Parents

PARENTS 2 modified

A few words for the children. Your parents have been lying to you. Best get over that now.

Boomers are the worst collective source of information on the planet. Don’t listen to them. They were formed in another time and are loopy enough to believe the past will repeat. It’s why they want you to be exactly like them and, sadly, why so many Gen Xers (or Millennials or whatever they’re called) are rapidly turning into their parents. Big mistake.

The wrinklies grew up in a time of inflation and sustained economic growth. Today we’re closer to systemic deflation and a flatlining economy. It’s no fluke interest rates have been in the ditch for six years because without that artificial stimulus we’d have a jobs crisis and falling incomes. As it is, youth unemployment’s 14% and wage growth trails the cost of living.

Inflation and expansion for the Boomers made making money easy. Buy a house, make minimal mortgage payments, and wait. Every year salaries rose, real estate plumped and debt got easier to pay. Of course, that all ended circa 1989 when rates jumped and houses crashed – but most Boomers think nothing of consequence has happened since then, anyway.

Your parents went to university and it paid off. Tuition was cheap and a degree was gold. A cult of higher education was born, and it became de rigeur for every Boomer baby to head off to college. So now everybody has a degree, and it means diddly. But that piece of paper cost a ton of money, so student debt is off the chart.

Big debt. Few jobs. See where this is headed?

Worse, lots of education and a delayed adulthood don’t equate to more income. According to Stats Canada university grads have made almost no ground over the past decade and a half. For example, the average guy with a BA living in BC earns 39 cents an hour more than a grad did in 2000. Women with a degree make 67 cents more (but still earn lss than $20 an hour).

During the same period, thanks in large part to their parents, house prices have doubled in most places. So what are the wrinklies doing to ensure their children turn into them? Surveys now show at least 40% of the kids expect the Bank of Mom to help them with a real estate down payment. And this march into condo indenture is being assisted by the banks (plus CMHC), who are happy to loan money to people with none of their own, unstable employment, diluted degrees, student debt and little or no credit history.

Of course this is being encouraged by the Boomers at a time when real estate has never cost more and rates have never been lower. So what lessons are being taught when you push your kid to buy an inflated asset with extreme leverage and no skin in the game? That they’re entitled? Or special? Or that real estate always goes up, because it did for you?

As I mentioned yesterday, you can buy the average condo in Toronto with 5% down and $2,465 a month in carrying costs plus $380,000 in debt. Or you can rent it for $1,600. No debt. Leasing spares you from borrowing a dime while giving freedom and mobility to chase elusive jobs in a tight marketplace. It eliminates the substantial risk that even a small real estate correction would wipe out all equity and put you underwater on the mortgage. And it lets you start building a portfolio of liquid assets – essential in a world which could drift inexorably closer to deflation and swampiness in the years ahead.

So, moist virginals, just stop listening to your elders and don’t take their down payment cash (it’s all a plot to keep you from changing cities, anyway). This is not the Seventies or the Eighties. The last thing you should want right now is a boatload of debt at rates destined to rise, which is tied at a property you might be selling at a loss. What helped your hippie parents build wealth in years of double-digit inflation could cream you in the no-growth decade ahead.

They had Jefferson Airplane. You’ve got the TFSA. No comparison.

209 comments ↓

#1 TurnerNation on 04.30.14 at 6:03 pm

Nee Jefferson Starship. Listen to Grace Slick yowling on the chorus of ‘Runaway’. Amazing.

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

#2 vancouverite on 04.30.14 at 6:07 pm

always entertaining!

#3 TurnerNation on 04.30.14 at 6:08 pm

Just checked wiki and it’s the other way around: Starship formed later. Oh well I wasn’t born then…

#4 joe on 04.30.14 at 6:10 pm

I would agree with the logic and disinflation coming….
but just received phone call from my friend in Toronto…
We spoke about RE and he just said it… again..
“Man this is Toronto-Hong Kong of Canada…”
housing would go forever here….you missed the boat…

#5 chopper on 04.30.14 at 6:11 pm

Garth you are right on the money today, my daughter has a degree from UoT and also a RPN and still no job in her field. Educated but works at a grocery store. It is bad out there people trust Me and it will only get worst.

Listen to Garth, it is the best advice. Forget your parents they are wrong.

#6 Michael on 04.30.14 at 6:14 pm

It’s always the same, Garth.

It’s always this repetitive story of doom and gloom with you speaking as if a sage, and the rest of the economists and mortgage holding public are fools.

But month after month and year after year goes by and your doomsday predictions continue to fall flat.

But I suppose if someone shouts that there is a terrible storm coming over and over again for vast periods of time, eventually they’ll get it right.

Eventually a storm does come.

It’s a pity that those that listened to your message from the start have unfortunately missed many years of sunny weather.

#7 Shawn on 04.30.14 at 6:24 pm

A Debt Thought Experiment…

Big debt. Few jobs. See where this is headed?

Right, Canadians have lots of debts it seems.

Question: To whom is the debt owed? To banks you say? But wait, banks created the loans by funding deposits, which are owned to someone other than the bank.

Most banks have more deposits than they do loans.

So, who owns all the deposits? Is is Canadians? Is it corporations including insurance companies? Is it pension funds. Is it foreigners?

Is it possibly the case that while many Canadians are deep in debt, another HUGE group is smiling quietly as all that debt is owed to them.

Perhaps these quiet depositors (and indirect lenders) are renters – but I doubt that – perhaps some are clients of Garth’s balanced approach, perhaps they are people with money in the Orange guys shorts.

What is your guess fellow posters and lurkers?

#8 Retired Boomer - WI on 04.30.14 at 6:25 pm

“One pill makes you larger, one pill makes you small,,, and the one that mother gives you don’t do anything at all…

Ahhh… the 60′s !!!

#9 Patient on 04.30.14 at 6:27 pm

I’ve been waiting for the housing prices to stable down (not even looking for a correction) since 2007, but it that never come through, at least not anytime soon. Sometimes, I get frustrated at the situation I’m in. I am a very frugal person, so does my spouse. We are able to save up one of our paycheck each month and invest. But, that could not keep up with the housing price increments. Even with a good return on the investment (as the investment are at most just equal to half of the house prices).Just sad.

#10 Vancouverbound on 04.30.14 at 6:37 pm

Don’t forget Hot Tuna!

#11 Music Critic on 04.30.14 at 6:38 pm

Jefferson Airplane was a good band though. Marty Balin wrote some great stuff. Like: I had a taste of the real world (at least a drop of it) when I went down on you girl (don’t ever stop it). The stuff these young folks are listening to may be as big a problem as their financial outlook.

#12 Realtor # 1 GTA on 04.30.14 at 6:42 pm

# 8 Patient

A big mistake not to be in the 2009 dip
Some us make mistake and spend a life time
Trying to recover. I feel bad for you

Tapering in its 4th month. How are those
Yeilds?? I thought they would be shooting upwards

70% ownership should dampen demand NOT
Employment flat
I don’t know what you guys have let to hang onto

#13 JOE on 04.30.14 at 6:44 pm

I think that we are here just a shm0cks with no money…
Who is buying that real estate in Toronto…?
We have to get used to 1mil for house in Toronoto- new reality.

#14 Michael on 04.30.14 at 6:45 pm

True enough. But why have those wrinklies also done so well in the stock market over the last 30 years? Because of the huge (and unsustainable) increase in Corporate Profits. I’m not sure a TFSA is going to do that much better over the next few decades.

http://research.stlouisfed.org/fred2/graph/?g=zf5

#15 WhiteKat on 04.30.14 at 6:45 pm

US Senators, Levin, McCain call for US to refrain from FATCA negotiations with Russia. Without a FATCA agreement, Russian banks face 30 percent withholding on US investments. “We should not be negotiating with the Russians to help them avoid FATCA’s sanctions at a time when Russian forces are threatening and continuing to destabilize Ukraine” Levin and McCain write in a letter to Treasury Secretary Jack Lew”. Full text of letter here: http://www.levin.senate.gov/newsroom/press/release/levin-mccain-call-for-us-to-refrain-from-fatca-negotiations-with-Russia#sthash.rNW5bJM7.dpuf

The stunning admission on the part of bi-partisan senators McCain and Levin is that FATCA withholdings are actually sanctions. Wasn’t FATCA supposed to be about catching ‘tax cheats’? FATCA is what the US does to its allies, like Canada; it threatens sanctions against them and forces them to sign so-called Intergovernmental Agreements (IGAs). With enemies like Russia it withholds the IGA so that it can happily impose the sanctions.

What debtor in any situation thinks that they are in a position to dictate the terms of their debt repayment to their creditors? Yet this is what the US has the gall to be doing here, and thinking they can get away with it.

“One of the under-reported but major risks to the U.S. economy stemming from FATCA is the potential for wide-scale disinvestment from the United States by foreign institutions seeking to avoid the IRS, penalties, and huge compliance costs. In fact, countless analysts and financial giants have said the 30-percent FATCA “withholding tax” represents a powerful incentive to get out of U.S. markets entirely. The implications for the stock market, bonds, the dollar, and more could be monumental.” says Alex Newman in his article ” The Dark Road, the Worst Tax Law You’ve Never Heard About’. Read full article here: http://www.thenewamerican.com/world-news/item/17986-the-dark-road-the-worst-tax-law-you-ve-never-heard-about://

The United States sanctions against Russian private individuals will likely backfire against USA companies like Exxon and Pepsi Cola, and will thus be yet another hit against pension programs that have already been absolutely decimated by ZIRP (Zero Interest Rate Policy) since 2008. This is what being a bad neighbour is all about. Imagine the same scenario if Canada had not signed the FATCA IGA with the USA. The US imposes 30% withholdings against transfer payments to Canada. Canada stops transferring oil, gas and electricity to the US. The US seizes Tim Hortons. Canada seizes Walmart, Costco, Target, Sears, Nordstroms, and Best Buy. Um, who is getting hurt? Ultimately such economic wars end in real wars. This is not a game the US should be playing, but 1.5 trillion deficit per year has the US in quite a pickle.

From an article today at Executive Magazine: “What happens when we (USA) start shorting payments on our Treasury bonds (TBs) by 30 percent? A sovereign holder is not subject to withholding, but for a private institution, what if the interest payment is done through SWIFT to a commercial bank that has not signed an IGA? Treasury will take the interest,” said Jim Jatras, Manager of RepealFATCA.com, which is lobbying against the law in Washington. “This is the kind of thing that could promote dumping TBs, and affect interest rates and the dollar as a global currency, which are issues nobody has thought out.” Read full article here: http://www.executive-magazine.com/business-finance/finance/fatca-answering-to-uncle-sam

Thank you for your honesty Mr Levin and Mr. McCain. We never really believed that FATCA was just about tax evasion, or even just information gathering. It is clearly all about COERCION and CONTROL. Thanks for finally cutting the crap and revealing the truth. I’m sure any day now you’ll have Russia on the run.

#16 Rogie on 04.30.14 at 6:53 pm

Garth please admit you are wrong and
let these poor people get on with their lives.

#17 YourTearsFeedMe on 04.30.14 at 6:55 pm

Michael and patient if you guys want to buy a house do so at your own peril. Does it make sense to you why homes are so expensive, or why price to rent ratios are off the charts? If Garth was issuing a stock tip about Nortel, is he giving bad advice if the stock was at $25 and we knew it would go past $30, even though the fundamentals aren’t there?

#18 truth seeker on 04.30.14 at 6:56 pm

#6 Michael on 04.30.14 at 6:14 pm

Well said. Couldn’t agree more. I’m tired of waiting for correction.

#19 mitzerboy on 04.30.14 at 7:02 pm

all I can say is …

I am sure glad we never had the instant photo and video stuff like we do now back in 1979…

#20 Short sighted on 04.30.14 at 7:05 pm

Its amazing how short sighted the heard can be. I just cant fathom how this could possibly end well. I firmly believe Canada is in big trouble. There isnt much heroin left to inject. Keep your powder dry the buying opportunities are going to be superb. As Buffet likes to say. Be fearful when people are greedy, and greedy when people are fearful. All thats need is a catalyst, a match, the music to stop and it stampede for the door.

#21 not 1st on 04.30.14 at 7:05 pm

Don’t listen to them?

Have you happened to notice who is running the country and all our major institutions?

#22 Smoking Man on 04.30.14 at 7:05 pm

It’s an obedience certificate. Not a degree… If you challenged your teachers opinions, if spoke truth to power, no certificate for you. No advancement…

I’m living proof…

My story.
High School
Bus Boy
Rivet bucket
Un documented Engineer.
Storm Door Retailer.
Window and door mfg.
Overseas sales agent.
Importer, building materials China.
Code Smith, working for the big boys.

So to be world renowned fiction writer. 3 books max.

Old age and Death..

#23 LB on 04.30.14 at 7:06 pm

There is continued talk of doom and gloom, but yet the prices of real estate keep going higher and higher. Really, when will it end? When is this “soft landing” going to happen – I’d really like to know. Because like a lot of others, we’ve been waiting for years for something to happen. A part of me wishes real estate here in Toronto will crash, but then again a part of me believes much of the Mainland Chinese money will keep it afloat. For example;

A townhome condo here at the border of North York/Markham went up for sale last week for $469,000. I watched all week how many cars arrived to view the house. I’d say within a week or so there were well over 50 vehicles that came to see the place. The agent told me there was an offer for $500,000 and she expected it to go for higher once all offers were on the table. 98% of those who viewed the home were of Asian descent – so there is money out there to keep this thing going. I just don’t see a stop to this madness really.

And as for jobs, you are right. There is no work out there.

#24 Johnny on 04.30.14 at 7:07 pm

A QUESTION FOR SMOKING MAN.
Hey bud, i have a question for you.
Where do you think might be a good area to do a RE flip on a property assuming i could carry it for a year or two….cheers mate.

#25 not 1st on 04.30.14 at 7:09 pm

So Garth, in the past you said clearly that earnings drive the stock market, nothing else.

Then care to explain what is happening in the DOW now? Earnings disappoint on dozens of major companies, retail sales and housing in the dumps and a number of major banks caught with their pants down again. Add in all the stupidest tech mergers and take overs.

Since you hardly post about the equity markets anymore, I suspect that sucker is peaking, creaking and about to take it on the chin ala 2000.

