The ‘balanced’ market

BALANCE modified

Well, if you believe CREA, the average house in Canada is now selling for $409,708, which is higher than last year at this time by about 7.6%. Sales were more than in March (when it snowed every two hours), but down from a year ago. Compared to April of 2011 or 2012, they are seriously down. This, the realtors say, is ‘balanced.’

But in a word, Spring’s a bust. Sales are in a long-term decline and prices have been pushed higher as reduced demand chases diminished supply. In the biggest market, Toronto, average SFH prices actually fell during April. In the second-largest market, Montreal, overall sales plunged 9% in April – the fifth consecutive month of negative numbers. In Vancouver, sales last month were 5% below the 10-year average. In Calgary listings fell 13% and average prices rose 7%. But they’re all nuts.

This is not the snapshot of a healthy market, despite massive regional differences. In some markets, like Halifax, sales, prices and hope are sinking. In Victoria, seasoned realtors swear they have never seen so many top-end properties flood the market, with so few sales. In Winnipeg fewer houses sold last month than last year and deal numbers for the year to date are lagging the 10-year average.

It’s amazing to see such a silent spring when five-year fixed mortgages have been widely available at 2.99%, and as the pumpers at Investor’s Group bring in their 1.99% US-style teaser loan. Meanwhile our new federal finance minister stays frozen in the headlights, praying the housing correction 18-wheeler doesn’t flatten his legacy. Good luck with that.

Well, below is an illustration that captures some of the content of this blog. It comes from some site called Gold Zebra – the “business, professional and personal development hub for Gen Y women” – which scares the hell out of me. But they obviously have a bigger graphics budget than this pathetic site. That numbers are for 2013, but they make the point: no matter what you hear or read, this market is wobbly, dangerous and unsustainable.

Picture2 modified

167 comments ↓

#1 T.O. Bubble Boy on 05.16.14 at 5:58 pm

“The Rule of Thumb is that you can afford a house four times your income… “

“… if you never want to pay it off”

#2 CPG on 05.16.14 at 5:59 pm

Rabbit, Hare and Squirrel Recipes

http://honest-food.net/wild-game/rabbit-hare-squirrel-recipes/

#3 Buy? Curious? on 05.16.14 at 6:04 pm

Wah wah, why hasn’t the market corrected based on economic fundementals? Marsha, Marsha, Marsha!

Canadains suffering from Jan Brady Syndrome.

https://www.youtube.com/watch?v=w2fXs3bf-p0

Losers!

#4 Jas Girn on 05.16.14 at 6:12 pm

Great article as usual!

#5 Joe on 05.16.14 at 6:24 pm

I bet you that banks will lower mortgage rate……!!!

This is only one way they can prolong and “rescue “ for some time the Canadian economy ……

Flippers are at the end of finish line to sell their homes for the premium price—-interesting how the news is spreading along the streets of Toronto about flippers selling out their inventory….right now….

They are still a lot of suckers particularly in Toronto to buy inflated houses…….

Question: What is so attractive and tempting to live in Toronto?

#6 zee on 05.16.14 at 6:29 pm

hey garth

you have said this in the past. used a couple of data points to conclude that the market is turning and a new period is starting with lower real estate prices. however, a short while later, prices and sales rebounded and went higher.
so whats different this time?

#7 Joe on 05.16.14 at 6:30 pm

Dear reader and mortgagee…..if you have mortgage over 500k expect in near future in Toronto that your loose at least 100K,
Ask real estate agent….they work with flippers together…

#8 calgaryPhantom on 05.16.14 at 6:36 pm

Alberta (calgary), not bad from the graphs above.

#9 West Coast on 05.16.14 at 6:37 pm

Hi Garth,
Just arrived home from holiday to find a major flood had occurred in my 30+ storey highrise. Fortunately, I rent and my suite wasn’t damaged, but many suites in the building were hit by a major flood which originated in one of the suites – cause unknown to date – owner absent. This follows a huge building reno project which resulted in 3 years of noise, inconvenience, increased costs and the building being covered in tarps. (Our local tarp colours are blue and white.)
All in all, a nightmare for the owners, many of whom put off selling during the reno and now this!
The condo market can be quite illiquid at times, but I can tell you that in Vancouver at least – the enemy is a liquid – and that enemy can attack the building from the outside or from the inside.
We had the leaky condo crisis with our low-rise wood-framed buildings and now we are facing a similar scenario with our older (15+) concrete highrises.
I have read that many buildings in greater Vancouver are not having depreciation reports completed. A building with a depreciation report may still have problems, but one without is a disaster waiting to happen.
How anyone can imagine they can buy a condo in this city and have ‘easy living’ is beyond me.
I know you feel you say the same thing over and over again in your blog, but new readers may decide to think twice about buying and
the rest of us welcome any honest information we can get.

#10 Jimmy on 05.16.14 at 6:37 pm

By far the most colorful post seen!

Enjoy the long weekend oh great one.

First BTW.

#11 Renter's Revenge! on 05.16.14 at 6:38 pm

Honestly, I think the best possible outcome at this point is flat house prices for next 10 years, an end to flipping and speculation, and a return to more productive modes of investment across the country (as opposed to deck building and kitchen renos).

I don’t want to see my friends and family and coworkers lose their homes, and I don’t want my bank dividends to stop rolling in. I just want to gloat over my higher cash flow and earlier retirement than everybody else I know :)

#12 Happy Renting on 05.16.14 at 6:38 pm

Geez, what do people do in Thunder Bay that earns them so much income?

#13 crowdedelevatorfartz on 05.16.14 at 6:42 pm

Nice graphics……..

#14 WannabeFool on 05.16.14 at 6:49 pm

$3 Million teardown in Vancouver?

got you beat.

http://www.theprovince.com/news/million+teardown+West+Vancouver+waterfront+classic+appears+chopping+block/9844057/story.html

#15 Sents on 05.16.14 at 6:51 pm

I didn’t get the idea of that ring graph. Simple bar chart might have been more effective..

#16 Mike on 05.16.14 at 6:52 pm

I don’t see any comments yet, which is right :) No comments needed, the numbers speak for themselves!

#17 Ferrari321 on 05.16.14 at 6:53 pm

But how do we factor HAM into the house buying equation?

#18 4 AM Sunrise on 05.16.14 at 6:56 pm

I recently completed a survey online. It showed me all the 2.xx% mortgage ads from all the big banks (names removed) and asked me if I recalled seeing them, how I felt about them, and what action I took after seeing them (if any). No space in the survey, unfortunately, to tell them that the RBC ads on YouTube constitute “irresponsible fear-mongering”.

I wonder how the banks are going to spin it if/when they raise their rates.

#19 Retired Boomer - WI on 05.16.14 at 7:01 pm

like you said yesterday, you can’t “FIX” stupid, but you can “TEACH” it.

#20 Shanks on 05.16.14 at 7:01 pm

1st

#21 Van on 05.16.14 at 7:04 pm

Townhouse open house in burnaby today, 400k, 900sq, one one bathroom, blue collar area. Crazy!! Would not even pay 300k for that. As expected, at least 10 mor fools were ther

#22 2nd Place is the first loser on 05.16.14 at 7:06 pm

1st

#23 Derek R on 05.16.14 at 7:08 pm

So looks like the NWT is the place to be!

#24 AlbertaGuy on 05.16.14 at 7:17 pm

From Yesterday…

#44 Smoking Man on 05.15.14 at 9:11 pm
Deleted, you jealous bastard

Blog dogs, who would like to see the entire compodium of all smoking mans delted blogs?

Smoking man would you agree to divulge?

#25 jess on 05.16.14 at 7:20 pm

how come the x axis states average salary
but the heading says median

http://www.purplemath.com/modules/meanmode.htm

#26 45north on 05.16.14 at 7:37 pm

But in a word, Spring’s a bust.

looks like destiny has caught up to the market. The thing about Toronto real estate is that sales double from January to May. Maybe not this year.

#27 devore on 05.16.14 at 7:55 pm

#12 Happy Renting

Geez, what do people do in Thunder Bay that earns them so much income?

Productive activities. Ie, not flipping houses. Although industry has been declining in recent times, as it has everywhere in the west, it is still going strong.

#28 TurnerNation on 05.16.14 at 7:59 pm

Attn. new blog dogs. The following usernames are still available; reserve yours today.

Sock Drawer Myopian

KJV, S&W and AG

Tchotchkes I can

Squamish Sasquatch

She Sells Seychelles

Ancient & Accepted Blog Dog

Bearded Old Goat

Schlock Broker

Fancy Coloured Kias

Dr. Wane

Stephen who?

Tune in, Turn On, LOC out.

Dip the Drain Operator

Mattamy_Swooner

…..

Reserved:
Blog Dog Poloz

#29 Bobby on 05.16.14 at 8:00 pm

Here in Victoria, lots of higher end homes sitting forever. Either reduced, or taken off the market. The market is slow as some realtors I know are now supplementing their incomes with a second job.
A colleague just sold his house, finally. It’s indeed a buyer’s market. Herein Victoria.

