The conundrum

SHORT modified

Karly’s shopping for a better rental in Vancouver and she’s not a happy babe. “While I agree with you renting is the best financial decision can we also agree it really sucks sometimes? Our apartment building had a fire a couple of months ago and we were forced to leave our essentially rent controlled apartment. When we started looking at other places I was flabbergasted at how much rents had increased, I mean I knew they were on the rise but this is crazy.”

To get a decent two-bedroom unit in YVR these days, Karly says, will cost her $2,500 a month (apparently she hasn’t heard of Kijiji).

“One of my theories is that the rents have increased because the people renting them need to cover their bloated mortgages. Some friends of ours just bought a two bed in our neighbourhood for $480k, now I’ve been reading this blog long enough to know that this isn’t a great financial decision but could you help me crunch the math? How high can we go in rent before buying isn’t such a bad idea? We make about 120k/yr combined and have 130k invested with a financial planner (not [email protected]) <—see I follow your advice.”

Good question. Vancouver’s one of the best condo markets in the country at the moment, with year/year sales ahead 42% in July. Easy to see why, when detached houses have gone into ludicrous mode, requiring buckets of money, a love letter to the owner and at least one kidney to purchase. The average beater SFH commands seven figures, while condos have a median price of $400,000. Even so, while detached prices rose 16% in a year, condo values climbed by only a third of that.

By the way, what happens to condos when a market runs out of hormones?

Let’s look at Calgary, where the pain has only started. In August apartment sales have crashed almost 40% from last summer, and the average sale price has taken an 11% dive, down to $296,300. Compare that to a more modest 20% rout for detached sales, and a mere year/year 1% drop in values, to $541,000. (In surrounding areas, it’s a far worse story, however, with prices off more than 9%.)

The lesson? If you’re going to buy real estate, make sure it includes some dirt.

Anyway, back to Karly. Does it make sense to buy a $480,000 apartment instead of handing over $2,500 a month to lease it?

Well, with closing costs that condo chimes in at about $500,000 and to avoid CMHC insurance you need a hundred grand down. The mortgage costs $1,900 a month (5-year, closed), with strata fees and insurance adding $500 and property tax at least another hundred. The $100,000 downpayment is not without cost, either, since if invested at 7% over five years it would grow by $580 a month. Total nut for owning is $3,080 a month.

Over five years, then, ownership costs are $184,800 as opposed to rental costs of $150,000, for a $34,800 premium. Now let’s say the condo retained its full value and was sold in five years for $500,000. After commission, HST and mortgage repayment ($343,000 remaining on the loan), plus getting the deposit back, the owner would walk away with $28,450.

So, Karly, it almost makes sense to buy since you’d lose only $6,350. That’s the cost of a used Kia and two mani/pedis at the Absolute Spa in the Hotel Vancouver (don’t ask). But it doesn’t end there.

Let’s talk about risk. Owners might make money if the condo they buy appreciates in value, but they face an equal risk of losing. Given the country’s swampy economy, the spreading impact of the oil collapse, crappy job creation, higher mortgage rates over the years to come and the fact young people are being priced out of YVR (not to mention the advancing hordes of socialists), residential real estate faces heavy headwinds. As Calgary proves these days, it’s condos – not detached houses – that are the first casualties.

There are other factors to consider, Karly. If the fire that forced you out of your rental unit had toasted a condo you owned, it’d be the worst news possible. Sure, insurance might have covered living costs and repairs, but you can be sure the resale value of your unit would be forever impacted, along with the monthly fees. With a condo, in fact, you have no control over the regular levy imposed by the condo corporation. You can’t control property taxes. You can’t have a mortgage without insurance, the premiums for which increase annually. If the building is not brand new, there could be a special assessment levied for new elevators, repairs to the parking garage or (shudder) leaks.

Of course, if the guy who buys above you is a flamenco dancer who practices all night, you’re screwed. The only way out is to sell. And what if the market is bad? What if you land a great job in Lillooet herding alpine goats and have to move fast? You already know you can’t rent out the condo for enough to cover your monthly costs.

In short, it’s no slam-dunk. People who rent expose themselves to potential inconvenience. People who own embrace risk – with the potential of return. So there’s your answer, Karly. And you expected clarity from a free blog?

170 comments ↓

#1 David W2 on 08.30.15 at 4:00 pm

I like renting and being liquid. Nothing better than this lvl of freedom.

#2 coming soon Cambie Condo Craze on 08.30.15 at 4:12 pm

Coming soon …just one area soon to release hundreds of rentals thus fall…the Marine Gateway project. ..minimum 200 condos there alone and more to come down the road … always a deal to be found when so many are completed at once. Lotsa cheap brand new rentals in Vancouver just look

#3 Obvious Truth on 08.30.15 at 4:14 pm

Keep doing what you are doing karly. We know it’s tough but tough is what it takes to be different.

And let’s all quit it with the crazy notion that capitalusm and innovation will end society as we know it. Life just changes. Some are good changes and some not so good. Que sera….

The world didn’t end when the wheel was invented and people stopped carrying things by hand.

#4 Freedom First on 08.30.15 at 4:24 pm

Karly is an ingrate. She has the world by the ball$ and can only whine. Sad.

#5 Bottoms_Up on 08.30.15 at 4:26 pm

If you’re living for the short-term, rent. If you’re thinking 5+ yrs, buy.

#6 Retired Boomer - WI on 08.30.15 at 4:28 pm

As an owner, retired, we are beginning to think about later on. Both 64 this year, who loves snow shovels, lawn care, and maintenance? Not us.

As we get more brittle, do we need this stuff? While no
VCR or 416 this 4 bed room, 3 popper, 2 car, on 1/2 acre of crabgrass should sell fairly fast.

Thinking of moving away to somewhere slightly warmer. No, not FL, not absolutely sure where, yet. Just thinking.

#7 lala on 08.30.15 at 4:33 pm

Spent the monies to yourself, you are the center of universe, work less party more. In the end we all will get a 6×3 piece of land. Why smoke tabacco when weed is cheaper.

#8 Bottoms_Up on 08.30.15 at 4:37 pm

#239 the Jaguar on 08.30.15 at 10:50 am
————————————–
Well 13 posts on 275 comments is 4%, so nora is taking over this blog to the same extent that asians are taking over vancouver real estate.

#9 Mean Gene on 08.30.15 at 4:41 pm

Time to start looking for a job somewhere else.

#10 Frank on 08.30.15 at 4:46 pm

Good advice. It kills me to hand over $2300/month in rent in this city too.

Of course as reasonable as the advice is the people that ignored it 5 years ago are laughing in my face. They bought that condo for $380K, are paying less in mortgage than I pay in rent and are sitting on a $100K valuation that’s not looking to be erased any time soon. And guess what, the numbers said buying was stupid then too.

Oh well.

#11 Setting the Record Straight on 08.30.15 at 4:46 pm

@257
Young and foolish

“Just for you … it’s like Obama said:

“There are a lot of wealthy, successful Americans who agree with me—because they want to give something back. They know they didn’t—look, if you’ve been successful, you didn’t get there on your own… If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business—you didn’t build that. Somebody else made that happen.”

Does this help?”

No it does not.
Any wealthy successful American who feels a moral obligation to pay more taxes can write a check to the government. Anyone who states they are personally not contributing sufficiently to the government is a hypocrite.

The great teacher was being paid for their work. They donot have a claim on their students later successs. Would you tax this great teachers or all the failures that went through his class? And why would somewelfarere ipienthave acclaim against thisstudent’s income?

Somebody invested in roads and bridges? Well if so and it is privately owned, then the tolls have paid for the value of the service and that toll road owner does not have a claim on the income of the successful business.

Maybe it’s the “investors” who paid for the bridge to nowhere who have this claim.

Since it’s the well to do who pay the vast majority if taxes maybe it’s that group who has the claim.

Well at least your handle reflects truth in advertising.

#12 Bob Santarossa on 08.30.15 at 4:47 pm

Better yet, find a month to month rental and wait for the economic news next 2 months and the election to be over.

If economy goes bad, in 6 months or so after, you can pick that condo up for a lot less and then Garth’s number look more attractive for ownership.

On the Flamenco dancer, SFH’s are no better where I have had next door: loud obnoxious rat dog that never shuts up; cat the comes regularly to relieve itself in my vegetable garden; nosy neighbor where you feel like Big Brother is watching your every move; the fishing trip neighbor that mows their lawn at 10 PM or 7 AM to make that early morning trip or the lets put my large central A/C unit far from their house and nearly under my bedroom window…forget about the evil spawn children that ransack your lawn whilst their parents are out back sipping on a Margherita and do not care.

I’ll take the Flamenco dancer in lieu (why God invented QuietRock Drywall…which I have used).

#13 Apocalypse2015 on 08.30.15 at 4:51 pm

And as Brittle Columbians are learning this week, they are at the forefront of global climate change as well, which won’t be good for condo values.

Forest fires, windstorms, crop failures and droughts, hurray.

Add in earthquake risk, and the little-mentioned likelihood of Vancouver becoming a hotspot for boatloads of desperate migrants in the near future, plus the absence of enough actually decent jobs in lotusland, and it’s really hard to see why anyone would invest in a condo there.

Karly, rent and invest in a survival kit. You’ll be using it there before you know it.

#14 Joe2.0 on 08.30.15 at 4:52 pm

City Groups Chief Economist says only Helicopter money can save the economy.
Markets are done otherwise.

As I’ve been predicting and have been correct, markets have started to decline.

I suggest a few nuggets of silver and an inverse fund that shorts the Russell.

My prediction stands as the markets continue to decline with the occasional dead cat bounce, Sept through March a blood in the streets scenario.
Just my opinion based on a s… load of research.
Any bets?
Don’t be greedy.

#15 Randy Randerson on 08.30.15 at 4:53 pm

#4 Freedom First on 08.30.15 at 4:24 pm

You’d never know, maybe Karly is a masochist, and likes the idea of the world has her by her balls. When the world got her by her balls, her heart and mind follow.

#16 Brian Ripley on 08.30.15 at 4:58 pm

I did an analysis of a ROI on a Vancouver downtown condo purchase in May of 2013, here:

http://www.chpc.biz/history-readings/vancouver-condo-yield-case-study

5 Yr old 600sf 1 bdrm condo
Good location downtown
Good amenities & condition
$1350/month Rent
$363,000 Purchase Price

Yes rents have ticked up since I did the analysis but there are still similar offerings of MLS listed condos for sale and many more on Craigslist for rent.

I tried 4 different scenarios changing price and financing, and it makes more sense to buy a riskless treasury bond (or high grade low yield corporate bond) especially if you think there is any chance that real estate prices are due for a correction.

My analysis concluded with:

“Today in this ZIRP environment, if you cannot yield 2-3 times more than a 10 year government bond, then you do not have enough margin to protect against an interest rate uptick or net revenue erosion from rental supply competition, expense statement shock or demands by government for more tax and or fees.”

Margin clerks are unsympathetic when prices correct.

