The sure thing

tuna1

Two Thursdays ago Tom strode out of the yard for the last time, went home and mounted his off-white hard hat on the fireplace mantle. “My trophy,” he said. And there it sits.

That hat adorned his head most days for the 26 years he was with the power commission, as a lineman, then stationary engineer, then inspector. Tom knows he scored – he and a few buddies are among the last to walk away with a defined benefit pension which just made him rich.

The pension amount ended up being $1.4 million. Tom could have left it sitting in the plan and started drawing about seventy grand a year, or commute the value, rolling most into an RRSP and still getting a fat cheque. He did the latter, figuring he’d rather control his money than give it over to a bunch of goofs in suits. And that’s how we got one of our latest millionaires.

There are 422,000 people in Canada who have at least a million dollars in investable assets outside of their homes. That’s 1.2% of the population.

If you looked at real estate values across Canada, you’d think a whack of those people live in Vancouver or the Lower Mainland. After all, this week there are 4,500 houses for sale over $1 million, and virtually every home west of Main has been assessed at more than seven figures. This makes Vancouver the second most costly place on the planet to live.

But wait. When it comes to millionaires, Van doesn’t even make it onto the list. According to WealthInsight’s new report you have to get past Tokyo, NY, London, Paris, Frankfurt, Beijing, Osaka, HK, Shanghai, Singapore, Seoul, Munich, Rome and LA to even find a Canadian city. Which is, of course, the hockey choke capital, Toronto. In the GTA live 118,000 millionaires, and yet there are only 2,600 million-dollar homes on the market.

This may be an imprecise measure, but you can add it to every other metric showing the delusional people clustered in the bottom left-hand corner of this nation are certifiable. Real estate values are unsupportable by incomes or accumulated wealth, and certainly not by the current BC economy. Nor is immigration a market-mover, as anyone trying to sell a house in Richmond or the Westside these days will tell you.

And while BC prices in general have fallen 8%, with Van down about 6%, the serious blood-letting has not yet even started. There are years ahead of piteous sales, apoplectic realtors, remorseful ex-virgins and relentlessly weak prices. Don’t expect crash. Anticipate melt.

This brings us to Vijai Mohan, who started a small hedge fund five years ago in San Francisco. He’s been making news (at least here) since he announced he’s got a new fund you can buy into that will profit from Canada’s housing mess by shorting the banks. During an online chat with the unemployed people who frequent the Globe’s site yesterday, Vijai said:

“Canadian banks appear to be the most simple and one-sided way to take a position here. Yes, roughly 60% of the Canadian mortgage system is currently insured by CMHC. However, the way a downturn might play out is anything but simple. My research suggests that the underwriting process for insured mortgages has been anything but robust, and that there could be potential “put back” risks where CMHC nullifies its insurance on individual mortgage loans.”

To be accurate, every high-ratio mortgage in Canada made by one of the monster banks is insured by the feds. Not 60% of them. All of them. If a borrower defaults (and relatively few do, or will) then CMHC will pay up. But, of course, it need only cover the difference between the mortgage on a property and its sale price. Currently about 0.36% of mortgages are in default (no payments in three months), so do the math. Meanwhile the Royal Bank alone is making $2 billion in profits every 90 days, in a grinding economy and a slowing housing market.

Vijai’s blowing smoke. But he’s not alone. There are financial advisors around peddling a short-the-banks strategy which has so far cost their clients dearly, usually because they’re also flogging gold. Fear sells, but right now only fools are buying.

That Canadian residential real estate will devalue is a given. That most households will suffer a loss of wealth through eroding equity – that’s assured, too. This is not a quick or short event. And that means the years of becoming a millionaire through mindless increases in the value of your home are done.

What will be legacy of this house horniness? Mortgage debt up 150%, to $1.2 trillion. Record household borrowing as people live off LOCs and credit cards. A third of the wrinklies retiring with home loans outstanding. A negative savings rate in BC. Plunging construction in the GTA. And 98.8% of the population who hitched their wagons to the wrong star.

The moral: get a hard hat.

161 comments ↓

#1 Lady Gaga on 05.07.13 at 8:54 pm

Think I am first…

#2 Dan on 05.07.13 at 8:59 pm

Not to be picky Garth it’s Stationary Engineer, well actually Power Engineer, or Operating Engineer in Ontario.

#3 TurnerNation on 05.07.13 at 9:00 pm

This blog win is better than a Fable Leafs win!! (They one. Once. It’s written somewhere. Well B4 my time.)

#4 City that smells like it sounds on 05.07.13 at 9:00 pm

I just may be 2nd today!!! Lost out on furst.

#5 visorman30 on 05.07.13 at 9:00 pm

I work the Province of Ontario and technically also have a defined benefit plan but I’m relatively new in the public service (about 7 years in and a long way to go). I hear you about the concern of the existence of the plan in the future and would prefer to control my own destiny as well but I don’t really think there are many options at this point.

I don’t plan on leaving anytime soon, am I just stuck between a rock and a hard place? Or are there options I haven’t considered?

#6 Shawn on 05.07.13 at 9:02 pm

Lady Gaga, you are first but it’s OKAY with me ’cause I am still number one!

#7 Adam on 05.07.13 at 9:02 pm

People who say public sector workers have fairly contributed to their DB pensions (there’s this one nut on G&M discussions who keeps saying this – probably a teacher) need to be punched in the face.

#8 Tom Vu on 05.07.13 at 9:03 pm

Not first…but not last either.

#9 Victor V on 05.07.13 at 9:03 pm

Buy or Rent? Reluctant renter, first-time owner square off. Video here:

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/home-buying/video-reluctant-renter-and-first-time-owner-talk-housing/article11650975/

#10 Brad J Lam on 05.07.13 at 9:04 pm

Garth, so we understand you right, Canadian banks are solid buys since mortgages are essentially guaranteed by taxpayers should there be a massive wave of mortgage defaults….Is that right?

There won’t be. — Garth

#11 Victor V on 05.07.13 at 9:04 pm

http://www.theglobeandmail.com/globe-investor/hedge-fund-chief-john-paulson-loses-big-on-gold/article11752265/

Hedge fund billionaire John Paulson is emerging as one of the biggest losers in this year’s gold rout, further tarnishing his once legendary status in the $2-trillion hedge fund industry.

Paulson’s $700-million gold fund lost a whopping 27 per cent in April, when the price of the metal plunged 17 per cent over a two-week stretch, according to performance figures provided by a person familiar with the fund.

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

Ouch.

#12 Shawn on 05.07.13 at 9:13 pm

Pension Commuted Value

I think Tom did the right thing.

$1.4 million cash will pay out $70k per year for precisely 20 years if it is invested at a 0% rate of return.

Now in reality the $70 would have been indexed for maybe 60% of inflation so our $1.4 million needs to grow at 60% of inflation to last 20 years.

Invested at 5%, $1.4 million or $1400 thousand will pay out $70,000 per year in perpetuity and you still got your $1.4 million. Invested at 5% plus inflation it will pay out $70k in real dollars in perpetuity. (A stretch but do-able)

It’s no contest if you are a decent investor or have a good advisor.

I never thought I would but with these low interest rates (driving up commuted values) I now plan to take my commuted value and run. My plan only allows commuted values before age 55 so I got 24 months to do it.

Big downside is I have to retire by 55 to grab this loot.

I can do it because I have a part-time business and substantial savings as well.

But if you are not a confident investor, this plan may be far too risky.

Maybe the government should offer a big program to get these government employees to retire early. A little encouragement (severance pay) would do it. Frees up jobs and or cuts the government payroll. Let’s go!

#13 Poltawadiva on 05.07.13 at 9:13 pm

For all those wannabe millionaires, there are only five (legal) ways to get rich:
1. win the lottery
2. inherit money
3.marry money
and for most of us mortals
4. make more than you spend
5. spend less than you make.

#14 Freedom First on 05.07.13 at 9:16 pm

There is a centuries old saying I rather like. “Debt is the money of slaves”. I like a good balance of assets, diversity, liquidity, and being debt free. Works for me.

Words to the wise: Choose your financial advisers carefully. It is extremely important.

#15 Skoby Doo on 05.07.13 at 9:19 pm

11 Victor V
———————————–
John Paulson is correct, it is simply too early in the game.
We will see again in 3-4 years who is up and who is down.
If he holds in long run and does not leverage he will have the last laugh.

BTW there would be opportunities of a lifetime coming down the road in the next year or two, I am sure that smart CONTRARIAN investor will catch them.
Hint: It won’t be DJ.

#16 Victor V on 05.07.13 at 9:24 pm

http://www.thestar.com/business/personal_finance/2013/05/07/early_exit_from_closed_mortgage_can_cost_you_dearly_roseman.html

When you buy a house and sign up for a fixed-rate mortgage, you probably don’t ask about the cost of getting out early.

But life is full of surprises — and if you have to sell or refinance before the mortgage term ends, you can be hit with a monstrous penalty.

Take Douglas Clinton Govier Jr., who sold his house this year. He had just over six months left on a closed five-year mortgage with CIBC.

“I was charged over $12,000, which was more than one full year of interest,” he says. “I expected to pay a reasonable penalty, but not one as unreasonable as this.”

He asked on at least two occasions how the penalty was calculated and couldn’t get an answer. He was told that the amount could not be reduced unless he took out another mortgage with the bank.

Here’s the problem: Govier was selling because he couldn’t afford to live in his house any more. He had hoped to use the sale proceeds to pay off bills, but now he was still in debt.

I asked CIBC to review the complaint, but the penalty stayed the same.

“I am truly disappointed and frustrated,” Govier says.

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

Lots more cases like this.

Not good for over-levered borrowers. Quite good for bank shareholders.

#17 Skoby Doo on 05.07.13 at 9:29 pm

Warren Buffet just said that bonds are terrible investment. Why if the dollar is strong and there is no inflation?

Garth, any comment?

#18 Skoby Doo on 05.07.13 at 9:31 pm

If the dollar would be the reserve currency in our lifetime as Garth stated, then why are not the US gov. bonds the best investment?

#19 ed on 05.07.13 at 9:37 pm

Speaking of losers, here’s another hedge-y guy who has been flogging Japanese government default of bonds as a sure thing (This is also called the widow maker trade) and has just lost big on gold, which he was also flogging:
http://www.zerohedge.com/news/2013-04-09/kyle-bass-perplexed-golds-low-price

#20 timmy on 05.07.13 at 9:38 pm

Obviously the figures for millionaires don’t include real estate holdings or almost everyone on the west side of Van who owns a house would be one.

