Eau du mal

SEXY modified

Every day I hear from people who want to get into condo ownership but they just don’t have the money for the typical 15-20% deposit that is required.

Let’s face it, if you are just starting out, scraping together $30-40K or more is hard. It takes a long time!

And the problem is that every year you save condo prices just keep getting higher. Each passing year you are missing out on more and more equity and your net worth is barely moving.

If you are in this situation, or if you are the parent of a child in this situation, I have some great news for you today:

And so it begins…

Selling into the teeth of a slow economy, with condos sprouting around you like zits on a sophomore, it’s getting harder and harder to be a unit-flogger. Anyone who can run a calculator knows that 600-foot cubbyholes selling for $300,000 and renting for $1,400, with $600 a month in fees and taxes, are money pits. The only possible reason for buying one – especially as yet unbuilt – would be for capital appreciation between the day of the deposit and the orgiastic moment of closing.

And this brings us to Eau du Soleil. No, no, this is not another post on those Quebecois separatists (who now insist they will leave Canada but keep the loonie), but the real epitome of Francophone culture, conveniently located on the Toronto waterfront. There two towers, 63 and 49 stories, will arc upward in a joie-de-vivre kinda way, making everyone grinding past on the Gardiner Expressway feel like they’re piloting their Deux Chevaux to a tryst with a coquette named Gisele.

So, here’s the deal.

Buy a $300,000 box with just $2,500 down, and then cough up $500 a month for 47 months, which in French is known as almost four years. Then, in 2018 (when the place is actually built, maybe) another bunch of money to make up 15% of the purchase price. The cost is $26,000 (up to closing), and the developer will give you gifts – a $1,500 transit pass, a $2,500 Caribbean holiday, free parking, free locker and free upgrades.

Smell the desperation yet? It gets worse. Cue the car.

“A lot of young people put buying or leasing a new car as a top priority as soon as they start to earn some money,” says the Eau du Soleil agent Andrew la Fleur (seriously), a man with beaucoup of that certain je-ne-sais-quoi.  “But a new car is actually a terrible investment. Let’s compare buying a condo at Eau Du Soleil with leasing a new car (for this example I just used a round figure of $300k for the condo purchase price).”

Yes, and here is the comparison, ‘proving’ that buying a condo is better than puberty.

CAR-CONDO modified

Now, putting money into a depreciating hunk of metal that will inevitably end up being hip replacements for Boomers is, yes, a horrible investment decision. Cars are tools. They help you get to a job, or cure the mental illness associated with living in six hundred square feet overlooking an expressway.

But the bigger issue here is publishing marketing materials which say, categorically, that a $300,000 condo bought on the installment plan will be worth $381,000 on the day you actually own it. Counting on 3% annual appreciation in the price of a condo in a mega-project like this, with tens of thousands of other units being added every year into a market as bloated as a grain-fed foie gras duck, is incroyable.

But here’s just another example of why real estate is the wild west of investing, where marketers, floggers, agents and developers can say what they wish, and promise unrealistic returns, unregulated. (Try that with a mutual fund or an ETF.) And who are prime targets for this kind of fiscal fantasy? Yep, those real estate-horny Boomer parents.

EAU modified

Who is this perfect for, Andrew asks?

“Parents who want to help their kids get into home ownership: Many parents with kids in the 16-30 age bracket are paying the initial $2500 then the kid pays the $500/month.

“It’s a great way to teach your kids about saving, investing, the importance of home ownership, and really it’s a forced savings plan where you make sure that if your child does have a job they are putting a few hundred away every month into an investment that will grow and that is a place they can actually live in and enjoy in a 4 years’ time. Or, if their life situation changes, they rent it out as a first investment property.”

And guess what they learn about then?

169 comments ↓

#1 TurnerNation on 03.13.14 at 7:44 pm

Kaputs.

#2 Asiakid on 03.13.14 at 7:49 pm

Woah. First? Maybe

#3 First on 03.13.14 at 7:49 pm

FIRST!!!!

#4 Barack Obama on 03.13.14 at 7:49 pm

Well said Garth and thanks for poking holes in the marketing BS of the developer…No one says it better than you!

#5 waiting on 03.13.14 at 7:50 pm

thanks to my mid-70′s high school french, I understood every word of your post.

Tres magnifique!

#6 Steve on 03.13.14 at 7:50 pm

That whole scenario gives me the chills. Also, I finalized the sale of our house today. I’ll never play at that table again. I’m more a Rock Paper Scissors kind of guy. No high stakes gambling for me. I’m out

#7 Jimmy on 03.13.14 at 7:51 pm

You lost me at Eau Du Mal.
Ewe You Smell ? Ewe the mall?

#8 Halifax Observer on 03.13.14 at 7:55 pm

Halifax continues to implode.

http://www.halifaxrealestateblog.net/

94 weeks of inventory…….

#9 Mark on 03.13.14 at 8:02 pm

I think I’m going to vomit.

#10 94 on 03.13.14 at 8:08 pm

…So its going to be one giant party house filled with just out of University kids holding piles of school debt??

#11 HD on 03.13.14 at 8:15 pm

@ #7 Jimmy on 03.13.14 at 7:51 pm

You lost me at Eau Du Mal.
Ewe You Smell ? Ewe the mall?

———————————————

Water of evil

Best,

HD

#12 DaleFromCalgary on 03.13.14 at 8:19 pm

Yesterday I was driving south on 37 Street SW adjacent to the Tsuu T’ina Reserve on the southwestern boundary of Cowtown, an area I don’t normally travel. There was a giant billboard of a good-looking blonde real estate agent of Romanian origin, urging motorists to call her if they wanted to get inside something gorgeous (her phrase).

The sad part is that she doesn’t have to debase herself like this. Any house peddler (I understand from this blog we’re not supposed to use the capital-R word lest we be sued by CREB) can move product in Calgary because of refugees from the flood and those fresh off the boat from Ontario. Judgement day has been postponed in Cowtown and condo projects don’t have to worry about incentives a la Toronto.

#13 amazon girl on 03.13.14 at 8:29 pm

Garth ,All the best wishes on this special day.
To a remarkable person ,Happy Birthday.
Je T’aime. Je me souviens

#14 Mike on 03.13.14 at 8:33 pm

I’ve never considered it before (and neither have most people), but it is a shame that the real estate industry has no regulation. If people sold mutual funds promising 200% returns, they would be slaughtered. The difference here is that a home (or condo in this case) is probably the biggest purchase a person will make, and there is little chance that the “investor” can afford the magnified losses that can accompany real estate. This situation is magnified by the fact that people who buy properties and lose money are losing money they don’t have; at least a mutual fund requires funds that the individual can afford to lose.

#15 Ken R on 03.13.14 at 8:34 pm

This whole housing craze just gets better and better for entertainment purposes. Day after day, yet another expert gets media coverage with an upbeat prediction. My friends and neighbours, however, can’t sell, can’t move for new work and can’t afford the upkeep. I must live on a special street I guess.

#16 Vangrrl on 03.13.14 at 8:38 pm

Geezus. An all new low. This country is pathetic.

#17 MagnumMtl on 03.13.14 at 8:39 pm

J’en reviens pas!

#18 Trojan House on 03.13.14 at 8:40 pm

#3 – First

You are third.

#19 hohoho on 03.13.14 at 8:40 pm

RE: Avery Shenfeld piece on Mark Carney

I submit Avery is being disingenuous with this piece … Mark has one lever to manage the economy, which has a million degrees of freedom. Can Avery do any better in Mark’s shoes? I think not.

Who decided to produce more condos and less factories? I submit it is the condo buyers and builders, the banks who fund them, and of course, conservative policy in terms of CMHC rules etc that encourage it all.

When the SHTF, it is all on ministers Flaherty and Harper, not Carney.

#20 Smoking Man on 03.13.14 at 8:42 pm

It’s your birthday garth….?

Ahhh happy birthday…..

Do we get to look forward to post chirps not making sense after a few.

Downing a micky of JD in your honor.

Have a good one old boy.

#21 TheCatFoodLady on 03.13.14 at 8:43 pm

Dear Gawd…

If my 27 & 24 year old ‘kids’ need Mommie Dearest to teach them about investing/savings at this age, to coerce them, through clenched teeth into a ‘forced savings plan’, then revoke my Parents’ Licence.

I haven’t checked the sales site, (I will), but if Mommie & Daddy are ponying up the initial $2.5K & depending on their little darlings to actually have a job so they can pay the $500/month, how are the sales contracts written up; who ponies up the monthly ransom is Junior or Juniorette loses their job? Who’s into ‘forced’ savings then?

I’d far rather my brats do something that suits THEIR agendas with the money – no matter if they invest it or go on an annual European piss up. At their ages frankly, an annual bout of minor debauchery punctuated by a tiny bit of cultural horizon expansion makes far more sense than getting tied down to a granite ball & chain.