#17 paul a on 08.30.15 at 5:06 pm

i couldn’t agree more ,no dirt no deal, box,s in the sky are first casualties in a downturn ,forget calgary,lookout gta
i think anybody with any sense can see the problems that are cumming soon in the great canadian real estate bubble
my comment today is directed to the bank of mom, i have recently had a couple of friends re mortgage there properties to assist the kids in stepping into this carnival real estate market, both against my advice to step aside
in both cases the mortgages are such that the bank of mom would find themselves in trouble, in the event of a 30 % market correction,not unlike what we saw in 89′
this makes me wounder if this stupidity is not setting up a potential domino effect, where the kids get burned and the bank of mom also goes down in her/there twilight years? well potential”bank of Mom’s” out there should consider this carefully before you mortgage the homestead,on a potentially fools errand, dont be afraid to say “no” remember “mom always knows best”
comments?

#18 Rainclouds on 08.30.15 at 5:06 pm

Sure Karly, buy in a beehive, maybe one of the next door drones will turn out to be a very short term neighbour.

http://www.vancouversun.com/business/Vancouver+strata+councils+tackle+short+term+rentals+head/11325228/story.html

Am thinking cuddly Rev Can IT Bots are already x referencing Airbnb ads/addresses/income declared here in “the big show”

Gonna get interesting as GOC revenues get squeezed……real interesting

#19 Dwilly on 08.30.15 at 5:10 pm

It’s called price to rent ratio. Take the price of the house, and divide by the annual rent.

Under 10-12:1 is a screaming buy. Don’t rent.
Over 20:1 is a screaming rent. Never buy.
Around 12-20:1 is not clear cut either way. You could make either case and it’s within the margin of error of your assumptions.

Most places in Canada today are firmly in the “could go either way” bucket – towards the top end to be sure

#20 OffshoreObserver on 08.30.15 at 5:16 pm

What a friggin’ idiot, Karly.

I rent a two bedroom house 1 block from the beach in Vietnam for USD$200/month.

The opportunity cost of living in a 2nd/3rd world country is about $1,500/month to the good. Capitalize that. My pension covers that. Then 3 years to get OAS.

Well, that’s why I am a multimillionaire with a under 30 year-old GF.

#21 I stand Corrected on 08.30.15 at 5:20 pm

What exactly is Karly complaining about? She and her squeeze pull in $120K and complain about $2500 in rent? That’s a mere 25% on her gross income. Going back 15 years when I was living in the UK I was spending 40 to 50% of my income on rent. It would take half a month of work just to pay the rent. My wife and I live in New West and pay $1550 including all bills except Internet/Cable. We have 2 bathrooms, 2 bedrooms, 2 parking stalls, 1 storage locker and a nice view of the Fraser River. Downtown Van is 30 minutes on the train when trees aren’t falling on the tracks and 10 minutes to Metro Town, YVR, the airport, is 25 minutes away and Seattle is 2 hours. C’mon man!

#22 Grooby on 08.30.15 at 5:24 pm

Calgary detached down 1%… Perhaps, perhaps not.

My wife and I have been following the RE market in SW and inner NW Calgary for almost 2 years, and there are ‘significant’ drops in list prices for like properties. Those in the 500 1,000k range have dropped 100k on average. This is from viewing wide swathes of detached homes. And house prices are still selling below the re-listed ‘list price’, on average -2%.

I suspect there’s the typical ‘pull and re-list’ strategy going on here that is skewing the avg price appreciation/depreciation statistics, but that can’t be the only thing…?

Considering it’s a known fact that the million+ houses are dropping a lot more, I really don’t understand how CREB is able to calculate a 1% change.

Some input from boots on the ground, as it were.

#23 Mister Obvious on 08.30.15 at 5:26 pm

“To get a decent two-bedroom unit in YVR these days, Karly says, will cost her $2,500 a month”
—————————-

Yep, that’s about right. In fact, I pay a little more. I’m not seeing the problem here. My landlord is still getting the crappy end of the deal. I figure he needs to be getting about $4500/mo per unit to realize a decent cap rate on this building (say 8%). Must drive him nuts.

#24 For those about to flop... on 08.30.15 at 5:26 pm

My wife and I rent a garden suite in east Van .
We stay there because we get it below market value .
2 bed for less than $1000.
Can walk to shops and restaurants
Relatively quite neighbours
Parking out front
It ain’t sexy but it does the job and we invest the extra money we save and go on holidays.
I thought by 40 I would have my own house but in this market it is financial suicide .
I owned a house once in Australia and contrary to popular belief it did not make me a better person or make all my problems go away.

#25 not me on 08.30.15 at 5:29 pm

In other news, first storm of the ‘season’ in YVR and it was a comedy central at intersections with no traffic lights.

2 small earthquakes in the valley in the past week. Has anybody ever wondered about those ’emergency escape routes’ what would they look like in case a big one hit?

#26 fleabitten monkey on 08.30.15 at 5:30 pm

Rents obviously depend on where in YVR u want to live. We live in east van. Newish townhouse (2006 build) 1300 sqft 2bed 2 bath $2,000/mo. These things now sell for approx $800K (set new records this summer), yep happy to be subsidized by the landlord. Move east for better value.

#27 Andrew Woburn on 08.30.15 at 5:34 pm

The Smoking Man has strong views on education. Is he really deriving veritas from vino or is he channeling the voices of giants?

“The more cultured the bourgeois state, the more subtly it lied when declaring that schools could stand above politics and serve society as a whole. In fact the schools were turned into nothing but an instrument of the class rule of the bourgeoisie. They were thoroughly imbued with the bourgeois caste spirit. Their purpose was to supply the capitalists with obedient lackeys and able workers.”

— Vladimir Lenin. Speech At The First All-Russia Congress On Education. 1918

#28 Andrew Woburn on 08.30.15 at 6:22 pm

David Rosenberg: Why investors’ fears about China are overblown

“The Chinese manufacturing data were ugly, but what pundits are missing is that China is not slowing down as much as the industrial data suggest because the country is successfully mobilizing resources towards the service sector – the PMI diffusion index here is running at a healthy level of around 54.

This gets very little attention because the media and Wall Street analysts know full well that bad news always sells better than good news — take this from a former bear.

China’s economy has a grand 16-per-cent correlation with the U.S. economy, knock-on effects and all. In other words, insignificant, though there are some sectors such as automotive and scrap steel that are affected.

China represents the grand total of 0.7 per cent of U.S. GDP, and while there is a tight link with commodity prices, which is critical for TSX performance, the bottom line is that as the U.S. economy goes, so goes the Canadian economy.”

http://business.financialpost.com/investing/investing-pro/david-rosenberg-why-investors-fears-about-china-are-overblown

#29 Renter's Revenge! on 08.30.15 at 6:26 pm

Karly, take the risk. It’s more exciting that way! Besides, it’s not like we’re talking about Winnipeg here. You guys’re runnin outta land, right? If you wanna live big you gotta spend big. 3 grand a month is not that bad to live in vanCOUver. Winnipeggers can only dream of rain in January. Buckle down and go for it! Buy the condo! Power through! Just do it! (Just make sure it’s not a LEAky condo – I hear those’re bad, eh?)

#30 Waterloo Resident on 08.30.15 at 6:28 pm

“detached prices rose 16% in a year.”

Now compound that rate of growth on a $800,000 STARTER home and in 30 years that same house will cost you:
——- wait for it —–

$68 Million !!!!!

Want to bet that minimum wage won’t keep up with that?

#31 tundra pete on 08.30.15 at 6:39 pm

I’m taking garth’s advise and not reading the comments section of this blog.

#32 Mark on 08.30.15 at 6:40 pm

“For Mark when he gets back….

Explains some of the nuances of being a reserve currency (tames inflationary pressures) and how inflationary currency devaluations are to non-reserve currencies (like Canada).

Just stepped off the plane from Toronto this afternoon. Lots of buzz amongst my acquaintances in YYZ last night of the RE peak being in the past (ie: like 2 years ago). Similar sentiment in Vancouver, Prince George, Edmonton, Winnipeg, Corner Brook, Halifax, and Montreal over the past two weeks when its come up in conversation.

The problem with the explanation in the cited Bloomberg article is that it does not take into account the fact that current deflation is (lack of) demand-led. In that, it is a truncation of Canadian (and EM demand in general) that is associated with the deflation. In such an environment, currency weakening is not only illogical, but subject to extremely violent reversal. Speculative excesses in favour of the USD$ can only last so long, especially as the ‘rate hike’ bubble pops soon enough (the data suggests the USA needs NIRP or QE, not rate hikes!).

Previous episodes of devaluation have been associated with excess demand that required attenuation, not diminished demand.

BTW, dating a flight attendant rocks. Though things have been so busy this summer that the standby situation has been extremely dicey.

#33 Vanecdotal on 08.30.15 at 6:45 pm

Agree with #12 Bob Santarossa, may be wise to go short term rental, (6 mos. – year) and then revaluate. To buy now, especially leading up to the election is fraught with risk (and not enough realistic expectation of appealing return), imho. RE “facing heavy headwinds” here may be a bold understatement.

#16 Brian Ripley
Great case study. The math jibes with what I see and hear happening anecdotally. Interesting.

#34 Tony on 08.30.15 at 6:47 pm

Re: #14 Joe2.0 on 08.30.15 at 4:52 pm

I buy out of the money puts on the market and will increase the amounts as we get closer to the American election. The worldwide exchanges have never been as overvalued ever on record. The German and American market indexes are the most overvalued in the world. I’m still waiting for at least a 50 percent down day on the American indexes with the exchanges halted for trading for 2 weeks to a month. I’m sure the FED and the bankers know the end is near as they’ve seen in China. No matter what measures the state comes up with it just makes the decline that much more, something Americans will learn only too well.

#35 Tony on 08.30.15 at 6:50 pm

Re: #29 Renter’s Revenge! on 08.30.15 at 6:26 pm

But the same $400,000 condo in Vancouver only costs $40,000 in America. Maybe Katy is looking for employment in the wrong place.

#36 VanMan on 08.30.15 at 6:56 pm

One of the problems with Vancouver rentals these days is Airbnb. I have several friends who have 1 or more condos that they rent on Airbnb and it’s simply because short term rentals in this city is where the $$$ is at. Some of my friends are making $5,000+ a month doing this and I’ve had 2 friends recently quit their careers to focus on this full-time because it has been so lucrative.

Residents in this city don’t make enough money to afford the monthly rents that are required to pay the owners mortgage costs, but if you rent short term to the 1000’s and 1,000’s of visitors that come to this city then you more then make up for it.

Factor in this past summer was the busiest tourist season on record according to TourismVancouver and that many of these “hosts” do not disclose the Airbnb income to Revenue Canada then it just makes sense to continue renting on a short term basis.

#37 Tony on 08.30.15 at 6:57 pm

Re: #28 Andrew Woburn on 08.30.15 at 6:22 pm

Here’s the real reason commodity prices plunged. The American public gets one set of figures to do with the unemployment rate, GDP and so on. The people on the inside in the know who have the real figures are the ones who shorted all the commodities. Then they use the strong U.S. dollar as a false front for these falling commodity prices when in actuality it’s the state America and the world economy is in for the collapse.

#38 rar on 08.30.15 at 6:59 pm

in Calgary, there are no rent controls unlike bc and Ontario. rents can go up $200 a month on a condo or house easily. Calgary has no land transfer tax saving thousands at closing time. if she were in Calgary, buying a condo would make sense.

#39 cd on 08.30.15 at 7:14 pm

Garth… whats with all these dog pics? Can we get some koala or panda bear pics?

#40 Lookinin on 08.30.15 at 7:22 pm

Total “nut” for owning is $3,080 a month.
—————
Great information, but why digress to such a crude terminology?