And nobody has a mortgage? — Garth

#21 Smoking Man on 05.07.13 at 9:48 pm

This is how things will play out GTA, May sales amazing, late spring flare up..condos not included, Then we hit the summer, traditional declines, laughing con comes back posts every five minutes, It’s going to be a nasty crash realtor a nasty crash…. Till the next spring market when, we all say, WTF sfh prices up again….

The cycle repeats….

But who cares this is amazing, and a former Canadian mister of defence outs UFOs exist…. 6 species of aliens among us…..

Don’t believe me watch this….. I have a theory, govt msm keep it under wraps cause the fear they will lose the herd to worship someone else.

https://www.youtube.com/watch?v=T2RbMsasfmo&feature=youtube_gdata_player

#22 Devore on 05.07.13 at 9:57 pm

That’s 1.2% of the population.

A million just ain’t what it used to be.

#23 Rabbit One on 05.07.13 at 9:57 pm

The way hedge fund makes money is the swing.
In my opinions, Canadian banks are not going to suffer from housing sector downfalls. But stock price will sideway. No much growth from this point, but will pay 3~4% dividends and highly potential dwith ividend growuth.

Sideway market is worst for the Hedge fund, if that happen to their bid (banks), it will lead to a big loss.

Talking about DBB, in these days market since 2008, people really want it. but your work place won’t give you any more.

But what’s wrong with DCP? It might do better tghan DBB depending on many factors including individuals ages, etc …… am I wrong?

#24 Finally on 05.07.13 at 10:02 pm

Go Vancouver Canucks!!!

#25 TK on 05.07.13 at 10:04 pm

Garth, is Canadian real estate following US footsteps just “slow motion”, as Robert Shiller suggests? Are we, as a Nation doomed for a decades of stagnation?

Try decades of stupidity. — Garth

#26 Shawn on 05.07.13 at 10:06 pm

stationary engineer or Stationary Engineer?

Dan at number two said:

Not to be picky Garth it’s Stationary Engineer, well actually Power Engineer, or Operating Engineer in Ontario.

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

What the capital letters? That’s beyond picky. That’s called annal retentive. And I doubt that there is any law that says one must capitalize engineer in everyday English.

By the way the purpose of writing (especially on a blog or other informal work) is to communicate not make a display of spelling or grammar.

I’m with Smoking Man, anyone who gets hung up on spelling is a servant to the machine and not a free thinker. If the meaning is clear then a few spelling errors (usually just typos) are no big deal.

#27 IvoteIndependent on 05.07.13 at 10:08 pm

Mr Turner, what advice do you have for all those loyal blog readers who maxed out both the RRSP and TFSA with diversified bonds, RIETs, ETFs and preferreds, and limited real estate to a reasonable fraction of net worth? What should they do to ensure that they can enjoy the fruits of their wisdom during retirement without having them stolen by the government to support the impoverished masses who foolishly wasted both their youth and their money?

Stop putting money in registered assets. — Garth

#28 Rabbit One on 05.07.13 at 10:08 pm

Sorry, many miss-spelling words in my recent post.

Garth is not saying BUY Canadian Banks, but he is saying they are not going to crash just because of housing market as American Banks did.
I totally agree.

Insurance people always complain, with this low interest world, banks always make money from account fees, existing mortgage, Visa, Wealrth Management, Capital Market, Safety Deposit, Car Loan, index-linked GIC, Big mutual fund sales, all from different sources.
Banks always make money.
Very well diversify and even more so in the future.

Insurance co are not as diversified as banks of course, cannot cover Capital Market loss with NSF fee profit.
And with new budget they will be suffering even more.

#29 Smartalox on 05.07.13 at 10:10 pm

So what’s you take on Vijai ‘s research? A portion of the US housing bust was caused by the so-called NINJA Loans (no income, no job, or assets) written up by commission driven mortgage brokers who falsified application info for buyers who had little ability to service the debt.

In cases of similar fraud involving CMHC insured mortgages, won’t CMHC balk at paying out when the mortgage goes bad? Have the banks factored defaults due to fraud into their stress-tests, and to what level? 20%, 30%, 40% of outstanding?

Do the stress tests consider one stressor at a time, or multiples, like a perfect storm of economic slowdown, rising rates, bad loans and a housing deflation. I’m not asking to be an alarmist, I’m asking because this might be the only place where I can get a straight answer.

If it’s not different here in terms of real estate values, why would it be different in terms of anything else?

First-time defaults in the US (in arrears at least 60 days) peaked at 2.89% of mortgages outstanding (and have since plunged). When you speak of defaults here at 20-40% you are off the charts. — Garth

#30 AK on 05.07.13 at 10:12 pm

“This brings us to Vijai Mohan, who started a small hedge fund five years ago in San Francisco. He’s been making news (at least here) since he announced he’s got a new fund you can buy into that will profit from Canada’s housing mess by shorting the banks.”
——————————————————————–
I feel sorry for the poor investors in this Hedge Fund.
There will be dozens of Hedge Funds that will bite the dust this year, and this will be one of them.

#31 Shawn on 05.07.13 at 10:16 pm

Skoby Doo at 18:

Warren Buffet just said that bonds are terrible investment. Why if the dollar is strong and there is no inflation?

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

It matters not if the dollar is strong or weak against other currencies. Buffett is talking about investments in U.S. dollars for the purpose of later spending in U.S. dollars. Bonds are a terrible investment because a 10 year government bonds pays about 1.8% and a 30 year government bond pays 3% and inflation is running at perhaps 1 to 2%. So you net somewhere around 0.2% to 1.2% pre-tax. Sucks.

In Buffett’s opinion the returns from stocks over 10 to 30 years will be far higher than the returns on bonds over same period. Why invest in things that pay an abominable return? Buffett said the same in approximately his 1981 annual letter in reference to tiny interest rates of the 1940′s called 1940 bonds like investing in an abdominal business. What was an abominable bond yield in 1940 is also abdominal today. In 1981 Buffett was buying some bonds.

#32 Smoking Man on 05.07.13 at 10:17 pm

My new hero Charles Ramsay…. Of Cleveland

#33 TurnerNation on 05.07.13 at 10:18 pm

That hard hat only protects so much. I suspect the loot will be mostly used for a cottage, boat, quad, snow machines, and endless rounds at the local watering hole. No suits allowed. Ask SM.

#34 Freebird on 05.07.13 at 10:19 pm

My condolences to all of the loyal Leaf fans. We have a few among our friends. Next year.

#35 Devore on 05.07.13 at 10:22 pm

#23 Rabbit One

But what’s wrong with DCP? It might do better tghan DBB depending on many factors including individuals ages, etc …… am I wrong?

The promise of a DBP is if there is a shortfall, the plan managers have to make up for it with an infusion of capital from the employer and current employees, and the benefits to retirees keep getting paid out at the “defined benefit” rate.

Of course, that fantasy is now coming to an end, which is why you take the money and run, if you can.

When a DCP takes a hit, you just look in the mirror.

#36 AK on 05.07.13 at 10:26 pm

Las Vegas Echoing US Recovery

Pedal to the metal L.A to Las Vegas?

#37 Tom Vu on 05.07.13 at 10:29 pm

Glow in the dark Brad Lamb ?

http://grizzom.blogspot.ca/2013/05/uruguay-scientists-have-genetically.html

#38 AK on 05.07.13 at 10:31 pm

#22 Devore on 05.07.13 at 9:57 pm
“That’s 1.2% of the population.

A million just ain’t what it used to be.”
——————————————————————–
A lot better than being in Debt.

#39 not 1st on 05.07.13 at 10:32 pm

I don’t consider that Tom guy hitting it lucky at all.

Lets look closer…26 years working for the man as a wage slave to stash 1.4 million that will return him a paltry $70k/yr in retirement. Thats not the retirement I have in mind. Multiply that by 2 or three and now we are talking a real retirement.

Also, stats prove that early retirees from a life of work a day jobs die sooner than the rest of us. You haven’t hit the lottery until you secure your own financial freedom at a young age.

#40 Smoking Man on 05.07.13 at 10:34 pm

Wife is forcing me to watch little couple, I don’t want to be insensitive but.. Speaking truthfully I would like to toss them both down a bowling alley and take out all the pins.

They are adopting kids on the show just for ratings….

I don’t buy there need to addopt…

#41 Tom Vu on 05.07.13 at 10:35 pm

Garth is right!!!!

Invest in Banks …

Banks are too big too fail..because Gov’t won’t let it fail..because we are Gov’t….and thus we can’t let it fial..even if it is a fiat enslavement machine…thus citizen are into fiscal BDSM.

So invest in banks makes much sense…sorta like Stockholm Syndrome…but don’t stop beating head against door…no time to feel pain..must make 5% + dividend.

Like this life cycle

Frog eats Worms
Snakes eat Frogs
Pigs eat Snakes
Man eats Pigs
Worms eat Man

repeat

#42 Nemesis on 05.07.13 at 10:36 pm

I should really be thinking about more serious things, OldPol… And I’m quite certain that Bill is wondering about this, too…

So… Please, PrettyPlease humour us with a hint as to your new steed’s provenance.

I’m wagering on a NakedRoadKing with TooledLeatherBags…

For some inexplicable reason… I see you in elaborately BeadedBuckskins and bespoke Rocketbuster SnakeSkin CowboyBoots.

#43 Canadian Watchdog on 05.07.13 at 10:41 pm

But, of course, it need only cover the difference between the mortgage on a property and its sale price.

And just how is CMHC going to sell foreclosed properties in a falling market like Quebec?

Quebec Arrears

CMHC High Ratio IFF

Interesting how Karen Kinsley stated (on record) that the biggest risk to CMHC's portfolio is rural foreclosures, not metro properties. Be assured, Quebec's market gone wrong has enough potential to wipe out CMHC's $13.8B equity. Perhaps that's why CMHC instructed Quebec realtors to hide foreclosures.

I don't know when, but CMHC's day of reckoning will eventually come. It always does.

#44 AK on 05.07.13 at 10:42 pm

“According to WealthInsight’s new report you have to get past Tokyo, NY, London, Paris, Frankfurt, Beijing, Osaka, HK, Shanghai, Singapore, Seoul, Munich, Rome and LA to even find a Canadian city. ”
——————————————————————-

WealthInsight

#45 Small Town Steve on 05.07.13 at 10:47 pm

I am in my 40′s currently I have over 500k in my pension but can do nothing with it until I am 55(early retirement but reduced pension) or slog it out until I am at least 58 for full pension benefits.(which also has continued full medical coverage. No it is not a government pension but still pretty juicy.