#22 Mark on 03.13.14 at 8:45 pm

None of this shammery would be necessary if the market was actually rising. Which calls the Realtors claims of a rising housing market into serious question. Most non-biased housing market observers have been watching things slip downwards since the infamous F announcement last year on “identical property” prices.

#23 Ralph Cramdown on 03.13.14 at 8:45 pm

What you get initially: A new car OR nothing? Traditionally, if you make the wrong choice in the Monty Hall Problem, you at least get a goat!

#24 Eau de Rambo on 03.13.14 at 8:50 pm

Markets down bigtime….hope I only lose 7% in my balanced portfolio instead of making 7%.

About time we had a decent correction. — Garth

#25 Canadian Real Estate Update on 03.13.14 at 8:51 pm

“I have no particular regrets. The (2006 US) housing bubble is not a reflection of what we did, as it is a global phenomenon.” – Alan Greenspan

Canada’s current housing bubble is much larger than the 2006 US housing bubble.

A housing bubble is formed when a housing market experiences relatively rapid and large price gains while incomes and rents experience much smaller gains over the same period of time. In other words, house prices become detached from underlying fundamentals.

Extreme overvaluation defines a housing bubble (examples of national housing bubbles).

A housing market is overvalued when the price-to-income ratio (or price-to-rent ratio) is substantially higher than the long term average of this ratio.

The Economist rates Canada’s housing market as the most overvalued of the 23 countries it tracks. House prices in Canada are 34% overvalued compared to incomes and 78% overvalued compared to rental prices.

Let’s compare Canada’s housing bubble to the 2006 US housing bubble.

* Degree of overvaluation:

Overall, Canada’s housing market is more overvalued than the US at its peak, the Economist says (2011)

Canada:
Compared to incomes: 34% overvalued
Compared to rents: 78% overvalued

* Increase in price-to-income ratio (first chart):

Canada: + 56% (2000 to late 2011)
US: + 24% (2000 to peak (2006))

* Increase in price-to-rent ratio (second chart):

Canada: + 73% (2000 to late 2011)
US: + 35% (2000 to peak)

* House prices have increased more in Canada than they had in the US (first chart):

Canada: + 124% (2000 to present)
US: + 53% (2000 to peak)

Other signs of a housing bubble include:

* A dramatic increase in the household debt-to-income ratio (third chart):

Canada: + 53% (2000 to present)
US: + 41% (2000 to peak)

* A dramatic increase in real estate investment as percent of GDP (second chart):

Canada: + 63% (2000 to 2012)
US: + 41% (2000 to peak)

* A dramatic increase in residential construction:

1) Increase in residential construction as percent of GDP (second chart):

Canada: + 56% (2000 to present)
US: + 38% (2000 to peak)

2) Increase in percent of labour force employed in construction (first chart):

Canada: + 43% (2000 to present)
US: + 10% (2000 to peak)

* Canada’s home ownership rate is at a record level and higher than the rate in the US at peak.

#26 Freedom First on 03.13.14 at 8:53 pm

Andrew La Fleur, any relation to Brad La Lamb?

#27 AndrewAB on 03.13.14 at 8:54 pm

Big news today!

Big Bad Brad Lamb has landed in Alberta!
FirstPlace Bob must be off his skis over this!
Brace yourselves Alberta…

#28 Old Man on 03.13.14 at 8:57 pm

I have been busy doing this research project, as was afraid tomorrow would be Friday the 13th. All is well as we have missed this dreaded horror by one day, so the 14th must have significance on Friday for the Gods. I beg the question that needs an answer; is the 14th a cardinal ordinal or roman number? I will announce my conclusion to this mystery after midnight as must discuss this all with my muse.

#29 montellino on 03.13.14 at 9:02 pm

Happy Birthday Garth!

#30 Son of Ponzi on 03.13.14 at 9:04 pm

I think we are entering the Mark Twain zone where “Return of Investment” is the key word.

#31 Son of Ponzi on 03.13.14 at 9:09 pm

Ying/Yang.
The German code monkeys are the best.
But only hire the ones wearing Lederhosens.
And keep the Jaegermeister shots coming.

#32 jan on 03.13.14 at 9:09 pm

What’s the deal with all these franchy words today.
Are you making a case for Quebec to stay in Canada ?

#33 Spaccone on 03.13.14 at 9:14 pm

#10 94 on 03.13.14 at 8:08 pm
…So its going to be one giant party house filled with just out of University kids holding piles of school debt??

I would bet on them being sleepy condo buildings where people hole up at the end of the day just like the rest of them.

#34 Daisy Mae on 03.13.14 at 9:18 pm

GLOBAL TV: “Thousands of BC (leaky) condos could be ‘under wraps’ again….

#35 Nemesis on 03.13.14 at 9:21 pm

Que puis-je dire? Je sais!… Le petit moineau! …

http://youtu.be/oromrP0iu3E

…”Come along, Milord!
You look like a kid!
Relax, Milord,
Come into my kingdom:
I heal remorse,
I sing romance,
I sing about milords,
who are unlucky!
Look at me, Milord,
You’ve never seen me before…
…But…You’re crying, Milord?
That…I would never have believed it!…”…

NoteToRalph: Just between the two of us… I would vastly prefer a nuclear future brought to us by MerylStreep, Cher & KurtRussell to the alternative PeriodMarqueeAttraction starring JaneFonda, JackLemmon & MichaelDouglas… but I digress, personally – and loathe though I am to admit it – goats, much like the Quebecois, have always held a special place in my heart: http://youtu.be/4ZFuh3DVsnY ]

#36 Drill Baby Drill on 03.13.14 at 9:21 pm

Dear Pathetic Blog : here in Calgary on the surface it looks like it is booming but alas it is not. The best leading indicator of how Cowtown will be one year out is the number of wellsites and drilling planned. I work in the O&G engineering biz and we have been laying off steadily for over a year now and just did a round of layoffs last week. I am in charge of hiring for my division and I can tell you that 85% of the new eng. graduates resumes need to have ESL as an upgrade in this market before they even have a chance of being considered. Many out of the Concordia Masters program. C’est la verite et la realite. (truth and reality)

#37 Roy on 03.13.14 at 9:23 pm

“It’s a great way to teach your kids about saving”

When realty marketers are giving out advice on how to raise people’s “kids”, you know society has got serious problems.

“the kid pays the $500/month”

“if your child does have a job”

Who uses this kind of language. Is little Johnny 16 – 30 years old still a little boy sucking his thumb? Obviously aimed at the total helicopter parent. Probably plenty of these, unfortunately, who still see their grown adults as children that need help.

#38 Suede on 03.13.14 at 9:28 pm

Happy Birthday GT,

To balanced portfolios and unbalanced masses!

#39 Cici on 03.13.14 at 9:29 pm

“Cars…help you get to a job, or cure the mental illness associated with living in six hundred square feet overlooking an expressway.

Beautiful, Garth. Just beautiful. Love the rest of today’s wordart too ;-)

#40 2CntsCdn on 03.13.14 at 9:31 pm

This whole thing is such a perfect storm of greed, stupidity and horniness…… it will continue to play out ….. so many different parties want it all to come true … they will all dive in.

When (not if) the sh!t hits the fan (knowing todays mentality) …. i want to see all the victims line up and try to sue anyone within 100 miles and claim they were duped. So sad for Canada, for the human race. Even though we have seen and heard it happen right next door (US of A)….. we go down the same road, do the same stupid sh!t and walk into the same trap. So many idiots, so stupid.

#41 FATHER on 03.13.14 at 9:31 pm

GARTH’S birthday is tomorrow march 14, have a wonderful b ‘day tomorrow GARTH

#42 TheCatFoodLady on 03.13.14 at 9:34 pm

Mon Dieu! It is justement, the alpha dog’s anniversaire. Not only that – he officially became a wrinkley!

Happy birthday & may you have a glorious weekend, hopefully with less pain & more mobility all the time.

#43 LIS on 03.13.14 at 9:40 pm

Happy Birthday, Garth!

#44 valleyrenter on 03.13.14 at 9:40 pm

Out here the local Children’s Hospital in Vancouver is having their lottery. One of the prizes is “a condo worth $315,000 or $250,000 cash”. Does that mean even they know the condo is overvalued by about $65,000? Too funny.

#45 Cici on 03.13.14 at 9:42 pm

#12 DaleFromCalgary

Garth actually did a blog on that women about a year and a half or two ago. I believe she is an Ontario reject…I’m going to check that out for you…

#46 Old Man on 03.13.14 at 9:43 pm

You are all too smart, and spoiled my fun. Oh well, so HAPPY BIRTHDAY MR.TURNER.

#47 Oakville Owner on 03.13.14 at 9:44 pm

Markets down bigtime….hope I only lose 7% in my balanced portfolio instead of making 7%.

About time we had a decent correction. — Garth
Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

That is an understatement Garth! Hopefully it drops enough to get some of the cash in the portfolio to work!!