Crude only in your mind. Shame on you. — Garth

#41 Joe Schmoe on 08.30.15 at 7:33 pm

Balance balance balance….

owning is fine dependent on how much of your net worth is tied up.

And how long you are planning to hold….like any asset.

If you are basing home ownership on a monthly cash flow comparison, do not buy.

#42 S.Bby on 08.30.15 at 7:36 pm

$2500/month on average to rent a nice four bedroom house in South Burnaby. House would sell for $1.2 – $1.4 million. Renting it is a no-brainer.

#43 james on 08.30.15 at 7:43 pm

Here’s a fun short clip from last week.

Watch the hideous Shark dismember the pouffy haired real estate shill:

http://www.marilyn.ca/AtHome/segments/Daily/April2015/4_9_2015/KevinOLearyScottMcGillivray

#44 observer on 08.30.15 at 7:43 pm

I have been renting since I sold my places since 2010.

There are tons of places from 1200 to 1700 a month. Inclusive heat, cable and internet.

Its BS, sure some places cost 2500 per month but in kits, 2 blocks away from the water you can get a 2 bedroom for 1800 a month.

BTW, good luck with your insurance cost next year because its going to triple

#45 Mike in the Okanagan on 08.30.15 at 7:50 pm

“With a condo, in fact, you have no control over the regular levy imposed by the condo corporation. You can’t control property taxes. You can’t have a mortgage without insurance, the premiums for which increase annually”

You also can’t control rent increases so I think this part of the argument is a wash.

In many jurisdictions rents are moderated. The costs itemized are not. — Garth

#46 OttawaMike on 08.30.15 at 8:00 pm

The Economist says in their latest edition that Canada’s lost factories will not be returning anytime soon.

Good thing we have our brilliant condo economy to fall back onto. .30 cent/kilowatt Ontario power sure doesn’t help either.
Why is our loss of manufacturing not even an election issue?

http://www.economist.com/news/americas/21662567-puzzling-weakness-manufacturing-new-rustbelt?fsrc=scn/tw/te/pe/ed/thenewrustbelt

#47 craig on 08.30.15 at 8:05 pm

um, is it just me, or is there a number missing from the total cost estimate? $1900 a month for the mortagage also includes $900 month towards principal, so adding about $54,000 over five years… leaving you up $48,000, not down 6…

It’s just you. The mortgage amount remaining after five years was reduced by principal repayments. — Garth

#48 common sense on 08.30.15 at 8:08 pm

Is there ever an ideal time to purchase a House, Condo or Property?

The best advise I ever got was from one of my clients who I visited one day and saw a concerned look on his face. “Neil, what’s the problem?”….”Well I’m looking at property to buy and I’m just thinking through how hard it will be to sell it when I want to. Anything is easy to buy, always more difficult to sell.”

Wise words from a person who is now handling a 75 year very successful retail and property business.

#49 common sense on 08.30.15 at 8:09 pm

Excuse me..advice.

#50 lee on 08.30.15 at 8:09 pm

Tony #35,

In Uruguay it’s only $25000 and all the sun and health care you can handle.

#51 OttawaMike on 08.30.15 at 8:17 pm

Sun Media guy summarizes why the socialists have a chance at governing Canukistan:

http://www.nationalobserver.com/2015/08/27/news/sun-media-reporter-unloads-tories

And our congenial blog host suggests we’d still be better off financially with the corrupt status quo?

I have made no suggestion other than this: I suggest you be careful what you wish for. — Garth

#52 Cyclist on 08.30.15 at 8:19 pm

225 Blacksheep – my choice of poison is the road, though i also own an old 26er mtn bike and a cross bike. My riding buddies want to me to try cyclocross this fall, so i must work on my “holeshot”!

And yes a few trips to the ER over the years……

Enjoyed your exchange with shawn the other day about the creation of debt from savings. I converted to your opposite view a while back as it just makes more sense. I like to bring that up in dinner/coffee shop conversation. you should see the baffled looks I get.
People still think they have a pile of “cash’ in their bank account.

#53 joblo on 08.30.15 at 8:45 pm

Here’s the NEW thing, coming soon to the big smoke and Vanny:

In Silicon Valley a 500 sq. ft. box rents for $4K a month.
So enter Shift Sharing, you sleep in 8 hour shifts and pay your portion of the rent.

Genius!

#54 Millmech on 08.30.15 at 8:47 pm

#36 Vanman
Wouldn’t CRA just have to get the records of every registered person using them to rent out their suite on their site.Airbnb will declare all the income sourced and be more than willing to give give copies of contracts to CRA.

#55 Bottoms_Up on 08.30.15 at 8:52 pm

#40 Lookinin on 08.30.15 at 7:22 pm
————————————
“Monthly nut” is quite a common phrase for ‘expenses’.

#56 fancy_pants on 08.30.15 at 8:53 pm

Ontario has become as hospitable for industry and manufacturing as the moon. Maybe Wynnie should change her tin foil hat and call her mother ship for additional instructions. Who wants to place odds the response will be spend more?

#57 getout on 08.30.15 at 8:53 pm

#20 OffshoreObserver on 08.30.15 at 5:16 pm
“…Well, that’s why I am a multimillionaire with a under 30 year-old GF.”

You mean prostitute. You mean you moved to a developing country and you pay for sex with poor women who have limited options. Canadian women must be weeping to have missed out on a catch like you!

#58 Andrew Woburn on 08.30.15 at 9:11 pm

Alberta regulator forces Nexen Energy to shut down 95 pipelines

“Late Friday evening, the Alberta Energy Regulator announced that it has forced the Canadian subsidiary of Chinese state-owned CNOOC Ltd. to shut down 95 pipelines at its Long Lake facility southeast of Fort McMurray for failing to comply with safety regulations. The suspension order comes roughly six weeks after one of Long Lake’s newest pipelines was found to have leaked more than 31,000 barrels of bitumen, sand and contaminated water in what ranks among the largest ever such spills in Canada.”

This was unlikely to kill us all in our beds but it just might be killer politics. La Notley defends us from sinister foreign powers. Look out Steve.

http://www.bnn.ca/News/2015/8/30/Alberta-regulator-forces-Nexen-Energy-to-shut-down-95-pipelines.aspx

#59 World Traveller on 08.30.15 at 9:11 pm

#30 Waterloo Resident on 08.30.15 at 6:28 pm
“detached prices rose 16% in a year.”

Now compound that rate of growth on a $800,000 STARTER home and in 30 years that same house will cost you:
——- wait for it —–

$68 Million !!!!!

Want to bet that minimum wage won’t keep up with that?

**

It’s ok, by that time the CHMC will let you claim your SFH as an apartment building and use the income from that on your mortgage application.

#60 Bob dog on 08.30.15 at 9:21 pm

Just want to remind young Canadians that they may be eligible for a NAFTA TN visa. This allows you to abandon Canada for up to 5 years and live in the USA where the dollars you earn are actually worth a dollar as opposed to the devalued canuck pesos you get here.

You would be surprised just how comical Canadian real estate is when you no longer live here.

#61 BS on 08.30.15 at 9:24 pm

One of the problems with Vancouver rentals these days is Airbnb. I have several friends who have 1 or more condos that they rent on Airbnb and it’s simply because short term rentals in this city is where the $$$ is at. Some of my friends are making $5,000+ a month doing this and I’ve had 2 friends recently quit their careers to focus on this full-time because it has been so lucrative.

The guy makes $5000 per month off rent through Airbnb and quits his job to focus on this full time? If he rented the place to a long term tenant which would require little work and allow him to still work he could probably get $2500 and keep getting a salary. He is either an idiot or had a very low wage. Good luck in renting places through the winter. You can get a hotel in downtown Vancouver for $100 per night 9 months of the year.

Airbnb is short lived for condos as most stratas have or will be banning nightly and short term rentals. The fine is $200 per occurrence plus they can charge the standard move in move out fee per rental which is usually $200 or more. It is also against city bylaws although that has not been enforced yet.

#62 Frustrated Renter on 08.30.15 at 9:28 pm

RE #38 rar : “in Calgary, there are no rent controls unlike bc and Ontario”

I rent an apartment in a smaller Ontario city (130k+) and most of the multi dwelling apartments have been bought out by large city based profit hungry companies and reits . The rent increase is set every year near the end of June (for the following year) by the gov’t (now capped at 2.5% yearly) however the landlords can apply for an above guidline rent increase every year capped at 3% (capital expenditures) in addition to the yearly gov’t regulated increase.This is almost a yearly or bi yearly occurrence now at our building. Although there has to be a L&T hearing to get the above guidline rent increase for so called capital expenditures approved, the hearings that I have attended have become a mere formality with the landlords always winning. If you’ve ever been to one of these hearings, they are a joke in my opinion.

#63 Nora Lenderby on 08.30.15 at 9:29 pm

I have made no suggestion other than this: I suggest you be careful what you wish for. — Garth

You did recommend voting for the best candidate. I first heard that advice from Mr. Joe Clarke when things went funny in his party. It’s sort of the decent thing to say that won’t get you on record for being a splitter, I suppose.

It’s actually good advice. Our system does not allow you to directly pick a prime minister – only a man or woman to represent your constituency. Choose carefully. — Garth

#64 Smoking Man on 08.30.15 at 9:30 pm

#50 OttawaMike on 08.30.15 at 8:17 pm
Sun Media guy summarizes why the socialists have a chance at governing Canukistan:

http://www.nationalobserver.com/2015/08/27/news/sun-media-reporter-unloads-tories

And our congenial blog host suggests we’d still be better off financially with the corrupt status quo?

I have made no suggestion other than this: I suggest you be careful what you wish for. — Garth
……

You’re all doomed, salad eating, tree hugging, femanazis climate change phycopaths.. Unionists, blood sucking bycle riding mobsters.

Government contracts awarded untendered to over priced rainbow flag flying backward business people.

Public sector bliss…. Raises for all.

All funded by entrepreneurs to stupid, or in my case too whipped to have left…

#65 BS on 08.30.15 at 9:36 pm

You also can’t control rent increases so I think this part of the argument is a wash.

Wrong. Rents are controlled throughout BC for all month to month rentals. They can only go up buy about inflation once per year. The landlord must follow the proper procedure on the anniversary once per year to increase rent by even inflation which the max for 2016 is set at 2.9%. If he misses one or more years of a rent increase he/she cannot go back and raise it latter.

Landlords can only increase the rent once a year by an amount permitted by law or an additional amount approved in advance by an arbitrator – they need to use the right form and give the tenant three full months’ notice of the rent increase.

The maximum allowable rent increase changes each year. The limits for residential tenancies and manufactured home park tenancies are different.

For residential tenancies, the standard allowable rent increase for 2016 is 2.9%

http://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/during-a-tenancy/rent-increases

#66 DisgustMadeMePost on 08.30.15 at 9:38 pm

#56 getout on 08.30.15 at 8:53 pm

Well said !!

#67 Figuy on 08.30.15 at 9:56 pm

Garth, I honestly don’t understand how you have the patience to explain this stuff day after day after day.

Good work.

Not sure if you have noticed lately, but mortgage spreads are unusually high over Canada bonds.

#68 betamax on 08.30.15 at 10:02 pm

Karly neither whined nor complained. She established her situation, her reaction to it, then asked a legitimate question. Unfortunately, the lunatic fringe is incapable of reading anything other than their psychopathology in whatever they read.