74% of corps have exceeded estimates. Q1 profits up 3.4%. Stop embarrassing yourself. — Garth

#26 Mister Obvious on 04.30.14 at 7:11 pm

#6 Michael

Straw Man Fallacy: Taking a person’s actual stance and substituting an alternate one that is more easily criticized but not factual.
——————————

Garth has been consistent for years. No catastrophic RE crash in Canada. Rather, most probably, a 15% correction (national average), followed by a long period of slow devaluation. From that, the following shakes out:

Older people who are depending entirely upon the equity in their homes to fund their retirements are at great financial risk.

Younger people who take on crippling debt loads to buy severely overpriced residential RE are at even greater financial risk.

People for whom real estate equity represents a sensibly balanced portion of their total net worth haven’t nearly as much to worry about.

That represents the bulk of the consistent long term message on this blog regarding real estate.

#27 Old Man on 04.30.14 at 7:13 pm

#5 chopper – perhaps your daughter with an RPN has been looking at traditional fields for employment. This too has changed over the years, so just where has she been looking for employment?

#28 Nemesis on 04.30.14 at 7:16 pm

“No comparison.” – HonGT

Indubitably.

http://youtu.be/SboRijhWFDU

#BonusBlastFromTheDistantMaplePast

http://youtu.be/mDSaEWdMbI4

#29 jess on 04.30.14 at 7:19 pm

fast food ceo’s must be really miffed at this

http://www.demos.org/publication/fast-food-failure-how-ceo-worker-pay-disparity-undermines-industry-and-overall-economy

April 29, 2014
by Michael Winship
http://billmoyers.com/2014/04/29/fast-food-pulls-a-fast-one/

#30 Van Isle Renter on 04.30.14 at 7:25 pm

I call “SHENANIGAN” on your trashing of a getting a degree. It depends on what degree you get. Medieval Basketweaving? I’ll grant you that it is a waste of time and $$$. Engineering or Applied Sciences? You better get a rake because you’ll need one to pile up all the cash people will pay you.

As with everything, there are good and bad decisions in life. Choose to get a marketable degree and you are laughing. Follow your “bliss” and be prepared to eat cat food.

#31 Mike T. on 04.30.14 at 7:27 pm

‘It’s no fluke interest rates have been in the ditch for six years’

to be fair, it is much closer to 5 years

http://www.tradingeconomics.com/canada/interest-rate

I don’t think this changes anything though

To be accurate, BoC overnight rate crashed to 1.5% in late 2008. — Garth

#32 CPG on 04.30.14 at 7:29 pm

Shale Drillers Feast on Junk Debt to Stay on Treadmill

#33 Jsan on 04.30.14 at 7:29 pm

I’m guessing that this percentage will be much worse here in Canada for those who have mortgaged their futures away over the last few years. Once the bidding war euphoria wears off and the stark reality of their foolish financial decisions begin to set in, again, I’m sure there will be many Canadians with some serious regrets.

1 in 4 homeowners regrets buying a house

http://finance.yahoo.com/news/homeowners-regrets-buying-a-house-redfin-163113390.html

http://finance.yahoo.com/news/homeowners-regrets-buying-a-house-redfin-163113390.html

#34 Smoking Man on 04.30.14 at 7:30 pm

#23 Johnny on 04.30.14 at 7:07 pm

A QUESTION FOR SMOKING MAN.
Hey bud, i have a question for you.
Where do you think might be a good area to do a RE flip on a property assuming i could carry it for a year or two….cheers mate.
…………………………………………………

Longbranch south of lakeshore, if you can find one, small run down bungalow. Knob and tube….termites. dump.

Renovate and double the value…

#35 Old Man on 04.30.14 at 7:32 pm

#5 chopper – I just checked out the market for the RPN degree using an untraditional method on the Canadian website called ‘Indeed’. The jobs are being posted on an hourly/daily basis as the market has demands for this profession in a variety of sectors.

#36 Pope SixPackSexBomb Snugglebums the 666blt (aka Nosty) on 04.30.14 at 7:43 pm

“Big debt. Few jobs. See where this is headed?” Yup, everything is changing big time.

#166 Aggregator on 04.30.14 at 4:16 pm, SMan et al, Great links Agg, and in conjunction with a stuttering US economy, C-new taxes-C, Monsanto, Agenda 21 and similar, remember the TPP?

China is now looking at beginning its’ own version of the TPP (possibly including Africa). China and Russia make deals, NATO and the west simply drop bombs and expects everyone to kiss their ass (Vietnam proved that fighting a war from the air doesn’t work), but this would mess the west up, esp. as the TPP is floundering. It also includes the PMs market, India.

#37 Tony on 04.30.14 at 7:49 pm

Another good reason not to buy a house in Canada is this country always taxes the rich. If you own a house even if it falls in price your property taxes will rise anyway. If you live like the poor and rent you won’t get these tax increases.

#38 I'm stupid on 04.30.14 at 7:54 pm

@#11 Realtor #1 GTA

SMH at how stupid you are. Don’t worry, you’ll learn what balance means eventually. I’m going to admit I own Realestate but I’m not going to rush out to spend every penny I have to buy more. That’s the point and the problem with 70% ownership. The top end has a safety net (savings) and the bottom doesn’t.

If you’re in your 20s try to save 100k first. This will teach you how hard and long it takes and give you prospective on current prices. The entire world knows we’re screwed why are we so blind?

#39 Steve on 04.30.14 at 7:56 pm

Most boomers I know are sanctimonious flobs. They definitely live unaware of what a greased ride they got as a group. I’m sick of them. Living in the okanagan valley will wear you out on old. They clog up the highways, clog up the clinics, clog up the buffets. Also every single day I have to listen to their sixty year old crap music in an endless loop on the boomer dominated radio stations at work. Enough!! Go to a nursing home all of you! And screw off with your bloody Harleys ripping around town with gutted out exhaust pipes. You’re pushing seventy for gods sakes!! Let us climb the ladder that you roost at the top of like a bunch of bloated owls. Dripping wisdom on our wretched underpaid heads. Gen X and all the rest of the kids you despise think you’re ridiculous. Try setting a bloody example and live within your actual means and for the love of all that’s Holy, knock it off with the unsolicited advice!!!!!

#40 James on 04.30.14 at 7:59 pm

#29 Van Isle Renter

Not so. The STEM fields experience cyclical performance. 5-10 years ago you couldn’t get much work as a graduating engineer, computer scientist, etc. You might recall something called the dot com crash, for instance.

Certain fields are probably alright in Canada. Mining, etc. I recall chemical engineers having a really really hard go of it here. The cycle will turn, probably in 1-2 years. Right now those fields are okay. Long term, I would rather be in health care, because that is an industry with endless demand.

#41 vladimr on 04.30.14 at 8:00 pm

china criticizes us on sanctions against russia
http://thebricspost.com/china-criticizes-us-sanctions-against-russia/#.U1-fePldWap
dont these Chinese dummies know that the US dont need russia or china to survive ,a few sherman tanks from WW2
would spank em good oh ya and the US could easily supply natrual gas to all of europe (after fracking the sh*t out of it of course )so russia should bow down to the best and most powerful empire in the world or else the us will frack, liquify ,ship natrual gas to europe and sell it to them cheaper than russia could . dam commies

#42 Pattie Weatherill on 04.30.14 at 8:01 pm

Garth, I love your sense of humor and take your words to heart! Great advice every day. Thank you

#43 DigDeep on 04.30.14 at 8:14 pm

Great synopsis #25 Mister Obvious

Garth is not a dooms-day-er. Quite the opposite. He is offering free, educated and validated advice. We should all be grateful for that.

Meanwhile in Doomsday News: Ontario budget tabled tomorrow. If it passes watch RE bump down as corporations decide what to do with a tax increase and companies do a headcount with an imposed Ontario Pension Plan to pay for.

This debt party is far from over. It may never be in the “Keep It Beautiful” province.

#44 Harbour on 04.30.14 at 8:15 pm

$1,600 ???????

I’m renting a full furnished 2 yr old basement suite (VERY NICE !!!) in upscale Edmonton with cable, wi-fi and utilities included for $895 a month

#45 Mark on 04.30.14 at 8:21 pm

“Not so. The STEM fields experience cyclical performance. 5-10 years ago you couldn’t get much work as a graduating engineer, computer scientist, etc. You might recall something called the dot com crash, for instance.”

Its still like that. The loss of Nortel and the heavy offshoring/outsourcing of IT has been devastating to Canada’s engineering professions in that area.

#46 omg on 04.30.14 at 8:25 pm

#6 Michael, #8 Patient

#1 rule of investing – nobody knows the future, period. For every really smart guy saying XX will happen, I can find a really smart guy saying it will not.

#2 balance your risk – this is were you look at Canadian RE and ask yourself what is the risk of buying now, particularly in hot markets like TO and YVR. Could it continue to increase at 5% to 10% annually?, could it fall by 15%?, could it just stagnate and lose value in real terms for the next decade?

Nobody has the answer so you have to judge the risk yourself and make a decision.

I’ll show you my bias – do up an spread sheet and increase prices in TO (or YVR) by 5% and 7% compounded annually for the next ten years and see who can afford anything.

#47 Bottoms_Up on 04.30.14 at 8:26 pm

Got my Enbridge bill today.

“Typical residential homeowner [just got shafted] an additional $400 per year”.

I believe typical residential income is around $80,000/yr (net $55,000?), thus Enbridge has just taken a 0.75% chunk out of family incomes, every year, for the rest of their lives.

Can this end well?

And when it comes time to negotiate your next salary, keep these numbers in mind.

#48 Old Man on 04.30.14 at 8:27 pm

#43 Harbour – do you go upstairs for dinner, as bet your mom is a great cook :)

#49 Habs76-79 on 04.30.14 at 8:27 pm

You know, I was just thinking after reading Garth’s post toady and some comments where it’s asked when will Canada’s real estate boom (nightmare) come to an end.

Well an analogy came to mind.

Tungsten light bulbs. You know each and every evening when you turn one on, IT LIGHTS! All is well. Things look tickity boo perfect as you have the light for your room and needs on any given evening. How can we tell when the light bulb will expire? AND IT WILL ONE NIGHT! Well you can’t tell until the one evening when you go to flip the switch to turn it on and IT GOES POP WITH A FLASH! At that point you will know the bulb that you relied on night in night out, just expired.

That is what may very well happen with the neurosis of today’s Canadian real estate market? We think it will always be just perfect. What can go wrong? Well our neighbours to the south and in other places such as England and Spain to name a few others saw it all crash around them. WE AIN’T SPECIAL MY FELLOW CANUCKS!

#50 Jsan on 04.30.14 at 8:32 pm

#6 Michael on 04.30.14 at 6:14 pm

It’s always the same, Garth.

It’s always this repetitive story of doom and gloom with you speaking as if a sage, and the rest of the economists and mortgage holding public are fools.

But month after month and year after year goes by and your doomsday predictions continue to fall flat.

But I suppose if someone shouts that there is a terrible storm coming over and over again for vast periods of time, eventually they’ll get it right.

Eventually a storm does come.

It’s a pity that those that listened to your message from the start have unfortunately missed many years of sunny weather.

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

Michael, I have met many people such as yourself over the years. All you can understand or grasp is what is on the surface, you do not understand the underlying structure.

It is so beyond obvious to people such as Garth, myself and many others that this will end very badly. The frustration is that there are way too many people such as yourself who just can’t grasp or understand what really is a VERY simple concept. When you have individuals and families purchasing houses at unbelievably high prices with VERY low and very manipulated interest rates that can ONLY go higher and WILL one day go higher, this can only end disastrously.

I used to work at Nortel. I remember telling a few co-workers not to participate in the employee stock program when the stock was at ridiculously lofty levels. Well guess what, the stock price kept going higher and I heard about it everyday from them. It didn’t faze me though because I understood the underlying reasons as to why the stock was so overvalued and why it would not last. Well when the stock eventually crashed all of a sudden I went from being despised to being the hero to these people. Why they could not understand or see what was so obvious to myself I do not know? The same goes for this ludicrous Canadian housing bubble. Why people such as yourself cannot see what is so obvious to many of us I do not understand?

Enjoy your mocking however I am very confident that as Garth has pointed out for awhile now, THIS WILL NOT END WELL, GUARANTEED!!!!!

#51 TheCatFoodLady on 04.30.14 at 8:33 pm

As generational cohorts, we can only teach what we know or think we know. Sometimes we’re right, sometimes we’re wrong.

My generation bemuses me – as we moved through life we changed… everything, often because of sheer numbers. Many of the changes were good – long overdue. Others – not so much. We saw our parents do well with real estate & many of us who bought also did well. We didn’t look at the long term demographic consequences of our own life choices. Economic success in modern societies is based on a pyramidal population structure… oops! We’re below replacement numbers in Canada & many of our kids feel they have to delay marriage/children for a number of reasons. Many don’t want to go that route at all.

We didn’t teach them to save – either by talking about it or by example & please understand I’m not speaking of everybody.

We did tend to push degrees. My ex pushed hard for that. It worked for my oldest but he knew exactly what he wanted & how to get there. My youngest took a degree in history because he loves it – realizing too late his job/career options were limited. He works in logistics – only junior there without a business degree. At least it pays his bills while he figures out what next & neither brat has student debt.

I’m not sure when we got so big on keeping the junior adults kidlets close to we parental units. As a generation we did a lot of hop scotching around the world, chasing dreams, chasing jobs. Not many parents have hysterics when their young adult children want to do same & yeah, typing them down with a starter condo certainly will keep them close to home… & your wallet.

My oldest is up north & every 5-6 years will go somewhere else through his job. I strongly encouraged him to go outside the box while he wasn’t tied down. My youngest is an adopted east coaster & although I appreciate his love of the place, he’d be better off heading elsewhere for 5-10 years, getting his stuff together & going back when he can do more than ‘just pay the bills’.

The biggest mistake I made was ‘assuring’ the kids that based on demographics; a ton of boomers heading for retirement age, a decent career choice should almost ‘guarantee’ them employment. I didn’t think about the impacts of offshoring, automation, debt laden boomers choosing not to retire or a host of other issues.

They’ll both be okay but yup – the world they live is very different from conditions that existed when I grew up.

#52 Bill Gable on 04.30.14 at 8:34 pm

He read today’s post, as he sipped his 5 buck Latte. He looked up at me, over the Mac, a few times. He humphed, twice.
“This Guy Turner sure loves Real Estate”.

My Agent friend made me pay for the caffeine. (*He hasn’t sold squat since February).