#30 Ralph Cramdown on 05.16.14 at 8:06 pm

#28 TurnerNation

If I didn’t already have a handle I like, I’d be tempted by “Cash Money Thousandaire”

Sadly, when I type Cash Money into the Google searchbar, autocomplete suggests “Cash Money Main and Broadway Hours” I’m not even in that timezone…

#31 Arfmooocat on 05.16.14 at 8:08 pm

At big-ticket dinners, a blunt Bernanke sounds theme of low rates

NEW YORK/BOSTON (Reuters) – In a series of quarter-million-dollar dinners with wealthy private investors, Ben Bernanke has been clearer than he ever was as chairman of the Federal Reserve on his expectations that easy-money policies and below-normal interest rates are here for a long time to come

http://finance.yahoo.com/news/big-ticket-dinners-blunt-bernanke-200233561.html

#32 X on 05.16.14 at 8:12 pm

It is pretty obvious to most how CREA picks which months to use for the month over month comparison, as opposed to comparing year over year.

Whichever makes the market look like it is moving upwards to fool the sheep.

Even sadder, is that msm eats it up word for word.

#33 Pierre Poutin on 05.16.14 at 8:38 pm

these graphics show that there are no problems in Quebec, as I have been saying all along. Our market is well balanced, and these graphs prove it!

#34 Meanwhile, in the real world... on 05.16.14 at 8:56 pm

Garth, as pointed out before, the BC stat is irrelevant.
The BC economy is pumped up by a $7B/year drug trade and vast amounts of rental suite income, that is not reported to the CRA. While the ‘offical’ reported household income in Vancouver may be $69K, the real number is likely double that. Until the drug and/or illegal rental income issues are dealt with in Vancouver, the RE prices will remain propped up at abnormal levels, that don’t make sense in normal economics. And what politician, with a home in Vancouver, is going to want to do anything about these issues and take a drastic hit on their home value? None.

#35 Ontario's Left Coast on 05.16.14 at 9:15 pm

#24 AlbertaGuy – …who would like to a compodium (?) of Smoking Man’s deleted posts?

How can I put this? Let’s just say I’d rather clean all the toilets at Union Station with my tongue. Come to think about it, the two experiences would probably not be all that different. Oh, and by the way, if they got ‘delted’ the first time, what makes you think a greatest hits version of his putrid spew would make it through this time? Pass.

#36 Adrian on 05.16.14 at 9:16 pm

@ #31 Arfmooocat on 05.16.14 at 8:08 pm

At big-ticket dinners, a blunt Bernanke sounds theme of low rates

Thanks for the link. I guess we are all Japanese now in terms of our long-term national interest rates.

#37 Financial Freedom at 40 on 05.16.14 at 9:19 pm

Browsing http://www.torontohousesoldprice.com/ is getting addictive – perusing recent sold prices, DOM, property taxes etc. in areas I know well (lived in, bought in, sold in). Much more informative than MLS.

You can see the slowness in pockets – the $2M range for example. Wondering if finally selling after many months and for a few hundred thousand under asking makes a difference to people in that bracket, or if it’s just pocket change and a fully anticipated wait.

Like anything there seems to be a ceiling you eventually bump into… where the upside potential runs out of steam.

But maybe those houses are more lifestyle showpieces and less about capital appreciation. Hopefully the artwork on their walls is doing better.

#38 Randy Cross on 05.16.14 at 9:22 pm

Buy a house worth four times you annual tax bill…haha…same deal

#39 Rainclouds on 05.16.14 at 9:31 pm

Blasphemy

The Oliveman is gonna fix everything.

Tubby, (the all seeing all knowing, oracle) has the pawns all positioned for his 2015 victory

Unless……………………..

#40 White Van Man on 05.16.14 at 9:35 pm

#15 sent

You BIG DONUT!!

#41 CPG on 05.16.14 at 9:44 pm

“Unsustainable Credit and asset Bubbles provide the existential threat. So-called “deflation” risk is a consequence of precarious “money,” Credit, securities, asset, economic and speculative Bubbles. At this point having resorted to rank monetary inflation (and with global growth dynamics alarmingly weak), Central banks have no solution. Trying to gauge how much time is left is the pressing issue for market participants.”

Nervous Time

PS – #31 – Arfmooocat – Great link

#42 gladiator on 05.16.14 at 9:51 pm

The pie (circle?) chart makes no sense. Percentages in pie charts should add up to 100%. They should have used bar charts. But very informative graphs otherwise. Good job, Gold Zebra!

#43 Walter Safety on 05.16.14 at 9:54 pm

Ah PEI right where it should be . 10 % less income than Ontario and houses at 50 % less and the same weather 3 days later unless the weather gets blown out to sea.
The neighbors will watch your house while your in Florida too, it helps that you know them.

#44 alan greenspen on 05.16.14 at 9:55 pm

#5 Joe on 05.16.14 at 6:24 pm

Question: What is so attractive and tempting to live in Toronto?
…………………………..
5 months winter, 5 months unbearable humidity, relatively nice 2 months mid May-mid June, mid Sept-mid Oct (enjoy while it lasts)

The worst traffic in North America since 2007 (horrific these days)

The world class entertainment (Maple Leafs) /sarcasm off

Fluoride in the water.
—————————–
On the bright side: the best variety of cuisine (no organic though so GMO/nitrates is a given)

Some very nice people, some very nasty people and almost no normal people (in stats it appears normal)

It could be worse.

#45 Brian Ripley on 05.16.14 at 10:06 pm

re ” Compared to April of 2011 or 2012, they (sales) are seriously down. ”

National MLS ANNUAL residential sales peaked in 2007 (+/- 525,000). The latest print, March data (Annualized) is +/- 445,000 sales a 15% drop from the peak. Chart here:

http://www.chpc.biz/6-canadian-metros.html

That March print is below the 2010 low and is threatening to break below the pit of gloom low set in 2008

#46 Blobby on 05.16.14 at 10:07 pm

The rule of thumb I grew up with in England (as it was the rule the banks had for lending, until the government allowed everyone to borrow pretty much anything).. Is:

Three times your income, or 2.5 times your joint income. Can you imagine if the chmc enforced that rule now?

#47 april on 05.16.14 at 10:10 pm

#29 – I disagree. It’s not a buyers market till prices come down alot further.

#48 Randol on 05.16.14 at 10:21 pm

Buy? Curious?

Why do you keep coming back for the sole purpose of justifying your recent RE purchase (mainly by putting down others)?

#49 Young & Foolish on 05.16.14 at 10:39 pm

Debt doesn’t seem so scary anymore …….

#50 Ralph Cramdown on 05.16.14 at 10:54 pm

Did Flaherty’s tightening work? How do Canada’s mortgage restrictions compare to those in other countries? And… What about Naomi?

http://www.imf.org/external/pubs/cat/longres.aspx?sk=41551.0

#51 Led on 05.16.14 at 11:17 pm

what are the chances that the smoking man is Charlie Sheen?

#52 Jon on 05.16.14 at 11:31 pm

One of my employees during his annual performance assessment (in vancouver) asked for a larger than normal raise, and i asked why considering i had given him an honest review and raise inline with that? And he stated he bought a townhouse a year ago and could just afford it until he was hit with a $100,000 thousand dollar payment due to leaky condo issues…. This is someone junior but with a good salary, dropped $400 plus k and now has to pay another $100k. Be careful buying a condo or townhouse in vancouver you could end up with much higher expenses than anticipated. Fortunately his family bailed him but it could easily have resulted in bankruptcy.

#53 Tufte Too on 05.16.14 at 11:31 pm

Graphic designers need to stop making charts before learning the basics of how they should be used.

#54 LOL on 05.16.14 at 11:49 pm

Nearly 400k for the average home in NWT and Yukon.

Okayyyy…

#55 may on 05.17.14 at 12:04 am

Remember how everybody was chirping about mortgage rates having one way to go?

Apparently the bond market disagrees. :D

#56 killaboi on 05.17.14 at 12:13 am

Real estate prices will continue to go up in Calgary for some time to come due to low supply and high demand. Want to rent instead of buying? Good luck – rental vacancy rate is around 1%.

#57 Freedom First on 05.17.14 at 12:33 am

Yes, it is easy to see that world wide all markets have come into a “Balance” for all asset classes. The “Balance” is that there is no “Regulators” who are enforcing the supposed in place regulations in any of the Markets. So…….the markets are in a perfect harmony of “Balance”, which has a new definition: “BUYER BEWARE”. If you want protection, look in the mirror, and come to realize who the real truth sayers are. Garth is one of them, and has been for decades. His record proves it.

#58 Comox Lurker on 05.17.14 at 12:42 am

Out here in the Comox Valley RE things are very slow. Almost every property is “New Price” or “Price Reduced” . The only things popping up this spring are for sale signs and condo developments where the developer is in denial or racing the clock.

A couple of weeks ago I finally saw the first house in several years that I was remotely tempted by. Nice house, great location, sold in about a week. Why? It was priced around $50K less than what other guys around the corner and down the block were asking. And the higher priced houses have been sitting for months. Someone got the memo I guess and priced to sell.

#59 greg on 05.17.14 at 1:21 am

GARTH “GERALD CELENTE PETER SHIFF TURNER.

#60 Ali on 05.17.14 at 1:23 am

Their budget was just labour – they used a free infographic generator site. You can just as easily plug in your data sets to infogr.am.

My first one took 20 minutes but after practice I learned to make them pretty quickly.

#61 jrn on 05.17.14 at 1:40 am

When “median household income” is referred to in these tables is the figure before or after tax?

#62 Funny on 05.17.14 at 1:51 am

I like how one of the graphs is titled, “Median Household Income (2011)” and the bottom of that same graph says, “Average Salary ($000)”

Cuz, you know, median=average

Some brilliant people at work here.

