smoking Man,

can I handle the truth? Which truth? The one that you don’t think at all? I suppose so.

#205 Daisy Mae on 01.26.13 at 8:52 pm

#149 Ret: “My read of the fire code is that these windows do not meet egress requirements for fire escape as these windows are too high above the finished floor and are often not the minimum length, width or total area required.”

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

An old neighbour of mine years ago built a basement bedroom with NO windows. OMG….what a nighmare.

#206 Daisy Mae on 01.26.13 at 8:54 pm

‘Nightmare’

It’s ‘nightmare’…..

*sigh*

#207 Smoking Man on 01.26.13 at 9:01 pm

Herb I’m shit faced don’t know what u mean

#208 Daisy Mae on 01.26.13 at 9:11 pm

#156T5>myT4: “Drove by Yorkdale mall this morning near Toronto. PACKED.”

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

It’s always been North Americans’ favorite pastime. But the day will come when they run out of credit….

#209 Kilby on 01.26.13 at 9:24 pm

♣ █ ANONYMOUS on 01.26.13 at 4:44 pm
If you don’t like the high fees of banks, the answer is simple: START YOUR OWN BANK !

No, I’m not kidding.
If you join a local Credit Union then you are essentially starting your own bank by simply becoming part of an existing bank.

So get off your butt and go to this site, find a local credit union, and open an account with them. They will share their yearly profits with you as you are a member, not just a customer.
——————————————————————-
We just received $1,050 in profit sharing from our credit union in BC (Summerland and District). Not many do it but you get profit from high deposits, mortgages etc…It is a great feeling and we would never go back to the big banks.

#210 Smoking Man on 01.26.13 at 9:33 pm

Humans are dumb

#211 Old Man on 01.26.13 at 9:37 pm

#200 – what is the first thing that a hospital does in with an emergency victim? They set up a saline solution for an intravaenous infusion because salt is good.

#212 AK on 01.26.13 at 9:41 pm

#162 Old Man on 01.26.13 at 2:06 pm

“I recommend you do some homework, and place $10,000 into 5 preferred share isssues in top blue chip Canadian corporations. This will give you about a 5 yield dividend yield, instant liquidity; and the dividend tax credit. Now you don’t give all the facts, but its an option to consider.”

A number of companies are redeeming their preferreds that were issued at a higher rate and re-issuing new ones at a lower rate.

http://www.marketwire.com/press-release/bank-montreal-redeem-200000000-non-cumulative-class-b-preferred-shares-series-5-tsx-bmo-1749596.htm

#213 Toronto_CA on 01.26.13 at 9:55 pm

#212 AK on 01.26.13 at 9:41 pm

The call option feature in the preferreds is an embedded derivative…I’m having fun trying to value these ED for year end disclosure to my auditors. The market has priced in the call feature to the detriment of the holders, apparently.

I hope you loaded up when I first recommended them four years ago. — Garth

#214 Westcdn on 01.26.13 at 9:58 pm

The following blog provided a very detailed analysis of Canadian Real Estate. It is not an easy read. In summary, it states the case RE prices will decline. http://pacificapartners.com/blog/2012/12/07/the-canadian-real-estate-housing-correction-chartbook/
My favourite quote – “Homeowners are naturally reluctant to lower prices and will first attempt to remove listing and re-list in a more favorable environment. However, home prices are determined not by idle inventory but the price that units are exchanged at. During periods of decreased sales volume, the few sales that occur will set the prices for the entire market. This is what took place in the US real estate correction over the last half decade.”
My favourite chart was Table 2) Canadian home prices over discounted rent valuation. This table indicates a 30+% decline in RE prices in order to return to historical prices. Whether that happens remains to be seen. Under the section of Policy Analysis: Errors and Heroes, it points out that in 2006 the “then governing Federal Conservative party to raise the maximum amortization period from the then 25 year max (what it is again now) to 40 years. This one decision may be remembered in Canadian economic history books as an extremely grievous policy error.” IMHO, it was akin to throwing gas on a fire.
The principal of large numbers seldom apply to an individual. If you want to purchase Canadian RE as a store of value, the odds are running against you for the present and near future

That report was referenced here when it was first released. — Garth

#215 Old Man on 01.26.13 at 10:02 pm

#212 AK – so what just roll the capital somewhere else, and keep the cashflow going with a high yield and grab that dividend tax credit.

#216 Ronaldo on 01.26.13 at 10:25 pm

#210 Smoking Man – “Humans are dumb”

Like this:

http://www.rd.com/advice/dumb-human-behavior-to-avoid/

#217 Grantmi on 01.26.13 at 10:37 pm

#7 Twooping on 01.25.13 at 8:16 pm

Why is Winnipeg never on any of these stats charts? I guess there’s not much of a bubble there.

Not much of a city either! Dude… poke your head out to the rest of the country. (or world)

Once you do… you’ll never go back to Peg!