#46 The Affluent Boomer™ on 05.07.13 at 10:49 pm

It’s amazing the negative reaction I get for people when I try to explain what I see coming and what Garth has been prediction. It’s not Garth’s fault that it has taken longer than expected for the market to turn. You can thank our government for manipulating the markets by backing up 100% of high ration mortgages and (and non-high ration mortgages) to the tune of almost $600 billion dollars, taking the risk away for our banks and putting the risk squarely on the backs of the Canadian tax payer.

Fortunately for the banks they will make out like bandits, while unfortunately the Canadian tax payer pays to clean up the mess. Don’t bet against the banks.

#47 Dan on 05.07.13 at 11:00 pm

#26 Shawn He had stationery engineer not stationary engineer. He has since corrected it.

My post is about a guy who designs gift cards. You people are thick. — Garth

#48 gagain on 05.07.13 at 11:01 pm

Garth u r wrong about immigration. it has made Toronto.

#49 Nosty in Nirvana on 05.07.13 at 11:04 pm

-
#21 Smoking Man — Hi SMan. It appears that you’re on to something.

Disabling Nukes Which is not a bad idea, esp. Dimona and the US.

0:43 clip Didja read up on the mushroom cloud over Damascus a couple of nights ago? Seems USrael are doing some very naughty things. A small nuke, but a nuke nevertheless.

4:08 clip These are the ones who are causing the trouble, and each to fight to the end.

Humpty Dumpty — Just guessing, but are you of the Christian faith? I was a Catholic and Protestant for just shy of two and a half decades, but we left Christianity in the mid-90s, and never looked back.

Of note: Thursday, June 6, 2013

June _____________ 6th month
2+0+1+3 _________ 6
Thu. _____________ 6th day

Don’t be concerned. The Negative Force (Satan, Lucifer or the Devil), who controls the lower psychic regions and takes orders from those in the higher spiritual regions, is just doing its job and nothing more.

Cheers y’all!

#50 Tom Vu on 05.07.13 at 11:11 pm

Rich Gov’t pension plan re-monikered so more down -to earth and palatable….like diet arsenic and Kool – Aid.

“Ben Dover and Phil Mawallet” plan

#51 Billy on 05.07.13 at 11:19 pm

“That’s called annal retentive.”

While you’re busy giving lessons, it’s anal retentive not annal.

Another new stock market high. Meanwhile I’m waiting for a correction or pullback (whichever one chooses to call it) am I being foolish to wait?

#52 Uh Oh Canada on 05.07.13 at 11:22 pm

So in Canada, most of us are part of the 98.8%

#53 Smoking Man on 05.07.13 at 11:22 pm

Vladimir if I didn’t see it with my own eyes last may, I would think he’s out to lunch, but I did, my family thinks I’m nuts..

I saw the ufo, no man or god will convince me other wise, I’m sort of like a laughing con

#54 Canadian Watchdog on 05.07.13 at 11:22 pm

THAT'S NOT OUR JOB. IT'S YOUR PROBLEM BANKERS.

CMHC’s emili System

The lender is responsible for ensuring their lending decision is based on accurate and complete information. The lender is also contractually responsible for ensuring valid data is submitted into emili prior to funding for each mortgage insurance application.

(CMHC clarifying on record that they do not verify incomes and application data.)

CMHC prudently manages its mortgage loan insurance function. In addition to the lender’s assessment of risk, CMHC will independently assess all mortgage insurance applications. CMHC does not use property value averages, but uses the specific characteristics of the property being assessed. CMHC’s assessment is based on specific risk factors, including the borrower’s ability to pay (e.g. debt service ratios) and credit history, the value of the property, housing market conditions in which the property is located, local and economic conditions and loan financing conditions. The results of these risk assessments are then synthesized to ensure that the loan — taking into account the down payment and amortization period — makes sense in the context of the household’s ability to manage the debt.

(So risk assessment is based on VAR models that can predict when people will lose their job or simply decide to stop paying their mortgage. Where have we heard this before?)

CMHC acquires data from a wide-variety of sources. CMHC does not acquire nor does emili use MLS® listing data. We acquire data related to either property valuations conducted by property tax assessment firms or from actual transactions that have occurred in the marketplace. We also look at independent, sales transactions, but not refinance transactions.

In other words, CMHC doesn't mark-to-market on assets using current data and instead will make up whatever valuations they want.

#55 Dr. Hoof - Hearted on 05.07.13 at 11:25 pm

From Last Blog:

#153 JimmyAAA on 05.07.13 at 5:50 pm

#125 Dr. Hoof – Hearted on 05.07.13 at 2:07 pm

Here in HAMVILLE…its weird.

A few Hi Rise projects are commencing as we speak….lots of product around the Olympic Oval coming on stream.

Doing a bit of digging, one finds many of the frontline local Companies are Joint Venture with offshore companies

Still think its all money laundering.

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

I think this actually worth an post by Garth, if he can any sort of data on it. What is the impact of the illegal drug trade revenues on the value of homes in Vancouver / BC. While not the main factor, it is significant.

In my local mall, we notice several short term tenants a year that sell wooden toys, crummy makeup, etc. They rent a storefront in a lonely section for 4 -8 months, you see no customers in them ever. And then they shut down. And a new store pops up 2 months later. Both of us think it is just money laundering.

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

I’ve lived here 50+ years and don’t know a single person who has bought one of these new condos.

A recent article in the paper has acknowledged Canada’s money- laundering laws are lax in comparison to other countries.

In fact , our own Solicitor General has disbanded an RCMP group investigating money laundering .

http://www.vancouverobserver.com/casino/2011/02/16/casino-expansion-bc-place-may-lead-increase-organized-crime-activity-sources-say

Other than casinos…. RE is a great way to launder money.

Other than inflating local RE prices and some rinky dink malls that cater to offshore clientele, the whole BC economy is one bubble ready to “black hole” style implode. This house of cards is going down big time.

#56 Shawn on 05.07.13 at 11:26 pm

#26 Shawn He had stationery engineer not stationary engineer. He has since corrected it.

My post is about a guy who designs gift cards. You people are thick. — Garth

“”"”"”"”"”"”"”"”"”"”"”"”"”"”"”"”"”"”"”"”"”"”"”

Okay, now I get it… and Great response from Garth…

#57 Shawn on 05.07.13 at 11:37 pm

NEW TARGET STORES

Our new Store in St. Albert just opened.

By the way, it ACTUALLY is different here as Money Sense named us best small City in Canada and CBC gave us what was I think the ONLY top rating in the country for a community hospital in its recent survey.

By the way too, I gotta say CBC has been doing some great work lately they have broken a lot of stories. They are doing some REAL investigative journalism. Ya gotta hand it to ‘em they are doing good.

Plus all NHL players should kiss the feet of the CBC daily for developing hockey into a national obsession. Today’s players think they deserve all the loot when if was the CBC and the old time players that sowed the seeds they now reap.

But getting back to Target.

Huge new store in St. Albert. They completely gutted and then expanded the old Zellers. It’s a LOT better than any Zellers ever dreamed of being. Prices are good although not great. I maintain they will not have low prices because they spent a FORTUNE to move into Canada they are simply not a low cost operation. For low prices go to Costco.

I think it’s a wonderful thing that our economy supports so many of these Horns O’ Plenty big box stores (well at least in St. Albert, where SUVs groan with the weight of the booty from many many trips to all these stores.). Think otherwise? Then move to Alberta and see.

#58 Billy on 05.07.13 at 11:46 pm

“My post is about a guy who designs gift cards. You people are thick. — Garth”

That’s firetruckin’ funny.

#59 JimmyAAA on 05.07.13 at 11:50 pm

#35 Devore on 05.07.13 at 10:22 pm
#23 Rabbit One

But what’s wrong with DCP? It might do better tghan DBB depending on many factors including individuals ages, etc …… am I wrong?

The promise of a DBP is if there is a shortfall, the plan managers have to make up for it with an infusion of capital from the employer and current employees, and the benefits to retirees keep getting paid out at the “defined benefit” rate.

Of course, that fantasy is now coming to an end, which is why you take the money and run, if you can.

When a DCP takes a hit, you just look in the mirror.

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

Except when everything your employer DCP offers is a piece of crap with 2 – 3.5 % MER. Like the poor saps at my company hired in the last 5 years. Sun Life garbage and you must buy it.

Interesting take from a blogger that I like here.

http://financialuproar.com/2013/04/24/why-im-forfeiting-my-employers-rrsp-match/

#60 bill on 05.07.13 at 11:53 pm

now that you mention it – yeah.

#61 Tom Vu on 05.07.13 at 11:53 pm

#48 gagain on 05.07.13 at 11:01 pm

Garth u r wrong about immigration. it has made Toronto.

//////// {} {} [}|||||$?$?$?\\\\\\\\\\\\********

What is punchline..or is this a contest ?

However, we do support Toronto’s application to get an NHL team

#62 Shawn on 05.08.13 at 12:25 am

Billy at 51said:

While you’re busy giving lessons, it’s anal retentive not annal.

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

Okay but by any other spelling or name it still smells just as bad.

P.S. how about annul?

#63 Dan on 05.08.13 at 12:33 am

I do have a hard hat Garth. I do the same thing this guy does. Can’t be too thick now can I?

#64 A Yank in BC on 05.08.13 at 12:44 am

Wow. To be able to receive a 1.4 million lump-sum retirement package from your employer after only 26 years of labor is quite exceptional. I’m guessing public-sector employee?

#65 not 1st on 05.08.13 at 12:57 am

Garth, here is a great new movie coming soon. I suggest you see it.

http://www.youtube.com/watch?v=8Y-NqShTj5w

#66 Screwed on 05.08.13 at 1:01 am

#55 Dr. Hoof Hearted
Much of Vancouver RE appreciation is due to money from sources that are probably not taxed anywhere and below the radar screen. If Canada’s policies in this regard are lax than that is a good thing in my opinion. Taxmen are clamping down on wealth creation everywhere and Dollars, Euro, Pounds, Yen or Yuan will run like water the path of least resistance. Why not make it a business to attract that money to BC? I could care less where it comes from. Money is dirty whether the legal mafia or the other kind has their hands in it.

Garth, if BC’s economy tanks and AB cannot bring its precious resources to a declining and shrinking market then all bets are off in regards to Canada’s debt load, the currency and THE BANKS.