Karly, $2,500/mth is $30k/yr. You’re not getting ahead by spending that much on rent. You might as well buy.

How much do you think prices will fall, and by when? In 5 years, you’ll have spent $150k on rent. How much will you save by waiting?

My advice: either buy a place or find cheaper rent.

#69 JimH on 08.30.15 at 10:09 pm

#56 getout

Nailed it!

#70 Andrew Woburn on 08.30.15 at 10:14 pm

#37 Tony on 08.30.15 at 6:57 pm
Re: #28 Andrew Woburn on 08.30.15 at 6:22 pm

Here’s the real reason commodity prices plunged.
======================

Although speculators played a role in driving up commodity prices, it is unlikely they are driving them down now. There are two kinds of commodity speculators: one is the commercial traders or end-users of the product who are the real market; the other is paper speculators who exit the market when it turns against them.

Although current prices are considered low, they are mostly still higher than they were when the China craze started about 2004. Copper hardly ever traded above $2 per lb before and was around $1.50 most of 2004. Now we think $2.30 copper is rock bottom but it probably has a way to fall to reach market equilibrium.

The simplest explanation for the commodity plunge is that customers stopped buying for the China market, paper traders ran away and a whole lot of overcapacity based on unrealistic end prices will have to shut down. I blame it on the central banks who prevented interest rates from exerting their normal market discipline.

#71 Porsche on 08.30.15 at 10:14 pm

Has anybody here ever seen anybody walking down the street wearing an AAPL watch?

Didn’t think so, please trade accordingly.

#72 JimH on 08.30.15 at 10:14 pm

#37 Tony on 08.30.15 at 6:57 pm
“…The people on the inside in the know who have the real figures are the ones who shorted all the commodities.”
====================================
Tony! It looks to me like you ‘think’ you’re one of those people ‘on the inside in the know’…

You seem to have great insight into what’s really going on!

How do you get this inside information? Inquiring minds want to know!

#73 meslippery on 08.30.15 at 10:16 pm

#6 Retired Boomer – WI on 08.30.15 at 4:28 pm

As an owner, retired, we are beginning to think about later on. Both 64 this year, who loves snow shovels, lawn care, and maintenance? Not us.

As we get more brittle, do we need this stuff? While no
VCR or 416 this 4 bed room, 3 popper, 2 car, on 1/2 acre of crabgrass should sell fairly fast.

Thinking of moving away to somewhere slightly warmer. No, not FL, not absolutely sure where, yet. Just thinking.

Might as well be VCR… whats YVR??

#74 BS on 08.30.15 at 10:17 pm

How much do you think prices will fall, and by when? In 5 years, you’ll have spent $150k on rent. How much will you save by waiting?

It doesn’t matter how much prices fall. $150K on rent over 5 years is less than buying factoring in all costs even before considering the inevitable capital loss.

#75 Smoking Man on 08.30.15 at 10:30 pm

The meaning of life……

Looking at an empty bottle hidden in the back yard . Knowing, there is a full 40 Oz of JD that you hid.. But wifee poo found it and re hide it, and won’t tell you where it is..

This is why murders happen…

The bitch loves her man, gave me two ten pound weights, work out old man she said…

#76 Sheane Wallace on 08.30.15 at 10:41 pm

Premium on 1 once Platinum Eagle is $ 400 per coin and there is no availability (APMex, SprottMoney)?

WTF?

How much you were saying is that condo or crack shack worth? Million or two?

#77 Suede on 08.30.15 at 10:46 pm

Garth,

Don’t bother with absolute spa. Head to Willow Spa at the Pacific rim.

#78 Blacksheep on 08.30.15 at 10:56 pm

Cyclist # 51,

I tried the road thing, but the neck couldn’t (barefooting injury) take it.

Did a cycle cross series one fall, lots of dismounting, leaping and running in the mud, good fun.

On Shawn, our debates and the reason I pushed.

People still think about debt in pre 1971 terms, before Nixon dropped the gold standard. They need to realize that if no one is creating new debt (new $ deposits) the system will stall.

You see this ignorance confirmed with Harper and Mulcair using the ‘balanced budget’ as an actual platform. They both know it will not be balanced (and it shouldn’t be) but are lying to the herd, cause that’s what the Cattle will vote for.

If so inclined, check out this interview with Stephanie Kelton on MMT.

Start 27:00 min. in, for a quick explanation of why, we actually pay taxes.

It is a brand new rabbit hole and no, it’s not what you think.

https://www.youtube.com/watch?v=zGen5o6vAmw

#79 fisheman on 08.30.15 at 10:56 pm

Month to month rent in Vantown is regulated at max 2.5% increase /year. But, yearly, theres no limit. When the new landlord wants to give you more “security” with yearly lease, he’s setting you up.
For what its worth, we’ve noticed a big uptick in R/E Agents mailouts for west side residential sfh For Sale. We used to get cold calls to sell but they never bothered us minor players to buy. This is the last couple months so early to call a trend.

#80 Retired Boomer - WI on 08.30.15 at 10:58 pm

#72 Me Slippery

Typo… meant not Vancouver or Toronto…. in other words
we just have normal real estate prices here…

At best this place might fetch $165K – $175K in todays’ markets around here.

We have no ocean, no great lake in our front yard…
Anyhow just thinking, why am I keeping this place? Kind of weighing options that’s all. Taxes, maint, utilities, insurance, AND opportunity costs… it costs around $1,100 to keep the door open on a “paid-for” house. WTF??

that, to live in Tax-Hell WI, where the winters are nasty. In spring you can sit in the yard, and listen to the Ford rust! Summers are a delight, as are fall.
Then get the hell out!
…Like I said, just thinking…

#81 Ponzius Pilatus on 08.30.15 at 10:59 pm

#74 SM
Tired of giving you advice, you idiot.
Just watch “The Lost Weekend”.
And be done with it.
jeesh.

#82 Leo Trollstoy on 08.30.15 at 10:59 pm

#6 Retired Boomer – WI on 08.30.15 at 4:28 pm

Seniors don’t sell their primary residence short of health issues.

99% guaranteed.

#83 Leo Trollstoy on 08.30.15 at 11:06 pm

#20 OffshoreObserver on 08.30.15 at 5:16 pm

Who Wants To Be A Vietnamese Millionaire!

Lol

#84 Victor V on 08.30.15 at 11:07 pm

https://ca.finance.yahoo.com/news/asia-stocks-sag-fed-rate-prospects-revived-china-005440325–finance.html

HONG KONG (Reuters) – Asian shares fell on Monday and looked set for their worst monthly performance in three years after top Federal Reserve officials kept the door open for an interest rate hike in September and Chinese stock markets took a fresh tumble.

Global markets are bracing for Chinese data on Tuesday which is expected to show the world’s second-largest economy is continuing to lose momentum.

#85 Mark on 08.30.15 at 11:12 pm

“Not sure if you have noticed lately, but mortgage spreads are unusually high over Canada bonds.”

And going higher. As I predicted probably a dozen times. Mortgage credit is now being recognized by the market as being significantly riskier than it was in the past. Confidence in a future (NDP) government to provide CMHC bailouts is waning as well.

#86 Hickster on 08.30.15 at 11:12 pm

On the spreadsheet, what Garth is saying makes sense. Having read the blog a few years, I went for it and rented rather than bought at first.

Bottom line we found there are more headaches than it is worth to rent. Dealing with neighbours, dealing with landlords, worrying about your own behaviour and whether you are allowed or not allowed to do something etc, was just not worth it for us. Then our landlord decided to sell so we had to move – something you have no control over as a renter. Ever moved? Pretty fun times right? When you rent you are facing that possibility every single year due to choices of a person you cannot influence, your landlord.

What Garth says makes a lot of sense when you are single, particularly male. You have less junk then, and moving is a more modest inconvenience. If you want the family life though, it is not so simple. It is a massive headache to face moving periodically because landlord is selling or changes terms or rent, or simply decides they want you out. This takes a paychological toll on kids in particular. Garth has lots of wisdom and is a smart guy, but that reality is not one he can factor into the spreadsheet. You know those people with wife and kids who love out of a few suitcases and can ditch a bad rental in a moment when needed? Ya neither do I.

Moving also requires use of that paper know as Canadian currency, which must be exchanged for boxes, hotels, pizza and moving companies. I’m never seen that on the calculator either.

We own now and are much happier and more settled. But we also live in Regina where costs of renting and buying are comparable and generally favour buying even with home price declines. In Vancouver or Toronto such is not the case, and I would still favor renting. I’m not here to tell you owning is best, it is not necessarily and it does have more financial risk. I’m just saying there are costs beyond what you might read here.

#87 Andrew Woburn on 08.30.15 at 11:14 pm

#37 Tony on 08.30.15 at 6:57 pm
Re: #28 Andrew Woburn on 08.30.15 at 6:22 pm

Here’s the real reason commodity prices plunged.
======================

I forgot to mention the other obvious reason for the commodity price drop – the rise in the US dollar which makes everything cheaper in USD.

#88 soleilsun77 on 08.30.15 at 11:14 pm

I live and rent in Vancouver. We have a 4 bedroom house for $2200 a month. First tip: go to the east side Tip #2: don’t look in September, that’s when all the students are back and landlords are looking for stupid rents. A quick check of our neighbourhood shows that there are full houses for rent for less than what she’s paying for a 2 bed apartment. Not everybody gets to live downtown.

#89 Blacksheep on 08.30.15 at 11:23 pm

Smoking # 75,

“The bitch loves her man, gave me two ten pound weights, work out old man she said…”
——————————————————–
Naw…she found out weight training increases men’s testosterone levels.

It’s the fountain of youth.

#90 Sheane Wallace on 08.30.15 at 11:28 pm

http://marketsanity.com/mohamed-el-erian-whats-next-after-another-turbulent-week-for-markets/

Increase in interest rates would be mediocre according to Mohamed El Erian. No revert to normal rates, rather minimum symbolic increase.

There goes the economy on fire that can not support 1 % interest rates.

Cheers to the savers, don’t expect that GIC to yield much in the future either. While inflation picks up.
Retirement? I don’t think so.

You are a gold troll. — Garth

#91 Hawk on 08.30.15 at 11:32 pm

#56 getout on 08.30.15 at 8:53 pm

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

Well if —-(according to you) ——a young woman going for an older wealthy man is a hooker, then there ain’t no shortage of them right here.

https://www.seekingarrangement.com/
http://sugardaddie.com/
https://arrangementfinders.com/

And unlike the poor women in the developed world they don’t have “limited”opportunities.

Think next time before making silly statements about expat guys or poor women abroad.

#92 kommykim on 08.30.15 at 11:39 pm

RE: #25 not me on 08.30.15 at 5:29 pm
2 small earthquakes in the valley in the past week

Liquefaction will sink many parts of greater Van when the big one hits. Say goodbye to Richmond and Delta.

#93 Rent control, Kanye West on 08.30.15 at 11:58 pm

It’s too funny to listen to renters bragging about how they are being subsidized by property owners, praising and relying on rent control while warning about the financial disasters of voting for socialists. Then some brags about how their US rental properties are doing great.

All this with the same breath and straight face.

No wonder Kanye West is announcing on mtv to run for president.

Everyone seems to be smoking the same sizzle.