#63 Funny on 05.17.14 at 1:52 am

Oh yeah, I though “Average” home prices were supposedly misleading? I guess we’ll just ignore that this time…

#64 Sam on 05.17.14 at 2:27 am

on your old friend carney

http://www.ipinglobal.com/ipin-live/407243/bank-of-england-deadline-for-decision-on-housing-boom

#65 Longterm on 05.17.14 at 2:45 am

Calgary=nuts

Indeed. I sold two houses there in the red hot greater fool spring market.

A duplex in Bowness, listed at $429k and sold for $465k in one night with 8 over offers, ten day close, no conditions. The second on Centre Street, a brutal location on two major roads, listed at $425k and sold for $440k in one day. The first was bought for $200k in 2002 when it was cricketville – no offers for three months. The second in 2007 and was underwater for 5 years untill the flood of greater fools arrived and catapulted it to a decent, but not outrageous profit.

The cash is now in a TD Waterhouse account being steadily invested.

So long suckers in Cowtown. You can have your overpriced real estate, mosquitos, homogenous narrative of life=tar sands=good and ball breaking winters.

#66 Tony on 05.17.14 at 2:47 am

Re: #46 Blobby on 05.16.14 at 10:07 pm

The rule of thumb used to be never pay more than three times the husband’s yearly salary for a house in Canada. Things seemed to changed around the mid nineteen eighties. In most of the rest of the world more than 3 times the joint income for a house is always deemed a sellers market for a house.

#67 High Plains Drifter on 05.17.14 at 2:59 am

Alberta, thats the name you need to remember. We are A$ students and we rush home to tell everyone. We need 150,000 bodies they say. Be one of our bodies and drive up real estate. You know you will.

#68 Smoking man on 05.17.14 at 4:15 am

My cell phone company sends me a text, your cut off, 200 in data…. Just say yes to carry on..

YES YES YES YES…

The good news plot complete, thanks Old Man for the email and connection. To you know who…

Found it….

Love you, you old bastard… I’m going to give you a credit in the best book since wizard of Oz…

#69 Smoking man on 05.17.14 at 4:37 am

Miss Smoking man goes out of character, pushes me out of the way… Drops a twenty on a black dude, a Nam vet in a wheel chair…

The bitch must have won big…. Or she thought he was cute….

Love this town…..

People leave the mask at home…

Walking the world mask less, it’s good to find your own kind…

#70 Mark on 05.17.14 at 4:50 am

The CREA and the TREB aren’t lying when they claim prices have gone up. From their point of view, yes, they have, because their members are increasingly transacting in a higher end segment of the market. As the sales mix has shifted quite dramatically.

Of course, when this was pointed out and discussed extensively at the RFD forums, a few RE industry trolls, including a prominent RE sell-side economist (who wrote a bunch of nasty stuff about Garth in a RFD thread) continually accused a certain poster of making stuff up. Even though the facts were staring them in the faces.

#71 Smoking man on 05.17.14 at 5:04 am

God damn it, takes jd for perfect spelling…

Felt a nudge, how do I described this… Sun fish fishing.. That little pop on the line..

It was Mr happy out of his coma..

Love Vegas….. Love Garth, love the dogs her…..

You bastars about to wake up… Me..

Carpet burned head posability…

#72 Stickler on 05.17.14 at 7:36 am

“The Rule of Thumb is that you can afford a house four times your income… “

…It used to be 2.5 times your income!

Example, if your annual salary is $75,000, you should avoid buying a home that costs more than $187,500.

With a household income of $160K (ie 1 teacher, and 1 police officer) should not pay over $400,000

…you see how f’d we are.

#73 Aggregator on 05.17.14 at 7:58 am

Ha. New IMF working paper on Canadian housing suggests government should level the playing field and continue its current mortgage policy, but back private insurers (remember Genworth is really General Electric) with 100% guarantees!

LTVs on First Home Loan By Country

The next scheme is coming as Genworth approches its $350 billion insurance cap (chart). The government has no choice.

#74 sheane wallace on 05.17.14 at 8:59 am

#55 may on 05.17.14 at 12:04 am
Remember how everybody was chirping about mortgage rates having one way to go?

Apparently the bond market disagrees. :D
……………………………….
Bond Market?
Are you serious?
What bond market, the one where Belgium buys 40-50 billions of treasuries per month since the beginning of ‘tapering’?

Are you buying bonds at 2.65 on 10 years T? No? I thought so.
Garth is not recommending it either, look at his portfolio guidance.

This are either utilization of the last left currencies swaps or outright fraud, the fact that is happening behind the scene is worrisome, we could be hitting the wall any time soon.

Europeans have enough issues themselves to be able to support us indefinitely.

#75 Angus on 05.17.14 at 9:14 am

This is a shocking piece about where unsold cars end up .I am starting to think something fishy is going on
http://www.vincelewis.net/unsoldcars.html

#76 Christopher on 05.17.14 at 9:20 am

Great article Garth.

I’m a bit new to all of this so bear with me, but what is the significance (if any) of comparing the median household income with the mean home price? Would it be more (or less) beneficial to look at either the averages of both, or maybe the median of both?

Thanks,
Chris

#77 tkid on 05.17.14 at 10:38 am

Gleaned off tumblr …

in 1930 the average wages were $27,481*
in 2012 the average wages were $44,321

in 1930 the average home cost $53,635*
in 2013 the average home cost $289,500

in 1930 the average car cost $8,369*
in 2013 the average car cost $31,352

but no you are probably right, it’s just twenty-somethings being lazy.

You ever think of starting up a tumblr account, Garth?

#78 Tony on 05.17.14 at 10:47 am

Re: #77 tkid on 05.17.14 at 10:38 am

Adjusted for inflation a car Model T Ford was much more than what the average car costs today. A 500 dollar Model T would be equivalent to about a 50 thousand dollar car today.

#79 Daisy Mae on 05.17.14 at 11:02 am

#42 gladiator: “The pie (circle?) chart makes no sense. Percentages in pie charts should add up to 100%.”

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

Why is it difficult to understand, and why does the pie chart need to total 100%? It’s quite clear, actually — The BC ‘income to home ratio’ is 8.20. Simple.

#80 Daisy Mae on 05.17.14 at 11:10 am

#52 Jon: “And he stated he bought a townhouse a year ago and could just afford it until he was hit with a $100,000 thousand dollar payment due to leaky condo issues….”

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

I know of one woman who took out a Reverse Mortgage to pay her $100,000 special assessment for her leaky condo. Worse thing she could have done…but I bet that option is common.

#81 geogar on 05.17.14 at 11:11 am

Seems obvious when the pumpers are luring with fire sale rates that the demand is trending negative not balanced but oh well oh hell.. The middle class providing inertia for our economy is running out of juice. Hola C–P look out below.

#82 Vancouverite on 05.17.14 at 11:24 am

IMF advises Ottawa to trim CMHC’s mortgage activities, then maybe phase it out

http://www.news1130.com/2014/05/16/imf-advises-ottawa-to-trim-cmhcs-mortgage-activities-then-maybe-phase-it-out/

#83 Ralph Cramdown on 05.17.14 at 11:51 am

#75 Angus — “This is a shocking piece about where unsold cars end up .I am starting to think something fishy is going on”

T’is only shocking if ye be feeble, wee Angus. It’s a collection of pictures of new cars from various times and places, with a story that suggests but doesn’t explicitly state that they’re all current and far more than normal.

To believe this, you’d need to believe that essentially all major carmakers’ bankers and shareholders are willing to front them the capital to produce vast quantities of unneeded cars. That ain’t so.

Plus, the thing is so full of basic errors that it’s certainly written by, or for, a moron. E.g. car companies don’t need to buy land to store excess production on, because anyone with a flat unproductive piece of paved land will gladly rent it out. Not rocket science, but indicative of the brains of the writer.

New car retail sales and months of inventory are tracked monthly because they’re an important economic indicator. Should we take undated photos over the numbers? Vast conspiracy?

Not to pick on you too much, wee Angus, but always approach stories like this:
– is he actually, explicitly, saying what he’s implying, or is he writing it in a manner that’s non-falsifiable if questioned (“I never said these photos were all recent”)
– Does he reference data, or is it all anecdote? Is there an independent source of data that would corroborate the theory? If so, CHECK IT.
– Is it possible that nobody knows about this? Big hedge funds and investment pools can now afford to buy near real time satellite data, and they use it for investment situations just like this. Are they short car manufacturers? The latter info is available online for free.

Finally, does he end the article with “Yes I’m also an author and my book on conspiracy theories has no correlation whatsoever with this webpage.”

Y’us bin trolled, as have I.

#84 World Traveller on 05.17.14 at 12:13 pm

Why learn english? it’s only the 21st century, man the spanish continue to amaze and disappoint.

http://clubclass.com/blog/spanish-prime-minister-mariano-rajoy-rejects-free-english-course/

#85 shane on 05.17.14 at 12:35 pm

Garth, noticing alot of price drops in the GTA this past week..

#86 G Dawg on 05.17.14 at 12:50 pm

“Daisy Mae on 05.17.14 at 11:10 am

#52 Jon: “And he stated he bought a townhouse a year ago and could just afford it until he was hit with a $100,000 thousand dollar payment due to leaky condo issues….”

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

I know of one woman who took out a Reverse Mortgage to pay her $100,000 special assessment for her leaky condo. Worse thing she could have done…but I bet that option is common.”

When an articling student in the early 1980’s I wrote a paper on the first plaster and stucco condo project being built in Vancouver…The Galleria on W8th Ave. My task was to appraise the project. I titled the paper ‘Building Tomorrows Ghetto’s Today’. I warned of the design, materials failing as they were being installed. I put the blame squarely on the architects and engineers who colluded to produce the project. City inspectors obviously incompetent. I didn’t get the job at City Hall…..instead I was invited to join an Asian joint venture which proved far more interesting.

