Consequences, part deux

CAREFUL

A few more things an informed public should know, in random order. I dedicate this to Jamie, a thirty-something from Langley who sent in this comment yesterday:

I’ve been following this blog for 7+ years. Same message is being pumped today that was being pumped 7 years ago. People on this blog talk about all the “spinning” that the real estate pumpers do, but at least they sell homes that people are living in! What has Garth done? He’s made people poorer who listened to him. Listen Garth, if I would have waited for your predictions to be right I would be an old man by now. Thank god I never drank your “kool aid” and bought when I did, we’ve made over 100K on our home and own two-thirds of it outright. I know you won’t post this, because your narrow little view of the world can’t handle criticism that is backed by historical data. The truth is you are a failed Nostradamus. End this blog, it’s getting ridiculous. No end in sight for the rise of Vancouver real estate prices, no mercy for those who never bought. Life is cruel and you haven’t even turned out to be right like a broken clock is right (twice a day). A broken clock is better than your old ass!

See what real estate does to people? Young Jamie must feel so insecure in her mortgaged house in a declining market that she lashes out at a saint like moi. And I note the comment about reading this blog for three years longer than it’s existed. It makes everything else so damn credible.

Anyway, this is for you.

The world‘s looking at Canada, and marveling at people like Jamie. Wall Street’s been busy constructing what are now known as ‘great white shorts’ – hedge fund plays betting against the value of houses in places like… Vancouver. Here is what Pimco had to say this week (the world’s largest bond fund, if you had to ask):

“Our secular view is that housing in Canada is overvalued and due for a correction. We believe a 10%–20% real decline in national housing prices over a five-year period is very realistic, with much sharper corrections in some local ‘hot’ markets such as Toronto, Vancouver and Montreal.”

And that’s the dovish view. The dudes at The Economist think 50% is more like it. Meanwhile this report was causing many ripples as it became more widely circulated. Written by Toronto-based Canso Investment Counsel, it concludes starkly: “We hope very much to be proven wrong, but the analysis is clear. Canada borrowed its way out of the 2009 Recession by stoking our residential housing market to absurd levels. We cannot afford the houses we are living in.”

Even starker: Canso has no confidence when the crash hits (there appears to be little doubt in the company’s position), that CMHC would not blow up. More consequences. The feds have insured at least $200 billion in mortgages on houses where the owners have 80% or more financing – equity that would be wiped away in any meaningful decline.

Just imagine what a default of that magnitude would do to the economy.

On a lighter note, it’s great fun watching what realtors across the country must do these days to flog houses, with slagging demand and greedy little owners  who think prices only go up, then stay aloft forever.

Here’s a house in the beautiful hicksville of Smithers, BC. Realtor Jeremy has promised to reduce the price by $1,000 a week, until it’s sold. “Don’t be caught saying ‘I should have!’” he cries. At $374,000, that could take a while.

Smithers

Meanwhile, blog dog Gregg has just come back from a trip to the Okanagan Valley. “We spent a few days in Kelowna. There are “For Sale” everywhere. It’s pretty unbelievable. But, the new construction is even more unbelievable. As expected, the new projects are trying desperately to lure in buyers. This one project near the shores of the lake (but right in Kelowna) really seems desperate. Check out their new marketing slogan.”

KELOWNA

And back in Ontario, how do you move a house ‘loaded with extras on a premium pie-shaped lot’ when it’s in a graying, post-industrial community like Grimsby? You list for a great price – in this case, one dollar. “My client will work with any offer,” realtor Marc says. “Houses on the street/area range from $450K-$550K.” Talk about bait & switch.

GRIMSBY

Of course, prime real estate is all about location, and in Toronto it’s always a plus being near a major transportation route. Every agent knows that. So just imagine being close enough to the Gardiner Expressway to commute to work easily – by walking on the hoods of the cars grinding past your window. Hurry. Only $249,900.

CONDO

Finally, for those who think this blog’s yammering about the perilous future of real estate is just my contribution to global warming, consider the latest new home sales numbers from the nation’s biggest market – released a few hours ago. Condo sales down 46% from this time last year, and running 38% below the 10-year average. Total new home sales off 30% from 2012, and 36% below the average.

It’s worthwhile knowing these things. Then make choices.

I emailed the Langley kid shortly ago. ‘When you grow up, Jamie, you will know better.’

Might be sooner than later.

201 comments ↓

#1 craig on 07.18.13 at 7:00 pm

This could be an out for many US cities and if it does trend that way, a collapse is imminent.

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

Despite signs of economic recovery, many parts of the nation’s most populous state are feeling a hangover from the collapse of housing prices, prolonged high unemployment and resulting declines in revenue. They are confronting soaring demands for spending on public workers’ pensions and retiree health care while slashing services, rolling back pay and laying off cops, firefighters and other workers.

“There’s a huge amount of California that’s in extreme distress,” says Joel Kotkin, a professor of urban development at Chapman University in Orange, Calif

California represents one-tenth of the nation and is the place where the rest of the country looks for emerging trends. If Stockton, San Bernardino or other California cities are able to alter or avoid debts or escape pension obligations through bankruptcy, cities across the country could be tempted to follow a similar route.

Short of that, the mere prospect of bankruptcies could reshape a municipal bond market that cities all over the country rely on for capital projects.

“If bankruptcies lead to financial relief to those cities by reducing their obligations to debt service or pension costs, other fiscally stressed cities may consider bankruptcy filings,” Moody’s Investors Service said in a report this week.

http://www.usatoday.com/story/news/nation/2013/05/15/california-city-bankruptcies/2076197/

#2 Matt on 07.18.13 at 7:01 pm

Great post Garth! With Alberta continuing to see the greatest influx of young people from eastern Canada on record, do you see a divergence between eastern Canada and Alberta? Ontario/the east coast is losing a huge number of the next generation of buyers, while Alberta is gaining them.

#3 mark on 07.18.13 at 7:06 pm

Smithers is a pretty place, but how a town of 5000 in the middle of nowhere has 400k houses is beyond me.

#4 Mr Happy on 07.18.13 at 7:08 pm

Well in all honesty Garth…You HAVE changed your tune a little from a few years ago….

But I am not cross, I made money with some of your recommendations buying AND selling bonds….

and I am not first….am I? LOL

#5 Rob on 07.18.13 at 7:09 pm

Garth I have been following your blog since 2008 and everything you say makes complete sense. But I have to say its very difficult to wait for this correction. This slow motion crash doesn’t make any sense at all. Whats keeping it from speeding up???? Its better to have RE bottom out so that its behind us and we can look forward like the USA.

#6 Donald Trump on 07.18.13 at 7:13 pm

So…..Darth Vaders left his helmet at the side of the road while nature (the dark force) calls.

#7 Bob on 07.18.13 at 7:14 pm

That sign to desperately sell a condo project in Kelowna is too funny “We need you to move in so we can move on”. At least they’re honest.

I spend quite a bit of time in Kelowna. There are Mcmansions with 2 retired folks everywhere. But, it’s hard to count the for sale signs or for lease signs. It looks to me that a sad situation is going to get a lot worse.

#8 Nemesis on 07.18.13 at 7:15 pm

…”your old ass!” – Jamie SullenBuck

Clearly he’s never been to Golden, BC’s RockWater Grill&Bar… formerly [literally!] better known as the infamous PackerInn (altogether apropos when you allow that the establishment catered primarily to ChapsAdorned HarleyRiders… I digress.)

#9 PokerCat on 07.18.13 at 7:17 pm

“Canso has no confidence when the crash hits (there appears to be little doubt in the company’s position), that CMHC would not blow up. More consequences. The feds have insured at least $200 billion in mortgages on houses where the owners have 80% or more financing – equity that would be wiped away in any meaningful decline”.

I always hear about “soft-landings”. Funny thing is, I’ve never come across one in my life, nor heard of a soft landing in any history book I’ve ever read…

#10 Bill Gable on 07.18.13 at 7:18 pm

Garth – your thick skin that you developed as a journalist and Politician serve you well. I would have been less, uh, diplomatic, to the young whiner.
I have to tell you fast anecdote – on West side RE in Vancouver. They are knocking down old retail places and slamming up condos, that look prefab. They are pricey and are so small that Flaherty looks tall, in one of them.
Then – to add insult to fiscal injury, these are pre-build ‘sale deals’.
It gave me the shivers.

It was a Wiley Coyote moment for me, and I am so happy we rent.
Thanks to you, Garth.

Oh, and my friend from Langley – you were out of line and think you would do well to apologize. Manners, display maturity, dude.

#11 Toronto and GTA Sales and stats -GTA Condo sales barely pass the 100 mark on 07.18.13 at 7:20 pm

http://recharts.blogspot.ca/2013/07/to-and-gta-condo-sales-and-stats-july.html

http://recharts.blogspot.ca/2013/07/gta-sfh-sales-and-stats-july-18.html

http://recharts.blogspot.ca/2013/07/to-sfh-sales-and-stats-july-18.html

#12 Plirril on 07.18.13 at 7:21 pm

I think Jamie’s a female. I know a person who graduated high school with a girl in the area with that name in ’94.

#13 Victor V on 07.18.13 at 7:21 pm

Toronto condo sales suffer 46-per-cent drop in June

http://www.theglobeandmail.com/report-on-business/toronto-condo-sales-suffer-46-per-cent-drop-in-june/article13298507/

…But the number of new condos sold came in at 1,251, down 46 per cent from 2,335 a year earlier, and down from 3,008 sales in June, 2011. The figure is 38 per cent below the 10-year average.

All told, new home sales in Canada’s most populous city during the first half of the year are the second-lowest in a decade.

“Both the industry and the consumer are currently challenged by a considerable reduction of affordability and choice in the market,” BILD chief executive Bryan Tuckey stated in a press release. “This has severely reduced new home sales, particularly in the low-rise market which is experiencing record-high pricing.”

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

Someone pass the popcorn.

#14 Bill Clinton on 07.18.13 at 7:24 pm

Hey Garth, nice lecture for little Jamie! He will thank you much later in his life!

#15 robert james on 07.18.13 at 7:25 pm

I have driven past the SouthWind in Kelowna quite a few times over the last couple of years.. They used to have a sign up similar to the one above that said “We Gaurentee Kelowna house prices have hit Bottom” and that was a couple of years ago.. They took that sign down a year ago or so..lol When it comes to real estate I am sure Kelowna must be one of the sleaziest markets in the country ..

#16 Steve-O on 07.18.13 at 7:25 pm

First.

#17 dienekes on 07.18.13 at 7:30 pm

Don’t worry everyone, Saskatoons economy is impervious to everything. It alone will sustain the Canadian economy. How? We can eat potash. To bad for the USA, if Saskatoon was in that country, no housing values would have declined. But it’s in Canada, so Canada is saved. We can’t afford an NHL team, NFL team, CFL team, NBA team. The US is jealous of this Island, that’s why you can’t actually fly into the US from here, you have to go through Calgary. Yes, all the wisdom, wealth and intelligence of the world is tied up in Stoon. Nothing will go down here!

#18 Dean on 07.18.13 at 7:31 pm

Canadian Secular View: Into Darkness?

http://www.pimco.com/EN/Insights/Pages/Canadian-Secular-View-Into-Darkness.aspx

#19 Chickenlittle on 07.18.13 at 7:33 pm

“A broken clock is better than your old ass!”