#48 Cici on 03.13.14 at 9:47 pm

#12 DaleFromCalgary

Diane Arvatescu…agent from Calgary, started the controversy just over a year ago with her “Let me take you home…it’s gorgeous inside” billboard.

http://www.greaterfool.ca/2013/02/07/cowgirls/

#49 Cici on 03.13.14 at 9:49 pm

Happy Birthday Garth!

And thanks for the reminder #13 amazon girl!

#50 sheane wallace on 03.13.14 at 9:51 pm

# 19 hohoho

Can Avery do any better in Mark’s shoes? I think not.
………………………………
I can.

#51 X on 03.13.14 at 9:52 pm

ROTFLMAO!

“It’s a great way to teach your kids about saving, investing…”

Yeah, right. By watching their parents do it…again, as they were originally living in the parents home, and obviously didn’t learn the first time by watching.

I showed the add to my father, but won’t post his response. There is no way Mr la Fleur can physically have his head up his own…..

These promotions, and RE, really needs to be regulated, a generation is going to retire cash poor partly because of the self interest of the RE industry feeding off of the financially illiterate. Or maybe that generate will not be able to retire at all….

#52 TheCatFoodLady on 03.13.14 at 9:54 pm

Yeah, I’m mouthier than usual tonight. I had a few thoughts about condos – one of which has already been stated by #44, valley renter. Every time I look at the ‘incentives’ offered by condo developers, I reason that the condo is significantly overvalued. A transit pass – gonna assume that’s fair value. The cruise? The developer is probably bulk buying those at discount. IF that’s the case, it tells me the cruise industry isn’t too healthy either right now; that or the condo are really overvalued. Parking & locker rental – that’s money right off the top for the developer.

Last point – we’re increasingly hearing about condos having major issues. Even buying a new condo, would a wise buyer, (is that an oxymoron in most markets?), not want to consider setting aside a hefty chunk of change monthly for special assessments that may arise in future? I don’t know the likelihood of that over the lifetime of a condo but it’s a factor I’d certainly feel obligated to consider before making the final decision.

#53 Snowboid on 03.13.14 at 9:57 pm

Bonne fête à l’avance, Professeur Turner!

#54 Carpicker on 03.13.14 at 9:59 pm

First..

#55 tf on 03.13.14 at 10:05 pm

Love the Greater Fool!

That marketing material is blatant symbolism for the male members of our society.

O, look glorious towers – sparkling in the sun. One tower, tall and thin – the second, shorter but thicker – two gleaming towers ready to be mounted. The base podiums anchoring the spears as they burst into the sky.

I think guys need a hobby.

#56 Julia on 03.13.14 at 10:06 pm

Very clever post tonight, Garth. Happy birthday!

#57 totalinvestor.com on 03.13.14 at 10:06 pm

Canadian Housing Bubble: Canadians come face to face with the paradox of golden real estate handcuffs and a younger less affluent generation.

#58 Smoking Man on 03.13.14 at 10:14 pm

#41 FATHER on 03.13.14 at 9:31 pmGARTH’S birthday is tomorrow march 14, have a wonderful b ‘day tomorrow GARTH
…….

What, tomorrow, and I’m being nice to the bastard today….. Damn amazon, sucked me in like a midget playing a tuba.

#59 quebec economist on 03.13.14 at 10:20 pm

So I am predicting a majority PQ gov. followed by bickering between Marois and Harper… I am considering playing this by converting all my cash to US to buy CDN at the record lows that will come with the referendum. Must see opportunities in the turmoil.

Cheers

#60 Chickenlittle on 03.13.14 at 10:21 pm

Happy Birthday, Garth!

Now you can get senior’s discounts! No more paying full price!

Enough of this. Off to buy Depends. — Garth

#61 LJ on 03.13.14 at 10:24 pm

Ok, let’s just assume that the condo will depreciate at 5%/year (ie. slow crash).

At that rate, when the poor sap who signed up (and paid $45,000) gets his condo, that is now worth roughly $232,000 (compounded depreciation), they will owe more than the condo is worth and have to cough up the difference ($23,000) and another down payment (5% or higher, plus CMHC) for getting the privilege from the bank to let him live in the place. The sap will also probably be dealing with much higher interest rates on whatever is left owing.

At least the guy who bought a car, has a car and no debt at that point.

#62 Obvious Truth on 03.13.14 at 10:25 pm

Post is a tour de force.

Some love for the people of Quebec. If we didn’t love you we wouldn’t poke fun.

And easy on the correction talk. Yen is holding as of right now. And we’re down on the year pour l’amour de Dieu.

#63 sheane wallace on 03.13.14 at 10:26 pm

What crash?
GDXJ is up 7 % in the last 2 days.

#64 Ontario's Left Coast on 03.13.14 at 10:39 pm

Yikes, I’m pretty sure I’d still go for the car!

#65 Aggregator on 03.13.14 at 10:44 pm

Looks like a great deal. Too bad they don't offer the same deal to U.A.E. investors.

Here Andrew, post this on your website under that table. Oh right, you can't post that part because it's all about selling obligations ("nothing") with guaranteed returns and flying unicorns. Got it.

The sad thing is, folks, these presale pumpers along with developers don't even know the origins of their own market, nor have they read any academic work on the risks involved with selling properties forward or how an expanding presale market creates an artificial wedge under resale prices, meaning, what happens in the presale market will directly affect resale prices, or as they say, the tail wagging the dog, whereas the tail is presales and the dog is resales. Even worse, selling with incentives creates asymmetric information and distorts value on the buyers end, giving a false impression that a deal holds less risk.

I don't know what the catalyst will be to tip this market over, but when it eventually turns, as all markets do, and those global condo carry trades unwind, the systemic spillover will be unprecedented.

#66 Smoking Man on 03.13.14 at 10:51 pm

#140 Smoking Man on 03.13.14 at 4:36 pm

MH 370 OR 3x7xO=21
Boeing 777 7+7+7 =21

Ucc says play black jack this weekend.

………..

Yesterday renters revenge chirped me said that
7x3x0 does not equal 21

He was wrong, can anyone spot the obvious?

Haha, the herd….

#67 Inglorious Investor on 03.13.14 at 10:54 pm

#19 hohoho on 03.13.14 at 8:40 pm

“Mark has one lever to manage the economy, […]”

I disagree with your entire premise. Central bankers (e.g. Mark Carney) should not be trying to “manage” the economy in the first place. As for Monsieur Shenfeld, I’m sure he’s and intelligent guy, but really, who cares what he, or most any other economist, thinks?

#68 Inglorious Investor on 03.13.14 at 10:57 pm

Happy birthday, Garth!

#69 John W Foster on 03.13.14 at 11:00 pm

Garth,

I always knew you had a certain je ne sais quoi with words, but you outdid yourself tonight.

Happy Birthday from Oakville!

#70 "Callgirl" on 03.13.14 at 11:14 pm

I am absolutely shocked by the inquiries about the Home Buyer’s Plan lately.
Employers that do not have pensions are often offering RRSP’s plus matching as a pension substitute- and therefore people are essentially using pension equivalents to fund homes with HBP. This isn’t right in my view. They of course must pay it back over 15 years– just another added pressure on top of the debt.
Imagine also if I take 25k made up of both my contribution and my employer’s then loose my job. It will be a LONG HAUL putting it all back on my own.
Worse, there have been an influx of calls asking to remove RRSP balances from 500-12000 range for first homes. Yes they may have other funds, or a partner also contributing–but these down payments are not significant and not from folks with other pension assets. It’s truly frightening, when added to constant cash outs and layoff calls.
And now Ontario is going to try to force another pension on a population who constantly calls and asks to cash out the pension funds they do have? (Notice how the FSCO now has hardship withdrawals and unlocking all funneling directly to the financial institutions as of Jan 2014. (the sheer volume of requests is staggering)
I find it very sad when big brother measures are the only way to attempt to control a population “for their own good”
So we let people take all their RRSPs for a home, unlock their LIRAs and then all of a sudden will get tough with a forced savings program that will cost a considerable sum to administer?
Why not just offer a savers credit or penalty like the 401k in the US for withdrawals instead of a forced Ontario Pension Plan? Just what the economy needs right now. The Registered Pooled Pension is a much better option and idea.

#71 LB on 03.13.14 at 11:22 pm

Check this one,

“We Guarantee!
We guarantee that you will make profit on a pre-construction condo if you buy with us and will sell it when the project comes to a close,otherwise we won’t charge any commission to sell it!”

#72 VicPaul on 03.13.14 at 11:23 pm

55 tf on 03.13.14 at 10:05 pm
Love the Greater Fool!

That marketing material is blatant symbolism for the male members of our society.

O, look glorious towers – sparkling in the sun. One tower, tall and thin – the second, shorter but thicker – two gleaming towers ready to be mounted. The base podiums anchoring the spears as they burst into the sky.