Billions of dollars later and lives wrecked…it turned out that I was right……the carnage obvious.

#87 rosie "moving forward" in the knowledge that, "this won't end well" on 05.17.14 at 1:10 pm

#78 Tony

A $500.00 car in 1914 would cost $10,400 today. Google inflation calculator for proof.

#88 TurnerNation on 05.17.14 at 1:19 pm

Cramdown clearly you posses at least a Masters level take on Econ. Perhaps as a prof., even.

Bad new for ‘Smoking men’ Jillys adult entertainment has been kicked out.

http://news.nationalpost.com/2014/05/13/some-stayed-for-hours-some-stayed-for-years-quick-sale-forces-tenants-out-of-broadview-hotel-and-jillys-strip-club/

Another article – about Drake Hotel – mentions they are searching a new location…will Broadview Hotel become the next hipsterish hangout?

Actually Drake Hotel on Queen W is quite acceptable – I’m there 2x a month on Monday nights for a great soul band, ’till the wee hours. Work be damned!

#89 Smoking man on 05.17.14 at 1:21 pm

Anyone who thinks the USA economy is in the toilet, you haven’t been to Vegas lately.

Haven’t seen it this busy since 2007.

#90 Herb on 05.17.14 at 1:43 pm

A note from the rental front –

Having been Garthed for years and moving to Toronto for family reasons, we have been negotiating renting a bungalow vice buying one outright. Apart from the fact that the “negotiations” amounted to take it or leave it, I have one more hurdle to overcome. An email received from the property manager of record, Royal Lepage Real Estate Services, informs me that I have to hand over 10 postdated cheques “…before you move in, we will exchange them for the keys …”

Now, Section 108 of the Residential Tenancies Act, 2006 states specifically that

Neither a landlord nor a tenancy agreement shall require a tenant or prospective tenant to,
(a) provide post-dated cheques or other negotiable instruments for payment of rent; …

So it would appear to be illegal for a landlord to even make such a demand. I thought that Royal Lepage was just doing its usual one-sided RE thing and checked other rental ads in the GTA. Zounds, all kinds of them on the MLS site state bluntly that (to cite one sample) “1st and Last Months Rent Required for Deposit Plus 10 Postdate Cheques [sic].”

Now, Toronto is the provincial capital, the home of the Ministry of Housing and Municipal Affairs and of the Landlord and Tenant Board, presumed defenders of landlord and tenant rights. How is it that landlords can openly advertise a patently illegal requirement, and no one hiccups? Heck, even if he makes an illegal demand, the worst a landlord has to fear is this threat by the Board (in its FAQs):

The tenancy agreement should not contain any rules or conditions that are not allowed by the Residential Tenancies Act. If there are any such rules or conditions in the agreement, they will not be enforced by the Board if there is a dispute between the landlord and tenant.

Nothing like a law with teeth to regulate the marketplace, wot?

#91 Shawn on 05.17.14 at 1:45 pm

BE VERY CAREFUL WHAT YOU LEARN!

On this long weekend I suggest a reflection on being VERY careful what you learn. It should be obvious that in this life you can descend into a life of misery by learning the wrong things.

This comes down to

BE CAREFUL FROM WHOM YOU LEARN

From the start, this blog has had its share of doomers who would bitterly teach you that it is not even worth trying to become wealthy. And, the internet in general is lousy with doomers.

If you want to learn how to be great at hockey study what Wayne Gretzky has said and study Gordie Howe and study anything written or spoken by the greatest players in the game now or historically.

If you want to learn how to hit a baseball, read Ted Williams’ books.

For physics, read Einstein and Stephen Hawking.

If you want to be rich, or at least wealthy through investing (including real estate) then study what rich investors and property owners say and do.

Laughably, doomers often disrespect Warren Buffett on this site and many others. Yet he is indisputably one of the greatest investors in history. He has said he wants to be remembered as a great teacher of investing (of course his main wish these days is to remembered not for being the world’s richest man for a time but hopefully also eventually its oldest man for a time). Buffett has written and spoken extensively about investing since the 1950’s. His message has hardly changed at all. If you want to make money in stocks you are making a huge mistake not to read and heed his words. I suggest two rules be followed.

Rule Number 1: Always assume that Buffett is correct

Rule number 2: Don’t forget Rule Number One.

There are many sources of investment advice. I suggest you focus on those written by people who have had strong success in investing. In our society it is deemed impolite to state one’s income or net worth. That is a shame because stating it would help others know if they should bother listening or reading.

The notion that you will find financial success by reading diatribes against banking, essays about “rigged” markets, predictions of the outright collapse of the world economy and paper money, or rants about hoarding gold is rather laughable. Very few if any of the authors even claim to be rich, so why listen to them?

To become wealthy and eventually rich through investing, study what the richest and most successful investors have to tell you.

Here’s a decent start. Read the richest man in Babylon written about a fictional rich ancient figure and (importantly) written by a wealthy man.

http://www.ccsales.com/the_richest_man_in_babylon.pdf

In investing as in hockey you cannot learn and re-learn and practice the basics too many times.

Review the simple math of compound returns often.

Read and study diligently. But pick your sources wisely and never let the poor or the bitter attempt to teach you how to be wealthy and happy.

By the way, as far as listening to me goes, I far from being on Canada’s top rich people list but I am nicely in the 1% both in terms of wealth and income. My personal investment returns since the start of the year 2000 are a compounded average of 14.9% per year and a cumulative 597%. Also I read constantly and try to pass along the best ideas.

Happy Weekend Reading.

#92 armpit on 05.17.14 at 2:09 pm

In the late 60’s to the late 70’s, the demand by baby boomers in need of housing drove up price of homes.

In order to dampen the prices, interest rates went higher to a point there was a moratorium on new sales.

Re-sales were managed by a balanced supply and demand, with the cost of the mortgage dictating the price.

However, when it came to remortgaging, it became unbalanced.

Homeowners couldn’t afford the new payments when the rates increased from 10 percent to 17 or higher. This drove the price of re-sales down and they couldn’t sell their homes for what they paid 5 years ago.

Instead they went to the bank in droves and surrendered their house keys.

Since then, interest rates began to trickle downward…slightly but gradually for the next 25 years.

For new homes, the monthly payments remained similar, only to increase as salaries did. So did the re-sale price increase.

Homeowners renewed at lower rates, freeing some income to pay down their mortgage (if they were smart) or fund their children’s education.

Whenever there was a pause in the economy, rates edged a bit lower. Another pause, again lower.

The price of homes went up, but the cost of home ownership remained balanced with incomes, price, and interest rates.

Now interest rates have hit rock bottom, and re-sales prices are sky high. Still, the payments are manageable (for most).

The best, that now can happen, is things remain the same until most people pay down their debt.

But change is inevitable.

The question is when?

And let’s not forget the elephant in the room – USA ballooning deficit. Nobody wants to talk about again …. for now.

#93 darkselling on 05.17.14 at 2:42 pm

As I’ve mentioned many times, Calgary seems fine. Slightly over the 4.0 threshold and Moody’s come’s out with the gem today

“Valuations in Calgary appear more solid, supported by Alberta’s booming resource industry. Yet rapid appreciation and extensive building mean that if energy prices fall, Calgary real estate could follow quickly.”

Incomes support housing prices in Calgary and it shouldn’t be grouped in with Garth’s broad brush that he so often uses to paint the nation.

#94 FutureExpatriate on 05.17.14 at 3:08 pm

#1 Oh yeah?!

Well at least when you “rent from the bank” you can piss away even more money by borrowing even more and “fixing” it up the way it suits your wife!

#95 triplenet on 05.17.14 at 3:12 pm

#86 G Dawg

Was it plaster and stucco……….

Or was it wrapping the building in plastic, hence the building has no ability to breathe or the total lack of an hvac system designed to accomodate the”new design”.
Secondly, plaster is/was an interior product – not exterior and stucco is
an inert product, somewhat resisent to fire.

#96 TurnerNation on 05.17.14 at 3:16 pm

The world’s power structure is set up as a Pyramid.

-Bottom level is us.
– Then our elected leaders/actors (CNBC trumpeted that India’s new PM is their “Regan”. Need I say he was an actor. After they blew up favourite Ms. Bhutto a few year ago.)
– Then the corporations who select/pay for the candidates.
– Above them are the bankers who fund it all.
– At the top is elite royal families. (Check the back of your coinage lately? Surely you noted Prince Phillips and George Bush Sr’s Germanic noses. Same family. Hence Project Paperclip. Hence 30+ years of a Bush/Clinton as P, VP or close to. And Ms. is planning on a run in 2016. “Anyone can become president in USA!”)

What we are given it purely theatrical. ‘Kerry warns Putin’. ‘The thin red line’. Whatever. They are all (rational) – economic – actors. Business is good. Heads buried in smart phones.
5 thing we know about the crisis in _____.
Cat in the hat fables.

(The new water filters arrived.)

And for SM, Nosty, Aggregator while everyone was smart phoning over a year ago I looked up and saw this, on a weekday. Blue beam. No idea.

http://imgur.com/iewVrvd

http://imgur.com/4m61gIA

#97 Habs76-79 on 05.17.14 at 3:31 pm

#77 Tkid.

The numbers you provide in your post are wrong. Maybe by 1 decimal point.

In 1930 the avg. household income was more like $2,748.00, avg. house price maybe $5,363.00 and avg. car price close to $836.00.