Hardly. You don’t get the same satisfaction from slapping a clock…

#20 Godth on 07.18.13 at 7:33 pm

#182 Mister Obvious

Isaac Newton to Mister Obvious, calling Mister Obvious…
http://www.youtube.com/watch?v=Dkuj_dQ_0lM

#21 Sebee on 07.18.13 at 7:34 pm

Yeah..and those new condos, 59% off 2011 sales volume. Ouch.

#22 Raj on 07.18.13 at 7:35 pm

In the mean time , MSFT and GOOG getting slaughtered in AH.

#23 vernie on 07.18.13 at 7:36 pm

Since moving – and now renting – to Ottawa last year, have been watching a Condo development going up at Bank / Walkley that was taking forever to be completed. The sales sign claimed 60% Sold ! but month after month hardly any workers doing anything. Yesterday on the way home from work I check it out and there’s a “Residence Inn by Marriott” sign up on side of the bldg and lots of construction activity going on – so much for that Condo 60% Sold !

#24 jan on 07.18.13 at 7:39 pm

How do u explain reality to stupid people who think their little shacks will continue to rise in value forever when we all know better……..Canadian people are some of the dumbest most entitled humans on earth and reasoning with them is as futile as it explaining the concept of relativity to a poodle!

#25 will on 07.18.13 at 7:50 pm

Jamie, I’m so sorry you haven’t internalized the blog’s message after “7″ years.

#26 Marginal on 07.18.13 at 7:53 pm

Yes, you can definitely smell the desperation (heat wave aside) when RE reps have to go door to door in our small town; first time that’s ever happened since we moved in early 90s. Gee, wonder if they knocked on Jimmy and Christine’s house round the corner…..that would have been a moment of truth.

#27 Old Man on 07.18.13 at 7:59 pm

#2 Matt – my experience in life is never follow the herd, and it is a shame that the younger people from the east are going west. I feel that great opportunity exists in the eastern provinces; the real problem at hand is to identify a need or demand if you will, and earn a living by fulfilling it with a longterm outlook.

#28 will on 07.18.13 at 8:02 pm

Garth, everyone knows by now that the City of Detroit has declared bankruptcy. Will you comment on this most interesting event tomorrow? Thanx in advance.

Why is anyone surprised at this? Widely expected. — Garth

#29 Donald Trump on 07.18.13 at 8:02 pm

#1 craig on 07.18.13 at 7:00 pm

well ……Detroit just pulled the plug.

Detroit files for bankruptcy protection
City losing residents as tax base shrinks

http://www.cbc.ca/news/business/story/2013/07/18/detroit-bankruptcy.html

#30 jess on 07.18.13 at 8:09 pm

13 years ago 11,000 appraisers signed a petition….

Bill Black’s recent articles on appraisal issues surrounding the financial crisis, the following comes to NEP from an Appraiser via creditwritedowns.com

Heeding the Appraisers’ Fraud Warnings Would have Prevented the Crisis

…“From 2000 to 2007, [appraisers] ultimately delivered to Washington officials a petition; signed by 11,000 appraisers…it charged that lenders were pressuring appraisers to place artificially high prices on properties. According to the petition, lenders were ‘blacklisting honest appraisers’ and instead assigning business only to appraisers who would hit the desired price targets” (FCIC 2011: 18).

Note that the appraisers’ petition began in 2000 and was public. When the regulators and prosecutors did nothing in response to the appraisers’ warning the appraisers delivered it to government officials to ensure that no one could say they were not warned…”

http://neweconomicperspectives.org/2013/07/heeding-the-appraisers-fraud-warnings-would-have-prevented-the-crisis.html

#31 Jeanputin on 07.18.13 at 8:12 pm

Montreal is the only city in the country where prices stillkepp going up! Lots of new immigrants driving up prices, it’s good to be here, no bubble in sight chez nous!

#32 Calgary Real Estate Update on 07.18.13 at 8:13 pm

Historically, the real estate markets of Calgary and Edmonton have followed boom and bust cycles. The most recent example of this occurred within the last 5 years.

In mid 2007, house prices in Calgary and Edmonton began to decline and that decline continued until mid 2009 when a massive housing market intervention turned the Canadian housing market around and reinflated the bubble. Calgary property prices plunged 15.1% while Edmonton prices dropped 17.5% in less than 2 years. The price of oil was above $100 for most of that time. Calgary and Edmonton led the country in terms of real estate price losses. By early 2009, many condos in the suburbs of Calgary were selling for 50% below peak. I know of an example of a house in Midnapore that had been recently renovated and sold for 20% below peak value in the summer of 2008. By early 2009, similar houses in the same area were selling for 30-35% below peak.

By September 2007, Calgary house prices were 2.5 times the level they were at in the year 2000 (Edmonton 2.98 times). The bubble price run-ups that these two cities experienced were comparable to those experienced by US cities such as Miami, Los Angeles, Phoenix and Las Vegas immediately before the US housing bubble burst and crashed in 2006.

Excess credit as a result of lax lending standards was responsible for the housing bubble that formed in the US in 2006 and is responsible for the current housing bubble in Canada. House prices in Calgary and Edmonton were pushed into bubble territory by these same lax lending standards.

Currently, Calgary house prices are still lower than the peak reached in September 2007 (Teranet), despite 4 years of unprecedented housing market stimulus, including continued emergency level interest rates. Similarly, in Edmonton, house prices have failed to reach the previous peak (September 2007).

As I mentioned, housing busts are nothing new to Calgary and Edmonton. The 1980s provides another good example of this.

Calgary house prices crashed 47% from 1981 to 1987 and Edmonton crashed 50% from 1979 to 1985. Remember, they had oil back then too.

All housing bubbles burst and correct dramatically. The housing bubbles in both Calgary and Edmonton will burst and correct dramatically, it is only a matter of time.

#33 COW MAN on 07.18.13 at 8:22 pm

Sir Garth:

You are too good to be true sometimes. I think when the Father’s Of Confederation created the Cabinet (if they did) I think their intention was to fill it with men and women like you. “Second sober thought” is truly needed in this country. Thank you.

#34 takla on 07.18.13 at 8:22 pm

garth..you forgot to send that memo stateing the big economic comeback for the U.S.of A to the governing heads of Detroit City USA,,Today{july 18} the city officially filed for bankruptcy.The city is prepareing to default on city /municiple pensions and major debt due creditors.Wasnt detroit considered the economic engine of usa with all the automobile manufacting?Rumor is this is not the ONLY large u.s city in the same predictament.With continued quanitative easing from the Bernank,State\city defaults,and a ever expanding gov deficits can we remain optimistic for our lovely nabours to the south?

#35 Patient in Richmond on 07.18.13 at 8:23 pm

There is a house here it has been on the market for over 1.5 years now it started at 1.4 Million and is now still for sale for 1.0 Million, Thats a pretty good drop in 1.5 years .

To really understand how silly this market really is check this listing .

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=13233843&PidKey=53389092

#36 father on 07.18.13 at 8:24 pm

GARTH IS GREAT GARTH IS GREAT GARTH IS GREAT WU WU WU WU garth f… him because we still respect you

#37 Victor V on 07.18.13 at 8:26 pm

The Globe’s Rob Carrick is jumping on this bearish news too:

http://www.theglobeandmail.com/globe-investor/personal-finance/carrick-on-money/carrick-on-money-we-cannot-afford-the-houses-we-are-living-in/article13296040/

‘We cannot afford the houses we are living in’

That’s the conclusion of this well-researched and quite alarming summary of the Canadian housing market and the risks it presents to individual and government finances, as well as the economy. A must-read if you believe the stronger sales numbers of the past month mean it’s onward and upward for housing. The authors of the report are the people at Canso Investment Counsel, a firm that specializes in managing portfolios of corporate bonds.

#38 Daisy Mae on 07.18.13 at 8:26 pm

Jamie: “Thank god I never drank your “kool aid” and bought when I did, we’ve made over 100K on our home and own two-thirds of it outright….”

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

Bully for you. Garth had this mess pegged long before anyone else. Now finally the so-called ‘economists’ and world governments are coming on board and agreeing with his findings. Good luck holding the value on your real estate as time goes by….

#39 jess on 07.18.13 at 8:27 pm

professional confessional survey

public confidence in Wall Street remains battered from the financial crisis, a new survey of ethics in the financial services industry is unlikely to help. (read more »)

http://www.pbs.org/wgbh/pages/frontline/business-economy-financial-crisis/untouchables/survey-one-in-four-on-wall-street-open-to-insider-trading/

#40 T.O. Bubble Boy on 07.18.13 at 8:31 pm

Following for 7 years? Didn’t the blog start in 2008?

#41 father on 07.18.13 at 8:32 pm

I would of said love but that would not be my style with my banks full of cash & my amg e class while renting a 15 year old house for 3 grand

#42 valleyrenter on 07.18.13 at 8:33 pm

Good ol’ Langley, where you can buy a condo for the same asking price it was dollar for dollar eight years ago.

#43 a prairie dawg on 07.18.13 at 8:37 pm

#24 jan
How do u explain reality to stupid people who think their little shacks will continue to rise in value forever when we all know better.

- — -

History will teach them that lesson.

Those who drank the koolaid and those who run the koolaid stands will be among those most affected by it. And the majority of them have no idea that it’s coming.

#44 observer on 07.18.13 at 8:39 pm

Funny thing cause I was just mentioning about Hedge fund managers the other day.

Ok here’s the scoop to win the war you have to position your troops in preparation for the attack.

Now that the Global Filthy rich are in the game hedge (betting) against Canadian Real estate. Who do you think will win this. Crea is rich but the Filthy rich own them. And Who gives a crap about CMHC, because its not the responsibility of the stinkin rich its own the poor ass Canadians.

You watch, soon Crea’s pumping will stop and the will start promoting sell now or lose everything. (More fear) take a look at the US Crisis and how that played out. We are no different, except were going in slow mode!

#45 T.O. Bubble Boy on 07.18.13 at 8:42 pm

Will Scarborough become the next Detroit if they have to only have a 7-stop LRT instead of a 3-stop subway?

(Detroit has a monorail, but you can’t get off at certain stops or you’ll be shot)

#46 Marginal on 07.18.13 at 8:49 pm

#28 Will
Detroit’s implosion is interesting from an individual householder perspective. Garth is quite right when he states that this is no surprise. A few years back, I believe The Economist had an article about Detroit. City growth happens organically as chunks of subdivision development are filled by new homeowners. Different story when your company town employers leave en masse; not everyone in a city block leaves at the same time. You have paid up retirees with nowhere to go since you can’t sell. The city was still providing services to sections of the city with only one or two residents. Good lesson here….know when to hold them, know when to walk away, know when to run.
Very sad. Sometimes there is nowhere to run to. No easy answers to a complex urban planning problem.

#47 Old Man on 07.18.13 at 8:52 pm

I have been kicking back with the hot weather, so today for the first time in years went shopping at 6:00 PM, and witnessed a surprise or an economic shift in two new businesses that saw a need to be fulfilled a few minutes away at a small plaza center.

The parking lot was filled at 6:00 PM? I squeezed into a small space; not a good idea. So went to Macs Milk to buy a small jug for my cereal, and to a Polish store to buy several items; nobody there at either business, so why all the cars? Two new restaurants opened up; one Chinese and the other Japanese who saw a demand to make money.

Now some guy was waiting for me, as his wife was in the car feeding her baby because my car was too close to his door, and could not get in to drive away on either side. I said ok am backing out, and he laughed his head off watching me trying to get out into what was a traffic jam with cars fighting for my spot.

#48 eddy on 07.18.13 at 8:59 pm

In C11, also known as Leaside, there are zero bungalows for sale, that’s right – zero.