I think guys need a hobby.
~~~~~~~~~~~

I think you need a man…

#73 "Callgirl" on 03.13.14 at 11:25 pm

And Happy Birthday!

May you long rule over the Cottonelle Class!
:)

Hope recovery is going well…

#74 Shawn on 03.13.14 at 11:25 pm

I Want My Mommy!

Outrageous and unfair! Apparently that nice salesman is not my friend after all! Apparently he puts HIS interests before mine. Apparently he is not my Mommy!

Who’a thunk it!

P.S. I do love Garth’s writing. Still thinking about that tryst with Gisele.

#75 Son of Ponzi on 03.13.14 at 11:31 pm

Kanukistan could learn from Germany.
What a concept.
Unfortunately, Kanakistan has decided to go the Asian way.
http://ca.finance.yahoo.com/news/kenney-points-study-u-democrat-income-splitting-promise-180242293.html

#76 Bottoms_Up on 03.13.14 at 11:34 pm

Likely been said, but what about taking the $2500 and investing it into a TFSA, then adding $500 a month to that investment for the next four years, take your saving/investment returns in four years and purchase the exact same unit at 2/3′rds of today’s price?

#77 45north on 03.13.14 at 11:44 pm

If you are in this situation, or if you are the parent of a child in this situation, I have some great news for you today:

bait and switch!

somewhere in the conversation Eau du Soleil is going to want a co-signer. Like the parents. I mean there’s nothing illegal about saying it requires $2500 in the pot. True enough! Nothing illegal about $500 a month. True enough! but something tells me that it is going to want a co-signer with verifiable assets and a substantial salary base – just in case.

The thing that tells me is David Fleming’s article “Condominium Financing”:
http://www.torontorealtyblog.com/archives/condominium-financing/9775

eau de la co-signature

#78 Robbie on 03.13.14 at 11:53 pm

Happy Birthday, Garth! Welcome to the wrinkly years! :)

#79 waiting on 03.13.14 at 11:58 pm

Is that Smoking Man’s dog?

#80 Bottoms_Up on 03.14.14 at 12:00 am

#152 ignorant&desperate on 03.13.14 at 7:13 pm
———————————————
Garth is right. Run.

Take your 36k from your TFSA. Transfer it into a self-directed trading account at http://www.questrade.com

With your cash buy a diverse basket of ETFs. Sprinkle in one or two of your favourite companies. And voila, you’ll likely have an investment account paying you at least 4-5%, with the benefits of exposure to the broader stock market.

Go ahead and ask your banker about this plan. If they try to talk you out of it or sell you a limited number of mutual funds — run. If they tell you you’re doing the right thing, well, then, you have found yourself a sound advisor.

#81 Lola on 03.14.14 at 12:00 am

Apostles
What’s the buzz
Tell me what’s a-happening

Jesus
Why should you want to know?
Don’t you mind about the future
Don’t you try to think ahead
Save tomorrow for tomorrow
Think about today instead
I could give you facts and figures
I could give you plans and forecasts
Even tell you where I’m going

(c) “Jesus Christ – Superstar” Soundtrack

What really frustrates me… is why do I have to worry about investing my hard-earned money to begin with? I work in IT, and I don’t expect “the regular Joe” to understand Java code or how it all works. But “Joe” expects stuff to just work. And leaves nasty app reviews if the app crashed on his device. And we have to work overtime, trying to reproduce and fix the problem. To keep “Joe” happy, so he’ll give our app 4-5 stars that will convince “Jane” to choose us over competitors.

I don’t want to come home after hard day (or night – doing a midnight deployment as I type) at work and think about condo market crash or stock market crash or our money plain rotting in the bank at % below the inflation. I want to look at beautiful turquoise glass tiles for our ensuite bathroom reno (speaking of which – how ‘bout bashing all those home renovators who waste thousands of dollars on reno projects and advise them to invest in ETFs instead? After all, old ceramic tiles do their job just fine!) and sunny places for our next vacation. And I’m sick of all the leeches who live off of those who try to make their money work – bankers, brokers, realtors, financial advisors, lawyers, tax attorneys, you name it! With zero responsibility if – and when – something goes wrong.

And where do I leave a bad review with one star after the market crashes and we lose the money – yet again? And who will work overtime to keep us happy?

(The comment is inspired by your answer to #24. Terrible blog interface btw, impossible to follow the dialogs. Go ahead, don’t open this comment, either.)

#82 Happy Renting on 03.14.14 at 12:02 am

You have to admire the ethic-less ingenuity of the marketing. As bash-you-over-the-head shameless as Axe toiletries, but hits people in their weakest spots, so it’ll probably work. Which is sad.

Oh well, as #10 pointed out, this could be a great place to rent in the hopes of being surrounded by alcohol, partying, and promiscuity (the 20-34 year old owners who have to live it up at home, they’re too broke to go out.)

Speaking of living it up, happy birthday, Garth! Best wishes, hope it’s a good one.

#83 KommyKim on 03.14.14 at 12:05 am

RE: #24 Eau de Rambo on 03.13.14 at 8:50 pm
Markets down bigtime….hope I only lose 7% in my balanced portfolio instead of making 7%

Why? Did you just get into the market 2 weeks ago?

#84 Bottoms_Up on 03.14.14 at 12:20 am

#136 Steven on 03.13.14 at 3:46 pm
—————————————–
A nuclear energy worker is legally allowed to be exposed on average to 20 milli-sieverts per year, with a single 1-yr maximum of 50 milli-sieverts.

If Fukoshima waste is washing ashore at 1 micro-sievert per hour, someone would have to be swimming in the ocean, continuously, for an entire year, to get a yearly dose less than 1/2 that of a typical nuclear energy worker.

Not sure about you, but I have no intention of treading water for that length of time. Not my idea of a fun vacation.

Worry about something worth worrying about, such as tanning beds and exposures while flying (hint: don’t take a window seat).

#85 Keith Horton on 03.14.14 at 12:26 am

Happy Birthday, Garth
Now that you are officially a geezer, you can grump about the government, complain about our current crop of youth, and use up our limited medical resources. Oops, I think you got a head start on all of these.

#86 Andrew Woburn on 03.14.14 at 12:43 am

Anyone who thinks a bank’s ability to lend is limited by the amount of cash deposits on hand or that central banks control the money supply should read this.

http://www.pieria.co.uk/articles/the_money_multiplier_is_dead

#87 Jen on 03.14.14 at 12:54 am

Heureux soixante cinquièmes anniversaire, Garth!
I trust the Amazons have been preparing for weeks for this joyous occasion? Enjoy yourself.

#88 Setting the Record Straight on 03.14.14 at 1:06 am

The West–Sask, Alta, BC –should strike preemptvely and secede. Vancouver could be spun off to become the new Singapore –or not.

#89 Not an economist on 03.14.14 at 1:10 am

First of all, happy birthday Garth! I’m assuming you’re 65, you handsome devil? Must be nice knowing you can retire, even thought I don’t think you will slow down one bit. How ironic (is that the right word?) it must be to know that you are not only the vanguard of ideas, but also a physical vanguard of a generation that will shape Canada’s history one more time before they pass the torch.

Second, I am very happy to see that both the wordsmithing quality of blog posts and the general discourse in the comments are at such a high level, which is saying a lot for a blog. Have you seen what the comment sections of other blogs look like? Eeeesh

This right here, The Greater Fool, is a relic of our time. Just like the exurban nation blog is America’s gift to future anthropologists and economists, so is Greater Fool a first hand account of a little significant piece of Canadian history, captured in ember. Assuming Garth keeps a backup of the blog, and has an interest in preserving it past the point when it is no longer needed. Backups are important Garth, offsite backups handled professionally. This here is too valuable to lose, if you think a lot of people are interested in reading this now, wait a decade or two and see. It’s like setting up high speed cameras to record a train wreck well ahead of time, from multiple angles, with every moment caught in slow-mo for posterity. And a director’s cut commentary from a man whose biggest talents are astute observations and writing flowery prose that can make you laugh even the subject is no laughing matter.

#26, nice going funny man. You owe me a new keyboard. Now excuse me while I go clean coffee out of my nose.

#90 Nemesis on 03.14.14 at 2:14 am

YiPPieYiEh!…

It’s your BirthdayToday!

“Let’sRide”

NemesisStyle…

http://youtu.be/NvBHDRsFAmo

#91 Waterloo Resident on 03.14.14 at 2:28 am

What we really need right now is a good old fashioned NUCLEAR WAR.
That way no one will care if their condos are good investments or not.

#92 Simple Joe says on 03.14.14 at 3:25 am

Canada will offer $220M to prop up Ukraine’s finances

Money for the people of Ukraine – I bet. In the long run it works out like this:

*Stupid bankers with a too big to fail mentality, see easy money loaning to U. (Hell, I bet even the U rich send their money to the west ASAP)
*Things go bad. They always do – as if the U is risk free.
*Much like a teenager taking up smoking, our government wants to be thought of as part of the in crowd of countries, and pledges Canadian tax payer money as part of a multilateral bail out.