My prices will probably be much more close to the truth at least for North American stats.

Of course the math will be the same. In other words it probably took 2 times the avg household income to buy a house in 1930 and probably much less than 1 year’s wages to buy a new car in 1930.

#98 DAN on 05.17.14 at 4:08 pm

Today [email protected] told me that I have a nice balance and should consider investing in real estate. ‘have you heard about our special on mortgages?’ she said.

I told her that if anyone from RBC EVER AGAIN suggested that I ‘invest in real-estate’ and I didn’t enquire, that i’m going to bank elsewhere. I’m sick of their fucking shit, this has happened every month for the last two years.

Today was the last straw. When I think of anyone saying that something is on ‘special’, it makes me feel as if i’m in a bakery or grocery store and buying meat by the pound. Am I supposed to make one of the biggest purchases of my life simply because getting a mortgage is now the equivalent of buying some black-forest ham??

Saying ‘no’ to [email protected] is tough. I’ve gotten angrier over the months and 6 months ago I asked them to stop asking me. They said that they would put a note on my file but it doesn’t seem that they have.

#99 Entrepreneur on 05.17.14 at 4:13 pm

Looks like B.C. will get hit hard when the correction happens. Debt does seem like The King and I think this has been going on since the 70’s. Debt looks good, have everything (or seem to); our leaders look good, everyone coming to this beautiful land. Leaders ignore the Food Bank line, the homeless on the streets, the child poverty, closing of small businessess, etc. all on the increase. Two sides to a coin.

Debt is okay but only when used for a short time. Who is going to win, debt or cash? So far debt is ahead.

#100 Mike T. on 05.17.14 at 4:24 pm

TurnerNation

It gets really interesting when you go past the royal families.

To me that is where the conspiracy starts, the stuff you outlined is pretty obvious. What goes on beyond is anybody’s guess.

#101 Old Man on 05.17.14 at 4:35 pm

#88 TurnerNation – The Drake Hotel? I say if you want soul its time to step up in life with a bit of class as its at The Rex – 194 Queen Street West. There is no exception when it comes to the best in life.

#102 devore on 05.17.14 at 4:37 pm

#42 gladiator

The pie (circle?) chart makes no sense. Percentages in pie charts should add up to 100%. They should have used bar charts.

When you’re comparing numbers against each other, they don’t need to add to up 100%. They just need to be proportional.

But, should have used a bar chart for clarity.

#103 devore on 05.17.14 at 4:42 pm

#45 Brian Ripley

That March print is below the 2010 low and is threatening to break below the pit of gloom low set in 2008

Comparing to 10 year old numbers is pushing the credibility boundary without adjusting for population growth, which in Canada is about 1.25% annually. Over 10 years, that’s almost 15% more people. I would expect 15% more transactions.

#104 Upset with pic on 05.17.14 at 4:54 pm

I hate this picture. Why can’t you get your point across with a pic that does not humiliate an animal?

He looks bemused to me. — Garth

#105 Critique on 05.17.14 at 4:57 pm

“what are the chances that the smoking man is Charlie Sheen?”

Come on. Charlie Sheen is way more coherent and less self absorbed.

#106 devore on 05.17.14 at 4:58 pm

#72 Stickler

“The Rule of Thumb is that you can afford a house four times your income… “

…It used to be 2.5 times your income!

You have to make some adjustment for perpetual low interest rates, and also demographics. Couples stay childless and dual-income for much longer than they used to. This allows for greater paydown before the household goes into single income high expense mode.

#107 sheane wallace on 05.17.14 at 5:21 pm

#91 Shawn

For physics follow Nicola Tesla.

For investment follow Garth Turner, Peter Schiff, Jim Rogers.

#108 devore on 05.17.14 at 5:34 pm

#83 Ralph Cramdown

I love those sites too. It’s basically a collection of random Google Maps and other snapshots without any dates or context, strung together with a conspiracy theory. What is more likely, that there are hundreds of millions of cars manufactured in the last couple of years that will never be sold (if this is true, these cars would have to be liquidated for literally pennies on the dollar), a fact completely missed by a global collective of analysts, regulators, investors, speculators, shareholders, managers, employees, contractors, hedge funds, reporters, investigators, greenpeace wackos, somehow omitted from annual reports and all other public documentation, or… OR, that this theory is total and complete bunk?

In the tradition of finest conspiracy theory web sites everywhere, I will end this way: let the reader decide.

#109 Signpost in the bushes on 05.17.14 at 5:39 pm

#62 Funny
I like how one of the graphs is titled, “Median Household Income (2011)” and the bottom of that same graph says, “Average Salary ($000)”

Cuz, you know, median=average

Some brilliant people at work here.

For Funny and others;
i. 100 ii. 90 iii. 50 iv. 45 v. 35

Add the above five numbers together and divide by five to determine the average:- 320 divided by five equals 64.

Count from either the top or bottom of a list to determine the median:- in this list #iii, which is 50.

So a median of 50 is lower than the average 64 in this example…

#110 Angus on 05.17.14 at 5:50 pm

@#83 Ralph Cramdown on 05.17.14 at 11:51 am

Thank you for your opinion,you say does he provide dates locations etc….. well it does say to google map it to the location of where the pictures came from and look for yourself also I have a friend who is a car salesman and he says that his lot is totally crammed and I can attest to this because I drive buy it everyday and can see that they are now leasing the spot across the street to store their 130 day supply of vehicles also you ask ‘To believe this, you’d need to believe that essentially all major carmakers’ bankers and shareholders are willing to front them the capital to produce vast quantities of unneeded cars. That ain’t so. well I think that if they produce more than they sell cant the automakers just get another 50bill or something like that GM got as a bailout in 2009 and why isn’t this overproduction of vehicles plausable surely if a lovely city as Toronto can overproduce condominiums to the tune of 25k+ with more in the pipeline coming with not much demand sounds to me like its the same thing no?but who knows interestingly my car dealer friend just recently purchased his wife a 2008 Pontiac G6 with only 200 k no thats not a typo the mileage was 200 kilometers I think some salesmen have really good connections in the auto business why is it that places like XS cargo can purchase a skid of 50 inch TVs for 500 dollars then are able to sell a TV for approx $200 . its because they are overproducing electronic gadgets buy the millions which end up at auctions at ports all over the world so its not just condos ,TVS,but I think car makers are betting on a bailout in the future just like the last time and here is a link to an issue with overproduction http://online.wsj.com/news/articles/SB10001424052702304558804579377293202213988
and reporting rules have changed how dealers and manufactures report sales before cars sold at dealer level were considered sold now cars are counted as sold at the manufactures level regardless if it’s still sitting at the dealership so yes GM shares may be up but my friend can still buy a G6 Pontiac with 200kilometers and they will just get their bailout as usual because that’s what we do best is socialize the debt and privatize the profits

#111 devore on 05.17.14 at 5:51 pm

#90 Herb

So it would appear to be illegal for a landlord to even make such a demand.

They do, because they can, and people don’t know their rights (and responsibilities either, just to be complete). You can try showing up without the post dated checks, and see what happens. All the rule says is if that there is a dispute, the board will not enforce any rental conditions that are in dispute, if they are contrary to the Act. Like any contract, you can put almost anything into a rental agreement, but that doesn’t make it legal even if you sign it. You can never sign away rights granted to you by law.

For the time I’ve been renting in Vancouver, no one’s ever asked me to provide post dated checks. Maybe it’s my honest face.

#112 Old Man on 05.17.14 at 6:00 pm

Now for you that are looking for a cultural experience this holiday weekend may I recommend the following:
May 18th at 12.00 PM Excelsior Dixieland Band Group 7 pieces playing the 20’s, 30’s, and 40’s.
May 19th at 9:30 P.M. John Chessman Jazz Orchestra 14 piece who will rock the house.

Furthermore, this establishment brings in the best artists from all over North America will live music day and night. I know where the action takes place in Toronto.

#113 Buy? Curious? on 05.17.14 at 6:20 pm

#48 Randol on 05.16.14 at 10:21 pm

“Buy? Curious?

Why do you keep coming back for the sole purpose of justifying your recent RE purchase (mainly by putting down others)?”

Could you have not proven my point any better?

#114 4 AM Sunrise on 05.17.14 at 6:34 pm

#98 DAN on 05.17.14 at 4:08 pm

I used to be [email protected] They talk to you about mortgages every time because they HAVE to. If they don’t, they get chewed out at the performance review. (Managers have ears to hear). It’s probably their spring mortgage campaign…with a leaderboard in the lunch room tracking how many mortgages each staff member has sold each week.

Notes can be placed on file for customers who really throw a fit. I’ve seen stuff like, “Muslim client – do not discuss interest-bearing products”.

#115 the jaguar on 05.17.14 at 6:36 pm

On Tuesday Putin will be in China to ink a trade deal.
Given the recent position taken by his government to de-dollarize Russia this could be a significant event.
If major players begin to abandon the dollar as the world exchange currency the fecal matter will hit the oscalating rotator. Demand for it will drop and so will its value. Does Bandit have any thoughts on these matters, Garth?

#116 Angus on 05.17.14 at 6:50 pm

@ralph cramdown
While the site doesn’t exactly present the information in a convincing fashion, the photographs are intriguing. It seems that the cars parked near a port are probably waiting to be loaded onto a ship for export, but the photos of cars parked at inland locations are puzzling and for these it’s more difficult to create an alternative explanation

#117 Mark on 05.17.14 at 7:13 pm

“You have to make some adjustment for perpetual low interest rates, and also demographics. Couples stay childless and dual-income for much longer than they used to. This allows for greater paydown before the household goes into single income high expense mode.”