#218 kreditanstalt on 01.26.13 at 11:10 pm

“With the US on LowT therapy and stock markets advancing, bond prices have only one direction in which to travel. That means bond yields – and mortgage costs – will do the opposite.”

Not so fast. The central banks and governments will bend over backwards to stop bond yields rising. In fact, the US has promised this through, I believe, 2015.

Secondly, the Fed is now buying back something like 90% of new long bond issuance. Sure, they’re not doing it directly – which allows them to claim they’re “no printing money” – but the secondary market is a different matter. And these profits are a lifeline for banks in a time of diminished lending…so they won’t stop.

With the Fed’s marginal buying keeping prices steady-to-rising, what’s to stop it?

Thirdly, stock markets are “advancing” not with retail money but with printed lucre. The printed US$80bn/month (40 of it in Treasuries) goes to big banks first. Their prop-traders promptly place much of that into risk assets – junk retail and Herbalife-type stocks – , but this does not indicate any less cash flowing into bonds.

Not at all clear how this will end but without some kind of exogenous shock the cheap money party is far from over.

#219 Chickenlittle on 01.26.13 at 11:43 pm

This blog is kind of reminding me of a Facebook group page I once went on…I don’t have FB anymore..waste of time…All of the back and forth is really funny!

John Taylor Gatto has a few good books on the education system. Excellent reads, believe me. Don’t disregard his work just because a chicken recommended the books to you…

#220 Innumeracy chick...No more(AKA AMAZON) on 01.26.13 at 11:46 pm

#211 Old Man your cracking me up your soup contains about 1/4 of the recommended Na daily intake. It is true that that in an emergency resuscitation starts with IV fluid containing Na but eventually you need a rapid blood transfusion…platelets, FFP….
Google low Na diet. We all are eating too much salt. But I do love Campbells soup too! AWW just teasing you. Toilet paper is on sale at Shoppers. My Dad has it down to an art he knows the best deal per roll! I think he has a years supply of TP.LOL nothing wrong with saving money. I agree the majority of young people overspend on ridiculous stuff.

#221 Mr Buyer on 01.27.13 at 12:11 am

Antibiotic resistance….
http://ca.news.yahoo.com/rise-superbugs-called-apocalyptic-scenario-162449696.html

It seems capitalism is failing us on other fronts as well. Lets get our excellent Canadian researchers on this in a heartbeat and get some of the hundreds of potential antibiotics cooking on the stove. It is a good opportunity to redirect some of the huge amount of wasted money into critical activities such as staying a step or two ahead of bacterial infections (drug companies are dropping the ball and we all know that for things that really matter nothing beats a well managed government agency immune to tooling around by transient politicians). Lost a friend to a simple bacterial infection 10 or 12 years ago. There was a time when cutting yourself shaving was a near death or actual death experience. Lets not go back there.
Three big concerns raised in Britain recently are…
Acinetobacter baumannii, Pseudomonas aeruginosa and Klebsiella pneumonia but there are others.

#222 DON on 01.27.13 at 12:32 am

#173 coastal on 01.26.13 at 3:17 pm

“And basement rentals are short term in nature and are not consistently rented out.”

#172 Don,

Very true, yet any of the bulls who got sucked in the last 5 years will tell you as it’s God’s word that they have never had a problem renting out long term nor a single problem. Now that’s either a complete crap shoot luck or complete BS. If someone lived in my basement suite for longer than 6 months I would be very concerned with who this person really is. Strangers in the basement with a smile on your face is just such a bizarre way to own a home and justify some superiority while claiming home owning this way gives me so much “security”. What a load

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

What a load, indeed.

There is a story in the local paper about a renting family who moves from rental to rental never paying a cent but the initial deposit.

Then there are the homeowners who are setting the bar high for potential (allowable) renters, 2 bedroom basement, looking for mature professional couple or single, $1200 and share utilities, non smoker, no pets (not even a cat – single and no cat or dog?) and oh yah parking on the street – and shared back yard with a family). Nice!

Someone needs to jump on that, maybe one of those professional realtors will be interested.

#223 Mynegation on 01.27.13 at 12:43 am

43% to 30% is not just a drop of 13%. That means that the absolute number of the buyers in this category (provided that the total number of buyers stays constant) will drop more than 30%. Given that the total number of buyers is more likely to drop, the drop in this category will be even more pronounced.

#224 Nostradamus Le Mad Vlad on 01.27.13 at 12:59 am

-
#65 GTA Girl — “The bloodshed wil, be viscous . . . Don’t feel sorry for any of them. They’ve all destroyed people in their rise to top..” — Got that right, the wheel never stops turning. Can be called positive / negative karma (both exist), Christianity refers to it as sinfulness / redemption or the Spiritual Law of Cause and Effect.

#75 Smoking Man — “How to be a smoking Man…. It’s fking spiratchal..” — Affirmed! O&O! (Over and Out). Interesting 0.58 clip. Skip the first 40 seconds, go to the last part, esp. the last section — less than a second. Do the faces ring a bell?