*Canadian tax payers, with their 50% plus all inclusive taxation, help keep said foreign banks alive and help the execs keep their 7 figures bonuses, so they’ll be able to do more of the same in the future.

Much like a adolescent, our government is more concern with its appearance on the world stage, than the dull stuff of taking care of business at home.

#93 Joe on 03.14.14 at 4:07 am

The ole first hits free principle.
Drug dealers have been doing it for years.
Gotta have it at any cost cuz it feels soooo good.

#94 Tony on 03.14.14 at 4:27 am

Re: #47 Oakville Owner on 03.13.14 at 9:44 pm

Just keep on repeating it over and over again “the FED has got my back”.

#95 World Traveller on 03.14.14 at 6:12 am

More like Eau du toilette.

Today’s post hurt my brain trying to switch back and forth from French to English, but I was laughing none the less.

By the by, 600 sq ft is TINY! I lived in a just under 1000 foot after moving from a 1400 sq ft and it was a major adjustment. They should just classify the sub 600 sq footers as storage lockers, because that is essentially what they are, or a hotel room.

#96 mark on 03.14.14 at 6:28 am

Comparing it to a car is a stacked deck.

It’s obvious why they wouldn’t compare it to an actual investment.

#97 JR on 03.14.14 at 6:37 am

To #59 quebec economist

you mean you didn’t go all USD months ago?

btw I am following your thoughts on the 3 fund TFSA solution: agriculture, infrastructure and healthcare.

Only moral dilemma was having Monsanto in my portfolio. Pretty evil.

#98 truth seeker on 03.14.14 at 6:40 am

Great post as usual. Too bad it doesn’t reach the people that should be reading it.

Happy birthday!

#99 maxx on 03.14.14 at 6:48 am

#10 94 on 03.13.14 at 8:08 pm

” …So its going to be one giant party house filled with just out of University kids holding piles of school debt??”

Lived above one of those units once. Complete and utter nightmare. Noise at all hours. No regard for anyone but their precious, entitled selves. Damaged the unit and building. Unit had to be completely redone, paid for by mummy and daddy . I will never buy residential rental property, if for that reason alone. The time for rental profit has largely passed anyway.

#100 maxx on 03.14.14 at 6:57 am

Bonne Fête Garth!!!

#101 live within your means on 03.14.14 at 8:11 am

How did you find a pic of our darling Echo? Seriously, yrs ago on Halloween night hubby would put eye glasses, a hat on her with an unlit cig in her mouth & visit the neighbours. Brought back so many memories of her.

And, then U made me laugh by your comment “making everyone grinding past on the Gardiner Expressway feel like they’re piloting their Deux Chevaux to a tryst with a coquette named Gisele”

I rode in a Deux Chevaux 40+ yrs. ago overseas & have a Parisienne SIL who called herself a coquette. She’s extremely pretty & funny but is no longer one. Brought back some great memories.

#102 Catalyst on 03.14.14 at 8:27 am

Whoa I can make 81K only paying myself 500 a month, where do I sign up!

#103 live within your means on 03.14.14 at 8:48 am

Happy Birthday Garth – Hope U, Dorothy & Bandit will have a great day.

#104 amazon girl on 03.14.14 at 8:59 am

Amazon girl to Father#41
I know with day it is.The post was after 8.00 pm
for Friday morning…and I want to be the first…….
be a good father.
To Smoking Man #58
I am the Amazon yes,I am the first..Iam one step a
head of you both. So go out and spend your day shopping…birth gifts…p.s I will laugh all day

#105 241A65 on 03.14.14 at 9:34 am

Great post, Garth. Yet another silly condo – as if more were needed – on the Toronto skyline. Reminds me of a cartoon I saw in the old National Lampoon magazine way back in early 1978, a drawing of the Toronto skyline populated entirely by an endless number of CN Towers, the caption reading ‘I have seen the future, and it is Toronto’. Replace those CN Towers with condos and you have it – hey!

BTW – ‘…those Quebecois separatists (who now insist they will leave Canada but keep the loonie)…’

Quebec is free to use the loonie – knowing that the population would never accept a Quebec currency – but they get NO SAY whatsoever in monetary policy. NONE! No seat on the Bank of Canada. When you’re gone, you’re gone, mes amis.

#106 Daisy Mae on 03.14.14 at 9:44 am

#24 Eau de Rambo: “Markets down bigtime….hope I only lose 7% in my balanced portfolio instead of making 7%.”

About time we had a decent correction. — Garth

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

What Garth is really saying is that it’s a buying opportunity. Gee, we ARE learning! ;-)

#107 Daisy Mae on 03.14.14 at 9:57 am

#40 2CntsCdn: “Even though we have seen and heard it happen right next door (US of A)….. we go down the same road, do the same stupid sh!t and walk into the same trap. So many idiots, so stupid.”

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

Yes. How’s this for federal government ‘leadership’?

#108 Alistair McLaughlin on 03.14.14 at 10:03 am

Co-worker of mine just told me yesterday, “Well, my daughter is moving out. Just bought a condo with her boyfriend. Nice place.” He added, almost as an afterthought, “I sure never lived like that when I was a student.” (He never said if he was fronting a down payment or not and I never asked him.)

This got me pondering things a bit. Students buying condos? That was unheard of when I went to university in the 1990s. I don’t think anyone would have bothered to write something like that as fiction. Some magical La-La-Land where kids who are still in college buy their own place? And it’s just normal? Lord of the Rings would have sounded like a documentary compared to that. But in two decades, what would have sounded like dystopian fiction is now reality. Where is this going to end? From my recollection, dystopian novels do not have happy endings.

#109 gladiator on 03.14.14 at 10:13 am

@84 Bottoms_Up:
Agree on the exposure limits. Agree on which seats to take on a plane. And also, we are talking about different things here: you mean exposure; I mean radioactive particles. One nano-sized particle in your body (it tends to accumulate and keep them) is enough to wreak havoc on the neighbouring cells and trigger apoptosis, which will generate a benign (hopefully) or a malign tumour. The malign one is called cancer.
Swimming in water that contains even a low concentration of these particles, you could ingest one if you, for example lick your lips. And this is the low-risk scenario. The really high-risk one is that in Canada and US it rained many times with water containing these little cuties, the water dried and we all inhaled some dust with them already. We have them in us. THAT’s the danger Steven and I mean.

#110 Dupcheck on 03.14.14 at 10:15 am

Would be nice if F deity elfin made the mortgage payments tax deductible similar to the Americans. That would ease the pain for years to come and guarantee a slow bubble deflation.

#111 Buy? Curious? on 03.14.14 at 10:17 am

Gawd! Enough with the dog pictures! I couldn’t imagine what this blog would be like if you loved cats!

#112 Blacksheep on 03.14.14 at 10:19 am

Andrew Woburn # 86,

Nice find Andrew. I’m sure Shawn agrees.

Forget condos or RE.

This problem is far more dire. Inflate or die. Confirms, MMT is not a theory.

“Commercial banks create money, in the form of bank deposits, by making new loans. When a bank makes a loan, for example to someone taking out a mortgage to buy a house, it does not typically do so by giving them thousands of pounds worth of banknotes. Instead, it credits their bank account with a bank deposit of the size of the mortgage. At that moment, new money is created.”

“The Bank of England also notes that when loans are paid off, bank credit money (so-called “broad money”) is destroyed. Under normal circumstances, repayment of one loan would be replaced by creation of another, either to the same borrower (refinancing) or to another borrower, so the net effect on the money supply is zero. But when more loans are being paid off than are being created, money in circulation diminishes. Not surprisingly, the Bank commends QE as a replacement for inadequate bank credit creation in a deleveraging cycle”

http://www.pieria.co.uk/articles/the_money_multiplier_is_dead

#113 Buy? Curious? on 03.14.14 at 10:23 am

Oh yeah, Happy Birthday!

https://www.youtube.com/watch?v=1YnjSksXqZw

#114 chapter 9 on 03.14.14 at 10:24 am

Happy Birthday Garth and to my Big sister!

#115 Holy Crap Wheres The Tylenol on 03.14.14 at 10:44 am

Happy Birthday Garth, you can officially retire now, or not! As most of us Boomers wont be retiring! I would like to give you the deed for the entire Credit Valley River lands but unfortunately the dog ate it last night. I have an old map on the wall of my study from 1950 for the credit river valley system. Sorry, but it does remind me of many days in the 1960′s when I was a teenager fishing, hunting, hiking and camping along the river from the Cataract Falls to the lower area of Churchville. Most of the good land has been gobbled up now. Thank God they are not building Condos near the river, it would just ruin the views.

#116 Smoking Man on 03.14.14 at 10:46 am

Russia…..

Not only is Putin going to take Crima, he’s going in to get even more… Got to love his balls.

Big Bird flipping out, it’s illegal he says.

Law isn’t worth the paper it’s written in unless backed up with the biggest gun and people not afraid to use it.

