Empty bubble, Part deux

GOOGLE modified

Wendy’s been trying to sell her house in Burnaby for a couple of months now. ‘It’s cheap,” she says, “because we were thinking of asking a lot more. But we opted for a quick sale.”

Fat chance. Even at a bargain price of $1.4 million, there are steady showings, but no offers. She’s started to fret. A lot. They’ve already bought a new place – for more – down near the border in White Rock. “Another month,” she says, “and I’m dropping the price. What choice do we have?”

I spoke with her on the same day the latest, official, shiny REALTOR®-approved statistics came out, with the media hopping on board. But for Wendy, and a lot of other people who sure wish they could sell their houses, there’s something weird about what they’re reading here, or in places like the Financial Post:

Vancouver existing home sales, prices continue to climb in July

The number of homes sold in Canada’s most expensive market topped 3,000 in July, marking a fourth straight month sales have hit that level. The Vancouver sales market has not been this strong in three years, according to the Real Estate Board of Greater Vancouver.

“The Greater Vancouver housing market continues to see slightly elevated demand from homebuyers, steady levels of supply from home sellers and incremental gains in home values,” said REBGV, in a release.

Sounds bullish, right? You bet. All kinds of bull, in fact. Property sales were down a substantial 10.1% in July from the month before, and prices appear to be stalling. The benchmark Frankenumber for all properties last month was $628,600, which was virtually identical to the month before, and compares to $602,000 during the summer of 2013, which was 3% less than the summer before, when the benchmark price was – surprise! – virtually the same as it is now. The sure looks to me like we’re at 2012 prices

But there’s more for Wendy to worry about. Sales of properties listed over $1 million – which constitute the majority of houses now for sale in wide swaths of Vancouver – are starting to flame out, at least in the burbs like Burnaby.

“My realtor is still sending me a monthly stats package and I find it very telling,” writes Aman.  “Yes, average prices are up for single family detached homes but it seems to be asymptotic with $1,000,000 being a line in the sand that most homes are marching towards but not crossing with the same vigor.  Essentially it looks as though the “lower end” of the market is moving up but then, kaput, volumes die off sharply.  Therefore yes, the average price moves up but it is far from uniformly spread across the market.”

Aman Bhangu should know. He’s VP of research and a portfolio manager with Pacifica Partners, a Van-based capital management company known for its cutting-edge statistical analysis of the delusionally bubblicious local real estate market.

In three major suburbs of Vancouver – where extreme development has been going on and half a million people live – Bhangu sees the same pattern:
Burnaby

  • Over $1mm, 386 homes were listed, only 50 sold, or 13%
  • Under $1mm, 140 homes were listed, 63 sold, or 45%

New Westminster (A more affordable and smaller municipality):

  • Over $1mm, 16 homes were listed, 2 sold, or 13%
  • Under $1mm, 90 homes were listed, 31 sold, or 34%

Tri-Cities (Port Moody, Port Coquitlam, Coquitlam) home to over 200,000 people

  • Over $1mm, 202 homes were listed, 20 sold, or 10%
  • Under $1mm, 364 homes were listed, 166 sold, or 46%

“Notice the drop-off after cross the million threshold?” he asks. “So, where is the HAM buying all the expensive homes?  I don’t see it.  I do see the locals getting squeezed into home values based on the maximum amount the banks are willing to freely lend.”

Of course, he’s right. More evidence of what this pathetic blog has been yapping on about for a year or two. A market in which average prices are ridiculous, incomes are sub-par and debt bloats daily cannot be saved by a relative trickle of foreign money finding its way into a handful of specific neighbourhoods. The smartest people in Vancouver are those who can read behind the headlines. Which obviously do not include reporters.

Finally, Alberta. Ah, the smell of testo and greasy truck nuts in the morning!

Sales last month in Calgary leveled off, as have prices, while the number of listings has swelled by 14%. It all points to a calmer ride ahead. But with the average SFH now at more than $511,000, prices have soared well over 10% in the past year – even as a barrel of oil has weakened. But, of course, everyone thinks house values will go up forever. And what a price they’re paying.

While people in the East have been paying off debt, Albertans have been piling it on. Cowboy household indebtedness has risen by 40% in the past year, and the average family there now has twice the debt load of those in metrosexual Ontario.

Says BeeMo economist Sal Guatieri: “Part of the reason household debt in Alberta is so much higher than in other provinces may be due to rapidly rising house prices, which have caused some home buyers to take on larger mortgages.”

Meanwhile, Alberta’s first Rolls-Royce dealership has just been announced, which will take up residence in a new development opposite the Calgary Tower. You know what this means, right?

You bet. Rolls nuts!

148 comments ↓

#1 Pooh on 08.05.14 at 7:19 pm

Blog dogs – I need your help.

I have recently changed jobs and need to decide what to do with the RRSP that both my old employer and myself contributed to. I understand that it needs to remain an RRSP and that it can’t simply be transferred to my TFSA in my home bank.

What is the smart and tax efficient decision to make here if I wanted to transfer the money into my current bank?

To make things more complicated, does it make sense to open up a spousal RRSP considering that my wife is on maternity leave? Don’t even know if I have that option…

#2 Gardener on 08.05.14 at 7:19 pm

Garth, as a blog reader and Burnaby resident I think you are on track for what is happening in Burnaby.

#3 Smoking Man on 08.05.14 at 7:20 pm

Twitter is an amazing tool for unfiltered information from people on the front lines.

I’ve been studying the posts and prospectives from Gaza, and Isreal. Each tribe is fead a plot, a reality that’s designed to invoke an emotion. Just like being pro Real Estate, pro Rent.

Each side thrilled with a kill on the apposing team.

Why are humans so easy to manipulate, so effortlessly
programmed. A life is a bloody life.

A young Israeli army lad, a little kid in Gaza. Both loved, both taken away from someone because the men and
leaders far from the front lines decide and will it.

They wouldn’t get far if the respective populations ran on logic, void of emotional attachment, the tribalism of
belonging whenever groups are formed.

But schools everywhere teach community, tribalism, individuals with independent though banished.

On of the main reasons I chose to have no friends, I hate
all people equality, and have no time for the illogical, less of course I’m judging the bastards and writing about them.

In fact I would have wrote a much bigger and in depth opinion on this topic had I not accidentally discovered during my research #Nude Selfies.. That was it. Another area of interest. Individualism at its finest..

Yeah!!!!

#4 Retired Boomer - WI on 08.05.14 at 7:20 pm

A Rolls-Royce dealership huh? Good luck with that.
Maybe a used BIG NUTS TRUCK CENTRE maybe, but only if they can offer 72 to 84 months financing on good terms.

Oil?? Smart money is moving away to renewables these days. Yeah, it’s not your father’s Oldsmobile, nor his world anymore. Global warming has set a new way to live in the decades ahead, get ready for it. It’s coming to a hood near you tomorrow!

#5 Lurcher on 08.05.14 at 7:21 pm

I live in Burnaby (rented bungalow – Deer Lake area) and this area is hardly ‘flaming out’. The house two doors down from me sold in a week in June with realtors flocking around on the first day it was listed. Asking price was 1.5 million and a bit. Don’t know what it sold for. I won’t mention who the buyers are (but you can guess). Alot of other stuff around us has also sold this year and sales action is noticably more active than last year. I don’t see any downturn.

#6 DaleFromCalgary on 08.05.14 at 7:24 pm

The property tax assessment on my 1950s teardown bungalow in central Calgary went up $70,000 this year to $588,000. The sad part is that I agree with it, because most of my neighbours in two-story infills are assessed at $700,000 to $1,000,000+.

I’m surprised the new Rolls Royce dealer in Cowtown is locating so far away from the Petroleum Club. 9th Avenue SE is pedestrian hostile and a bit of a wind tunnel by the Calgary Tower.

#7 MissisaugatoVancouver on 08.05.14 at 7:35 pm

Where does is say a HAM has to spend over $1M?

There is no local average-income-earner buying a house over $800K that isn’t an idiot taking on that size of mortgage for a single family house, even if 3.5%.

HAM is buying the land, not the home. aka tear down the character home…who cares?

Add North Van and Richmond to add a HAM perspective on areas where they are buying. Do a search on realtor.ca…all the $1.3M+ homes listed by HAM agents and marketed to HAM

#8 bdy sktrn on 08.05.14 at 7:36 pm

“So, where is the HAM buying all the expensive homes? I don’t see it
————–
not in those godforsaken burbs , that’s for sure. pure hell driving there. vancouver traffic has nothing on those evil burbs

try west side and rmd.

#9 Mister Obvious on 08.05.14 at 7:36 pm

My oath! What a silly place this BC Lower Mainland has become. Who would commit to a house for over $1.4M before first selling their existing $1.4M house?

Is it not glaringly obvious that this is begging for serious trouble?

I know of a house in Burnaby in a nice greenbelt area near BCIT that listed for $1.5M over two years ago. It was on the market for many months but the owner would hardly budge.

I think he came down maybe $50K on the asking price. Then it went off the market and rented for a while. Now its back on the market for $1.3M. Its been listed for about three months at that price. Crickets.

The time has come for caution and readjustment of expectations, not wild leaps into the blue yonder.

#10 Andrew on 08.05.14 at 7:39 pm

I welcome this news of Calgary cooling. It has been insane here (half a million for a 1980 SFH untouched since it was built… 40 minutes from downtown…)

#11 Role on 08.05.14 at 7:43 pm

Frankenumber can find witch numbers often, but many, or less, never found more debt them can fall out of!! Femily house much, then can fall, and fund from ether bank..take pick!! All same,, even ones with the red jackets!

#12 Smoking Man on 08.05.14 at 7:45 pm

Love the tee shirt….

#13 Son of Ponzi on 08.05.14 at 7:48 pm

For every statistic that proves something there’s one that proves something else.
RE is local, and it is not so hard to do your own head count.

#14 Temporary Foreign Prime Minister on 08.05.14 at 7:48 pm

As a former 20-year Calgary resident, back when the Deerfoot Trail ended at Glenmore Trail, it’s comical to learn that the citizens of one of Canada’s richest provinces are still as inept at managing their own finances as their own (c)onservative government.

How does that old 80’s bumper sticker go again?

“Please God let there be another boom and I promise not to piss it all away next time.”

Sure.