Plus — Smoking Man – Education?

#111 Young & Eligible — “I look forward to the acres of parking being prepared at Yonge & Eglinton, Toronto.” — Sounds vaguely familiar to China’s ghost cities, where everything is complete but no one lives there!

#117 Nemesis — Holy sheepshit! That’s a vertical zombie line, dead man walking!

#133 The Prophet Elijah and #58 Smoking Man — “School is such a waste of money. There is alot of truth to this.” — This is better!

#145 Snowboid — “What’s fresh produce?” — Found under Strawberry – Rhubarb Pie with Chocolate Almond ice cream, French Vanilla Mochas and Pecan Hazelnut Cake, plus many others in the dessert section (they’ve teamed up!).

#181 Hoof – Hearted — “Of course, this creates a spiral of more jobs exported (or Chinese workers come here) and we sink lower in western standard of living .” — Guess that explains why Chinese miners and unions here are having a bit of argy-bargy in BC. Companies don’t want to pay high wages, but the Chinese, who aren’t used to high pay back home like the medium-pay jobs here.

#197 Grim Reaper/Crypt Speculator — “Got a text message on my Samsung from Steve Jobs.” — No surprise there!
*
9:37 clip Banking – The Greatest Scam on Earth; Short Clip The US economy may be on a roll, but constant war has its consequences; Public or Private banks? Check the Greeks; Marriage from Hell; Chart (inflation); 4:36 clip Phil Mickleson (and Tiger Woods) on California’s high tax rates; More inflation, dammit! Payday Loan Companies going after kids in UK; France “Military protection of corporate assets in foreign countries: this will set a trend, as long as those countries being invaded by foreign armies don’t have the will or capability to prevent it.” wrh.com; Urban Farm Path to Freedom; Apple New factory and onshoring jobs; China introducing gold ETFs (from China News); ObombaCare hits smokers big time; 34:43 doc. Central banks losing power to set gold and silver prices; Texas Debt; Delusional Germany; The Omnibox Replacing cable? Lower Gold Prices? UK and world economies, but PM lies (surprise, surprise); Paying Off Debt vs. Investing Garth touched on this subject recently.
*
13:48 clip WW3 is already here, it’s just that the m$m prints all the lies that’s fit to print; McDonald’s Addicts Junk food is annoyingly addictive; The Artist formerly known as Chimp; The Haunted Royals One of Princess Di’s ancestors, and Deal With A Devil aka Lord of the Flies; FB and Pentagon The Pentagon needs its shills everywhere, spreading disinfo.; 13:43 clip Generation Rx; 7:48 clip The Fourth Amendment, patriots ready for war, 2:09 clip and this; 1:32:20 doc. CIA admits sheeples are pawns on a chessboard, which incl. this; Walmart and Big Food Want GMO labeling? Blowing Up Superbugs A few come to mind; The Chickenhawk Club; State Sovereignty or secession? Five anti-aging herbs.

#225 An Cat Dubh on 01.27.13 at 1:49 am

The economy in Vernon, B.C. must be getting better. Only two businesses on 30th ave are closing at the end of this month. One however is due to retirement. There are a few empty spaces(besides these two) for rent downtown also if you are interested.

#226 juno on 01.27.13 at 4:46 am

http://whispersfromtheedgeoftherainforest.blogspot.ca/

Talk to a mortgage guy this weekend, I mentioned there has been zero percent down payment which allowed the (super spender and non saver) to put into the market.

He said there no such thing. Yeah Right. When this whole ponzi scam is unravelled, well see the obvious. We were no better than the American’s Fanny and Freddy. CMHC and the whole Banking system orchestrated this whole thing as a cash grab on the middle class.

Way back in the 2000’s they tried different things to get the Richer Baby Boomers money. Reverse Mortgages, freedom 55 and etc. Now that most canadiens has a choke collar around their neck via DEBT. The banks can begin squeeze the remaining life out of those poor lost souls. At the end of the day the banksters will cash out big time!

#227 David McDonald on 01.27.13 at 6:20 am

BigEnglish wrote “Glad we got out when we did. Hoping to convince wife we should wait before the next purchase and rent for a while. Will be using your blog to help in that matter.”

If you succeed in convincing your wife please tell me how. Essentially I am in the same situation and fighting a losing battle against my wife and children. I know it is crazy to buy just now but the conventional wisdom is just too strong.

#228 Al on 01.27.13 at 9:25 am

#160 – Apartment REITs have been using short-term financing rather than long term fixed rates to-date. Read their prospectus.

False. Major REITs like Boardwalk use bond forward transactions and rate swaps to hedge future interest costs, as well as lowering the overall portfolio cost. The great thing about being anon on the net is saying anything you want, right? — Garth

#229 dontcallmeshirley on 01.27.13 at 10:24 am

Garth is right about Boardwalk hedging their financing rates. They take advantage of CMHC insurance too.