Putin got this one.

Big Bird…. Back to Sesame Street

#117 Alistair McLaughlin on 03.14.14 at 11:01 am

@ #110 Dupcheck, that would further subsidize home ownership in a market already distorted by various incentives provided by government. Worst idea ever.

#118 Peter on 03.14.14 at 11:09 am

We get it Condos are bad investment. When are you going to shift gears towards the segmented SFH in Toronto. The 600-900k are hot. Even using the spreadsheet you provided two days go says buying is better than renting with a measly 1% house price appreciation.

The point I guess even if people knows there may be correction, 10% at best I think, that is pretty much a blip over the course of 25-30yrs. So why not take the plunge now?

#119 happity on 03.14.14 at 11:15 am

S&P 500 down for the year, precious metals kicking butt.

Now why is that given the media proclaimed USA economic renaissance ???

#120 economictsunami on 03.14.14 at 11:24 am

Interest read on the disinflation/ deflation, re-inflation/ inflation ongoing debates…

Central Banks Are All Increasing Their Balance Sheets:

“The following feedback came from a very sharp individual who used to be Director of Research for Moody’s.

“Hi Charlie & Team–Thanks for the great work! I think we will have inflation, then a collapse of the dollar, then declining prices.”

“I do not think you mean deflation. Deflation by definition is declining prices concurrent with monetary restraint. We are not going to have any monetary restraint. But we will have multiple bubbles bursting. That is not deflation. That is simply declining prices resulting from a change in the demand/supply fundamentals for all sorts of assets. People are going to revalue stocks, currencies, lots of assets. But monetary restraint will not be the driver so by definition it is not deflation.”

http://tinyurl.com/k3m6smn

#121 45north on 03.14.14 at 11:33 am

Ontario Tories say LRT sinkhole evidence of bad Liberal transportation policies

http://www.ottawacitizen.com/news/Ontario+Tories+sinkhole+evidence+Liberal+transportation/9615327/story.html

weak, very weak

I mean nobody knew exactly what was under the ground until he dug there.

#122 economictsunami on 03.14.14 at 11:37 am

Apologies. I meant to include this link.

China Can Drag Down The Global Economy:

http://tinyurl.com/k6e7d3t

The Crimea and Ukraine may make for good political theater and with positive HFT algo producing push for many markets but what is taking place in China and Japan has more measurable global economic impact.

What both are endeavoring to accomplish is unprecedented and highly experimental; both pure central planning alchemy and highly interventionist .

It definitely comes without a DIY manual; as it attempts to export their economic consequences…

#123 jess on 03.14.14 at 11:38 am

…regarding the the principal residence exemption …how many parents bought homes in their “kids” name for another purpose.
http://www.theglobeandmail.com/globe-investor/personal-finance/taxes/house-flippers-beware-you-cant-always-sell-your-residence-tax-free/article4804446/

—————-
so who is on the board?
energy magnate , dmitry firtash arrested in austria
http://www.independent.co.uk/news/uk/crime/ukrainian-energy-magnate-with-close-links-to-senior-tories-arrested-in-austria-after-fbi-investigation-9190366.html

http://www.theguardian.com/world/2010/dec/01/wikileaks-cables-russian-mafia-gas

#124 father on 03.14.14 at 11:41 am

HAPPY BIRTHDAY GARTH

#125 45north on 03.14.14 at 11:43 am

Lola : Terrible blog interface btw, impossible to follow the dialogs.

I don’t like it either, but it’s not my blog.

#126 JimH on 03.14.14 at 11:47 am

#112 Blacksheep, et al.
Great post! Thanks!
Cullen Roche and others (pragmatic capitalism, or “www.pragcap.com” for eg) have been way ahead of the majority of economists on this subject and other issues.
MMT is pretty much a dead horse.

#127 Rational Optimist on 03.14.14 at 11:49 am

#84, #109

If you think that you get appreciably more radiation exposure sitting in the window seat than an aisle seat of a plane, I have good news for you. I am planning on marketing a special hat and chastity belt (trust me, it will be) made from tinfoil manipulated with a proprietary process. The product will block UV, some gamma radiation, mind control rays, and other harmful infiltrants. You fellows can purchase a set before the product is available to the general public. In return, I just ask you to wear it on a transatlantic flight (your expense) so we can conduct market acceptance testing.

I’m not saying you guys are wrong about radiation exposure on airplanes, but I just picture you accusing a check-in counter girl of trying to give you cancer, or telling your wives that there will be no trip to Europe because you’ve already exceeded your quota of x millisieverts.

#128 IgnoranceIsBliss on 03.14.14 at 12:05 pm

Nice how the realtor skewed things further by comparing to leasing a car. With financing the car you would at least have had the used car instead of “nothing”.

Like Garth said, a car is most often a tool… for transportation (public transit in Canada – yuck – especially in winter), enjoyment (once you leave the city that is), employment, etc. You pay for the use of it and that is a given. Funny how people think paying rent is a waste – it gives me a roof over my head, a place to park my car. Is paying for electricity a waste? What about water? I can build my equity in other ways without having to dump 100% of everything I own into a condo.

#129 IgnoranceIsBliss on 03.14.14 at 12:19 pm

@108; Agree… when I moved out I just wanted to not have to live with my parents. No plan at all for buying a condo or house. I thought I was lucky living in an apartment, clean 500 sq ft bachelor for $500/mo all inclusive 15 yrs ago.

And when I had to either move or become unemployed around the tech bubble, I was able to give notice and leave for a new job. I gave 2 months notice, left after just 1. Apartment was rented immediately and I didn’t have to pay the last month and got my security deposit back.

Interesting that a car was important for me when I moved out on my own. It was relatively expensive and almost worthless when I sold it 8 years later for sure. But not having to spend hours waiting for public transit every day for school in the winter was awesome… When I needed to move for the new job, the car gave me huge freedom finding a new apartment, driving between cities in the interim month, etc.

#130 Derek R on 03.14.14 at 12:51 pm

#126 JimH on 03.14.14 at 11:47 am wrote:
#112 Blacksheep, et al.
Great post! Thanks!
Cullen Roche and others (pragmatic capitalism, or “www.pragcap.com” for eg) have been way ahead of the majority of economists on this subject and other issues.
MMT is pretty much a dead horse.

Yep, great post. But this stuff isn’t exactly new. Frederick Soddy was saying it in 1926 and many others have written about it since then. The trouble is getting the academic economists to pay attention to it. The bankers already get it for the most part. So good to see the Bank of England supporting it (and with a very clear explanation, readable even for non-economists) but I don’t expect the money-multiplier/exogenous money/gold nonsense to disappear as a result. If that was going to happen it would have done so in the 1920s.

#131 Penny Henny on 03.14.14 at 12:56 pm

The Toronto Real Estate Board (TREB) said the average sale price for the month was $553,193, an 8.6% jump from a year earlier. Prices jumped about 5% from January’s average of $526,528.

My prediction for May is $583,000.

#132 Derek R on 03.14.14 at 1:06 pm

#110 Dupcheck on 03.14.14 at 10:15 am wrote:
Would be nice if F deity elfin made the mortgage payments tax deductible similar to the Americans. That would ease the pain for years to come and guarantee a slow bubble deflation.

Careful what you wish for, Dupcheck. This is one of those policies that sounds good in the short-term but actually has disastrous effects long-term.

Making mortgage payments tax deductible reduces the size of existing mortgage payments like reducing interest rates does. So far so good. However new mortgages can be bigger, since people can now afford to borrow more. So tax deductible mortgage payments have exactly the same effect on house prices as interest rate reductions: they push prices up.

That’s fine if you want to live in an economy where house prices are high. However I’d prefer to live in one where house prices are low as would you I’m sure, so I have to come out against tax-deductible mortgage payments.

#133 Trevor on 03.14.14 at 1:12 pm

If everyone is suppose to have multiple residential properties; investment and residence .. who is going to rent the investment properties??

I cannot comprehend how average people think they can get such a great ROI. If these condos were so lucrative they would be all owned by the rich and not require average people to finance the build for 4 years lol.

#134 angela on 03.14.14 at 1:12 pm

russian stock market down 22% from feb 18 highs enters bear market lol there has to be some pun in that
Us in a bull(shit)market

#135 sciencemonkey on 03.14.14 at 1:59 pm

Regarding policy changes that make houses more or less affordable, I’ve posed the following idea in the past: When it comes to RE affordability, there are two factors. The first is how much foreign capital (HAM) and wealthy domestic investor money there is to buy RE outright. On the other hand, joe sixpack doesn’t have a lot of money to buy. Therefore, the second factor is how much credit is available to joe sixpack to compete with the wealthy investors.