#15 Josh Renning on 08.05.14 at 7:48 pm

Someone is telling them that oil prices will hit 200 U.S. a barrel so it will be good times for maybe 5, 10 more years.

I don’t believe it and debt stays with you but your job does not.

If you are in Alberta, please don’t put all your money in a house and be in debt until your eyeballs.

It maybe too late already for most.

#16 ILoveCharts on 08.05.14 at 7:49 pm

Putting the flow of money aside, if enough people think HAM is real, then it will have a material impact on the market.

#17 Randy on 08.05.14 at 7:50 pm

Alberta…..keeps sending Ontario those massive transfers and equalization payments. We haven’t run out of ideas as to how we can waste money !

#18 Glen on 08.05.14 at 7:57 pm

how about GTA?

#19 sherwood park on 08.05.14 at 7:57 pm

Can you please publish the link detailing Albertans 40% rise in household indebtedness. I don’t doubt the numbers. Ive been living out here for the past 8 years and have seen the crazy spending first hand. I would just like to see all the gory details.

Here’s one. Then try BMO. Its their report. — Garth

#20 Sheane Wallace on 08.05.14 at 8:00 pm

Just disband the f…ng CMHC.

#21 Fred on 08.05.14 at 8:05 pm

Last!

#22 Karl Hungus on 08.05.14 at 8:07 pm

You realize sales go down as summer winds down right?

Does summer wind down now in July? — Garth

#23 Freedom First on 08.05.14 at 8:10 pm

Garth always knew. He’s been telling us this on his Blog. Now Wendy knows.

Ask yourself, who are you going to believe, REBGV, CREA, msm, condo kings, condo queens,….etc., or your own eyes.

Remember this, in the U.S. and elsewhere in the world where they have had their RE prices crumble in recent history, there was a constant denial of a coming/happening RE crash by the above usual culprits, right up until they could no longer deny it.

Hence the name of Garth’s Blog, The Greater Fool, which I refer to simply as: “The financial illiterates house ownership at any cost herd”.

Yes, the Albertans debt levels are stunning, especially the fact that over 50% carry a credit card balance. This Province has seen TSHTF before. But of course, it’s different this time.

#24 Retired Boomer - WI on 08.05.14 at 8:13 pm

Markets are undergoing a corrective phase while the war drums beat louder in Europe. Employment is not growing very fast, and wages even less so. Everybody might understand that Real Estate -hardly a ‘must have’ item in most budgets- pauses, or falls in times such as these.

That IS with “chap mortgage money” as is currently available.

How much faster will the price of Real Estate slip as interest rates slowly head higher? Your guess.

As for me, I’ll watch the idiots re-position themselves.

#25 Happy Renting on 08.05.14 at 8:16 pm

If only I were in the market for a $1M+ house!

Nice to see some numbers showing how anything under the CMHC limit is bloating, but transactions that require real money are behaving rationally.

#26 Paul on 08.05.14 at 8:19 pm

Things maybe slowing in some markets but if you can figure this out submitted an offer on a 60 year old semi in friggen south Pickering 10k over asking and was beat by an offer of over 400k 6 competing bids. Third time in 6 days lost to higher offers. We are firm no conditions

#27 Capital One on 08.05.14 at 8:19 pm

#1 Pooh

You can transfer your RRSP contributions to any other RRSP account in your name (including one at your bank).

You can transfer your employer’s RRSP contributions to a Locked-In RRSP (LIRA) account in your name (again – could be your bank).

You cannot transfer funds from your RRSP or LIRA to a spousal RRSP.

#28 X on 08.05.14 at 8:19 pm

Doubtful the million dollar mark will be changed in regards to financing amounts…too bad, a lower amount would have protected alot of greaterfools from [email protected] in regards to mortgaging their future.

#29 Happy Renting on 08.05.14 at 8:22 pm

#1 Pooh on 08.05.14 at 7:19 pm

Need more detail on the RRSP to give an opinion. What’s it currently invested in? Penalties for transferring out or selling the investments? What do you want to invest it in?

Spousal RRSP has a three-year lead time, so if your wife is going on mat leave again 3+ years from now and will have a lower marginal tax rate than you at that time, sure. Blog dogs: does it have to be new contributions going into the spousal RRSP or can investments be transferred from Pooh’s existing RRSP?

#30 Shawn on 08.05.14 at 8:26 pm

Mortgage Defaults Remain Incredibly Low

The latest 90 day delinquency figures for mortgages were posted in the last day or so. The 90-day delinquency rate is reported at 0.29%. That means 1 in 345 mortgages are 90 days past due. The comparable rate in the U.S was higher by a factor of 10 to 20 times at the peak of the problems there.

http://www.cba.ca/contents/files/statistics/stat_mortgage_db050_en.pdf

Possibly the rate is artificially low due to bank programs that allow you to skip a payment or make other arrangements.

But on the face of it any rumors that Canadians cannot afford their mortgages is greatly exaggerated.

I have been waiting for this rate to spike for years . Did not happen.

As for sub-prime, look at Home Capital it never misses a beat, hugely profitable.

Yes Virginia it is apparently different in Canada. This is not the U.S.

Things can change and I keep watching and waiting. But has been no sign of delinquency issues for the big banks.

It is, of course, a false indicator, which no analysts take seriously. — Garth

#31 Brian Ripley on 08.05.14 at 8:31 pm

Garth said: ” Vancouver property sales were down a substantial 10.1% in July from the month before, and prices appear to be stalling.”

Sales are also stalling – they are rolling over right on cue and heading towards the seasonal low in 1Q 2015.

I have updated my chart here: http://www.chpc.biz/vancouver-housing.html

#32 Van Isle Renter on 08.05.14 at 8:32 pm

Oil?? Smart money is moving away to renewables these days. Yeah, it’s not your father’s Oldsmobile, nor his world anymore. Global warming has set a new way to live in the decades ahead, get ready for it. It’s coming to a hood near you tomorrow!
+++++++++++++++++++++++++++++++++++++

Bull puckey. The Germans, Brits and Japanese are busily chewing their arms off to get out of the bear trap of renewables and subsidies that they’ve found themselves in. Poorer Brits and Germans are unable to afford the massive hydro price increases that the renewable folly has forced on them and must choose between food and heat. Even the British minister in charge of the debacle is trying to dodge the the tax increases in his own power bills by buying his electricity through a loophole not available to all Brits. Yeah, all sunshine, lollipops and unicorns in the EU!

Japan is busily firing up their nuclear plants again as the renewable energy band wagon turned into a gong show. Korea and Australia are out of the carbon trading fiascos.

And now the CRA is challenging the foreign funded eco-billionaires that are trying to buy Canadian elections to prove that they should be allowed to continue to suck funds from schools, hospitals and roads through their tax free charity status. All in favour of letting US billionaires get subsidized by Canadian tax payers say “Aye!!”

Renewable energy is proving to be a mess that only gets messier and worse the more that you do it. Kind of like the children’s book “Curious George Gets a Medal”. The problem is there is no Man in The Yellow Hat to clean it all up and save the day.

#33 FormerSaskie on 08.05.14 at 8:33 pm

Garth, what would you advise in Wendy’s housing situation? I’d be in a screaming panic :)

Scotch. — Garth

#34 Montrealer on 08.05.14 at 8:42 pm

You cannot transfer to your Spousal RRSP from your own directly. Well, you can but that means de-registering the money (and having tax witheld) and then re-registering it into the Spousal RRSP. At the end you get the same tax benefit but you loose part of the $ until your income tax return and you also loose all that RRSP contribution room.. So it’s usually really not a good idea.

#35 CREI on 08.05.14 at 8:51 pm

It is, of course, a false indicator, which no analysts take seriously. — Garth

Why is that?

#36 TurnerNation on 08.05.14 at 8:52 pm

http://www.bcbusiness.ca/real-estate/realtor-bob-rennie-delivers-provocative-udi-speech

“Amidst all the fiery rhetoric was the usual smattering of numbers to surprise and delight: a third of homes in Greater Vancouver have more bedrooms in the home than people; 43 per cent of 25- to 34-year-olds in Vancouver are homeowners, while 26 per cent of Vancouverites under 25 years old own a home. Perhaps the most amazing statistic of all: Greater Vancouver’s over-55 demographic is sitting on $163.4 billion in clear-title housing assets.

“What will the impact be of this equity be on our marketplace?” asked Rennie, before noting that over 40 percent of Rennie’s first-time homebuyers are now getting their down payments from their parents. “This might just be the tip of the $163.4 billion iceberg.”

“The pattern that we should all be watching is the movement of this wealth by the living,” he concluded, “which may be more important than the transfer of wealth by the dead.””

#37 crowdedelevatorfartz on 08.05.14 at 8:52 pm

@#33 FormerSaskie

A stiff shot of booze THEN a drastic price reduction to move in front of the other listings to the top of the (Burnaby) Mountain.

Suck it up buttercup! If yer place isnt moving drop yer price! Review in 2 weeks and drop again if nothings happening. School starts in 3 weeks! (unless there’s a strike :)

#38 };-) aka Devil's Advocate on 08.05.14 at 8:53 pm

You must first understand that REALTORS® represent Buyers and they represent Sellers. The interests of each, Buyers and Sellers, does typically not align with that of the other. One wants a higher price, the other wants a lower price.

What possible advantage could REALTORS® attain by skewing the statistics in any way shape or form? To do so would be to the disadvantage of Buyers or Sellers, if not both, and we represent both.

Can’t you see the tin foil hat conspiracy theorists you all are by believing we report anything other than that which is fact?

We need our clients to be informed so that they can set realistic attainable goals.

Remember, REALTORS® don’t get paid until they get the job done. Why ever would we want to set the bar so high, or low for that matter, that it would be virtually unattainable?

Have a little common sense people.

#39 Van Isle Renter on 08.05.14 at 8:57 pm

Further on the issue of the Global Warming Scam:

There has been no warming found for 17 years and 10 months. Some global warming emergency. Big Whup.

And on top of that, in the US, NOAA, the guys who keep temperature records, have caught red-handed cooking the temperature data. Their “adjustments to historical data” are in undeniable lockstep with CO2 increases in the atmosphere. This means that as the the CO2 increased, they altered the historical record to make the past ever colder so today looks warmer in comparison. Somebody needs to go to jail for that fraud.