Low interest rates eventually lead to high ones, and the high prevalence of dual income families has destroyed a lot of income for males. Elizabeth Warren did an interesting speech at UC Berkeley a number of years back that you can find on Youtube which basically outlined the destruction of real wages with the widespread introduction of the dual income family.

Fact is, credit to household borrowers is abnormally cheap. Business loans are abnormally expensive. CMHC subprime borrowers can borrow to buy a house cheaper than BCE can borrow to create jobs in the telecom sector (BCE paid 3.51% to borrow $1B on 5-year notes ~6 months ago!!). This is why we have the hyperinflated housing, poor job environment — its all about abnormally cheap credit due to the CMHC subprime credit preference towards the housing sector.

#118 Smoking man on 05.17.14 at 7:13 pm

It’s not a good idea to give someone with lactose intolerance a pizza, oozing with greasy cheese after ten bears, I am the pool.

Jet fuel, rocket fuel.. No match for this lethal combo brewing in my belly..

All they saw was a man a cowboy hat, shades.. Skip across the pool at near light speed..

Tonight circus circus.. Re living fear and loathing..

#119 Shawn on 05.17.14 at 7:19 pm

A Man Cannot Serve Three Masters

Sheane Wallace says to me:

#91 Shawn

For physics follow Nicola Tesla.

For investment follow Garth Turner, Peter Schiff, Jim Rogers.

*******************************************
Well if I tried to follow those three would I not be going in three different directions?

Garth would lead me safely in a balanced fund. Schiff I dunno, lead me to a bunker?, Jim Rogers would have me move to Singapore and trade commodities on a technical basis.

Nope, I’ll follow my own path with illumination from Warren Buffett and others who invest in businesses as opposed to squiggles on a screen.

#120 For those about to flop... on 05.17.14 at 7:51 pm

I am starting to see why Smoking Man is disliked …

#121 G Dawg on 05.17.14 at 7:54 pm

“Or was it wrapping the building in plastic, hence the building has no ability to breathe or the total lack of an hvac system designed to accomodate the”new design”.

Nope ..pure and simple poor design. Flat roofs….flat windows….every surface and corner invited the rain in and rotted the buildings from the inside out. The ‘Arizona look’ proved fatal to hundreds of thousands of unsuspecting buyers.

The buildings were failing as they were being built…..in the case I sited the ceilings of unfinished suites were waterlogged and bowed before they were ever for sale. And….it wasn’t like every one involved didn’t know the problem existed well in advance of the city staff rubber stamping hundreds of thousands of projects with the same toxic potential of intrusive water damage.

We watched the same construction flaws built into concrete high rise…flat windows with no flashing to slough the rain away…..the concrete soaks into the re bar and begins the process of disintegrating…as is happening now.

#122 Rob Ford In Rehab on 05.17.14 at 8:07 pm

Geez Louise!!

I was emailing a constituent to make sure they have no crack. In their sidewalk. Then they sent me this:

http://ward27news.ca/invitation-to-celebrate-international-day-against-homophobia-and-transphobia-idahot

WTF? IDAHOT? Why do I care if IDA is HOT? I have plenty to eat at home!

“Transphobia”? This one I think I get. Most of the dudes I knew who drove Trans Ams to high school were Dagos and minorities, never liked any of them. Cheap car, better to get a Vette or wait for your family get you an Escalade. (Just like real estate, patience pays off)

I totally gotta get back into the office to stop this LGBTTQQI2SWTF!! takeover of Tronna. Taxpayers demand respect!

Seriously, though, I gotta find my clothes first…I don’t get this rehab place, all day long we’re buck naked with our beer bellies hanging out and there are no chicks here, just young guys who all have moustaches and want to rub my back..

Doug!? Where the hell did you send me????

#123 Old Man on 05.17.14 at 9:06 pm

#118 Smoking Man – circus circus is for a family with young kids; please don’t hop any rides tonight as the cops might jail your butt. Keep an eye peeled for Big Brother and stay safe ok.

#124 Ralph Cramdown on 05.17.14 at 9:27 pm

#116 Angus — “It seems that the cars parked near a port are probably waiting to be loaded onto a ship for export, but the photos of cars parked at inland locations are puzzling and for these it’s more difficult to create an alternative explanation”

I think 2008 is the alternate explanation. The economy crashed and the car plants kept cranking them out for a bit. Most of the photos are probably from then. See anecdotal evidence here:
http://www.thetruthaboutcars.com/2008/12/ask-the-best-and-brightest-where-are-the-cars/

#125 Ralph Cramdown on 05.17.14 at 9:46 pm

You can also just look at manufacturers’ assembly plants on google maps. Most of the imagery looks to be dated 2014. Ford Oakville looks more full than usual, but Chrysler Stirling Heights and Chrysler Belvidere don’t look full at all. Some of the older urban plants don’t have much parking space, but the suburban ones were all built with lots of buffer space for inventory.

There’s plenty of wacky theories out there that are hard to falsify, like whether Belgium is fronting US T-bond purchases for shadowy Venusians, or whether the US is lying about how much gold it has in Fort Knox. But anybody can now look at car plants from space, recent photos for free, and very recent for a few bucks.

The data available for free on the internet tubes is truly staggering. There’s no excuse for believing somebody’s homespun conspiracy about economic stuff without thinking about a way of verifying it for the price of an hour or two of your time, and doing so.

#126 Big Brother on 05.17.14 at 10:03 pm

MKULTRA says Smoking Man is loose on I-15 in a convertible, Area 51 is where you will find us! Take route 93 North Knucklehead to find Area 51, it’s not on I-15. P.S don’t let the wife know you are checking out the hotties at the pool. Just keep her busy on the slots.

#127 Astounded on 05.17.14 at 10:31 pm

Why do any of you people doubt Angus? As he admits the website is not proof but you can buy a high milage used 2008 Pontiac G6 so there you have your proof. Also there are pictures on the website (not related to the issue) but they are photgraphic proof that there are cars parked some where for some period of time and undetermined purpose. WOW!

I have a relative like Angus, I can’t even talk to them anymore for all of that kind of stupidity they spew. All of it gleaned from the internet. Caution Angus eventually you believe this nonsense so deeply that you discard all of your doctor’s advice and it doesn’t end well.

#128 TheCatFoodLady on 05.17.14 at 10:39 pm

#90 – Herb: Talk about a twist, eh? RTA won’t ‘enforce an illegal clause” but you can’t become a tenant without fulfilling this illegal ‘requirement’? You’d have to pay an application fee & have a hearing scheduled in order to get your cheques back. Then you run into the issue of method of payment ‘being agreed upon by landlord/tenant’. A corporation’s lawyers can have fun with that.

There are still landlords asking for damage deposits, key money & no pet clauses – none of which are legal. In tight markets, they generally get away with it.

#93 – Shawn: I can’t tell you how many Doomers I know who believe in The Universal Conspiracy Theory of Everything & frantically stock up on TP, #10 cans of parboiled beets & ‘barter items’. Then a COMMON financial hiccup hit & they couldn’t cough up the cash. Planning for the Zombie Apocalypse may be fun & fascinating but it’s the unexpected cutback in job hours, accident or illness that nails them.

Thanx for the book link – on my reading list for tomorrow.

#98 – Dan: As others mentioned, there’s a lot of pressure & sales quotas. Meeting or exceeding those quotas doesn’t merit an “attaboy!” as readily as an increase in quotas. If you don’t succumb to in branch blandishments, they happily pass your name/number to whoever they’ve hired this quarter to sell their products. You can get off their call lists… with great difficulty.

We had 8 calls in three days last week, all happily clustered around the supper hour. If No Frills had that many specials on offer, I’d be eating free for a year.

#129 OneMoreThing on 05.17.14 at 10:50 pm

4x income after tax! RENT!

#130 Big Brother on 05.17.14 at 11:12 pm

Smoking Msn come home to MKULTRA we are here out on Groom Road. Take 93 North to 275 west get off on Groom Road and drive west. Area 51 awaits you baby, come home to your creator. All of the other aliens are waiting to greet you ET too!

#131 Smoking Man on 05.18.14 at 1:21 am

#126 Big Brother on 05.17.14 at 10:03 pmMKULTRA says Smoking Man is loose on I-15 in a convertible, Area 51 is where you will find us! Take route 93 North Knucklehead to find Area 51, it’s not on I-15. P.S don’t let
the wife know you are checking out the hotties at the pool. Just keep her busy on the slots.
…….
Knucklehead? Really…..

I was in area 69,being the only human to survive a trip through the UCC, speaking and writing in 9 alien dialects.

Your bosses envied me down, what I know is above your clearance and pay grade…

Now get back to NSA, and find the next big merger on Wall Street..

Leave the universal negotiations and tactics to me.

Tonight’s going to be a good, good night, I have a feeling…

#132 rule911 on 05.18.14 at 1:22 am

First time poster,

Love this site… read it before bed daily. We are 30 something, own 2 rentals (all outside of B.C., cash positive (if we had a mortgage), and happy to be renting in Vancouver (making more on our ‘down-payment’ than our rent-AKA living free). Will buy again… not today… or tomorrow., maybe next week.

This is interesting,
http://www.zerohedge.com/news/2014-05-16/where-worlds-unsold-cars-go-die

#133 Choo Choo on 05.18.14 at 1:25 am

For years people were talking about how low rates were going to rise! Soon! Next year! The year after that! Ok another year!