#49 takla on 07.18.13 at 9:02 pm

Im betting those gov pension holders in detroit are wishing they had exchanged those almost worthless pension promises for a little of the shiney gold . Garth ,I know ,,,I know you hate gold as an investment but you have to admit its resiliance to retain wealth is much more attractive then paper promises,even with prices mired in the summer doldrums its still worth far more than 20 cents on the dollar that the pension holders will get!!

#50 COW MAN on 07.18.13 at 9:09 pm

Meredith Whitney called the Municipal Bond Bubble. Detroit is just the first of many.

http://www.insidehalton.com/news-story/3897860-councillor-mayor-ask-community-to-make-case-for-tree-bylaw/

#51 Canadian Watchdog on 07.18.13 at 9:16 pm

Ontario eyes introducing qualifications for condo managers

"The Ontario government will consider introducing mandatory qualifications for condo managers as part of a wider review of condo legislation. Condo managers are currently not required to have any training, though they often oversee massive budgets and manage buildings worth millions of dollars."

Video text: "It would mean training, even for property managers already working in condos, but a key part of the plan is having someone in place to enforce rules and discipline"

Buried in a few short lines of text, a hidden agenda appears : former renters now owning and struggling to maintain their $350-500K condos, who find themselves unable to afford a lawyer to sue property managers or developers are now demanding that our big squid government stretch its tentacles to save them from their own careless mistakes. Of course, the government will respond, as any public cry for help is an opportunity to pillage more money into provincial treasury coffers.

So what's next? The Ministry of Condo Development? Ontario Property Management Collage? I wouldn't be surprised.

It's not the government that should be feared, rather individuals who beg for more government.

#52 Donald Trump on 07.18.13 at 9:19 pm

I pose the question…in reference to that WTF? re:Ontario architecture.

……is it a frontal lobotomy and/or a 40 pounder in front of me to get an Ontario architects’ license.

Stevie Wonder maybe?

#53 Donald Trump on 07.18.13 at 9:21 pm

#46 Old Man on 07.18.13 at 8:52 pm

So went to Macs Milk to buy a small jug for my cereal, and to a Polish store to buy several items; nobody there at either business, so why all the cars? Two new restaurants opened up; one Chinese and the other Japanese who saw a demand to make money.

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

So..know any good jokes?…I gotta million of them..did you hear the one about the two.___and the ___

#54 Timing is Everything on 07.18.13 at 9:25 pm

#1 craig

“If bankruptcies lead to financial relief…”

…contagion

http://tinyurl.com/m3e58yr

#55 Dean Mason on 07.18.13 at 9:27 pm

I heard from somewhere that their floating around a possible municipal moving away tax that would cost people based on their value’s property.I heard of 25% to 30% but this seems high.

In addition,they also were floating around a moving away tenant tax $5,000 for year 1 and there after you are a resident.I think they are floating around these ideas to stop people moving out of certain cities and keeping their tax base.If this is true,putting all your money in real estate has another nail in it’s coffin.

I don’t think they expect the people to pay the tax but these tax policies make it impossible for most people to move.Sounds ridiculous and I don’t know if they can do this but desperation breeds desperate measures.

#56 Obvious Truth on 07.18.13 at 9:33 pm

No one will notice till the dam bursts. Keep watching them TVs.

#57 not 1st on 07.18.13 at 9:36 pm

Jamie stop attacking Garth about his RE predictions. RE might have another couple % possible gain, but it has a better chance at falling 30%. Just on history alone, he has won that argument already.

Instead focus on his America call. Thats where he is blowing sunshine and discounting all sorts of risks, including the effects of too much sovereign debt and normalized rates.

http://www.businessinsider.com/detroit-likely-to-file-for-bankruptcy-2013-7

Detroit is a non-event. — Garth

#58 Old Man on 07.18.13 at 9:38 pm

#52 Donald Trump – I got a good one and it is you.

#59 TheCatFoodLady on 07.18.13 at 9:44 pm

I can’t see a ‘moving away’ tax surviving a court challenge – freedom of movement & all of that. I’ll look up the appropriate Constitutional stuff… I may be dead wrong.

Wondering… you’d think those buying as an investment, hoping to pay off their purchases through rentals, are starting to wonder if it’s worth it. Currently I know a fair number of people who are FORMER investment/owners. They were out of that game within a few years, all reporting they couldn’t come close to breaking even, never mind cover costs.

#60 Cowpoke on 07.18.13 at 9:45 pm

7 years ago was the time to buy in. 2 years ago it was time to exit. Now, don’t even consider it. Just look at how low the monthly/quarterly volumes are for BC and Ontario! Many other factors suggest not buying into this market. Very creative advertising for sure. Ignore it!

#61 jan on 07.18.13 at 9:49 pm

Garth said…….Well, I cannot remember a time when deception was so everywhere, with so few in positions of influence seeming to care.

Well sir, it seems to me that since all the influential rich people hold a lot of real estate it would be detrimental to their net worth to say anything against it.
Hypocrisy in Canada is never-ending !

#62 T.O. Bubble Boy on 07.18.13 at 9:54 pm

@ #47 eddy on 07.18.13 at 8:59 pm
In C11, also known as Leaside, there are zero bungalows for sale, that’s right – zero.
_____________________

… but, plenty of McMansions for sale where the bungalows used to be. I guess there isn’t infinite demand for $2M houses?

#63 Dean on 07.18.13 at 9:55 pm

Toronto is the centre of the universe, the herds keep pushing it up…
http://www.torontorealestateboard.com/market_news/release_market_updates/news2013/nr_mid_month_0713.htm

#64 neo on 07.18.13 at 10:00 pm

As Garth continues to talk about corporate profits being a sign of a US recovery he is ignoring something that is becoming quite obvious. So far this earnings season companies are beating the EPS but falling short on revenue. This have been the case now for several quarters. Top line growth is a much better barometer of the health and well being of the U.S. consumer whose consumption is 70% of GDP, as well as the economy as a whole. EPS can be tinkered with, it can actually fatten by firing said consumer or delaying hiring them altogether. Sure, many *may* benefit, even by proxy through pensions/401K’s, but it is mostly the wealthy that do. Top line growth, revenue, is what it is. Either consumers are buying or they are not. Let me know how many in the Dow actually beat top line. I bet it will be very few when it is all said and done.

So I gather you have not enjoyed any of the 19% gain in US markets this year? Pity. — Garth

#65 Kilt on 07.18.13 at 10:01 pm

Garths main mistake is that he has lumped Canada all into one basket. Sure, Vancouver (and the Island) is seeing price drops, but not all areas of Vancouver are being affected. Income to mortgage ratios don’t work when most homes have a basement suite rented for $1400. Income that isn’t reported.
Housing in the prairies is strong and getting stronger. Net immigration, high wages, and low supply are the reasons.

Most who bought in the last 3-5 years could care less if prices drop 10-20%. 50% isn’t going to happen, just too much pent up demand from people who are priced out.

And you still need a catalyst to get the price drops. Garth has mentioned before a doubling of interest rates in 5 years. That was 3 years ago and I suspect you can get a lower rate now than you could then. All it takes is one slow quarter and bond yields will drop again.

Oh, and I was in the Okanagan last week. Didn’t notice for sale signs everywhere. Did check the June stats though: Listings down 9% YoY and sales up 12% YoY, Prices mainly flat. Days to sell is pretty nasty – 125.

Kilt.

#66 Dienekes on 07.18.13 at 10:07 pm

The Canso research paper on Canadian Housing;
Very sobering reading, should be required reading for everyone in Canada.
Who can claim to live in a free country when CMHC is being used in such a way. It’s bewildering. We should be ashamed. Or should I say, we will be.

#67 sideline sitter on 07.18.13 at 10:11 pm

#65 – who rents a basement for $1400/mo?

That’s insane.

#68 Roy on 07.18.13 at 10:12 pm

Lol Kelowna sign. Maybe they should consider slashing prices if it is that bad

I am reminded of the phrase, at first the truth is rediculed… then it is violently opposed… then it is accepted as self-evident. We are still in stage 1

Nice when the obvious is stated so simply like Canso does.

“Canada borrowed its way out of the 2009 Recession”

Same as what Poloz said in his first press conference-
“Canada’s relative good economic fortune through the downturn rests largely with households that took on personal debt.”

Canso: “We cannot afford the houses we are living in.”

Wonder how long before the obvious becomes self-evident.

#69 Gg on 07.18.13 at 10:13 pm

Detroit is a non-event. — Garth

Read the paper. Detroit? How about many coming up. Aka – city pensions funds going to bankrupt many.

#70 father on 07.18.13 at 10:17 pm

#65 basements are harder to rent now but watch when all those empty condos hit the rental market rents are going to go down

#71 Donald Trump on 07.18.13 at 10:21 pm

#58 Old Man on 07.18.13 at 9:38 pm

#52 Donald Trump – I got a good one and it is you.

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

That’s a good one..I love it……. ahahahahahaahahahaha

(PS did Smoking Man right dat 4-ewe?)

#72 Koshy Alex on 07.18.13 at 10:42 pm

Dear Jamie Sallenback, a thirty-something from Langley,

The 100k you gained will evaporate slowly, here in Toronto areas (eg: Mount Pleasant) where even Garth predicted nothing will happen are seeing listings getting delisted in two weeks, listings that were 1.2 million going down to 799k in 4 months are getting delisted without getting any offers, as you said life is cruel and you will realize it soon, the debt fuelled real estate orgy is coming to an end with the rise in rates

#73 a prairie dawg on 07.18.13 at 10:43 pm

#61 jan

Hypocrisy in Canada is never-ending !

- – -

Did you read my post at the end of yesterdays blog? lol

#74 Donald Trump on 07.18.13 at 10:43 pm

Dodge Journey, Mexico to go their separate ways

http://www.autoblog.com/2013/06/02/dodge-journey-mexico-to-go-their-separate-ways-sterling-heights/

According to an Automotive News report, Chrysler Group is saying adios to Toluca, Mexico, and moving production of its next-generation Dodge Journey to Detroit, Michigan, when the model is replaced in 2016. The change of venue, discovered through sources at suppliers, would mean the mid-size crossover would be built alongside the next-generation Chrysler 200 sedan, due in 2014, at the automaker’s Sterling Heights Assembly Plant. It would also leave the Toluca plant without a product after 2016.

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

Donut trussed Gartho

He is investing in Detroit as we speak.
PS He said never bet against US..right?

#75 expat on 07.18.13 at 10:52 pm

Garth, everyone knows by now that the City of Detroit has declared bankruptcy. Will you comment on this most interesting event tomorrow? Thanx in advance.

“Why is anyone surprised at this? Widely expected. — Garth……”

….because you keep teling everyone US economy is a superstar and everything is rosy down there then say all the doomers predicting bankrupcy in US states / companies etc are wrong. Looks like they are right after all!

#76 Freedom First on 07.18.13 at 10:52 pm

Well, it is sad when someone can be following Garth’s free blog longer than it has been around has totally missed the sound financial principles that Garth refers to and explains in great detail on a regular basis. Balance and re-balancing, diversification, liquidity. So many Jamie’s, and only one Garth. Sad indeed.

#77 Dave on 07.18.13 at 10:52 pm

Just got back from Kelowna. I noticed a lot of Sold signs on houses in the $400-$500k range. Sales volume is up but prices are still very flat.

#78 ozy - SO FAR PRICES STILL INCREASED on 07.18.13 at 11:08 pm

TREB SAYS 10% increased in Toronto Detached homes…july 2012 to july 2013…I can see that 750000 become 820000 in our hood, so it’s not a lie.