#40 Bill Gable on 08.05.14 at 9:02 pm

Because of my latest taste of America has left me worried about how this will impact us in Canada.
(*I am still shocked when my friends who live in Seattle, fed heaven’s sake, have trouble grasping that there is a huge Country to the North. (Truly an indictment of the education system of some of the States).
My Point is….I came away very worried about what I saw, but I needed numbers….and it makes me wonder what is coming OUR WAY.

This is NOT pretty, and I apologize for hijacking our usual topic, because I really feel you blog dogs deserve to get some hard numbers.

Gulp.

“Even though the recession ended years ago and even though the U.S. economy has created 200,000-plus jobs over the past six months, a plurality of Americans – 49 percent – believe the economy is still in a recession.

(However, that percentage is the lowest it’s been since the Great Recession began, and 50 percent of respondents believe the economy is improving.)

What’s more, a combined 71 percent say the recession personally impacted them “a lot” or “just some,” and 64 percent say it’s still having an effect on them.

Then there are these numbers in the poll:

40 percent say someone in their household lost a job in the past five years; 27 percent say they have more than $5,000 in student-loan debt for either themselves or their children.
20 percent have more than $2,000 in credit card debt they are unable to pay off month to month.
*WHOA – 17 percent say they have a parent or a child over 21 years old living with them for financial or health reasons.

“People are continuing to tell us what ways [the Great Recession] is still impacting them today,” said GOP pollster Bill McInturff. “Those stories are pretty grim.”

Are we next?

Link: http://tinyurl.com/l3odn9d

#41 TurnerNation on 08.05.14 at 9:03 pm

For SM, the other M.E. chatterers. Why not listen to the boots on the ground. These women describe themselves as broken, addicts. Some respect.

http://www.linktv.org/programs/to-see-if-i-am-smiling

“Israel is the only country in the world where 18-year-old girls are drafted for compulsory military service. In the award-winning documentary To See If I Am Smiling, the frank testimonials of six female Israeli soldiers stationed in Gaza and the West Bank pack a powerful emotional punch. The young women revisit their tours of duty in the occupied territories with surprising honesty and strip bare stereotypes of gender differences in the military. The former soldiers share shocking moments of negligence, flippancy, immaturity and power-tripping as they describe atrocities they witnessed and participated in.”

#42 JimH on 08.05.14 at 9:04 pm

Great post as usual, Garth! Thanks! This especially…

‘“Notice the drop-off after cross the million threshold?” he asks. “So, where is the HAM buying all the expensive homes? I don’t see it. I do see the locals getting squeezed into home values based on the maximum amount the banks are willing to freely lend.”

Of course, he’s right. More evidence of what this pathetic blog has been yapping on about for a year or two.’ &etc.
====================================
Looks like the “smart money” (10% HAM 90% just everyday smart) is seeking greener pastures.

As for the reporters and their reluctance to “read between the lines”, well, I guess without those fat ‘Real Estate for Sale’ sections padding the ever dwindling pages of the Sun and the Province would shrink away to nothing… They already look more like tabloids than their former status as ‘newspapers’.

As for the local TeeVee networks/stations, they seem to think viewers only want to see what viewers like to see, rather than what they need to see.

They may wake up yet… I’ll never forget than night back in 1968 during the Tet Offensive when Walter Cronkite finally had his epiphany; “What in hell’s going on?… I thought we were winning this thing!”

I still have a little faith left in the essential goodness and need for inegrity in the human spirit. After all, “The mills of the gods grind slow… but they grind exceeding sure”.

#43 Setting the Record Straight on 08.05.14 at 9:07 pm

@4
Give the Alberta bashing and global warming hype a rest.
You think Milwaukee is the preferred home of the one percent?

#44 };-) aka Devil's Advocate on 08.05.14 at 9:09 pm

#33 FormerSaskie on 08.05.14 at 8:33 pm
Garth, what would you advise in Wendy’s housing situation? I’d be in a screaming panic :)
Scotch. — Garth</cite

Wendy has an unrealistic price expectation, has apparently since day one. If not her place would have sold by now. Her REALTOR® is either afraid to tell her for fear of losing the listing or confident that the on fire Vancouver market will soon enough catch up to her.

#45 Smoking Man on 08.05.14 at 9:14 pm

OSCE monitor on MH17 disaster
VIDEO

ttp://www.cbc.ca/m/news/#!/content/1.2721007

Wow CBC comes through, the power and reach of Gratho’s pathetic blog…

Click above link… The see the first clip, at 6 minute mark, listen.

For you Herb…. You know…

#46 PeterfromCalgary on 08.05.14 at 9:15 pm

First Calgarian to get a picture of a Rolls with nuts on it to Garth wins.

#47 NostyVlad the Snugglebombed on 08.05.14 at 9:32 pm

What happened last week in Lake Erie (undrinkable water) happened in BC today — Shitty water.

The world has become a manifested hell. Never mind ebola, the middle east, MH stuff along with the rest of the crap in the world today, there are still nutbars who think buying a bigger, larger and more expensive home will ‘protect’ them. From what? A fatal heart or nuke attack, ‘quake or EMP blast from space? Then again, there is this brain dead, dimwitted bimbo to keep us laughing.
*
#134 Herb on 08.05.14 at 4:26 pm — “Smoking Man does have a point: if the truth is inconvenient to western interests, we’ll never see it in western media.
— and —
#111 Smoking Man on 08.05.14 at 11:40 am —
“Do we hear one boom, shrapnel from a missle or machine gun 30 millimeter rounds hitting the cockpit….”

You are both correct, gents. An Inconvenient Truth (aptly named) is what the paid-for and controlled m$m has become, not bothering to report any of the facts, as there are too many other things happening, but check this out. Also, this appears to be the main reason. What if Russia decides to close its airspace in retaliation for sanctions? China and Russia don’t need the petro-dollar anymore.

Ed Snowden is bad? Don’t think so, Concentration Camps The shoe is on the other foot now.

#48 TO Renter on 08.05.14 at 9:38 pm

@ 4 Retired Boomer – WI on 08.05.14 at 7:20 pm

Oil?? Smart money is moving away to renewables these days. Yeah, it’s not your father’s Oldsmobile, nor his world anymore. Global warming has set a new way to live in the decades ahead, get ready for it. It’s coming to a hood near you tomorrow!

+++++++

Unfortunately AB still generates 85% of their power from coal and gas resources (NS is top at 90%). The NEB forecasts that renewables – biomass, solar, geothermal and wind – will grow from a collective share of 3 per cent in 2010 to 12 per cent by 2035.

The car is a 60 mph in 5.2 secs hybrid, figuring out how to add solar panels to the mix next. SRI funds haven’t been bad performers in the mix either. Embracing eco smugness. I’d like to think I’m ahead of my generation.

#49 devore on 08.05.14 at 9:45 pm

#30 Shawn

You of all people should know delinquencies and defaults are a distant trailing indicator.

#50 OttawaMike on 08.05.14 at 9:45 pm

Smoking Man on 08.05.14 at 7:20 pm

Tribalism

Sigh–
Today I asked my recently immigrated Israeli coworker why his former home nation was floundering so badly in the PR dept. these days, he emailed me this:

A fly drops into a cup of coffee.

The Italian guy gets angry, spills the coffee and walks away.

The French guy removes the fly, then drinks the coffee.

The Chinese guy spills the coffee and eats the fly.

The Russian guy quietly drinks the coffee.

The Israeli guy sells the coffee to the French and the fly to the Chinese. He buys himself a new cup of coffee. With the remaining money, he founds a startup to develop a fly-repellent cup of coffee.

The Palestinian blames the Israeli for inserting a fly into his coffee. He submits an official complaint to the UN for excessive force applied. He then receives funds from the EU to buy a new cup of coffee. Instead, the Palestinian buys explosives and blows up the coffee shop in which the Italian, French, Chinese and Russian are trying to explain to the Israeli that the Israeli has to give up his cup of coffee to the Palestinian.

#51 Mark on 08.05.14 at 10:02 pm

Of course the sales mix has changed substantially in the past year in the wake of hitting the CMHC ceiling and the cessation of expansion in CMHC-insured subprime credit. The data is quite clear for Vancouver, Calgary, and Toronto, which supports the fact that prices have been declining in all three cities when adjusted for the shift in the sales mix.

Of course, the various Realtor trolls will claim that the ‘sales mix’ is non-existent. Various Realtor trolls would try and impute a different meaning to the ‘statistical mirage’ of a drastically shifted median house price. But remember folks, you don’t even need a grade 12 education to be a Realtor, while the shifting sales mix is perfectly obvious to anyone with a reasonable statistical background. Don’t even have to be an engineer to understand what’s going on.

#52 JimH on 08.05.14 at 10:02 pm

32 Van Isle Renter
“Renewable energy is proving to be a mess that only gets messier and worse the more that you do it. Kind of like the children’s book “Curious George Gets a Medal”. The problem is there is no Man in The Yellow Hat to clean it all up and save the day.”
===================================

Yep… lots of “bull puckey” here! Just a matter of what side of the argument you’re promoting!

Your ‘information’ is both faulty and disingenuous. “Clean energy” equities like FSLR, DNN, REGI, RTK, PESI, HTM, LTBR, and the riskier CUAEF are up YTD over 30% (annualized up over 51%).

By contrast, the “dirty energy” (coal) big-boys, BTU, ANR, ACI, NRP, YZC, CNX are down -20.5% YTD (-34.7% annualized).

Of course, for the climate change deniers, who are collectively much, much smarter than the markets, this means nothing. If they put their money where their mouths are, they couldn’t afford a dial-up internet connection.

My home in AZ has 24 LG electronics LG290N1C solar modules, each coupled with an Enphase energy M250 microinverter on the roof. This has produced 5.43 Megawatt hours of clean energy since going active in late March of this year. (it would have done better, but the HelioCoil solar water-heating system that heats my swimming pool hogged most of the south-facing roof area.)

Yes, clean energy is a real joke! I swam in my pool on Christmas eve and New Year’s eve thanks to the solar water heater; for the rest of my life, I will pay very low winter-time electricity bills, if any; from March through November I sell electric power back to my electric utility.

I have no idea at all what world you’re living in, but I prefer mine! Facts are facts. Clean energy is a concept who’s time has come.