Vijai should look at other sovereigns which had their ass pounded and their face kicked over the last 3 years when taking a stab at the Canadian banking system. The US is on a planet of their own making. Canada is not the US and is more likely somewhere between Greece and Zimbabwe.

Hedge Funds can do some serious damage to Canada if they conspired to an attack on Canada’s banks. Who is buying Canada’s debt and what prices are these people willing to accept going forward? Canada is rolling over some 230 billion in sovereign paper this year alone.

Higher interest = death knell to Canada’s economy and a death knell to Canada’s banks – bank run – bank closure – confiscation of deposits to fund a bail-in.

Got cash?

#67 renata on 05.08.13 at 1:02 am

I’m reading your post for some time and my conclusion is, what about people living in real, not borrowing to live, not living the live they can’t afford.
I’m an immigrant and I came to this country with zero English and the same amount of money, but I earned my money before I spend it. I don’t agree that savers are lost and whatever they invest into will pay in the long term because they didn’t borrow to invest.

#68 David McDonald on 05.08.13 at 1:18 am

Garth mentioned his political rehabilitation via this miserable blog. How does that work? He probably has more credibility than any politician in Canada among a certain (fairly large) slice of the Canadian population. However our elections are local so that slice only translates into a small proportion of the vote in any given riding.

I am afraid there doesn’t seem to be much room for independent thinkers in parliament these days and certainly not in the Conservative party.

#69 Piccaso on 05.08.13 at 1:18 am

IT’S A SWEEEEEP

Bring out the riot gear.

#70 AACI Home-dog on 05.08.13 at 1:52 am

Garth…say a person has over $1 million in rrsps only…would the potential tax consequenses exclude them from being included in the 1.2% ?

#71 Merry on 05.08.13 at 2:08 am

#16 – I don’t understand when people say the bank refused to tell them how their prepayment penalty was calculated because, if you read your mortgage document, the formula they use is written right in it. At least it was in the mortgage I got from TD (which I have now paid off).

#72 alex grant on 05.08.13 at 2:33 am

I thought Vijai was shorting only the dollar? Perhaps this is a roundabout way of doing doing so. In any case he has a handle on the economic situation facing Canada in the future and will profit from it I’m sure.

#73 Dean Mason on 05.08.13 at 2:42 am

I have a friend where his father and mother retired in 2008 at 61,62.He told me that they have saved and invested for 33 years.They bought mostly GIC’s,Canada savings bonds,Ontario savings bonds and short term deposits.He told me that they just live off their C.P.P,OAS $2,100 combined a month and a small $600 a month company pension.

Their RRSP’s, and non-registered accounts are a total of $1,450,000. The father wanted to put it in all 5 year GIC’s.My friend told his father that 5 year GIC’s are not good for long term income because they only guarantee the interest income for 5 years and are lower rates compared to longer term bonds.

So he convinced his father and mother to buy 2 Canada bonds, 11 different provincial bonds in 2008 ranging from 4.65% to 5.06% at 2 different investment dealers,brokerage companies.They do not mature until 2034 to 2037.

They are earning $71,000 a year in annual interest.They get $15,000 from their RRSP’s and $56,000 from non-registered accounts.My friend told me that he gets $11,000 a year from his parents to put in his own and his wife’s TFSA’s.The father and his mother do the same $11,000 maximum TFSA’s a year.

His father and mother told him it was the best financial move they ever made considering that GIC’s were paying 4.50% in 2008 and now are at 2.50%. He told me his parents put about $51,000 in TFSA’s so far but has saved $128,000 in 3 dividend ETF’s with 4.21%,3.89%,4.35% yields in 5 years.The dividends are paying for 2 RESP’s for my friend’s children.

Hy friend told me that his parents did not touch any of the principal and continue to put $11,000 in their TFSA’s,his own and his wife’s TFSA’s.The parents are also saving $1,900 a month into the dividend ETF’s.

#74 Dean Mason on 05.08.13 at 2:46 am

Correction
My friend told me his parents did not touch any of the principal

#75 Rabbit One on 05.08.13 at 2:51 am

#35 Devore

>When a DCP takes a hit, you just look in the mirror.

Thanks for the comment. All you said is very true.

I have 2 DBPs and 1DCP.
My DCP is much better matching feature and
based on my rate of contribution and age, it seem good deal in my case.

Now I have to look at the 2 DBPs promised numbers once again.
About 20 years ago (yes, 5Y-GIC was over 7~8%, Kits 4BR Detached was about $300K), DBP numbers didn’t look attractive but it might look different now.

I still think, leaving company pension fully to how market does, what is wrong with that?

When things go bad, your company pension is not the only one that sinks.
And you are already retired.

Also, it depends how generous / sustainable the DBP’s promise is.
I may be still missing points…?

#76 Rabbit One on 05.08.13 at 2:53 am

How about having private insurance company audit CMHC?

#77 Buy? Curious? on 05.08.13 at 3:04 am

I don’t understand a few things. What the difference between a crash and a melt if the end results are the same? If real estate is local and some hoods are more desirable, immune to this correction, does that mean buying a place in one of those hoods a safer bet? Why do people buy places way out in the suburbs to commute 5hrs a day, 5 days a week?

Today’s post is rated a 7 out of 10. Not necessarily a downward trend. It’s that I hold the future Prime Minister of Canada to a higher standard.

http://www.youtube.com/watch?v=l2hqzEKbaIQ

#78 Humpty Dumpty on 05.08.13 at 5:01 am

ROSENBERG: The Fed Is Trying Like Crazy, But Nothing It’s Doing Can Save The Economy

http://www.businessinsider.com/david-rosenberg-bernanke-wizard-potemkin-mauldin-presentation-2013-5#

G, you always tell us, “don’t bet against amerika”….
kinda like its a sure thing…

After looking at these charts, It may be prudent to bring a life rope to acompany the hard hat……

#79 Ralph Cramdown on 05.08.13 at 5:28 am

#15 Skoby Doo — “John Paulson is correct, it is simply too early in the game.”

I hate to get all reality-based on you, but John Paulson was wrong. If it was too early, he should have waited to buy. The markets are not a morality play, they’re not a metaphor for love, and, if I may share a few quotes from every goldbug’s patron saint, “In the long run, we’re all dead,” and “Markets can remain irrational a lot longer than you and I can remain solvent.”

There’s no too soon about it. John Paulson was playing in a zero-sum market. He bought gold, was wrong, and lost himself and his investors a lot of money. Whoever it was that sold him the gold avoided losing money by selling it to that rube Paulson at the right time. Paulson and his patsy co-investors were left holding the asset that was declining in value. They got poorer. Somebody else didn’t. You need to accept this, unless you wish to continue to be the person who buys what others are correctly selling. But there’s probably no hope for you, because gold makes its admirers INSANE IN THE BRAIN!

#80 Ralph Cramdown on 05.08.13 at 5:45 am

#39 not 1st — “26 years working for the man as a wage slave to stash 1.4 million that will return him a paltry $70k/yr in retirement. Thats not the retirement I have in mind. Multiply that by 2 or three and now we are talking a real retirement.”

Does it feel good to piss on those lower down on the ladder? Statscan says that median household income is about 70k. If our friend can live with getting most of his income from dividends of Canadian companies, he can have a middle class income forever, pay very little tax, thus vaulting him higher on your better-to-be-pissing-on-than-pissed-on scale, and he can direct his seven figure estate where he wishes. It’s my impression that not too many Canadians have accomplished this, so we should celebrate rather than denigrate those who have.

I also aim to have a higher retirement income than our friend, but I consider the need for such a personal failing, not a virtue.

#81 The real Kip on 05.08.13 at 7:16 am

It seems strange to read your blog where you kind of defend the Canadian banks and other institutions against the likes of Vijai Mohan. Bravo, it’s about time.

Canadians are quite capable of managing our affairs and this country will easily jump this current economic hurdle.

#82 AK on 05.08.13 at 7:17 am

Roubini out with his latest prediction.

Roubini

#83 AK on 05.08.13 at 7:24 am

Hedge funds in search of distress take a look at Detroit

Detroit

#84 yorel on 05.08.13 at 7:38 am

I know some people who commuted their pensions (against the advice of their financial advisors). They are now flipping burgers, and not at their backyard barbecue. They took a sure thing and gambled with it.

Then they deserve what they get. But smart people who follow sound investment advice almost always commute, and win. — Garth

#85 Nukester99 on 05.08.13 at 7:57 am

Garth, Tom does NOT have $1.4M as the tax man will take a large percentage away as tax. Tom will have been required to take some of his DB out as cash, some can go into a RRSP and some into a RRIF. Since in Ontario the NDP has given us the “gift” of a higher tax rate for people earning over $500K, Tom will undoubtedly pay around $250K in tax on his enforced withdrawal. $450K into his RRSP to be taxed later and $450K into a RRIF. He would be allowed to remove 50% of his RRIF when he turns 55 and again pay tax on that amount. If married he losses the income splitting opportunity and losses the pension income deduction for both spouses. His decision is not as cut and dry as you suggest. I had the same type of decision and having to worry about my money outweighed made the cashing out not suitable for myself. I hope Tom had some good advice and understood himself before hand. TNL@TB would certainly steer him to mutual funds as I have seen exactly such a plan from a major bank. The only one that made any income was the bank.

#86 Ralph Cramdown on 05.08.13 at 7:59 am

#71 Merry — “I don’t understand when people say the bank refused to tell them how their prepayment penalty was calculated because, if you read your mortgage document, the formula they use is written right in it. At least it was in the mortgage I got from TD.”

A few years ago, we investigated giving a mortgage to TD (back when they still did conventional mortgages). TBL@TB said she couldn’t show us the charge terms — essentially, they were a secret until we were so far committed to the process of buying a house that it would be too late to do anything if we didn’t agree. I knew that we could go to the land office and, for a nominal fee, print a copy of some other customer of TD’s charge terms. Bizarre or what?

I agree with you that a customer with an actual mortgage likely has MOST of the info to figure out his break fee. Probably not all though, and the banks don’t make it easy. Better a shareholder than a borrower be.

#87 Not 1st on 05.08.13 at 8:06 am

Not pissing on this guy at all. He is the one who has a hard hat as a trophy. I would say he is the one pissing on the majority of the rest of us.

I know exactly who this person is. 26 yrs with one company says govt or utility monopoly worker, unionized, racked up a lot of bogus OT and coffee breaks on the company dime, all toyed up, probably NDP. This is someone who has lived off the generosity of the state and not some financial genius like he probably thinks.