#94 Freedom First on 08.31.15 at 12:01 am

#40 Lookinin

You’re nuts.

#95 jane 24 on 08.31.15 at 12:30 am

I also don’t understand why young people in Vancouver/Calgary/Toronto live there and pay those RE or rental prices. To live in cardboard houses too. Crazy. There is a whole world out there with cheaper living and no winter. In Canada you can indeed earn $150,000 a year as a couple and live hand to mouth as the Canadian cost of being alive is so high. I have countless friends and family who do this there. Double crazy. Plus the place is too far away from the rest of the world to enjoy your life and travel. Why Garth, I really don’t understand. Did I say Canada is also freezing. Living in Montreal in January is like being dead for 6 months each year. Done this.

I have lived in Montreal, Toronto, England , Italy and the Middle East and Canada was by far the worst standard of living but the folk there think it is the greatest simply because most of them have never been anywhere else. Been to Vietnam too and it is indeed a great and very cheap place to live and retire too. Lovely people in Vietnam.

Young folk should travel the work while working and building their CV and then think about where they want to settle and why.

Old folk should travel the world and then decide where they want to retire. I am personally keen on Southern Italy. Stunning stone house for $100,000 or less and a nice standard of living for 1000 euros a month. Easy access to airports to get anywhere else. Good health care. No snow. What more do you want?

#96 Waterloo Resident on 08.31.15 at 12:41 am

Oh oh, looks like last week’s stock market recovery was simply a DEAD CAT BOUNCE.

Markets all over Asia are tumbling 1% plus as we speak.

If that’s true then this week we will see another 10% + drop on North American markets, perhaps more. Sure hope that doesn’t happen. Garth says that American growth will keep American markets rising; hope he’s right about that, but I have a gut feeling that we are on a roller coaster ride, now about to start GOING DOWN.

#97 Mister Obvious on 08.31.15 at 12:58 am

#86 Hickster

If this were a world where the only rentals available were from landlords trying to at least break even on their second so-called ‘investment’ property, the points you make about rentals would resonate more.

Perhaps in Regina that’s the kind of world you are in, and if so, I sympathize. In your place I might seriously consider buying over renting. I just might.

But here in Vancouver there are other alternatives. I have been renting now for the past 5 years after owning a detached home for the 25 years prior to that.

My strong advice: Seek out professionally managed, high quality, purpose built rentals where everything is done by the book. Find places that will appreciate what you, as a responsible tenant, will bring to the table. Then ensure that management will reciprocate with the same responsibility and professionalism.

That’s how renting ceases to be a negative experience.

#98 bdysktn on 08.31.15 at 1:11 am

You would be surprised just how comical Canadian real estate is when you no longer live here.
———————–
central 2br , no den, seattle, new 1.15M. cdn
http://liveluma.com/?floor-plans=1201

it’s west coast, not can/us.

#99 KL on 08.31.15 at 1:35 am

That’s a crazy high rent. I live in downtown Vancouver and am renting a 3 bedroom, 1400 sq ft condo for $2700. You can find 2 bedrooms for under $2000, and if that’s hard on your budget just go to east or south Van. Sure it’s not downtown but so what? If we bought a condo in our same building it would cost around $900,000. Renting has its uncertainties, but buying has more.

#100 BS on 08.31.15 at 3:10 am

It is a massive headache to face moving periodically because landlord is selling or changes terms or rent, or simply decides they want you out.

Are people really this ignorant about rental laws and lease terms? A landlord cannot change terms or rent and if you have a lease your landlord cannot make you move simply because he decides. Even if the landlord sells they cannot make you move with a lease in place. Once a lease goes month to month the only way he can make you leave is if he or his family wants to move in and then they have to give you 2 months notice and 1 free month rent here in BC. Anyone who wants stability should request a multi year lease which reverts to month to month at the end. Choose a landlord who has no intention of moving in or selling.

If you spend more than a few moments researching your landlords history and intentions and make sure the lease meets your requirements before agreeing to move in you will never be forced to move and never have a rent increase above inflation as a renter. Never sign what is called a fixed term lease. You lose all your rent control rights and ability to stay as a renter. A lease should always go automatically to month to month at the end of the term which is standard unless you as a renter agree otherwise. There is no advantage for a renter to agree to a fixed term lease which terminates at the end and allows the landlord to renegotiate terms.

If you put half the time and research into renting a place as would be required to buy a place you will not have a problem as a renter.

#101 davikk on 08.31.15 at 5:52 am

It Gets Even Uglier In Canada: Businesses Get “Crunched” In The Oil Patch, Consumers Lose It, Indexes Hit Financial Crisis Levels

http://investmentwatchblog.com/it-gets-even-uglier-in-canada-businesses-get-crunched-in-the-oil-patch-consumers-lose-it-indexes-hit-financial-crisis-levels/

#102 BobC on 08.31.15 at 7:10 am

It has become difficult if not impossible to read anything positive about the economy/investment markets. Everywhere but here the “experts” are yelling a huge crash is right around the corner. I’m trying to stay away from doom and gloom reporting. Can anybody point out what blogs to read to keep a positive attitude and not sell everything?

#103 the jaguar on 08.31.15 at 8:00 am

#51 -Ottawa Mike…
I think Trudeau is actually gaining a little momentum with his plan to run a small deficit. Ex-Gov Bank of Canada David Dodge was on heard on the radio over the weekend endorsing the move. A job creator, and if there are more layoffs in the fall (oil patch, Toronto Airport, and others across the nation) his campaign could get more traction. There is still lots of time for one of the leaders to make an error that the media will jump on. The Keystone announcement should be any day and the media will pull out Harper’s “It’s a no brainer” comments. And the knives are out for Mulcair. It will be interesting to see how Alberta votes federally. Notley has not really stumbled yet.

#104 Shawn on 08.31.15 at 8:13 am

Warning, Doomer Link

101 davikk on 08.31.15 at 5:52 am said:
It Gets Even Uglier In Canada:

***********************
I won’t click an obvious doomer link with a sensationalist doomer agenda.

#105 Thin Man on 08.31.15 at 8:35 am

Not sure what Karly’s smoking, but where does she get that $2500/month rental fee for a 2 Bedroom in Van? We live 2 blocks from City Hall in the trendy Mount Pleasant Area (if it’s good enough for Premier Christy Clark, local TV anchors and Chef Vikram Vij, it’s good enough for us) and we pay $1850/month for a 3 bedroom, renovated place with a full kitchen (including gas stove, and all the other details), use of the yard, and literally a couple of blocks from the trendy South Main and Cambie Village shopping/restaurant areas.

#106 Scott on 08.31.15 at 9:07 am

Sounds to me like Canadians need to look at building more trailer parks. The best antidote to higher prices is more inventory. If it’s all about a temporary fix to unrealistic real estate prices then a decent double wide is a very attractive option.

http://www.halstonhomes.com/index.html

#107 Dave in Kincardine on 08.31.15 at 9:17 am

Nobody seems to put this into their equations- Inflation. The Chapwood Index (Google it) shows inflation is around 12% per year in the US. Canada is probably worse especially since our currency dropped 35% in one year.

12% loss in purchasing power per year means anyone on fixed income is screwed. If you can borrow at 4% and have an asset rise you may keep up. But basically keep working.

#108 lee on 08.31.15 at 9:34 am

105

Maybe she’s an agent?

#109 Holy Crap Wheres The Tylenol on 08.31.15 at 9:34 am

#75 Smoking Man on 08.30.15 at 10:30 pm
The meaning of life……
Looking at an empty bottle hidden in the back yard . Knowing, there is a full 40 Oz of JD that you hid.. But wifee poo found it and re hide it, and won’t tell you where it is..
This is why murders happen…
The bitch loves her man, gave me two ten pound weights, work out old man she said…
_____________________________________________
Well Smoking Man perhaps your wifee poo is a hot little trophy wife and just wants you to look the part of her hot escort? I thought you told us you where a bald, skinny chain smoker, so why exercise? Or back to reality, why don’t you go to the LCBO and just buy a new bottle. I told my wife about you and your wifee poo. She laughed so hard she couldn’t believe it. Showed her your last wifee poo episode. She said “and this guy is writing a book, well I hope its about his life with wifee poo because that would be a comedic best seller!”

#110 Nagraj on 08.31.15 at 9:42 am

“Canada”
An Overview
by Tulong Sarong

There are three Prairie Provinces. They have wheat and cows. One of them had oil but it dried up.
The Marytimes Provinces have fish and fisherpeople. Except for Cape Briton which grows the famous life-prolonging sauerkraut. There’s also an island which grows French fries. If you’re from the Delmarva Peninsula or Maryland you will like the Marytimes.
The other two provinces are called Ontario and Vancouver. The capital of Vancouver is Victoria and many Anglican church ladies with big hats like it. They drink tea out of nice cups. Nobody likes Ontario because there’s not enough roads there.
Canada also contains another little country called French Canada or La Terredesnosaieux or Quabeck. It is very picturesque. Many Americans who can’t afford pricey Paris visit is capital, Boucherville, and love it.

The Negatives
Nobody in Canada can afford to buy a house or cheese. All the young people are imprisoned in their parents’ damp basements. Orphans run loose in the streets.

Of Particular Note
The capital of Ontario is Tobermory. North of there many European tourists get on a boat to admire the wildernis.
There’s also some Rocky Mountains in Canada. If you’ve seen one Rocky Mountain you’ve seen every Rocky Mountain. Ha, ha.

Tulong

[Bulto here. Dr.Louise has been teaching us about our new country. Tulong is very proud of his essay.]

#111 The American on 08.31.15 at 9:50 am

Hey, Tony! How’s your boner for America doing this morning? Remember, anytime it lasts more than four hours, you should seek medical help immediately.

Tony, you do realize China is not of America’s concern, right? China’s goings on in the markets actually impacts Canada far more than the U.S. Dude, you’re just fucking stupid but entertaining. Who know who *really* impacts the U.S.? It’s CANADA. As the globe knows (except Canada), your economy is really in the shitter, and Canadians don’t even know about it, or they don’t accept it because well, they’re cray naive and overwhelmingly misinformed. You should learn how to read someday. It will serve you well…

http://www.bloomberg.com/news/articles/2015-08-28/uh-oh-canada-china-pales-as-a-risk-to-u-s-growth

#112 Nora Lenderby on 08.31.15 at 10:06 am

#62 Frustrated Renter on 08.30.15 at 9:28 pm
I rent an apartment in a smaller Ontario city (130k+) and most of the multi dwelling apartments have been bought out by large city based profit hungry companies and reits . The rent increase is set every year near the end of June (for the following year) by the gov’t (now capped at 2.5% yearly) however the landlords can apply for an above guidline rent increase every year capped at 3% (capital expenditures) in addition to the yearly gov’t regulated increase.This is almost a yearly or bi yearly occurrence now at our building. Although there has to be a L&T hearing to get the above guidline rent increase for so called capital expenditures approved, the hearings that I have attended have become a mere formality with the landlords always winning. If you’ve ever been to one of these hearings, they are a joke in my opinion.

Interesting. I used to rent in central Ottawa, over the years from a variety of amateur and professional landlords. Almost all spent absolutely nothing on maintenance of their assets (possibly self-selected since we were trying to tightly control our costs).

One high-rise (a festering dump) was ultimately bought by a Montreal property company. They started renovating and bringing it back from the dead. Serious and very disruptive changes to fix perhaps 30 years of neglect.