If you live on beautiful and relatively unspoiled Vancouver Island, and you’re content to go on doing nothing to combat Global Warming, you’re worse than the Greatest Fool!

Shame on you!

#53 Retired Boomer - WI on 08.05.14 at 10:03 pm

#43 Setting The Record Straight

Milwaukee is known for two things. Beer is one of them

#54 Smoking Man on 08.05.14 at 10:14 pm

#50 OttawaMike on 08.05.14 at 9:45 pm

LMAO

Did you write that, if so, nice flair for creativity, like it.

But I stand with my thesis…. Which you have trivialize, you bastard. :)

If took am Israel kid, brought him up in Gaza, took a Palestine kid, brought him up in Israel.

Each would grow up to hate each other even though genetically they belong to the other side. … Programming, man.

#55 the Jaguar on 08.05.14 at 10:18 pm

“you are running down a dark alley, without a flashlight.”….Bill Gable, previous blog post.

Mercy. Bill Gable just captured my entire life. Enough said. I have somehow survived though, Bill.

As for Albertans taking on debt, don’t think for a moment all those cornflake boxes built on the ever expanding prairie (where the wind howls endlessly) are the only source of misery. Every convert to the oil patch requires the equivalent of a Ford F350 Crewcab for more or less $80,000. A sum which used to be representative of household mortgage debt, but now is just another item that one cannot function without, i.e. the SUV sized sub-zero fridge, home theatre, BarBQ bigger than a subcompact car, the expensive vacations, the weekly manicures, the maids, the equivalent of grownup toys for the kids. It’s endless.
And none of it will make them really happy or be sustainable when the divorce rolls around because they have focused too much on “stuff” instead of on their relationship. Call me cynical.
Where is Billy Bob? I retract my proposal and may extend an offer to Bill Gable if you don’t come down from the stratosphere and give us all some good advice.

#56 OttawaMike on 08.05.14 at 10:20 pm

#52 JimH on 08.05.14 at 10:02 pm

Very impressive. Over 1 Mw per month from a passive system. Once the electricity storage hurdle is overcome, lookout–the fossil fuel boys will be left behind in their collective yellow smog haze.

Ottawa pumps all of its urban core drinking water with an 1876 hydraulic river water powered turbine station. Saves us $1,150,000 in electricity/year.

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

Hamilton and Montreal had the same systems designed by the same engineer but the fossil fuel hucksters convinced those 2 cities to come into the 20th century and move to oil and coal powered stations. They scrapped their water turbine stations. This is the same mentality as Van Isle renter, SM and others have on here towards clean energy.

#57 Sean on 08.05.14 at 10:35 pm

You realize sales go down as summer winds down right?

Does summer wind down now in July? — Garth

——————

No, I think in Canada summer BEGINS in July!

#58 Sheane Wallace on 08.05.14 at 10:38 pm

What if there is no interest rates increase but just the talk of it despite the inflation in the next 4-5 years?

they just talk about it, dollah goes up, paid MSM tells people all is good until they have nothing left?

What if we – the ‘international community’ – US, Canada, UK really have have no other option but a total reset?
And what comes next?

#59 Sheane Wallace on 08.05.14 at 10:39 pm

No, I think in Canada summer BEGINS in July!
…………………………
Canadian summer this year WAS ON July 31 st.

#60 Cici on 08.05.14 at 10:40 pm

#3 Smoking Man

You are right on that one. What a waste of lives on both sides. Manipulated by their leaders, who entice them with nonsense “goodies” and rally them against “the enemy”–not unlike what we see with our own taking up issue against so-called “HAM” that’s supposedly pricing them out of the market. More likely a load of “bologna” than actual “HAM.”

Greed, lust, uncontrolled emotion and blindly devoted tribalism: This pretty much sums up the history of modern man.

But glad you found the nude selfies…nothing like a ray of sunshine in the storm, eh?

#61 coastal on 08.05.14 at 10:40 pm

Not surprised at mislading data. Ever since Victoria REB went to the HPI method you knew the jig was up that they are worried the inevitable tanking is coming and will do anything to put lipstick on the pig. Foreclosures on Oak Bay waterfront for $1.2 million and no takers ? I’m prepared to rent the rest of my life or buy a nice clean apartment near the ocean for $150K than pay half a million for a moldy box in sketchy neighborhoods with some buffed up hardwood and still needing major kitchen renos. Just don’t tell the wife. ;)

#62 AB Boxster on 08.05.14 at 10:48 pm

#27 Capitol 1
Re #1 Pooh

I’m not so sure that Pooh cannot transfer the entire RRSP contributions to a personal RRSP. I have had these before and an RRSP is held in the name of a person and not a company.
The company may contribute to your RRSP but the contributions are generally all yours.
If the company contributed to a pension of some kind then maybe they would have to go to a LIF.

#63 Ole Doberman on 08.05.14 at 10:55 pm

Calgary update:

Here in the NW near Varcity I’m still seeing the same 4 houses + a new one for sale going on a bit over 2 months.

Interesting, these would sell within 2 weeks a couple months ago.

Could indicate a trend reversal but still too early to say for sure.

#64 Mark on 08.05.14 at 10:56 pm

“What if there is no interest rates increase but just the talk of it despite the inflation in the next 4-5 years?”

That may very well be the case. However, it doesn’t mean that lenders will continue to lend against specific collateral (such as housing) at current rock-bottom rates and risk premia. After all, if inflation ex-housing does pick up, credit-worthiness of mortgage borrowers will likely decline on a fairly widespread basis.

Over the next few years, I believe this actually will be the story. Flat or even lower policy rates (1% actually is quite a high rate given the sort of deflation we have in Canada and the moribund economy ex-FIRE). RE-backed credit getting more expensive, while business credit becomes less expensive. Particularly large business credit, and definitely not credit to RE businesses/REITs/etc.

Ultimately, it is this less expensive business credit that will reboot Canada’s non-FIRE economy, and place a floor beneath Canada’s falling RE prices (which we’re well into a year of such!). Should be good for the stock market as well.

#65 JimH on 08.05.14 at 10:57 pm

#55 OttawaMike

Thanks! I feel it was a sensible investment, even though at my age (68), I will probably not live long enough to get the full benefits of it! Well, it’s good for the future owners!

I do feel a little guilty about the pool, which is 8,500 gallons. Then again, it runs on a salt water system and was last filled in 2005. It has a very “airtight” cover system, so heat loss overnight and evaporation during the day is extremely low. Overall water use is about 2.21 USGals per day. Then again, my “front and back lawns” are now gravel and cactus plants, so there is no watering and mowing. (it took 4.5 hours on the 54″ riding mower to mow my lawn back in Missouri, and water use just for the minimalist flowers around the house amounted to over 10 USGal/day in the heat of summer (ever been to the mid-west?), and about half that in the spring and fall. Winter water use was less, but still enough to keep the soil around the foundation from shrinking away from the foundation.

I used much less water for domestic use when I ranched in the BC interior from 1970’s until 1994, but then, I didn’t smell as good, either, as it cost a lot to pump it up from 250 feet.

Arizona is a great place; especially for an ex-Canuck in January. Come on down and we’ll tip back a few! (My fav is still Molson’s Canadian, but Dos Equis and Sam Adams Classic are closing the gap!)

#66 Al Redford on 08.05.14 at 11:02 pm

What the H does average household debt mean anyway and why do I care?

#67 nonplused on 08.05.14 at 11:21 pm

We already have a Bentley dealership, why not Rolls Royce? Trophy wives aren’t cheap to keep.

#68 Mark on 08.05.14 at 11:21 pm

“What the H does average household debt mean anyway and why do I care?”

It is an indicator of how much present consumption has been borrowed from savers, and how much future consumption the borrowers will have to pay back.

Today’s F-150 driving redneck who has no business driving a truck, is tomorrow’s dude who commutes to his menial McJob with a bus pass. Debt is merely a fancy way of transferring wealth from the borrower to the lender. Those Albertans are indenturing themselves to be slaves to the Ontario bankers for decades to come. In BC, its right off the map, but a significant chunk of the Vancouver population at least can expatriate themselves without consequence if debt becomes really oppressive.

#69 Sheane Wallace on 08.05.14 at 11:22 pm

#64 Mark

Collateral? They have CMHC to ‘insure’ the loans hence no collateral is needed.

There is no deflation but inflation, suppressing the rates is practically stealing and will trigger currency crisis.
Expansion of debt is inflationary! Period!

Rates have anything to do with real returns and in absence of bond buyers they do QE. If there is a bubble it is in the bond market.

#70 Sheane Wallace on 08.05.14 at 11:23 pm

I will not touch government bonds with a stick in my life.

#71 Sheane Wallace on 08.05.14 at 11:23 pm

The only possible way to have deflation is default on debt.

#72 Sheane Wallace on 08.05.14 at 11:26 pm

floor for the RE market at this valuations? Yes if the dollah looses 70 % of its value.

Stock market might go up but I care not about the Ca stock market.

#73 Terrier on 08.05.14 at 11:33 pm

I guess in the real estate cycle, all goes through phases … euphoria kicks first, followed by anxiety, then comes a denial, slowly slipping into fear … and finally panic and depression. Where do you think we are at this point?

#74 fenster on 08.05.14 at 11:42 pm

You mention tricities, Burnaby and New Westminster prices why HAM is not a factor.

How about West Van and Van West and North Van where ONLY HAM can buy..

There are no houses under $1 Million in these areas and the ONLY buyers of the multimillion dollar houses are HAM.

#75 Doug in London on 08.05.14 at 11:47 pm

@JimH, post #52:
Good post, Jim. History has shown that most people are slow to catch on to new ideas and renewable energy is no exception. I should add that low carbon energy producers like CSE, NPI, and AQN on the TSX continue to pay out generous dividends.

#76 Van Isle Renter on 08.06.14 at 12:06 am

52 JimH

So you have a solar powered house in AZ. Big deal. Does it produce enough electricity to run your AC in summer? Or do you abandon it for Canada? And by the way, how are your legs from all that walking? I assume that you must walk back and forth from Canada rather than flying or driving and burning those evil fossil fuels otherwise you’d be just another hypocrite, bemoaning the O&G industry while claiming the benefits of it.