Folks that drum 20% price drop, WHY DON’T YOU SELL ALL YOUR HOUSES FOR CURRENT MARKET PRICE THEN DONATE 20% TO SOME HOMELESS CHARITY? GARTH, anyone else?

Anyway, it’s CLEAR: since the lower-middle class housing market did not tank – you’ll have to wait 2 more years for medium-upper one to crash…so I do not want to be in your shoes fellas! maybe is better for you (at least at this time in your life) to believe Mr. Turner version of the future and live worry free in rental…

I think many of YOU aren’t ready for proudness of ownership (get handy, fix stuff, make home depot your deluxe destination, and work hand in hand with contractors in all projects to get respect and complete more projects for the price of one)… comment if you think it’not true.

BE CAREFUL THOUGH, only a few houses are worth buying nowadays.

#79 Cici on 07.18.13 at 11:11 pm

Hey Garth,

Thanks for doing what you do, and for putting up with all the flack from idiots like Jamie.

Veering away from RE a little, what’s your take on the latest TSX run-up? Is this phoney or for real, and how long will it last? I thought we were only bullish on America?

Looking forward to hearing your take on it!

#80 Smoking Man's Old Man on 07.18.13 at 11:16 pm

Garth. When are you going to get this real estate correction right!

I can’t wait to buy so I have a lawn to cut regularly, things to paint and fix on the weekend, not to mention all the extra space so I can continue to accumulate crap in the hope my self esteem will be greatly enhanced.

As it stands now my time is my own and my life is fairly stress free, so get your act together!

#81 Ben on 07.18.13 at 11:16 pm

Hi

can anyone point me to raw data, ideally updated regularly, on Montreal house prices?

#82 harboursnug on 07.18.13 at 11:40 pm

I wouldn’t be buying NOW, but in hindsight everybody is up at least a 100K having bought 7 years ago.

Oh well, maybe in another 7 years the bottom will be in and I’ll get another chance at those prices.

#83 not 1st on 07.18.13 at 11:45 pm

Detroit is a non-event. — Garth
______

Yup, next up about a dozen more munis teetering on the verge. After that medicare, medicaid and SS.

I will watch with interest to see how a country with soaring debt to GDP and massive unfunded liabilities charts a course for the future.

#84 earlybird on 07.18.13 at 11:52 pm

Jamie hasn’t made a dime until he sells….then do the math…

#85 Guy_in_Regina on 07.19.13 at 12:00 am

Ha ha, that condo on the gardiner is hilarious. I did some business travel to T.O. this winter and noticed that sign every time.

It was spooky to see the condo overload in the city; but I’m glad I did. It’s one for the ages.

#86 Joe on 07.19.13 at 12:04 am

Detroit has filed for chapter 9 bankruptcy, you can kick the can but you can’t hide.
US recovery is a manipulated myth.

#87 Siva on 07.19.13 at 12:12 am

I don’t understand how people hiding behind anonymous names attack others who don’t hide their identity

#88 takla on 07.19.13 at 12:29 am

watching BBC for more news on the Detroit Bankruptsy this evening and reporter in an area of the city was doing an interview,directly behind him were numerous ,delapidated homes with a big sign infront of one of them reading”for sale by owner 1000.00 for quick sale”,think this is possible in Canada?I hope not!!

#89 Mister Obvious on 07.19.13 at 12:29 am

#20 Godth

Thanks kindly for the link to that excellent BBC documentary on Isaac Newton. I watched all 60 minutes. Some of that history I was aware of and some of it not.

For example, I was aware of his semi-secret forays into alchemy and his suspected self-caused lead poisoning that some say accounted for more than usual eccentric behaviour toward the end of his life.

But to my original point. It still fascinates me that a man of Newton’s genius coupled with a colossal, arrogant ego and who refused to take anyone’s word for anything could be hoodwinked by financial scam artists. That’s on par with, say, talking Garth into a reverse mortgage.

After all, this was the man who invented calculus and the scientific method not to mention becoming Master of the Royal Mint in his final years. Fascinating.

#90 Half Full on 07.19.13 at 12:37 am

Hey Jamie,
When you have the $100,000 in your hand, then you have “made” the money. Until then, add up what you owe and what you think you have in equity.

#91 Consequences, part deux — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer on 07.19.13 at 12:44 am

[...] via Consequences, part deux — Greater Fool – Authored by Garth Turner – The Troubled Future of Rea…. [...]

#92 Blue bee on 07.19.13 at 1:25 am

I used to work in the Detroit area for 10+ years. It’s been in the economic toilet for years. The problem is that all of the money is in the suburbs (which are separate entities) instead of the city. And since the suburbs are richer they have better services and then more people leave the city and it gets poorer and poorer.

The suburbs (like say troy, rochester hills, royal oak, among others) are pretty good places to live. Little or no crime compared to the city and similar to Canada. Affordable housing, food, and general living. Just need a decent job that for health benefits. To be honest, living is royal oak or Birmingham would on most days is better than etobicoke or north York. Any day there’s less traffic, easier to park your car, better radio music, winning sports teams, and they are much cheaper to go out for lunch or dinner.

I really hate this Detroit murder city rep. Chicago had many many more murders than Detroit. Last year it was close to 500, yet Detroit still has this reputation. Yes there’s crime but its limited to certain areas. Just don’t go to those areas, or if you do, don’t rob a crack dealer

So any commenters who have said certain things like getting shot on the people mover or whatever, have you been here? Not driving though, but lived here or in the area? Detroit people (and suburb ones too) are some of the best ones out there so don’t cast them aside and believe you’re superior.

#93 The American on 07.19.13 at 1:35 am

At #17, dieneke, now THAT is some hilarious shit. I cannot stop laughing with your comment. Thanks for the humor, man. I have been smoking some seriously stout White Widow sativa, alongside sipping a fine American Rye Whiskey. I am blessed to live where, by popular vote, we are free to smoke our brains out on a recreational basis and marry whomever we want. I’m sorta celebrating tonight.

#94 Paul on 07.19.13 at 1:36 am

Reality from Chilliwack….40 minutes east of Langley. Two bedroom Condo that sold in 2007 for around $200K, today goes for around $130K. Nice single family home in nice hood that sold for around $550K in 2007, today sells for around $520K. That is already SEVEN years of decline, with no end in sight. The average person still cannot afford the average house, even at 3.09%. There is only a couple outcomes, large decline quickly….or a slow painful flatlining for several more years, kinda like the vitals of recently deceased.

I have been renting, liquid and diversified before I even knew about Garth’s blog. Garth may not be Nostradamus, but he is much more right than wrong. I always go with odds.

#95 ApplePi on 07.19.13 at 1:38 am

It’s not thatGarth can predict the future. No one can. But his advice back in 2009 still applied back then. Problem is, the government decided to make some bad decisions which led to further price inflation and a bugger eventual crash. Why they did is could be for a variety if reasons. To make Canada look good and stable while the USA faltered. To further pad the wallets of bank shareholders, or to stimulate a building boom of condos to make things look shinier in downtowns across the country.

The USA had issues, but they said “screw it” and let the economy dive. Short term pain, but overall benefit. The people were better off because all they lost were their house. Banks went under but who cares, that’s the risk and reward in capitalism and all the avarice contained within.

Canadians would still be in debt to the bank. Banks aren’t allowed to fail here.

Whatever the reason the government made their decisions doesn’t change the fact that it was still a non-sensical time to buy. Otis easy to look at the past and look like a genius. What I have always seen Garth as promoting is just common sense and a willingness to look through he crap and actually do the numbers now on debt cost.

Would Langley boy do the same thing today as 7 years ago? If not, then he can’t say anything. The real estate message is still the same, after all.

Question is… Who ya gonna trust?

#96 Harry Wilson on 07.19.13 at 1:41 am

Hello, Mr. Turner;

It took several hours, but a thought just occurred to me: Could the $1 house in Grimsby be a conscious attempt to gussy up some otherwise dismal July sales numbers? A house selling for $500K over asking would certainly make Marc’s year-end average the envy of fellow realtors, and on his website, he claims to be an “out-of-the-box” thinker.

P.S. Ever notice that people who still use the phrase ‘thinking outside of the box’, aren’t?

#97 Piccaso on 07.19.13 at 2:07 am

#65
I had a fully furnished apartment for $900 a month just off Yonge Street not even 3 years ago when I was on contract in Toronto. Walked to work, it was great

#98 angela on 07.19.13 at 2:08 am

looks like a lot of countries are moving away from the us dollar for trade ,for those that do not understand how currencies work (petrodollars) move along nothing to see here
ECB request 800 billion YUAN swap agreement
http://www.bloomberg.com/news/2013-07-02/yuan-offshore-trade-race-picks-up-with-frankfurt-bid-currencies.html
toronto to become YUAN trading hub
http://www.bloomberg.com/news/2013-07-04/toronto-reviews-bid-to-become-yuan-currency-trading-hub.html
switzerland join race to be YUAN trading hub
http://www.bloomberg.com/news/2013-07-06/switzerland-will-join-race-to-be-trading-hub-for-china-s-yuan.html
yes Garth we know in your head this is a non event and in your world KING DOLLAR is here to stay even all the debt attached to it LOL . looks to me the world is tired of the USA exporting their inflation world wide via the petrodollar .also australia,japan ,russia,brazil,south africa already have YUAN currency swap deals in place looks to me like the excess dollars being printed wont be needed for much longer ,japan has already started offloading treasuries and soon many others will follow before the yields get to high looks like a perfect petrodollar shitstorm to me .oh did i mention that the big surprize could be that the YUAN could be partial GOLD backed gee them pesky chinks keep mining gold and are the worlds most productive and are also the biggest importers of gold gee I donno what they’re up too

#99 A Nightmare on Bay Street on 07.19.13 at 2:30 am

#5 @Rob

“But I have to say its very difficult to wait for this correction. This slow motion crash doesn’t make any sense at all. Whats keeping it from speeding up???? Its better to have RE bottom out so that its behind us and we can look forward like the USA”

I totally agree with you. But you already know why this bubble continued here in Canada after 2008 : Cheap credit.

The treatment in USA for their stalled economy is the same: Fed is buying 85$ billions of toxic debt per month to keep the machine rolling.

As much as I like Garth, I think he is dead wrong on the US recovery. I think he “wish” US will recover and he dont blink at 85 billions per month of quantitive easing.

I think everybody knows that cheap credit to sustain a maket or QE, QE2, QE3 etc, to sustain a market, is exactly the same.

I think Garth know this better than anyone, in fact.

Close the tap and it will die.

So, I dont think the USA are “looking forward” right now.

#100 dosouth on 07.19.13 at 2:53 am

South Winds in Kelowna has been under development and for sale since 2008….just crap quality and high HOA fees.

Just Google and see what is for sale there or trying to rent, anything to attract the uneducated. Should have left the orchard that was there and got more creative use of the the land.

#101 Buy? Curious? on 07.19.13 at 3:05 am

Hey Garth, do you ever get bored of bitch slapping these weirdos? Can you post some of the hate mail you get?

http://www.youtube.com/watch?v=8gDFbJtXwb0

#102 young & foolish on 07.19.13 at 5:55 am

Let’s see when those rental rates come down …. we’re still holding our breath for that one! Perhaps municipal taxes will go down as well :-)

#103 detalumis on 07.19.13 at 6:40 am

#62 Bungalows in tear-down country are a special breed. I live in south Oakville and any bungalow that goes up for sale still has multiple bidding wars right now in the middle of a heat wave. I’m talking 1,200 square foot old junk houses selling for over 700K. Now the mini Mansions do not sell in 3 days like my neighbour’s house just did last week after she was carted off to LTC, they can take a long time to move and they always have.