Then the rent increases started, obviously. Tenants appealed and we all went to the hearing. Most of the tenants tried an emotional appeal based on their inability to pay (many retired older women on fixed incomes who had lived there all their adult lives). This didn’t count in the panel’s considerations.

We had found an error in the company’s application (their numbers were wrong) so we did get a small change, but otherwise the owners got their rights.

I was sorry to see that some people would have to leave their homes, but the rent was ridiculously low for a place within 10 mins walk to Parliament Hill. Ultimately the market decides the rent, not the landlords. If there are people who can or will pay more, then rents will go up and people have to move.

We left soon after because mould in the apartment was really bad.

#113 Broke Dick on 08.31.15 at 10:08 am

#12 Bob Santarossa on 08.30.15 at 4:47 pm
…forget about the evil spawn children that ransack your lawn whilst their parents are out back sipping on a Margherita and do not care.

Ooh, I want to hear more about the ransacking of your lawn. Do tell!

#114 Sheane Wallace on 08.31.15 at 10:14 am

#78 Blacksheep
Great post.

That is the nature of credit money – in reality nothing more than coupons.

While people accept it, feel rich with the ‘appreciation of their assets’ and do not care about their savings diminishing everything will be great. But this system requires two things:
increasing debt (we are already at peak debt) and constantly declining interest rates as the growth in credit drives consumption (aka economy).

The very nature and definition of money requires market determination of price of money (aka interest) and ability to retain value. None of this is feature of the current monetary system.
It might go for a while, there is no question about it. But if the herd understands at some point (due to unforeseen circumstances like excessive food inflation) how they are gamed it could be a very quick unravelling.

Of course balanced budget is not possible, only excessive QE can sustain excessive consumption due to the overblown monstrous credit bubble. we will get our QEs and the CAD will be literally obliterated. Or we face the most severe depression in history.

No, I am not gold bug, I am just thinking that if this thingy resets at some point in time we would have completely different economy and values and trust in governments could be greatly diminished along with public pensions and benefits like health care.

In the meantime let’s enjoy the race to the bottom, negative interest rates and the desperation of the liars lying about CPI, inflation and the herd ‘getting richer’ through over-leveraged ponzi shemes (aka housing and credit bubble) subsidized by the generosity and stupidity of governments and all of us as a society. In the land of the idiots one can’t be to wise. It is not healthy.

#115 Broke Dick on 08.31.15 at 10:18 am

#32 Mark on 08.30.15 at 6:40 pm
“For Mark when he gets back….

Explains some of the nuances of being a reserve currency (tames inflationary pressures) and how inflationary currency devaluations are to non-reserve currencies (like Canada).

Just stepped off the plane from Toronto this afternoon.
===========
You were in Toronto? No wonder it felt so icky lately.

#116 Calgary Rip Off on 08.31.15 at 10:31 am

Way off with perspective on Calgary. Rents are still about the same as most mortgages in the NW. The real clarifying points are short term vs. long term and job security. Does it make sense to rent for the next 30 years at $1700-1800/month when a mortgage is the same? Dont answer. You should instead invest right?. Let’s see, its easy to pay rent and invest at those rates. Please.

Please look a little deeper before posting. Maybe examine the MLS listings for each of the cities before commenting on them and then address how advice here impacts different age brackets. Eg. a person in their 30’s, 40’s working for the next 30 years may want to buy the mortgage vs. those in their 50’s up for retirement in 8 years renting is fine.

#117 Tim on 08.31.15 at 10:40 am

Re no 2. Cambie at Marine is a shit hole of a neighbourhood. Light commercial areA right across Marine Dr and lots of noise from Marine Drive. If you go south you hit Richmond. Need I say more?

#118 Tim on 08.31.15 at 10:45 am

Re No 97
My landlord would love it if I moved so he could raise the rent. I’ve been there for 9 years and pay 1200. My reward for being a good long term tenant? A rent increase every single year. Welcomes Vancouver.

#119 jgg123 on 08.31.15 at 11:03 am

Seems a little unfair to assume 7% rates as a certainty on a balanced portfolio yet to assume stagnant or declining RE values, when both are touching all time highs?

Not familiar with every city in Canada, but in Edmonton area, there has only been one decade in the history of real estate where if you held for five years the average sale price was less than when you purchased. Basically 1980-85 thru 85-89. And interest rates are no where near the levels which drove those declines.

Can the same be said about the stock market?

Bottom line, both require a long term outlook, and if you buy at the top of the market, that term becomes longer.

Financial markets move on corporate earnings and economic prospects, not (primarily) hormones. There is a scant relationship between them. In any case, a balanced portfolio has outperformed residential real estate handsomely over the last three decades. That is a worthwhile yardstick. — Garth

#120 Retired Boomer - WI on 08.31.15 at 11:04 am

#96 WATERLOO RESIDENT

It is merely time for a stock market breather… not the end of civilization.

What would happen if stocks fell 25% and stayed there for 2 years? Would it affect your life? Let’s move that up to 35-40%? Well, is your life over now?

Oh, you weren’t balanced… had 100% in equities, so NOW you have maybe 60% of the CASH VALUE you HAD if you decided to sell today? Didn’t like my story? Then don’t be so dam concentrated, you could lick bullion instead. It might go up, might go down but, will never pay interest or a dividend.

Markets DO, what market’s do… change…DAILY.
get used to that. If you are seasick, stay out of the boat

#121 Axehead on 08.31.15 at 11:13 am

Karly,

Rent, Rent, Rent. Times are getting tough; expect more layoffs at end of 3rd qtr in Cowtown with ripple effects throughout the country. Times are a changing and it’s too uncertain to buy. Keep liquid, avoid debt and be ready to move.

Unless you’re a teacher and ready to go back to work tomorrow after a 10 week summer vacation, what with all the PD days and conventions and reading weeks and Easter weeks and Christmas holiday plans to prepare for.

#122 Retired Boomer - WI on 08.31.15 at 11:22 am

#82 Leo Trollstoy

Seniors don’t sell their primary residences short of health issues? 99% guaranteed.

I have to wonder why? Sense of “security?” If you analyze that one, there is no ‘security’ in owning a place.
Delay the maintenance, it rapidly decays. Don’t pay your property taxes, it gets sold here after 3 years at auction.
WHAT is the beauty of being ‘tied’ to a property?
I really just do not understand that idea…

I just do NOT want to be cutting lawns, snowplowing or shoveling, raking leaves yadda yadda yadda all the time!

People get older, they might get more lazy (worked for me!) I would prefer the freedom.

I would have to sell off a whole bunch of stuff, junk what didn’t sell. Amazing how ‘stuff’ just seems to accumulate in a place. Scary at times!

As I said, just Thinkin’

#123 Shawn on 08.31.15 at 11:24 am

Inflation in the number of Morons?

#107 Dave in Kincardine on 08.31.15 at 9:17 am said:

Nobody seems to put this into their equations- Inflation. The Chapwood Index (Google it) shows inflation is around 12% per year in the US. Canada is probably worse especially since our currency dropped 35% in one year.

*************************************
The Chapwood Index? Is that right next to the Moron Index?

Claims of 12% inflation are an insult to those of us who actually lived through such inflation in the 70’s and also an insult to intelligence in general.

Yes, Canada has some inflation and the currency drop has added to it. We might be at 3%. 12% and an implication that it will be ongoing at that rate is simply moronic.

#124 Sheane Wallace on 08.31.15 at 11:57 am

#123 Shawn

Inflation in food, medication, dental, education is higher than 3 %. Maybe 6-7.
For food there is constant repackaging with smaller packages. Similar with quality.

Gas is down, but imaging what would happen if/when it goes up.

Everything imported – shoes, clothes is more expensive by 8-10 %.

You pay higher banking fees.

Our prices are still much higher than the prices in the states after the currency conversion.

The only things that declined for me this year are slight gas prices and auto insurance cost reductions. Everything else is up. While interest rates is zero.

#125 1990 on 08.31.15 at 12:03 pm

Housing affordability deteriorates to ‘risky’ levels: RBC

Lack of affordability in Vancouver is at a record level, according to RBC’s quarterly housing affordability report released Monday. It is approaching 1990 levels in Toronto, it says.

https://ca.finance.yahoo.com/news/toronto-vancouver-housing-affordability-deteriorates-153756451.html

#126 Llewelyn on 08.31.15 at 12:17 pm

If we accept the premise that the market value of an asset can be increased through the circulation of information that might not be accurate it might be prudent to consider the sources of inaccurate information. If mainstream media suggest that the value of real estate in Vancouver is based on the lack of supply it might be useful to investigate whether the supply is as limited as media sources funded by the real estate industry are suggesting.

When mainstream media suggest that single-family detached houses are being purchased by foreign buyers it might be interesting to determine the number of units actually purchased by foreign buyers arriving with suitcases full of cash?

Consider the possibility that thousands of houses in Vancouver were purchased as investments with the intent of selling at a profit. Circulating information related to foreign buyers might lead to a perception that the market value of houses will increase. Once the owners of all single-family houses buy into this perception an increase in listing prices is quickly followed by information that the average selling price is increasing. Potential purchasers become convinced that they are competing for assets valued by foreign buyers and that the higher listing prices are justified.

Cabbage Patch dolls are in short supply and are being resold at five times their purchase price while stores await their next shipment. Better get in line!!

Consumers are manipulated all the time and I find it very surprising that anyone would ever consider purchasing an investment valued at $1,000,000 before investigating the fundamentals behind this value.

Weapons of mass destruction come in all forms. Caveat emptor.

#127 Smoking Man on 08.31.15 at 12:21 pm

#109 Holy Crap Wheres The Tylenol on 08.31.15 at 9:34 am
#75 Smoking Man on 08.30.15 at 10:30 pm
The meaning of life……
Looking at an empty bottle hidden in the back yard . Knowing, there is a full 40 Oz of JD that you hid.. But wifee poo found it and re hide it, and won’t tell you where it is..
This is why murders happen…
The bitch loves her man, gave me two ten pound weights, work out old man she said…
_____________________________________________
Well Smoking Man perhaps your wifee poo is a hot little trophy wife and just wants you to look the part of her hot escort? I thought you told us you where a bald, skinny chain smoker, so why exercise? Or back to reality, why don’t you go to the LCBO and just buy a new bottle. I told my wife about you and your wifee poo. She laughed so hard she couldn’t believe it. Showed her your last wifee poo episode. She said “and this guy is writing a book, well I hope its about his life with wifee poo because that would be a comedic best seller!…
……

Tell your wife, I don’t really smoke, or drink, or gamble. I’m just an insane humanoid that likes to write.

#128 Rational Optimist on 08.31.15 at 12:27 pm

62 Frustrated Renter on 08.30.15 at 9:28 pm

These above-guideline increases are completely legitimate- in many municipalities in Ontario, property taxes are increasing more than 2.5%, the new cap. If a building pays hydro, their increases can be murder.

The hearings seem like a joke because it’s a mathematical formula: if a building’s taxes and utility increases justify it, or there are capital expenses, it happens. There’s an application fee, so smaller buildings can not take advantage of it, and have to be satisfied with rent increases smaller than the increases in their expenses.

Purpose-built apartment buildings are finally being built again in Ontario, which will decrease your rent in the long-term. Thanks to rent control, older smaller buildings will lose value as more modern buildings not subjected to rent control are built.