I stand by my statements: Catastrophic Global Warming is a scam and nothing more than a tax grab. Your example of dropping values of coal companies is hilarious. The drop is caused by the massive unrelenting and scientifically vacuous rulings of the eco-nuts that have taken over the EPA. The free market is suspended when it comes to “green energy”.

As to living on Vancouver Island, it’s great. I love it here. I rarely use the AC or heating. I also only live in one house and don’t travel much. I’m quite certain that my energy footprint is a fraction of yours.

#77 John in Mtl on 08.06.14 at 12:07 am

“Meanwhile, Alberta’s first Rolls-Royce dealership has just been announced, which will take up residence in a new development opposite the Calgary Tower. You know what this means, right?”

Eh….Ah…Hm….

The HAM’s are coming, the HAM’s are coming!! ?

#78 Son of Ponzi on 08.06.14 at 12:10 am

#49 devore on 08.05.14 at 9:45 pm
#30 Shawn
You of all people should know delinquencies and defaults are a distant trailing indicator.
—————
Devore, you’re giving Shawn far too much credit.

#79 Agnes on 08.06.14 at 12:17 am

So the line in the sand is 1M. It will be tough for the sellers to drop the price. In toronto where people are flush with money (ie good paying jobs) buyers can only hope for another 2008 price drop. Besides, Banks require mortgage approval at higher rates anyways. So when 2018 rolls around with rates at maybe 4% it will be a non event. Buyers can keep waiting …maybe a lifetime.

#80 Karl hungus on 08.06.14 at 12:25 am

You realize sales go down as summer winds down right?

Does summer wind down now in July? — Garth

From all your data collecting you don’t realize prices are typically highest in April/may?

#81 Burnaby Boy on 08.06.14 at 12:25 am

My buddy was offerred $800,000 for his bungalow near Metrotown, Burnaby on a site which will be redeveloped with 48 story + skyscrapers. Sems a tad low for me but there you are.

#82 Cha Ching on 08.06.14 at 12:34 am

All this nonsense about sales volumes has bee going on for years. Nobody cares. Prices across Vancouver (and Canada as a whole) has been ratcheting higher.

For those beard who are sad, here’s another article to cry over:

http://www.theglobeandmail.com/report-on-business/economy/housing/vancouver-housing-prices-rise-to-new-highs/article19926194/

#83 Andrew Woburn on 08.06.14 at 12:38 am

Why Canada’s banks are loading up on capital – The Globe and Mail

OR: How to stop worrying and learn to love bail-in regulations

http://www.theglobeandmail.com/report-on-business/streetwise/why-canadas-banks-are-loading-up-on-capital/article19913427/#dashboard/follows/

QUOTE

Late Friday, the finance department announced a public consultation on its “taxpayer protection and bank recapitalization regime.” In line with other major countries, Canada has agreed to design a program that would protect taxpayers when private banks fail – i.e. prevent government bailouts – and investors have long awaited the proposed rules for bail-in debt, which can be converted to equity in a crisis. Unlike regular bonds, which rank higher than stocks in the queue to be paid should there be a bankruptcy, this type of debt can be converted into equity if the bank fails, erasing their seniority.

While that news was expected, the finance department also announced a proposal that will require the domestic “systemically important banks” – that is, the Big Six banks – to yet another capital requirement, known as the Higher Loss Absorbency.

Under Basel III rules, capital rules are focused on common equity buffers, and banks are required to hold enough common equity capital such that it amounts to 7 per cent of their risk-weighted assets.

#84 Andrew Woburn on 08.06.14 at 12:45 am

All that glitters, etc. – “Cayman Islands Stock Exchange”? You bought what?

“Banco Espirito Santo Loan Mystery Confronts Derivatives Buyers”

http://www.bloomberg.com/news/2014-08-05/banco-espirito-santo-loan-mystery-confronts-derivatives-buyers.html

QUOTE

Some investors are waking up from a stimulus-induced malaise and realizing they don’t exactly know what risk they’ve assumed.

There’s a prime example in buyers of credit-linked notes created by Banco Espirito Santo SA last year.

Investors who bought the securities agreed to protect against losses on a 2 billion euro ($2.68 billion) pool of commercial loans made by the Portuguese bank, according to marketing documents reviewed by Bloomberg News. That was under the assumption that they stood to get annual returns in excess of 10 percent.

Now that Banco Espirito Santo’s finances are unraveling, investors in the Lusitano Synthetic II Ltd. deal are understandably getting nervous about the specific loans they’re guaranteeing. They asked for details last month, which the issuer is declining to give them, according to a July 23 notice on the Cayman Islands Stock Exchange.

The Lisbon-based lender’s sudden fall is a rude awakening for bondholders who’ve generally been rewarded for delving into the riskiest, most-illiquid securities for the past five years. The easy-money policies of central banks across the globe have propped up debt prices, suppressing borrowing costs so much that investors have piled on more and more risk to meet their return targets.

#85 Spectacle on 08.06.14 at 1:00 am

Awesome Garth, thanks.

Re : #39 Van Isle Renter on 08.05.14 at 8:57 pm
Further on the issue of the Global Warming Scam:

There has been no warming found for 17 years and 10 months. Some global warming emergency. Big Whup.

Scams. Exactly like gold, or realestate, the warming and cooling of the earth changes. We are headed for another Ice age! ( People, Stop Watching US television ). In the shorter term 100 years or so, real estate will be under water in low lying areas in coastal low cities. Imagine the sewer systems issues 30 years before surface water is an issue! Richmond or Kitsilano for investment , nay nay!

Also, thanks NostyVlad , your input is saving me much investigative time/effort. Good input, actually great at times. ( when I can understand it…. : ) )

Regards all…..

#86 Bobby on 08.06.14 at 1:01 am

For #38 Devil’s Advocate,

Sadly many of the weaker realtors, and there are many, will offer up an unrealistic sale price to secure the listing. Have seen it many times.

Ironically you allude to it in one of your later posts.

Lots of homes sitting on the market forever here in Victoria. Yet, if you read the latest email I got from a realtor, you would think the market is smoking.

Many should get out more I think.

#87 Exurban on 08.06.14 at 1:36 am

I live in the Ranch Park area of Coquitlam. Houses here mostly go for $700k to 900k. About two dozen have come on the market this year in my immediate nabe and every one of them has had a SOLD sticker put on the sign within a month. There is some HAM here but not much. It’s mostly rental houses owned by residents of China and managed by Vancouver property agents. There are no empty houses here like you find in the real HAM zones like westside Van, Richmond, and West Vancouver.

BTW the traffic congestion situation here improved quite a bit since the Highway 1 improvements. Greater Vancouver in general is overcrowded and unpleasant but it’s easier to commute from this neighborhood than it was 5 years ago.

#88 james on 08.06.14 at 2:24 am

Can we start wiping out all the posts on the middle east? I find it decidedly obnoxious to read what is ostensibly a housing blog, only to have to wade through foreign affairs commentary.

#89 @Smoking Man on 08.06.14 at 2:29 am

Twitter is a threat to the powers that be.

The Internet was supposed to allow control over information disseminated to the masses.

Twitter is an anomaly…..it will be reined in eventually.

Just too big of a threat.

#90 Mark on 08.06.14 at 2:35 am

“This has produced 5.43 Megawatt hours of clean energy since going active in late March of this year. “

Wow, you made $200-$250 worth of electricity in the sunniest 5 months of the year. But how much was the amortized capital cost of such?

Rough math, and assuming that your generation is going to taper off severely in the winter, you can make $450 a year. At a 10% discount rate, 20 year service life, hope you didn’t pay more than $4k for that your setup. Although I suspect you paid a multiple of such, which is why you types should stick with investing in index funds, rather than solar energy.

#91 SHELTER THE MONEY NOT THE PEOPLE on 08.06.14 at 2:46 am

#20 Sheane Wallace on 08.05.14 at 8:00 pm
Just disband the f…ng CMHC.
____________________________________
Not likely Sheane, It is a political tool. No politician will knowingly give up another tool that could net them a few percentage points at the polls.

A few corrupt points here and a few corrupt points there.
Expect the next budget to be the most generous since the last election.
Call in a few favors from South of the Border even.
The Americans had no qualms about picking favorites when the Conservatives were first elected. Notice the Softwood Lumber Treaty was promptly signed as soon as the Liberals were tossed out. Some Liberals did kind of shoot themselves in the foot there with Anti-American comments from some mouthy MP’s. If the Americans don’t like you they will make you suffer financially.

Add to all this a bag full of money in a New York hotel room and you’ve got yourself ready for an election.

#92 cynically on 08.06.14 at 3:06 am

What does the the new Rolls Royce dealership in Calgary mean — maybe some HAM have moved there but its the young bucks who like the expensive cars, particularly the Italian sport jobs so it remains a mystery.

#93 Arshes76 on 08.06.14 at 3:30 am

#1 PoohBlog dogs – I need your help.

I have recently changed jobs and need to decide what to do with the RRSP that both my old employer and myself contributed to. I understand that it needs to remain an RRSP and that it can’t simply be transferred to my TFSA in my home bank.

What is the smart and tax efficient decision to make here if I wanted to transfer the money into my current bank?

To make things more complicated, does it make sense to open up a spousal RRSP considering that my wife is on maternity leave? Don’t even know if I have that option…
—————————————————-
If the plan is similar to mine it’s just an Rrsp where both the employee and employer make contributions. If your getting statements from the investment house in your name it’s now really just an rrsp. Mine is at Rbc same with my dad’s. You can just leave it there if you like the investments, that’s what we did with my dad’s he’s retired. If you want to move it to your bank, open a rrsp there and then fill out a fork to transfer the rrsp to another rrsp. No tax consequences. I don’t think you can transfer to a spousal because it’s an older contribution. But that wouldn’t be a benefit with your wife on mat leave as there is a 3 year wait before she can take it out and have the money taxed in her name.

#94 Dom on 08.06.14 at 5:44 am

@ #1 Pooh

You can transfer your Company RRSP “in-kind” to your bank or any other financial institution. The specific funds your Company RRSP may have offered previously may not be unavailable to you, however, but the dollar figure should be made available to you.

No need to take a tax hit moving the money from one box to another.

#95 Italians love real estate on 08.06.14 at 8:04 am

Lots of declining financial markets these days . I make no guess as to how much further down they will go.. That’s up to the people who actually invest in them.