The reason is that there is a subsection of people that want to build their dream home and want a building lot and that’s what these bungalows are, a mature treed building lot, they have better tax breaks when it is called a renovation and not new construction. Once a mini Mansion is built it is somebody’s else’s dream home and much harder to sell.

The opening story, Jamie’s message, actually is something completely different, it’s about why do you expect people to put their lives on hold for a decade in the prime of life wishing and hoping for something that may or may not happen. You yourself as a boomer did not live like that and yet you expect young people to put off owning anything until they are what 40+ which is what Jamie would be if she had listened to the blog. Sometimes it really isn’t all about money, I live surrounded by seniors who put off living to pile up money and it really does lose it’s meaning at a certain point in time. You really do enjoy home ownership more when you are younger and still starry eyed about the future.

#104 US Stumbles on 07.19.13 at 6:53 am

Can’t wait for your post about Boston’s Bankruptcy!!! Toronto is next in line

#105 betamax on 07.19.13 at 6:58 am

Jamie, your insecurity is showing.

I believe the earth is round, but I wouldn’t troll Flat Earth blogs because I don’t care if they’re wrong, and I have zero interest in persuading them otherwise.

Frightened realtors and anxious homeowners who troll here with vapid claims of a forever boom and paper profits are just whistling past the graveyard. Otherwise, why bother?

#106 willworkforpickles on 07.19.13 at 7:18 am

A typical day down south of the border with an American or two mulling over ways to solving theirs …. and even our problems? – in one of many one fell swoops.
We got it…We get it…. Hey Canada…want some cheap real estate ?…Well.alrighty then …. first……. whaole give Detroit to Canada….and then..AND THEN…

#107 fancy_pants on 07.19.13 at 7:55 am

If the peckerettes didn’t mess with the levers to keep this afloat back in 2009 when RE prices started going south we wouldn’t be int his predicament now.

ok. So the volumes have proven to be down for some time now… question is when the prices will follow. Under ‘natural’ conditions this wouldn’t take long, but with so many players with a shirt in the game who knows.

The theme Garth is reiterating is the peckerettes only bought us time dicking with the levers, but time is running out.

#108 neo on 07.19.13 at 7:58 am

So I gather you have not enjoyed any of the 19% gain in US markets this year? Pity. — Garth

What does that have to do with what I said? You missed the point entirely. The market has gained 19% but main street still struggles and GDP will print at best 1% this qtr. Some even think it may be negative or flat. That is NOT a recovery. A recovery in REVENUE will imply a SUSTAINABLE recovery. At that point companies will start hiring in earnest and release more capex spending and not cost cutting to simply improve eps so you can brag about it while it achieves nothing for the BIG picture improvement of the overall economy.

I’ll take that as a ‘no’. — Garth

#109 craig on 07.19.13 at 8:06 am

Detroit is a non-event. — Garth

The 11th largest city in the USA goes bankrupt and its a non event.

The fact that Michigan and the Fed Gov’t (Obama) allowed this to happen is a huge international event. It makes their polices laughable around the globe.

We all know that Detroit has been in trouble for a long time but the fact that it actually happened sets the table for other large cities to follow.

That’s the issue and Moody’s concern. Who else will take the easy route (NYC, LA….) and just default on their obligations. Police, Fireman, city workers losing their jobs, pay cut backs, lost benefits, lost pensions…

All part of the great US of A recovery. NOT!

Here’s another non event in the works;

New York City

Deficit through June 2012: $2 billion

Budget in FY2010: $63.1 billion

Estimates of the NYC deficit range from $3.6 billion according to Comptroller John Liu to around $2 billion according to the Independent Budget Office. Everyone agrees that the deficit will be worse if New York state cuts aid as part of its own deficit reduction plan.

I have told you before: worry about yourself. The US will be just fine. — Garth

#110 TurnerNation on 07.19.13 at 8:18 am

The kids are all right?

Somebody give that ‘kid’ the “frowning of a lifetime”.
Simpsons quote…
http://www.youtube.com/watch?v=VEV0VTxEUsU

#111 Castaway on 07.19.13 at 8:20 am

So, Jamie in Langley “thinks” he/she has made $100k on the home they still own! No doubt backed up by a realtor’s assessment of what they could sell it for. Go ahead Jamie, put it on the market. Your $100k gain might just be a $100k loss!

#112 TurnerNation on 07.19.13 at 8:20 am

Free-tax incentive on the Least Coast.

http://www.cbc.ca/news/canada/prince-edward-island/story/2013/07/18/pei-borden-tax-incentive-584.html?cmp=rss

The town of Borden-Carleton wants to attract more business and residents to the area, and is offering a five-year tax holiday for people who build.

The tax rebate would be available for single family homes, apartments, and commercial properties.

“We’re really trying to work on getting a subdivision going,” said Mayor Dean Sexton.

“We’re offering up the municipal portion of our tax to any new builder, home or commercial property, anything over $50,000. And it’s good for five years, this tax incentive.”

#113 X on 07.19.13 at 8:21 am

http://blogs.wsj.com/moneybeat/2013/06/28/the-intelligent-investor-saving-investors-from-themselves/?KEYWORDS=jason+zweig+the+intelligent+investor

#114 Dupcheck on 07.19.13 at 8:28 am

Canadians can be easily confused, but if you really want to confuse a Canadian walk around your office with a “Persimmon” in your hand. They will say what is that? A pumpkin? A tomato? A pepper? hahahaha, No one has a clue about this fruit. Unlike real estate it will not bite them in the behind.

#115 Ralph Cramdown on 07.19.13 at 8:33 am

#98 angela

I see a lot more evidence of banks wanting to trade yuan for a slice than actually wanting to hold yuan as a store of wealth. Yes, the US has been exporting price inflation and bubbles. But Chindia has been exporting wage deflation. I can understand concerns about the future value of the US dollar. But suggesting yuan as a substitute? Going from the frying pan into the fire on that one. Scratch the surface on China and you discover fraud or gross measurement error in all aspects of government and private accounts at all levels, endemic corruption, and mind-bogglingly vast misallocations of capital. Despite all that, the Party has done an amazing job improving the people’s average standard of living and education SO FAR. Talking about the yuan as a reserve currency is like watching the crew of a 747 with two engines on fire and only partially operational flaps fight to put ‘er down and saying, just as they’re passing over the outer marker, “gee, wouldn’t these guys make great astronauts for a mission to Mars?”

#116 neo on 07.19.13 at 8:51 am

I’ll take that as a ‘no’. — Garth

I’ll take that as a “no” as well.

#117 CrowdedElevatorfartz on 07.19.13 at 9:04 am

@#65 Kilt
Your comment. “…..when most homes have a basement suite rented for $1400……”

I call bullshit .

#118 Toronto_CA on 07.19.13 at 9:22 am

$1400 gets you a newly built one bedroom condo nearly anywhere you want to live downtown TO. Maybe a really large multi-bedroom multi-bathroom basement apartment in Rosedale would be $1400? But yeah, most basements are subterranean and also sub-$1000/month. Lack of daylight, mold/mildew, flooding, noise from the owner’s above, low ceilings, tiny bathrooms, etc.

#119 Jim on 07.19.13 at 9:28 am

Yesterday, I made some posts about how poverty in Metro Vancouver is moving away from East Van and moving towards Surrey and Langley. Although I acknowledged valleyrenter is correct that Whalley (which is just a small part of Surrey near the skytrain) is gentrifying with all the condo towers, I argued that poor people, who in the past may have found affordable basement suite rentals in East Van, are moving to the more distant parts of Surrey, like Newton and Guildford, and even to Langley, which is the next municipality over from Surrey. The suburbs aren’t what they used to be–an oasis for middle class families looking to insulate themselves from the ills of the inner city. As inner cities are gentrifying, some suburbs are starting to look like inner cities. Surrey, Langley, Abbotsford have all been in the news lately for their drug problems. You do sometimes see people shooting up drugs in these places. I saw a needle on the sidewalk the other day when I walked to Safeway in Surrey. It’s starting to become like the Downtown Eastside here, although it’s still not that bad.

Anyways, since everyone seems to be talking about Langley today, I just thought I’d point out that I saw on the news last night this grocery store that just opened up in Langley. It’s called Oasis. It’s only for people who make less than $20,000 per yer–they can go there and buy their groceries at discount as grocery items are sold at 30 to 50% of their retail value. It’s just another sign that poverty is moving to the suburbs as the inner cities gentrify:

“For many low-income residents in Langley, buying groceries is becoming a luxury they can no longer afford…

The non-profit discount grocer, which offers grocery items for 30 to 50 per cent of their retail value, has opened a new location on the corner of 203 Street and Douglas Crescent.

Their purpose is to give low-income individuals and families a place where they can shop with dignity, said executive director Kevin MacNeil…

“Our concept is just to try and help low-income families, seniors and the working poor,” MacNeil said. “Try to get more out of life, make them feel like they’re putting back into the community. There’s no discrimination.””

http://www.langleytimes.com/news/213182471.html

#120 Kelowna Man on 07.19.13 at 9:41 am

#65 Kilt

“Oh, and I was in the Okanagan last week. Didn’t notice for sale signs everywhere. Did check the June stats though: Listings down 9% YoY and sales up 12% YoY, Prices mainly flat. Days to sell is pretty nasty – 125.”

—————————————————————

Kilt, maybe a good idea would not to get too excited about one month sales stats. Yes Kelowna listings are down from last year a little bit – but you are talking all time highs as a comparison. As well, sales are also a little up YOY – but from way off of their 10 year averages.

The MOI still puts Kelowna deep into Buyers territory.

#121 Misunderstanding China on 07.19.13 at 9:43 am

#116 Ralph Cramdown, are you describing China or the US? Because it’s hard to tell. http://www.gfmag.com/tools/global-database/economic-data/11944-wealth-distribution-income-inequality.html#axzz2ZUy61Nwn

#122 Misunderstanding China on 07.19.13 at 9:49 am

Addendum to my previous post: Ralph Cramdown, you will find that most Westerners have a decades-old antiquated understanding of the economic situation of most of the rest of the world. http://www.ted.com/talks/hans_rosling_shows_the_best_stats_you_ve_ever_seen.html

#123 Dad on 07.19.13 at 9:55 am

Son, listen to your father for a minute.

When I first met your mother all she wanted to do was cruise around and sit at the beach, but before long it was vacations to beaches and cruises on the ocean.

Our crummy condo in a crap part of town that we mortgaged 50,000 on wasn’t enough, she wanted bigger and better.

Then came the second car, then came the second floor, then came the second child. I never had any choice.

I know how much that girl Jaime likes you, but think: Are you willing to go broke to sustain her lifestyle?

Call your mother.

#124 Holy Crap Where's The Tylenol on 07.19.13 at 10:07 am

#104 detalumis on 07.19.13 at 6:40 am
#62 Bungalows in tear-down country are a special breed. I live in south Oakville and any bungalow that goes up for sale still has multiple bidding wars right now in the middle of a heat wave. I’m talking 1,200 square foot old junk houses selling for over 700K. Now the mini Mansions do not sell in 3 days like my neighbour’s house just did last week after she was carted off to LTC, they can take a long time to move and they always have.

The reason is that there is a subsection of people that want to build their dream home and want a building lot and that’s what these bungalows are, a mature treed building lot, they have better tax breaks when it is called a renovation and not new construction. Once a mini Mansion is built it is somebody’s else’s dream home and much harder to sell.