When we look at things like low interest rates, RRSP withdrawals for HBP, low down-payment percentages, long amorts, and tax-deductible mortgage interest (in the US), these all let joe sixpack compete with credit against the rich for RE, but at the same time these things drive up the price of RE since joe sixpack will spend to his max monthly.

I propose that we would be better served with the following system. We would start with policies preventing residential RE being used as an investment. These might include reduced immigration, only citizens being allowed to purchase, only money earned or generated in Canada to be used to purchase RE (no foreign capital), capital gains tax on any RE capital gains, and a limit of one primary residence per couple per city.

Next, we would limit the credit available. This might include 20% minimum downpayment, 6% mortgage rates, 10 year maximum amorts, no RRSP helper on the downpayment.

The effect this would have would be to lower house prices dramatically, and allow joe sixpack to pay off RE quickly. After RE is paid off, joe could proceed to save for retirement, and also buy lots of ketchup, ATVs, bathroom tiles, TVs, brewskies at the bar, etc, keeping the economy healthy. In other words, we would no longer have RE payments strangling discretionary spending.

Of course this plan means that investors would not be able to earn money off of RE. I could care less if some leeches don’t get rich off of unearned RE appreciation. Also, there are still stocks and bonds available for investment, and stocks are actually good for society because it represents investing in a productive business. Not to mention how much better stocks would do if joe sixpack had discretionary cash burning a hole in his pocket.

#136 Rainclouds on 03.14.14 at 2:04 pm

#131 The Toronto Real Estate Board (TREB) said the average sale price for the month was $553,193, an 8.6% jump from a year earlier. Prices jumped about 5% from January’s average of $526,528.

Yea, unbiased credible statistics from an entity highly regarded for accuracy, truth, and transparency. Please……..

#137 Ralph Cramdown on 03.14.14 at 2:08 pm

#120 economictsunami — (quoting a couple of permabears) “’The following feedback came from a very sharp individual who used to be Director of Research for Moody’s.’”

What kind of appeal to anonymous authority is THAT?

Comstock is a name that gets used by all kinds of businesses, so it’s important to make sure you’re getting the right one when analyzing their track record. These guys are the ones who title their web home page “Comstock Funds – Contrarian Charlie Minter Bear Market Bearish.” Not likely you’ll ever get a buy signal from them, is it? Here’s their mutual fund:

http://finance.yahoo.com/q/bc?s=DRCVX&t=my&l=on&z=l&q=l&c=

From $12 to $0.98 in twenty years. “I am Comstock, destroyer of wealth.”

#138 Pope Snugglebums the 666ed (aka Nosty) on 03.14.14 at 2:29 pm

Happy Birthday Garth and many more!

Now, to other boring, irrelevant meaningless stuff.

#116 Smoking Man on 03.14.14 at 10:46 am — “Russia…..Big Bird…. Back to Sesame Street”

Hey there SMan, TurnerNation, Frizzzz, shanks, Suede, Nemesis, economictsunami plus a few others — remember the missing nukes not too long ago?

Well, Flt. 370 + Ukraine, /a> Deliberate, 9-11 V, 2.0 and Hot Mic! (0.9 clip) they certainly didn’t walk off those air force bases by themselves. Anyway, it’s a theory!

#139 A Yank in BC on 03.14.14 at 2:43 pm

#119 happity

Let me see now.. you want me to ignore Warren Buffett’s advice, and follow yours instead. Right.. got it.

#140 heineken on 03.14.14 at 2:47 pm

this is for garth and all his disciples.
go get some kleenex and enjoy!

http://www.bloomberg.com/news/2014-03-12/n-z-raises-key-rate-to-become-first-developed-nation-to-tighten.html

#141 Brad Mitchell on 03.14.14 at 3:13 pm

http://www.theglobeandmail.com/report-on-business/top-business-stories/dont-fear-todays-data-showing-still-swollen-consumer-debt/article17492021/

Interesting:

“Net worth among Canadian households increased by 3 per cent in the fourth quarter of last year.”

“Household net worth now stands at a record $7.7-trillion, as does per-capita net worth of more than $218,000.”

“The pace of mortgage and credit debt accumulation has noticeably slowed versus the decade-long average.”

“Another measure, the debt service ratio, was just about flat at some 7 per cent. That measure, household debt interest divided by disposable income, is at just about a record low.”

> No wonder the housing bears keep getting it wrong.

#142 ponerology on 03.14.14 at 3:21 pm

“forced savings plan” is the most bizarre argument I’ve ever heard. If I wanted a “forced savings plan” (and didn’t have a mandatory pension) all I would need to do is sign up for one of those bank accounts which automatically debits your account every month and places it into an RRSP.
I would also argue (like some above have) that at least the car would give me more freedom of mobility (unlike the house), I could get insurance that would let me “walk away” from the car lease if I lost my job/got injured (can’t do that so easily with a house), and I guess it’s possible to live in the car too (wouldn’t recommend it though).

#143 Olympic Lifts are not crossfit on 03.14.14 at 3:27 pm

Ah yes, latest from the Calgary Herald: http://www.calgaryherald.com/business/real-estate/Calgary+housing+market+hot+but+not+overheated+like+2006/2007/9618249/story.html

Supposedly another housing boom? What is it with the people that write these articles? Why isnt status quo and boring normal levels of housing costs what is wanted? So I bought a mortgage in 2011 and now through no effort of my own that mortgage value is higher? And so I have to pay more taxes? How all is this to my benefit? Take note of the picture in the article, that is just what it looks like: Half a million dollars to live in Brooklyn, New York. I have a saying to describe it all: “Stay Calm. Witness the Funk”

This “boom” probably explains the claustrophobic feeling of Calgary. What to do? Keep your job to pay for it all and play chess to give psychological space.

Its a firm prediction that the realtors in Calgary are getting off literally and figuratively, regularly due to this “boom”. Can you say r-i-p-o-f-f?

Anyone reading this contemplating a move to Calgary know that its a good place to raise a family and the mountains are beautiful, but the timing is nuts here trying to get in. The key thing is to remain c-a-l-m… with bs detectors on at all times.

#12 Dale in Calgary is correct.

#144 Ry YYZ on 03.14.14 at 3:30 pm

I think your math on this ad was a little off, Garth. I take that little comparison chart to mean that the condo will be worth $336,000 after four years, with $45,000 paid in, yielding $81,000 in “increased net worth” after 4 years (assuming its value continues to increase by 3% per year while its still being built. Of course, they don’t point out that if you just took your $45,000 in deposits, payments, etc, and invested it, you would still have your $45,000 in increased net worth, plus whatever those investments yield, but without the risk that goes along with home ownership.

Really, though, you can’t blame people for thinking that you can’t lose by buying a house – for over 10 years now it’s been nothing but up, up, up. I wish I had bought a house 10 years ago, rather than last year.

#145 Why the doomsayers are wrong on 03.14.14 at 3:33 pm

Why the doomsayers are wrong about Canada’s housing market –

http://www.theglobeandmail.com/report-on-business/economy/housing/why-the-doomsayers-are-wrong-about-canadas-housing-market/article17446985/

Alwyn

#146 Ry YYZ on 03.14.14 at 3:35 pm

Further to #133. Also, in the comparison chart, they use an example of a car lease that would cost $26,000 over 4 years. I’m guessing that would probably be about a $50,000 car or so. Not the sort of thing one should be buying (or leasing) if scraping $40,000 for a down payment on a house is difficult for you. I’ve never owned a $50,000 car (not being independently wealthy, I can’t afford to piss away my money on a depreciating asset like that), and probably never will (in constant dollars) unless I buy it used for a big discount (maybe after some fool has spent $26,000 to lease it for 4 years).

#147 Steven on 03.14.14 at 3:41 pm

Garth how is the leg doing? Is it still in a cast?

I had it bronzed. — Garth

#148 Happy Renting on 03.14.14 at 3:52 pm

#71 LB on 03.13.14 at 11:22 pm

Like Lionel Hutz! He’ll win your case or you get a free pizza. :)

———-
#95 World Traveller on 03.14.14 at 6:12 am

My first Toronto apartment (rent paid by me) was a 310 sq ft bachelor. I’ve seen floor plans for 297 sq ft. They’re not called shoeboxes in the sky for nothing! The kids whose parents buy them those 600 sq ft condos are downright spoiled.

———–
#111 Buy? Curious? on 03.14.14 at 10:17 am

Garth seems to be an equal-opportunity pet picture picker. The cat from the Faux Chateau entry still cracks me up.

#149 april on 03.14.14 at 4:02 pm

Consider the source … always!

#150 Nemesis on 03.14.14 at 4:02 pm

#BirthdayBalderdash #BeardEnvy #GrowingOldDisgracefully

“A beard is the cheapest, most authentic accessory a man can have.” – Jonathan Pryce, British FashionSnapper

[G&M] – What a beard really says about a man