Meanwhile the green keeps flowing in Cdn. RE prices .

I can tell you that if Cdn dollar sees 80 cents , a million dollar crack shack in T.O is going to be a bargain missed by the RE doomers

(a) Equity markets have declined by 4% after a 30% gain. Oh, the horror. (b) The dollar is not going to 80 cents and, if it did, mortgage rates would get downright ugly. Please tell me you do not represent mainstream Italian thinking. — Garth

#96 weedeater on 08.06.14 at 8:19 am

#1 Pooh
Depends on the terms of the existing RRSP. You may be able to transfer in-kind (meaning all the existing holdings) but some company RSPs do not allow that. It may have to be liquidated before transferring out.

Whether you take it in-kind or in-cash, think carefully about where you want it to go. It must be transferred to another registered retirement savings plan or will be considered a withdrawal with full tax hit.

IMO if you can, avoid a bank RRSP GIC; educate yourself about investing: opening a brokerage account is easy and buying ETFs or Index mutual funds will provide exposure with less risk than individual stocks and the high fees of regular mutual funds. If it’s a substantial amount of money ($500K+) contact Garth to manage.

Learn more about spousal RRSPs–it depends on other factors (have more kids? spouse SAHM permanently? her income etc)

#97 OttawaMike on 08.06.14 at 8:27 am

90 Mark on 08.06.14 at 2:35 am
Wow, you made $200-$250 worth of electricity in the sunniest 5 months of the year. But how much was the amortized capital cost of such?

Rough math, and as..
—————————————–
Actually closer to $800 worth of electricity at today’s Arizona price but that would have ruined your post’s proposition so you tweaked it a bit.

#98 Ray Skunk on 08.06.14 at 8:48 am

UK homeowners start to panic sell in the face of house price uncertainty

http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/11015301/UK-homeowners-start-to-panic-sell-in-the-face-of-house-price-uncertainty.html

#99 JimH on 08.06.14 at 8:52 am

#90 Mark

Your response comes across as arrogant, condescending and insulting. I welcome sincere skepticism, but you are way out of line here due to your own ignorance.

I’m not the least bit sorry to inform you that you’re way, way, way off base. Perhaps before jumping in with faulty math, you might instead ask the right questions? That way, you deal with facts and avoid assumptions, which in this case throw you way, way off base.

It takes a little humility to ask when you have a question, Mark, granted, but the results may surprise you.

There is a tremendous proliferation of solar panels sprouting up on residential properties all over southern Arizona. You seem to think that those folks are all fools? In actual fact, your ignorance of facts makes you look silly.

My electric utility in AZ sells electricity to the consumer at $0.135 per Kwh. My system went ‘online’ on March 28 of this year. To date, it has produced 5.5 Mwh (5,500 Kwh), or $742.50 worth of juice.

The yearly guaranteed (minimum) annual production from this system is 11.6Mwh or $1,566.00. I repeat that this level of production is the guaranteed minimum. So far, in spite of our July rainfall being over twice the historical average, we are at this point about 8% above the project’s projections. BTW, the projected maximum payback period is 8.8 years, based on those guaranteed minimum production numbers, and NO increase in utility rates. (when I put in my ground loop geothermal system in Missouri, the estimated payback period was estimated to be 7.5 years; we broke even at just under 5.5 years… in part because the cost of propane, the only alternative, skyrocketed; perhaps we’ll do as well in Arizona)

20 year service life? Better do some more research! Solar panels have come a long way.

The most productive months of the year are May and June, with projected production of 1.302Mwh and 1.286Mwh respectively. Perhaps contrary to your assumptions, heat has a negative effect on solar panels and makes them less efficient. They do great at 75F, but when it’s over 95F, they ‘wilt’ somewhat! Besides, you seem ignorant of the fact that in my region of Arizona, July and August are referred to by the locals as “Monsoon Season”, with 3″ plus rainfall each month. (West-coasters can laugh)

You assume that solar production drops “severely” during the winter. Projections call for the lowest production months (Dec and Jan) are 586Kwh 643Kwh or about 1/2 of the best months. I don’t find those numbers “severe”. After all, there’s no snow covering those panels for months on end!

You also could have asked about Federal, State and local utility cash incentives and tax credits, but you didn’t. They covered more than 60% of the cost of installation.

You also could have asked about the effect of a solar-panel installation on property re-sale valuations in Arizona, but you ignored this factor also.

Mark, with all due respect, you do have certain areas of expertise. But, you know little about this subject, less about my region of Arizona, and even less about the cost of electricity in Arizona and it’s impact on property values.

Aside from the economics, my contribution to energy production in Arizona, along with that of my many neighbors with similar systems, helps to cut down on the number of coal/fossil fuel burning power plants, and I fail to see than as a negative.

As Clint Eastwood pointed out years ago, “A man has to know his limitations”.

#100 Italians love real estate on 08.06.14 at 9:20 am

Garth to me at #95

A) I don’t care how far the financial markets have fallen from previous high as I don’t invest in them. No horror for me

B) mortgage rates would get downright “ugly “and would solicit a borrowing response from Canadians that would take RE prices to a level that would shock even the most ardent RE bulls. As for representing anyone else I would never hold myself out as a representative of a group but I can tell you one thing for sure ” Italians love real estate ” ! .

#101 Joe Schmoe on 08.06.14 at 9:22 am

I put some nuts on my wife’s mazda3.

Lots of sparks.

Sadly she won’t let me put them on her miata.

Calgary: higher end (+2m) housing dropping 10-25%. Apparently people with money feel this asset is overinflated. Nothing moving.

#102 Shawn on 08.06.14 at 9:30 am

Mortgage defaults in Canada and the U.S.

At 30 above I gave a link to the latest 90 day mortgage delinquency rates for the big banks in Canada. The rate stands at 0.29% and has not moved upwards in years.

Garth responded:

It is, of course, a false indicator, which no analysts take seriously. — Garth

Devore indicated it is a lagging indicator.

*****************************************
Okay, fair enough.

Like CREI at 35, I would be interested to know why it is a false indicator.

Here is a link that gives 30-day delinquencies and also charge off rates for the U.S.. 30 days late is not comparable to 90 days. So let’s be conservative and compare the charge off rates in the U.S. to the 90 days late in Canada.

http://www.federalreserve.gov/releases/chargeoff/

http://www.federalreserve.gov/releases/chargeoff/chgtop100sa.htm

The second link give the charge off rates seasonally adjusted for the 100 largest banks.

The current charge off rate of residential real estate loans is 0.39%, so not that much higher than our 90 days late. But this is charge offs (write-offs) which you would expect to be lower than the 90 days late.

As far as an indicator, look back and I think you will see this charge off rate rose noticeable in 2006, rose more in 2007 and more in 2008 and got well over 2% and only fell below 1% in 2013.

If you look at the U.S. 30 -day delinquency rate a similar patter applies.

The Canada 90-day delinquency rate is lagging in part because it is published 2 or 3 months lagging. But at some point if very many can’t pay mortgages it must rise. It lags but after predictions of problems I watched it for well over five years. Just how long is the lag?

To me it looks like these figures have some use.

So why exactly is this data not of any use? Anyone?

#103 Bigrider on 08.06.14 at 9:33 am

I haven’t posted in a long time but couldn’t resist chiming in on #95 Italians love real estate and Garth’s response to it.

Unfortunately Garth, I do think that he represents the majority Italian Canadian thinking.

#104 Dupcheck on 08.06.14 at 9:52 am

Put an end to CHMC it is doing more harm than good.

#105 Smoking Man on 08.06.14 at 10:07 am

Well basement dwellers today is a very good day for you.

Trade surplus of 1.86 billion…. Prozac will love that, the needle just moved a tad for higher over night rate..

A full quarter of this, BOC will go from negative, neutral
To leaning toward a hike…

But then again it will strengthen the Cad dollar..
I hence hurting future surplus…

The madness of economics.

PS

Mark throughs a left,, JimH counters with a right…
Good battle going on…

JimH, you anywhere near Bullhead AZ?

#106 Wise Old Owl on 08.06.14 at 10:07 am

Hi Garth,

I hope you can find time to read and reply to my dilemma.
I own a house which I bought new thirty years ago in Oshawa Ontario.
Raised three kids in it so it is a “little shop worn” and I’m told really 1980’s.
Here’s my dilemma. I am quoted $45,000 for a refresh of the kitchen (which includes refacing cabinets, new hardwood floor and quartz countertop with undermount sink) and hardwood floors on the ground floor and new carpet on the upper floor to replace worn out carpet everywhere.
Ever mindful of your recommendation to limit the amount of net worth to keep in real estate (or ones principal residence) should I just list it “as is” and take whatever hit comes from the house being “dated” or should I spend the $45,000 and hope to recoup it on a “fully remodelled” house?
I’m asking myself “Why put the money in, in hopes of getting it back” just list as is and keep the money in pocket”?
Which move is the better bet?
I’m planning to retire in about one year and need to downsize from 3000 sq. ft,. to about 1600-1800 sq.ft. bungalow, wife has plastic knee, needs to avoid stairs, tired of maintaining, dusting, vacuuming, heating such a large place. Kids gone at last.
Thanks for taking the time to read this.

Wise Old Owl.

Paint it, clean it and list it. — Garth

#107 rosie "moving forward" in the knowledge that, "this won't end well" on 08.06.14 at 10:24 am

Break even by mid 2016. Can you hang on for 8 years just to break even?

http://www.forbes.com/sites/kirandhillon/2014/08/01/heres-a-look-at-the-housing-market-eight-years-after-the-collapse-3/

#108 rosie "moving forward" in the knowledge that, "this won't end well" on 08.06.14 at 10:38 am

Sold in 2004 for $108000. Some interesting finger painting highlights this fixer upper in Motown.

http://www.realtor.com/realestateandhomes-detail/621-Clairmount-St_Detroit_MI_48202_M34371-35503#modal_PhotoGallery

#109 Mr Buyer on 08.06.14 at 10:45 am

There are new crypto-currencies coming online every couple of days there is a new one that just launched that is giving away 150 coins for the next couple of days to anyone that downloads the wallet and logs into a chat board and posts their address from the wallet. The currency’s home is monetaryunit.org and the currency is call MUE. This coins start up and eventually hope to get listed on an exchange were they can be traded. That happens only if enough people are mining the chain block for coins and thus keeping the chain block live. When somebody starts a new coin they hold some for themselves for whatever reason so it could prove lucrative if your coin reaches a couple of cents in value nevermind bitcoin like values. The problem with wide spread adoption is that is is way to techy still with not many easily installable gpu miners available and nerds mining with huge gpu rigs driving up the difficultly to mining before the coin even gets out of the gate. Some coins now are trying to make it less attractive to these big mining outfits and provide in wallet cpu mining. This new MUE coin is one such outfit. I was just thinking though that the software for these coins is open source and we should get going on GARTH coins. If we could get Smokingman to stay sober for a couple of days he could probably have it set up and I know we would all buy some of these coins and mine them. What do you say Garth? If you are in I want a finders fee of say a million GARTH coins for bringing you the idea though.