I also live in south Oakville and I am in an older mature neighborhood with the same stuff going on now for at least the last ten years. The wife and I call it reno-plosions. Leave one wall standing and its a reno. Bulldoze and use the scorched earth policy for McMansions. No shortage of cash in Oakville.

#125 mike in Etown on 07.19.13 at 10:07 am

Just came back from a week in BC. In the Kootenays. I made the comment to my wife that EVERYTHiNG seemed to have a For Sale sign on it.

My favourite was one near Creston. The owner must work at the brewery there. The For Sale sign offered free beer for a year if you buy now.

Beautiful scenery.

#126 PoltawaDiva on 07.19.13 at 10:20 am

#55 exit tax

It seems we really are reverting back to serfdom. ( SM uses the term slave, but serf is more appropriate, since serfs could own property). In the 13 century, serfs were required to work 2-3 days a year, 14 cen. 1 day a week, 17 cen. it was 4 days a week and in the 18th 6 days a week (Polish Lithuanian Kingdom, other jurisdictions had variations-hence the many religious holy days, when serfs were free to go worship, and not work) . Today’s serf works till mid June for all taxes owing (depending on jurisdiction). This of course does not take into account the obligations to the bank (ie mortgage) which are” voluntary” And now comes the clincher – serfs were “tied to the land”. And that is what an exit tax would do.

Welcome to the 17th (or is it 18th) century.

#127 The real Kip on 07.19.13 at 10:20 am

Garth, tell your friends in the United States, don’t bet against Canada, they’ll lose, again.

#128 broadway skytrain on 07.19.13 at 10:30 am

#118 CrowdedElevatorfartz on 07.19.13 at 9:04 am
@#65 Kilt
Your comment. “…..when most homes have a basement suite rented for $1400……”

I call bullshit .
———————————————————

http://vancouver.en.craigslist.ca/search/apa/van?query=basement&zoomToPosting=&srchType=A&minAsk=1300&maxAsk=&bedrooms=

not ‘most’ but many do – for any decent suite on the west side 1400 is about right.

#129 Sixth sense on 07.19.13 at 10:30 am

Where do I find the news about plunging new condo sales that you’re referring to Garth?

Start here. — Garth

#130 JustTryingToProtectEquity on 07.19.13 at 10:31 am

#114 X

Thank you very much for that link.

#131 broadway skytrain on 07.19.13 at 10:34 am

when i put my semi crappy, east side, bsmt apt up for 1100 i got a list of ppl as long as your arm wanting to rent

#132 HD on 07.19.13 at 10:35 am

#94 The American on 07.19.13 at 1:35 am

Out of curiosity,

I’d like to hear your take on the Treyvon Martin case…if you care to share.

Best,

HD

#133 Doug in London on 07.19.13 at 10:37 am

It’s obvious Jamie, age 30 something, has never seen a serious real estate bust before. When the last one happened she was probably a teenager, and your average teenager doesn’t pay much attention to what real estate markets are doing. That’s part of the reason many younger people are buying over priced houses, throwing caution to the wind, and thinking prices will keep going up forever. Normally the real estate cycle is about 10 years, and the last “bust” was only a short bump. This cycle has been going for about 18 years now and is long overdue for a correction. Most likely Jamie will find that out the hard way.

Why would anyone want to buy a house when last month there were better deals with REITs, preferred shares, and utility stocks? Prices are recovering now (even more so for U.S. stocks!), I wonder how many people who frequent this blog took advantage of those Boxing Week sale prices.

#134 brainsail on 07.19.13 at 10:41 am

From the comments on another blog that was discussing the Detroit situation.

“Why don’t they adjust the border so that Detroit ends up in Canada?”

The response was, “Fine, but you get Justin Bieber!”

LOL

#135 Mixed Bag on 07.19.13 at 10:43 am

#119 Toronto_CA on 07.19.13 at 9:22 am

FWIW, I know a woman in Downsview renting her basement for $1000/ month, 950 sqft bungalow. Utilities, Internet, phone and parking included. If you’ve got an IP phone plan, that could worthwhile as a landlord; and as a tenant, no hassle with setting up accounts.

#136 bigrider on 07.19.13 at 10:49 am

“gimme homes” a “gimme homes” “gimmie homes”

I’m Vinnie Bobarino. !

#137 Not1st on 07.19.13 at 10:50 am

Face it Garth, this one goes to the blog dogs. You clearly said the US will not renege on any if its obligations yet one of its cities defaults for the world to see. Your prior statement was wrong.

Additionally you have shown clear bias is your blogging by continually overstating risks in one asset class and ignoring them in another. Thought you were all about balance? How about a post on derivatives or shadow banking or the real unemployment rates or food stamps or the 200 trillion in debt the US has or HFT corruption on the exchange or front running orders or commodity manipulation?

The United States did not renege on any obligation. This is a municipal bankruptcy, one of many cities escaping pension obligations. — Garth

#138 Daisy Mae on 07.19.13 at 10:51 am

#85 Expat: “….because you keep teling everyone US economy is a superstar and everything is rosy down there…”

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

Garth states the USA is recovering…slowly. This will take literally years.

#139 bigrider on 07.19.13 at 10:55 am

Yesterday night, ima ina dis bakery for da Bread calabrese to buya fresh for papa. He lika dipa da bread ina da sugo after he a finished his pasta.

Dis very heavy Italiano lady ,she tella da young girl behinda da counter who getting married very soon, she tell her to hurryuppa and buya a house before da wedding a day because she said “you no finda notting ifa u waita ,anda da prices ,she only goin a upa upa UPA ! ” said disa heavy Italiano lady.

No way she or her gonna listena to our very smart blogga host ( who bya da way no go buy his bread, me thinks in an Italiano bakery)

You may be Italian, but this stereotype is offensive. No more will be published. — Garth

#140 Ralph Cramdown on 07.19.13 at 11:07 am

#123 Doug in London

I agree with you on the current relative value of houses versus certain income producing securities.

I think the analysis has to take into account whether you have money or not. Typical SFH looks like a crummy deal for a cash buyer, and in most places it doesn’t even pencil at 20% down. But for a young person with little money — say enough for 5% or 10% down plus closing costs, an assumed 2%/year price increase starts to look really good, considering a) nobody’s going to lend the punk anywhere near that amount of money except against real estate, and b) some or all of the downpayment may have come from family on the condition that it be used to buy real estate.

You’re also right on the money about a lot of people being too young or too forgetful to remember what a real estate bust looks like. Wherever you go, it’s different there…

#141 bigrider on 07.19.13 at 11:10 am

#140 Garth to Bigrider- “…no more will be published”

Well, at least you called it a stereotype correctly and not rascism as others would on this blog.

I’m sure it would offend some, as there are those who are wound up real tight, but for most they would find the humour and truth in it.

I can tell you for certain that the conversation mentioned has been had a million+ times at least over the years.

#142 confused and a little crazed on 07.19.13 at 11:17 am

Hello broadway skytrain,

I rent for $ 700 1 bedroom, basement suite per month in the grandview / boundary area. so if they are asking for $1400 just move on. i buy stocks with my money. if we crash i just put a stop loss and buy more

if Us recovers more ..even better. my dividends reinvest themselves

#143 Iconoclast on 07.19.13 at 11:18 am

#34 takla

Ironically, the bankruptcy of Detroit might mark the beginning of the resurgence of the US.
There is no future when you have such an enormous overhang of debt.

As each new municipal bankruptcy happens, it gets easier for the next one and reduces the stigma.
As soon as governments figure out it gives them a competitive advantage going forward, watch out!
And why not? Everyone else is doing it!

Sucks to be a pensioner… but I’ll bet bondholders make out okay.
Watch for Bernanke to start buying muni bonds to bail out the banks and pension funds.
This is exactly what he’s been doing with MBS holders to the tune of 45 Billion per month.

#144 The real Kip on 07.19.13 at 11:21 am

Stay out of Detroit unless you buy a .357 on Kijiji. Get the speed loader, it’s going to get nasty.

Typical, stupid Canadian comment. — Garth

#145 confused and a little crazed on 07.19.13 at 11:23 am

but i do feel a little sorry for those did nothing during the crash. a 1 % GIC return is near criminal when the banks loan @ 3 %
and the world govts subsidized real estate with $4-5 trillion in bailouts. long term consequences everything will be more expensive…milk , eggs, bread… we are all exposed to this bailout.

now to find the next gold rush…non regulated/ or self regulated …with implicit govt backing. that is the key.

US govt ony 17 trillion in Debt…increase debt ceiling

#146 Ralph Cramdown on 07.19.13 at 11:30 am

#144 Iconoclast — “Sucks to be a pensioner… but I’ll bet bondholders make out okay.”

I wouldn’t bet on that.

“Watch for Bernanke to start buying muni bonds to bail out the banks and pension funds.”

Nor that.

“This is exactly what he’s been doing with MBS holders to the tune of 45 Billion per month.”

How exactly is buying agency MBS — which are already backed by the full faith and credit of the US government, just like the dollars he’s buying them with, bailing anyone out?

#147 Ralph Cramdown on 07.19.13 at 11:36 am

Instead os spending your time in gun shops, why not check out Slows Bar-B-Q, The Detroit Institute of Art, the Heidelberg Project and the Henry Ford Museum? Cross the border some time and you might discover that some of these rust belt cities, even after decades of decay and decline, are the home of more culture and wonder than many of Canada’s cities could hope to achieve even with a generous grant from the Harper Government’s Gazebo Action Plan.

#148 Joe on 07.19.13 at 11:49 am

The US is not just fine ask the people living in tent towns in shelters or on the streets, or ask the record number of people on food stamps, or fathom the tens of millions of people on anti depressants or the increased suicide rates.
Or look at the increase in alcoholism and drug abuse.
The recovery is a redistribution of wealth that is annihilating the middle class.
Its a recovery that is killing people:

Unbelievable. — Garth

#149 Nemesis on 07.19.13 at 11:54 am

“Typical, stupid Canadian comment.” — HonGarth

Agreed. Revolvers are for Rodeos and period costume dramas.

‘RoboCop’ (aka MQ9-Reaper) is far better suited to the MoTownSalient.

#150 :):( Ying Yang on 07.19.13 at 11:55 am

Smoking Man is conspicuously absent on today’s blog? With Detroit falling is he packing his bags to leave town?
My brother is beginning to understand you now after going to the Dyslexic Smoking Mans blog. He still says WTF but likes what he sees. He says Smoking Man would not last long in Hong Kong though as life here in the investment world is very short. One day your just a guy with some balls and some cash, invest big, win big, leave town as soon as possible. Loss it all and back to the drudgery of crawling back up to the top. To get to the top there is painful. Have fun at your favorite Casino in Detroit!

#151 Suede on 07.19.13 at 11:57 am

5 year BoC bonds heading towards testing resistance.

#152 TnT on 07.19.13 at 11:59 am

Look forward people….

Having Detroit go bankrupt allows for restructuring the bad decisions that were made by (insert generation here) on an unsustainable retirement plan. You can’t just keep getting raises. You can’t take more than you put in. This is very unfortunate and I feel bad for those who did not plan responsibly as this will affect many who are dependent on their pensions. Bad planning, greed and kicking the can down the road never ends well and screws up the whole system. It takes “guts” to call it like it is as a Politian and a society deserves it’s government it votes for….

But on the bright side… once Detroit purges their debt obligations the city will continue moving forward, the sun will rise and people will move on and settle in their new reality.