Case closed.

#53 Nemesis on 04.30.14 at 8:38 pm

@VanIsleRenter/#29

“It depends on what degree you get. Medieval Basketweaving?” – VIR

You’d be surprised how useful one of those can be sometimes…

http://youtu.be/o3uf4YSwY9I

@SmokingMan/#21

Believe it… or not. There once was a time when they were called ‘DisobedienceCertificates’. And then came TheSuits.

@Steve/#48

I feel your pain [with abject apologies for the Clintonism]. NoSarc. We Dazed&Confused were just OldEnough to understand what was going on… but too young by far for a seat at ‘TheBanquet’. When the last ellipsis had been typed on that ComingOfAgeScript – TheParty was well and truly over.

Many didn’t make it past the nineties. TheSurvivors do, actually, understand your angst. Some are even trying to TurnTheTables.

http://youtu.be/Ls_8cFgBUj4

#54 Harbour on 04.30.14 at 8:40 pm

and to add…

Your high school dropout general contractor makes more then a degree in Alberta. lol

#55 vladimr on 04.30.14 at 8:41 pm

Today we’re closer to systemic deflation ~Garth~
systemic deflation WTF ? stock markets the world over have risen to record levels which is inflation some countries in double digits like venezuala at an astonishing 700+ % even my cash in the stocks have inflated so have my gas ,groceries,heating ,hydro,water,insurance,education,..BILLS.but oh ya I can get an Iphone or an Ipad for cheaper than last year (your definition of deflation ,if you get my drift wink wink )all the while my wage barely budged from 5 yrs ago Garth if you dont post this thats fine by me but may I ask where did you get your education on the subject of inflation/deflation forces on currency because you can spew all your deflation theories into fantastic words arranged in fancy order as to almost ………you know make it believable .Its just that I actually purchase things I use to survive such as food and based on my math is more per dollar unit than it was last year and everything else mentioned above . thank you for your time Mr Turner

You state your wages have barely increased over five years. That’s how deflation works. — Garth

#56 GTA Engineer on 04.30.14 at 8:44 pm

74% of corps have exceeded estimates. Q1 profits up 3.4%. Stop embarrassing yourself. — Garth

Garth my friend – they’ve pulled the wool over your eyes like everyone else:

EPS are up. Why? Because earnings are up per share of course, but why?? Earnings have increased due to cost cutting, not due to revenue growth. In addition, the # of shares outstanding has gone down because corporations are buying back shares to make their EPS ratio higher. A lot of these shares are being bought back with NEW DEBT. So yes, corporations are flush with cash, but their cash-to-debt ratios are the WORST in 15 YEARS. (Source: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/04/DB%20cash.png )

Let’s not delude ourselves – companies are not healthy. They’re playing games to keep investors happy, because investors care more about EPS than the fact that the companies are loading up on debt to fuel EPS. But what happens when interest rates rise, as you admit will happen and impact homeowners? Companies are in BIG trouble. It’s coming Garth, call me a doomsdayer, but it WILL happen. Noone knows when, but the bell will toll..

Yours already did. — Garth

#57 Nemesis on 04.30.14 at 8:45 pm

Yikes!… almost forgot…

@PopeSixPackSexBombSnugglebumsThe666blt/#35

Correct. DeathFromAbove solves nothing… and usually makes things worse. Far worse. There are no good wars.

Just popular ones.

http://youtu.be/dcmwPYCUysw

#58 Aggregator on 04.30.14 at 8:45 pm

Craigslist GTA Average Rental Price Index (Rental Offers) – Chart

There's a large diveraging trend taking place between decelerating 1-2 bedroom and rising 3-4 bedroom prices; mainly due to smaller condo units and divided homes. However, if measured by value on a square foot year-over-year basis, price growth is likely in the double digit rate for all 1-2 bedrooms within the GTA. (Note: one bedroom listings make up 47% of Craigslist listings.)

The new way Toronto condo developers are saving space

#59 Harbour on 04.30.14 at 8:49 pm

DELETED

#60 johnny d on 04.30.14 at 8:50 pm

All this talk of “doom and gloom” forecasts. The real doomsday predictions come from RE bulls who say prices will increase forever because rates will stay low or go lower?

Seriously think of the implications of that? A worthless currency, painful price inflation for everyday goods and services, tax increases, a huge slowdown in retail due to inflation, lost jobs and eventually it all will crash hard.

A 15% correction in the housing market is just what the doctor prescribed to fix a long painful downturn in the overall economy.

Sustained low rates and ridiculous house prices might benefit a few greedy, short sighted people now but will ultimately hurt the quality of life for many in the long run.

#61 rower on 04.30.14 at 8:51 pm

Well said, Garth.

Just got off the phone with 20 something year old son with great job who complained about the cost of houses. I told him to keep renting, pay off debt and save for the future because house prices are going to correct big time.

His dad and I lived through the 80s correction. We were renting at the time and watched many of our neighbours move out of their homes in the middle of the night. Foreclosure sign was on the window the next day. It wasn’t pretty then and it won’t be pretty this time.

Hope you are healing nicely, Garth.

#62 Bottoms_Up on 04.30.14 at 8:52 pm

#5 chopper on 04.30.14 at 6:11 pm
—————————————-
Your nursing friend either doesn’t want to be a nurse, is not looking in the right places (ie doesn’t want to relocate), or in the wrong area of nursing specialty.

There are tons of nursing jobs out there.

#63 GTA Engineer on 04.30.14 at 8:53 pm

Yours already did – Garth

Here’s a fine example. Apple issuing $17 billion in debt to buy back shares. Yes, EPS going up – woo! Oh, $17 billion in debt? No biggie..

http://appleinsider.com/articles/14/04/28/apple-preparing-17b-bond-sale-to-help-fund-massive-share-buyback

Of course part of this is because Apple is out of cash in the USA and doesn’t want to repatriate foreign cash because it would cost them a big tax bill. But this is happening in many companies.

It’s akin to me taking out a huge mortgage, buying a sawdust+glue box in Leaside for 2 million, and claiming, hey, I’m $2 million richer! Umm. no.

#64 Daisy Mae on 04.30.14 at 8:57 pm

“So what lessons are being taught when you push your kid to buy an inflated asset with extreme leverage and no skin in the game? That they’re entitled? Or special? Or that real estate always goes up, because it did for you?”

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

This blog, combined with that picture of the idiot parent above, tells us that we can’t think for ourselves, we don’t have any sense at all…we’re just plain STUPID. I guess we will ‘reap what we sow’….

#65 Smoking Man on 04.30.14 at 9:02 pm

Nemesis
@SmokingMan/#21

Believe it… or not. There once was a time when they were called ‘DisobedienceCertificates’. And then came TheSuits.
…………

True, but that was just before my time..

#66 bullacacca on 04.30.14 at 9:16 pm

no inflation? Where do u shop sir? Where do u pump gas sir ? I own rental condos in Downtown Toronto, every year the rents go up.Where do u live sir?
I think u are full of bullacacca

#67 Realtor # 1 GTA on 04.30.14 at 9:17 pm

# 37 I’m stupid

What happened too….
-Tapering causing yeilds to rise
- baby boomers retiring and selling their home yet
Listings are down
-70% owner ship yet sales have increase from last year
- new insurance rules reducing buyers

Time and time again we wait for something holding
On to anything that May or may not cause this crash
And time and time again we hear of bidding wars.

If so many people bought will little down and have large mortgages and are in and over their heads how come listings are down

Please some explain to me why prices are high than last year but interest rates are the same

You have nothing left to hold onto – this 70% ownership
Appears to be your new “weapon” because I remember reading this blog on 2011 2012 about interest rising gues what they are about to renew at still low rates

If the market is torrid why are you posting here hourly? — Garth

#68 Harbour on 04.30.14 at 9:19 pm

#47 Old Man on 04.30.14 at 8:27 pm
………………………………………………………………………….

No, I’m no relation to the landlord.

#69 sheane wallace on 04.30.14 at 9:22 pm

Tuition was cheap and a degree was gold.
—————————–
I thought gold was useless. Barbarous relic.

#70 Old Man on 04.30.14 at 9:23 pm

There are huge corporations and airports in the L.A. area whereby their computer systems are not working anymore. I wonder what is causing all these problems.

#71 not 1st on 04.30.14 at 9:23 pm

Garth, if the GDP of Canada and the USA is hovering about 2.5-3% and adjusted inflation is at about the same, well just pop those two concepts into your financial calculator and tell us the result.

Or I can save you some time. The economy is flatlined and no amount of bogus wall street headlines is going to change that. Mathematics is the ultimate boss.

#72 not 1st on 04.30.14 at 9:27 pm

#45 omg on 04.30.14 at 8:25 pm

Rules of investing, as portrayed in wolf of wall street. (Language warning)

DELETED

#73 omg on 04.30.14 at 9:32 pm

#62 GTA Engineer

Seriously, use some of that engineer grey matter to look at the financials of the company. Numbers look big, but are small compared to the size of the behemoth that is Apple.

AAPL issued a variety of bonds with several maturities and yields. The yields are so low compared to what AAPL returns on capital that it would be contrary to shareholders best interest to not borrow at these rates. Back-up the truck!

As for Apple being out of cash in the US look at what there quarterly cash-flow is in North America.

BTW, AAPL debt is about 7% of its current market cap and about 1/5 of cash on hand.

Basically if a company I own can increase my ownership by buying back share I like it.

#74 Piccaso on 04.30.14 at 9:35 pm

I remember a teacher telling a friend of mine that dropped out of school he’d be nothing more then a ditch digger.

Well he’s a multi millionaire with a shop the size of Walmart and millions of dollars worth of machinery and he digs ditches.

#75 Victor V on 04.30.14 at 9:43 pm

They had Jefferson Airplane. You’ve got the TFSA. No comparison.

You can say that again.

Just reconciled my TFSA account for month-end. After maxing contributions, am sitting at a little over $39K — that’s 8K gain since inception.

Keeping fingers crossed that the Feds increase the annual limit to $10K so I can build this thing up into the 6 figures in the next few years.

Curious as to how some of you other blog dogs are faring in your TFSAs? Anyone care to share their $?

#76 Trojan House on 04.30.14 at 9:55 pm

#54 vladimr on 04.30.14 at 8:41 pm

Garth is right, but it’s more like stagflation. Exactly what Japan has been going through for the last 25 years.

#77 Andrew Woburn on 04.30.14 at 9:56 pm

What helped your hippie parents build wealth in years of double-digit inflation could cream you in the no-growth decade ahead.
===========================

Garth could also have mentioned that boomer real estate investments benefited hugely from the growth in population. There are about twice as many Canadians now as in the Sixties and a far greater proportion of them live in a few major urban areas. That population growth is gone and the so-called population pyramid of age groups looks more like a Christmas tree these days.

The French have a term for the period in which the boomers grew up – “Les Trentes Glorieuses” or the “Glorious” thirty years between 1945 and 1975 in which the rebuilding of capital after World War II plus the population growth plus the surge in productive technologies led to an unprecedented boom in Western economies. That’s not happening again but boomers and their free-spending politicians believed it was the new normal.

The notion that the West will have low growth for decades may make sense given the tapering population but one-third of the world’s population lives in India, Indonesia and China. There is no reason to believe they have given up on long-term growth. Canada was settled by people who moved here for better opportunities. Maybe the next generation of Canadians will have to repeat that cycle.

#78 Marco Polo on 04.30.14 at 9:58 pm

I like all the Garth bashing here tonight, its really telling. I expect we’ve found a busload of boomer realtors, who’ve just found a wifi connection..

Seriously, a blind man could see that any inflated asset should usually be avoided, as the ROI is usually low, and the risk is high. Nortel, even Apple stocks and Gold are not as hot as they were. It’s a time to sell real estate, and gain more balanced, managed assets.

Besides, who would want to pay market rates for Canadian RE, when far sunnier parts of the US, Spain, and Greece are on fire sale, many with a much higher quality of life then here.

I especially enjoy seeing new oversized POS homes here in Alberta, built to the prairie standard, with only dirt supporting the foundation. We have many foundation problems here with older homes, almost unknown when I lived on the bedrock of the Canadian shield.

You certainly don’t get what you pay for.

#79 randman on 04.30.14 at 10:06 pm

Oh boy….

http://news.xinhuanet.com/english/sci/2014-04/25/c_133290171.htm

SHANGHAI, April 25, (Xinhua) — A private company in east China recently used a giant printer set to print out ten full-sized houses within just one day.

The stand-alone one-story houses in the Shanghai Hi-Tech Industrial Park look just like ordinary buildings. They were created using an intelligent printing array in east China’s city of Suzhou.

The array consists of four printers that are 10 meters wide and 6.6 meters high and use multi-directional automated sprays. The sprays emit a combination of cement and construction waste that is used to print building walls layer-by-layer.

Ma Yihe, the inventor of the printers, said he and his team are especially proud of their core technology of quick-drying cement.

#80 OttawaMike on 04.30.14 at 10:06 pm

#46 Bottoms_Up on 04.30.14 at 8:26 pm

-thus Enbridge has just taken a 0.75% chunk out of family incomes, every year, for the rest of their lives.
—————————————————-

The increase is supposed to be interim/temporary. We will see if that turns out so.

http://www.thestar.com/business/2014/03/27/enbridge_gets_hefty_interim_rate_increase.html

#81 Ben on 04.30.14 at 10:07 pm

Poster who mentioned modern societies only working for a pyramid demographic hit the nail on the head.

When can we default on the obligations the boomers signed us up for? Now when it will hurt a bit or later when the whole thing is near breaking point?

#82 Saskatoon-Living on 04.30.14 at 10:09 pm

“Boomers are the worst collective source of information on the planet” -Garth

Agreed. But aren’t you a boomer??

‘Collective.’ — Garth

#83 45north on 04.30.14 at 10:09 pm

Inflation and expansion for the Boomers made making money easy. Buy a house, make minimal mortgage payments, and wait. Every year salaries rose, real estate plumped and debt got easier to pay.

Your parents went to university and it paid off.

guilty as charged

jsan : It is so beyond obvious to people such as Garth, myself and many others that this will end very badly.

it’s beyond obvious to me

Bill Gable : talking about his friend the real estate agent:

He read today’s post, as he sipped his 5 buck Latte.

My Agent friend made me pay for the caffeine. (He hasn’t sold squat since February).