#110 Retired Boomer - WI on 08.06.14 at 11:03 am

#99 JimH

I applaud you for saving money by investing in smart ways to trim utility use. We live in western WI known for some cold winters. Last year our largest monthly bill to heat this average sized home was $67 using natural gas.

Building with triple glazed windows, 6 inch sidewalls, insulated foundation etc etc all contribute to smart energy use. (Looked at ground loop geo-thermal cost prohibitive at the time 1997).

Cut down on driving, the biggest waste of energy in our lives. Besides we benefit from hoofing it. It’s small but it all adds up.

#111 Ex-oilburton on 08.06.14 at 11:03 am

Alberta’s ex premier Allison Redford( aka Princess Allison) is an example of Alberta excess .$45,000 government jet trip to Mandela funeral, artificial air fare manifests to ensure private flights for Allison on Government jets, a private suite planned for her in the new Alberta government building , are just the few items exposed so far. Entitlement to the extreme ! Ralph must be rolling over in his grave over the “new Alberta”. I miss the place but not the 8 month winters.

#112 Alex n Calgary on 08.06.14 at 11:12 am

The household debt here in Calgary being so high is not suprising. Its the same, race to Reno the house as everywhere else in Canada. With the firm belief that 20k put into new kitchen (there are so many free dishwashers, ovens, fridges on Kijiji, perfectly working) will be 30k in value in the house. You know, I don’t begrudge people buying houses based on our difficult renting experience but its the investment properties that are so dangerous. My wife and I figure like 70% of our friends have investment condo’s or houses.

My one friend told me, after a discussion on housing boom/bust cycles, “once I realized that if people aren’t buying houses, they’re renting, I knew my investment would be good forever” yeah dude, unless the province empties out of inter-provincial construction/oilgas laborers who return to their province and bail on this place.

Same activity here in Calgary as others have seen, some houses below 400k go fast, others that are 600k+ are going nowhere, nobody is left to “move up” , this is a city mostly of laborers who can’t afford a house over 400k, even the outskirts of the city houses and condos are mega priced now, probably taking advantage of the fact nobody can afford a house anywhere within the city.

Hard days, feels like it’ll never end.

#113 JimH on 08.06.14 at 11:20 am

#105 Smoking Man
“… JimH, you anywhere near Bullhead AZ?”
=================================
Not even close, sir. SE part of State; ~15 miles north of the fence.

I have friends near Bullhead; the winds can be horrendous. Lake Havasu SP in that area is beautiful.

#114 kits388 on 08.06.14 at 11:45 am

Garth, perhaps you could spend a little time educating yourself … apparently, 45% of 70 million HNW Chinese want to migrate … Canada is the first choice. Also, the Australian government has initiated parliamentary inquiry over foreign investment in real estate … yup, I am sure there is no foreign investment impact on prices in certain Vancouver areas … yup, just keep wishing, ignoring the facts or …

http://www.bloomberg.com/news/2014-08-05/chinese-demand-rush-for-australia-homes-here-to-stay-ausin-says.html

Concerns by locals that overseas investment in Australian real estate, particularly from China, is driving up prices and reducing affordability has prompted a parliamentary inquiry into foreign buying of domestic property. The report from the inquiry will be released in October.

Overseas purchasers bought 10.2 percent of new properties in the quarter ended June 30, falling from a record 13.9 percent over the first three months of the year, according to surveys of real estate professionals by National Australia Bank Ltd. They accounted for 7.2 percent of purchases of existing properties, compared with 9.5 percent earlier.

Home prices across Australia’s state and territory capitals rose 10.2 percent over the year through July from a year earlier, according to the RP Data-Rismark Home Value Index. Sydney and Melbourne led the gains, with values climbing 14.8 percent and 11 percent respectively.

Taking guidance from Australians on immigration and residency issues would be a bad idea, but I can see how you’d like that. — Garth

#115 TurnerNation on 08.06.14 at 11:52 am

From the Schlock Broker dept: my top short term stock pick is Dollarama. Look at the recent moves in Loblaws, Tim Hortons stock. Canadian retail.
Richer than we think

#116 45north on 08.06.14 at 12:10 pm

fenster : There are no houses under $1 Million in these areas and the ONLY buyers of the multimillion dollar houses are HAM.

the $1 million limit on CMHC mortgages is distorting the market. I suppose that some people do understand it and they don’t make public announcements. A requirement for 10% down on mortgages between $900,000 and $1 million would be a good thing.

JimH : My electric utility in AZ sells electricity to the consumer at $0.135 per Kwh. My system went ‘online’ on March 28 of this year. To date, it has produced 5.5 Mwh (5,500 Kwh), or $742.50 worth of juice.

I was on Mark’s side until I saw your last post.

Shawn : But on the face of it any rumors that Canadians cannot afford their mortgages is greatly exaggerated.

on the face of it mortgage defaults are significant but Mark Hanson says that a rising market covers a multitude of faults. Someone in trouble just sells at a higher price and all is forgiven. Didn’t Mark ( Mark on this blog not Mark Hanson ) say that the banks are hiding 90 day delinquencies?

Bigrider : I thought that you were “Italians love real estate”.

#117 Mike on 08.06.14 at 12:15 pm

Last night I heard on the radio here in Edmonton that the average consumer household debt (so mortgages are not included, but LOC’s, vehicles, CC’s, etc are) in Canada is $76k and in Alberta it’s $125k. UNREAL! This seriously blows my mind. How can people afford to live like that? You know these are the same ppl that have massive mortgages, but honestly I don’t understand the economics of it? Either everyone is putting every penny they earn towards payments and not saving a cent, or i’m seriously being underpaid at $80k/yr as a low-level manager.

#118 Holy Crap Wheres The Tylenol on 08.06.14 at 1:03 pm

#54 Smoking Man on 08.05.14 at 10:14 pm
#50 OttawaMike on 08.05.14 at 9:45 pm
LMAO
Did you write that, if so, nice flair for creativity, like it.
But I stand with my thesis…. Which you have trivialize, you bastard. :)
If took am Israel kid, brought him up in Gaza, took a Palestine kid, brought him up in Israel.
Each would grow up to hate each other even though genetically they belong to the other side. … Programming, man.

_____________________________________________

Programming to a point, environment, education, or therefore lack of it, misinformation, however genetically Christians, Muslims and Jews from the middle east are all the same DNA wise. Yes that’s a fact!
So yes they hate their own brothers and sisters equally.

#119 Chickenlittle on 08.06.14 at 1:20 pm

Hi Garth! Can you please do a post for the self employed? 100 accountants will give 200 different answers. You seem to have a good grip on tax law.

#120 Hmmm.... on 08.06.14 at 1:55 pm

This just doesn’t make sense… I think the context on the debt is wrong.
How come the debt incurred by Albertans (highest in Canada) is due to mortgages, when house prices are much lower than Ontario and very much lower than BC ? And also Albertans earn more than people in Ontario and BC…
Debt is true, But blame on mortgages doesn’t make sense. May they are just spending or investing…

#121 Tony on 08.06.14 at 2:17 pm

Re: #115 TurnerNation on 08.06.14 at 11:52 am

And the stock market indexes have been following the price of oil downwards. It was up today but oil is lower again. Waiting patiently for the big crash. Hint the bear funds and short sales will do the best.

#122 Bob Rice on 08.06.14 at 2:41 pm

On China and real estate:

“As of May, average residential price growth started to turn slightly negative. Transactions fell by 10% and housing starts fell 12%.

Real growth in investment fell, too, from a 20% growth rate in 2012 and 2013 to around 10% by May 2014.

The IMF said that previous downturns, such as 2008 and 2012, were driven by policies to cool the market, but this current one has come without a direct tightening of real estate policies and appears driven by overcapacity and concerns about future capital gains on behalf of investors. As a result, many Chinese home buyers are turning to overseas markets, making oversupply a greater issue than before.”

http://www.forbes.com/sites/kenrapoza/2014/08/03/real-estate-oversupply-becoming-bigger-problem-for-china/

#123 Entrepreneur on 08.06.14 at 3:17 pm

Wendy made the mistake by buying another house before selling her first one. She had misread the market. She should have sold her first home first then bought.

Some houses sold around me but their prices were reduced about every month or so until a buyer (flipper) bit. The house across the way has been on the market for years. The owner (flipper) refuses to lower her price. She better be careful; she might be stuck with it.

Prices are coming down all around this area but like someone said the owner would not even notice.

Thanks, #52 Jim H, on the solar heating panel method. Wrote the info down and will look into it, always wanted to go solar. Will give it try on Vancouver Island even though my better half has doubts.

#124 CBC on 08.06.14 at 3:21 pm

Just wanted to share some of my experiences in the van/burnaby detached market. For context, i’ll say up front that me and my wife are both chinese born in canada.
Since this spring we’ve been shopping for a teardown in the killarney/fraserview area of eastvan. Frequenting open houses i’ve noted my fellow shoppers being majority ham. i have nothing quantative, just observation of the people and names of the sign up sheet so take it for what ever you like. The vehicle of choice seems to be benz, usually ML or GL SUV and mostly mandarin speaking but some cantonese too (hong kong accent). When i speak to the agent in english, other open housers do a double take. Anyways, we made a 1.195 mil offer on 60yr old leaky roof (as is where is)number with a good size lot asking 1.18mil but structured to take all bids by a certain cutoff date. We find out a week later the winning bid is 1.28mil, 100k above asking! To me, ham has a very serious influence, albeit only in this pocket we were active in which is considered “desirable” as far as east van.