…“We are living in the hairiest time ever and the most permissive,” explains Allan Peterkin, a Toronto-based psychiatrist and the author of One Thousand Beards: A Cultural History of Facial Hair. The last cultural instance of pervasive male hirsuteness was the Victorian era. Kings and leaders wore them, which influenced the male population. Now, celebrities with beards (George Clooney, Ryan Gosling, Daniel Craig) are the style setters.

Still, Peterkin sees the modern beard as having significance beyond the emulation of Hollywood gods. “This current trend is a bit of a performance of masculinity,” he says in a telephone interview. And no, he wasn’t stroking a beard as he mused thoughtfully because, he says, he can’t grow a good one. Peterkin did confirm, however, that beard envy – how long, how thick, etc. – is indeed a real phenomenon.”…

http://www.theglobeandmail.com/life/fashion-and-beauty/beauty/what-a-beard-really-says-about-a-man/article17425141/

[BBC] – Meet Jonathan, St Helena’s 182-year-old giant tortoise

…”He is virtually blind from cataracts, has no sense of smell – but his hearing is good,” Joe tells me. At 182, Jonathan may be the oldest living land creature…

…Jonathan loves having his neck stroked. His head extends out from his shell to a surprising length.

He snaps for his food – bananas, cabbage and carrots – with some ferocity. Joe almost lost the end of his thumb and has resorted to wearing thick gloves.

“He doesn’t mean to nip me,” he says, “he just finds it difficult to locate his food.”…

…Tortoises may be slow but they are noisy, especially when they mate: “A noise like a loud harsh escape of steam from a giant battered old kettle, often rounded off with a deep oboe-like grunt.” Joe reassures me it’s another indicator of good health.”…

http://www.bbc.com/news/magazine-26543021

#151 april on 03.14.14 at 4:03 pm

#136 Rainclouds. I agree.

#152 Tom from Mississauga on 03.14.14 at 4:15 pm

http://www.citynews.ca/2014/03/11/toronto-hydro-seeks-public-input-on-potential-rate-increases/

Of course Toronto McMansion owners have there own energy inflation problem.

#153 GTA Girl on 03.14.14 at 4:22 pm

The developers of that project have a lot of expenses lately. The McMansion near Post Road that hosted a soirée for Rob Ford to raise money for his legal fees. Of course, the developer seemed to forget he was chair of BILD & subject to lobbying laws.
http://www.toronto.ca/legdocs/mmis/2012/cc/bgrd/backgroundfile-46327.pdf

So maybe add in more legal fees because of the mess.

Isn’t the developer offering Tesla’s with this condo?

Or is that their next project?

#154 Dupcheck on 03.14.14 at 4:31 pm

I hear what you saying guys (against mortgage tax deduction), you can not win with stupid. If you give them a break they would get in more debt instead of paying that down. I was thinking more in terms of having more money aside (say from tax breaks) to invest elsewhere.

#155 Dupcheck on 03.14.14 at 4:35 pm

Also remember that the only people that can get mortgage tax breaks are our citizens that pay tax and not the foreign investors. So that would give an edge to the Canadians.

#156 saskatoon on 03.14.14 at 4:46 pm

another piece of schlop:

http://www.thestar.com/business/personal_finance/2014/03/14/toronto_real_estate_how_to_play_safe_during_bidding_war.html

#157 Westcdn on 03.14.14 at 5:01 pm

I am just catching up on my readings. SM, I guess you are tired of waiting – the answer to your puzzle is there a difference between the letter O and the number zero 0.
To the response of the “genius French Canadians preserve their culture despite Anglos” – it is the main reason for PQ. I would watch France carefully as their system/culture is ready to fail – socialism has a price.
I was thinking – what if we printed 20% of Cdn currency with Rene Leveque’s portrait to be issued in only Quebec, like the Euro it would be accepted nationwide – seems like a small price for national unity.

#158 Derek R on 03.14.14 at 5:13 pm

#152 Dupcheck on 03.14.14 at 4:31 pm wrote:
I hear what you saying guys (against mortgage tax deduction), you can not win with stupid.

Absolutely. That’s the problem. If there were more smart investors and fewer debt-crazy spendaholics it might work. Trouble is that for every smart investor there’s an idiot or two that just can’t wait to sell themselves into debt slavery for stainless steel and granite. So the overall effect would be bad.

#159 Smoking Man on 03.14.14 at 5:31 pm

#157 Westcdn on 03.14.14 at 5:01 pm

Very good, tell the truth, u slightly dyslexic?

The actual answer is, Type Mismatch. If you where coding.

And yes tired of the old Queens face on our money..

I nominate Rob Ford…. Can you imagine the children reporters at the Star taking tantrums over it.

#160 TheManwhoStaresatSheeple on 03.14.14 at 5:49 pm

Re #141 Brad Mitchell
…..
“> No wonder the housing bears keep getting it wrong.”
======================================
Hehehe
Statscan Q3/2013 release here: -http://www.statcan.gc.ca/daily-quotidien/131213/dq131213a-eng.htm

Quote – “Leverage, as measured by household credit market debt to disposable income, increased to 163.7% in the third quarter from 163.1% in the second quarter.”

Statscan Q4,2013 release here:
http://www.statcan.gc.ca/daily-quotidien/140314/dq140314a-eng.htm

Quote – “Leverage, as measured by household credit market debt to disposable income, edged down from 164.2% in the third quarter to 164.0% in the fourth quarter.”

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

For the challenged – final Q3 gets revised UP 0.5% and now bingo Q4 “edged down” (and people do not buy that much RE in Q4…)

So you are richer than you think, you probably can swallow some higher taxes,or … revenue tools, new forced pension plans… don’t worry we got it finally under control.

Then Q1/2014 will revise UP today’s Q4/2013 but who is paying attention!

#161 Iceflows on 03.14.14 at 5:51 pm

Happy B-Day Garth!

Wow! What a terrible comparison. A leased car to a condo?
Can you get any more blatant pitching to illiterate investors?

And what happens when the strata counsel is in place and won’t allow renters? What happens if the bottom falls out and the whole numbers thing falls apart? I hope nobody is falling for this crap! 25 years of debt servitude on an overvalued and extremely leverage skybox for a transit pass and a cruise!
And honestly, pitching to 16yos! Isn’t that illegal!
I am the last person to suggest more Gov regulation but, this RE salespeople pitching ‘investments’ has got to stop!
Well, at least the NDP is going to save us from those predatory ATM fees! They will save millions of us from destitution while the other parties fiddle with insignificant populist garbage!
Wait, I got that backwards. They will use taxpayer funds to fiddle with insignificant populist garbage while the other parties do nothing to save millions of us from (RE) destitution.

#162 Shawn on 03.14.14 at 6:23 pm

Money Supply and Wealth

Andrew Woburn at 86 (supported by Blacksheep at 112) reveals:

Anyone who thinks a bank’s ability to lend is limited by the amount of cash deposits on hand or that central banks control the money supply should read this.

*****************************************
A bank’s lending capacity is limited by its debt and equity capital and not so much by cash on hand.

But what is your point? Banking has worked that way for a very long time and the economy benefits greatly.

Yes the banks TOGETHER with their borrowers and depositors can increase the money supply. Wealth is not however instantly created. Nor is inflation.

Banks do slowly but surely increase the wealth of their share owners, as do all profitable businesses.

Dooming about “revelations” about banks and the money supply will not make you rich. Investing steadily in bank shares (eventually) will.

Winners Win and Losers Lose… Which path to follow?

#163 docteurfolamour on 03.14.14 at 7:01 pm

bon anniversaire mr turner. je lève mon verre de vin à votre rétablissement!

#164 Boom on 03.14.14 at 7:01 pm

http://globalnews.ca/news/1207046/watch-costly-nightmare-for-dozens-of-b-c-homeowners/

7% interest? TD Bank holds the most on the books in terms if financing condos developments etc, they could very well be in trouble someday

#165 DM in C on 03.14.14 at 7:14 pm

#143 Olympic Lifts are not crossfit

The pic in that story is of Tuscany in the NW, facing southwest. That’s where we live, but our view is much different.

Only community in Calgary to have it’s own private LRT station, with no businesses next to it. Still haven’t figured out why.

#166 Macrath on 03.14.14 at 8:10 pm

Joyeux anniversaire,petit vieux.

So why on earth would they want to use fiat that they rendered worthless with pictures of a despised monarch?

#167 MUFEMILF on 03.15.14 at 12:13 am

Happy Birthday Mr. President ;)

#168 Young person in Calgary with more money than brains on 03.15.14 at 12:28 pm

http://www.reddit.com/r/Calgary/comments/20et8n/is_it_smarter_to_buy_a_condo_now_or_a_house_later/

#169 confucius on 03.16.14 at 3:49 pm

Debt is only a problem if you choose to believe so.
My Friend Raked up 78K and never paid back. Proposal.

Living a pretty decent life – just like Americans. Borrow Steal. Print American-Tire money (Green-Backs) and flip the birdie if any nation asks for their money back – down the road. Does anyone seriously believe those Fat Ass Yanks are going to return the debt they have piled up from International Community ?

NewAge Mantra: Borrow and Be Happy