Case closed.

pretty funny

#84 boopsie on 04.30.14 at 10:09 pm

Breaking
Mayor ford on leave
G&M at about 9.14pm
Mayoral race just got interesting

#85 Babblemaster on 04.30.14 at 10:09 pm

“It’s no fluke interest rates have been in the ditch for six years because without that artificial stimulus we’d have a jobs crisis and falling incomes.” – Garth

——————————————————–

It’s a Ponzi scheme. Because of all this stimulus we have lots of jobs, high income and juiced up stock market. Wonderful. However, all ponzi schemes eventually crash. Don’t they?

#86 Cici on 04.30.14 at 10:14 pm

Gawd Garth, you sure have a lot of RE trolls trying to sway opinions on your blog tonight. They must be going hungry and getting more and more desperate…

#87 chopper on 04.30.14 at 10:18 pm

#34 old man-Thank you for the tip, I will let her know about the indeed website. She has sent out more than a dozen resume to local hospitals, and senior homes and no reply. Two degrees and tens of thousands spent over 8years and nothing in return. This country is in big trouble, everybody thinks all is OK, to call it as it is you are labeled a pessimist.

We will face the truth one way or the other, time will tell.

#88 GeorgeSoonToBeRetired on 04.30.14 at 10:19 pm

#6 Michael

So sad for you, Michael, you and your wife both real estate agents and having to come here to try to desperately deny the obvious.

Listings down is the only reason prices are up, end game now happening in the bubble era. It is classic market behaviour and wont end well.

#89 HogtownIndebted on 04.30.14 at 10:23 pm

To those on this blog who have made comments that defended Rob Ford, you are complete asses and morons.

Period.

#90 Notta Sheeple on 04.30.14 at 10:24 pm

“……Of course, that all ended circa 1989 when rates jumped and houses crashed……….
=========================

Shortly thereafter, in the early 90′s and under intense lobbying pressure from the Canadian Banksters Association, the Bank of Canada conveniently removed ‘mortgage interest’ from it’s Consumer Price Index calculations, in order to create a new ‘Frakenumber’ of its own, thereby giving Canadian citizens the illusion that all is well within their household budgets. Borrow, borrow! Spend, spend!

It worked out quite handsomely for the Big Five. Record Canadian bank profits, year after year even through the 2008 crash, while the average Canadian citizen chokes on record mortgage payments and personal debt.

The banks are running scared, now that gravy train has run out of coal, with even my lowly bank teller is now being programmed at the wicket computer screen to chastise me for being a ‘renter’ for throwing money away.

“A mortgage makes much more sense for you” she lectures.

I reply that by the time I remove condo fees, property taxes, utilities, not to mention maintenance from my rent, I’m basically renting my one-bedroom apartment for about $350/month, leaving me my entire disposable income to grow under my own control.

She rolls her eyes and gives me that ‘You’ve been reading Garth Turner’ look. “Next customer in line, please….”

#91 4 AM Sunrise on 04.30.14 at 10:26 pm

$35k in the TFSA. My statement-auditing helicopter parent pressured me to buy GIC’s the first 5 years. I untethered myself this year and bagged 8% YTD.

Another thing I discovered after untethering myself is that in bars and in general, men in their 50′s really like talking to me (Stranger Danger!). (I’m in my 30′s but tend to pass for younger). They express frustration with the stock market. They talk about HFT-bots and dark pools. And real estate:

HIM: Well, I’m not that good at investing, but I’ve done pretty well with real estate.

ME: Generational advantage!

HIM: …and my father was pretty good at it, too.

ME: Generational advantage!

#92 Suede on 04.30.14 at 10:28 pm

Go to university they told me…
Buy a condo they advised me…
Settle down they pressed on me…

Boomers all have the same advice. Go against the flow and you have a chance to make out different, for better or worse.

Or just buy a house with a huge mortgage and finance a BMW for 72 months to impress your friends. Find out a few months later how hollow you still feel and then you’ll have learned your lesson.

Except it’ll take you about 5 years to dig yourself out of the hole and you’re back right where you started.

ps. Dow Jones all time record high in Canadian Dollars. Ditto for S&P 500

boom

Where’s Shawn tonight? I would read his blog if he had one. I like his patient and thought out writing style.

#93 Cici on 04.30.14 at 10:31 pm

One more reason to love renting: found out yesterday that our rental home (that we had a chance to buy last year), which is already located on a busy street, will soon be directly facing a six-level, 60-unit condo building.

This neighbourhood was once high-end and peaceful, but they keep putting up more and more condo units, and traffic is already a mess.

So glad that we didn’t buy, only to find out shortly afterwards that the small empty lot across the street would soon be filled with towers overshadowing our sunshine and privacy.

#94 WileyM on 04.30.14 at 10:34 pm

#29 Van Isle Renter
#39 James

University of Alberta career office advising recent electrical engineering graduates that they will have to move to find work. Presumably to the United States because there are no jobs in supposedly booming Alberta (or the rest of Canada). My son has been looking for months and there is nothing out there. He is willing to relocate.

Also engineering students being laid off in the middle of their co-op placements. So why are the Conservatives building another engineering school in Calgary?

#95 Dual Citizen In Canada on 04.30.14 at 10:35 pm

How could anyone promote going into debt a life strategy? A home is a place to live, not a monetary investment. I think the same people who purchase homes also play the lottery in hopes of becoming debt free. People seriously need to wake up or get educated. Garth is doing his best. What do you think is in it for him? He has no obligation to help anyone, yet he churns out, night after night, real world advice based on a lifetime of experience. People really need to take the red pill.

I rent, therefore I am!

#96 Son of Ponzi on 04.30.14 at 10:37 pm

They had Jefferson Airplane. You’ve got the TFSA. No comparison.
____________________________
Right on, Garth.
White Rabbit vs. TFSA.
No contest.

#97 4 AM Sunrise on 04.30.14 at 10:40 pm

#92 WileyM on 04.30.14 at 10:34 pm

This is the first time I’ve heard about co-op students being laid off. How badly is a company doing that they have to lay off a somewhat-underpaid intern? Ouch! At least these students can now say their placement definitely gave them experience in the real working world.

Bonus question: was the co-op student then replaced by a temporary foreign worker?

#98 takla on 04.30.14 at 10:42 pm

Whats the chances our current flat economy slides into stagflation Garth?We are all painfully aware of the riseing cost of living,fuel/food/tax’s
and I don’t personally know anyone who’s had an increase in pay the last yr or two of those who have been lucky enough to keep their jobs..seems everythings going up except realestate and wages!

#99 Johnny on 04.30.14 at 10:43 pm

A QUESTION FOR SMOKING MAN.
Hey bud, i have a question for you.
Where do you think might be a good area to do a RE flip on a property assuming i could carry it for a year or two….cheers mate.

#183 The ‘renters are poor, owners are rich’ fallacy on 04.30.14 at 7:27 pm
#175 Johnny on 04.30.14 at 5:16 pm
Are the most people here renters ?
Why is it that people who rent and have no real money always moan how expensive houses are while people who have coin not so much.


Why is it that most people who have been ‘buying’ houses recently have no real money and have to take out big insured loans from the bank instead?

Oh man, because as Smokey will rightfully tell you…you don’t fight the herd, you join it or you become slaughtered……end of story.

#100 Ripped on 04.30.14 at 10:48 pm

#92 WileyM on 04.30.14 at 10:34 pm
#29 Van Isle Renter
#39 James

University of Alberta career office advising recent electrical engineering graduates that they will have to move to find work. Presumably to the United States because there are no jobs in supposedly booming Alberta (or the rest of Canada). My son has been looking for months and there is nothing out there. He is willing to relocate.

———————————————————

I can relate… I’m a Telecom Engineer and have been unemployed for a year now in Alberta.

It absolutely sucks here unless you climb roofs or work in the mud building over passes for Anthony Henday.

My last job was in the U.S and ended over a year ago before that big black border guard denied my TN visa for the third year.

#101 Son of Ponzi on 04.30.14 at 10:50 pm

When logic and proportion
Have fallen sloppy dead
And the White Knight is talking backwards
And the Red Queen’s off with her head
Remember what the dormouse said
Feed your head
Feed your head
——————
Just about describes the RE junkies in Vancouver and Toronto.

#102 JL on 04.30.14 at 10:50 pm

I work in real estate in Calgary. I’ve said it before and I’ve said it again – price to rent ratios in Calgary do not appear to be at all similar to Toronto.

I rent 100′s of properties for clients and own my own investment properties as well. I get $1900 per month for a condo I could sell for $320,000 and $1500 per month for a condo I could sell for $220,000.

If what Garth says is accurate; that you can rent a $380,000 condo for $1600, then yes that is ludicrous – crazy to buy in that market. But that does not appear to be Calgary.

#103 Snowboid on 04.30.14 at 10:52 pm

#38 Steve on 04.30.14 at 7:56 pm…

Sorry, son – but I’m still not lending (giving) you the down payment.

Suck it up!

#104 shawn on 04.30.14 at 10:55 pm

GDP Growth is Real

Not !st at 69 says:

Garth, if the GDP of Canada and the USA is hovering about 2.5-3% and adjusted inflation is at about the same, well just pop those two concepts into your financial calculator and tell us the result.

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

How do I say this? Rookie mistake.

You have to ADD inflation to the growth in real GDP to get nominal GDP, which by your figures is 5 to 6%.

GDP figures are stated as real growth after deducting inflation.

But to be fair you must only add the official inflation which more like 1% so nominal GDP growth in Canada is maybe 3.5% to 4%.

#105 takla on 04.30.14 at 11:00 pm

On another note,everyone out there has a choice ,you can rent and pay your landlords mortgage,or … buy and pay your bankers mortgage{we’ve all seen pics of their homes/mansions}….your choice!

#106 Pooh on 04.30.14 at 11:01 pm

Don’t worry about ‘#6 Michael’ folks. Pretty obvious a troll, likely a realtor, simply here to stir the pot. Trust me – no coincidence his post sits at the top. Waited all day to spread his wisdom.

Offers nothing more than to reaffirm my bearish outlook. I respect fair debate, but really get a kick out of the bulls that don’t seem to realize that bearish doubt is what really brought them here in the first place.

#107 Aggregator on 04.30.14 at 11:10 pm

#91 Cici

This neighbourhood was once high-end and peaceful, but they keep putting up more and more condo units, and traffic is already a mess.

That's the UN's sustainability plan, and if people don't like condos being built in their own backyard after years of hard work and money invested into creating a neighbourhood they love, then that's too bad, because from here on you only get to choose what the they say if good for you neighbourhood.

Now watch how the UN's well trained muppets control and explain to a community crowd how their private land is now "open space" and controlled by the government. Link

#108 AnoninCalgary on 04.30.14 at 11:13 pm

Thanks Garth – I appreciate this article. My mother keeps pressuring me to buy a condo in Calgary instead of renting, and I’m getting tired of listening to her ‘good advice’. At least now I can say I have someone else on my side who agrees I don’t need to take on massive debt to be ‘happy’.

#109 Grantmi on 04.30.14 at 11:37 pm

I will ask you again JOE! ANSWER THE QUESTION!!!

#62 Grantmi on 04.29.14 at 11:11 pm

waiting for your response Joe.. stop with all your ramblings.. and nothingness!…

ANSWER THE QUESTION!!!!!!!

#72 Grantmi on 04.27.14 at 8:15 pm

Again Joe! Answer the question!!!!!

#175 Grantmi on 04.26.14 at 3:44 pm

#2 Joe on 04.25.14 at 5:51 pm
Buy a second house rent and in ten years you will make money on the sale..

Of course you’re claiming the rental income, and the appreciation increase over the 10 years of your non-principal property on your income taxes… ….. Right, Joe????

#110 Mark on 04.30.14 at 11:48 pm

“This is the first time I’ve heard about co-op students being laid off. How badly is a company doing that they have to lay off a somewhat-underpaid intern? Ouch! At least these students can now say their placement definitely gave them experience in the real working world. “

I know of an employer who laid off all of their new-grad hires (usually selected from the top of the class) and replaced most of them with half-price “interns” when the economy collapsed a number of years back. In a public sector engineering company no less.

The CEO and the HR VP were given huge raises subsequent to such. Disgusting, eh?

#111 Hulot on 05.01.14 at 12:02 am

#6

So true Michael, so true

#112 Millenial-Falcon on 05.01.14 at 12:12 am

yaaahhh Garth!

We need more of these posts! Teach us we are here and we’re listening. Screw these boomers and their delusions of grandeur. They had a golden opportunity in a golden age and blew it! The kids need your help cause our parents and their equals in the investment world are living in the past. THE GAME HAS CHANGED and the kids need advice!

#113 worried realtor on 05.01.14 at 12:16 am

Is it me or are there more out of work realtors posting here then basement dwellers? I think so which tells me the peak has been hit and the downside is here. I should know as many of my colleagues have not made a sale in over a year. Some hungry realtors here.

#114 Porsche on 05.01.14 at 12:22 am

U.S. mortgage market index hits lowest since December 2000: MBA

https://ca.news.yahoo.com/u-mortgage-market-index-hits-lowest-since-december-110443023–sector.html

#115 BCD on 05.01.14 at 12:22 am

#73 Victor V on 04.30.14 at 9:43 pm

Curious as to how some of you other blog dogs are faring in your TFSAs? Anyone care to share their $?
___________________________________________

My TFSA was opened this year. I put 35K in it that we saved up since September. Planning to add another 35K next year to the wifes. It will all be invested in GIC’s.

The message here is it isn’t how much you make, or how much interest you make. . .it’s how much you can save. My old man started with nothing and never made a huge salary, but he died with more equity than most people he knew who made 6 figure salaries.

We are by no means in the top tier of wage earners, but cars (both new) are paid for and house is almost too. Of course I lived hand to mouth until age 37 because I refused to finance anything but my education. Delayed gratification seems to be working. . .but then I was taught to live with less and so was my wife.

I am sure there are guys like me out there who played the leverage game and have become millionaires (some probably only on paper). I am happy to own everything I have with cash on the ready for any crisis or opportunity. Life isn’t all about money, and I know I can’t take any with me, but I hope to leave some for my kids.

#116 Freedom First on 05.01.14 at 12:23 am

I like cash, cash flow, income streams, minimum of 8 diversified different asset classes preferably more, balance, re-balancing, liquidity, and no debt.