From there Nov 30/12 financials:

“(a) Interest rate risk
The Trust is exposed to interest rate risk as a result of its mortgages payable and credit facilities; however, this risk is mini- mized through the Trust’s current strategy of having the majority of its mortgages payable in fixed-term arrangements. As such, the Trust’s cash flows are not significantly impacted by a change in market interest rates. In addition, the Trust structures its financings so as to stagger the maturities of its debt, thereby minimizing the Trust’s exposure to interest rates in any one year. The majority of the Trust’s mortgages are also insured by the Canadian Mortgage and Housing Corporation (“CMHC”) under the nHA mortgage program.”

#230 Daisy Mae on 01.27.13 at 10:54 am

#220 IC: “We all are eating too much salt. But I do love Campbells soup too!”

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

How many cans of soup — 40? I figure 12 cans @ 50 cents each at Walmart is enuf at any one time. Old man, you paid too much!

I know, I know, Garth…we’re getting off topic. :-)

#231 Timing is Everything on 01.27.13 at 11:05 am

#86 Nosty

Ha! Good one…No, I don’t live there, just nearby. I like to keep an eye on my ‘friends’. They’re working on the ultimate ‘Snoopy’ version.
—————————————————-
Hey Garth, speaking of (your?) friends…Good news. The Canadian banks will get some new competition…

‘The federal government announced the coming into force of the legislative framework that will allow for the establishment of federal Credit Unions.’

http://tinyurl.com/b86kp9s

‘Expanding beyond their home provinces will let the cooperatives compete with Royal Bank of Canada, Toronto-Dominion Bank and other lenders…’

http://tinyurl.com/bh5p2lq
———————————————————-
F’ the banks and their service fees…

ding free®

http://tinyurl.com/bej6mnc
http://tinyurl.com/b46h4hg

#232 rob on 01.27.13 at 11:54 am

Ever been to a high priced auction. They bring out the “Strad” violin and start bidding at $500,000. After a while it goes for $1 million flat and it’s over. After that we listen to the perceptions around the room.

One guy in the back, who has 10 million cash, thinks the Strad was cheap at one mill and will pick one up next year. In fact he may get ten if they are offered. Some rich woman has 3 million and she figures her wealth is equal to three “violins” if she ever wanted them.

All around the room the feelings are the same as perhaps 100 million in assets are represented. They all equate their buying power to this one auction. Even though only one walked away with physical, everyone knows they are “strad rich” in wealth. Each goes home for the evening cognac and relishes in this knowledge. Their lifelong effort of hard work and shrewd investing has positioned them to own the wealth of many rare violins. Life is good, very good.

The one problem with all of this is that they based their “wealth holdings” on the outcome of just one auction. Truly, had they all bid, the violin would have gone for much more and their wealth would seem “not so much”.

In much the same way our world of dollar assets carries the same risk. All of us stand in the same world auction room and watch the daily bidding for goods and services. We watch the prices of cars, gas, houses, clothes, etc. and conclude our wealth balances based on what we could acquire at this auction should we choose to bid. We see our economy in a light of infinite goods and services but fail to balance this with the potential of others to bid, “in mass”. In this light, few have a valid perception of just how many dollar assets are out there. Indeed, without this grasp of “dollar inflation” we blindly consider our wealth and position in life using the present price structure of “things”. A system in which we trade paper IOUs of infinite number for real things of finite number.

So, our belief that life is good, largely rest not on the confidence in the dollar. Nor is it in the confidence that others will value and accept our dollars. Life is good, because all of us do not “bid” at the same time! If we did, our life would not be as good as our dollar wealth says it is!

This is the deception in our Western grasp of what wealth is. Our life savings are valued at what they can buy today, even though, in reality it is based on an unknown purchase price in the future. Just as all of the wealth at the violin auction was a phantom in self delusion, so too is our present good life and bank account numbers. The evolution of a people that once gripped gold for the real wealth money it was, has proceeded to the hoarding of bookkeeping entries of account credits. History has proven that once humans begin to question the value of this dollar “wealth owed them at a future unknown price” they run a race to outspend their loved brothers. Buying goods now at the “known” price quickly balances the books so no one is any longer fooled. The currency equivalents remain as a trading medium, even as real things are held in the background for value proof.

#233 Hoof - Hearted on 01.27.13 at 12:32 pm

Does China Plan To Establish “China Cities” And “Special Economic Zones” All Over America?

PART 1

http://www.thetruthseeker.co.uk/?p=64209

QUOTE:

What in the world is China up to? Over the past several years, the Chinese government and large Chinese corporations (which are often at least partially owned by the government) have been systematically buying up businesses, homes, farmland, real estate, infrastructure and natural resources all over America. In some cases, China appears to be attempting to purchase entire communities in one fell swoop. So why is this happening? Is this some form of “economic colonization” that is taking place? Some have speculated that China may be intending to establish “special economic zones” inside the United States modeled after the very successful Chinese city of Shenzhen.