#153 TnT on 07.19.13 at 12:01 pm

Politian should read Politician – heh

#154 Suede on 07.19.13 at 12:01 pm

To you Torontonians…

What are some of the better websites to find rental homes and condos in and around the downtown Toronto area or Lakeshore/Etobicoke?

#155 TnT on 07.19.13 at 12:09 pm

#155 Suede

What are some of the better websites to find rental homes and condos in and around the downtown Toronto area or Lakeshore/Etobicoke?

*******

Viewit.ca and http://www.realtor.ca are the only 2 worth using for Toronto. All others are cheap listing sites (Kijiji and Craigslist) and you get what you pay for….

#156 VICTORIA TEA PARTY on 07.19.13 at 12:15 pm

DETROIT HITS THE SKIDS…WHO’S NEXT?

“He who supps with the devil should have a long spoon.”

My late father reeled off that line many times during my youth when he spoke about a person’s need to exercise caution in money and other dealings with creditors, the “system”, and the like.

Now that Detroit has at long last declared backruptcy and the unionised workers, especially those who are now in retirement, it’s a brand new day! Life with no city pension. Zip. That’s where this is headed. Obama says he won’t help. “No bailout for you!”

May these poor wretches have long spoons while they watch their pensions head south along with whatever rest of the population is still “living” there in that former firebrand of a auto-making place. What a comedownance!

Many other US cities are in the same boat, as is the entire USA, Europe, China and Japan, to name just a few! Too much debt, not enough revenue. Too big to bail.

Someone could make a few bucks making long spoons as avaricious creditors send their knuckle-duster friends out to collect a few more bucks from starving debtors before the whole bloody thing just simply implodes.

As for Jamie: well young man, you’re whistling past an oversubcribed graveyard. It’s full of dead hopes like your’s mate.

Garth is right, as normal.

Jamie, how much other debt do you have and does it bring you pleasure or pain?

Are you one of those 160 percenters, you know the average Canuck who owes a buck 60 for every buck of revenue?

MEANWHILE…

CMHC imploding? Why not? But it’ll be bailed out, by us, because it’ll have to be. The federal Tories needed to do something post the 2008 GFC. I wonder what a Liberal or, horror of horrors, an NDP federal administration would have done?

Talk about devils and long spoons!

What kind of choice does a small couintry living next to a financially cancerous US behemoth gonna do?

Pray?

That’s what it’s startin’ to look like now, pilgrim…

#157 Onthesidelines on 07.19.13 at 12:22 pm

#132broadway skytrain on 07.19.13 at 10:34 am
when i put my semi crappy, east side, bsmt apt up for 1100 i got a list of ppl as long as your arm wanting to rent”

You’re either full of crap or you’re not checking for needle marks on your potential renters.

While in Van for 10 months a year ago or so, we rented a very nicely restored 6th floor 1B overlooking English Bay for 1150/M in a very well run building. Why would anyone line up for a basement apartment in the east end for 50 bucks less?

#158 craig on 07.19.13 at 12:29 pm

Garth,

Why is it, when someone posts something that doesn’t support your line of thinking, your rebuttal always consists of a personal attack and name calling?

My skin is clearly thicker than yours. — Garth

#159 Spiltbongwater on 07.19.13 at 12:30 pm

Detroit is the future of the USA. Keep letting big government run the show and this is what happens.

I think is the perfect place to legalize weed, and see how it plays out on their economy.

#160 Nemesis on 07.19.13 at 12:41 pm

#150 Addendum

“It’s not ScienceFiction.”

http://youtu.be/TZMl-eYiHmg

#161 langley guy on 07.19.13 at 12:49 pm

Not sure what Jamie is smoking but I live in Langley too. I saw the writing on the wall and sold our home 4 years ago, we only broke even. However, the rest of my neighbours weren’t so lucky and they either took haircuts or are still waiting for the market to turn around.

#162 Bottoms_Up on 07.19.13 at 1:25 pm

Detroit is bankrupt to the tune of $20 billion.

Exxon mobil earns (net) $45 billion every year. And that is just one company. Factor in the banks, insurance companies etc., appl holding it’s billions offshore to avoid taxes, GE avoiding taxes, and you begin to see how filthy rich these companies are. It’s sickening that they are bringing down (by avoiding paying their fair share) the very societies in which they were created.

#163 Old Man on 07.19.13 at 1:32 pm

I had a friend years ago who threw in the towel with a buddy, and they both had top jobs with a leading newspaper organization. They went to Boston and bought a 44 foot sailboat, and headed for Florida which they parked in Lauderdale at a marina to party. They had a permanent home on the cheap, and made big money on the side with extensive charters. There are options in life by thinking out of the box.

#164 Penny Henny on 07.19.13 at 1:49 pm

You may be Italian, but this stereotype is offensive. No more will be published. — Garth
————————————–
That was offensive??????
Huh?
I can picture in my mind many people in my life (growing up in Toronto) who would have said it exactly the same.
Political correctness= an experiment of the machine to measure obedience.
Penny Henny

There is nothing ‘politically correct’ about disliking ethnic stereotypes. Promoting them on this blog is inappropriate and juvenile. — Garth

#165 Donald Trump on 07.19.13 at 1:53 pm

Detroit will simply be history repeating itself like Weimar Republic.

Gov’t is programmed for failure and surrender.

The Gov’t is forced/co-opted to fire sale public assets to the multinationals. This sets up quasi police state.

Are you on drugs? This is a massively responsible act by government. — Garth

#166 Donald Trump on 07.19.13 at 1:54 pm

Elizabeth Warren and Ben Bernanke Q & A – July 18, 2013

http://www.youtube.com/watch?v=UjiFkUPb2WA

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

Old Helicopter Ben still can’t answer a straight question.

#167 Penny Henny on 07.19.13 at 1:59 pm

Garth,

Why is it, when someone posts something that doesn’t support your line of thinking, your rebuttal always consists of a personal attack and name calling?

My skin is clearly thicker than yours. — Garth
———————————————–

To Craig,
and when he’s called out on it, he just won’t post it.

You are most welcome to go and find another blog to dislike. — Garth

#168 Old Man on 07.19.13 at 2:06 pm

The real estate brokers who went bust in the past can end up anywhere. One guy came to me for some seed money, and bought a food trailer that was parked on hwy. #48 selling hamburgers, fries, and pop with a classy picnic table for customers to sit down. He paid me back, as him and the wife were headed to Florida.

They rented a house trailer in Sarasota, and started a flea market business somewhere getting locker merchandise like you see done on tv. Then he went bigtime for 6 weeks with an idea that covered the greater Tampa area until the USA government kicked his butt back to Canada.

He had tractor trailers from Canada making runs all week long for about 6 weeks with merchandise selling in dozens of areas for $25.00 each and the crowds were buying. I have no idea how he pulled this off, but was selling real live Christmas trees.

#169 Donald Trump on 07.19.13 at 2:15 pm

Are you on drugs? This is a massively responsible act by government. — Garth

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

Over to you Garth…what happens next in Detroit ?

Going bankrupt was the last resort, correct ?
Gov’ts are running out of tricks, even a stuffed and mounted Golden Goose is no longer working.

Bankruptcy means officials of today have faced up to bad decisions by officials of the past. It is a positive, cleansing action and will do much to restore a great city. There is no way any organization with 10,000 employees can pay full compensation to 20,000 retirees. Everyone with a public sector pension plan in North American is on notice, and rightly so. — Garth

#170 Smoking Man on 07.19.13 at 2:20 pm

I’m here ying yang…. Sort of.

2:30 pm still hung over……

Last night was nuts…….

#171 not 1st on 07.19.13 at 2:33 pm

Now if only some brave politician would tell the rest of the nation the truth about the deficit, debt and unfunded liabilities. That is there is no growth scenario on earth that will ever fund that debt and programs as they are. The U.S. is going to be at about 2.0-2.5% GDP for the foreseeable future.

4 choices, all bad;

1. Restructure the debt and liabilities (i.e. get less)
2. Raise taxes (i.e. pay more)
3. Devalue the dollar
4. Default

Everyone results in pain that the average person has never seen.

Last option, world debt jubilee, new currency.

5. Growth. The one that will actually occur. — Garth

#172 Rational Optimist on 07.19.13 at 2:44 pm

141 Ralph Cramdown on 07.19.13 at 11:07 am

You’re spot on. Real estate is the only leveraged investment that the average person can make right now. I’ve even heard real estate fanatics who approach especially close to self-awareness use that as an argument in FAVOUR of it.

What you describe in your example is of course a failure to understand the effects of leverage. If something makes good sense as a cash investment, returns can be magnified. If something does not make any sense as a cash investment, however, and someone levers it by 20 times because he has no cash…uhhh…

Sure enough, real estate has been bid up by greedy nincompoops who want to use other people’s money to “make money,” (in your example a measly 2% annual increase- but a “guaranteed” one!) and don’t understand risk.

#173 :):( Ying Yang on 07.19.13 at 2:48 pm

#171 Smoking Man on 07.19.13 at 2:20 pm
I’m here ying yang…. Sort of.
2:30 pm still hung over……
Last night was nuts…….

Thought it strange there was no words of wisdom from the alpha drinker smoker. Most of my (asian) friends drink lite beer and wine, I am an idiot, I drink Wild Turkey on the rocks with soda. What can I say I am Asian we like to smoke, drink and gamble. The drinking goes straight to our heads, (large hangovers), the smoking kills us eventually, and the gambling is in our blood. If you ever been to Hong Kong or China then you will know what we are like. Well I hope your nuts are not hanging over. Had your Dyslexic web address posted last time, but disappeared?

#174 Ralph Cramdown on 07.19.13 at 2:55 pm

“what happens next in Detroit ?”

You have to understand the barbershop. It’s a traditional center of social life in American black communities, and for Detroit, here and now, it’s no different. Haircuts for everybody!

#175 Holy Crap Where's The Tylenol on 07.19.13 at 2:59 pm

#170 Donald Trump on 07.19.13 at 2:15 pm
Are you on drugs? This is a massively responsible act by government. — Garth

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

Over to you Garth…what happens next in Detroit ?

Going bankrupt was the last resort, correct ?
Gov’ts are running out of tricks, even a stuffed and mounted Golden Goose is no longer working.

Bankruptcy means officials of today have faced up to bad decisions by officials of the past. It is a positive, cleansing action and will do much to restore a great city. There is no way any organization with 10,000 employees can pay full compensation to 20,000 retirees. Everyone with a public sector pension plan in North American is on notice, and rightly so. — Garth

If I may add this little note! Please note City of Toronto Employees! Your time is coming too. You can not drink from the well if the well is dry. The city does not have enough revenue to keep paying employees ridiculous wages for menial tasks let alone managerial positions. If you are worth your money and generate revenue then no problem paying high wages to you. Starting with the top lets see……Holy Crap!!!!!

http://www.fin.gov.on.ca/en/publications/salarydisclosure/2012/munic12e.html

#176 Linda Pearson on 07.19.13 at 3:03 pm

While the subject is stereotypes, I’m not too fussy about:

“Typical, stupid Canadian comment…”

Sadly Canadians feel inherently superior to Americans. That prejudice is on display here daily. — Garth

#177 broadway skytrain on 07.19.13 at 3:03 pm

EAST VAN teardown makes new high water mark – 988k bucks (ask) for a building lot – wow – over in ‘ghetto’ east van!!!

when i walked by these places yesterday i said to my gal they should be 850 but prob will ask 900plus since they are teardowns

#178 Godth on 07.19.13 at 3:07 pm

5. Growth. The one that will actually occur. — Garth

sounds bubblicious. unleash the debt creator! …oh wait, let’s call it leverage! hmmm, no, ok re-hypothecate this http://www.youtube.com/watch?v=bQoNWw0G2AY

#179 craig on 07.19.13 at 3:09 pm

“It is a positive, cleansing action and will do much to restore a great city. There is no way any organization with 10,000 employees can pay full compensation to 20,000 retirees. ”

It has nothing to do with employees and all to do with a tax base income (revenue). There is nothing there, everyone moved out and have been exiting for years.