Wow, Garth, financial insanity is rampant on your blog comments tonight. But hey, the idiots have to go through the steps to get their balls handed to them on a platter before they hit the final step: “Surrender”.

Our financial lives co-exist with our physical lives, as they are both a life long journey. Making decisions with knowledge, principles, and wisdom will work in every area of our lives.

To ignore the principles Garth passes freely to us only to help us and keep us from an assisted financial suicide perpetrated on the financially ignorant, by the also financially ignorant, and the evil, greedy, and unethical profiteers who will laughingly skin you alive.

#117 Steve on 05.01.14 at 12:33 am

#19 cici

Exactly, a really good point. When I bought our house that we just sold thirteen years ago the street was very pleasant. The lawns were healthy, trees looked good, neighbours not bad. That all changed in increments. All the things we liked about the place evaporated. The continual droughts began about six years ago. Now you’re considered a jerk if your lawn is green all summer. The best neighbour we had moved away and was replaced by an aggressive extroverted prick who lives like he has forty acres around him. I really really hated that douche. Another change was the slow ghettoization of the whole area. I can understand a couple of cars per block without plates. I can’t understand five cars per street without tires. I was titillated to discover on my last walk that we now have a whole new level of despair, cars without wheels laying on the driveway. How the hell do you even get a jack under it? The point is mobility. Get me out of here! It’s only getting worse too, the “view” from our front window went from normal neighbourhood to “a street car named desire” in ten years. But no more. I locked the door on that hovel forever tonight. I’ll never buy in again because of the risk. Not only the financial risk but the decay. Screw it all

#118 Freedom First on 05.01.14 at 12:35 am

To end my last post: “IS INSANITY”

#119 Flawed on 05.01.14 at 12:39 am

“We built this city. We built this city on debt and HAM.”

https://www.youtube.com/watch?v=5_EdzOSSDV0

#120 unbalanced on 05.01.14 at 1:04 am

I love the boomer bashing. It makes me feel all cuddly and warm. Ya want some whine with your cheese.

#121 Joe2.0 on 05.01.14 at 1:19 am

History sometimes repeats itself.
The housing downturn that occurred in parts the USofA is going to be repeated in parts of Canada.
Why?
We are not different.

#122 sam on 05.01.14 at 1:24 am

Joke of the week:

http://www.nytimes.com/2014/05/01/upshot/canadians-have-plenty-of-concerns-but-also-a-sense-theyre-better-off.html?rref=upshot&_r=0

#123 Londoner on 05.01.14 at 2:51 am

Regarding the post from 2 days ago about the Toronto house that sold for $1.366 million, did everyone miss the fact that there are 1,000 people looking for a this kind of house and that at least 50 of them are willing to spend over a million? It’s clear to see that what’s driving the increase in prices is the abundance of buyers. Someone posted yesterday that without an increase in unemployment or interest rates things will remain. This is true. There is a legitimate risk that people are over spending on housing. However a risk is all it is. There needs to be a trigger for the risk to be realized.

#124 Poorgeoisie on 05.01.14 at 3:01 am

Dear real estate pumpers,
Please help me understand what a housing bubble is. I’m sure you would concede that they have existed in the past and being experts you could help my dumb ass understand what causes them. Leave Canada out, just explain US, Ireland, Dubai, Spain or others in recent memory. While you’re at it could you provide an example of a soft landing (ie a place where values doubled in a decade and flatlined or dropped only slightly while wages stayed the same).
Like I said don’t explain why Canada is not in a bubble just explain what a housing bubble looks like.

#125 eddy on 05.01.14 at 3:03 am

@#1 TurnerNation -

http://www.hark.com/clips/ygmhswwswk-brown-acid-warning

BTW is Mars Bonfire still around?

#126 Roberto Noriega on 05.01.14 at 4:10 am

May you be guided by the Holy Spirit and be Blessed with Forgiveness!

#127 Buy? Curious? on 05.01.14 at 4:18 am

Get well, my friend Rob Ford. Rest up. Smoke weed, not crack.

Now, let me explain something to you dough-heads. Major cites are seeing an influx of immigrants and I don’t mean the international ones. With manufacturing jobs disappearing around the Hick towns, where are cute little Canadian people going to work? That’s right, CITIES! Places like Newfoundland, are seeing their talented youth (who aren’t waiting to see dead Blue Whales exploded due to the build-up of methaine gases) heading to TDot. Sexy girls from Lemmington won’t find jobs packing tomatoes with hopes of marrying Billy Bob in a trucker hat. They’re going to buy a one way ticket to Dundas and Bay and do the Mary Tyler Moore thing.

If you live in Toronto and are renting thinking that prices are going to come down or that “this won’t end well” (The stupidest line ever written on this blog), you’re chances of succeeding are as close as Jonah Hill winning a triatholon. Try Garth’s vague guide to investing compared to buying a house. Not a condo. A house. Tell me how it’s going.

Rob Ford 2014! Nobody is perfect. Well, maybe that nerd Vamanos Pest is close.

#128 Edward of Parkdale on 05.01.14 at 5:16 am

In this blog you have acknowledged that the Economy is in a slump and it seems like this is the new norm. Why do you keep on pushing equity investments?

I don’t. The best bet is a balanced and diversified portfolio with no individual stocks and no mutual funds. Having said that, with equity exposure you are investing in businesses, not the economy. What better time to do so than when prices fall? — Garth

#129 Detalumis on 05.01.14 at 6:42 am

You must not remember your boomer history, I graduated in the early 80s, it had much higher youth unemployment than today, in fact it was the historical high like 5 percentage points higher than today almost hitting 20%. There were zero jobs for nurses for e.g., in my college the entire graduating class had to relocate to places like Texas to find a job.

Then I got to buy my house during the last peak you know the late 80s at much higher interest rates and then live through a 7 year housing crash. I also hit the no job stability and the ageism, get out by 50 that is prevalent today. So yes I had it so good and my life has been oh so easy.

That is the reality for at least half of the boomers, the ones that were the younger siblings of the first half. So please STOP with the boomer bashing, it is getting tiresome.

#130 WhiteKat on 05.01.14 at 7:54 am

@Detalimus,

I hear you! I also graduated from university in TO in the early 80′s, with a Computer Science degree, and was very lucky to find a job in my field in Toronto. Many of my classmates did not, and ended up working in clerical or service jobs. A few years prior, recruiters were lining up at the universities, but not by the early 80′s.

I also bought my first house in 1989 in Hamilton because I could not afford TO prices. At 12% mortgage rate, my spouse and I ate a lot of Kraft dinners. When we finally had to sell 13 years later, due to my spouse’s job loss and to move closer to his new job, the house value had hardly gone up at all.

Younger boomers, born in the early 60′s, did indeed not have an easy start. Personally, I have never been able to recover financially from making the mistake of buying my first home at the top of a bubble, and can see the parallels with young people of today.

#131 HogtownIndebted on 05.01.14 at 8:36 am

#126 Detalumis

Don’t feel too bad, you are correct, and the fact that so many of your age range (and mine too) feel overlooked or just lumped in with the boomers is just another sign of how different things were and are for this cohort. Those assumptions, that kind of invisibility, is symptomatic of just how separate this group is from the boomers. Various demographers have made broader or more subtle distinctions in the groups born between 1945 and the 1960s, so you have to make up your own mind. (Has there been anything as bad as the 1981 recession some of us faced as teenagers trying to get work – I always use that as a comparison myself)

Douglas Coupland, who is credited with popularizing the term “Generation X”, and wrote the eponymous book that really crystallized it, was born in 1961. He was writing about the invisibility and challenges of people his age, a bit older and a bit younger too. I find that a useful guide in delineating boomers from Gen X (insofar as such labels do have lasting merits, which is always a question, of course.)

I have never considered myself a “boomer”, because in all practical ways, their reality was never mine. The people just a few years older (born in early to late fifties) had such a profoundly differently reality than most of my cohort, it’s like they were from Mars. They got into a job market that was often seeming to be asking merely for bodies, promotions came quickly because that’s what happened, you moved out when you were supposed to, houses were affordable in the 1980s and always went up in value, etc… etc…

To call someone born after about 1959/1960 a “boomer” with all those assumptions of pot, prosperity, and a life of relative ease and ample opportunity is just factually inaccurate and weird to me and most people I grew up with.

(But we’re all looking forward to rapid career progression – yeah right – after the ‘real’ boomers are retired, in 2018….er….2022…..er, make that 2025…oh, damn, our eyesight won’t be good enough for the new social media devices by then, so maybe we can move back in with mom. Mom…!? Where are you…?)

Calling people born after 1960 ‘boomers’?

It’s like thinking a modern day Leafs fan is someone who knows a lot (or anything) about winning the Stanley Cup.

#132 fixie guy on 05.01.14 at 8:42 am

#5 chopper: “…my daughter has a degree from UoT and … still no job in her field. ”

I know exactly how she feels. Two years after graduating with an engineering degree I was still unemployed and eventually forced to take a job well below my education too. Of course, that was in the early Eighties. Going through the same thing today is understandably ‘more specialer’.
BTW: I compared the inflation-adjusted cost of that degree against my university’s contemporary tuition and today’s rates are the same or a little less; the housing advice came from our parents and grandparents; Asian companies are returning profits dwarfing those available thirty years ago.
So many fingers pointed, so little responsibility accepted. Keep beating the inter-generational blame drum….

#133 Ralph Cramdown on 05.01.14 at 8:42 am

#46 Bottoms_Up — “Enbridge has just taken a 0.75% chunk out of family incomes, every year, for the rest of their lives.”

Natural gas is the cheapest home heating option. It is far cheaper here than elsewhere in the world, and it has recently gone from very cheap by historical standards to merely quite cheap. Either upgrade your insulation, your furnace, or admit that you bought too much house for your income and address that issue.

P.S. If you think Enbridge is screwing people, you can buy shares and benefit.

#134 4 AM Sunrise on 05.01.14 at 8:54 am

#113 BCD on 05.01.14 at 12:22 am

My TFSA was opened this year. I put 35K in it that we saved up since September.

—————————————————–

Is there a typo in that sentence?

#135 Ralph Cramdown on 05.01.14 at 9:01 am

#55 GTA Engineer — “EPS are up. Why? Because earnings are up per share of course, but why?? Earnings have increased due to cost cutting, not due to revenue growth. In addition, the # of shares outstanding has gone down because corporations are buying back shares to make their EPS ratio higher. A lot of these shares are being bought back with NEW DEBT. So yes, corporations are flush with cash, but their cash-to-debt ratios are the WORST in 15 YEARS.”

I don’t understand what case you’re making. If I’m a shareholder and I liked the numbers before, and they’ve gotten better, why would I care whether they’ve gotten better because of revenue growth, or because of higher net margins, or bacause share buybacks mean I now own more of the company than I did before?

Obviously I care about the debt on the balance sheet, AS DO THE INVESTORS WHO BOUGHT THAT DEBT. If they or I figure it’s unsustainable, we wouldn’t be holding what we do.

How long have you been tracking corporate cash to debt ratios? Since yesterday? I see. Is there a reason why that ratio doesn’t appear in the pantheon of solvency ratios that accountants and investors have been using for decades? I see.

#136 Shawn on 05.01.14 at 9:04 am

Youth unemployment is nothing new

I’m glad to see a few people remind others about the sharp recession of the early 1980′s.

I graduated university in the early 80′s and jobs were extremely scarce. Recruiting on campus was very low.

Around 1986 I saw a “help wanted ” sign in a store in Toronto and it shocked me because I not seen such a thing since the 70′s. Not a one until 1986.

Yeah the past always seemed to viewed through rose colored glasses.

I acan attest 1960 era “boomers” entered a horrible job market.

For gosh sales those that envy boomers should look up the word stagflation and what was happening in the 70′s

Yeah house prices soared in the last 20 years. But back in the late 70′s and early 80′s foreclosures were rampant.

#137 Daisy Mae on 05.01.14 at 9:33 am

#17 truth seeker
#6 Michael

Well said. Couldn’t agree more. I’m tired of waiting for correction.

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

Then, go ahead and buy “at your own peril” as #16 states. No one is holding a gun to your head. Why do you come here?

#138 Financial Freedom At 40 on 05.01.14 at 9:48 am

RE #125 If you live in Toronto and are renting thinking that prices are going to come down or that “this won’t end well” (The stupidest line ever written on this blog), you’re chances of succeeding are as close as Jonah Hill winning a triatholon. Try Garth’s vague guide to investing compared to buying a house. Not a condo. A house. Tell me how it’s going.

*****
It’s going great, thanks for asking. Balanced diversified portfolio returned 17.9% last year. Strong US equity weighting helped.

Happily renting someone else’s money pit south of Rob Ford. When we owned we were house rich, cash poor (necessary reno), and not sleeping well.

Now, we finally have a plan to retire, and well, fund 2 through uni in 15 years, travel, enjoy life. Visit the planner 4x a year to review performance and rebalance and hear about interesting financial products we didn’t know existed. Before, we had a house, sucking us dry as it aged along with us. Selling at a crazy price that we would/could never buy it for helped.

We will buy RE again, just not at a peak of madness. Our money is working harder for us now in other assets, producing tax efficient income, and capital appreciation. And it’s fun to move it around, easily, makes you think, creatively. And regardless of the headlines, various economists or CREA, and all the conflicting noise, we sleep well.

Garth’s blog is not prescriptive, nothing is one size fits all. But it makes you challenge assumptions and not get complacent. Many of the observations fit with our own direct experience, and concerns, and what we see among our peers and friends. Nothing wrong with being open to debate and learning.

#139 Holy Crap Wheres The Tylenol on 05.01.14 at 9:51 am

#134 Shawn on 05.01.14 at 9:04 am
Youth unemployment is nothing new
I’m glad to see a few people remind others about the sharp recession of the early 1980′s.
I graduated university in the early 80′s and jobs were extremely scarce. Recruiting on campus was very low.
Around 1986 I saw a “help wanted ” sign in a store in Toronto and it shocked me because I not seen such a thing since the 70′s. Not a one until 1986.
Yeah the past always seemed to viewed through rose colored glasses.
I acan attest 1960 era “boomers” entered a horrible job market.
For gosh sales those that envy boomers should look up the word stagflation and what was happening in the 70′s
Yeah house prices soared in the last 20 years. But back in the late 70′s and early 80′s foreclosures were rampant.