QUOTE:

Overall, the U.S. has run a trade deficit with China over the past decade that comes to more than 2.3 trillion dollars. That 2.3 trillion dollars could have gone to U.S. businesses and U.S. workers, and in turn taxes would have been paid on all of that money. But instead, all of that money went to China.

Rather than just sitting on all of that money, China has been lending much of it back to us – at interest. We now owe China more than a trillion dollars, and our politicians are constantly pleading with China to lend more money to us so that we can finance our exploding debt.

Today, the U.S. government pays China approximately 100 million dollars a day in interest on the debt that we owe them. Those that say that the U.S. debt “does not matter” are being incredibly foolish.

QUOTE:

But isn’t it more than a bit far-fetched to suggest that China may be planning to establish Chinese cities and special economic zones in America?

Not really.

Just look at what has already happened up in Canada. It is well-known that the Chinese population of Vancouver, Canada has absolutely exploded in recent years. In fact, the Vancouver suburb of Richmond is now approximately half Chinese. The following is an excerpt from a BBC article…

Richmond is North America’s most Asian city – 50% of residents here identify themselves as Chinese. But it’s not just here that the Chinese community in British Columbia (BC) – some 407,000 strong – has left its mark. All across Vancouver, Chinese-Canadians have helped shape the local landscape.

A similar thing is happening in many communities along the west coast of the United States. In fact, Chinese citizens purchased one out of every ten homes that were sold in the state of California in 2011.

#234 hangfire on 01.27.13 at 12:43 pm

#186 snow…at leat we don’t have to listen to a-holes like Mullah Mulcair spew nonsene like this

“In his January 14 speech at the University of Toronto’s Convocation Hall, Mr. Mulcair started from the well-known NDP premise of the desirability of a statist, or highly dirigiste society. The more enthusiastic a person is for an interventionist and authoritarian state, the more likely that person is to favour relatively high taxes to pay for these interventions — with the resultant encroachment on individual liberties being represented as merely a reflection of collectively expressed political will. As for the fact that these interventions are usually done by executive order, under only generally enabling legislation, and are implemented by unelected and largely unaccountable officials — this is something that Mulcair left to his audience to discover as they progress down the great boulevard of life.”

In the words of Jonie Mitchell “You don’t know what you got till it’s gone”…….think about how the Liberal civil service has raped the prospect of freedom from the Canadian taxpayer by ripping off 100% of the tax revenues from schools, hospitals, infrasctructure etc etc etc…..

#235 rosie "moving forward" on 01.27.13 at 1:06 pm

# 232

An interesting analysis of asset value. Moving forward, I plan to continue purchasing liquid, appreciating assets and sell depreciating assets. Anyway, I will continue to have someone trustworthy and knowledgable do this for me.

#236 Inglorious Investor on 01.27.13 at 1:20 pm

#233 Hoof – Hearted on 01.27.13 at 12:32 pm

Can’t pay back the debt? Sell the assets.

Watch for this to become a larger socio-political issue in the months ahead as the MSM is forced to report on it once it becomes a done-deal reality–– just as they do with every other issue of real importance.

#237 Hoof - Hearted on 01.27.13 at 1:31 pm

Does China Plan To Establish “China Cities” And “Special Economic Zones” All Over America?

PART 2

http://www.thetruthseeker.co.uk/?p=64209

QUOTE:
The Chinese certainly do seem to be laying the groundwork for something. They have been voraciously gobbling up important infrastructure all over the country. The following comes from a recent American Free Press article…

In addition to already owning vital ports in Long Beach, Calif. and Boston, Mass., the China Ocean Shipping Company is eyeing major ports on the East Coast and Gulf of Mexico. China also owns access to ports at the entry and exit points of the Panama Canal.

And due to fiscal woes plaguing many American cities and states, U.S. legislators have been actively seeking out Chinese investors.

In one of the worst cases, Baton Rouge, La., Mayor Kip Holden offered the Chinese government ownership and operating rights to a new toll way system if the Chinese would provide the funding to build it.

Does it make sense for the Chinese to own some of our most important ports?

Isn’t there a national security risk?

Sadly, there isn’t much of anything that our politicians won’t sell these days as long as someone is willing to flash a lot of cash.

The Chinese have also been busy buying up important real estate on the east coast as a recent Forbes article explained….

According to a recent report in the New York Times, investors from China are “snapping up luxury apartments” and are planning to spend hundreds of millions of dollars on commercial and residential projects like Atlantic Yards in Brooklyn. Chinese companies also have signed major leases at the Empire State Building and at 1 World Trade Center, the report said.

But it is not only just land and infrastructure that the Chinese have been buying up.

They have also been purchasing rights to vital oil and natural gas deposits all over the United States.