Which means no tax income from companies, small businesses etc. to pay the bills.

Simple as that, spend more then you make and you get yourself in trouble. Does that not sound familiar?

Except now all the pensioners are screwed, the remaining police, firefighters, etc will be downgraded in pay or simply let go and their benefits eliminated.

Police stations and fire stations will close….

So $20 Billion goes poof and this is a positive?

Who in their right mind would establish a new business there?

Detroit has 700,000 citizens and a manufacturing base bigger than that of Toronto. Your false statements are tedious. — Garth

#180 Jamie's Opposite on 07.19.13 at 3:27 pm

Garth, your sound reasoning on Detroit is very refreshing amid all the doom and gloom I am reading. As far as I can see the haters are mislead and listen like my better half; they hear what they wanna hear, not what is being said. I haven’t been reading for ’7 years’ but, your advice has helped me be secure, liquid balanced and diversified. I think thats the point of financial planning, isn’t it? Not making windfalls, making steady prosperous futures.
Keep your skin thick, abs epic, amazonians adoring, and blog pathetic!
PS: good move ditching the GF’s on the banner. I like the idea of a classic 80′s fantasy movie cover. Garth with his amazonians and blawg dawgs rushing an underwater house brandishing paper assets! Crimson Permanent Assurance comes to mind…
Too much for a respectable and modest fellow?

Thanks for the Blog, Humour and advice!

#181 Steven on 07.19.13 at 3:30 pm

This is why real estate prices are on thin ice.
If the market expects these people to pay more than 30 to 60 grand for a house and lot the real estate cultists are dreaming in technicolor.

THE “MCDONALD’S BUDGET”: LAUGHABLY UNREALISTIC BUT ALSO DEEPLY TRAGIC

http://www.silverdoctors.com/the-mcdonalds-budget-laughably-unrealistic-but-also-deeply-tragic/#more-29359

#182 frank le skank on 07.19.13 at 3:46 pm

I never feel the need to defend our hosts however I would like to show my appreciation for all his hard work and information sharing by clarifying the inaccurate statements below.

#159 craig on 07.19.13 at 12:29 pm
Why is it, when someone posts something that doesn’t support your line of thinking, your rebuttal always consists of a personal attack and name calling?
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His rebuttals are targeted to the more inaccurate, misinformed, annoying and borderline inappropriate comments. I find the name calling usually occurs after the posters commits multiple offenses and is well deserved.

#168 Penny Henny on 07.19.13 at 1:59 pm
To Craig,
and when he’s called out on it, he just won’t post it.
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I’m not sure if you realize it but this is posted.

#183 Spiltbongwater on 07.19.13 at 3:49 pm

Sadly Canadians feel inherently superior to Americans. That prejudice is on display here daily. — Garth

And in America, they feel superior to Canadians. You know how much LOL Canada, and Meanwhile in Canada memes are made on other internet forumns in the deep web? Lots

#184 craig on 07.19.13 at 4:08 pm

Detroit has 700,000 citizens and a manufacturing base bigger than that of Toronto. Your false statements are tedious. — Garth

Show me the money oh wise one

Toronto is a white collar city, not blue and probably generates 100 times more than Detroit, so how does manufacturing fit the bankruptcy discussion.

#185 jess on 07.19.13 at 4:15 pm

50 COW MAN

But ultimately the hammer fell, and fell hard, following a massive, multi-year investigation by the FBI and its partners called Five Aces (a reference to cheating by stacking the deck) that came to light in October 2011 after the first arrests. A total of 15 federal employees and contractors—plus one company, Nova Datacom—have since pled guilty. That includes the mastermind of the conspiracy, Kerry Khan, who just last week was sentenced to nearly 20 years in prison.

Khan, while serving as a program manager and contracting officer’s technical representative for the U.S. Army Corps of Engineers, cooked up the bribery scheme in 2006 with his co-worker Michael Alexander to take their own piece of the contracting pie.

The case evolved into a complicated conspiracy, involving six different companies and several shady practices. The FBI began its investigation in the summer of 2009, when we received a tip indicating that an area business was submitting phony references and evaluations to boost its chances of getting government contracts. The company, we discovered, also had a disabled veteran falsely posing as its owner—which gave it an advantage under federal contracting laws.
http://www.fbi.gov/news/stories/2013/july/a-30-million-case-of-corruption/a-30-million-case-of-corruption

#186 Smoking Man on 07.19.13 at 4:17 pm

Ying Yang

Been to Hong Kong, China, many times. As well as Japan, Singapore, Thailand, Malaysia, Japan, , Phillipines, Indonésia.

Had a kick ass import export company back in 90s

3 big mentors, than smokiffied me. The best was Mr Y. C. Lee from Hong Kong.

Only white man that could get tones of business back then. You know the clubs where you get a room and a mike :)

Anyway don’t be hard on garth, if I have something of financial interest charts etc, weather I agree with him or not, he leaves the link,

When I have pics of 1/2 naked ladies, Links vanish.

He has a code….

#187 The Prophet Elijah on 07.19.13 at 4:18 pm

Bankruptcy means officials of today have faced up to bad decisions by officials of the past. It is a positive, cleansing action and will do much to restore a great city. There is no way any organization with 10,000 employees can pay full compensation to 20,000 retirees. Everyone with a public sector pension plan in North American is on notice, and rightly so. — Garth
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This is why capital is moving away from the public sector to private. Defined Contribution plans are the wave of the future.
(backed by gold….JK Garth!)

#188 Apartment fan on 07.19.13 at 4:41 pm

Jamie Jamie you poor thing. Not sure what you’ve been drinking or smoking or sniffing out there in Langley but I fear that in a little while you will wish you had chosen Garth kool-aid. You really should be drinking Garth kool-aid sucka

#189 brainsail on 07.19.13 at 4:43 pm

For all of the people that wrapped themselves around a telephone pole over the Detroit thing.

“A Michigan Circuit Court Judge ruled Friday that Detroit’s bankruptcy filing is unconstitutional and ordered the case be withdrawn from federal bankruptcy court.”

http://money.cnn.com/2013/07/19/news/economy/detroit-bankruptcy-order/index.html

#190 Unpoovvio on 07.19.13 at 4:43 pm

Just found this “chart”, it seems to be a bit of tea leaf reading (either a generalization of global R.E. or more US-centric) but he shows:
(i) downleg from Feb 2007 to May 2011
(ii) halfway recovery upleg from May 2011 to Sep 2015
(iii) contraction from Oct 2015 to 2033

http://i2.wp.com/armstrongeconomics.com/wp-content/uploads/2012/08/realestate-cycle.jpg?resize=584%2C344

#191 Doug in London on 07.19.13 at 4:46 pm

Garth said: There is no way any organization with 10,000 employees can pay full compensation to 20,000 retirees. Everyone with a public sector pension plan in North American is on notice, and rightly so.
————————————————
One lesson we can learn here is you should always have a backup plan. For the same reason a parachutist has a reserve parachute as well as a main one, or a hospital has a diesel generator for power failures, it’s wise to have a backup retirement plan in the form of some savings. Also, don’t put all your net worth in one asset like your house. Now let me think, where have we heard or read that idea before?

#192 The real Kip on 07.19.13 at 4:50 pm

“Detroit has 700,000 citizens and a manufacturing base bigger than that of Toronto. Your false statements are tedious. — Garth”

Please, why don’t you put up relavent statistics. The current 710,000 (2010) was 1,850,000 in the 50′s. Detroiters are voting with their feet.

http://en.m.wikipedia.org/wiki/Decline_of_Detroit

My number is accurate. — Garth

#193 Unpoovvio on 07.19.13 at 5:01 pm

The link above (“real estate cycle”) is only a projection/prediction of turning points, and not the level of increase or decline to scale.

#194 craig on 07.19.13 at 5:18 pm

March 23, 2011 at 2:30 PM EDT

Detroit’s Population Decline: 1 Person Departed Every 22 Minutes between 2000 and 2010.

That’s a lot of take out orders.

http://www.pbs.org/newshour/rundown/2011/03/-sarah-hulett-of-michigan.html

You are tedious. Bye. — Garth

#195 Ralph Cramdown on 07.19.13 at 5:41 pm

#185 craig — “Toronto is a white collar city, not blue and probably generates 100 times more than Detroit [...]“

Rather than investing ten seconds in personal enlightenment by punching first “toronto gdp” and then “detroit gdp” into google, please feel free to continue to publicly bloviate.

Just because the erstwhile Arsenal of Democracy is diminished doesn’t mean she’s small.

#196 Evangeline on 07.19.13 at 6:04 pm

I don’t know how bankruptcy legally works, but the judge rejected the motion or whatever it’s called. She said it violated state law.

#197 Evangeline on 07.19.13 at 6:08 pm

I don’t understand the concept of 10,000 having to support 20,000. Didn’t those 20,000 contribute over a long period of time, expecting the monies would be properly invested? What happened?

#198 bill on 07.19.13 at 6:30 pm

study estimated that Detroit’s urban area had a Gross Domestic Product of $203 billion. …… Bureau of Labor Statistics (December 2012)
Detroit United States America, Northern 197.8[5] 184.3 253 198.6[6]

and toronto:
Toronto Canada America, Northern 260.6 253 270.0
hmmmm 100X did you say?
kind of makes you wonder what Detroit might be producing as the us economy picks up steam…

#199 Iconoclast on 07.19.13 at 6:30 pm

Ralph Cramdown,

> “Watch for Bernanke to start buying muni bonds to bail out the banks and pension funds.”

> Nor that.

We’ll see what they come up with.

> “This is exactly what he’s been doing with MBS holders to the tune of 45 Billion per month.”

> How exactly is buying agency MBS — which are already backed by the full faith and credit of the US government, just like the dollars he’s buying them with, bailing anyone out?

Fannie/Freddie, legally, weren’t supposed to have been backed like Ginnie Mae. But I guess that didn’t really matter in the end; they weren’t allowed to fail. Now the Fed owns all their crappy debt, they’re whole again.

But I do have to say I don’t really understand the money flow.
I just assume anymore that somebody is getting blown under the table.

#200 AisA on 07.20.13 at 7:55 am

The time to buy real estate will be when everyone you know has a story about how much money they lost in real estate. Simple.

I signed a lease yesterday on a one bed, top floor apartment in a 6-plex. New kitchen, new bath (new everything from floor tiles to exhaust fans), washer dryer hookups, new windows, recessed led lighting throughout. 650$ a month. It faces a park, has a shared backyard of about 4000sqft. It’s a 10 minute walk to work, supermarket(s!) pharmacies and restaurants.

There is literally one traffic light between my new address and where I work!

I feel good. James Brown good.

#201 a prairie dawg on 07.21.13 at 1:17 am

#190 brainsail

“A Michigan Circuit Court Judge ruled Friday that Detroit’s bankruptcy filing is unconstitutional and ordered the case be withdrawn from federal bankruptcy court.”
- — -
Also read it was meaningless because one they filed in Federal bankruptcy court, state law doesn’t have jurisdiction.