It never happened.

Canadian bond yields continue to get crushed.

http://online.wsj.com/article/BT-CO-20140513-708688.html

Maybe next time bears. Sorry.

#134 Choo Choo on 05.18.14 at 1:28 am

I carefully orchestrated the perma ban on Mark and another poster on RFD. Not directly of course. It was a blend of postings. I admired them from afar. Now that it’s over, I can continue on RFD with my postings.

Overall, I thought it was a well-thought-out and well-executed plan. If I do say so myself.

#135 wallflower on 05.18.14 at 1:46 am

#98 DAN on 05.17.14 at 4:08 pm

Tangerine. There is no [email protected]

#136 Stickler on 05.18.14 at 8:12 am

@ #106 devore on 05.17.14 at 4:58 pm

#72 Stickler

“The Rule of Thumb is that you can afford a house four times your income… “

…It used to be 2.5 times your income!

You have to make some adjustment for perpetual low interest rates, and also demographics. Couples stay childless and dual-income for much longer than they used to. This allows for greater paydown before the household goes into single income high expense mode.

>>>>>>>>>>>>

Good points & I agree, but does that equate to an extra 1.5 years of before tax income? …To allow for short term (compared to a mortgage) emergency interest rates?

Also something to think about is that taxes, utilities, food, transport have all gone up as well. So there is less after tax income to service the debt.

#137 raider on 05.18.14 at 8:57 am

Somehow Voteman reminds me to Garths blog.

https://www.youtube.com/watch?v=Sqr5JqxQpRc

That maybe a possible narrative to engage more folks in financial discipline: ‘He will make you maintain a balanced portfolio!’

Unfortunately, voteman did not survive censorship from the EU parliament for very long…

#138 rosie "moving forward" in the knowledge that, "this won't end well" on 05.18.14 at 9:13 am

Tighter rules= more greater fools. Start making your lunch, and learn to cut your own hair. Gotta getta house.

http://www.dailymail.co.uk/money/mortgageshome/article-2631278/Can-pass-5-stress-tests-mortgage.html

#139 Condo Minion on 05.18.14 at 9:28 am

After 10 a.m. EST today on CBC radio, they’ll be discussing how Vancouver “..has become the most Asian city in the world…” outside of Asia.

http://www.cbc.ca/thesundayedition/

Wonder if this will touch on the real estate perceptions/reality so often discussed here…..

#140 sheane wallace on 05.18.14 at 10:45 am

#119 Shawn
———————–
they all advocate for internationally diversified portfolio, dividend stocks/ETF with Jim and Peter more bearish on North America, Garth more bullish, so apply an average.

Peter and Jim advocate for some gold (but not much) Garth does not like it much so apply average again as insurance – 3-5 %. Similar of commodities and agriculture. Ignore Peter’s rants on gold, he sells gold after all but also advocates for limits in investing in gold (5-10 %)

All three do not recommend real estate, with Jim very bullish on farmland.

A decent rock solid portfolio would be an average of the above with some very strong energy plays.

Nobody likes bonds which is ‘strange’ considering the bond yields ‘going down’ . It is way better to have preferred’s with much higher yields that overrated but in reality ‘junk’ bonds.

#141 TheCatFoodLady on 05.18.14 at 11:06 am

A beautiful is somewhat cool Sunday here – sunny & a light breeze. There are roughly a half dozen open houses being held within a 5-6 block stretch of my neighbourhood. They consist of a few new listings, some stale ones & re-lists at lowered prices. I’ll be doing few walk bys to see how busy they are – they should be; open houses have been dead these last 4-6 weeks with local agents blaming the weather.

People kicking tires on homes for sale now have to get serious quickly if they plan to buy – they may have homes to sell, stuff to sort & pack & if they have kids, they want that done before the new school year.

Let’s see what happens today.

#142 chapter 9 on 05.18.14 at 11:20 am

How is it possible for the tiny country of Belgium to buy $141.2 billion of US treasuries over a 90 day period. That works out to 29% of their GDP! Financially their trade,budget, and current account are in the red and they can’t print the money.
Another shell game by the federal reserve???

#143 TurnerNation on 05.18.14 at 12:01 pm

Old man, I know the Rex it did not impress. Not really a fan of jazz which they tend towards.

Every Thursday night after my ‘pub crawl’ I end up in the Shangri-la hotel lounge where they have small bands playing hits, motown, soul. Kicking crass and taking names.

Some dance to remember, some dance to forget.

On MLS the cheapest 1 bedroom there is 765k. Rents 3.5k/mo. More money than brains.

#144 Herb on 05.18.14 at 12:28 pm

#128 CatFoodLady,

That’s precisely what I find so galling about the business world and legislation and why I turn into a raging socialist at times. The suits making like The Great God Marketplace behind that curtain arrange things to suit themselves and make sure that legislation is written accordingly. All we sheep seem to get to do is elect the robowriters periodically.

By the way, there should be no problem getting your illegally-demanded post-dated cheques back: just have your bank stop payment on the suckers. Of course your landlord will be mad, but he can’t throw you out for not complying with an illegal requirement.

After this move I am going to take on the Ministry of Municipal Affairs and Housing about this particular way of doing business. And as I’ve discovered, my future landlord is a business lawyer with ambitions of running for my least-favourite political party. At the risk of sounding like Smoking Man, I’m going to have some fun.

#145 Ralph Cramdown on 05.18.14 at 12:48 pm

#142 chapter 9 — “How is it possible for the tiny country of Belgium to buy $141.2 billion of US treasuries over a 90 day period.”

http://lmgtfy.com/?q=belgium+treasuries

#146 Godth on 05.18.14 at 1:07 pm

While that zero hedge article on surpluss car inventory is a little sketchy there’s certainly some truth to it as this news was already reportted.
Why this winter’s blizzards are knocking down new car prices
http://blogs.marketwatch.com/thetell/2014/03/03/why-this-winters-blizzards-are-knocking-down-new-car-prices/
“These are the highest inventory levels we’ve seen since 2009,” Lyman said, and it leaves manufacturers two choices: either make fewer cars for a while or step up incentives to move them faster. So far, they’ve preferred incentives.

#147 A guy who likes dogs on 05.18.14 at 1:16 pm

The dog in the photograph does look bemused, as Garth says, and perhaps there is more to it than just being put into a swing seat. Like the abyss looking back at the puny human who stands before it, perhaps the dog is also expressing its real feeling about the human that it is in charge of. In general, I have learned a great deal from dogs including how to get along (although I draw the line at sniffing the nether regions of others). My Jack Russell Terrier has taught me a lot (albeit slowly as I am not as smart as she would like) about the importance of being observant and knowing people’s habits, particularly as it relates to how often and where they are most likely to drop food.

As to the question of how much income to devote to the purchase of a house, I think that twice annual income is a good rule of thumb. And, as a corollary, if nothing is available in the price range that I can afford, I am better off renting. I get the same bemused expression as the dog in the photograph when I read Garth’s dispatches from the front lines about what sort of money people are willing to assume as debt. I have learned my lesson; I do not judge lest I be bitten for my trouble.

#148 Shawn on 05.18.14 at 1:20 pm

Belgium Buys Bonds?

Chapter 9 at 142 asks:

How is it possible for the tiny country of Belgium to buy $141.2 billion of US treasuries over a 90 day period?

Sheane Wallace has also mentioned this

*************************************
It is a good question. But it may not be happening. Bought IN Belgium is not necessarily bought BY the Belgian government.

There are some very huge insurance companies and banking entities in the area of Europe and it may be those that are buying.

Where does the European central bank do its buying? A quick Google search reveals it has three offices, one of which is Brussels Belgium. Perhaps your mystery has been solved.

It’s an interesting question but it probably has NOTHING to tell us about our investment strategies.

#149 Aggregator on 05.18.14 at 1:51 pm

#146 Godth

Already covered it back in February.

#212 Aggregator on 02.12.14 at 6:44 pm

DO NOT buy a car or truck. Prices are set to tumble hard as subprime auto lenders have already given every last deadbeat who couldn't afford to drive a new vehicle. There's nobody left, literally.

But I didn't think they would resort to fake recalls to keep assembly lines busy before the elections.

This is how absurd and inefficient the economy is: when Canada's gross public and private sector debt-to-GDP is nearing 300%, the government, corporations and households have to spend/borrow $3 to produce $1 of GDP. 

What part of that don't the permabulls get? It's unsustainble. The economy will crash again as governments use every last measure to boost demend. Geezus, look what they did to those students. Who's next? Kids?

#150 Old Man on 05.18.14 at 1:52 pm

#145 Ralph Cramdown – Belgium is just fronting as an agent. I spent hours trying to find out who owned a network of companies that will be going down for about $28 billion and got my best clue from Moody’s ratings when they saw in their words an indirect subsidiary entity in hiding. Its starts with A investors; then to B the investment managers; C becomes the holding company; D is the named company on the stock exchange; E is the operating subsidiary; F is the acquisition subsidiary; and G becomes the indirect subsidiary where they are transferring the good stuff.
They raised $2 billion to buy the gems with the funds coming from A as it needs to be burn’t on operating costs to buy time – bankruptcy pending? Will I be selling short? I am watching to see what else they will do, as someone will be holding the bag and it won’t be A.

#151 TheCatFoodLady on 05.18.14 at 2:02 pm

#144 – Herb:

You’re doing the right thing keeping yourself informed about the RTA here in Ontario. It boggles my mind how many tenants/landlords don’t & how BOTH can get screwed as a result. It can become costly for both/either.