There have been two Chinese companies that have been primarily involved in this effort.

The first is the China National Offshore Oil Corporation (CNOOC). According to Wikipedia, CNOOC is 100 percent owned by the Chinese government…

CNOOC Group is a state-owned oil company, fully owned by the Government of the People’s Republic of China, and the State-Owned Assets Supervision and Administration Commission of the State Council (SASAC) performs the rights and obligations of shareholder on behalf of the government.

#238 Herb on 01.27.13 at 1:32 pm

#234 hangfire,

would it be asking too much in the way of facts to ask for the source of that brilliant piece of wingnut propaganda maskerading as analysis?

#239 Fabrega on 01.27.13 at 1:34 pm

Garth,
Can you please give us your taughts abou this:

“Apparently, a great reckoning is fast approaching inside the country’s gleaming bank towers. Canada’s major banks are said to be on the verge of hitting a revenue iceberg that could slice earnings per share growth in half this year.

And it’s all Mark Carney’s fault. The Bank of Canada governor’s obsession with aggressively low interest rate policies and his get-tough message on climbing household debt are really putting a crimp in the historically predictable and reliable sources of income the big banks have enjoyed at home.

The two engines that have fuelled strong earnings momentum during the global economic turmoil— growth in consumer credit and residential mortgages — are stalling.

All six of the majors — Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank — are said to be feeling the squeeze.

Related
Despite $1.57-billion writedown, RBC still keen on U.S. retail banks
Bank of Canada adopts dovish tone on rates as growth forecast cools
Delinquent loans fall to record low amid signs Canadians are kicking their debt habit
RBC leads Canada’s banks as takeovers hit 5-year high

To pick up the imminent slack, they’re being forced to look outside the country to boost their balance sheets in 2013. Except the problem is that it isn’t a whole lot rosier out there either, which is why the mighty financial institutions will likely see their credit ratings lowered a notch next week by Moody’s Investors Service Inc.

Basically, the rating agency is concerned about the banks’ exposure to record high levels of consumer debt and elevated house prices, which has made them more vulnerable to the downside risks than they have been of late.

The big red flag is that current Canadian household debt resembles rates in the United States before the housing market tanked in 2008. According to Statistics Canada, the ratio of household debt-to-income in this country reached 163.4% in the second quarter of 2012, up from 161.8% in the first three months of last year. The trend continued in the third quarter of 2012, showing Canadian households owed $1.65 on average for every after-tax dollar they earn.

Compare that to the U.S., where household debt-to-income at the height of the housing bubble in 2007 was 170%.

This is causing considerable angst because a shock to the Canadian economy will inevitably reverberate on bank balance sheets.

Already, bank retail margins are under pressure. Consumer lending is falling; 5.1% in November, 2012, from 5.8% during the same month in 2011.

At the same time, a series of initiatives to tighten mortgage requirements has had a cooling effect as the resale of homes in Canada fell 17% in December from 2011. The end of the boom in residential mortgages has a double whammy effect on banks because that revenue stream helped cushion the blow of slimmer margins on loans and shrinking revenues courtesy of persistently low interest rates.

Stalling income growth at home means the banks have to find other ways to shore up their balance sheets. Obviously, that means focusing on their operations outside Canada. Except for Scotia, which has carved a unique presence in Latin America and risky developing markets where the margins are wide, the focus for the rest will likely be in the U.S. For RBC, that means trying to capitalize on the exodus of European players in capital markets and wealth management. TD and BMO will continue to scratch out a presence in the lucrative and hugely competitive U.S. regional banking sector.

Nonetheless, the challenge on the home front will be keeping expenses at, or below, diminishing revenues. In order to maintain a competitive position in Canada, the banks have to make major investments to their retail banking infrastructures, while at the same time, making sure expenses don’t get ahead of income growth.

The bottom line: expect bank earnings to be stunted this year, with predictions of industry revenue growth in personal and commercial banking to be a paltry 1%. That translates into estimated earnings per-share growth to be in the 5% range this year — hardly the end of the world, but still below 10% from 2012.

Even so, the trends may be going in the wrong direction, but much of the balance-sheet consequences will be played out at the margins. It may be harder to make the kinds of heady returns bank shareholders have enjoyed in recent years, but in Canada banking will always be a profitable proposition. So chin up, no matter what Moody’s says.”

Source: Financial Post

(a) Next timke use a link. (b) The column concludes with “It may be harder to make the kinds of heady returns bank shareholders have enjoyed in recent years, but in Canada banking will always be a profitable proposition.” That’s not too scary. (c) Another reason not to buy individual equities, as I have argued. — Garth

#240 Fabrega on 01.27.13 at 1:36 pm

…”taughts abou”…I mean thoughts about.