#129 Lolo on 08.31.15 at 12:37 pm

Those in YVR bragging about the deals in rent; when did you start renting? Now, $2500 for a 2 bdr is a bit high, but not out of the ordinary if looking in the west side. I am paying under $1700 for an upper level of a 9 yr old house (3 bdr, 2 bath) in E.Van. I started renting over 2 years ago, and even then it was relatively cheap. The landlord hasn’t increased our rent since we moved in. When I browse craigslist for similar places now, I see prices are mostly $1900-$2200. So we count ourselves lucky.

#130 Victor V on 08.31.15 at 12:48 pm

Toronto, Vancouver housing affordability deteriorates to ‘risky’ levels: RBC

https://ca.finance.yahoo.com/news/toronto-vancouver-housing-affordability-deteriorates-153756451.html

“The fact that Vancouver’s affordability readings approach all-time highs for any market in Canada — albeit more so for single detached homes than condos — exerts little restraining effect on homebuyer demand at this stage. Given the current high degree of tightness in the market, further price acceleration and affordability deterioration are likely in the near future.”

Toronto is seeing double-digit price increases and huge demand, pushing it “closer to risky levels,” the housing report said.

“Affordability in Toronto is moving ever closer to the historically poor levels that prevailed in 1990, which may signal that risks are mounting because those were associated with a housing bubble at the time,” it said.

#131 Andrwe on 08.31.15 at 12:51 pm

If you want Toronto and Vancouver real estate prices to go down, abolish the Greenbelt and abolish the Agricultural Land Reserve. That’s what’s causing the housing bubble.

#132 Holy Crap Wheres The Tylenol on 08.31.15 at 1:12 pm

#127 Smoking Man on 08.31.15 at 12:21 pm

#109 Holy Crap Wheres The Tylenol on 08.31.15 at 9:34 am
#75 Smoking Man on 08.30.15 at 10:30 pm
The meaning of life……
Looking at an empty bottle hidden in the back yard . Knowing, there is a full 40 Oz of JD that you hid.. But wifee poo found it and re hide it, and won’t tell you where it is..
This is why murders happen…
The bitch loves her man, gave me two ten pound weights, work out old man she said…
_____________________________________________
Well Smoking Man perhaps your wifee poo is a hot little trophy wife and just wants you to look the part of her hot escort? I thought you told us you where a bald, skinny chain smoker, so why exercise? Or back to reality, why don’t you go to the LCBO and just buy a new bottle. I told my wife about you and your wifee poo. She laughed so hard she couldn’t believe it. Showed her your last wifee poo episode. She said “and this guy is writing a book, well I hope its about his life with wifee poo because that would be a comedic best seller!…
……

Tell your wife, I don’t really smoke, or drink, or gamble. I’m just an insane humanoid that likes to write.
____________________________________________
She said now you truly are a comedic novelist. She did have one word of advice after reading several of your yarns. Learn how to spell and take a grammar course. It will go far in your new career.

#133 Lorne on 08.31.15 at 1:14 pm

#128 Andrew
If you want Toronto and Vancouver real estate prices to go down, abolish the Greenbelt and abolish the Agricultural Land Reserve. That’s what’s causing the housing bubble.
……..
Sure, right, housing is much more important than food!
Perhaps there might be a better way to move housing prices down…and, in fact, it will soon be here!

#134 Bottoms_Up on 08.31.15 at 1:15 pm

#126 Llewelyn on 08.31.15 at 12:17 pm
——————————————————
Fundamentals you say, like the following?

1) over the long term, real estate goes up (average trend is inflation)

2) multi-pronged government policies that support and buoy the real estate market

3) supply and demand….

#135 TCContrarian on 08.31.15 at 2:34 pm

Well, don’t take this as ‘advice’, but I’ve just sold my house in 604 and decided to rent a townhome (at $2,200/mo). Everyone I know (almost), thinks it’s ‘risky’ as I may get priced out of the market…but I think it’s the other way around. I don’t plan to buy back until everyone thinks RE is ‘risky’ – just as they do in the US now. I’d say in 3-5 years.

#136 jas on 08.31.15 at 2:35 pm

#20 offshore observer
As far as I know, you have to come back and live in Canada to be eligible to get your OAS.

check this out

#137 Blacksheep on 08.31.15 at 2:38 pm

Sheane # 144,

“No, I am not gold bug, I am just thinking that if this thingy resets at some point”
—————————————————–
Learn about MMT and you will never look at gold the same way. Stephanie Kelton is great on this topic.

Here is teaser:

https://www.youtube.com/watch?v=oLntiX4AeWc

Thanks for the feedback.

#138 Blacksheep on 08.31.15 at 2:40 pm

Sheane # 124.

#139 not me on 08.31.15 at 2:43 pm

#95 jane 24 on 08.31.15 at 12:30 am

Amen to that. Folks here (Canada) can’t see past the tip of their nose.

#140 IM in C on 08.31.15 at 2:51 pm

@ #126 Llewelyn

3.5) demographics !
The leading edge of the baby boom just turned 70. And as they move through their 70’s they will discover they have entered their elderly years. They will no longer have the inclination, or the ability, to continue living in their suburban mansions. Oh, and as a group , they will start to see an steeply increasing mortality rate! Their children , who will be inheriting their houses, won’t be sitting on them, or renting them out. They will be selling, even at a reduced price, in order to get the money .
So , demographically speaking, I perceive another 5 years of rising house prices, then we will start to real estate gently but firmly decline.
What are your thoughts Garth ?

#141 not me on 08.31.15 at 2:53 pm

… not to mention they have no clue what the meaning of words such as beautiful, upscale, luxurious, executive, etc is. Just look at MLS listing.

#142 Smoking Man on 08.31.15 at 2:59 pm

Bill Gates just put a wooden stake into the hearth of the educational industrial complex.

Free text books for all…

https://openstaxcollege.org/

#143 H on 08.31.15 at 2:59 pm

And THAT is what happens when news says water is worth more than oil.

We shall now see what happens when supply cant meet demand because 2/5ths of the capital for projects were chopped.

You want inflation? $2 a liter should do it.

#144 4 AM Sunrise on 08.31.15 at 3:00 pm

#95 jane 24 on 08.31.15 at 12:30 am

Young folk should travel the work while working and building their CV and then think about where they want to settle and why.

Sound suggestion, but travel where?

USA: yes, if you’ve got the skills that they want, then as a Canadian you can get that fast-track visa that somebody mentioned a while back. Lower cost of living, too.

EU: if you’re not lucky enough to have EU papers, you’ve got to be special enough to leapfrog their policy of hiring locals first. I know of somebody in banking who’s been trying to get transferred there for years. This person is talented, but not quite special enough.

UK: This same person in banking was recruited to start immediately in London but turned the offer down upon double-checking the cost of living.

Middle East: sure, if you’ve got skills that they want. Istanbul reminds me of Hong Kong – lots of go-getter energy.

Asia: Hong Kong has a program to lure Canadian-born kids back to the motherland to work. I hear from friends that rent is “insane”. The rest of Asia is humming, for sure, but it depends again on your skillset.

Latin America: I’m not sure; back when I worked for a multinational, the brains were draining from there to Canada, not the other way around.

Africa: I am woefully ignorant about this one.

And let’s face it: not all “young people” have the emotional resilience or the open-mindedness to want to work abroad. For all the multiculturalism that we teach our children, some young people – maybe today’s bubble-wrapped generation – are genuinely freaked out by the prospect of strange food, unfamiliar customs, and – I think this is a big one – separation from friends and family.

On top of this, not all “young people” have the skills that are wanted abroad, anyway. They get their obedience certificate (Smoking Man shoutout!) that gets them an obedience job say, answering phones at city hall explaining to seniors how to fill out their property tax rebate forms.

And that’s why some young people “settle”, because they don’t have the skills or desire to go abroad for work.

#145 Shawn on 08.31.15 at 3:01 pm

A Fact for doubters of the U.S. recovery

Toll Brothers, a luxury home builder in the U.S. reported in Q3 numbers released August 25 that its signed contracts for new homes during the quarter averaged $834,000 the highest quarterly average in the companies history and up from $717,000 the prior year.

This is a fact from a publicly traded company. So presumably no conspiracy issues of fake numbers. (Who am I kidding? doomers see conspiracy everywhere)

Toll reported a profit and revenue decline in the quarter but that was based on a lull in contracted sales of a year ago. Revenues are booked only when homes are built and delivered and so this company has a year lag between sale and revenue.

Clearly an indicator of a strong economy.

Doom on… at your own peril.

#146 Mark on 08.31.15 at 3:09 pm

“Toll Brothers, a luxury home builder in the U.S. reported in Q3 numbers released August 25 that its signed contracts for new homes during the quarter averaged $834,000 the highest quarterly average in the companies history and up from $717,000 the prior year.”

$834k is how many sigmas away from the average new house price in the United States? Think about that for a minute before you start extrapolating the results of one luxury house builder to the rest of the economy.

#147 OXI in GREECE !! on 08.31.15 at 3:19 pm

Meanwhile in Australia….

http://www.smh.com.au/technology/technology-news/data-retention-and-the-end-of-australians-digital-privacy-20150827-gj96kq.html

But don’t worry….we are continually reminded on this blog that “This will never happen in Canada”.

#148 Smoking Man on 08.31.15 at 3:24 pm

#132 Holy Crap Wheres The Tylenol on 08.31.15 at 1:12 pm
#127 Smoking Man on 08.31.15 at 12:21 pm

#109 Holy Crap Wheres The Tylenol on 08.31.15 at 9:34 am
#75 Smoking Man on 08.30.15 at 10:30 pm
The meaning of life……
Looking at an empty bottle hidden in the back yard . Knowing, there is a full 40 Oz of JD that you hid.. But wifee poo found it and re hide it, and won’t tell you where it is..
This is why murders happen…
The bitch loves her man, gave me two ten pound weights, work out old man she said…
_____________________________________________
Well Smoking Man perhaps your wifee poo is a hot little trophy wife and just wants you to look the part of her hot escort? I thought you told us you where a bald, skinny chain smoker, so why exercise? Or back to reality, why don’t you go to the LCBO and just buy a new bottle. I told my wife about you and your wifee poo. She laughed so hard she couldn’t believe it. Showed her your last wifee poo episode. She said “and this guy is writing a book, well I hope its about his life with wifee poo because that would be a comedic best seller!…
……

Tell your wife, I don’t really smoke, or drink, or gamble. I’m just an insane humanoid that likes to write.
____________________________________________
She said now you truly are a comedic novelist. She did have one word of advice after reading several of your yarns. Learn how to spell and take a grammar course. It will go far in your new career.
………

If she really wants a laugh, tell her I’ll be hanging out, pun intended at Hanlins point beach all week.

I’ll be on the SS Smoking Man Bow rider….

#149 Mark on 08.31.15 at 3:27 pm

“If you want Toronto and Vancouver real estate prices to go down, abolish the Greenbelt and abolish the Agricultural Land Reserve. That’s what’s causing the housing bubble.”

I’d have to disagree. There is no generalized housing shortage in either city. Renting, especially compared to ownership, is extremely affordable.

What we have in Canada is a bubble in optimism towards rent growth in the future (and perhaps a bubble in optimism towards abnormally low risk premia on RE-backed loans). This bubble is currently being deflated with a combination of expanding risk premia against RE loans, and an onslaught of new supply. The ALR or the “greenbelt” are relatively insignificant factors.