_______________________________________________
Amen to that one brother, My family moved to the US in the sixties so I attended 2 years high school there and then straight into University, graduated with very little opportunity in the job market, so who scooped me up! The USAF. I joined the Air Force figuring I would at least not be a grunt going over to Vietnam. Wrong they sent me anyway but at least in an aircraft. I only good thing that came out of that adventure was the post university training and skills gained were invaluable. After leaving the USAF I could write my own ticket anywhere.
As for the 70′s and 80′s foreclosures, yep right on dude!

#140 Shawn on 05.01.14 at 9:58 am

Suede at 90 said:

Where’s Shawn tonight? I would read his blog if he had one. I like his patient and thought out writing style.

***************************************
Thank you Suede. I shall watch for your posts as well. I can tell you are a most intelligent person of discriminating taste.

#141 :):(Ying Yang on 05.01.14 at 10:08 am

#158 Smoking Man on 04.30.14 at 3:02 pm

Any Realtors out their, that little shit bungalow on James Street has a sold sign…

What it go for?
______________________________________________
I know someone who has an offer on it Smoking Man. My friend with the family didn’t put in an offer but his buddy was interested. I looked at it but not for me, as myself and the girlfriend (getting serious) she couldn’t do the area. She said too many old people (50 years-70 years) She is a 27 year old downtown girl who loves action and said the area is too seedy. I laughed when she said that. So was every other neighborhood in the city at one point.
They are thinking of blowing it up and doing a re-build. It is not off MLS as of yet termination time this week on offer. Only conditional offer at this point not sold! Offer not ridiculous over asking either. Realtor said no bidding war on this one! The area is in flux apparently! What ever that means in Realtor Terms?

#142 liquidincalgary on 05.01.14 at 10:56 am

@ #54 vladimr

inflation vs deflation

you can have inflation in some areas of an economy (groceries, gas, etc) while other areas, of an economy deflate (iphones, housing, etc).

if deflating areas outpace inflating ones, you have NET deflation. this is exactly what happened in the US when their housing bubble exploded. housing values went down ($50000-100000/yr), while gas/groceries increased modestly…ergo, they experienced net deflation.

you would have to take many trips (gas) to the grocery store (groceries), in order to offset that kind of housing deflation…just wait, it WILL happen here as well

#143 liquidincalgary on 05.01.14 at 11:06 am

@ #74 Trojan House

stagflation/disinflation/slowing inflation = DEFLATION

#144 I'm stupid on 05.01.14 at 11:10 am

@#66 Realtor #1 GTA

I’m not even going to waste my breath. Prepare a proper counter argument. None of those stats address the need to be diversified so risk is mitigated.

#145 rosie "moving forward" in the knowledge that, "this won't end well" on 05.01.14 at 11:11 am

I still think it was the weather.

http://www.washingtonpost.com/opinions/robert-samuelson-another-housing-bust/2014/04/30/b0448d6e-d07c-11e3-937f-d3026234b51c_story.html

#146 Old Man on 05.01.14 at 11:12 am

#138 Ying Yang – you gave away who the boss will be in this relationship, as now know who will be making all the decisions. Ying you are now in training. SS

#147 Mister Obvious on 05.01.14 at 11:23 am

#129 HogtownIndebted

“The people just a few years older (born in early to late fifties) had such a profoundly differently reality than most of my cohort, it’s like they were from Mars. They got into a job market that was often seeming to be asking merely for bodies, promotions came quickly because that’s what happened,…”
—————————

I honestly don’t know what you’re talking about.

I was born in 1950 in the Greater Vancouver area. I graduated high school at 17. Jobs we’re very scarce around 1968. Pay was low if you could find employment at all while promotions definitely went to those of higher education, experience, and most importantly, long seniority.

My life did not substantially improve until I completed a technical degree at BCIT in 1983 at the tail end of a bad recession. My first job after gaining an honours electronics degree? Bricklayer’s helper.

It took another year to be fully employed in my chosen field. Only then did things really roll for me. I might add that I started BCIT at the age of thirty. Most of my fellow students were twenty. People of your disadvantaged cohort. They all did quite well too.

#148 Bargains everywhere on 05.01.14 at 11:26 am

Let me add my voice to the 1960s boomers as well.

When I graduated university in the early 80s many, if not most, of the on-campus recruiters (which had always been a mainstay to landing your first job) had cancelled their hiring programs. We were entirely on our own in a terrible job market and in the middle of a deep recession to find our first position. I graduated with a business degree and eventually found a low level clerical job which I was thrilled to have because I had friends that even a year or more later still had found nothing.

Then, in the late 80s when my husband and I bought our first house, we experienced rising interest rates and increasing mortgage payments as we saw our mortgage go from 9% to 13%, only to be followed by a drop in house prices of about 25% in Toronto. It was painful.

We were also the first generation to experience large scale layoffs and lack of job security, which have unfortunately become all too common place these days.

Fortunately, it all worked out for us in the end because we were hard savers, but I would have to agree that there is a real delineation between earlier boomers and later boomers.

Believe me, I’m not one of those who think young people have it easy today in comparison to what we went through because I believe in many ways it’s even tougher now than it was then but I hope they will understand that it wasn’t all a piece of cake for us later boomers either.

#149 Hawk on 05.01.14 at 11:30 am

#139 liquidincalgary on 05.01.14 at 10:56 am

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

Yes, except for the small fact that iphones aren’t reducing in price and neither is any product that provides real value to society.

Apart from wages, where do you see deflation?

Housing in Canada is only just starting to achieve some deflation and then largely because of it being ridiculously overvalued; a correction will probably be around for a while, but eventually the asset bubble blowing will commence again.

Deflation ….riiiiiiiiight……if only!

The real issue is that central bankers all over the world working in tandem, have created inflationary spirals and the asset bubbles that accompany them, with money continuously losing its value. Populations are suckered into buying the deflation scaremongering, while the reality is that most of the world is experiencing inflation, some parts of it a very significant amount.

I like Ron Paul, but don’t necessarily agree that we can go back to Gold, but certainly the existing system isn’t working either, not for the 99% anyway. Until and unless the control of monetary and fiscal policy returns to some very responsible parties, —–we are screwed.

#150 bill on 05.01.14 at 11:35 am

#123 eddy on 05.01.14 at 3:03 am

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

#151 Calgarian on 05.01.14 at 11:38 am

Interesting thing is, there are bunch of people at this blog, spearheaded by Garth, who keep telling that there will be a RE crash soon but at the same time they think they will do great with their investments at the Stock Market. They keep talking about what happened in the US real estate market between 2006-2012, while they are ignoring the fact that the stock market also collapsed during the same period of time.
Of course, Garth will say now “Well, a balanced portfolio achieved 7%, blah, blah ,blah” but he will not tell you that what has fueled the RE market in the US (and in the world) is now fueling the stock market; cheap debt.
If the RE market will collapse, so will the stock market. Cheap debt is not owned only by home owners but also by all corporations. Money that escaped the developed markets after 2006, boosted emerging market economies like never seen before and now that balloon is deflating too. So my friends, what will screw up RE will also screw up your “balanced portfolios”. When interest rates start going up, corporates will not have record profits, banks will not get as much business, your neighborhood restaurant will not get as many clients. House prices for sure will go down but so will the stock market.

There is no correlation between equity markets and Canadian residential real estate. As for cheap debt, the US Fed is tapering continuously, and stocks have digested it totally. Stick with horses. — Garth

#152 Derek R on 05.01.14 at 11:43 am

#100 JL on 04.30.14 at 10:50 pm wrote:
If what Garth says is accurate; that you can rent a $380,000 condo for $1600, then yes that is ludicrous – crazy to buy in that market. But that does not appear to be Calgary.

I’m currently renting a $400,000 fourplex unit for $1550 in Altadore. And that’s definitely Calgary. So what Garth says is accurate.

#153 Just Say-In on 05.01.14 at 11:55 am

#105 Aggregator on 04.30.14 at 11:10 pm

Comming soon to a city near you!

http://www.washingtonpost.com/local/trafficandcommuting/white-house-opens-door-to-tolls-on-interstate-highways-removing-long-standing-prohibition/2014/04/29/5d2b9f30-cfac-11e3-b812-0c92213941f4_story.html

#154 Ralph Cramdown on 05.01.14 at 11:57 am

#125 Buy? Curious? — “If you live in Toronto and are renting thinking that prices are going to come down or that “this won’t end well” (The stupidest line ever written on this blog), you’re chances of succeeding are as close as Jonah Hill winning a triatholon. Try Garth’s vague guide to investing compared to buying a house. Not a condo. A house. Tell me how it’s going.”

My definition of success is financial independence, and my definition of financial independence is an old fashioned one: A pile of capital big enough that I can reinvest enough each year to at least keep up with inflation, living comfortably on the remainder of the income. If I bought a house in Toronto commensurate with my station in life at today’s prices, I don’t think I could achieve that goal in the timeframe and at the level of effort I’m targeting. So I rent. If prices come down a bit or I get ahead of my target, I may buy. If prices come down a lot, I may buy a handful of houses and become a landlord. But my financial goals are paramount.

Others may set lower goals, be willing to work harder, longer, have a greater preference for current consumption, or simply earn more money. But I get the impression that most people aren’t really planning well or saving much, and figure that some factor that bailed out prior generations (higher wage growth, declining interest rates, house price increases above inflation) will bail them out, too. I’m not gambling my future on it, because I consider it unlikely.

#155 Calgarian on 05.01.14 at 12:07 pm

“There is no correlation between equity markets and Canadian residential real estate. As for cheap debt, the US Fed is tapering continuously, and stocks have digested it totally. Stick with horses. — Garth”

Well, I work for a big corporate as an executive and I can tell for sure my company and all others in the same industry are in debt up to their eyeballs. So much that if our debt rating is somehow downgraded one level and our refinancing interest rate goes up 0.5%, share prices go down 15-20% and this happened last year.
This is not a Calgary horse trading company we are talking about, a global corporate with a “balanced portfolio”, operating in 60+ countries, most of them in the emerging world. Let’s cut the crap about stocks digesting debt. We will see what will happen when Fed starts increasing the interest rates.

#156 liquidincalgary on 05.01.14 at 12:11 pm

@ #146 Hawk

well known fact that instead of lowering prices on electronics, manufacturers add options…just to maintain the same price point.

most durable goods are in the same boat…ever check out the number of options you get, for the same price (inflation adjusted), as your four year old Kia??

patience, little grasshopper, you will soon realise deflation is here

#157 Nemesis on 05.01.14 at 12:17 pm

#SmokingManSightedAtSceneDevastingBlaze #RanchoCucamonga

[UK Independent] – Shirtless man holding dog propositions TV reporter trying to conduct interview

…”KTLA reporter Courtney Friel was dispatched to the gloriously-named Rancho Cucamonga near Los Angeles to get some local reaction to a fire raging through the neighbourhood.

Stopping the passing man, she asked him: “Sir, do you live around here?”

“Yeah…wow you’re so pretty you wanna…”…

A consummate professional, Friel ploughed on with the vox pop undeterred, as smoke billowed from the flame-licked horizon.

And what did the man think of the fire threatening his town?

“Pretty cool.”

http://www.independent.co.uk/news/weird-news/shirtless-man-holding-dog-asks-out-reporter-during-report-on-devastating-fire-9310978.html

#BonusZen #TrackFiveToCucamonga

http://youtu.be/ygVFbz6AsnE

#158 Mister Obvious on 05.01.14 at 12:23 pm

#38 Steve

Well Steve… I’m a boomer but I do agree with you on at least one point. I’ve had it up to the teeth with ‘my’ music. Enough classic rock and roll already!! Can we finally put Crosby, Still & Nash in the dust bin and move on? (Wow, somebody’s going to hate me).

On the other hand, Lady Ga Ga doesn’t inspire me much either. Perhaps I’m finally too old and miserable to appreciate any popular culture at all.

#159 4 AM Sunrise on 05.01.14 at 12:34 pm

#113 BCD on 05.01.14 at 12:22 am

My TFSA was opened this year. I put 35K in it that we saved up since September.

—————————————————–

My BS alarm will not stop squawking until somebody tells me how one can put 35K in a TFSA when the limit is 31K (5000*4 + 5500*2 = 31000 for somebody who’s never contributed until this year).

#160 Ralph Cramdown on 05.01.14 at 12:53 pm

#146 Hawk — “Yes, except for the small fact that iphones aren’t reducing in price and neither is any product that provides real value to society. Apart from wages, where do you see deflation?”

If I’d told you thirty years ago that in 2014 you’d have a pocket device capable of instantly calling up virtually any fact known to man, virtually any book ever written, photos of nearly every human artifact and all the music ever made, and that the device could also take pictures and send them instantly to anyone else in the world with a similar device, or that I could point at the sky and it would tell me where the stars and planets are, that it could give me directions to anywhere I can drive, walk or take transit to, that it could tell me where the closest Thai restaurant is, the menu and reviews of whether it’s any good, if I told you all that and said that this device would be so inexpensive and useful that most people in the middle class, teens included, would have one, would you quibble about the price? Oh, and it makes phone calls and does email and text messages. A generation ago, a very wealthy person could have had a tenth of this capability at his fingertips if he employed an army of researchers and personal assistants. In a very real sense, that is deflation.

My car is so much better than the first one I owned that it isn’t even funny. We are on the brink of doing things with DNA that nobody even dreamed of a generation ago. Yes, much of the stuff we buy every day is nominally more expensive than it was a decade ago, if it existed then. But if you think your life is getting worse, maybe you’re just not focused on the big picture.

#161 pinstripe on 05.01.14 at 12:57 pm

The boomers are taking an unfounded licking.

Many boomer retirees are spilling the beans on the inner working of government.

For example, Harpo et al will balance the budget at all cost in order to win the next election. An attempt to tell Canadians “I told you so”.

The government business model applied is cutting resources to meet the criteria for a balanced budget. People positions are assigned with acting-positions where decisions are not made but are being pacified, ignored, delayed etc and eventually forgotten. High performance employees are punished and Poor performance employees are rewarded.

The housing industry is not any different. interest rates will stay low and easy credit will be made available for as long as Harpo et al are calling the shots.

Non performers will be rewarded and Performers will be punished.

#162 Old Man on 05.01.14 at 1:02 pm

Some of you have commented on the job market as there are no jobs. Its imperative to keep a positive attitude that there is a job for me always. Never surround yourself with negative people as they will pull you down, so mingle with positive people at all times to keep you up. A job search is an adventure so get excited about finding one, and assume nothing.