#241 Snowboid on 01.27.13 at 1:38 pm

#232 rob on 01.27.13 at 11:54 am…

Giving you the benefit of the doubt, I assume you are the same person who originally posted this in 1999 at:

http://fofoa.blogspot.com/p/foa1.html

Tricky way to post a PM comment, eh?

#242 Snowboid on 01.27.13 at 1:39 pm

#234 hangfire on 01.27.13 at 12:43 pm…

Bravo, truth hammer, way to redirect without commenting on the Texas boondoggle!

#243 Finally on 01.27.13 at 2:16 pm

Live in YVR, sold my place in May 2012, had a baby in May 2012. Patiently waiting for the big drop … I want to buy a house.

#244 dosouth on 01.27.13 at 2:17 pm

#219 Chickenlittle – “This blog is kind of reminding me of a Facebook group page I once went on…I don’t have FB anymore..waste of time…All of the back and forth is really funny!” – how true. Just like sitting at the mall and watching old wrinklies have a Timmies. Subject starts off well meaning then off they go, hemroids, healthcare, bad drivers, price of gas and then back to the subject, where did you say the bathrooms are….?

Oh, you mean like the post you just made? I get it now. — Garth

#245 TEMPLE on 01.27.13 at 2:34 pm

#201 Devore on 01.26.13 at 8:17 pm

the management expenses fee is taken out of the fund itself…This applies to any fund or ETF (or stocks as well for that matter).

Devore, I am not sure what fees you mean when you mention stocks. There are no management expenses per se for stocks, and certainly no fees that are taken directly out of stock holdings.

You may be talking about an administration fee that a brokerage charges, share dilution, or salary paid to a company’s management, but none of those expenses are management fees. Plus, all those expenses are considerably more transparent than the fees charged by mutual funds.

TEMPLE

And tax-deductible. — Garth

#246 45north on 01.27.13 at 2:39 pm

Hoof – hearted: Some have speculated that China may be intending to establish “special economic zones” inside the United States modeled after the very successful Chinese city of Shenzhen.

or maybe modeled after Vancouver:

Michael Levy: (by way of Inglorious Investor) Actually, very few people know this, but technically speaking, Vancouver is a special administrative region of China, like Hong Kong. But Hong Kong has nothing on Van. And besides, being an Special Administrative Region is not enough; we must take it further. So I have established a committee to make Vancouver legally a suburb of Beijing.

http://www.greaterfool.ca/2013/01/07/numbies/

#247 rob on 01.27.13 at 3:11 pm

#241 Snowboid
a google search can do wonders. no trick intended but also no need to bring freegold discussion to the table here, it would probably be ignored and rightfully so.

a simple example is enough to bring the idea of what a man once said “today, your wealth, is not what your currency say it is”

#248 45north on 01.27.13 at 3:12 pm

Hangfire: Mr. Mulcair started from the well-known NDP premise of the desirability of a statist, or highly dirigiste society.

Dirigisme is an economy in which the government exerts strong directive influence.

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

Here’s an idea: what if the political speeches, the legislation, the civil service directives were all put on the internet? That way we could all see the original goals, how they were implemented, what was the cost, who was responsible and what the end result was.

We’re pretty close right now.

#249 OkanaganInvestor on 01.27.13 at 3:16 pm

Hey Garth, I think your feedback on collateral mortgages is worth getting, after I watched the Marketplace episode as other blogdogs have.

‘Few products ignite broker debate like collateral charge mortgages. For Gord McCallum, who will be part of panel of industry leaders discussing the subject at the upcoming Mortgage Summit, the need for broker education on every facet of these complicated deals is key.

“They have their place, but proper disclosure is an important aspect in terms of consumer protection,” says McCallum, broker/president of First Foundations Residential Mortgages in Edmonton.

“What concerns me are the more recent developments where they’re being used across the board for all mortgage products as opposed to lines of credit.”

Collateral charges have been used for lines of credit before, but the ah-hah moment for brokers came when TD began registering all of their mortgages as collateral charge in 2010.

“Some of us saw that as contractual handcuffs at renewal for clients because it took away a lot of the client’s leverage in terms of being able to transfer that mortgage at renewal to another institution,” says McCallum. It also plays a role in renewal pricing, he says. “If you don’t have any leverage the lender will price things less competitively at renewal.”

Collateral charge mortgages also seriously hinder a client’s ability to get secondary financing.’

http://www.canadianmortgageprofessional.com/forum/the-great-debate-collateral-charge-mortgages/123699/

http://www.cbc.ca/marketplace/episodes/2013/01/decoding-mortgages.html

#250 Daisy Mae on 01.27.13 at 3:44 pm

#239 Fabreca: “…..and his (Carney) get-tough message on climbing household debt….”

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

Nothing but lip service.

#251 Hoof - Hearted on 01.27.13 at 3:57 pm

If one studies the US Civil War, it was also called the war of Northern Aggression.

The United States was originally set up with each state like a quasi country, independent, but under the protective umbrella of the Federal Gov’t..aka if a member was attacked…the Feds would marshall military forces.