Now let me tell you what the rich do. They build asset streams that pay them right now, not in 26 yrs. and they have no upper limit on their income or at the very least they get it into the 1% range (250k).

#88 Nukester99 on 05.08.13 at 8:22 am

Not 1st,

You sound jealous, envious or even angry. All these things are bad for your health. Relax, enjoy life and stop dwelling on others. I hope your revenue streams work out great and you have everything in life you need.

#89 Suburban Guy on 05.08.13 at 8:31 am

Garth,
You’re playing loose with the facts. Tom CAN NOT put nearly all of the 1.4 mil into an RRSP. (In fact, he can put money into it, only if he has contribution room. In general, he must put the money into a Locked in Retirement Account) But how much money can he put into a LIRA? Well, it’s based upon age and annual benefit payable at age 65, but it doesn’t include indexing or early retirement benefits. Without knowing exact details Tom’s age or exact pension payable at age 65 (because the 70k would likely drop when Tom turns 65) it becomes a bit of an educated guess.
Let’s see…70K is probably based upon the 2% benefit rule. As a rule of thumb, it would be 1.4% at age 65 (Yes I know, I’m a bit off because of the CPP Max Pensionable Earnings), but….. Therefore the pension payable at age 65 would be 49K (calculated current salary of 134,600). Multiplied by a factor of 10.4 (you can look it up) if Tom is almost 55 and he could transfer 510K into a LIRA. The rest is taken as income in the current year or as is sometimes allowed, spread evenly over the 10 years until age 65–but not invested earning extra income.
So Tom would get 900K/10 = 90K each year until 65 and then he would start withdrawing from the LIRA.
Depends what he earns on his LIRA, but remember there is no cost of living adjustment, as would be the case with a pension.
His income just might be much lower when he turns 65, but then again he may not make it until then and would have a nice income of 90K until then.

A full pension granted upon retirement age according to a DB plan is…duh…a pension. It does not need to go into a locked-in account which is actually locked, but pays whatever the benficiary wishes to withdraw from the registered vehicle. if commuted. Yes, not all of a pension can be commuted and some is paid in cash (as I stated). That amount is, of course, taxable in the year received. — Garth

#90 Nuke It on 05.08.13 at 8:37 am

The security of having a defined benefit plan with 30 years of service is priceless. As a contributor to two of them, one government one big insurance company, I am counting on that guaranteed indexed income when I retire in the near future.

The beauty of these plans is that when you are young, with kids, mortgages and not the best pay the pension is accruing. Many of the folks I work with started right out of high school. A year of service at $20,000 income in 1990 is just as good as a year of service at $120,000 income in 2013. What you earned at the beginning is irrelevant, only that you contributed. Your pension is going to be based on your best income years.

Also as you get closer to retirement, your contribution is fixed at about 9% of income, but to secure your guaranteed pension for that year, the amount that needs to be set aside could be 3 to 4 times that.

So for those lucky stiffs with a defined benefit plan you win at the beginning and at the end. An if you don’t care about managing your money, the pension funds will and simply send you a fat cheque every month.

#91 Canuck Abroad on 05.08.13 at 8:37 am

Guardian’s article breaks out multi-millionaires and billionaires as well. Vancouver still not on any of the lists, who knew?

http://www.guardian.co.uk/news/datablog/2013/may/08/cities-top-millionaires-billionaires

#92 jess on 05.08.13 at 8:42 am

hard hats needed ?
according to a Canadian construction industry association, BuildForce Canada,

“In the wake of the end of the federal government’s Sector Council Program, industry leaders have stepped up to the plate,” says Executive Director Rosemary Sparks. “We have a new brand, a new Board of Directors, a new funding model and a new governance structure,” she says. “But our mandate will continue to address the need for a skilled workforce in the construction
industryhttp://www.workpermit.com/news/2013-05-08/canada-needs-250000-construction-workers

#93 Buy Low Sell High on 05.08.13 at 8:47 am

I have come across a recent real estate transaction that I find immoral and unethical. A house located in Toronto’s TREB district C2 was just sold for $940k from an asking price of $950k. The owner had been trying to sell this house for almost 3 years, starting back in the summer (July) of 2010 at an asking price of $889k. Then in the summer of 2011, it was re-listed at a price of $849k with a different brokerage and later reduced to $828k. This listing was suspended before Christmas 2011. There was no action in 2012 and along comes January 2013 and the house is on the market again with a different brokerage again at an asking price of $950k! WTF! You can’t sell at $828k so you might as well increase the price by a $130k? And, in a softening market? After 106 days on the market and with only 13 days to go until the listing expires, it was sold for $940k. The part that does not sit right is the agent who represented the buyer was the same agent who listed the house at $828k and couldn’t get it sold! And, that agent’s office is located 400 metres from the house and they are considered experts in district C2!! What possible explanation could there be for this behaviour?

#94 jess on 05.08.13 at 8:48 am

funded partially by the Government of Canada’s Sector Council Program.

This brochure introduces and briefly describes the immigrant construction employment model and the Implementation Guide, and tells users where they can learn more.

http://www.buildforce.ca/en/catalog/recruitment/immigranttemporary-foreign-workers

#95 jess on 05.08.13 at 8:53 am

AK
bailin’

Dijsselbloem issues bank stress-test warning –

single-supervisory mechanism
Uninsured depositors and bondholders in eurozone banks could face imposed losses following stress tests carried out before a “single-supervisory mechanism” headed by the European Central Bank begins work next June.

Mr Dijsselbloem said.

“The outcome of that asset quality review we don’t know yet, but it might be worrying. It might be worrying for some banks in some countries. We don’t exactly know. What I do know is that when we do have an outcome that is worrying, we need to have the instruments to deal with the problems.”

As well as setting up the new ECB “single-supervisory mechanism” in June 2014, the eurozone is to agree common rules on “bank resolution”, setting out which uninsured depositors and bondholders will lose money if financial institutions need to be taken into receivership and restructured.
http://www.telegraph.co.uk/finance/financialcrisis/10042259/British-savers-could-face-losses-in-eurozone-bank-stress-tests.html

#96 It came to that! on 05.08.13 at 8:59 am

HA!

http://www.huffingtonpost.ca/2013/05/03/andrew-ciastek-remax-real_n_3209353.html

#97 Shawn on 05.08.13 at 9:08 am

YOU’RE POORER THAN YOU THINK

AACI Home-dog at 70 asks:

Garth…say a person has over $1 million in rrsps only…would the potential tax consequenses exclude them from being included in the 1.2%?

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

You are quite correct. $1 million an RRSP will ultimately be taxed and is worth roughly $600k in cash account.

Everyone with an RRSP should think of it as about 60% their’s and 40% the government’s.

Recall that when you invested $1000 you got a $400 refund. In effect your net cost was $600 or 60% of the contribution and the government kicked in 40%.

Whether the RRSP grows 1% or 20% compounded the government will tax back about 40% of it at some point.

Your $600 will however, based on this math and contrary to popular opinion, grow tax free. THAT is the great advantage of the RRSP.

$1000 in an RRSP, (which costs you $600) grows after tax exactly like $600 in a TSFA – assuming an unchanged 40% marginal tax rate.

And dreams of extracting the RRSP tax free are just that – dreams. Won’t happen in 90% plus of cases.

#98 dosouth on 05.08.13 at 9:54 am

Okay now this is worth a laugh…..one seriously misguided article.

Sellers need to price accordingly, and be ready to make less on the sale, which they’ll likely make up on their next purchase

#99 thiscountryis going down the toilet on 05.08.13 at 9:54 am

OK…..you’re not a millionaire if you’re real estate has been ‘appraised’ by a realturd for $1 million or more…….money is only real when you have it in cash in your hands. RE is a very risky and volitile asset……remember that investing is all about risk management……even cash has a beta ( risk/volitility) component…….albiet lower than real estate.

The reason most investment financial insitutions will not take real estate as an asset on your net worth declaration is because houses are not a fungible asset. If you get a margin call they are not going to call your realturd and ask for a partial sale to cover the divit.

Meanwhile the liberal paper money scam hasn’t fooled anyone except the fools…..with central banks and global investors snapping up the hated yellow metal more than at any time in the 14 year uptick in price.

http://www.bnn.ca/News/2013/5/7/Retail-gold-buying-soars-in-April-after-sharp-selloff-survey.aspx

Look…the liberals want you to have faith in their system……this is why Obama announced recently that he wanted people to trust government…bwahahahahahaaaa. The game is rigged in favor of the civil servants and special interests ( the real 1% elite) who suck off revenue from the taxpayer at increasingly egregious amounts every year. If people atop playing the liberal game then the ‘full faith and credit’ nonsense gpoes down the tubes. The April rush to gold by governments themselves shows you that even they don’t believe the hogwash they advertise as gospel.

#100 Daisy Mae on 05.08.13 at 9:58 am

“Real estate values are unsupportable by incomes or accumulated wealth, and certainly not by the current BC economy…..”

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

These ‘millionaires’ will be paying property taxes based on unrealistic house assessments.

#101 NOTTOSURE on 05.08.13 at 10:05 am

Garth a question for you ? How much value is in a 2000 a month pension worth as far as value to your rule of 9o this is based at age 55. thanks.Is there a way to calculate this in to real dollars so I have a better idea where I stand for your formula

My formula does not fold unrealized pension payments into net worth. Nor should you. — Garth

#102 Holy Crap Wheres The Tylenol on 05.08.13 at 10:27 am

#83 AK on 05.08.13 at 7:24 am
Hedge funds in search of distress take a look at Detroit
Detroit

Yes I know what you are thinking but no one and I mean no one wants to put up two nickles to invest in this city. The difference of only 1000 feet on the river is like comparing the Congo to Italy. Such a shame back in the day I used to go to cruise on Woodward Ave when Detroit was appropriately penned The Motor City & Motown, now it is The Murder City.

http://blogs.windsorstar.com/2012/12/04/a-tale-of-two-cities-windsor-and-detroit-murder-rates-show-stark-contrast/

#103 jess on 05.08.13 at 10:41 am

17 Skoby Doo

bonds are terrible investment?

well maybe for some
“wealth” preservation”

… the “significant investor” class 888 visa created by the Gillard Government last year to lure successful business people.
Last year, Chinese investors made up 80% of “EB-5? immigrants to the US who were awarded visas for investing $500,000 or more and creating at least 10 jobs in America.
http://www.businessmigration.wa.gov.au/?page=business-migration
Western Australian State nomination criteria includes:

You have business and/or personal assets of at least A$5,000,000 which are available for investment in a complying investment(s) in Australia immediately prior to visa grant; and
You have an additional A$50,000 which is available for domestic and/or settlement purposes;
Applicants will be considered on a case by case basis with the contribution to the Western Australian economy being the prime factor considered for approval of State nomination.
What are complying investments?
Complying investments for the Significant Investment Visa include: Western Australian State Government bonds… read more
———–

#104 Penny Henny on 05.08.13 at 10:54 am

#93 Buy Low Sell High on 05.08.13 at 8:47 am
I have come across a recent real estate transaction that I find immoral and unethical. A house located in Toronto’s TREB district C2 was just sold for $940k from an asking price of $950k. The owner had been trying to sell this house for almost 3 years, starting back in the summer (July) of 2010 at an asking price of $889k. Then in the summer of 2011, it was re-listed at a price of $849k with a different brokerage and later reduced to $828k. This listing was suspended before Christmas 2011. There was no action in 2012 and along comes January 2013 and the house is on the market again with a different brokerage again at an asking price of $950k! WTF! You can’t sell at $828k so you might as well increase the price by a $130k? And, in a softening market? After 106 days on the market and with only 13 days to go until the listing expires, it was sold for $940k. The part that does not sit right is the agent who represented the buyer was the same agent who listed the house at $828k and couldn’t get it sold! And, that agent’s office is located 400 metres from the house and they are considered experts in district C2!! What possible explanation could there be for this behaviour?