An employer is not looking for a negative, but a person who is positive, enthusiastic, and open. They want an asset; not a liability so the interview must be upbeat. Be careful what you put in a resume as always take a perceived negative and turn it into a positive experience with a spin. Lets say a nurse is looking for a job position, and on her resume states she is employed at a grocery store.

She spins it with positive comments to catch the employer’s eye, both on her resume and the interview. It is now called a wonderful experience as direct field training, as she had the opportunity of taking theory into practice as can now relate. Many a day she had to assist the elderly; the disabled; and others in their shopping endeavours and gained valuable knowledge as an RPN graduate with real life experience.

#163 Bill on 05.01.14 at 1:03 pm

Seems the phenomenon that is employee pricing has come to mortgages! Just heard on the radio that RBC has an employee pricing mortgage special on. One of the rates is a 2.99% fixed 5 yr. Found this link.

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2014/05/employee-pricing-on-rbc-mortgages.html

#164 Aggregator on 05.01.14 at 1:10 pm

London Powers U.K. Housing Boom to 7-Year High

U.K. house-price growth accelerated in April as a surge in London pushed the annual increase to the most since before the financial crisis struck, according to Nationwide Building Society.

The average value of a home increased 1.2 percent from March to £183,577, the lender said today. That’s double the 0.6 percent median forecast in a Bloomberg survey of economists. Prices jumped 10.9 percent from a year earlier, the biggest annual gain since June 2007.

Looks like the Queen and her colonies are using last resort measures by allowing wealthy Asians to buy her sovereigns. Her Majesty knows very well that if home prices decline, and household wealth is lost, a mob of angry serfs will reach for their pitchforks and march towards the capital demanding answers.

When I said CMHC was buying $1M+ properties and selling them abroad, I wasn't kidding.

#165 WhiteKat on 05.01.14 at 1:25 pm

@BargainsEverywhere, re: #145

Well said! Kids today have similar pressures, but are also experiencing many that we did not.

Whoever said life was supposed to be easy anyway? I’d like to think that all the difficult situations I have experienced in the past, have helped me better deal with the curve balls life continues to throw, and that I would be rather boring and superficial, if I had never experienced as much adversity.

#166 Fort Mac Flatlander on 05.01.14 at 1:40 pm

#148 Calgarian
There is no correlation between equity markets and Canadian residential real estate. As for cheap debt, the US Fed is tapering continuously, and stocks have digested it totally. Stick with horses. — Garth

Garth, I believe Calgarian is incorrect believing that corporate debt is the concern. A housing correction in Canada will have little to no affect on non-Canadian stocks. My concern is the ever increasing use of margin and its direct correlation with stock prices. When the cheap debt disappears will this force a increase in margin requirements, forcing some to sell assets?

Thanks

#167 liquidincalgary on 05.01.14 at 1:47 pm

@ #146 Hawk you said:

I like Ron Paul, but don’t necessarily agree that we can go back to Gold, but certainly the existing system isn’t working either, not for the 99% anyway. Until and unless the control of monetary and fiscal policy returns to some very responsible parties, —–we are screwed.

you want equality? deflation is the great equaliser. it is inflation that widens the gap between rich and poor.

also…i care not a whit how ‘fiscally loose’ central banks or bankers are. if there is no one left to borrow (no credit, bruised credit, no job), it’s like shooting pool with a rope…and we’ve all been there, on a drunken saturday night.

right guys?…guys??

#168 Mark on 05.01.14 at 1:48 pm

“There is no correlation between equity markets and Canadian residential real estate.”

Actually there appears to be negative correlation. The equity markets have performed poorly in the past decade, while housing has surged forward. Housing performed poorly in the 1990s, while the equity markets tripled (and most banks quadrupled!). More recently, as Toronto RE has been declining in price, the equity markets have started to actually start performing rather decently.

#169 HogtownIndebted on 05.01.14 at 1:52 pm

#144 Mister Obvious

“I honestly don’t know what you’re talking about”

(Re: generational employment differences etc…)

Your experience, no disrespect intended, sounds like that of a statistical outlier. Check the data and the reality is much clearer. Example:

Unemployment rate 1974 – 5.6%
(even with the oil crisis)

Unemployment rate 1982 – 13.1%
(when many of us were finishing high school or university)

Big, BIG difference, and it lasted for years, never returning to the levels early boomers experienced.

http://www.davemanuel.com/historical-unemployment-rates-in-canada.php

This generally much higher level of unemployment has been the norm for everyone except the early boomer groups who got more easily into a real (i.e. non-Starbucks) workplace, moved up, got first homes, even survived first divorces, while everyone who followed has seen the hill get higher and steeper every decade with many previously good entry level jobs globalized or technologized out of existence.

In the 80s, almost all my bosses and directors were in their 30s. Asked how they got their jobs, it was usually some combination of a business expansion and retirements of WWII era employees making room for them. Work hard, it’ll happen to you, they would say.

Not so much, Gen X found out.

Chances for that kind of smooth progress since that time – pretty slim. Bosses today tend to be those same boomers, clinging in their late 50s and 60s to try to scramble together a retirement while a 30 year old today is lucky if she can even get started on life and move out of the basement. (Obviously, these are generalizations, though based on the real data, local and provincial differences and individual cases will always vary, such as yours.)

And I agree, not to be a complete moaner, that it may indeed be worse for 20-somethings today.

I do have some hope for those under 10 today that they may escape having to pay for boomer health care (since they’ll be mostly gone) as well as have more options for work in twenty years. So, we can still live through our kids, Gen X’ers.

But we all continue to pay in many ways for the disparities in generational economic experiences, such as the reduced birth rate, which is largely a result of lack of confidence in one’s economic status, which will continue to be a tax and health-care payer problem for years to come.

#170 Bottoms_Up on 05.01.14 at 1:54 pm

#132 4 AM Sunrise on 05.01.14 at 8:54 am
——————————————–
I think one is allowed to put 2 years worth of room into the TFSA, so at this point the maximum contribution without triggering taxes is $11,000?

So yes a $35,000 contribution would seem to be not right.

#171 Bottoms_Up on 05.01.14 at 1:58 pm

#131 Ralph Cramdown on 05.01.14 at 8:42 am
————————————————–
Increasing the price of a necessity by 25% over night, that is a fairly substantial bill for any family, is substantial, regardless of whether the resource is comparatively cheap.

And no I’m not so much worried about me as about the impact on society in general.

As I said, that is an overnight extraction of 0.75% of disposal money out of the economy.

How can that be a good thing?

Is disposable income going up 0.75% overnight?

#172 4 AM Sunrise on 05.01.14 at 2:13 pm

#167 Bottoms_Up on 05.01.14 at 1:54 pm

He said he’d never had a TFSA up until this year. If you’ve never made a contribution, your room accumulates from 2009 up till how. The limit was $5000 for the first 4 years and $5500 for 2013 and 2014. That adds up to $31k. And no, there’s no room for excess. (I used to diligently maintain $2000 in excess contributions in my RRSP, so believe me, I checked.)

#173 Calgarian on 05.01.14 at 2:13 pm

To those who think that corporate debt is not a risk. Fact is corporates are as much in debt as households, proportional to their profits. This is not limited to Canada only. So increasing interest rates will hit as hard the stock market as the housing market. Not only corporate debt serving will go higher when interest rates rise, but also their revenue will go down since households will start cutting spending. It is a double whammy on profit, hence on share price.

http://blogs.wsj.com/economics/2013/11/05/rising-corporate-debt-may-be-reaching-dangerous-levels/

http://online.wsj.com/news/articles/SB10001424127887323324904579042891563817588

You’re afraid of a lot, aren’t you? GIC man? — Garth

#174 45north on 05.01.14 at 2:20 pm

Ralph Cramdown : My car is so much better than the first one I owned

in the 50′s it was common to see a car pulled over with a flat tire. Now-a-days quite rare.

#175 duster on 05.01.14 at 2:31 pm

#87 HogtownIndebted on 04.30.14 at 10:23 pm

To those on this blog who have made comments that defended Rob Ford, you are complete asses and morons.

Period.
==============
He’s still better than Mayor Miller. I’d rather have a mayor that smokes crack than one who wastes money. Miller’s talent was making any amount of money disapear into stupid projects that only a crack head would come up with (ie those wave docks on queens quay)

#176 Daisy Mae on 05.01.14 at 2:35 pm

#38 Steve: “Also every single day I have to listen to their sixty year old crap music in an endless loop on the boomer dominated radio stations at work. Enough!! Go to a nursing home all of you! And screw off with your bloody Harleys ripping around town with gutted out exhaust pipes…>”

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

I bet your mom is so proud…. LOL

#177 Old Man on 05.01.14 at 2:43 pm

#170 Calgarian – negative attitude so take a look at the recent financial report of A&W that I bought during the big crash. Its a cash cow paying me royalties month after month, and with adjustments on the initial capital investment am yielding at least 14% which includes bonus payments. I really need to take my huge capital gains one day. What to know what else I am holding?

#178 Banjopete on 05.01.14 at 2:54 pm

Interesting to see all the angry people popping in to give their advice. @Realtor # 1 GTA, you’re not exactly disproving Garth’s premise that your lot is generally under educated. I challenge you to take two seconds to proofread before posting. We’re not all smoking men with a disdain for grammar and spelling.

Also to follow up with all the gripe about future ability to advance in careers, a real challenge that largely wasn’t faced by boomers is the importance placed on education backgrounds now. Most career streams of note require a specific education, then further down the road to advance further education levels often need to be achieved like MBA’s, professional designations, etc.

Sadly that results in slightly pigeon-holed people with highly specific work backgrounds. Not bad if you’re making something of it, but pretty tough when you find yourself not enjoying your chosen path. I know, first world problems but if debt financed your education stuff like this matters.

I guess there’s always real estate, I mean what are the education requirements for that Realtor # 1 GTA…

#179 Holy Crap Wheres The Tylenol on 05.01.14 at 2:55 pm

#172 duster on 05.01.14 at 2:31 pm
#87 HogtownIndebted on 04.30.14 at 10:23 pm
To those on this blog who have made comments that defended Rob Ford, you are complete asses and morons.
Period.
==============
He’s still better than Mayor Miller. I’d rather have a mayor that smokes crack than one who wastes money. Miller’s talent was making any amount of money disapear into stupid projects that only a crack head would come up with (ie those wave docks on queens quay)

______________________________________________
While I can’t say Im a moron or asshole I can honestly say at least with Ford you know what you are dealing with. Miller was the biggest looser mayor Toronto ever saw. If he caved any more into the Unions he would have picked up an STD.

BTW I don’t support him but I dont hate him either.

#180 devore on 05.01.14 at 3:01 pm

#55 GTA Engineer

EPS are up. Why? Because earnings are up per share of course, but why?? Earnings have increased due to cost cutting, not due to revenue growth.

You guys have been saying this for 5 years now. That’s hella lot of cost cutting. Maybe it’s time to come up with a new excuse.

In addition, the # of shares outstanding has gone down because corporations are buying back shares to make their EPS ratio higher.

“To make it look higher”? Share buybacks are not an accounting trick. This is a legitimate way to return wealth to stock holders. Buybacks reduce equity dilution, and increase the value of outstanding shares. These are open operations and described in detail in quarterly and annual statements. A buyback can be made for good reasons, or not, it is not inherently a negative, it is a tool corporations have.

So yes, corporations are flush with cash, but their cash-to-debt ratios are the WORST in 15 YEARS.

They’re flush with cash, and have worst cash/debt in 15 years? Come on, you’re a smart guy, you can’t have both at the same time. That’s like “it’s a good time to sell AND buy”.

Cash/debt being lowest in 15 years is a meaningless metric. Maybe corporations have been sitting on too much cash for 15 years, “flush with cash” as you put it? Corporations are converting expensive liabilities and non-performing assets to cheap debt. This is good for investors and the corporations.

Let’s not delude ourselves – companies are not healthy. They’re playing games to keep investors happy, because investors care more about EPS than the fact that the companies are loading up on debt to fuel EPS.

No, they are being responsible stewards of shareholder equity, and are looking towards the future, after being mired in stagnation and paralysis for 15 years. If you don’t like what they are doing, buy a share and ask questions in public shareholder meetings.

The Zerohedge guys are grasping at straws. The doom, gloom and meltdown they have been predicting since inception has not come to pass, and looks less likely to with each passing year. The level of cognitive dissonance there must be off the charts.

Of course part of this is because Apple is out of cash in the USA and doesn’t want to repatriate foreign cash because it would cost them a big tax bill. But this is happening in many companies.

Sounds like good corporate governance protecting shareholder value. Maybe governments could pull their collective heads out of their butts and come up with some sensible corporate taxation rules, rather than trying to carry water in a sieve.

It’s akin to me taking out a huge mortgage, buying a sawdust+glue box in Leaside for 2 million, and claiming, hey, I’m $2 million richer! Umm. no.

Apple would claim a $2M asset purchase, and an additional $2M debt, as would be obvious to any investor looking to put money into the company, so no, not akin at all. The only question here is whether there will be a return on this $2M debt, and what the risks are.

#181 :):(Ying Yang on 05.01.14 at 3:02 pm

#143 Old Man on 05.01.14 at 11:12 am
#138 Ying Yang – you gave away who the boss will be in this relationship, as now know who will be making all the decisions. Ying you are now in training. SS
………………………………………………………………………..

You are partially correct, while I’m not a Smoking Man whom puts his wife in her proper place (I assume). I like the girlfriend and she is smart. She comes from a very wealthy Hong Kong Family! Are you getting the picture now Old Man? A marriage could be profitable for both parties. While I make great money at my company, she doesn’t, however her family money blows away what I could earn in a lifetime of slaving! Decisions, decisions, hmmmm to be poor or rich?
Still in training……………………..

#182 Old Man on 05.01.14 at 3:07 pm

#173 Daisy Mae – register with Live365 as they play a million songs for free day and night within all categories. I am partial to blues and jazz, but those old songs from the 60′s and 70′s were the best because it was boomer music.

#183 BCD on 05.01.14 at 3:08 pm

#156 4 AM Sunrise on 05.01.14 at 12:34 pm
#113 BCD on 05.01.14 at 12:22 am

My TFSA was opened this year. I put 35K in it that we saved up since September.