The Southern states saw they were being exploited by the North. There was talk of breaking away, which the North would not tolerate, and created the bogus Civil War demonizing the Southerners.

Old Abe Lincoln didn’t give a damn about the slaves, he was part of a cabal that wanted a Central Gov’t in Washington. Karl Marx thought well of Lincoln….which implies that Lincoln was a neo-con /socialist.

In addition the US stole land from the Mexicans, which is now many of the South Western States.

if one through in the Cascadia discussion (ie BC becoming a US State) , North America could have a far different look that in has now.

Read “Team of Rivals.” Then eat your socks. — Garth

#252 Richard and Zeus on 01.27.13 at 4:16 pm

“It seems the only people who are not predicting much lower prices are realtors and real estate boards. The reason is obvious. Victoria is very overpriced right now. It is actually considered to be extremely unaffordable and one of the most unaffordable cities in the world, along with Vancouver. Victoria is really no different than Miami, Phoenix, Los Angeles and Las Vegas were before their housing markets crashed. I will write more about that another time.”

If Victoria was not so jammed packed with tax sucking useless govt workers buying houses with YOUR money….it would not be so overpriced. Right Zeus? Bark!! Good dog.

#253 Old Man on 01.27.13 at 4:19 pm

I have some good news for the Smoking Man, as have this hot babe who wants to enroll in his course to wealth and success, and asked me how much he will charge? She will be watching as to when and where; not to mention the cost for his program.

#254 smartalox on 01.27.13 at 4:27 pm

@WestCDN #214:
“Homeowners are naturally reluctant to lower prices and will first attempt to remove listing and re-list in a more favorable environment. However, home prices are determined not by idle inventory but the price that units are exchanged at. During periods of decreased sales volume, the few sales that occur will set the prices for the entire market.”

That’s how bubbles burst, right there.

If you’ve got a house to sell, but can’t get your price, pulling it off the market may be your first instinct, but it’s a critical mistake: in times of low sales volumes, the market actually falls lower, faster as any comparables that sell set the market price. By the time an over-optimistic seller decides to re-list, market prices have fallen far lower, and the seller is forced to cut their price deeper, just to stay on buyers’ radar.

It’s counter-intuitive, but in a falling market, it’s better to take a small reduction early, than to wait and be forced to make a much larger reduction later on.

Nobody wants to be the left holding the bag, in the form of holding the last unsold house on the block (or in the complex, as the case may be).

#255 hangfire on 01.27.13 at 6:36 pm

snowy…huh…….what boondoggle? have you ever existed outside the CBC propaganda universe? typically with the liberals..every one who disagrees is a bad person……sad that anyone should comment from a place of absolute ig……morance.

#256 Snowboid on 01.27.13 at 11:56 pm

#255 hangfire on 01.27.13 at 6:36 pm…

Truth Hammer, come on now – check out the other US media that is reporting on the Texas budget issues.

Don’t watch or listen to the CBC – besides I don’t think they are covering the Texas story.

Your attempts at spreading propaganda, however, do need some work – maybe reviewing Edward Filenes’ Institute work would help.

I don’t think you are a bad person, just an id……iat.

#257 Holy Crap Wheres the Tylenol on 01.28.13 at 11:35 am

After reading this sad story I just had to laugh and cry!
WTF were they thinking?

I keep pitchin’ ‘em and you keep missin’ ‘em!
That boy’s as timid as a canary at a cat show!
Nice mannered kid, just a little on the dumb side!
You’re way off, I say you’re way off this time son!
Nice girl, but about as sharp as a sack of wet mice!
Nice boy but he’s got more nerve than a bum tooth!
I say, boy, pay attention when I’m talkin’ to ya, boy!
Pay attention, boy, I’m cuttin’ but you ain’t bleedin’!
Smart boy, got a mind like a steel trap – full of mice!
He’s so dumb he thinks a Mexican border pays rent!
That boy’s as strong as an ox, and just about as smart!
This boy’s more mixed up than a feather in a whirlwind!
Look sister is any of this filterin’ through that little blue bonnet of yours!

Thanks Warner Bros, Looney Tunes & Merrie Melodies cartoons for reminder quotes!

#258 TonyMontoya on 01.28.13 at 11:44 am

Put the final nails in this over hyped Real Estate market already. Its currently on life support, and needs to just be put to rest. The banks need a new scheme….ummm wait a minute…how about rising interest rates…or a war…or another banking crisis (derivative market crash) that will finish off this corpse. Then the corps through their real estate subsiduaries, can buy up large tracts of developments for pennies on the dollar, like they they did in the US recently.

#259 The W on 01.28.13 at 4:17 pm

@ #55 HogtownIndebted on 01.25.13 at 11:07 pm
I’m saving your comment and printing it out… going to reflect on it… I might just sell my car and move downtown (and I only bought it a month ago)… what a great post.