Not wanting to be competing in this type of environment, we switched focus on a new house (0-2yrs) in burnaby east, specifically burnaby hospital, garden village, central park, metrtown, south slope. My observation us that the 1.5-1.75mil category is absolutel stagnant. Often times these listings will get pulled and re-listed as “new” with 50k incremental reductions. june had a 5% sold rate and may 3%
http://vancouvermarketreports.com/index.php?fuseaction=cPageGoTo.DisplayDoc&DocumentID=86087

To be fair 800k-900k “starter homes seem to be flying off the shelf.
Now i am more on the sidelines just waiting to see how the fall shapes up. I live in a condo in vancouver thats paid off and i dont need a mortgage for my house purchase so interest rates dont affect me other than its affect in the market.

I should also mention that developers/builders (mostly east indian) play a key role in the east van market (duh), but that might change considering the 2mil match stick houses they build dont seem to be selling as well

#125 JimH on 08.06.14 at 3:37 pm

#123 Entrepreneur
Re: solar ‘heating’
I have 2 systems; one for heating the water in the pool and a solar-photovoltaic system that produces electricity. I’m not sure to which system you’re referring, but I would be most interested in how anything solar would work out for you!
Are you on the east, south or west side of the Island???

It looks like you have several solar electric contractors on Van. Isle. May I suggest that you get several quotes and proposals? Does BCHydro (if that’s your utility) provide any incentives to help out?

#126 JimH on 08.06.14 at 3:45 pm

#110 Retired Boomer – WI
“…Last year our largest monthly bill to heat this average sized home was $67 using natural gas.”
================================
In Wisconsin? WOW! That is fabulous! Even with today’s low natgas prices, that’s still fantastic!

#127 Victor V on 08.06.14 at 4:08 pm

http://www.chch.com/burlington-homeowner-insurance-wont-cover-flooding/

The clean-up continues in Burlington after Monday night’s torrential downpour that left parts of the city underwater.

Some neighbourhoods are still flooded, with lawns looking more like ponds. Burlington mayor Rick Goldring has called for an assessment of the city’s water management system.

For some residents, the bad news is getting worse. Glen Nicholson told CHCH News his new neighbours won’t be getting any help from insurance companies.

“These guys that just moved on the street, they’ve already been told that their insurance will not be covering their damage, so now there are rumours up and down the street about whether insurance will or won’t cover it. I guess everybody’s keeping their fingers crossed in having to deal with their insurance companies independently.”

#128 Mark on 08.06.14 at 4:18 pm

Collateral? They have CMHC to ‘insure’ the loans hence no collateral is needed.

Of course collateral is needed. Collateral is the basis for all secured lending, of which, mortgages are the quintessential example.

The point was, if any confidence is lost in CMHC and their willingness to pay claims, that will hit the CMHC subprime borrowers hard. Additionally, housing as an asset class and as collateral, periodically goes out of favour. As do government bonds. Currently, we are at the height of enthusiasm for such as “investments”. I don’t think we can say this will be a permanent state of affairs. Just look at the 1970s for a good example of a loss of confidence!


There is no deflation but inflation, suppressing the rates is practically stealing and will trigger currency crisis.

Housing prices are falling, consumer prices are barely rising. Debt expansion is decelerating. What’s not deflationary about such?


Expansion of debt is inflationary! Period!

The rate of such is slowing significantly.

#129 Mark on 08.06.14 at 4:49 pm

“Frequenting open houses i’ve noted my fellow shoppers being majority ham.”

Did you ask each of these alleged “HAM” their nationality? And how do you know that they’re actually bringing “money” to the table, rather than using debt?

This is the problem with the “HAM” theory. Yes, everyone knows that people of Chinese ethnicity are buying housing in Canada’s major cities. Some are Canadian citizens (albeit poorly integrated ones if they can’t speak one of the official languages)! But evidence of them actually bringing ‘money’ to do so with is practically non-existent.

#130 Mark on 08.06.14 at 5:00 pm

““These guys that just moved on the street, they’ve already been told that their insurance will not be covering their damage, so now there are rumours up and down the street about whether insurance will or won’t cover it. I guess everybody’s keeping their fingers crossed in having to deal with their insurance companies independently.””

Hence, the problem that the CMHC faces. With a 5% downpayment, and the recent housing price declines in the GTA, those borrowers are, figuratively and literally, most likely underwater at this point. If insurance doesn’t pay, they’ll be even more underwater.

How long will this state of negative equity be ignorable? How many of the highly leveraged borrowers in that neighbourhood won’t be tempted to walk away? How bad will the housing neglect become in the area as people stop investing in their (financially) underwater houses?

“on the face of it mortgage defaults are significant but Mark Hanson says that a rising market covers a multitude of faults. Someone in trouble just sells at a higher price and all is forgiven. Didn’t Mark ( Mark on this blog not Mark Hanson ) say that the banks are hiding 90 day delinquencies?”

Perhaps a different Mark as I have no data about delinquencies. Other than, I have observed that the banks are extremely aggressive in coming up with programs that mitigate delinquencies in a manner that doesn’t have to be reported as an official delinquency per se. For instance, TD’s well-advertised “payment holidays”. Contrast such with the US culture where securitization was pretty much the rule, and servicers had no meaningful power to vary terms and conditions.

#131 CBC on 08.06.14 at 5:22 pm

@mark
i am generalizing based on the dialect of mandarin which is different from say someone from taiwan or someone who grew up in canada. You are correct that they could be poorly integrated or recent immigrants. Without official stats, we dont know the extent or influence of ham $. Someone did do an independent study involving last names which were distinctly mainland chinese were on new property titles… sfu proffessor? i will have to find the link.
But like i said, i am just sharing my experiences. People can draw their own conclusions

#132 saskatoon on 08.06.14 at 5:33 pm

agg!!!!???

#133 Italians love real estate on 08.06.14 at 5:38 pm

Everyone concerned about HAM influence on RE prices .

I think you should all be concerned about Prociutto influence on RE prices

#134 espressobob on 08.06.14 at 5:44 pm

#115 TurnerNation

#121 Tony

Good luck with that! I’m sure both of you are smarter than mr. market.

#135 nonconfidencevote on 08.06.14 at 5:57 pm

@#133 Italians Love Real Estate

Sorry but here in Lotus land it appears HAM has you beat by a mile. The bank machines out here offer 3 languages to do transactions……. English, French? and the other one aint Italian.

#136 saskatoon on 08.06.14 at 6:13 pm

#117 Mike

dude…it’s called a “recovery”.

#137 Steve French on 08.06.14 at 6:24 pm

Why do Canadian real estate bubbles happen?

We go out in the world and take our chances
Fate is just the weight of circumstances
That’s the way that lady luck dances
Roll the bones… roll the bones!

https://www.youtube.com/watch?v=oV9yUvNp6z0

#138 Mark on 08.06.14 at 6:26 pm

“My electric utility in AZ sells electricity to the consumer at $0.135 per Kwh.”

Sure. But a portion of that is to pay for fixed infrastructure. At some point, if enough people start self-generation, the tariff will have to change to a fixed infrastructure fee + wholesale cost of generation. At Palo Verdes, a commonly used reference price in Arizona, around $30-40 per megawatt hour on average.

Similar situation with electric cars — the economics look great at this point, but remove the up-front subsidies, and start adding on the equivalent in fuel taxes to electricity (like is paid on fossil fuels), and wham, the picture looks substantially different. You can be assured that, in both the scenario of the home electricity generator with solar panels, as well as the Tesla drivers, that eventually the true economic reality of their decisions will be exposed to them.

#139 Mark on 08.06.14 at 6:28 pm

” 45% of 70 million HNW Chinese want to migrate … Canada is the first choice.”

You lost me at “70 million HNW Chinese”. Do you have something actually credible to say?

#140 Longterm on 08.06.14 at 6:46 pm

#123 Entrepreneur on 08.06.14 at 3:17 pm

You might want to have a look at this to secure cheap PV in your area.

http://www.gabenergy.com/

#141 Josh Renning on 08.06.14 at 6:47 pm

#71 Sheane Wallace

There is another for them to use deflation besides defaulting on debt.

They can just reduce the population by killing people. This way they don’t have to pay them or their families.

It sounds crude but desperate times calls for desperate measures.

When cheaters can’t win anymore, they cheat themselves to victory.

#142 Stickler on 08.06.14 at 7:22 pm

$200/barrel!? the futures market disagrees.

http://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html

Try $87

#143 Herf on 08.06.14 at 7:26 pm

#39 Re: Global warmng;

I’ve just got to share this. Pay particular attention to statements attributed to a few Canadian politicians in recent years; also to the comment made back in 1989 by the person speaking for the scientific community.

http://wattsupwiththat.com/2014/07/29/a-brief-history-of-climate-panic-and-crisis-both-warming-and-cooling/

#144 Realties.ca » Empty bubble, Part deux on 08.06.14 at 8:27 pm

[…] Source: http://www.greaterfool.ca/2014/08/05/empty-bubble-part-deux/ […]

#145 Snowboid on 08.07.14 at 12:18 am

#99 JimH on 08.06.14 at 8:52 am…

Are you on SRP or APS? We’re on APS and they will only pay the wholesale price for electricity generated by home solar panels.

But they are offering a trial soon (subject to approval) of putting solar panels on your roof – they collect the power but will provide a $ 30 credit on your power bill.

Since our highest bill is about $ 80 (lowest $ 35) – this would be a great deal as there is no capital cost to us.

May look into when we head south in a couple of months.

#146 Entrepreneur on 08.08.14 at 1:12 am

JimH…I’am on the east coat of Vancouver Island.

Thanks, #140 Longorm, I printed the site and will read it tomorrow.

Thanks, Garth Turner, I love this blog; I love the connection.

#147 Andrei Rotenstein on 08.09.14 at 11:55 am

DEAR GARTH:

I like your blog a lot but am balking at the fact that you don’t provide references for almost all of your claims about facts. Your wonderful blog has a credibility gap that’s easily filled by simply giving references — links, reports, etc. The kind of arguments you make necessitate them.

PLEASE! It’s so easy to do and makes such a big difference!

I’m not your research assistant. If you disbelieve me, simple. Go away. — Garth