_____________________________________

would you like some cheese with that whine?

#105 cramar on 05.08.13 at 11:15 am

#98 thiscountryis going down the toilet

“The reason most investment financial insitutions will not take real estate as an asset on your net worth declaration is because houses are not a fungible asset.”

———-

Hey, on behalf of those who own a former crack house, I must protest that the house IS a fungible asset.

#106 Ray on 05.08.13 at 11:16 am

#102 jess on 05.08.13 at 10:41 am

class 888 visa – LOL – specially designed for Chinese?

#107 Axxman on 05.08.13 at 11:18 am

TREB seems to be aware that several people are tracking their numbers closely and their lies are becoming more difficult to mask. The following was posted on their website: ” In conjunction with TREB’s redistricting project, historical data may be subject to revision moving forward. This could temporarily impact per cent change comparisons to data from previous years.”

I read this as: we have too many people who are now able to unravel our numeric distortions so we are finding new ways to obscure the data. We thank you for your patience while we execute our latest large scale deception.

Have they no shame??????

#108 john on 05.08.13 at 11:25 am

Garth, I’m confused. Isn’t a market of 118,000 potential buyers (not including those who acquired their million(s) through the property ladder) with listings of 2,600 pretty balanced? There are about 250k houses for sale with just over 10 million households in Canada right now, so roughly the same ratio as Toronto millionaires. I would have thought the ratio of $1M+ listings to “real” millionaires in Toronto would be far, far higher. Is there anything to read about the Toronto real estate market for this?

Maybe many are millionaires because they didn’t (and won’t) buy a house. — Garth

#109 OkanaganInvestor on 05.08.13 at 11:28 am

#21 Smoking Man on 05.07.13 at 9:48 pm
But who cares this is amazing, and a former Canadian mister of defence outs UFOs exist…. 6 species of aliens among us…..

Don’t believe me watch this….. I have a theory, govt msm keep it under wraps cause the fear they will lose the herd to worship someone else.

https://www.youtube.com/watch?v=T2RbMsasfmo&feature=youtube_gdata_play
_________________________________________

That video submission is an impressive disclosure of our current Western affairs up to and including the Boston marathon bombings by the Hon. Paul Hellyer and the first time I have taken an interest in any of your comments.

As for Canadian banks, here are their current Weiss World financial strength ratings:

Bank of Montreal $540.9B C
Bank of Nova Scotia $668.3B D+
Canadian Imperial Bank of Comm. $400.0B D+
Laurentian Bank of Canada $ 31.3B D
National Bank of Canada $179.5B D
Royal Bank of Canada $822.3B C-
TD Canada Trust $804.3B C-

Not so impressive.

#110 Steve on 05.08.13 at 11:29 am

#93 Buy Low Sell High on 05.08.13 at 8:47 am I have come across a recent real estate transaction that I find immoral and unethical. A house located in Toronto’s TREB district C2 was just sold for $940k from an asking price of $950k. The owner had been trying to sell this house for almost 3 years, starting back in the summer (July) of 2010 at an asking price of $889k. Then in the summer of 2011, it was re-listed at a price of $849k with a different brokerage and later reduced to $828k. This listing was suspended before Christmas 2011. There was no action in 2012 and along comes January 2013 and the house is on the market again with a different brokerage again at an asking price of $950k! WTF! You can’t sell at $828k so you might as well increase the price by a $130k? And, in a softening market? After 106 days on the market and with only 13 days to go until the listing expires, it was sold for $940k. The part that does not sit right is the agent who represented the buyer was the same agent who listed the house at $828k and couldn’t get it sold! And, that agent’s office is located 400 metres from the house and they are considered experts in district C2!! What possible explanation could there be for this behaviour?
_____________________________________________
Sorry, which part is immoral and unethical? Presumably the buyer was informed and agreed to the dual representation. If I offer my house for sale now, but do not sell it, and then offer it again in 10 years at a higher price and sell it in dual representation, is it wrong to get then current pricing, or should I be somehow bound by morals and ethics to sell it at the decade ‘old’ price? What if the new price was lower? Should the buyer be bound to buy it at the old price?

As far as possible explanations for this behaviour: It seems like you are whining about this place because you expected something different than what occurred…you holding a grudge against the agent?

#111 Mixed Bag on 05.08.13 at 11:37 am

@ #12 Shawn
“Maybe the government should offer a big program to get these government employees to retire early. A little encouragement (severance pay) would do it. Frees up jobs and or cuts the government payroll. Let’s go!”

You don’t think that $1.4 MILLION is enough of an incentive to retire? Jesus Christ and all that is Holy, I’d retire right now if I could draw on a retirement plan like that. This very second. Out the door – bam!

Sorry, but this is exactly the type of comment that sounds like public sector employee entitlement. Curious to know how much of a carrot you think needs to be dangled as severance for folks to bite.

#112 Dr. Hoof - Hearted on 05.08.13 at 11:42 am

Old school pensions?
Not sustainable.

Years ago, I was in a union. (supermarket)
This was back in the 1970′s.

However, competitors were coming in with non – union workers. Then the union companies began negotiating 2 tier contracts.

Newer employees were to be paid at a lower rate, but the senior employees would maintain their wage levels.

The old school/ golden age of pensions can’t be sustained.

In fact, a few days ago our local paper had reported on many seniors who either can’t afford to retire or don’t want to retire. Thus fewer jobs for younger generation.

The “Tom” types either will die off….or simply be taxed more to pick up the growing gap and increasing disparity.

#113 Ronaldo on 05.08.13 at 11:57 am

#81 The Real Kip – agree.

I understand that the banks short positions right now are extremely high and that some of the banks share prices are near or higher than when they previously split and they are now looking and doing just that.

According to analysts, when the last splits took place the bank shares rallied quite nicely. I can see some major short covering happening soon as bank shares start to rise as a result of the splitting and Vigal may find himself with his shorts down around his ankles.

#114 jess on 05.08.13 at 12:03 pm

Ray
conmusing for my unsophisticated brain!

austerity usa + austerity europe = mild recession ???

The IMF says austerity bad. The politicans says elect me =no austerity

The unemployed in spain, italy ,greece, ireland portugal = brain drain due to no work. but where to go if demand has slowed everywhere…
http://neweconomicperspectives.org/2013/05/william-black-at-cfka-conference.html#more-5440

premise of the euro centric idea – unification under one currency producing rational economic behaviour
Back in 1998 Oskar Lafontaine, was Germany’s finance minister called for the ‘end of the nation state’ in favour of a ‘united Europe’ Now calling for the currency to be broken up so that southern Europe can recover from economic crisis.
marginalized countries in trouble might unite to force a change in crisis policy at Germany’s expense.

demographic
the gap
http://www.bpb.de/apuz/156762/die-kluft-was-deutschland-teilt
http://www.bpb.de/politik/grundfragen/parteien-in-deutschland/42145/zahlen-und-fakten

location location location
http://www.bloomberg.com/news/2011-06-22/potsdam-is-better-than-hamptons-as-millionaires-purchase-villas.html

#115 Spiltbongwater on 05.08.13 at 12:22 pm

Garth, do you have any thoughts on RE buyer protection plan? In a rising market, do you ever think they will try selling a Seller protection plan?

http://bc.ctvnews.ca/buyers-insurance-policy-protects-homeowners-from-price-drops-1.1271390

#116 jess on 05.08.13 at 12:32 pm

china float

http://www.khanacademy.org/science/core-finance/money-and-banking/china-us-debt-situation/v/floating-exchange-effect-on-china

#117 Marquis de Sale on 05.08.13 at 12:36 pm

I could have taken my DB pension out when I left the gov’t. But I left it in ‘cus it’s “longevity insurance”. My portfolio is my plaything!

Does your wife know the big income stream dies with you? Not the case if you commute. — Garth

#118 Peter on 05.08.13 at 12:51 pm

to #93 Buy Low Sell High

I fail to see what is “immoral” or “unethical” in your example. Someone trying to sell a house , prices it, doesn’t sell, re-lists, prices it , adjusts ASKING price, doesn’t sell, waits, re-lists , then sells. Someone offer gets accepted, then it sells…WHAT IS THE PROBlem?? ..if you don’t LIKE the selling price , tough, unless the person buying had a gun to his head , what are you trying to say??….unethical and immoral..really??

#119 Holy Crap Wheres The Tylenol on 05.08.13 at 12:53 pm

#21 Smoking Man on 05.07.13 at 9:48 pm

This is how things will play out GTA, May sales amazing, late spring flare up..condos not included, Then we hit the summer, traditional declines, laughing con comes back posts every five minutes, It’s going to be a nasty crash realtor a nasty crash…. Till the next spring market when, we all say, WTF sfh prices up again….

The cycle repeats….

But who cares this is amazing, and a former Canadian mister of defense outs UFOs exist…. 6 species of aliens among us…..