A true housing shortage would be accompanied by a rapid expansion in rents, and a conversion of industrial properties to residential uses as marginal industries are forced out on account of land use pressures. Neither of which are happening in the aggregate.

#150 OXI in GREECE !! on 08.31.15 at 3:47 pm

#145 Shawn on 08.31.15 at 3:01 pm
A Fact for doubters of the U.S. recovery

Toll Brothers, a luxury home builder in the U.S. reported in Q3 numbers released August 25 that its signed contracts for new homes during the quarter averaged $834,000 the highest quarterly average in the companies history and up from $717,000 the prior year.

This is a fact from a publicly traded company. So presumably no conspiracy issues of fake numbers. (Who am I kidding? doomers see conspiracy everywhere)

Toll reported a profit and revenue decline in the quarter but that was based on a lull in contracted sales of a year ago. Revenues are booked only when homes are built and delivered and so this company has a year lag between sale and revenue.

Clearly an indicator of a strong economy.

Doom on… at your own peril.
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

How about this story professor…..

http://www.cnbc.com/2015/08/31/cost-of-living-is-increasingly-out-of-reach-for-low-wage-workers.html

#151 bdy sktrn on 08.31.15 at 3:50 pm

Clearly an indicator of a strong economy.
———————
just like canada?

easy money everywhere.

#152 cramar on 08.31.15 at 4:01 pm

#6 Retired Boomer – WI on 08.30.15 at 4:28 pm

Thinking of moving away to somewhere slightly warmer. No, not FL, not absolutely sure where, yet. Just thinking.

———

Okay FL is not in the running, but you didn’t mention where your interests are leaning. In continental U.S. or possibly other countries?

#153 Godth on 08.31.15 at 4:09 pm

#145 Shawn on 08.31.15 at 3:01 pm

Great! So people in the US are diving into more debt again. I wonder what that means? Steve Keen has a message for you:
https://www.youtube.com/watch?v=-HHJ3q2TxEQ

#154 EB on 08.31.15 at 4:14 pm

Good grief, I’ve been renting in Van for five years @ $1300 per month with nary a rent increase to be seen – for a 3 bedroom upper story of a house in North Van, barely cracking 15% of gross for shelter. I could have a slightly shinier countertop for $2500 but I’d much rather invest the rest. There’s deals to be had, particularly if you have time to look around.

Beware amateur “investors” who want you to offset their losses.

#155 Llewelyn on 08.31.15 at 4:18 pm

# 134 Bottoms Up

Your comments actually reinforced my point!.

Potential purchasers have been convinced that the ‘real’ in real estate is actually real.

Once accommodation became viewed as a form of investment the true value of real estate based on
demographic and economic fundamentals was replaced by a market value based on information distributed by sources with vested interests..

This fact that the market value of real estate was shored up by fiscal, monetary and immigration policies only reflects that our government is catering to 70% of the population view their accommodation as an investment and do not want to be disappointed..

Suppose interest rates were to decline to zero, immigration targets were doubled, amortization periods were increased to 50 years and not one new unit was built for the next ten years. Even in this ideal environment for price increases the true value of housing could not increase beyond the purchasing capacity of future customers. At some point fundamentals will bring market values back into line with the true value.

The belief that future customers will continue to devote 50 or 60% of their disposable income to purchase accommodation is not realistic. An environment where annual wage growth is limited to 2.0% per year, were unemployment rates are not declining and where interest rates are already at historical lows cannot support the escalation of market values for much longer. The multi-pronged bag of tricks you referred to is all but empty and the purchasing capacity component of demand is about to emerge from the shadows.

Once the leverage associated wth real estate starts to workin a reverse direction enthusiasm for inflated market values will disappear overnight.

#156 bill on 08.31.15 at 4:31 pm

Karly:
our two bedroom apts in kits are going about 1600 or so when I last looked.
if Broadway and Arbutus isnt a decent enough neighbourhood then maybe your a bit too picky?

#157 Shawn on 08.31.15 at 4:32 pm

You Got Sumthin’ to Say to Me?

#153 Godth on 08.31.15 at 4:09 pm said:

#145 Shawn on 08.31.15 at 3:01 pm

Great! So people in the US are diving into more debt again. I wonder what that means? Steve Keen has a message for you:
https://www.youtube.com/watch?v=-HHJ3q2TxEQ

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I don’t click links. If you have an opinion based on what you saw, state your opinion and a summary of the link first and THEN I might look.

I merely point out the FACT that Toll Brothers house prices reached a record. To me, that supports Garth’s observation that the U.S. economy continues to recover.

You can spit out “buts” all you want. I presented a fact.

Another fact (or at least truism) is that we all key in on facts that support our existing views and ignore or try to explain away counter facts.

Hard to ignore the U.S. recovery but yes, it can be ignored if you wish.

Doom on…

#158 Shawn on 08.31.15 at 4:39 pm

Affordable housing

I don’t recall a time when people thought houses were nicely affordable.

In 1991 I had for rent a $275 (utilities all included) one bedroom basement apartment in a little house in Edmonton and I had a hard time finding tenants and on the radio they were talking about the lack of affordable housing.

(They wanted two bedrooms above ground for $275 I guess, I mean that is all some people could afford then and now)

Past is always so nice in rose colored glasses. Actually, life has always been hard work and money has always been in short supply.

People look at those boomers that got the auto union job and forget about the boomers who never got a pension. Believe me, they exist.

#159 BC resident on 08.31.15 at 4:52 pm

Back in 1993 I rented the main floor of a house in Terrace, BC – $1600 per month. It had a yard for the dog and allowed cats. Vacancy rate was near to zero at the time – we felt lucky to get the place!

#160 bdy sktrn on 08.31.15 at 4:53 pm

everybody is paying 1999 rents, it seems.
heres craigs for bdy/arbts today
===============

our two bedroom apts in kits are going about 1600 or so when I last looked.
if Broadway and Arbutus isnt a decent enough neighbourhood then maybe your a bit too picky?
———————–
Kitsilano 3br basement -partially furnished
$2200

$3475 / 3br – 1600ft2 – Kits rancher house

Spacious 840 Sq. Ft., Sept 1, 2015: $2200
1 Bedroom, 1 Den, with balc
$2200 1BR

#161 Andrew on 08.31.15 at 5:04 pm

>Sure, right, housing is much more important than food!
Perhaps there might be a better way to move housing prices down…and, in fact, it will soon be here!

You wouldn’t have to pave over more than a tiny fraction of Canada’s agricultural land near Toronto and Vancouver to make housing prices way down. Most of Canada’s agricultural land is nowhere near the major cities.

There is no shortage of food. We have an obesity problem, not a food shortage problem.

These “greenbelt” laws are the main reason why Toronto and Vancouver housing prices are so nuts. A shortage of new detached housing means that prices go up, and encourages foreign speculators to buy up all the housing and make prices go up even more. There is a reason why Toronto and Vancouver housing prices are way more than the rest of the country (which doesn’t have greenbelt laws).

#162 Bytor the Snow Dog on 08.31.15 at 5:46 pm

@155 Lleweyln- I agree except for one piddly little thing—-

2% wage increases per annum?! Even us public servants here in our cushy ivory towers ain’t gettin’ that!

Why, I guess I’ll have to call a meeting and initiate a little more proxy violence!

#163 devore on 08.31.15 at 5:47 pm

Meh, the condo numbers only look as good as they do in TO and Van due to a very large portion of sales coming from new units, which are very expensive vs comparable resales.

#164 Bottoms_Up on 08.31.15 at 6:09 pm

#161 Andrew on 08.31.15 at 5:04 pm
————————————-
Greenbelt laws are needed to ensure we dont destroy all our farmland.

Pave paradise, put in a parking lot?

#165 Bottoms_Up on 08.31.15 at 6:14 pm

#155 Llewelyn on 08.31.15 at 4:18 pm
——————————————-
Disagree. A SFH is not your average dwelling, much like a 200k family imcome is not average.

Fundamentals suggest the average family 80k(?) needs to be able to afford the average house (a 300k townhouse?).

#166 devore on 08.31.15 at 6:16 pm

#116 Calgary Rip Off

Why always such extremes? How many rent for 30 years? Who lives in the same house, their first house even, for 30 years?

You’re creating a false dilema. It is no way to base an argument off of. Buy when it’s cheap, rent when it isn’t. And if “affordability” passes your lips even once, you’re probably basing your reasoning on the monthly payment, which is only going to end in tears.

#167 Sheane Wallace on 08.31.15 at 6:28 pm

#78 Blacksheep

The lady in that video has no clue what she is talking about:
—————————————
It is a brand new rabbit hole and no, it’s not what you think.

https://www.youtube.com/watch?v=zGen5o6vAmw
—————————————

Her statements about Weimar republic, hyperinflation are laughable. She only expresses opinion and no evidences whatsoever.

I can do much better job in explaining nature of monetary policy in the post-Nixon era and probably will.

#168 rjrt on 08.31.15 at 6:29 pm

I rent a 1000sqf 2 bedroom townhouse in YVR for $1850. Which was brand new before we moved in. The rental market is tough in Vancouver. But if you can be patient and put some work in, there are reasonable places to rent.

#169 Snowboid on 08.31.15 at 8:06 pm

#19 Dwilly on 08.30.15 at 5:10 pm…

Our ratio is 12.6 to 1 – so we felt safe buying our Okanagan condo, but we had a long list of ‘must-haves’ that hopefully will lessen any impact on value down the road.

Here are the main ones:

– Location within 100 metres of lake, walking distance to shopping, food and restaurants
– Low rise (3 stories) top floor, south facing corner condo (we like sun), gas fireplace and range
– Concrete sub-floors, good sound-proofing, central air/heat, split bedroom plan (guests snore and so do we)
– Large contingency, fair strata fees, completed and acted on depreciation report
– Within 20 metres of elevator from our U/G parking spot
– Secure bike storage, common room, gym, storage locker on same floor
– Over 1250 sq ft, master must accomodate king suite, walk-in closet and large ensuite
– All in around $ 250K

That was our budget and we paid cash – other units here sold closer to $ 350K four years ago, so this purchase met our definition of ‘vultching’.

Many of these points were decided as we looked at places over the last four years, and some came from this and other blogs.

Of course it did take four years of looking to find a place in Kelowna! And it did hurt a bit knowing we paid about double what our Phoenix SFH cost!

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#65 BS on 08.30.15 at 9:36 pm…

And many landlords are getting around this by insisting on fixed-term leases – see this more and more in the Okanagan.

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#122 Retired Boomer – WI on 08.31.15 at 11:22 am…

We haven’t mowed a lawn, shovelled snow or put snow tires on the beast for five years and don’t miss it a bit!

#170 Mark on 09.01.15 at 12:10 pm

“I merely point out the FACT that Toll Brothers house prices reached a record. To me, that supports Garth’s observation that the U.S. economy continues to recover.”

Yes, one high-end construction company. Not a representative sample that reflects the ‘average’. You make a mistake similar to that of the people who claim that Canadian house prices are still going up — by focussing only on a relatively small segment of the overall sales mix.

There has been no US recovery. Its not doom to point out facts. There won’t be a US recovery either until there are major policy changes and a meaningful liquidation of debt and malinvestment which serves to inhibit economic growth.