The RTA, here in Ontario is actually pretty weighted towards tenants’ rights & any application that goes before a hearing… let’s just say hearing officials will bend over backwards to ‘give tenants a break’. In all honesty in many scenarios, they go way too far… then we wonder why we’re so short of small, private landlords.

As you know from reading the RTA, you & your landlord have to agree on a rent payment method which subsequently can only be changed with mutual agreement. Landlords like PDCs because they don’t have to ‘chase tenants’. My view is they’re not thinking it through. Having A PDC on hand doesn’t mean the cheque won’t bounce.

As a tenant, I see two disadvantages – if I’m in a serious skirmish with my landlord & want to pay my rent in trust to the Landlord/Tenant board pending crucial fixes or something of the sort, I have to cancel one or more PDCs. If I change banks, I have to make sure rent payments continue smoothly.

But it would be the same if I was using pre-authorized payment – which I do. An increasing number of landlords don’t want to deal in cash. They don’t want thousands of dollars floating around a rental office – I can see that. They’re not always that secure & building staff can be tempted.

A tight rental market can be a dog to get into. It’s crucial to maintain, (for application purposes) a stellar credit rating & as a tenant, make sure all rent is paid on time – always. Following all the rules makes you a valued tenant & in some buildings, a ‘value added tenant’. THAT becomes a strong negotiation point when the market softens.

Off to check out open houses…

#152 straight six on 05.18.14 at 2:07 pm

the shifting RE’ality..
It wasn’t that long ago a house on Vancouver’s west side went for 75K.. the average household income was 30K and savings accounts realized around 10%.
Then the double digit eighties arrived, Expo 86 was launched and the world stampeded all over our freshly rolled out red carpet.

not even 30 yrs later..
Many Canadians are either out of work or working for multinationals (at well below the living wage) and foreign worker programs sweep up the remaining McJobs.. people are borrowing to survive or going into debt and savings rates remain near zero.

Meanwhile a west side teardown now goes for 3 mil to another offshore buyer..

“Who are YOU..” the hookah smoking caterpillar asks, since grampa Boomer is away spending his deferred property taxes on yet another cruise.

“We are the future.”

Like.. should we be concerned?

Of course not.. so just RE-lax!

#153 TS on 05.18.14 at 2:55 pm

#91 Shawn on 05.17.14 at 1:45 pm

Great advice, Shawn. Thanks very much for the recommended reading and keep up the great work. Like Garth, yours is a voice logic and reason.

#154 Blacksheep on 05.18.14 at 3:25 pm

Shawn # 91,

“BE VERY CAREFUL WHAT YOU LEARN!”

“BE CAREFUL FROM WHOM YOU LEARN”
——————————–
All caps, more authoritative. Orwell rolls.
——————————–
“By the way, as far as listening to me goes”
——————————–
Whom in their right mind would ‘listen’ to an anonymous internet entity?

I prefer to take all opinions with healthy dose of critical thinking.

It’s the net, nothing is taken at face value.

#155 Ralph Cramdown on 05.18.14 at 3:37 pm

The truth about cars:
research.stlouisfed.org/fred2/series/ALTSALES
http://www.edmunds.com/industry-center/data/days-to-turn.html
…click on “Download Excel data file” and get days to turn for every manufacturer for the last thirteen months.

Or just keep reading your favourite conspiracy/doomer website. They say there’s a gigantic secret storage facility under Belgium…

#156 Godth on 05.18.14 at 3:48 pm

#149 Aggregator

Oh, I have no doubt it was covered back in Feb. as even the most cursory search turns up plenty of coverage. People have short memories in the information age and like to file anything outside their blinkered vision ‘Conspiracy’.

It isn’t sustainable and if one aggregates all the fraud and deception, etc., it’s beyond obvious. Do we really need to humiliate ourselves with another (more) big war to try reset a broken system (imagine the ‘opportunities’ in a time of war for the monopolists – dear God help us all) or can we grow up (instead of perpetually out)?

#157 straight six on 05.18.14 at 4:04 pm

re #90.. landlord/tenant issues.

My experience is the best tenants are the ones out on parole. They’re always on their best behaviour and they never complain (maybe because they’re medded up).
You’ve got a P.O. riding shotgun and they don’t dare step out of line for fear of being sent back.

and it’s a terrific party icebreaker too..
Ya that’s right,
my tenants are ALL sex offenders!

#158 Bella Lagosi on 05.18.14 at 4:14 pm

Vancouver’s west side went for 75K.. the average household income was 30K

Yup, but Christoper Lee was still making Dracula films then. Speaking of blood suckers, thanks to the blogger for informing us that the IMF(blood bank in the vampire analogy) thinks that CMHC is out of control.
Thanks IMF for that gratuitous, unsolicited, unwelcome opinion. Hey IMF, stick to what you do best- destroying countries. CMHC is our economic action plan.

‘Listen to them, children of the night. What music they make’

#159 Aggregator on 05.18.14 at 4:15 pm

#155 Ralph Cramdown

The truth about auto data:

When they say retail dealer inventory, they mean wholesalers and importers, not actual retail auto dealers. The BLS and StatsCan's New Motor Vehicle Sales Survey is based on this:

There are approximately 3,600 new car dealers in Canada. For this reason, it would be too costly and time consuming to collect the data from individual dealers across the country. Instead, Canadian automobile manufacturers (for North American produced vehicles), as well as importers of vehicles manufactured overseas, complete this survey. The respondents provide consolidated totals of their dealers' monthly reports on sales of new motor vehicles.

That's what channel stuffing is: they're pumping out autos just for the sake of boosting revenue and GDP.

#160 Old Man on 05.18.14 at 4:15 pm

Would anyone buy a corporation that directly and indirectly controls 50 businesses which most would recognize? Last year their gross income fell by 50% because they messed up in Asia, and their 5 year net income composite amounted to (90.52%). The President of the Parent Company is optimistic because the 4th quarter net loses are estimated between $1.7 to $1.82 billion, and from memory the shareholders equity is about ($23.00) per share. HUH!

#161 Godth on 05.18.14 at 4:19 pm

#155 Ralph Cramdown

So give us a quote. I don’t feel like downloading but let me guess: car companies are carrying an extra 20-30% inventory above their prime targets or some such. It’s getting better after a hard winter and lots of incentives to buy…

It must be hard to be you commenting on a conspiracy/doomer site about housing while rationalizing all the other news as conspiracy/doomer. I love irony.

#162 devore on 05.18.14 at 4:52 pm

#125 Ralph Cramdown

The data available for free on the internet tubes is truly staggering. There’s no excuse for believing somebody’s homespun conspiracy about economic stuff without thinking about a way of verifying it for the price of an hour or two of your time, and doing so.

Au contraire. This is the power of conspiracy theories (and things like lobbying and special interests).

Any idiot can spend an hour to put up some dumb theory on the internet. But there are millions of idiots with theories and a few minutes on their hands. If everyone researched every bonkers theory they come across, we’d all be doing nothing but. So mostly we just discard anything (good and bad) that seems unlikely or conflicts with our beliefs, and sorta accept things that seem possible and validate our views. At most one will apply some rough heuristics (too good to be true? too much suspension of disbelief?) or check out Snopes.

Maybe you have time to pore over satellite pictures of car plant parking lots, but the 7 billion of the rest of us just don’t worry about it much.

#163 devore on 05.18.14 at 4:59 pm

#128 TheCatFoodLady

Then you run into the issue of method of payment ‘being agreed upon by landlord/tenant’. A corporation’s lawyers can have fun with that.

You cannot require a method of payment (post-dated checks) that is ruled illegal. A lawyer would have lots of fun with that one, because it’s free money for them to do nothing.

#164 TheCatFoodLady on 05.18.14 at 5:36 pm

Post dated cheques are not deemed an illegal method of payment:

***When a landlord and a new tenant agree to enter into a rental agreement, they usually discuss how the rent will be paid.

Although the landlord and tenant can agree that the rent will be paid by post-dated cheques or automatic payments (such as debits from a tenant’s account or by credit card), a landlord cannot require the tenant to pay by either of those methods.

Once the landlord and tenant have agreed on a method of payment, it cannot be changed unless both the landlord and tenant agree.***

http://www.ltb.gov.on.ca/en/Key_Information/STEL02_111677.html

#165 Herb on 05.18.14 at 6:55 pm

#164 CatFoodLady,

I would look forward to asking the Landlord and Tenant Board how they reconcile this opinion with the following Section 4 of the RTA:

Subject to section 194, a provision in a tenancy agreement that is inconsistent with this Act or the regulations is void. 2006, c. 17, s. 4.

And section 194 reads

194. (1) The Board may attempt to mediate a settlement of any matter that is the subject of an application or agreed upon by the parties if the parties consent to the mediation. 2006, c. 17, s. 194 (1).

(emphasis added.)

Subsection (2) does state that “a settlement mediated under this section may contain provisions that contravene any provision under this Act.”

So don’t agree to mediation, but insist on a hearing.

#166 straight six on 05.18.14 at 7:19 pm

re #158 ya Bella.. back in the good old days! 1979.. when capt’n Kirk could still fit into his pants.. Mount Saint Helens was getting ready to take the stage.. and Vancouver was as yet unknown to developers.

#167 Andrew on 05.19.14 at 7:57 pm

I just saw a sign the other day advertising “No Income Verification Mortgages”. In other words, the same subprime mortgages that brought down the US financial system exist in Canada too. Even unemployed people can buy houses in Toronto now.