Don’t believe me watch this….. I have a theory, govt msm keep it under wraps cause the fear they will lose the herd to worship someone else.

https://www.youtube.com/watch?v=T2RbMsasfmo&feature=youtube_gdata_player

While I generally agree with you on some GTA real estate and your inherently exclusive technique of generating investment wealth I have to say how did you sneak the Citizens Hearing on Disclosure in here under the radar of the Omnipresent One! Perhaps Garth was busy? Oh what the hell, I did observe the full disclosure and the one thing that was paramount in the vocalizations was the reality that everyone kept mentioning their books by name! Garth here is your next forum in which you can sell a book! Just go to a Citizens Hearing on Disclosure!

#120 bruce c on 05.08.13 at 1:27 pm

Mr Turner I really have an issue with all this Real Estate bubble and hostile blog you have against Real Estate.
What option do we have. Where on earth can I get 3 or 4 or 5oo thousands dollars for almost free. When the bank of Canada is shelling out money at will why on earth would I or anyone else say NO. If i wanted to buy anything else on earth the banks would laugh and say NO. well thank God we have this free money and no matter what happens we take no risk. I say enjoy life and buy the biggest most expensive place and send the BOC a TY card. And when it does tumble down. Just say oops and hand the keys to them and say ty for the ride.

#121 Justin on 05.08.13 at 1:41 pm

I’m considering an investment in Berkshire BRK.B while the CDN$ is close to par. What would be the most tax efficient account to hold it in, a TFSA? There are no dividends so I don’t want to put in my RRSP.

I see Buffet’s fund as a nice way to hedge CAD$ risk in case of a hit from a housing slowdown and/or China slowdown.

Anyone have any insight into this?

#122 Adam on 05.08.13 at 2:00 pm

#118 “…Just say oops and hand the keys to them and say ty for the ride.”

——————————

Good luck with that. Maybe you should read something, ever hear of “full recourse” mortgages?

#123 Marquis de Sale on 05.08.13 at 2:21 pm

Wife has fully funded HOOP pension. Danger of commuted is that the money can be blown It happens. Or some advisor offers 8% guaranteed return and he turns out to be running a Jebus- Ponzi-plan. Really, we need the CPP expanded so everyone can have a better pension!

#124 sciencemonkey on 05.08.13 at 2:43 pm

Like Justin @ 119, I’m also curious about BRK.B. Could it be a buy and forget for the US equity portion of an investment plan? My one concern, not to be macabre, is will the company still perform as well once the leaders who made it what it is pass away?

#125 Dr. Hoof - Hearted on 05.08.13 at 2:48 pm

#113 Spiltbongwater on 05.08.13 at 12:22 pm

Garth, do you have any thoughts on RE buyer protection plan? In a rising market, do you ever think they will try selling a Seller protection plan?

http://bc.ctvnews.ca/buyers-insurance-policy-protects-homeowners-from-price-drops-1.1271390

QUOTE:

The program allows buyers and sellers to agree on a contract that the buyer will receive a rebate if the market drops one year after the sale of the home. The seller holds back five per cent of the sale proceeds in a trust account with their lawyer and the buyer gets that money back if the price of the home goes down in the 12 months after the purchase.

For example, if you buy a Buyer Protection Plan home for $1.45 million, it would come with a five per cent money back guarantee. If the market falls five per cent in the next 12 months, then the buyer receives $72,500.

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

Smacks of desperation….I wouldn’t touch it .

Is the realtor going to given back any commission?

Why don’t they have “sellers” protection…if market rises they get a cut ? This idea is out of balance.

Who decides the “5% ” drop ?

Pay your money take your chances….I think its fair to say the market will drop more than 5% by next year.

#126 NOTTOSURE on 05.08.13 at 2:49 pm

I can realize the pension as of next month as I wil be 55 .The problem is I can not with draw pension without huge penaltiy .I really don’t know what it is worth as a pension as far as dollars of investment only what I have contributed for the last 20 years not the growth.

#127 Dyslexic Smoking Man on 05.08.13 at 2:53 pm

#117 Holy Crap Wheres The Tylenol on 05.08.13 at 12:53 pm

Just keep you eye in the sky, we are not alone, I had no interest or believed in them UFOS till last May when I saw one fly over my house.

#128 Ronaldo on 05.08.13 at 3:11 pm

#93 Buy Low Sell High – ”I have come across a recent real estate transaction that I find immoral and unethical.”

What was the seller supposed to do when he received this offer? Should he have said to his agent, “No, no, that’s way too much. Take that offer back to his realtor, I can’t possibly accept this much. This place is not worth it and I told you that when I relisted it with you. Are you trying to make me look bad?”

#129 Mike Woodsworth on 05.08.13 at 3:21 pm

Great article, something for everyone to keep in mind for their retirement planning.

Garth, this may be a bit out of the left field but you should do a piece on finding a good financial adviser, their designations (CFA, CMA, CA, etc.,).

#130 happity on 05.08.13 at 3:25 pm

Awesome, Tom is juicy low hanging fruit goof for the future bailin.

#131 Pulp Faction (dorf) on 05.08.13 at 3:38 pm

#118bruce c

Nice fairy tale, but there is no clause on the agreement you signed that says,

“Cut your losses and F-O when it’s no longer working out for you”….

That’s the “girlfriend escape clause” and it only works for girlfriends.

YOU get to stay in the house, maintain it, keep it up, keep it clean, show it when asked, and make up the difference when it sells.

They will hand you back the keys, and say “Thank YOU for the ride”.

Gone, is all your payments and any down and fees and property taxes and you get to square up for every last dime. The bank didn’t take the risk, they just insuredly financed it.

#132 Pulp Faction (dorf) on 05.08.13 at 3:38 pm

Dat why !

#133 Pulp Faction (dorf) on 05.08.13 at 3:40 pm

You will have better luck trying to say F-O to the Canada Revenue Agency.

#134 Pulp Faction (dorf) on 05.08.13 at 3:44 pm

And on the first day, the BOC made plans to enforce repayment of sketchy, low interest loans in default…..

……..then, on the second day, they introduced sketchy, low interest loans.

They locked all the doors before they even put the horses in the barn. None of them getting out.

#135 Condo sales CRASH 55% in the GTA on 05.08.13 at 3:49 pm

The housing crash in the GTA is really getting bad. Out of work realtors are financially hurting bad. I hear alot of in fighting at the RE offices.

http://www.thestar.com/business/real_estate/2013/05/06/toronto_new_condo_sales_fall_55_in_2013.html

#136 Smartalox on 05.08.13 at 3:50 pm

Garth, thanks for yor clarification re: foreclosures in the US meltdown. What a difference an order of magnitude makes!

#137 Condo sales CRASH 55% in the GTA on 05.08.13 at 4:06 pm

Buy Low Sell High #93

I know this house very well. I can not imagine what stupid greater fool would pay that much for a house that no one wanted for years. The house is also in need of major upgrades. The buyer could of had this home for $800K or less. I’ve seen open houses where people would walk in and walk out in under 1 min (no Joke).

#138 Canadian Watchdog on 05.08.13 at 4:07 pm

Like a drop of blood in shark infested waters — once one alerts another of prey in distress, they all come hunting for a piece.

Steve Eisman Is Bearish On Canadian Housing

Live Tweets from SOHN Conference, where all the biggest hedge fund managers are right now.

"Eisman #sohn2013: Eisman basically laying groundwork for a Canadian housing price crash, which will hurt mortgage lenders."

"Eisman #sohn2013: Canadian banks hold very little capital domestically. Zero capital req’s for CMHC backed loans."

"Eisman #sohn2013: Canadian banks have huge funding gaps. Loan growth funded by CMHC, “Canada’s Fannie Mae.”

"Eisman #sohn2013: Turning to Canadian Banks and Housing Finance. Shows slide of US vs Canadian housing prices."

"Eisman #sohn2013: “We think its too late for a soft landing” for Canadian housing."

"Eisman #sohn2013: Canadian banks are not pricing in potential rising credit costs."

—-

Better get the hell out while you can. This is going to get ugly.

#139 FukkTheMillionaireWannabes on 05.08.13 at 4:10 pm

#13 the only respectable way to become a millionaire is to build an honest business that provides honest value to others. Unfortunately this notion has beccome alien to most people, everyone wants wealth without actually providing something of essentially equal value in return.

#140 Dr. Hoof - Hearted on 05.08.13 at 4:23 pm

Fascinating interview….

Watergate=____?

Nixon..Banksters….S and L’s…
2008 meltdown can be traced back to early 1970′s and huge litany of behind the scenes manipulations.

Wal Marts true origins…not Sam Walton was not the main guy

Bob Woodward was a Navy Intelligence officer

It is always about $$$$ ….rest is smokescreen…
I know things were crooked…but not THIS bad !

http://grizzom.blogspot.ca/2013/05/spingola-speaks-20130508.html

#141 Dean Mason on 05.08.13 at 4:58 pm

To#121 Marquis De Sale

I already paid and pay alot of income taxes,property taxes,H.S.T.,C.P.P.,E.I.,gasoline taxes,land transfer taxes,liquor taxes,garbage fees etc.

If a certain segment of the Canadian population wants a much higher C.P.P pension pay for it yourselves.I am responsible to save and invest my own money.I do not have a $3,000-$4,000 a month government defined benefit pension.The 8% rate of return is not realistic today.

I have accepted a 4.50% to 5.00% annual rate of return today but this could go up as interest go up.I am tired of those in the government and labor unions pushing this down my throat.Take responsibility for your own lives and stop trying to socialize everything.

#142 Spiltbongwater on 05.08.13 at 5:03 pm

Who decides the “5% ” drop ?

#123 Dr. Hoof – Hearted on 05.08.13 at 2:48 pm

from the article, “The plan uses statistics from local real estate boards to determine whether a property has lost or maintained its value.”

So ya, we are going to trust the statistics from the local real estate boards? What if after the payment the stats are revised? Seller gets lawyer and sues?

Garth, I think you should update your suggestions on conditions a seller should go with and include “never accept an offer where the buyer is wanting this Price protection insurance

#143 Snowboid on 05.08.13 at 5:26 pm

The Kelowna RE update from my favourite duo, it’s all faaantaastic!

http://www.youtube.com/watch?v=L7mMyMakrAs&feature=youtu.be

#144 Ron on 05.08.13 at 5:33 pm

Not to mention that he probably retired at the age of 52 with that pension. And most up till reciently, never paid a single dime into their Pension Plan.

It’s a crime. It’s governemnt. It’s unions.

#145 Canadian Watchdog on 05.08.13 at 6:00 pm

Toronto condo market to slow as developers hit credit crisis

many lenders are “thinking twice” about loaning money to developers, even when they have reached a threshold of 70% of pre-construction sales — the traditional level needed for a construction loan." Mr. Tal says

Poor Benny. It took him long enough to figure out what I already reported on this blog many months ago. Now he just needs to figure out why 905 detached, not 416 condos, will be the epicenter of a housing implosion.