—————————————————–

My BS alarm will not stop squawking until somebody tells me how one can put 35K in a TFSA when the limit is 31K (5000*4 + 5500*2 = 31000 for somebody who’s never contributed until this year).
________________________________________

Sorry, I was referring to the amount we had saved as of January when I bought TFSA GIC’s in the amount of 31K which was the max.

Listen, you don’t have to believe a word I say. We are on track to save close to 50% of our income this year, and we still enjoy ourselves by going out to dinner etc. Another 17K sitting in savings now since January which will be absorbed by life mostly (hope not though). We make good money but I don’t spend it that much–neither does wife. That said, if there is anything we want, we usually buy it. And believe it or not I wasn’t born rich. I got an education when that mattered more, got a little lucky, met the right educated woman, and had some minor help along the way. I’ve always viewed debt as a cancer though and i don’t have hobbies, or expensive tastes. I was raised to live simply, and buying things with cash gives me great pleasure and puts us ahead in the long run.

#184 Old Man on 05.01.14 at 3:28 pm

#178 Ying Yang – I get the message loud and clear, but is it wise to marry based upon expectations? There is an old saying: Never do anything for the wrong reason, as it might come back to kick you in the bxxxx.

#185 PoltawaDiva on 05.01.14 at 3:36 pm

157 Ralph Cramdown

In 1973 a simple calculator cost $150 (the kind you can get at the dollar store -would not even do percentages).
I know, couldn’t afford one for an accounting class. Was earning $1.25/hr. Would have needed to work 120 hours.

#186 Smoking Man on 05.01.14 at 3:41 pm

#87 HogtownIndebted on 04.30.14 at 10:23 pm

To those on this blog who have made comments that defended Rob Ford, you are complete asses and morons.

Period.
…………..

Asses and morons, hardly. I’m tired of you tree hugging sissy boys jumping up and down when a celebrity gets blows of some steam after hours.

He does his job well, keeps the commies from the vault…

I didn’t vote for him because of his looks, behavior or attitudes.

He’s like a big gigantic security guard protecting my money.

He’s got my vote in Oct and I hope he doesn’t pull out.

#187 Doug in London on 05.01.14 at 3:43 pm

Garth is quite right, the wrinklies lived through a different time which favoured home ownership as an investment more than now. That doesn’t, however, fully excuse the wrinklies from not understanding that housing is in a bubble in many cities in Canada and now is probably a bad time to buy in those markets. I’m a 53 year old wrinkly who clearly remembers housing corrections in the early 1980s and 1990s, and actually understands the not so abstract idea it that could happen again. In fact, one normally occurs about every 10 years so we’re long overdue now. Why don’t more wrinklies understand that idea? What ever happened to gaining wisdom with age?

#188 Ralph Cramdown on 05.01.14 at 4:03 pm

#168 Bottoms_Up — “As I said, that is an overnight extraction of 0.75% of disposal money out of the economy.”

It doesn’t come out of the economy. It comes out of the part of the economy that isn’t natural gas producers, pipelines and distributors. Their bit goes up, the rest goes down. The price of something goes up and somebody benefits while somebody else loses. As you may have guessed, I’m one of those people who is often smiling when others on this blog complain that the price of some stuff going up, because I own bits of the companies that sell the stuff. Nothing personal, it’s just business.

#189 BCD on 05.01.14 at 4:07 pm

#178 :):(Ying Yang on 05.01.14 at 3:02 pm

however her family money blows away what I could earn in a lifetime of slaving! Decisions, decisions, hmmmm to be poor or rich?
Still in training……………………..
____________________________________________

Her family money is still HER FAMILY money. I find it interesting how people feel entitled to their parents/inlaws wealth and sometimes count it among their own. My wife’s parents are comfortable, but we don’t see a dime. There are tall tales being spun at dinner parties about how they have “invested for us and our kids”. I don’t believe any of it. What’s more, with people living longer how much will be sucked away from inheritances?

You are in charge of your own financial future. I have never waited for a handout and never will. If I spent now like I will be rich in 10 years I’d be poor now and poor in 10 years.

#190 HogtownIndebted on 05.01.14 at 4:14 pm

Ontario budget now being rolled out:

“A new measure to standardize home inspections”

More to follow……

#191 michael schratter on 05.01.14 at 4:25 pm

#49 Jsan comments on #6 Michael:

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

Michael, I have met many people such as yourself over the years. All you can understand or grasp is what is on the surface, you do not understand the underlying structure.

It is so beyond obvious to people such as Garth, myself and many others that this will end very badly. The frustration is that there are way too many people such as yourself who just can’t grasp or understand what really is a VERY simple concept. When you have individuals and families purchasing houses at unbelievably high prices with VERY low and very manipulated interest rates that can ONLY go higher and WILL one day go higher, this can only end disastrously.

I used to work at Nortel. I remember telling a few co-workers not to participate in the employee stock program when the stock was at ridiculously lofty levels. Well guess what, the stock price kept going higher and I heard about it everyday from them. It didn’t faze me though because I understood the underlying reasons as to why the stock was so overvalued and why it would not last. Well when the stock eventually crashed all of a sudden I went from being despised to being the hero to these people. Why they could not understand or see what was so obvious to myself I do not know? The same goes for this ludicrous Canadian housing bubble. Why people such as yourself cannot see what is so obvious to many of us I do not understand?

Enjoy your mocking however I am very confident that as Garth has pointed out for awhile now, THIS WILL NOT END WELL, GUARANTEED!!!!!

_____________________________________________

#49 JSan

You are a classic example of another devout follower that gets upset when someone is challenging your cult-like beliefs.

Look, I hate to put car-sized holes through your petty insults, logic, and assumptions. Nonetheless:

Garth has been ranting the same rant for about a decade. And if you’d taken his advice from the start, then you’d have missed what is arguably the greatest real-estate opportunity in our life time, and would have been far worse off.

I fully agree that speculative real estate investment with a hope of simply “flipping” constituted a risk far higher in recent years than it did in the five years before that. However, it has long been said that if an economic forecast doesn’t work out, simply extend the time frame for that eventuality.

So far, the numbers as represented by the foreclosure rates have not lent credence to the bear position, as they are so low across the board in the Lower Mainland, even including Whistler, which as recreational property would be the first to get the gavel. But it has just not happened; it is not happening, and if it is going to happen and somebody wants to claim credit for making the call, please feel free to post the date, because the Ides of March has come and gone!

Buying an affordable home with a sizable down payment is still the best way to ensure that you will have a nest egg in your golden years.

It’s forced savings plan, which is the crux! As 95% of the population does not have the discipline to invest the difference between home ownership costs and renting costs, for every month, for some 20 years, a mortgage forces that discipline for you.

As a semi-sophisticated investor with semi-high net worth, I understand the importance of diversification. I understand that the remaining portion of my mortgage is an asset class and so the rest of my investments are diversified in stocks, ETFs, and bonds, via first my TFSA and RRSP contributions.

The problem with your argument is that most people do not have the resources, nor as I said before, the discipline to remain a ultra-long term, highly frugal, and shrewd consumer, all the while renting and being an excellent investor.

Jsan, the key to learning is to be open to both sides of a debate. You exemplify the worst of the behavior witnessed on this blog. Closed mindedness.

PS. The best quote of the day, “THIS WILL NOT END WELL, GUARANTEED!!!!!”

#192 :):(Ying Yang on 05.01.14 at 4:27 pm

#186 BCD on 05.01.14 at 4:07 pm
#178 :):(Ying Yang on 05.01.14 at 3:02 pm
however her family money blows away what I could earn in a lifetime of slaving! Decisions, decisions, hmmmm to be poor or rich?
Still in training……………………..
____________________________________________

Her family money is still HER FAMILY money. I find it interesting how people feel entitled to their parents/inlaws wealth and sometimes count it among their own. My wife’s parents are comfortable, but we don’t see a dime. There are tall tales being spun at dinner parties about how they have “invested for us and our kids”. I don’t believe any of it. What’s more, with people living longer how much will be sucked away from inheritances?
You are in charge of your own financial future. I have never waited for a handout and never will. If I spent now like I will be rich in 10 years I’d be poor now and poor in 10 years.
………………………………………………………………………

I’m just being a bit facetious regarding my girlfreind. While she comes from old HK money. I make my own hard earned Canadian $$. Five years of University better pay off big time! I’m good with six figures dude. Her parents are a bit snobby anyway, and I could never work for her father. But I do plan on buying out his company one day!

#193 Son of Ponzi on 05.01.14 at 4:27 pm

Yin,Yang.
Obviously, you are not in a traditional Chinese relationship.
Otherwise, your GF’s parents would tell her daughter to dump the bum.

#194 Mike T. on 05.01.14 at 4:37 pm

‘To be accurate, BoC overnight rate crashed to 1.5% in late 2008. — Garth’

we can split the difference and call it 5.5 years.

Also,

#6 Michael

see, the thing is, you twist and mutate the message this blog puts out…there is no hate on for real estate…but there is a huge risk in putting your only 15K into a property at historically high prices, especially when it is your only 15K

people like you choose, willfully, to twist the message to make yourself feel better about your own choices, and that’s cool, but you are lying to yourself and justifying it with stupefying comments like the one at #6

own property as long as it is not the only thing you own, that’s the message

simple

#195 Kingarthur on 05.01.14 at 4:39 pm

Two daughters; both graduated debt free and are working in their fields (environment and communication). BTW, I don’t read Smoking Man or long posts.

#196 Just the facts Ma'am on 05.01.14 at 4:42 pm

#111 worried realtor on 05.01.14 at 12:16 am
Is it me or are there more out of work realtors posting here then basement dwellers? I think so which tells me the peak has been hit and the downside is here. I should know as many of my colleagues have not made a sale in over a year. Some hungry realtors here.
——————————————————
you say out of work, I say I retired with lots of cash.
tomayto-tomahto

#197 Old Man on 05.01.14 at 4:51 pm

#189 Ying Yang – its time to break the log jam and man up to the fact that renting is the way to go for a few years or so. Try that on your wife to be using facts and logic to ascertain what happens next. I can see the outcome because she is home horny for you to buy her a home using your money; its a trap!

#198 Second Hand Smoke on 05.01.14 at 4:59 pm

This proposed 3.8% increase in pension payroll taxes for Ontario employees and employers up to the $90,000 income threshold should do wonders for people’s ability to save their own money and contribute to a TFSA.

I’m sure the working stiff making $60,000 has an extra ~$2,300 per year laying around. But don’t worry, if he lives long enough, he just might get some of his money back.

#199 Old Man on 05.01.14 at 5:28 pm

This all reminds me years ago having nightly tea with this very wealthy widow from Newfoundland. She bought a 3 storey mansion and converted it into 10 modern separate apartments. She would say – do you want to hear the latest dirt? There was this school teacher who gave notice that she was finally getting married at age 43. I said so what. The old woman who was in her 80′s said she just met this guy and he is as old as dirt living out of town. The teacher told her that his home is beautiful and paid in full; she wanted the house not him so much. The old woman smiled at me and stated they are out there so be careful.

#200 Smoking Man on 05.01.14 at 5:45 pm

#192 Kingarthur on 05.01.14 at 4:39 pmTwo daughters; both graduated debt free and are working in their fields (environment and communication). BTW, I don’t
read Smoking Man or long posts.
…….

I’m crushed, lol your in a big crowd, so what.

The schooled always flip out whenever an original, a great mind tosses a wrench into their programing.

Stay between A to Z it’s safe

#201 Pope Six Pack Snugglebombed the 999rd (aka Nosty) on 05.01.14 at 5:53 pm

Aggregator – Goes with your links a couple of days ago about the US and Canada becoming one entity — bid adios to the Canadian Healthcare System (by which time us Boomers will be dead meat anyway).

Tomorrow – An interesting day in south east Ukraine, while this clearly is identical to All Wars Are Bankers Wars.

#202 Retired Boomer - WI on 05.01.14 at 6:19 pm

Garth-

Your comment “Boomers are loopy enough to believe the past will repeat”….

Dam straight it will.

I watched grandparents get old, sick, and croak. Ditto parents, and in-laws. No doubt myself, and the better half WILL DO exactly the same thing.

That’s the life time line.

Whether real estate, or market returns, or kids’ job prospects will resemble what we boomer’s have experienced, it is highly unlikely to repeat. It MAY rhyme a bit, or be completely different what with global warming, increased foreign competition, debts levels at record levels -both gov’t as well as a personal debt.

Who knows? Ask me how long I will live? no clue, but I certainly do NOT look forward to be a shuffling blank-stare dementia addled old geezer somewhere in my 80′ – 90′s

#203 Nemesis on 05.01.14 at 6:43 pm

#HowToTellIfYourSecurityGuardIsSmokingCrack

http://youtu.be/0q_uLzEljo8

#204 World Traveller on 05.01.14 at 7:44 pm

I’m crushed, lol your in a big crowd, so what.

The schooled always flip out whenever an original, a great mind tosses a wrench into their programing.

Stay between A to Z it’s safe

**
Another ugly post from SM, your getting quite boring….

#205 Steve on 05.01.14 at 8:23 pm

#101

go to the devil

#206 @Vladimir on 05.01.14 at 11:00 pm

Ref post #54.

Garth, what Vlad is trying to tell you is that his salary isn’t moving up because China keeps on exporting deflation to western countries while our western banking cartels are causing massive inflation that is being felt by most.

Stop being so fcuking blind!

#207 What about CMHC? on 05.02.14 at 9:51 am

Thanks for this… For the last few days, I have made your blog compulsory reading for my teenage kids, nephew and niece.

“It’s better to walk alone, than with a crowd going in the wrong direction.” (Diane Grant)

#208 The American on 05.02.14 at 9:54 am

At #14: WhiteKat, your “theory” is well and all, but one little detail you forgot when evaluating all sides… The U.S. holds the pursestrings. Canada does not by any stretch of the imagination. US Economy is easily 10X that of Canada’s, and the USD is still and will remain the global reserve currency. There will be absolutely no backfire against the likes of Exxon or Pepsi Cola. Mark these words. LMAO. Such a narrow minded viewpoint. If Canada didn’t sing FACTA IGA with the U.S. then it would be CANADA in a world of hurt… not the other way around. My oh my, what are they teaching you up there? Canada’s self importance is laughable in this scenario.

#209 IVoteIndependent on 05.02.14 at 11:39 am

20 million U.S. families could buy homes, but don’t

http://finance.yahoo.com/news/20-million-u-families-could-135315766.html