#146 Herb on 05.08.13 at 6:24 pm

#142 Ron,

you are quite right: it is impossible to pay a single dime into a government pension plan.

It’s 7% of gross pay from day one until you either have contributed for 35 years or retire early, with or without penalty, depending on your years served.

Hope you’re just gullible and not terminally stupid.

#147 shawn on 05.08.13 at 6:41 pm

GOVERNMENT PENSIONS

Herb at 144 said:

you are quite right: it is impossible to pay a single dime into a government pension plan.

It’s 7% of gross pay from day one until you either have contributed for 35 years or retire early, with or without penalty, depending on your years served.

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

In Alberta most or all government pensions (including teachers and fire and police) are funded 50 / 50 by employer and worker. (‘course you can argue that all the money ultimately came from the employer, the government, but technically it is 50/50.)

The rates of contribution are currently in the range of 12% EACH up the CPP maximum and 17% EACH above that CPP maximum. Years ago it was closer to 4% and 6% each.

Part of these contributions are to fund shortfalss.

Right now a full one third of gross salary amount is going to pensions!

Most of the so called shortfalls are just actuarial gloom. If properly invested in 60% equity and 40% bonds there will likely be no shortfalls. The shorfalls mostly exist when one assumes all the money is going be invested in government bonds at paltry rates forever and that is ludicrous.

Most pension plans are growing their assets by leaps and bounds even while reporting acturarial shortfalls as the far too conservatively calculated liabilities go through the roof as interest rates decline.

When a company like Nortel goes broke the rules require all the money go into bonds which GUARANTEES it will be insufficient. This to avoid the RISK that investing equities would cause a shortfall. Absolutely ludicrous! (Like killing a person to avoid the risk of sickness)

#148 Dr. Hoof - Hearted on 05.08.13 at 6:59 pm

#140 Spiltbongwater on 05.08.13 at 5:03 pm

The way I see it….it’s always calm before the storm.

The last dregs will go the the beach…see the tide is waaaayyyyy out….then BOOOM comes the T$unami.

Tsunamis are interesting…they can creep up and then crest…OR they simply creep up in a stealthy -but- overwhelming flow..but either way are unstoppable.

#149 Monty on 05.08.13 at 7:07 pm

Garth please can you comment/write a counter argument on this story:
http://tinyurl.com/c37z5a8

#150 Devore on 05.08.13 at 7:31 pm

#71 Merry

I don’t understand when people say the bank refused to tell them how their prepayment penalty was calculated because, if you read your mortgage document, the formula they use is written right in it

It is, the penalty is part of your mortgage terms, it is there in black and white. Regardless, the penalty formula and amount should be about as shocking as finding out about rent controls on Toronto condos. The thing is no one bothers to read the papers they sign (it’s just a mortgage, eh, mere pocket change), even when they’re ready to sue their lender over it and go national with their sob story.

#151 Devore on 05.08.13 at 7:36 pm

#59 JimmyAAA

Except when everything your employer DCP offers is a piece of crap with 2 – 3.5 % MER. Like the poor saps at my company hired in the last 5 years. Sun Life garbage and you must buy it.

“Must buy it?” Correct me if I’m wrong, no one is making you put any money into this. If it is so terrible for you, look into opting out.

If you have a problem with your company’s pension plan, you should talk to your HR people and run it up the flag pole as high as you can. Mine is also with Sun Life, and there isn’t a single 3%, or even 2% MER fund in it. All the ones I am interested in are under 1%. The selection is terrible, admittedly, but I can diversify in my RRSP/TFSA/etc.

#152 Patiently Waiting on 05.08.13 at 7:42 pm

Combined sales of Single Family Homes for both the Real Estate Board of Greater Vancouver & the Fraser Valley Real Estate Board for the last 30 days continue to show sales are not only trending below 2012, but are lower than 2008/2009 financial crisis. While prices are starting to fall, with sales this bad it is only a matter of time before the façade tumbles …. Interesting though how the general public is completely unaware of how bad the sales numbers really are. Here are they are:

FVREB & REBGV Combined Single Family Sales Last 30 Days:

Year Sale of SFH’s last 30 days
—————————————————————–
2013 1105
2012 2142
2011 2500
2010 2518
2009 2367
2008 2159
====================================

Here are the numbers for White Rock:

Year Sale of SFH’s last 30 days
—————————————————————–
2013 64
2012 127
2011 221
2010 152
2009 126
2008 98
—————————————————————–

Cheers
pw

#153 jess on 05.08.13 at 7:55 pm

Spain’s national court has ruled against extraditing a former HSBC employee to Switzerland, where he faces charges of stealing and revealing client information known as the “Lagarde list -guardian uk

#154 Calgary Car Guy on 05.08.13 at 8:37 pm

Re #93 Buy Low Sell High “house at $828k and couldn’t get it sold! And, that agent’s office is located 400 metres from the house and they are considered experts in district C2!! What possible explanation could there be for this behaviour?”
——————————————————————–The answer is GREED. The answer to these same kind of questions these days is always “greed”. And I am so sick of it. The minute I even smell greed in any situation I turn and walk away. I work retail customer service in a top import dealer. The people who will whine the most about a bill or try to get something covered after their warranty has expired are always some of the wealthiest people I deal with. And they very often get it. The single mother with two kids eating KD doesn’t make a peep. I’ve actually often pretended they have “peeped” and gone to bat for them. Makes me feel good and that’s worth more than money to me.

#155 Ron on 05.08.13 at 9:11 pm

Herb.

People at OPG and Hydro One paid NOTHING into their pensions. I repeat. NOTHING. 100% paid for by th company.

It wasn’t only until about 10 years ago where they started paying a portion, and still, it’s about 15% of what the company has to fork over because of low intrest rates.

OPG and Hydro One are better then government. (For the employee, not the taxpayer) Maybe you should be better informed before you make comments that you don’t know anything about.

#156 Herb on 05.08.13 at 9:39 pm

#154 Ron,

then perhaps you should have been a bit more specific in your comment rather than lashing out “It’s a crime. It’s governemnt. It’s unions.”

#157 JimmyAAA on 05.08.13 at 10:44 pm

#59 JimmyAAA

Except when everything your employer DCP offers is a piece of crap with 2 – 3.5 % MER. Like the poor saps at my company hired in the last 5 years. Sun Life garbage and you must buy it.

“Must buy it?” Correct me if I’m wrong, no one is making you put any money into this. If it is so terrible for you, look into opting out.

If you have a problem with your company’s pension plan, you should talk to your HR people and run it up the flag pole as high as you can. Mine is also with Sun Life, and there isn’t a single 3%, or even 2% MER fund in it. All the ones I am interested in are under 1%. The selection is terrible, admittedly, but I can diversify in my RRSP/TFSA/etc.

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

Yes it is called a pension plan and it is not optional. You must buy it.

>As a permanent non-unionized employee in a grade 4 to 12 position, you automatically become a member of the CN Defined Contribution Pension Plan (DC Plan) upon hire.

>You are required to contribute a percentage of your pensionable earnings, based on your combined age and total service as follows:

I am not in the DC, thankfully our union has managed to keep DB for us. If go to management, I can stay in the DB plan as well. Note that the exalted ones (pay grades 1-3) still get hired on and get the DB plan.

Next post – will be MERs

#158 Cici on 05.08.13 at 10:50 pm

#56 Shawn

Not to be picky, but it’s “anal” retentive, not annal retentive.

Sorry, but at math, but good at spelling. Just doin’ my duty.

#159 JimmyAAA on 05.08.13 at 10:55 pm

CN’s DC is with Manulife (sorry my mistake)
Here is every possible fund to buy. Still trying to find the MERs.

Manulife Canadian Money Market Fund (MAM) (3132)

Guaranteed Interest Account
Guaranteed Interest Account 5-year (1005)

Canadian Bond
Manulife Asset Management Canadian Bond Index Fund (4191)

Canadian Large Cap Equity
Manulife Manulife MAM Canadian Equity Index (7132)
Manulife GE Capital Canadian Equity Fund (7761)

U.S. Large Cap Equity
Manulife BlackRock U.S. Equity Index Fund (code 8322)

International Equity
Manulife Sprucegrove International Equity (8361)

Retirement Date Funds
Manulife BlackRock LifePath Index Retirement Fund (2321)
Manulife BlackRock LifePath Index 2015 Fund (2323)
Manulife BlackRock LifePath Index 2020 Fund (2324)
Manulife BlackRock LifePath Index 2025 Fund (2325)
Manulife BlackRock LifePath Index 2030 Fund (2326)
Manulife BlackRock LifePath Index 2035 Fund (2327)
Manulife BlackRock LifePath Index 2040 Fund (2328)
Manulife BlackRock LifePath Index 2045 Fund (2329)
Manulife BlackRock LifePath Index 2050 Fund (2330)

#160 JimmyAAA on 05.08.13 at 11:17 pm

I give up the MERs for some one not in the plan are opaque. I cannot find them. I have heard from people in the plan they are high.

#161 GenXer on 05.09.13 at 10:26 am

@ Buy Low Sell High #93

We know the listing you refer to because we were investigating it ourselves. We too noticed the first agent listing it at $849K then $828K, then the expiry a year later then a new agent at $950K which was nuts.

We don’t know why it didn’t sell at $828K the first time around but heard the the first agent (who later represented the buyer) wouldn’t let the seller terminate so the seller was obliged to let the too-long agreement (one year!?!) expire. That part could be the immoral / unethical you point to. As for why the second agent listed at $950K is beyond me because it did take 4 months. The seller is an old guy who could afford to wait and wait – he didn’t need the money and maybe he was pissed off from his first listing. I mean, if he can wait a year for an agreement to expire, he can wait four months to sell. The house had good bones but looked like crap, really cluttered and totally dated in a dowdy 1940s-1950s way. Needed at least $150K worth of work to modernize..the bathrooms were scary and the basement felt like a cluttered dark dungeon…

One thing working in the seller’s favour was the complete dearth of listings in the area, and a bidding war for another house on Markham St that pushed a house from $799K to $940K (sadly we were one of the 7 in this fray but withdrew in the first round). I am assuming one of the losing bidders capitulated and bought this listing.

Glad it wasn’t us – we found a fantastic rental instead and can sit out the summer and fall. Market is definitely softening at the edges of 416 and even in North York where we bailed this spring, but a few pockets of insanity remain in the core.